MHA's Executive Briefing

Carve-Outs Mean Hospitals Need To Redefine Their Business Model

Hospitals face numerous pressures: the need to operate at a sustainable margin, regulations to comply with, their often charitable mission of caring for those who can’t always pay, increasing payer bargaining power with reimbursement rules that are not on pace with inflation, and a relative inability to compete on price and quality.

The increasing number of free-standing clinics has compounded the problem. These clinics are not subject to the same regulations and with newer equipment and lower overhead, they can carve out the highest margins in the market for themselves. They can capture more profitability while utilizing the hospital for the higher risk, uninsured and complex cases.

Where does this leave the hospital? Playing catch-up. Just to stay competitive, they must upgrade and expand facilities, implement expensive new technology and compete for a shrinking pool of qualified staff, increasing their debt load all the while. This spend-and-borrow treadmill will not sustain itself when paired with flat or shrinking margins, so hospitals need to redefine the business they are in.

Physicians are under pressure too - from shrinking reimbursement and higher costs. All the same, they don’t all want to be businesspeople. Many desire a relationship that allows them to focus on their practice. These factors suggest an interdependent relationship rather than one of competition. What can be done to align these two parties? A strategy that identifies the issues for each party and builds on the potential for interdependency is vital.

For the full story from HealthLeaders Extra!, click here.

Bill would kick off new emergency care demo programs

A new bill being introduced this week in Congress would kick off a new program intended to help create a more efficient emergency care system in the U.S. The Improving Emergency Medical Care and Response Act of 2007, sponsored by Sen. Barack Obama (D-IL) and Rep. Henry Waxman (D-CA), would provide for the development of four demonstration programs focused on developing a "regionalized, accountable" emergency care system. As part of the programs, researchers would gather data that could be used to improve coordination, efficiency and effectiveness of emergency care programs elsewhere in the U.S.  The new bill also would support emergency medical research throughout the federal government.

The bill serves as a complement to the Emergency Medical Services Act, introduced early this year, which creates a commission tasked with studying access to emergency medical services, and possibly creating boarding and diversion standards for EDs.

To learn more about the bill, read this ACEP press release and read Obama's press release.

[ via Fierce Healthcare ]

Panel holds hearing on tax-exempt organizations

The House Ways and Means Subcommittee on Oversight held the first in a series of hearings on July 24 on tax-exempt charitable organizations, looking broadly at how to strengthen the sector while ensuring public accountability. Witnesses included representatives from the Internal Revenue Service, Government Accountability Office, Independent Sector and Council on Foundations.

Steven Miller, commissioner of the IRS’ tax exempt and government entities division, said the agency has increased compliance examinations and communications with the sector, examining more than 7,000 returns and communicating with more than 5,200 organizations last year. “On the whole, the charitable sector is very compliant with the tax code,” he said.

A report released by the IRS last week summarized responses from almost 500 tax-exempt hospitals to a May 2006 questionnaire about how they provide and report benefits to the community.

[ via AHA News Now ]

IRS issues report on community benefit

The Internal Revenue Service on July 19 released an interim report summarizing responses from almost 500 tax-exempt hospitals to a May 2006 questionnaire about how they provide and report benefits to the community. According to the report, 97% of respondents reported making uncompensated care available.

The IRS also found that hospitals surveyed provided $9.3 billion in community benefit expenditures. After uncompensated care, the next largest community benefit expenditure categories were medical education and training, research, and community programs.

Also, minority staff from the Senate Finance Committee issued a “discussion draft” on potential reforms for nonprofit hospitals. Mindy Hatton, American Hospital Association senior vice president and general counsel, said, “Today’s IRS report shows that hospitals provide a broad range of benefits to their community. The IRS is vetting new reporting schedules that will provide the public with greater and more consistent information about hospitals’ service to the community. With this significant work going on, the proposals in the minority staff’s draft report are not needed.”

[ via AHA News Now ]

Reimbursement changes for audiologists

Audiologists will now have use relative value units (RVUs) to calculate reimbursement rates, according to an American Speech-Language-Hearing Association (ASHA) press release. In the Medicare Physician Fee Schedule released on July 2 by CMS, the proposed change also includes four cochlear implant programming codes. The services are as follows:

• Comprehensive hearing testing
• Acoustic reflex threshold testing
• Reflex decay testing
• Visual reinforcement audiometry

Under the Medicare program, audiology services are now considered professional not technical work, according to the ASHA press release.

Proposed CMS rule would add quality reporting measures to outpatient care

CMS last week issued a proposed rule on the Outpatient Prospective Payment System that would require hospitals to report on 10 quality measures in the outpatient setting in order to receive their full Medicare reimbursement.

Hospitals that don't report the data to CMS would forfeit 2% of their full Medicare market basket update.

The proposal calls for hospitals that are paid under the Inpatient Prospective Payment System to report the applicable outpatient quality measures in the hospital outpatient department in 2008 in order to receive the full OPPS market basket update in 2009. The measures are as follows: 

1. Emergency department (ED) transfer for Acute Myocardial Infarction (AMI): aspirin at arrival

2. ED transfer for AMI: median time to fibrinolysis

3. ED department transfer for AMI: fibrinolytic therapy received within 30 minutes of arrival

4. ED transfer for AMI: median time to electrocardiogram

5. ED transfer for AMI: median time to transfer for primary percutaneous coronary intervention

6. Heart Failure: angiotensin-converting enzyme inhibitor or Angiotensin receptor blocker therapy for left ventricular systolic dysfunction

7. Perioperative Care: timing of antibiotic prophylaxis

8. Perioperative Care: Selection of prophylactic antibiotic

9. Empiric antibiotic for community-acquired pneumonia

10. Hemoglobin A1c poor control in Type 1 or 2 diabetes mellitus.

Comments on the proposed rule will be accepted until September 14, and a final rule will be published later this fall.

For more information, click here.

[ via Quality Improvement Monitor ]

AONE launches fellowship program

The American Organization of Nurse Executives will accept applications through Sept. 15 for its inaugural Nurse Manager Fellowship program. The yearlong program is designed to prepare the next generation of executive-level nurse leaders to meet practice needs.

The curriculum is based on the Nurse Manager Leadership Collaborative’s Learning Domain Framework and includes an individual project benefiting the sponsoring organization. The faculty, comprised of notable nursing leaders, will work with fellowship participants at quarterly leadership retreats and through a virtual learning community.

The fellowship “seeks to challenge a group of stellar nurse managers to reach for their highest potential and become our leaders of tomorrow,” said AONE CEO Pamela Thompson. “It is a key component of our professional succession planning.”

Fellows will be announced on Nov. 1 and begin in January 2008. Applications are available at www.aone.org.

[ via AHA News Now ]

Help for hospitals dealing with 'corporate campaigns'

The American Hospital Association has issued a resource to help hospital leaders assess whether they are vulnerable to a "corporate campaign" waged by a labor union. Corporate campaigns are a union's public, multi-faceted attempt to pressure a targeted hospital or health system to expedite an organizing campaign, by means of a "card check" or similar process, instead of a private ballot election. Often, the unusually aggressive tactics can impede the ability of a hospital to serve the short- and long-term needs of its patients or communities.

Access the resource Corporate Campaigns: Five Questions Every Hospital Leader Should Ask to Prepare For and Manage a Corporate Campaign from the AHA (PDF format; sign-in required).

Not-for-profit hospital downgrades continue trend

Not-for-profit hospital credit-rating downgrades outpaced upgrades in the second quarter of 2007 by a ratio of 1.3-to-1 with 12 downgrades and nine upgrades, according to Moody’s Investors Service. That was on par with the year-ago period and consistent with historical trends over the past three years.

Through the first half of 2007, downgrades outpaced upgrades 1.4-to-1 compared with 1.5-to-1 for the year-ago period. In the second quarter, 63 rating affirmations represented 66% of all rating actions, representing $19.2 billion of outstanding debt. Ten of those 63 rating affirmations had outlook revisions, six in a positive direction and four in a negative direction.

As of June 30, three ratings are on Moody’s Watchlist for possible downgrade, similar to the four ratings on Watchlist for possible downgrade in the year-ago period. Seven of the nine hospitals upgraded in the second quarter demonstrated multiyear improvements in operating performance and liquidity through physician recruitment, volume growth and improved payer rates, according to Moody’s.

Similar to the first quarter, the main drivers of the downgrades in the second quarter were continued deterioration in operating performance and liquidity. Four of the downgraded hospitals added a sizable amount of debt after poor financial performance as a result of operating in difficult service areas, Moody’s said.

[ via Cinda Becker, Modern Healthcare's Daily Dose ]

Bill protects access to long-term hospital care

Reps. Earl Pomeroy (D-ND), John Larson (D-CT) and Phil English (R-PA) on July 17 introduced legislation that would help define the appropriate role for long-term care hospitals while ensuring patient access to appropriate services. The American Hospital Association-backed bill (H.R. 3057) would require the Centers for Medicare & Medicaid Services to develop patient and facility criteria for LTCHs, as recommended by the Medicare Payment Advisory Commission. It would prevent the 25% Rule for hospital referrals from being extended to freestanding and grandfathered LTCHs, and freeze the Rule at 50% for co-located LTCHs and 75% for rural and MSA-dominant LTCHs.

The measure also would limit a regulation on short-stay outliers that took effect this month and prevent a one-time budget neutrality adjustment. The bill would expand the current medical necessity review of LTCH admissions to ensure clinically appropriate patients are admitted, impose a three-year moratorium on the development of new LTCHs to address concerns about growth, and create an LTCH-specific quality initiative.

[ via AHA News Now ]