2024 will be make or break for nonprofit hospitals, says Fitch Ratings.
The outlook is still “deteriorating” for 2024 as staffing shortages and rising inflation is putting the pressure on nonprofit hospitals, according to a recent report from Fitch Ratings.
On top of this, Fitch says downgrades and negative outlooks will likely continue to outpace upgrades and positive outlooks.
Out of these ongoing struggles has emerged a “trifurcation” of credit quality that will only become more prominent in 2024, the report said.
“Much of a hospital’s ability to be successful, will depend on their ability to recruit and retain staff in the currently hyper-competitive landscape for personnel,” said Fitch senior director and sector head Kevin Holloran.
So what does this really mean for CFOs of nonprofits? There are a few key takeaways that CFOs can utilize to remain financially stable in 2024:
Managing salary, wages, and benefits is crucial.
The report highlights that managing the largest single expense for healthcare providers, which is salary, wages, and benefits, is the most important factor for operational success in 2024. CFOs should focus on attracting and retaining staff at all levels to reduce usage and cost per hour of external contract labor, leading to cost savings.
Labor shortages remain a challenge.
The industry continues to struggle with labor shortages, which have been a significant pressure point in recent years. CFOs should anticipate that this shortage will persist in the foreseeable future, potentially impacting operating metrics. Developing strategies to address this challenge and mitigate its effect on operations and financial stability will be crucial.
Incremental operational recovery expected in 2024.
While overall labor supply shortage and financial pressures are expected to continue, the report suggests that there will be incremental operational recovery in 2024. CFOs should plan for this recovery and work towards gradually improving financial performance by addressing key challenges and implementing strategies that align with industry trends.
Some providers may lag behind.
The report also cautions that not all healthcare providers will experience the same level of recovery. Fitch expects a number of providers to lag significantly behind in their operational and financial recovery. CFOs should assess their organization's unique circumstances and actively work to prevent falling behind by prioritizing financial stability and growth initiatives.
The healthcare organizations unveiled by the ONC this week have completed the certification process to support the exchange of healthcare data under TEFCA standards.
The announcement follows years of work on the underlying foundation for nationwide health interoperability, which was envisioned in the 21st Century Cures Act. The goal is to create a healthcare system where all parties, including health systems, payers, and patients, can exchange data from a variety of sources, ranging from EHR platforms to digital health wearables.
“After over a decade of very hard work, today marks another major milestone in our march towards a 21st century digital health care system,” US Health and Human Services Secretary Xavier Becerra said during a signing event Tuesday at HHS headquarters. “TEFCA allows patients, providers, public health professionals, health insurers, and other healthcare stakeholders to safely and securely share information critical to the health of our country and all of our people.”
The following organizations worked their way through the TEFCA certification process to become officially designed QHINs:
eHealth Exchange
Epic Nexus
Health Gorilla
KONZA
MedAllies.
QHINs are, according to the HHS Office of the National Coordinator for Health IT (ONC), “the pillars of TEFCA network-to-network exchange, providing shared services and governance to securely route queries, responses, and messages across networks for eligible participants including patients, providers, hospitals, health systems, payers, and public health agencies.”
“In February 2023 we announced that TEFCA would be operational by the end of the calendar year, and we are delighted to achieve this goal,” ONC Chief Micky Tripathi, PhD, said in a press release accompanying the signing ceremony. “This would not have happened without tremendous stakeholder support, considerable investment of resources and expertise by the QHINs, and the hard work of the RCE (Recognized Coordinating Entity the Sequoia Project) and ONC staffs.”
ONC officials expect to roll out an updated version of TEFCA, called TEFCA 2.0, during the first quarter of 2024. The new version will include enhancements and updated to support Health Level Seven (HL7) Fast Healthcare Interoperability Resources (FHIR)-based transactions.
In this week's episode, Dr. Boris Pasche, president and CEO of Karmanos Cancer Institute, joins HealthLeaders strategy editor Jay Asser to talk about his vision for the organization and cancer care. Pasche, who took on the role in August, also offers insight on navigating workforce challenges and improving physician relations, while forecasting some of healthcare's biggest obstacles in 2024.
A series of bills called the Live Health package includes the creation of a Health Care Innovation Council that would fund new technologies and programs, as well as state support for the CMS Hospital at Home waiver program.
Florida lawmakers want to make healthcare innovation a state strategy.
The Sunshine State’s Senate President has unveiled a series of bills, called the Live Health package, that includes a proposal to create a “Health Care Innovation Council.” The 15-member council, located within the Florida Department of Health, would oversee a revolving $75 million loan program to spur healthcare innovation within the state.
The proposal highlights the challenges faced by healthcare organizations across the country in balancing innovation with the bottom line. Many health systems are struggling to stay in the black, and have little money set aside for new technologies or strategies, yet they’re facing soaring costs, a growing workforce shortage, and competition from disruptors like Amazon, Google, Best Buy, and Walgreens that aims to siphon away patients.
“Free-market principles show us that the private sector can innovate in ways government could never imagine,” State Senator Gayle Harrell, chair of the Senate Appropriations Committee on Health and Human Services, said in a press release issued by Senate President Kathleen Passidomo last week. “What government can do is facilitate the exploration and implementation of innovative technologies and delivery models that increase efficiency, reduce strain on the healthcare workforce, improve patient outcomes, expand public access to care, and reduce costs for patients and taxpayers without impacting the quality of patient care.”
“Our Health Care Innovation Council will convene experts on the delivery of healthcare to examine solutions to improve the delivery and quality of healthcare in our state and develop a loan program to support implementation of innovative solutions,” she added.
Supporters called the bill the first in the country to enable state funding and management of healthcare innovation. Some critics have said the bill would tie that innovation to state-sponsored programs and goals, raising the specter of political influence.
In all, the Live Health package calls for almost $900 million in state spending to address a number of healthcare issues, from workforce shortages to soaring costs. More than 11% of the state’s residents don’t have insurance, the fifth highest number in the country.
Among other things, the plan would encourage health systems to explore alternate care settings for patients who show up in the Emergency Room with non-urgent care needs and urge patients to set up a “medical home” to cut back on non-essential ER visits. Those strategies could spur the development of mobile integrated health (MIH) and community paramedicine programs.
Also, the plan requires the state Agency for Health Care Administration to pave the way for hospitals and health systems to qualify for the Acute Hospital at Home program overseen by the Centers for Medicare & Medicaid Services (CMS). Close to 300 health systems nationwide are taking advantage of CMS waivers that enable such programs to be reimbursed by Medicare. The program requires hospitals to follow a strict set of guidelines, as well as alignment with state guidelines.
The Florida Senate’s Health Policy Committee will take up the proposed bills next week, according to Passimodo’s office.
UMass Memorial Health aims to make a 2-year-old program sustainable by giving patients what they really want: Care at home.
An innovative strategy launched some 20 years ago to help overcrowded hospitals reduce their inpatient populations is now showing positive clinical outcomes.
“The number one benefit is they’re at home,” says Constantinos (Taki) Michaelidis, medical director of the Hospital at Home program at UMass Memorial Health, which launched in August 2021 and has seen more than 1,300 patients receive care at home rather than a hospital, rehabilitation facility, or skilled nursing facility bed. “They’re leaving behind some of the more challenging parts of the hospital and being where they want to be.”
Hospital at Home, also called acute care at home, saw widespread use during the pandemic, when many hospitals struggled to deal with a surge in patients and sought to separate infected patients to prevent the spread of the COVID virus. The Centers for Medicare & Medicaid Services (CMS) created a pathway for Hospital at Home and established waivers to allow hospitals to receive Medicare reimbursement. More than 220 health systems are taking part in that pathway, though the waivers are set to expire at the end of 2024 unless either Congress or CMS acts to extend or make them permanent.
The program has helped hospitals reduce inpatient traffic, cut down on patient length of stay and rehospitalizations (the UMass Memorial program has reportedly helped patients avoid 4,369 days in the hospital), and reduce stress and burnout among staff and care teams. The crucial piece of the puzzle that could make this program sustainable is data that proves patients are healing better and faster at home than in the hospital.
Michaelidis, who was named the 2023 Hospital at Home Clinician of the Year by the Hospital at Home Users Group, and whose program was named the 2022 Hospital at Home Program of the Year by the American Academy of Home Care Medicine, says the key to the program’s success is the patient’s clinical experience. And roughly 90% of the patients surveyed after going through the program have given it high marks.
“They just like it so much more,” he says. “We’re seeing across-the-board improvements [in care outcomes], but the real benefit is hearing from patients and their families. People are in tough situations when they’re in a hospital. They feel crummy. This is different.”
Benchmarks for Success
According to Michaelidis, the UMass Memorial program, which handles care for roughly 15 patients on any given day, has halved the patient mortality rate and reduced 30-day readmissions by 20% to 30%. There are also far fewer adverse health events, especially infections. And patients are usually discharged from the program four to five days after admittance.
Among the program’s biggest fans, Michaelidis says, are payers. UMass Memorial’s patient base is largely underinsured, with about 30% on Medicaid and many more having no insurance at all. It takes longer to get these patients checked into a hospital, and their care tends to be more expensive. The Hospital at Home program reduces those costs, and for 80% to 90% of these patients it replaces an expensive stay in a rehab facility or SNF.
Constantinos (Taki) Michaelidis, medical director of the Hospital at Home program, UMass Memorial Health. Photo courtesy UMass Memorial Health.
More importantly, he says, patients are at home, in their own beds, with family, friends, and pets nearby. They’re eating their own food, watching their own TV, going to their own bathroom, looking out the window to their own neighborhoods, and not being subjected to the noises and activity of a hospital.
“Patients are also spending 60% to 70% less time in bed,” Michaelidis adds. That means more activity, less loss of muscle mass, and a happy, more engaged patient. And a more engaged, active patient will heal faster and better.
That’s not to say Hospital at Home is not a complex program, with many moving parts and a considerable input of resources and cash from the health system.
Michaelidis says the program was launched to address significant pain points for the Worcester-based hospital, the only Level 1 trauma center in central Massachusetts, whose coverage area comprises some of the most underserved communities in the commonwealth. It wasn’t uncommon, he says, to see 60 to 80 patients in the Emergency Department at that time, many in need of a bed that the hospital didn’t have available. And during COVID, many of those patients were being housed in tents set up on the campus to handle the overflow.
Addressing Health Equity
In that environment Hospital at Home was unveiled, with specific guidelines and guardrails. Patients are interviewed for the program after being admitted to the hospital through the ED, in a process that includes questions about their homes and social determinants of health. If they are admitted to the program, they are transported by ambulance back home and met there by a team from UMass Memorial that sets up the technology and helps both patients and family members get acclimated to the new devices and routines.
The process includes assessing the patient’s surroundings, a key component in the health system’s quest to address health equity.
“This allows us to understand them better,” Michaelidis says. “We are laser-focused on health equity,” and that means identifying and recognizing the many societal, cultural, environmental, and technical aspects of one’s life that affect health and healthcare access. Everything from family environment, diet and exercise, job security, finances, transportation, and technological literacy is factored into how care is delivered.
“We have a unique opportunity to detect things before they become worse,” he adds.
(Michaelidis says only one patient couldn’t be helped at home and had to receive care in the hospital: A man whose ‘home’ turned out to be a parking lot. UMass Memorial admitted him to the hospital and is working with social services to find better housing.)
Once the patient is settled at home, the program kicks into gear. Virtual visits with the care team are held every morning, and in-person visits are scheduled at least twice a day. There are also regular “huddles” with the entire care team, including physical therapists and social workers. RPM technology is installed in the home to ensure wireless connectivity and handle virtual visits and monitoring. The health system also has partnerships in place with physical therapists, social services, and a company that handles remote imaging in the home.
Looking for Sustainability
Those services are what make the Hospital at Home program so intricate and expensive, costing health systems millions of dollars in setup costs and making the sustainability argument difficult. Michelidis says UMass Memorial is following the CMS guidelines for Medicare reimbursement, lobbying lawmakers to make those waivers permanent, and gathering the data to reinforce the point that the program both cuts expenses and improves outcomes.
He also says the program doesn’t require extra staffing, and doctors and nurses like it because it allows them to perform at the top of their license. They enjoy going into the home and determining what it takes for a patient to not only manage their health concern but adopt healthier habits.
The patients and their families enjoy that interaction as well.
“These patients are getting one-on-one care for a few hours each day,” Michaelidis points out, noting that is often more time than a patient would get in a hospital.
Family members, meanwhile, are grateful that they don’t have to go to the hospital to see their loved ones and appreciate the support with caregiving duties. In fact, Michaelidis says, care team members often receive handwritten notes after the patient is discharged, and they’re invited back to visit or even attend family events.
“It’s a rewarding experience,” he says.
As UMass Memorial pushes to make the program sustainable, they’re also looking to expand. Michaelidis envisions a payer-agnostic platform that includes more partnerships with programs focused on health equity, as well more technologies (like AI and wearables), a larger geographical base, and more services, such as post-surgical and C-Section pathways.
“We’re seeing a lot more acceptance for this type of program,” he says. And one can’t overestimate the value of sleeping in one’s own bed.
HealthLeaders Senior Editor Eric Wicklund talks with Rick Evans, senior vice president and chief experience officer at NewYork-Presbyterian, about how the health system is using new technologies and strategies to optimize the patient experience.
A new certification course offered by The Joint Commission will set guidelines for secondary use of data by healthcare organizations
Healthcare executives looking to validate their health system’s data use efforts can now apply for certification from The Joint Commission.
The organization has unveiled a voluntary Responsible Use of Health Data (RUHD) Certification program for US hospitals, including critical access hospitals, which aims to “provide guidance and recognize healthcare organizations navigating the appropriate sensitivities needed to safely transfer data to third-party organizations, also known as secondary use of data.”
The surge in virtual care, digital health, and AI programs, alongside a national effort to identify and address health inequity, puts the emphasis on how healthcare organizations capture secondary data. The Health and Human Services Department’s Office of the National Coordinator for Health IT (ONC) has reported that nearly 85% of all US hospitals now have the ability to export patient data for reporting and analysis purposes, yet many face challenges to integrating and using de-identified data because there are no standards in place.
“As more healthcare organizations are leveraging clinical data for secondary purposes, there have been increased calls to assure responsible data stewardship,” Jonathan Perlin, MD, PhD, MSHA, MACP, FACMI, The Joint Commission’s president and chief executive officer, said in a press release. “The Joint Commission recognizes it can play an important role in validating that robust policies and procedures are in place to help protect, govern and accountably use secondary data. We believe our Responsible Use of Health Data Certification will help healthcare organizations use data responsibly to improve the safety, quality and equity of care, develop new technologies, and discover new therapies benefitting all patients.”
“The principles established within the Trust Framework are more pertinent than ever for organizations engaging in cross-sector collaboration to propel a new generation of data-powered solutions as artificial intelligence forges a new frontier of innovation and discovery in healthcare,” Richard Schwartz, Health Evolution’s CEO, said in the Joint Commission press release. “The Health Evolution Forum developed the Trust Framework with the intention that its enduring principles will serve as the groundwork for industry-leading organizations and coalitions to build upon this effort and chart the path forward in an ever-evolving technology, regulatory and business environment.”
In the video interview excerpt below, Tande discusses how this new bill with impact the payer/provider relationship and how Scripps plans to help “bend that cost curve a little bit more.”
As healthcare leaders rush to implement AI tools, some are questioning whether they’re equipped, both technically and organizationally, to use the technology.
Healthcare organizations are rushing to launch AI programs, often to ease administrative workflows or address care management gaps, but are they really ready to use the technology effectively and responsibly?
“There seems to be a proliferation of AI across every industry,” says Shane Thielman, CHCIO, FACHE, corporate senior vice president and chief information officer at Scripps Health, which has launched several AI initiatives recently. “But healthcare is different. You need to have corridors for testing with safeguards in place. And things are moving so fast” that some health systems aren’t planning properly.
Shane Thielman, CHCIO, FACHE, corporate senior vice president and chief information officer, Scripps Health. Photo courtesy Scripps Health.
“We’re being careful and cautious,” he adds. “We’re not using AI today [on anything] that doesn’t have a human in the loop.”
Understanding what AI can and can’t do is tricky, even for the experts. In healthcare, that means not only understanding what an organization needs to have in place before using the technology, but measuring an organization’s AI maturity. Executives need to know what they know and what they don’t know.
Among those developing maturity models is MI10, a for-profit consultancy launched by Anthony Chang, MD, MBA, MPH, MS, chief intelligence and innovation officer at the Children’s Hospital of California and founder of the AIMed conference. The company’s model, called MIQ, uses 11 factors, both technological and human (along with one factor called ‘intangibles’), to measure a health system’s readiness and maturity, giving out a number on a scale of 1 to 100.
According to Arlen Meyers, president and CEO of the Society of Physician Entrepreneurs, a professor emeritus at the University of Colorado School of Medicine and Colorado School of Public Health, and a strategy advisor to MI10, the MIQ tool was used to evaluate dozens of health systems across the country, and found many that hadn’t even met readiness standards yet. Those systems scored between 26 and 88, with a median score of only 56.
“Our understanding and intelligence is that most hospitals don’t even know how to start,” he says. “And many don’t know where they are now” on AI maturity.
Meyers says healthcare organizations across the country are developing their own AI innovation centers. Some, like Vanderbilt University, have established an AI advisory board, and others, like Duke Health and Microsoft, are collaborating to launch centers of excellence that include a deep dive into AI ethics. Still others, he says, are relying on maturity models created by advisory firms and think tanks that sit outside the healthcare ecosystem.
“There are several descriptions of what have been referred to as maturity models,” he says. “I don’t think anybody has been able to validate the assumption that any of these models are accurate.”
Putting AI to Work
At Scripps Health, Thielman and David Wetherhold, MD, the San Diego-based health system’s chief medical information officer, say they’re taking a slow and methodical approach to developing and using AI. They’ve created a team of executives, clinical leaders, and experts from the legal, IT, audit and compliance, and security departments to focus on governance.
“One of the first questions we ask is whether this is actually fixing a problem or is this just technology for technology’s sake,” says Wetherhold.
Wetherhold says many healthcare applications for AI at present focus on deterministic models, or tools that summarize large volumes of data. That’s great for improving back office and administrative tasks, he says. But the evolution of AI tools will move toward probabilistic computing, in which the technology maps outcomes and gauges likely results.
And that’s where things get tricky. In large-language models, AI tools could create hallucinations, or patterns or objects that are nonexistent and therefore inaccurate. As healthcare organizations move toward using AI in clinical settings, that could be dangerous.
With that in mind, Wetherhold and Thielman say healthcare organizations have to understand how to design prompts, which are basically the directions given to AI tools on how to gather and disseminate data. Health systems that fail to pay attention to prompt engineering run the risk of designing faulty AI tools that can cause damage.
“There really is no such thing as a clean data model,” Wetherhold points out. “It all comes down to how you ask the questions.”
Erskine says enthusiasm for the technology is high, so much so that he’s “having to hold people back.” But he feels the hype around the technology is overblown, and the health system is creating its own guardrails to make sure AI is used properly.
That includes the Emory Empathetic AI for Health Institute (AI Health), an initiative launched in early 2023 to guide the health system and “shape the artificial intelligence revolution to better human health, generate economic value, and promote social justice.”
Erskine says he’s working with AI Health to make sure AI readiness and ethics are part of the game plan. For example, if someone using the technology is asked to defend the results and replies with, ‘It’s what the AI told me,’ that means there’s more work to be done on enforcing the tenet that AI augments but doesn’t replace the human.
“We do tell the doctors to review everything,’ he points out.
Alistair Erskine, MD, MBA, chief information and digital health officer, Emory Healthcare. Photo courtesy Emory Healthcare.
Erskine says the health system is very much attuned to both technical and organizational readiness to use AI. There’s a clear understanding of inherent bias in the technology, he says, but the technology is also evolving and maturing itself. Doctors understand, he says, that more work put into the tools, the better the results.
“More comprehensive notes support higher levels of billing,” he says.
And that’s where Erskine sees the most benefits right now. Doctors spend too much time going over their notes and working in the EMR, time that should be spent with patients. AI tools can do that work faster and better, building a more complete patient record, reducing workflow pressures and stress, and creating more opportunities for care management, care coordination, and reimbursement.
“The chance to shave two hours a day for a clinician is vital,” he says. “That’s a huge amount of time.”
In this episode, we speak with Arianna Urquia (VP/CFO, Nicklaus Children’s Hospital in Coral Terrace Florida) about how the hospital has utilized technology in their revenue cycle for a more efficient patient experience.
