Managing the ice in the waters ahead: lessons from the Titanic

To navigate carefully through today's rough healthcare waters, healthcare financial managers need to: Plan for the unexpected. Realize that technology alone is not a solution. Refrain from being overconfident

Consumer-directed health care: what to expect and what to do

As consumer-directed health care grows, providers will need to develop competitive prices and make prices and payment options available to consumers. Providers should expect an increase in self-pay patients and be prepared to offer them financial counseling. Providers also will need to create a strategic plan and budget for CDHC.

Outpatient training in neurology: history and future challenges

The organization of neurology as a specialty and of neurology training specifically has evolved tremendously over the last 130 years. Originally primarily an outpatient specialty, the focus of training shifted to inpatient neurology in the early 20th century when accreditation of programs required training in newly established inpatient-based neurologic departments. Now and in the near future, the growth of neurologic critical care and the expansion of neurology intensive care units may require even more inpatient responsibilities in neurology residency programs. Contrary to these trends in training, most community neurology practice is still focused on outpatients, and surveys of neurologists have consistently indicated a need for more outpatient exposure in neurology training. This article briefly reviews the history of neurology training, discusses current challenges to outpatient training, and recommends possible solutions for the future.

Unleashing The Untapped Potential Of Hospital Philanthropy

Across the country, hospitals face the challenge of finding new strategies to address capital needs in an era of shrinking operating margins. Particularly for nonprofit community hospitals, the solution is being found in philanthropy. Philanthropy was once simply "nice to have," but discussions regarding its role and strategic imperative can now be heard regularly at hospitals. More institutions are incorporating explicit expectations of fundraising into their financial planning and now consider fundraising a "must" for survival. This paper explores why philanthropy is needed, the challenges hospitals face, and what institutions must do to build an internal culture supporting this new imperative.

Understanding diagnostic related groups (DRGs) and inpatient hospital reimbursement

Knowing insurance plan regulations and complying precisely with requirements is critical for hospital reimbursement of care provided. Diagnostic related groups provide guidelines widely used in the United States to determine hospital reimbursement by Medicare, Medicaid, and many insurance providers. Because hospitals are the largest employers of nurses, nurses have a responsibility and interest in contributing to the stability of their hospital's financial status to protect incomes and job security. This article provides an overview of diagnostic related groups and demonstrates how nurses can contribute to more accurate documentation outcomes that determine hospital reimbursement.

Hospitals And Physicians: Not A Pretty Picture

Hospital-physician relationships in the United States have deteriorated markedly in the past few years. An asymmetry of obligations to caring for the uninsured and inappropriate financial incentives have worsened the conflict between hospitals and physicians in many markets. Sadly, the resources and political bandwidth consumed by managing this conflict have been diverted from the fundamental challenge of providing universal health coverage--the root cause of much of this conflict.

Payment. M+C redux?

The government's latest attempt to rejuvenate Medicare managed care launches this month. Whether Medicare Advantage succeeds will be determined by how it plays in rural America.

Trends in Medicare disproportionate share (DSH) distribution in US hospitals: 1996-2003

Implemented in 1986, Medicare's disproportionate share (DSH) adjustment is intended to recognize hospitals' additional resource investment in caring for low-income patients. This project analyzed changes in the DSH percentage between 1996 and 2003 and examined the association between selected hospital characteristics and such changes. Results obtained revealed some interesting findings. First, minimal changes in DSH percentage occurred during the period 1996-1999 with a hike in that ratio in 2000-2001. However, even with the absence of any legislative or executive changes to the DSH threshold or formula during 2002 and 2003, significant increases occurred during 2001-2003 (11 percent increase between 2001 and 2003). Such an increase may be caused by the nation's economic situation during that timeframe (i.e., more people depending on public programs for coverage).

Predicting financial distress in teaching hospitals

Despite the prestige and reputation of teaching hospitals, as a group they are in financial distress. If this trend continues, one would expect to see a higher incidence of mergers and acquisitions or divestitures of assets and services, and other strategies designed to combat failing businesses. Nearly one out of every six teaching hospitals sampled was predicted to be near immediate bankruptcy, and the overwhelming majority was not far behind. It will take a significant effort for these hospitals to continue to treat their operations as a clinical and research "business," but they must do just that if they are to survive the continually turbulent market.

Did the strong get stronger and the weak get weaker? Examining changes in hospital financial condition

In the late 1990s and early 2000s, many industry observers expressed the view that there was a growing dichotomy in the hospital industry in which financially weak hospitals were getting weaker and financially strong hospitals were getting stronger. Although existing analysis of cross-sectional financial data concur with this view, our analysis of 1993 to 2000 longitudinal data provides only partial support. We find that about one half of general acute care hospitals classified as financially strong in 1993-95 continued to be strong in 1998-00. More persistence was found for hospitals in weak financial position in 1993-95 with about 60 to 70 percent of them continuing to be weak in 1998-00. Persistently weak hospitals did experience deteriorating financial condition whereas persistently strong hospitals appeared at best to hold their ground financially. Although many Medicare payment policies appear well-targeted to hospitals that would otherwise have financial problems (for example, isolated rural institutions and teaching hospitals), policymakers may need to consider the development of temporary loan or grant programs to assist hospitals that experience transitory financial problems during difficult times.

Did recent changes in Medicare reimbursement hit teaching hospitals harder?

PURPOSE

To inform the policy debate on Medicare reimbursement by examining the financial effects of the Balanced Budget Act of 1997 (BBA) and subsequent adjustments on major academic medical centers, minor teaching hospitals, and nonteaching hospitals.

METHOD

The authors simulated the impacts of BBA and subsequent BBA adjustments to predict the independent effects of changes in Medicare reimbursement on hospital revenues using 1997-2001 Medicare Cost Reports for all short-term acute-care hospitals in the United States. The authors also calculated actual (nonsimulated) operating and total margins among major teaching, minor teaching, and nonteaching hospitals to account for hospital response to the changes.

RESULTS

The BBA and subsequent refinements reduced Medicare revenues to a greater degree in major teaching hospitals, but the fact that such hospitals had a smaller proportion of Medicare patients meant that the BBA reduced overall revenues by similar percentages across major, minor, and nonteaching hospitals. Consistently lower margins may have made teaching hospitals more vulnerable to cuts in Medicare support.

CONCLUSIONS

Recent Medicare changes affected revenues at teaching and nonteaching hospitals more similarly than is commonly believed. However, the Medicare cuts under the BBA probably exacerbated preexisting financial strain on major teaching hospitals, and increased Medicare funding may not suffice to eliminate the strain. This report's findings are consistent with recent calls to support needed services of teaching hospitals through all-payer or general funds.

An Update On Safety-Net Hospitals: Coping With The Late 1990s And Early 2000s

Recent forces have created new financial stress for hospitals but also some relief. This paper explores hospitals' changing involvement in the safety net between 1996 and 2002. We replicate approaches used in a study of 1990-1997 and thus provide a needed update on the U.S. hospital safety net. Overall, some groups of safety-net hospitals increased uncompensated care, but others did not. Non-safety-net hospitals trimmed certain services commonly used by the indigent; this may point to future reductions in access. We examine the implications of these findings for the future of the safety net.

Capital: beyond the tried and true

The old standbys remain by far the financing vehicles of choice for hospitals. But other, less traditional methods are gaining a foothold as not-for-profit hospitals look elsewhere--usually the corporate world--for successful precedents that can help fund big projects without leaving a bad financial aftertaste.

Blessings from above. Large Catholic healthcare systems have seen their revenue, profits rebound. How will that affect spending on charity care?

The U.S. Catholic healthcare system is healthy financially, but providers are warily expecting cuts in federal reimbursement. Large systems have worked to become more efficient and profitable, and those efforts are paying off. "We are doing well. We've continued to improve our operating margins," says Kris Zimmer, left, an executive at SSM Health Care.