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Deadliest Finance Issues for 2010

 |  By HealthLeaders Media Staff  
   June 22, 2009

With travel budgets slashed, some of you probably didn't make it to this year's HFMA conference in Seattle. While traveling to a conference across the country may be a pain, I find that once I'm there I'm energized by the crowd's enthusiasm and this year was no different, especially given all of the new pressures hospitals are facing.

One of my colleagues said he had heard that attendance was down and people seemed depressed—a logical conclusion given the economy. However, as I noted in my post last week, the exhibit floor was the perfect setting for an antidepressant commercial, while the session hall was upbeat. This year's conference was especially important because many of the sessions were covering issues that hospitals are trying to understand better, such as RACs, patient collections, and tax-exempt status.

Here's a wrap up of some of the more interesting topics and conversations that made it to the top of my list.

Estimate your tax bill now!
There are still more questions than answers when it comes to knowing how to prepare your finances in the event of a loss of tax-exempt status. Provena Health's Gary Gasbarra, system vice president, chief accounting officer, and corporate controller, along with other panelists, discussed Provena Covenant Medical Center's loss of tax-exempt status and challenges that other hospitals face. Of chief concern is that all nonprofit hospitals' tax-exempt status may go away if Sen. Grassley (R-IA) and other legislators have their way once healthcare reform passes.

While some hospitals are taking a wait-and-see attitude, panelists urged hospitals to be proactive and at least take the steps to estimate their property tax bill should their tax-exempt status be revoked. Along these lines, panelists talked about roadblocks associated with finding someone who can help you assess the value of your real estate. Another issue, says Gasbarra, is tax authorities' lack of understanding in whether they should be measuring gross or net revenues. Some states, he says, are measuring net.

Getting RAC ready
"You are going to get a RAC audit and it will be a three year look-back. You need systems in place today," said Elizabeth Lamkin, CEO of 93-bed Hilton Head Regional Hospital, in her opening remarks to an audience that was eager to learn about her experiences as a RAC audit survivor. As noted in our earlier coverage last week, Lamkin said in preparing for an audit, organizations must first have the right physician advisor in place to handle medical necessity cases and this person must have a strong relationship with case managers. Panelist, Rudy Braccili, senior director, national Medicare center for Conifer Health Solutions, also noted that appeals cost an average $3,000 to $7,000 to file, which is not reimbursed if you win. There are five opportunities to appeal and it takes five years to exhaust all levels of appeals, he said.

"Be sure to only appeal cases in which you have sound reason to appeal because you have to pay interest on payments." The highest dollar take-back is from medical necessity cases, he said.

What happens after reform?
While the healthcare reform debate came up often during the conference, Brenda Snow, executive vice president of strategic planning and analysis at MedAssist, a revenue cycle services company, is proposing that the conversation start to move past "will there be healthcare reform?" and begin to focus on "the order of magnitude" reform will have on healthcare. Healthcare organizations need to be thinking about what will hit them first, she says.

"Do we identify first and second phase activities and if so when do we raise issues like tax exempt [status] and how do we respond to that as industry?" asks Snow, formerly with Geisinger Health System. If near universal coverage happens and if tax exempt status reform happens, it may take providers at 3% margins down to zero, she says. "A lot of small community hospitals are not only the primary provider of services but they are also a primary employer. Are providers thinking in those terms?"

Moreover, says Snow, the industry is still at the phase where it is trying to understand buzz words like "administrative simplification" and "meaningful use" when it needs to move to the next level of tactical information. "A draft on meaningful use was released from David Blumenthal. Well, from a provider perspective how will that impact their spending if they cannot demonstrate that added technology brought about better outcomes?" As an industry we should be thinking about those "what if" questions, says Snow, "not just trying to understand the buzz words."

Is your team operating in peak condition?
Think your leadership team is a peak performer when it comes to communicating with one another? Patrick Lencioni, who gave the keynote address on day 1 (read the wrap up) of the conference is the author of The Five Dysfunctions of a Team. He says the absence of trust on even the best of leadership teams can ruin a company. Identifying trust issues is tricky. Management teams often fall into the trap of believing that trust exists among its members, simply because they have known each other for a long period of time.

But true trust, he says, comes when human beings on a team can be vulnerable and say things like I don't know the answer." As Lencioni tells it, one famous CEO, who ran his company into the ground, was brilliant but so intimidating nobody on his team would give him truthful feedback." This company spiraled out of control," he says. "When the Wall Street Journal says a company had a product issue, the real issue is there was no trust and vulnerability on the executive team."

Finding the right approach to patient collections
A lot of talk this year involved improving patient collections, from front to back end, especially with the continued growth in the self-pay population. As this population continues to grow, it will become critical for hospitals to have a strong program that not only segments patients on the front end, but is automated front to back. Some hospitals, in an effort to be as patient friendly as possible are carrying large balances in their patient payment plans and operating like a bank, while others are developing programs that offset some of that debt, at least temporarily, onto banks.

In Birmingham, AL, St. Vincent's Health System drove down accounts receivable days from 50 to 34 by implementing a patient credit card program that allowed the system to immediately collect on the debt from the issuing bank. "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 Jerry Smith, vice president of revenue cycle at St. Vincent's.


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