How does one read the tea leaves to know when a hospital is in trouble? I have six factors for you, courtesy of Moody's Investors Service.
Nonprofit hospitals rarely default on their bond obligations (only 17 Moody's-rated credits have defaulted since 1970), but when they do, the revelation tends to catch people by surprise. Remember AHERF, anyone? In any case, since that implosion last century, hospitals have had to pay a risk premium above what they would have otherwise had to pay for the privilege of borrowing money, say many of the analysts I talk to.
So while the Moody's report was intended to benefit institutional investors, many hospital boards have to be educated about this stuff, too. Kudos to Lisa Goldstein--a friend of HealthLeaders, a heck of an analyst, and author of the report--for putting it out there. Some of it is common sense, but when these kinds of blowups happen, a lot of common sense has long since left the building. So here are the factors that signal trouble:
Excessive emphasis by the board of directors or hospital management on "mission over margin," often manifested in recurring operating losses and high reliance on investment income
Board failure to check management's unfettered capital spending
Weak market share or a failure to establish a clear niche in a competitive market.
Inability to recruit physicians and attract volumes to replacement hospitals or new hospitals
Failure to plan for, and react to, weak local area economic conditions
Inflexible responses to cuts in Medicare and Medicaid
Most of this stuff is just ordinary blocking and tackling, but when major financial blowups happen, hindsight often shows that multiple blocks were missed and multiple tackles were broken. The report comes out as many observers see clouds on the financial horizon in general and for healthcare in particular. Of the 17 rated defaults that have happened in the past 37 years, 10 occurred before 2000 and seven have happened since then, indicating a modest increase in defaults recently. Growing challenges to the industry, according to the report, include rising capital investment and potential Medicare reimbursement cuts.
Often, rating agencies provide good early warning of investments going bad. But those warnings trickle out in the form of downgrades and outlook revisions. That's why rating agencies are there, after all--but ask those who got burned on collateralized debt obligations in the financial markets last summer whether the rating agencies provided enough warning?
To really get the full story about how bad or good the situation is, a little more digging is required. If you're paying attention as a board member or officer, you're likely to take steps to ameliorate any of the factors mentioned before they morph into a verifiable crisis. But the fact remains that in the coming years, some hospitals will default, lots of money will be lost, and someone who's supposed to be watching will have been asleep at the switch.
Bottomline Technologies, a vendor of document imaging and management software, has signed an agreement to buy Optio Software Inc. for $44.9 million. Alpharetta, GA-based Optio has a special focus on healthcare, where it has more than 700 organizations using its technologies.
BlueCross BlueShield of Massachusetts has announced that it will not require physicians to install an EMR to participate in its bonus program. Relying on information from past studies, BlueCross decided the financial benefits of office-based electronic medical records systems are not worth the cost to doctors. Analysts say the decision won't make technology advocates change their tune on the benefits of EMR, but that it may strengthen the case for outside funding for physician EMRs.
For two decades, electronic health records have been the Next Big Thing in healthcare. In 1994, President Bill Clinton announced that all doctors would use computerized records within 10 years, and in 2004 President Bush called for universal use of digital health records. Despite these declarations, 90 percent of U.S. doctors and more than two-thirds of U.S. hospitals still use paper for patient records.
While the pharmaceutical industry is making strides to boost its Web presence, it still has a long way to go, according to the results of a digital-outlook report conducted by the Electronic-media agency Avenue A/Razorfish. "Pharma marketers must be increasingly creative with how they engage their target consumers," Brian M. Krick, director of search marketing at Avenue A, told PharmaExec.com. "The standard approach of buying all the content for whatever indication was on the table is getting less effective in terms of how to blanket a consumer."
The American Cancer Society has decided to support the inclusion of virtual colonoscopy as a front-line screening exam for colorectal cancer. The decision came after the ACS examined the latest published research and preliminary results of recently completed trials. VC is now included as one of several options for colorectal cancer screening and prevention in average-risk adults age 50 years and older and recommended that this population receive the procedure once every five years.
A growing number of organizations are using online well-being programs as a cost-effective way of getting a healthy living message across to staff. Winning staff over, however, can be a challenge. By offering employees advice and support about healthy living which they can access via the company intranet or online, HR teams are trying to make well-being seem more fun. That may now be easier in Britain, following the launch of a new strategy to encourage employers to use the workplace to promote healthy lifestyles. The strategy is part of the British government's 'Health Work and Well Being--Caring for our Future' strategy launched in 2005.
The number of physicians practicing part-time is on the rise, which isn't good news for facilities that are short-staffed or struggling to recruit.
Between 2005 and 2007, the percentage of physicians practicing part-time increased from 13 percent to 19 percent, according to the Cejka Search and AMGA 2007 Physician Retention Survey. Carol Westfall, president of Cejka Search, and Joseph Scopelliti, MD, president of Guthrie Clinic in Sayre, PA, unveiled the results of the latest survey, now in its third year, at the AMGA annual conference in Orlando.
The physicians opting for part-time work tend to be early-career females or pre-retirement males, but they have different reasons for doing so. Thirty-one percent of male physicians cite "unrelated professional or personal pursuits" and 29 percent cite "preparing for retirement" as their reasons for going part-time. However, the majority of female physicians (69 percent) work part-time because of family responsibilities, including pregnancy. Past surveys suggest that part-time male physicians--but full-time female physicians--have the highest turnover rates.
Turnover concerns aside, groups should be aware of the impact part-timers will have on their ability to provide quality patient care, the presenters said. Take call coverage, which is already a contentious issue between physicians and hospitals. Roughly half (47 percent) of survey respondents said they reduce call proportionately based on full-time equivalent status for part-time physicians.
To offset the lower call availability, many groups are turning to hospitalists; 86 percent hired hospitalists or engaged a hospitalist organization in the past year to handle call and other hospital responsibilities. This is often viewed as an effective retention strategy, as it reduces the call burden on other physicians in the group.
The part-time trend doesn't show any signs of reversing or slowing in the near future. Pre-retirement male physicians and early-career female physicians, the two groups with the highest turnover rates and the most likely to practice part-time, are also fastest growing segments of the physician workforce.
Beth Averbeck, MD, associate medical director for care improvement with HealthPartners Medical Group, describes her organization's approach to tracking and addressing racial and ethnic treatment disparities.
Pennsylvania hospitals and other medical providers often seek higher state reimbursements for treating low-income, elderly and disabled people. Now the Pennsylvania Department of Public Welfare has come up with a new tax idea that would make higher payments possible by placing an "assessment" on the profits of general hospitals in two counties. While the additional revenue would come only from hospitals in Allegheny and Philadelphia, the money would be spread around to Medical Assistance providers, including hospitals, in all 67 counties.
