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Can Hospitals Break Even with Medicare?



A financial analysis shows that to reduce the drain of the federal program, hospitals need to do more than simply control costs. There's room for improvement on the revenue side, too.



5 comments on "Can Hospitals Break Even with Medicare?"
Todd (12/20/2010 at 5:06 PM)

I have to agree with Steven Watkins. Why would the government continue to pay facilities above break even? A facility showing it can effectively get cost out will just further show the government that it makes sense to cut reimbursement. In the future, look for fully public (Medicare and Medicaid) facilities and fully private facilities to provide care.
Insight 101 (12/16/2010 at 12:43 PM)

It's not a given that hospitals have to lose money on medicare. One commenter noted they often can't truly identify if they are losing money by the payer in the truest sense of the concept. I work for an large MA only company and we believe hosptials could become more profitable with us if they become more engaged. There is so much opportunity to improve they just tend to have no interest. I can't frankly explain the reticence but it's real and unfortunate.
Steven Watkins (12/15/2010 at 2:19 PM)

The answer is, "No". Hospitals cannot make money on Medicare(or Medicaid) only. As soon as hospitals reduce costs, Medicare reduces reimbursement...so it's a never-ending cycle. In fact, facilities operating with 70% Medicare and Medicaid (without dipping into a mega-foundation) would be hard-pressed to demonstrate high quality and patient satisfaction scores today. In response to Obamacare, we'll soon see "Medicare Only" facilities and "Private Only" facilities in the same communities.
Rick Milliron (12/15/2010 at 2:08 PM)

I'm a healthcare consultant, and several years ago worked on a project for a hospital system that was in a unique situation. Medicare was the BEST payer, because unions pushed down commercial rates. It was interesting that the hospital was breaking even, their physician organization was losing money and their hospital-sponsored HMO was making money. Hospitals offer discounts of approximately 50% of charges to large commercial payers. Medicare collections might be in the range of 37% of charges, but hospitals are giving up a lot of revenue to get the commercial business. The problem is that "hospital charges" are so far out of wack, that it's difficult for hospitals to know if, and where, they are making money.
Olamide (12/13/2010 at 1:30 PM)

At the heart of every community is your local hospital. MCHC recently released a new video highlighting the importance of hospitals in our community. http://bit.ly/enNzNm