It's confusing week after week to read articles saying the federal government will increase reimbursement for outpatient services yet the hospitals in many cases say the increase may lead to lower "profits" on outpatient services over the previous year (See story, p. 86). Some hospitals maintain they will make more with the new prospective payment system.
I believe hospitals' anxiety stems from the method of reimbursement, in that hospitals will be moved from cost-basis reimbursement to a PPS. Analogous to that situation in my business would be moving our sales force from the security of a flat salary to a commission-oriented plan, whereby one is rewarded or penalized based on performance and results. It sounds like what we're hearing from hospitals is that there was security in cost reimbursement because the pressure to be efficient and cost effective was not imminent; with the advent of the PPS, it is. The carrot is that those institutions that are cost-conscious and efficient will be greatly rewarded.
One can conclude that hospitals' fears are not based on the amount by which the federal government will be increasing reimbursement, but on how the reimbursement will be made.
Senior vice president, corporate sales