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In Financial Forecasting, Time to Plan for the Worst

Karen Minich-Pourshadi, for HealthLeaders Media, October 10, 2011

Robert Shapiro, senior vice president and CFO at North Shore–Long Island Jewish Health System in Great Neck, NY, is vexed by some recent data. In his more than three decades in healthcare finance, it’s the first time that patient volume has been flat. Moreover, it’s also the first time Shapiro has had to do a financial forecast for the $6 billion–plus organization in which he is predicting zero Medicare and Medicaid increases. The double whammy is “very unusual, and it will greatly affect us,” he says. 

It’s nearly the same story in Frederick, MD, where Michelle Mahan, senior vice president and CFO at the 295-bed Frederick Memorial Regional Health System, is tracking flat patient volume and declines in Medicare and Medicaid reimbursements. She’s scouring the hospital’s operating data for clues about why patient volume has dropped off, where patient increases might be found, and how it all affects her upcoming financial forecast.

Flat or declining patient volumes are to be expected – five years from now. The reduction of inpatient hospital care is a goal of healthcare reform; better quality outpatient care should result in less inpatient volume. However, it’s far too early for any readmission reduction projects or medical home pilot to be bearing fruit. So, where have all the patients gone? My guess is that they may be at home searching job listings and holding off on spending, medical and otherwise. 

The monthly Bureau of Labor Statistics data released last Friday may offer some clues about why patient volume is flat for some healthcare organizations. In September, the number of jobs in the U.S. grew by a paltry 103,000. It was enough of an uptick to keep pace with population growth, but alas not enough to reduce the national unemployment rate of 9.1%.

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1 comments on "In Financial Forecasting, Time to Plan for the Worst"


Jackie Larson (10/11/2011 at 11:34 AM)
This article does a great job of presenting the problem and framing the factors at play. Without a doubt, implementing best practice labor management solutions, and leveraging BI tools to help drive efficiencies (which improve patient care) is a measure to stop the hemorrhaging. Labor, after all, is anywhere from 50% to 70% of a healthcare organization's budget. While we have very little control over the external factors discussed in this article (flat patient volume and government cuts to Medicare and Medicaid), we have a lot of control over how we manage our organizations.