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From HFMA: Capital Constraints, Regulatory Challenges Common Theme at HFMA

Michelle Pointe, for HealthLeaders Media, June 17, 2009

The vendors had long faces and the ratio of candy and pens to the high-end swag was much higher than I've seen at conferences of past, but this year's HFMA sessions in Seattle nonetheless were packed and fewer attendees were nodding off. In fact, there were a lot of energetic and impatient hands raised when it came to hot topics, such as RACs, charity care, and accelerating patient payments.

From hospital CFOs to revenue cycle companies, banks, consultants, and healthcare finance managers, this group was acutely focused on learning strategies for how to maneuver through the tough economic times of healthcare reform, frozen access to capital, a growing number of self-pay patients, and huge regulatory changes.

In dealing with all of these issues, there was much talk of squeezing extra cash out of operations, including the revenue cycle and being as efficient as possible in all aspects of the business. The growing divide between the haves and have nots was also a common topic as was the idea that healthcare is entering a time of massive consolidation due to any number of the aforementioned items.

"We need near-term solutions to stave off debt and increase cash reserves," said Jerry Smith, vice president of revenue cycle at Birmingham, AL-based St. Vincent's Health System, as he explained to a packed room how his system drove down accounts receivable days from 50 to 34 by among other things implementing a patient financial assistance program that offers a low-interest rate credit card program for patients Essentially, the credit card program, backed by U.S. Bank, enables St. Vincent's to be paid a loan for 100% of a patient's bill within 72 hours.

The credit cards come with a 5.99% interest rate, plus prime. Patients pay as little as a $10 down payment to get into the program and are not prequalified with a credit report. But there are some risks, acknowledged Smith. "When you look at the parameters around the loan program and the no qualification score, you are rolling dice and hoping the patient will come through. You can do this intelligently by monitoring your recourse rates closely," said Smith. Still, in the end if the patient doesn't pay, the debt reverts back to the system's books and it gets sent out to third-party collection.

Meanwhile, consolidation was a theme heard over and over. As one person put it, the gap between the haves and have nots is growing to the point where consolidation will occur like it did following the Balanced Budget Act of 1997. This is due to a variety of factors, including hospital margins falling, reimbursement getting squeezed and the big race for technology. The ability to invest in technology will become a real differentiator, said another person.

Coding was another topic of key concern for this audience. Out on the exhibit floor, one consultant said that the changeover to ICD10 is going to be a big problem for hospitals because it requires a much higher degree of specificity in documentation than ICD9. At lunch, I sat next to a guy from a prestigious east coast hospital, who has had made it his personal mission to improve coding. He says coding has become a lot more important over the last year and a half with the implementation of severity DRGs and the first-ever revision of the CC list (complication and comorbidities). Still, hospitals are leaving money on the table through improper coding. "There are bizarre aspects of this business and how patients are coded is surreal. The variation is not explained by anything rational."

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