Observation or inpatient? get it right up front

Auditors from all types of payers are focusing their attention on patients'level of care making it imperative for hospitals to ensure that the level of care is appropriate and the documentation supports it. There are a lot of grey areas in the rules and admission criteria sets and the Recovery Audit Contractors (RACs) are looking at them as tools, and not as definitive answers as to whether patients meet inpatient criteria. Insufficient physician documentation is the reason for a large number of hospital payment errors. Level of care determination doesn't necessarily affect physician billing but it can have a huge impact on hospital reimbursement and patients' out-of-pocket expenses. Patients appropriate for observation services are those who need additional care or who need to be reassessed before a decision on admission is made. At some hospitals, case managers on the surgical unit conduct reviews to ensure that patients are placed in the proper status after surgery.

Centers for Medicare and Medicaid services tighten reimbursements

Hospitals will suffer when the Medicaid Recovery Audit Contractor (RAC) starts on Jan. 1, 2012, if case managers aren't scrutinizing those patients as closely as those who are covered by Medicare. Make sure your documentation is complete to avoid denials and prepare for appeals. Work with your state Medicaid provider to determine how the program will work in your state. Learn the rules for all states in which your patients reside. Be aware that the Medicaid RACs are charged with taking a proactive approach to identify potential fraud.

Saving it for later. Healthy hospitals turn to layoffs to bend own cost curve

When the credit crisis hit in 2008, many hospitals reacted by cutting staff. While credit access and the markets may have rebounded, hospital spending hasn't and some are still looking for cuts. Dennis Dahlen, of Banner Health, recently told the health system's investors that executives will "plan for the worst and work for the best."

The effect of health payment reforms on cost containment in Taiwan hospitals: the agency theory perspective

This study aims to determine whether the Taiwanese government's implementation of new health care payment reforms (the National Health Insurance with fee-for-service (NHI-FFS) and global budget (NHI-GB)) has resulted in better cost containment. Also, the question arises under the agency theory whether the monitoring system is effective in reducing the risk of information asymmetry. This study uses panel data analysis with fixed effects model to investigate changes in cost containment at Taipei municipal hospitals before and after adopting reforms from 1989 to 2004. The results show that the monitoring system does not reduce information asymmetry to improve cost containment under the NHI-FFS. In addition, after adopting the NHI-GB system, health care costs are controlled based on an improved monitoring system in the policymaker's point of view. This may suggest that the NHI's fee-for-services system actually causes health care resource waste. The GB may solve the problems of controlling health care costs only on the macro side.

Hospital specialization: product-line planning during the market reformation

Rational expectations theory dictates that firms respond to shifts in the demand function as a result of substantial reforms in the insurance marketplace. Federal health reform has enhanced the benefits of specialization. Hospital product-line specialization trends are studied using multiple regression analysis for the period 2001-2010. The observed 32.8 percent rise in specialization was associated with a 9.8 percent decline in unit cost per admission. The number of specialized hospitals has grown by 174 percent in the past decade. Other hospitals are getting more specialized by reducing their product lines. Specialization has been highest in competitive West Coast markets and lowest in the rate-regulated states (New York and Massachusetts). Hospitals have less incentive to contain costs by decreasing the array of services offered in stringent rate-setting states. The term "underspecialization" is advanced to capture the inability of some hospitals to selectively prune out product lines in order to specialize. Such hospitals spread resources so thinly that many good departments suffer. Unit cost per case (DRG-adjusted) is higher in the less specialized hospitals.

Health care reform: what it means for North Carolina's hospitals

Because hospitals are both health care providers and employers, they face significant challenges and remarkable opportunities, particularly to improve quality, increase access, and reduce cost, as implementation of the Affordable Care Act moves forward over the next several years.

Financial Tech Trends 2010. Trend: reimbursement reform

THE LANDSCAPE: Whatever the controversies around health insurance reform on Capitol Hill, there's a strong bipartisan consensus as to the need for reimbursement reform, including a shift towards value-based healthcare purchasing under Medicare. For healthcare CIOs who will need to implement data reporting and sharing systems that can facilitate new reimbursement arrangements nationwide, the implications are huge.

THE FUTURE

CIOs and other leaders who have been involved in advocacy work say the time is now to prepare for the reimbursement reform changes to come.

Clinical Tech Trends 2010. Trend: HITECH

THE LANDSCAPE: After conducting "ARRA readiness assessments," many CIOs are juggling their project priorities to work toward achieving the definition of meaningful use. As a result, some financial and infrastructure projects are put on hold.

THE FUTURE

Once work on CPOE, quality reporting and data sharing are on track, expect IT leaders to refocus some of their attention to topics such as clinical-financial integration, business intelligence, and asset tracking.

Hospital capital spending: shifting and slowing even before the financial meltdown

A recent study of changes in U.S. hospitals' capital spending and financing disclosed that between 2001 and 2007: Annual capital spending rose from $25.1 billion to $34.7 billion. Hospitals shifted capital spending toward physical infrastructure and away from equipment. Not-for-profit hospitals spent a significantly lower percentage of available funds on capital improvements in 2007 compared with 2001.

Evolution of the healthcare CIO

Six factors that will affect CIOs and healthcare IT departments in the next five years include the following: Increased requirements for transparency and accountability for care quality, safety, and efficiency. Advancements in medicine and medical imaging. Operating margin pressures. Capital constraints. The pace of innovation. Increased regulations and incentives for IT.

Back into the pool

In a near reversal from previous months, healthcare borrowers have recently found obtaining credit to be a little easier. But caution still rules. Charles Santangelo, details his hospital system's attempt to get a bond deal to finance construction. "I just wanted to hurry up and get it done," he said. But things became a little more complicated.

Planning during turmoil: credit challenges and healthcare finance. Interview by Carole J. Bolster

The crisis in the financial markets is having a major impact on hospitals' ability to access capital. Providers are seeking longer-term fixed-rate debt rather than shortterm debt. Hospital management teams and their boards need to understand the upside and downside of variable-rate debt and interest rate derivatives.

Major trends affecting hospital payment

Healthcare financial leaders should focus on initiatives that will help them increase their organization's margins in 2008, such as: Payment policing and standardization of contract requirements. Contract performance modeling. Shift in volume and cost risk to hospitals. Consumer-directed health plans, price transparency, and pay for performance. Health plan consolidation. Value-driven health care.

States' rights and wrongs. Hospitals and their state associations are trying to move their nonbilling policies for adverse events past the talking phase

While hospitals across the country are pledging to stop billing for some medical errors, some believe the initiative is more public relations than anything else. The National Business Group on Health's Helen Darling, says the premise that hospitals are already leaving out payment requests "doesn't ring true."

On solid ground. Revenue gains continue to outpace growth in expenses, allowing U.S. hospitals to enjoy record profit and margin

Hospitals enjoyed a surge in profits last year, reporting an aggregate profit margin of 6%. Executives at financially strong systems credit long-term efforts to improve performance for the results. Elizabeth Concordia, left, of the University of Pittsburgh Medical Center system, says its efforts stressed ongoing consolidation and integration to wipe out waste and errors.

Standing alone. Assessing a hospital's long-term viability

Given the growing number of hospital/health system affiliations over the past decade, the decision to remain an independent institution requires detailed self-analysis.

The new era CFO

Once upon a time, hospital chief financial officers were almost exclusively number crunchers. Nowadays, the ideal CFO must have a broad understanding of all aspects of health care, including the clinical side, operations, and marketing. One prominent member of the profession puts it bluntly: "CFOs who are overly focused on finance won't succeed."

Ascending in healthcare. Roman Catholic Ascension Health has made a Fortune 500 name for itself with business acumen, risk-taking and efficiency

In less than a decade, Ascension Health has risen to the top tier of U.S. healthcare systems, with operating revenue that bests household names like Google and Amazon.com. Helping lead the system's meteoric rise is CEO Anthony Tersigni, left. "We are a ministry. We're not a business. We do business practices for one basic reason: We have bondholders who are counting on us to repay the bonds."