On top of investment portfolio losses, incessant inflation, and staffing shortages, children’s hospitals have had to contend with a decline in patient acuity and a temporary increase in contract labor utilization, the report said.
How does this compare to previous years? Well, according to the report, 2023 children's hospital medians show operational deterioration and liquidity dilution with median cash flow metrics falling to the lowest level in a decade.
But, there is good news.
The report shows that children’s hospitals still have favorable reimbursement, unique market positions, and generally maintain a lower debt load, which allows for a more consistent performance, Fitch said.
The median days cash on hand for children's hospitals is 323, and while this is a significant drop to prior years, these numbers are still higher than overall acute care facilities and are still in line with pre-pandemic levels, the report said.
Despite these formidable challenges, the stand-alone children’s hospitals’ median rating remains strong at ‘AA-’ Fitch says.
“Children's hospitals continue to be able to drive positive operating results as a result of favorable reimbursement for higher acuity services and distinct market positions that provide for more consistent volumes compared to the overall acute care sector,” said Fitch Ratings director Richard Park in a news release.
Working through deteriorating margins isn’t new for Bridgett Feagin, CFO for Connecticut Children's—a level 1 pediatric trauma center with roughly $600 million in net patient revenue. She has been working tirelessly since joining the organization in June 2020 to balance the hospital's financial needs with its mission to help sick children.
“One thing I always tell my team is, no margin, no mission. You need a margin to continue with the mission. So, it's about balancing the needs of the community and being able to cover your costs,” she previously told HealthLeaders.
Connecticut Children’s doesn’t have high margins, she says, but it obviously needs a decent margin to be able to continue with patient care to cover inflation.
So, what’s the workaround?
“We work with our payers to cover our costs and a little bit more than our costs because we need to purchase capital and facilities. So, it's a fine line. We have to be good partners with our payers in order to get paid for the services that we render,” she said.
Payer scrutiny won't be letting up anytime soon, in fact, expect it to intensify.
The COVID-19 public health emergency has come to an end, which means more audits will be coming your way.
To prepare for a potential increase in payer audit activity, especially from CMS, it’s essential for revenue cycle leaders to examine upcoming trends so they can best protect an organizations’ bottom line.
In fact, organizations should expect heavier scrutiny from Medicare risk adjustment data validation (RADV) auditors in the near future, Rose Dunn, chief operating officer of First Class Solutions Inc. in Maryland Heights, Missouri, told NAHRI. “We are definitely going to see an uptick in activity because the RADV auditors have a few years to catch up on,” she said.
Telehealth will be looked at more intensely moving forward, Sandy Giangreco Brown, director of coding and revenue integrity at CliftonLarsonAllen LLP in Minneapolis, Minnesota, said in the same article. “I’ve done a fair number of audits for telehealth over the last three years and identified some things,” she says. Now that the public health emergency is over, leaders need to determine what will and won’t be allowed by different payers, she said.
To help with telehealth policy compliance and avoid potential payer audits, Brown suggests conducting internal audits as soon as possible. “I think we’re going to have to do our due diligence and make sure we are following who is allowing what,” she says.
Telehealth audits will likely focus on whether provider organizations were billing appropriately based on what rule was in place at that point in time, Dunn says. Auditors will look for documentation issues, as well as whether it was appropriate to treat a patient via telehealth. “I think this area is ripe for audits,” she says.
Going forward, Dunn emphasized to NAHRI that the need for national rules that preempt state requirements, especially for providers who are located near state borders.
Providers should also expect heavier scrutiny on reimbursement for COVID-19 claims, according to Brown. “We’ve seen some really sick patients who had COVID-19 on top of comorbidities,” she says. “And those are some long lengths of stay with very complex patients.”
Responding to COVID-19 audit requests shouldn’t be different than responding to any other audit requests based on diagnosis, such as sepsis or malnutrition, Brown noted to NAHRI. As long as the documentation is thorough and the audit response is complete and timely, there shouldn’t be any surprises.
Over the last few months CMS has been releasing procedure codes for your revenue cycle teams, both for inpatients and outpatients.
For your inpatient procedures, the updated ICD-10-PCS codes will available for discharges starting October 1. When it comes to outpatient reporting, most of the HCPCS code changes were just implemented July 1.
CMS recently announced the addition of 395 new diagnosis codes, 25 deletions to the diagnosis code set, and 13 revisions. An ample amount of these changes pertains to reporting certain diseases, accidents and injuries, and social determinants of health. These code updates will take effect on October 1.
MedPAC estimated that Medicare Advantage (MA) plans would be overpaid by $27 billion in 2023, mostly due to coding intensity of enrollee health conditions combined with bonus payments related to quality. That estimation did not factor in favorable selection of MA plans.
Detroit-based Henry Ford Health recently expanded its collaboration with CodaMetrix to include patient bedside visits, where abstraction takes an average of 40 minutes per patient and accounts for 20% of the health system's overall coding costs.
Medicare overpaid $22.5 million in 2019 and 2020 for physician services while enrollees were hospital inpatients or in skilled nursing facilities, according to an audit by OIG.
Researchers conducted analysis of the 2.1 million physician service claim lines identified at risk of overpayment because of non-compliance with the place-of-service policy.
Medicare pays for physician services separately from the payments it makes to inpatient facilities like skilled nursing facilities and hospitals. However, practitioners may not always correctly report the place-of-service code on a claim line, causing Medicare to pay more at higher nonfacility rates than at lower facility rates while beneficiaries were inpatients of facilities, OIG stated.
Multiple senators recently sent a letter to stakeholders to seek input on improving the 340B drug pricing program.
The senators, who are all members of a 340B bipartisan working group, released a request for information to look for policy solutions that would “ensure the program has stability and oversight to continue to achieve its original intention of serving eligible patients,” according to the letter.
The Health Resources and Services Administration administers the 340B program, and it previously issued guidance that allowed covered entities to dispense drugs through contracted pharmacies in the program. However, the senators noted that the current 340B statute does not clearly address this issue.
“The 340B drug pricing program is not working as effectively as it should,” said Senator Moran said in a press release. “The confusion around its contract pharmacy provision and lack of transparency and congressional oversight is failing the patients the program exists to help.”
In addition, a number of drug manufacturers haven’t offered 340B discounts on their covered outpatient drugs dispensed at contract pharmacies in recent years, according to the letter. The senators said that providers in their states have alerted them to the negative impact this has had on providers who serve their constituents, according to the letter.
The senators also acknowledged that stakeholders have been concerned by the need to strengthen the program’s integrity measures. To address these concerns, the senators are requesting information on ways to improve covered entities’ accountability and ensure transparency according to the letter.
As finance and revenue cycle leaders know, the 340B program requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and other covered entities at significantly reduced prices, and these payments are a lifeline for some orginizations.
"Henry Ford Health system and a lot of folks rely on 340B discounts and other mechanisms like disproportionate share payments. We're a big teaching institution, so a lot of these special payments that we do in order to teach the healthcare leaders of the future or make sure that we can take care of vulnerable patients are extremely important," Damschroder said.
"So that is an area that we and others are actively—in our advocacy—ensuring that these programs stay intact or evolve to a place that enhances the programs for the people that were trying to care for," said Damschroder.
Cheryl Sadro, the CFO for UC Davis Health, and Tammy Trovatten, the director of government reimbursement for UC Davis Health, also connected with HealthLeaders to discuss the financial issues hospitals and health systems have been dealing with over the course of the pandemic, one key area being 340B payments.
“One of the things we've been watching and will continue to watch through this process is where we go from here with 340B. We're the only level one trauma center in a multicounty area, and between 340B trauma and transplant, we've garnered a large portion of our bottom line,” Sadro said.
The senators’ goal is to ensure that the program has improved stability and integrity and that it continues to enable providers to use federal resources to provide better healthcare, the group says. Stakeholders should submit written responses no later than July 28, 2023.
Molloy will oversee the organization's accounting, financial planning and analysis, reimbursement, and revenue cycle functions, as well as managed care contracting and treasury starting in July.
While his current role is still as the managing director and head of municipal banking at Citi, Molloy is not new to the innerworkings of Ochsner Health’s finances. He has been a key financial advisor to Ochsner for several years and has spent more than a decade overseeing banking for all municipal-related activity, including public finance, healthcare, higher education, and public-private partnerships.
When Molloy officially joins Ochsner in July, he will work side-by-side with Ochsner’s current CFO, Scott Posecai, who will retire as CFO in December.
Molloy recently chatted with HealthLeaders about his new role and how he plans to ensure the financial success of the organization once Posecai departs.
HealthLeaders: Ochsner says you will play a pivotal role in the continued development and execution of strategy as the health system builds on its clinical excellence and innovation in healthcare delivery. How does your background in banking make you a good fit for this new role and Ochsner in particular?
Jim Molloy: I’ve worked on all types of financings and have led numerous strategic projects over the years. This background has afforded me a strong understanding of healthcare and the financial markets while allowing me to create strong relationships with investors and other stakeholders. It has also exposed me to the strategic aspects of the business.
I have been fortunate to work with Ochsner on projects that fueled the organization’s strategic growth, including the original merger of the clinic and the foundation. I have developed a strong connection to the organization, and I understand how important Ochsner is to the overall health and well-being of the communities it serves. I have also been fortunate enough to get to know much of the executive and board leadership.
I have a deep respect for the culture and depth of talent at Ochsner, and I’m committed to the organization’s values and mission to serve, heal, lead, educate and innovate.
Photo courtesy of Ochsner Health.
HealthLeaders: CFOs need to help their organizations grow while keeping expenses low. What sort of processes do you plan to put in place to make sure this happens?
Molloy: My engineering background and my consulting work helped influence the process-oriented thinking I adopt and live by today. It is important to develop a culture in which leaders seek continuous improvement, while also measuring the appropriate things and benchmarking yourself in key areas against best-in-class organizations. While it is important to always keep a mindset toward reducing expenses, the true key to success for any organization is disciplined growth.
HealthLeaders: With your history in banking, how will you use your expertise to think outside of the box when it comes to Ochsner’s investment portfolio?
Molloy: When considering investments, it’s critical to have strong discipline and balance appropriate risk-taking.
The organization has done a great job of this over the years, but over time I will utilize my industry connections to identify new ideas and opportunities to improve.
HealthLeaders: How will you help ensure financial stability for Ochsner in 2024 and beyond?
Molloy: I will look to develop strong relationships across Ochsner’s management, clinical leadership, and finance teams to ensure we can support our operational and clinical priorities, which in turn will support our strategic growth priorities.
I plan to examine our portfolio of businesses and assets to ensure we are investing in the best areas to fulfill our mission. Resources are limited, so it is important to determine what competencies are core to the organization and then find good partners for important non-core competencies, so we properly allocate resources.
Most critically, we must keep our focus on better serving our patients and improving the lives and the health of our communities. We need to find new ways to make healthcare more accessible to the communities we serve, and work to ease the pressures on our workforce. Improving in those arenas each year will be critical to our success.
HFMA announced the winners of its 2023 MAP Award for high performance in revenue cycle, and 10 hospitals were awarded.
According to the Healthcare Financial Management Association (HFMA), there are five physician practices, four hospital systems, three individual hospitals, two critical access hospitals, and one an integrated delivery system, with high performing revenue cycles.
The awards were presented at the HFMA annual conference on June 25 in Nashville and recognized providers that have excelled in meeting industry standard revenue cycle benchmarks, implemented the patient-centered recommendations, achieved outstanding patient satisfaction, and more.
Some of the winners of HFMA’s 2023 MAP Award for high performance in revenue cycle include the following organizations:
Winning integrated delivery system:
Saint Francis Health System
Winning hospital systems:
Ballad Health
Covenant Health
OhioHealth
ThedaCare
Winning individual hospitals:
CHRISTUS St. Michael Health System
Liberty Hospital
The University of Texas MD Anderson Cancer Center
Winning critical access hospitals:
Henry County Health Center, Inc.
Van Diest Medical Center
Winning physician practices:
Alo/Avance Care
ENT and Allergy Associates
Graves-Gilbert Clinic
Heart and Vascular Care
State of Franklin Healthcare Associates
“We are truly honored to be recognized with this high-performance award,” Steven Sinclair, CFO of Graves-Gilbert Clinic, told HFMA. “While our tradition of clinical excellence dates back more than 85 years, our approach to revenue cycle could not be more contemporary. Our entire revenue cycle team is dedicated to making the financial experience a seamless one for our patients.”
The new codes cover a range of procedures, including:
Bypass femoral artery using conduit
Insertion of conduit to short-term external heart assist system
Insertion of intraluminal device, bioprosthetic valve
Introduction of drugs into peripheral veins
Repositioning of larynx
The revisions and deletions mainly featured vertebral fusion procedures and introduction of certain drugs.
When it comes to outpatient reporting, most of the HCPCS code changes will be implemented July 1, but some codes were made available as early as March 14.
New administration code 0174A is for patients six months through four years of age and is to be used in conjunction with CPT product code 91317 (SARS-CoV-2 vaccine, mRNA-LNP, bivalent spike protein, preservative free, 3 mcg/0.2 mL dosage, diluent reconstituted, tris-sucrose formulation, for intramuscular use). In March, the Food and Drug Administration amended the bivalent Pfizer-BioNTech COVID-19 vaccine’s emergency use authorization to allow clinicians to administer a booster to certain young patients. Shortly after, the AMA released administration code 0174A, which became effective March 14.
The transmittal also mentioned the 20 Category III CPT codes that were originally introduced in January. These 20 Category III CPT codes will be available for use beginning July 1.
All of these new procedure codes come in conjunction with the 2024 ICD-10-CM diagnosis codes that were announced in June.
Robust data is critical to hospitals’ efforts to improve reimbursement. One way to better capture data on your patient populations is through proper documentation and keeping revenue cycle staff up to date on code changes.
June's National Hospital Flash Report from Kaufman Hall says hospital finances showed signs of stabilizing in a few key areas in May.
Healthcare leaders have been battling incessantly against poor operating margins and increases in expenses. But luckily for health systems such as Ascension Healthcare—who recently announced "significant improvement plans" focused on operational efficiencies and controlling expense growth amid a loss of almost $1.8 billion—stabilization may be on the horizon.
According to the June 2023 report, hospital finances saw slightly improved operating margins, declining labor expenses, and increases in outpatient visits, i.e., more reimbursement.
Here are three ways hospitals saw financial improvement in May:
Operating margins regain positive territory.
The median year-to-date (YTD) operating margin index for hospitals was 0.3% in May, up slightly compared to 0.1% in April and March, the report says.
Although operating margins are slowly regaining positive territory, they are well below levels during the latter half of 2021 and prior to the pandemic.
Labor expenses saw a decrease.
While labor costs remain significant, expenses were down 9% in May 2023 compared to May 2022. FTEs per AOB saw a decrease of 6% between May 2022 and 2023, and a decrease of 21% compared to May 2020.
Interestingly, April’s report showed that high expenses continued to put pressure on hospitals, with labor expense per adjusted discharge increasing 3% from March to April, that report revealed.
More hospital revenue is being driven by outpatient services.
Net operating revenue per calendar day was 9% higher in May 2023 compared to May 2022, while outpatient revenue per calendar day rose 14% over the same time frame.
“Now that hospital finances are showing signs of stabilization, it’s an opportune time for executives to reevaluate their longer-term business strategy,” Erik Swanson, senior vice president of Data and Analytics with Kaufman Hall, said in a statement.
“The continuing shift in patient demand from inpatient to outpatient services is particularly important and will inform business decisions for years to come,” he said.
The June 2023 National Hospital Flash Report draws on data from more than 1,300 hospitals from Syntellis Performance Solutions.
The president of St. Johns Radiology Associates talks about its middle revenue cycle tech implementation process.
Implementing new technology to reduce administrative burdens and increase bottom lines is commonplace in the revenue cycle, but getting there isn’t always an easy road.
Between administrative buy-in and complicated go-lives, there always tends to be hiccups from conception to implementation. But this is where St Johns said its experience differed.
Just like other healthcare organizations, St. Johns needed to streamline revenue cycle processes. The group decided to do this by implementing an advanced speech reporting solution with built-in computer-assisted physician documentation functionality for its middle revenue cycle.
HealthLeadersrecently chatted with Dr. Arif Kidwai, president of St. Johns Radiology Associates, about the steps the organization took when implementing an AI-powered clinical documentation and workflow management solution and how it was able to avoid any major hurdles in execution.
HealthLeaders:Healthcare organizations have had a rough few years financially as they try to navigate inflation and labor shortages, among many other challenges, so this has led to a lot of leaders in your position to look toward technology to fill gaps and help their bottom lines. Can you tell us about the gaps that you were seeing at your organization and what technology you implemented to help fill those gaps?
Dr. Arif Kidwai: Yes, the last two to three years have been really rough for everybody in the healthcare industry across the board, radiologists included.
I've been fortunate to be a part of a hospital system where the executives are very proactive and ahead of the curve. They've always been aggressive with looking at new technology and trying to find ways to deliver healthcare more efficiently and provide better care for the patients.
About ten years ago, we started moving towards creating a better workflow within our own department and part of that process was to look for a new voice recognition system. At that time, we looked at a lot of the major players. But then we came across the 3M Fluency for Imaging product. For us, that was a game changer.
Once we started using a better workflow with a better voice recognition system, we were able to improve our turnaround times in radiology so that we had faster reports coming out to the clinic patients. We now have better accuracy in our reports because the voice recognition technology is the best that we've ever seen.
Having that voice recognition technology with a better workflow package made us better radiologist's both in quality and in our efficiency. Its something that we've seen now play out positively in the last three years, especially as things have even been more tight in the industry as the number of radiologists relative to the number of cases that we see annually has continued to grow and grow and grow.
There’s a great data graph out there that shows this gap between the increasing imaging volume year over year versus the relative flat number of radiologists that we've had nationally. And it's a challenge for everybody you know, as patient volume continues to grow and the shortage of clinicians persists. I think just finding that efficiency and the technology has been the only way to cope with that.
HealthLeaders: I know you said you're a part of a larger health system, so did you have to get an ample amount of buy-in from others in the system when it came to which solution you wanted to adopt?
Kidwai: We were really fortunate. When we were going through this process our chief medical information officer came to us and said the hospital organization wanted to buy one vendor product that would provide voice recognition software both in the radiology arena as well as hospitalwide for the new EMR that they were purchasing.
He came to me and said, ‘you know, at the end of this, it's the radiologists’ decision. You tell us what you like, and the hospital will follow.’ So, we worked hand-in-hand with his team, and we brought in all the major players at the time and we went through the standard inner product review of product demos.
For us, it was an easy decision. We had an ‘open mic night’ of sorts because our executives basically sat down in a room and had all the radiologist come in one by one. We came in, sat in the chair, and dictated into the microphone—signed in under a generic account with no voice training—and we just watched it work. It was really refreshing because technology before that had really been lagging as far as the radiologist expectations.
Everybody knew the pain of trying to correct reports, and to be able to sit down just see it work was really the thing that changed everybody's attitude about moving forward with new technology. That night we basically had a unanimous vote from the radiologists that this was the tech we wanted.
We went to the CMIO the next day and said, ‘this is our choice,’ and he smiled. He said, ‘that was my choice to, I just didn't want to tell you.’ That's how we as an organization came to this decision, and then we moved forward with it.
HealthLeaders: I frequently hear from other leaders that new technology is great, but implementation isn't always the easiest. So now that you’re over that hurdle, can you tell us a little bit about how implementation went at your practice and how you overcame any obstacles?
Kidwai: Yes, adoption of new tech is always a challenge for everybody. But prior to go-live our vendor did a lot of prep with our team. They did lot of training for our IT department. They came and they coached the radiologists of what to expect. Then on the go-live date they had trainers on site. We had both of our major sites covered with staff.
We also already had IT people that had been trained, so we were all ready for it. We also purposely decreased our outpatient volume for two days just to kind of handle the change and knowing that there would be a little bit of a kind of a learning curve to this.
But, for us, the shock was that after about three days, we were back to 100% productivity. And so, everybody went from being afraid of what's going to happen to three days later just simply doing our jobs again and forgetting that we had to go through this learning curve.
The CFO of Brightside Health talks financial strategy amid a telehealth boom.
CFOs know that COVID-19 changed the game completely—not only from a financial lens but from a strategy perspective as well.
Traditionally, there has been hesitance to adopt telehealth due to reimbursement issues. Reimbursement is still a hinderance, especially with the pandemic waivers expiring and some payers reluctant to expand coverage, but the curtain has been lifting and the barrier to access is shrinking.
Now, it’s not uncommon for organizations to implement a virtual care road map across the care continuum as a lower-cost, more productive option for care delivery. As strategy shifts, we are seeing the creation of more orginizations that specialize in 100% virtual care.
From a cost perspective it can seem like a no-brainer, but without a mature telehealth strategy, the implementation of a 100% telehealth service may encounter resistance from all corners—IT, billing, clinical teams, and even patients. On top of this, the numerous downstream consequences for failing to financially plan are vast.
Chris Murray, the new CFO at Brightside Health—a completely virtual, mental health provider organization, is well aware of the risks, but a solid telehealth understanding and financial strategy is the key to success, Murray says.
Murray recently chatted with HealthLeaders about the organization’s financial strategy along with the three main differences he sees between the financial strategy of a completely virtual provider organization versus that of a brick-and-mortar provider.
HealthLeaders: You have over 15 years’ experience in roles across finance, operations, and go-to-market functions at healthcare and technology companies, so what drew you to the CFO role for Brightside Health?
Murray: The current spotlight on mental healthcare is critical, especially as one in five Americans live with some form of mental illness. Like many of us, mental health issues have touched my family personally. My passion for changing the way the healthcare industry evolves to meaningfully support people living with severe depression and anxiety aligns with the mission of Brightside Health to deliver life-changing mental health care to everyone who needs it.
I’ve been in the CFO role at Brightside Health for a few months now, and I truly believe our solutions are changing people’s lives for the better. I am excited to see what the future holds for Brightside Health and how I can help grow the business.
HealthLeaders: What direction do you plan to take Brightside’s financial strategy?
Murray: The financial strategy for Brightside Health is exciting and complex. Because we work with many different markets, there’s opportunity to grow the revenue stream in a variety of ways. We’re driving momentum in the commercial market among payers, providers, and even employee assistance programs and are exploring other avenues such as Medicare and Medicaid, while still serving consumers directly. We know each stakeholder presents a unique opportunity and plan to examine how their differentiators fit into our broader mission and vision, while also addressing their financial objectives.
HealthLeaders: 100% virtual care is a relatively new concept, so how do you plan to drive growth and strategic initiatives?
Murray: An important role of a CFO is to build an infrastructure that supports the efforts of our product and technology teams. To do this we need robust performance tracking in place to ensure we’re monitoring progress against our objectives and putting numbers and structure to our challenges and successes. My team and I will also continue to analyze where there’s whitespace in the competitive landscape, working to identify areas that are primed for innovation that Brightside Health can play a key role in.
HealthLeaders: How does building a financial strategy for a digital-first mental healthcare provider differ from building a plan for a hospital or health system?
Murray: There are three differences that come to mind when thinking about our financial strategy versus that of a brick-and-mortar provider.
The first is the difference in compliance and legal requirements. As a mental healthcare provider, we must think about state-by-state licensing for our therapists (in all 50 states plus D.C.) whereas health systems typically work in one or a handful of states and don’t need to be mindful of local laws and regulations.
The second is infrastructure. We don’t have brick-and-mortar costs, which means much less overhead and ultimately allows us to treat more patients.
Third are the marketing costs–essentially how we reach people and how people can find us virtually. Traditionally, this isn’t something that a hospital or health system has to think about as there’s already awareness of the physical location (and often less options within the community to select from). Building brand awareness and ensuring our key differentiators are well known in the industry and among potential patients is a critical function of our business and something we are implementing in a meaningful way.
HealthLeaders: From a financial perspective, what do you see for the future of telehealth over the next few years?
Murray: The industry has no doubt been accelerated by the pandemic, and telehealth has proven to be a viable solution that will continue to be the future of healthcare. Traditionally, there has been hesitance to adopt telehealth due to reimbursement issues, but since the pandemic, the curtain has been lifted and the barrier to access has been removed. We’ve seen patients express the desire and interest to stick with telehealth, especially for behavioral healthcare. I think we’ll see increased demand across the industry to adapt and implement more telehealth solutions into platforms because that friction no longer exists.
