As Congress and the White House wrangle over a compromise to avert the fiscal cliff, the anxiety (for hospitals) and expectation (among experts) regarding possible Medicare cuts is clear, as my colleague Jessica Zigmond reported.
Now, new reports on state budgets suggest continued strain on Medicaid (another major insurer) despite a modest recovery under way.
State budgets have recovered slowly from the last recession. Medicaid, which is jointly financed by states and the federal government, accounts for the single largest state expense. Medicaid paid $152.5 billion to hospitals in 2010, or nearly one-fifth of spending on U.S. hospitals that year.
Even the good news about state budgets comes with a caveat. For the first time since the downturn, state revenue in the coming year will exceed revenue states collected in 2008—but only without adjustment for inflation, the National Association of State Budget Officers reported last week. (It is “a turning point,” the group said.)
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Talks continue over New York state's Nov. 9 request to Medicaid officials for emergency cash assistance for hospitals with extraordinary expenses or lost revenue from superstorm Sandy.
In the meantime, New York state is advancing hospitals cash, the Greater New York Hospital Association said.
The state's request to Medicaid—for $427 million—would award more to hospitals that suffered more damage or disruption from the storm. Five damaged New York hospitals still cannot admit patients five weeks after the storm made landfall. (You can see inside one closed hospital, the Long Beach Medical Center in this video feature).
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West Penn Allegheny Health System—the distressed partner in a contentious and closely watched healthcare acquisition deal—posted another operating loss for the first three months of its fiscal year.
West Penn Allegheny, a Pittsburgh hospital operator with deteriorating finances, reported an operating loss of $28.3 million on revenue of $378.2 million for the three months that ended in September. That's more than the system lost during the same period the prior year ($27.1 million on revenue of $370.5 million).
The health system's poor financial health has strained talks (nearly to the breaking point) between West Penn Allegheny and Highmark, the Pittsburgh insurer that agreed more than a year ago to acquire the system. A dispute over how to address West Penn Allegheny's finances landed in court in September. A judge sided with Highmark after West Penn Allegheny balked at a proposed debt restructuring by trying to break off the deal.
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Lost revenue, not the extraordinary cost to repair damage from superstorm Sandy, could erode the A3 credit rating of NYU Langone Medical Center's hospitals, says an analyst with Moody's Investors Service.
As we reported, Moody's said it will review and may downgrade NYU hospitals' rating as a result of storm damage and disrupted operations.
Beth Wexler, a Moody's senior credit officer, said the biggest problem for the hospitals is that NYU Langone Medical Center's Tisch Hospital remains closed and without power weeks after the storm forced its emergency evacuation. She said that NYU hospitals have plenty of cash, however “it's more the revenue that is literally not coming in the door for extended periods of time.” And the longer the closure, the more opportunity for patients or referring physicians to turn elsewhere, she said.
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One major credit rating agency upgraded more not-for-profit hospitals and systems than it downgraded between July and September, and deals—mergers, acquisitions and leases—were behind better credit in several cases.
Moody's upgraded 12 not-for-profit healthcare borrowers with $3.2 billion in outstanding debt last quarter compared with the seven downgraded borrowers with $957.3 million of debt, Moody's said in a new report.
Indeed, deals have been so numerous and have so influenced credit that Moody's Investors Service now says it was wrong earlier this year when it said that 2012 would likely close with more downgrades than upgrades. The year may end with an equal number of each, the report said. “We're not prognosticators here,” said Moody's associate analyst Carrie Sheffield. “We do have a negative outlook for the sector” and analysts expected to see more downgrades than upgrades, she said.
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More than three years out from the end of the Great Recession, the economy's weak and fitful recovery has continued to deliver disappointing job growth. Hospitals have reported fewer patients and more uninsured since the recession, which stripped some households of health insurance as the economy shed jobs.
But here's some news that may be welcomed by hospitals. Newly released Census Bureau figures show that an erosion in employer-sponsored insurance, which accelerated during the downturn, halted in 2011.
Unsurprisingly, the percentage of people with health insurance through an employer dropped sharply in 2009 (56.1% from 58.9% the prior year) and continued to slide in 2010 to 55.3%. But last year's 55.1% was not a significant difference from the year before, the Census Bureau said. You can read more on the Census Bureau figures in this week's Modern Healthcare.
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Hospitals increasingly ask patients to pay a medical bill when they arrive or before they leave. Here's a look at how one Minnesota hospital went too far to collect bills and violated Medicare rules and a law that safeguards access to emergency medical care, regardless of ability to pay.
The University of Minnesota Medical Center, one of seven hospitals owned by Fairview Health Services, is facing a full audit of its compliance with Medicare rules and a follow-up inspection of how well it adheres to the Emergency Medical Treatment and Labor Act, which says hospitals must hold off any talk of payment until a patient has been examined and stabilized.
Collection efforts at Fairview hospitals came under public scrutiny this year after an inquiry by Minnesota's attorney general into Accretive Health, the healthcare billing and collection company Fairview hired. Accretive, based in Chicago, reached a settlement with the attorney general in July that barred the company from Minnesota for at least two years. Accretive denied any wrongdoing.
Nonetheless, an investigation into the University of Minnesota Medical Center found that hospital bill collectors harassed patients and violated EMTALA.
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Hospitals beware. Your customers may soon be comparison shopping, if they aren't already.
Hospital prices vary, sometimes widely, and some employers have started to test ways to drive patients toward quality hospitals that charge less than their competitors.
In California, Oregon and Texas, the push to encourage consumers to shop for value has underscored some stark price differences and employers' increasing unwillingness to pay more with no discernible benefit, researchers report in the latest issue of Health Affairs.
Indeed, the California Public Employees Retirement System and grocery chain Safeway have left the choice—and the cost—of selecting a pricey hospital or doctor to households.
The cost can be considerable, reports James Robinson, a professor of health economics at the University of California at Berkeley, and Kimberly MacPherson, the university's health policy and management program director.
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Diversity is a big issue in healthcare and not just with patients, caregivers and executives. It turns out there's diversity in financial incentives that are part of the accountable care organization phenomenon.
In Maryland, doctors will be paid bonuses later this year tied to quality reporting under a new shared-savings payment model. The experiment includes the state's five largest insurers and Medicaid managed care.
In Minnesota, early results of bundled payments for heart attacks did not yield savings, but similar payments for diabetes, hypertension, coronary artery disease and hip and knee replacements appear on track to share savings with providers in Illinois and Pennsylvania who have had success reducing potentially avoidable complications.
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Not-for-profit hospitals cannot escape a weak economy, and the sector won't get through the next few years as easily as it did the Great Recession.
That's essentially what analysts said last week in reports from two of the major ratings agencies.
As I have reported previously, hospitals came out of the worst recession since the Great Depression with solid margins. Hospitals protected those margins by holding onto cash and cuts to spending on labor, supplies or services.
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Not-for-profit hospitals cannot escape a weak economy, and the sector won't get through the next few years as easily as it did the Great Recession.
That's essentially what analysts said last week in reports from two of the major ratings agencies.
As I have reported previously, hospitals came out of the worst recession since the Great Depression with solid margins. Hospitals protected those margins by holding onto cash and cuts to spending on labor, supplies or services.
Read more »
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