My husband is a doctor who has owned his own practice for several years. In the time I've known him, I've watched him toil over his balance sheets, ponder marketing campaigns, and read up on growth opportunities. I've also heard sad tales of how his long-time patients have lost their jobs, their insurance, and even their houses and in this economy, his patient's woes translate into his practice's ones.
My husband isn't running a large, 900-bed facility with hundreds of employees, but the problems he faces are very similar to the ones hospital CFOs face too—how to keep the business going and still help people. Unquestionably, it's difficult to focus on the latter when you are doing everything you can to keep your books in the black and seemingly every outside agency is working against you. And there are many, myself included, who wonder if the other economic shoe is going to drop in healthcare—and a "W" or double-dip recession will smack us over the heads.
I was speaking to a CFO this week who made a few remarks that really resonated with me. He was pondering the possibility of the economic double dip and the ramifications it would have for hospitals with large Medicare patients who have been cost cutting to stay afloat. He remarked, "You can't cut yourself to prosperity." How true it is.
Interestingly Fox News interviewed President Obama in late November and he explained that if the nation keeps adding to deficit spending through tax cuts or more stimulus spending, eventually people could lose confidence in the U.S. economy and that could "lead to a double-dip recession."
Cutting costs isn't the way to get out of a recession, and financial leaders know it; the only way out is to grow. You can grow two ways: (1) by hiring physicians and other top staff, and (2) expanding your facilities. We know employment is up at hospitals nationwide. The healthcare sector reported 21,000 payroll additions in November, according to U.S. Bureau of Labor Statistics, and 613,000 payroll additions since the start of the recession in December 2007. The healthcare sector has created 249,700 new jobs in the first 11 months of 2009, an average of 22,700 new jobs each month, the BLS reported. So, it seems CFOs are working on growth opportunity number one.
Then there's the second path, building. Unfortunately growth via this avenue has been hindered by the bond market. The government tried to come to the rescue with a new program that allows hospitals to essentially triple the amount of bank-qualified bonds they may sell per year. The American Recovery and Reinvestment Act of 2009 added a temporary provision allowing nonprofit hospitals and other 501(c)(3) organizations to sell up to $30 million in tax-exempt, bank-qualified bonds in a single calendar year. Notice that this is a temporary provision. It expires December 2010, which gives hospitals just about a year to get this area of their finances squared away.
Unfortunately, having a great deal of outstanding debt, and too much of it tied to variable rate bonds, is likely to have a negative affect on your investor's credit rating, making it more difficult to get the new loans needed to build. However, assuming a facility can get new bonds secured, hospitals can begin the process of building and/or renovating, which means more space, and therefore (ideally), more patients and a larger market share. What does this all have to do with a double-dip in the economy?
Growth isn't easy for any business, but what makes it more complex is the unknowns that can disrupt the best laid plans. You may have missed it the week of Thanksgiving, but Moody's released a three-page sector comment called U.S. Health Care Reform: Credit Threat for High Cost Urban Hospitals. This Moody's sector comment noted:
"Both [House and Senate healthcare reform] bills highlight the conflicting goals of healthcare reform: (1) expanding the number of insured patients—while (2) restraining future healthcare costs. Achievement of these goals will affect hospitals in different ways, but cost control measures could be especially negative for the credit position of many high-cost urban hospitals even if the number of insured patients expands," the report noted.
The Moody's piece goes on to explain, "The drive to control costs is fueled by rising Medicare costs, as well as by research such as that conducted by Dartmouth College, which has published an 'atlas' of differing medical practices and costs by 306 Hospital Referral Regions (HRR) across the United States."
Moody's rates more than 50 hospitals or hospital systems that operate in the regions listed in the Dartmouth College study, and 17 of those they rate are among the highest cost HRR; 16 of which are in urban or densely developed markets (only one is in a rural area). Now if Medicare cuts do pass, regardless of the reasons for the high disparity in Medicare reimbursements, those hospitals will feel it in the financials and that includes investment service rating downgrades, the Moody's report noted.
"There are a lot of moving parts in healthcare reform that go beyond the current legislation in the House and Senate version," says Mark Pascaris, vice president and senior analyst for the healthcare ratings team at Moody's Investors Service. "If efforts aren't taken to reduce the variability of Medicare spending by market, those hospitals in the higher Medicare reimbursing regions could ultimately be affected."
In these high HRR regions, the best positioned hospitals according to Moody's are likely to have two characteristics: 1) those that are part of multi-state systems that can rely on broader economies of scale and can import cost-efficiency practices from outside of their local region, and 2) those that gain the most new paying patients who are newly covered by health insurance. The most vulnerable hospitals will be stand-alone hospitals dependent on high-cost referral practices and which do not gain many new paying patients.
So those systems that manage cost reduction and find growth opportunities will succeed. It seems like such a simple equation and yet it is so difficult to enact. If the rest of the economy continues to lag in the recovery, then growth may continue to elude healthcare facilities. Plus, if Medicare cuts go through that may ultimately leads to more cost reductions at hospitals.
But we already know you can't "cut yourself to prosperity," eventually you will run out of areas to trim. That's when things won't look so good. And that's why I wonder if a "W" is on its way. Even if a double-dip bypasses the national economy, depending on what happens with healthcare legislation, it very well could still hit many hospitals nationwide.
The best a CFO can do is try to apply the principles of cost reduction and growth to the best of their ability. If it's any consolation, Moody's released another report last week indicating that the Investor's Service upgraded ratings on 20 nonprofits this year. So getting out from under the red ink is possible, and some hospitals are doing it.
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The U.S. Preventive Services Task Force's (USPSTF) controversial mammography recommendations that were issued last month have already affected some Florida facilities.
After concerned women asked to cancel their appointments, receptionists successfully convinced some of the women to keep their appointments—though some still cancelled their screenings, says Andrea Harley, RT(R)(M), mammography consultant with ABCs of Digital Mammography, LLC, in Fort Myers, FL.
Women between 40 and 49 no longer be screened for breast cancer unless they had an increased risk of the disease
Women between 50 and 74 get screened every other year instead of every year
Women over age 74 not be screened at all
So what can your organization do to better educate women about the recommendations?
Bonnie Rush, RT(R)(M)(QM), president of Breast Imaging Specialists in San Diego, says there are a number of steps you can take to counteract potential negative effects from the mammography recommendations:
Spread the message that mammography works. Mammography may not be a perfect tool, but it does make a difference. According to the American College of Radiology (ACR), there are several points that should be considered:
Mammography has reduced the breast cancer death rate in the U.S. by 30% since 1990
One invasive cancer is found for every 556 mammograms performed in women in their 40s
Mammography only every other year in women 50 to 74 would miss 19% to 33% of cancers that could be detected by annual screenings
Starting at age 50 would sacrifice 33 years of life per 1,000 women screened that could have been saved if screening had begun at age 40
85% of abnormal mammograms require only additional images to clarify whether cancer is present. Only 2% of women who get screening mammograms require a biopsy.
Focus on what Kathleen Sebelius, HHS secretary, said in her statement. “My message to women is simple. Mammograms have always been an important life-saving tool in the fight against breast cancer, and they still are today. Keep doing what you have been doing for years - talk to your doctor about your individual history, ask questions, and make the decision that is right for you.” Gather links to articles by HHS which has not changed its position statement along with information provided on this topic by the ACR and American Cancer Society (ACS) positions and the Association of Breast Surgeons.
Offer information from noted breast imaging experts. This can be garnered through a Web search. Acquire a list of links and quotes. The information gathered can also be disseminated through multiple channels – via e-mail, posted on your Web site, printed in your newsletter, distributed at health fairs or hosted in a conference/forum.
Form partnerships. Work closely with your local ACS and such organizations as the Komen Foundation, which still supports the previous recommendation, in order to provide other resources women trust.
Work with the news media. “Contact local news media and have a local breast imaging or breast surgeon provide a forum for women to call in with questions or just discuss the findings [of the committee] and conclusions and rebuttals,” says Rush. Also work to get information into the local print media.
Alert your referring physicians. "Offer to speak with their referrers directly to help them determine how they will counsel women,” Rush says. Your marketing department should get out and talk with the physicians’ staff members, Rush adds.
Train internal staff members. Provide your breast imaging staff, including schedulers, information on how to answer questions from patients. Or set up a protocol that directs women to contact their physicians. If you refer women to their physicians, make sure the physician is willing to take this responsibility and has the necessary facts. If he or she chooses not to counsel patients, your facility must be prepared.
Educate patients directly. Use your Web site to allow women to read position statements on this topic directly. Hold an educational seminar for the community possibly in conjunction with your local ACS or Komen Foundation.
Bryan Burklow has joined Brandywine Hospital as the new CEO. Burklow replaces Mark A. Benz, who announced in November that he would be leaving. Burklow last worked at Merit Health Systems in Louisville, KY, where he was vice president of operations since 2007.
Skiff Medical Center has announced the appointment of Steve Long as president/CEO, effective mid-January. Long will take the position that was vacated by Kris Baumgart in early 2009 and subsequently filled in an interim capacity by Francie Jahn, vice president of Patient Care Services.
L. Clark Taylor Jr., president/CEO, Ephraim McDowell Health, has tendered his resignation, effective Jan. 4, 2010. Taylor has served in that role since July 2002. Taylor will begin service as CEO of Hospice of Chattanooga, TN, early next year. He will also serve on the staff of the First Centenary United Methodist Church in Chattanooga.
Michael Long has been named CEO at Marlton Rehabilitation Hospital. He previously was vice president of strategic planning and business development at Robert Wood Johnson University Hospital at Hamilton, NJ. Marlton Rehabilitation Hospital is a 49-bed acute-rehabilitation hospital, specializing in stroke and orthopedic rehabilitation. It is owned and operated by Vibra Healthcare of Mechanicsburg, PA, which operates 28 rehab and long-term-care hospitals in nine states.
The American Health Information Management Association has named Alan F. Dowling as the next CEO of the 55,000-member association, effective Jan. 13, 2010. He succeeds CEO Linda Kloss, who announced her resignation in July. Dowling is an adjunct professor of information systems at Case Western Reserve University, having also lectured at Georgetown University, the American University of Beirut, Simmons College, and the Sloan School of Management at the Massachusetts Institute of Technology, where he earned his PhD in healthcare management and management information systems.
Childhood was not easy for Delwyn Collins. His mother loved him and raised him well, and he is thankful for that.
School was hard, though. Collins and his mother were told—incorrectly—that he was mentally retarded. "That's what they called me—mentally retarded," says Collins, 51 a dishwasher and kitchen assistant for 20 years at Tampa General Hospital. "I grew up as a handicapped. I went to a special education school. I had a slow learning problem. I had a hard time trying to read and write and spell out words. What was so hard about it, I had people making fun of me."
Rather than sinking into bitterness, Collins uses his childhood hardships as motivation. "I don't have no regret what I went through," he says. "What I went through was hard, and when I think about it I am blessed today to be where I am at now. I came this far and now I'm giving something to the community what my mother gave to me," he says. "I show the people as a handicapped kid, what I went through, if I can make it on my own somebody else can too."
For 20 years, Collins has been the heart and soul of TGH in the annual Hillsborough County Foster Angel Program, which provides Christmas gifts for many of the county's more than 1,500 foster children. TGH has been the highest donor of gifts to the program every year since 1989, and a good deal of the credit goes to Collins, who donates at least 300 gifts himself each year. He also makes many of the Christmas decorations that adorn the hospital.
For Collins, the spirit of the holidays is a 12-month endeavor. He moonlights all year, doing yard work in his spare time, and uses all his overtime earnings at the hospital to buy gifts for foster children, spending a few dollars each month to stock the toy chest.
"I keep my bills caught up. I don't overdo it. I don't go places," Collins says, when asked how he accomplishes so much on a dishwasher's salary. "When I get paid I pay my rent and my other bills and I keep some money in the bank for myself. It's like somebody said, after 20 years you should retire doing this. But it don't bother me. I'm used to it. I made it this far and I'm going to try to stick it out for as long as I can."
Collins is single, and lives modestly. He doesn't own a car. He is legally blind and rides his bicycle six miles to work each morning. "It keeps me fit," he says.
Despite all he does for the foster children, Collins keeps his distance. "I have a rule. I don't like to meet them. I would rather let them have their privacy. I respect what they go through," he says. "A lot of these kids go through some hard times. They know somebody else is trying hard to make their Christmas good."
Collins says Christmas means sharing what you have with those who don't, whether they're foster children or people down on their luck. "This week I had people who needed some money on the street so I gave them a couple of dollars for bus fare or to just get by," he says. "I'm not a millionaire and I don't own a car, but what I do makes me feel good on the inside."
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Though nearly one-quarter of Medicare Advantage enrollees are in health plans with four or more stars, beneficiaries in many states don't have that luxury.
Kaiser Family Foundation reported Monday that less than 2% of beneficiaries in 25 states are in highly-rated plans, while more than half of Medicare Advantage enrollees in other states—Massachusetts, Oregon, and Hawaii—are in highly rated plans.
The researchers found that the average Medicare Advantage plan receives 3.27 stars on the CMS quality scale and quality ratings vary by plan types:
Private fee-for-service plans and regional PPOs have below average ratings and are "significantly lower" than HMOs and local PPOs
Nonprofit plans have "significantly higher average ratings" than for-profit plans
More experienced plans (those with contracts beginning before 2004) have higher ratings than newer ones
Average quality ratings vary widely among the largest organizations offering Medicare Advantage plans
The researchers wrote that the findings show that quality ratings are closely tied to plan type, plan experience, and whether they are nonprofit.
"If the star ratings are used in payment policy for Medicare Advantage plans, nonprofit plans and more experienced plans would be more likely to be rewarded," wrote Gretchen Jacobson, Anthony Damico, Tricia Neuman, and Jennifer Huang of the Kaiser Family Foundation.
The researchers added that policymakers should look into geographic variations, such as the fact that seven states and the District of Columbia do not have any Medicare Advantage plans available with four or more stars.
"With one in five Medicare Advantage enrollees in plans with fewer than three stars, policymakers may want to focus greater oversight and attention on plans with relatively low quality ratings," they added.
Researchers based the analysis on ratings posted by CMS on the Medicare Compare Web site with additional information from the CMS Plan Directory and enrollment files. They reviewed the summary scores for the plans, which are an overall measure of the quality of care, access of care, responsiveness, and beneficiary satisfaction provided by the plans. The researchers did not attempt to assess the validity of the quality ratings.
In a rare but not unprecedented move, the Senate met through Saturday and Sunday to top off the first week of reform debate. Aside from President Obama meeting with the Democratic Caucus on Sunday afternoon, several amendments did come up for a vote:
Insurer executive compensation. An amendment offered by Sen. Blanche Lincoln (D-AR) that would have limited the deductibility of health insurance company executive compensation to $400,000 per year attracted support from 56 senators—but fell short of the 60 votes needed to win approval.
Lincoln had argued that her amendment would have helped encourage insurance company executives to recognize patients' interests first. She added that since the early 1990s, the rate of insurers' revenue being spent on patient care has fallen to about 90% to 80%.
Malpractice award caps. An amendment offered by Sen. John Ensign (R-NV), which would have capped medical malpractice awards going to plaintiffs' attorneys to one-third of the first $150,000 in compensation awarded, received a 32 66 vote.
Sen. Richard Durbin (D IL), in floor debate before the amendment was voted on, said medical malpractice plaintiffs' attorneys already get paid 50% less than defense attorneys. Sen. Arlen Specter (D PA) said Congress should leave efforts to handle medical malpractice system problems to the states.
Home health benefits. An amendment offered by Sen. John Kerry, (D-MA) that would protect Medicare home healthcare benefits, received a 96 0 vote.
However, by a vote of 53-41, the Senate rejected a Republican effort to block cutbacks in payments to home health agencies that provide nursing care and therapy to homebound Medicare beneficiaries.
Divided along party line, Republicans charged that the cuts would hurt some of the nation's most vulnerable citizens; Democrats said, though, that the cuts would eliminate waste and inefficiency in home care.
Medicare. In a 97-1 vote, the Senate approved Sen. Debbie Stabenow's (D-MI) amendment that stated that nothing in the legislation would reduce benefits already guaranteed to seniors who get coverage through Medicare Advantage plans.
