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3 Bills That Could Bury Your Hospital's Bottom Line

Karen Minich-Pourshadi, for HealthLeaders Media, October 26, 2009

So while you're waiting to see what the outcome is, it's best to check your numbers, start with your patient mix. For most hospitals that breaks down to

  • 50% Medicare
  • 35% Payer Contracts
  • 5% Medicaid
  • 5% Charity/Bad Debt
  • 5% Miscellaneous (varies by hospital)

If you haven't already pondered the possible outcomes of these bills, then it's time to run some numbers. Consider how each bill may affect your overall operating margin, start by looking at the following:

  • Calculate the effect a 21% cut in Medicare reimbursements will have on your bottom line. Also look at a 5% and 10% cut in reimbursements, as those numbers are being bandied about by politicians. To get an idea how to approach this, the American Association of Family Practitioners has put together an excellent reference tool.
  • Analyze your contracted payer reimbursements; assume the same cuts above are taking affect. However, keep in mind that currently payer negotiated rates are generally 130-150% that of the Medicare rate. No one knows if those percentages will change if insurance companies need to try to make up potential losses from healthcare reform so adjust for a 110-120% rate.
  • Review your Primary Care Physician staffing levels and compensation. All of these bills call for more unilateral healthcare coverage, which means you'll need more PCPs to cover an influx of patients.
  • Consider alternative ways to offset the need to hire large numbers of PCPs to handle this influx of patients, such as utilizing more nurse practitioners.
  • Find the hidden fat. You've been trimming expenses, but there is likely a bit more lard to cut from your budgets. Look to your staff, if you haven't done so already, to help you find it (they know their jobs may be on the line and they will be more than ready to help you find those problem areas).

In this economy it's sometimes hard take your eye off today to truly focus on tomorrow. But if you aren't considering the serious ramifications of the five and ten years effects of any of these bills on your hospital you will be grossly unprepared by what happens when reform takes place–and not unlike what's happening with healthcare reform in Washington, that's no laughing matter.


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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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