Despite increasing demand for hospital financial data and the growing sophistication of hospital financial reporting systems, it's still a challenge to find comprehensive and timely financial data on the hospital industry.
Just ask the government.
When the Centers for Medicare and Medicaid Services decided to compile a report on the financial health of hospitals earlier this year, it had several data sources from which to choose. But each had a drawback.
For example, timely and reliable financial numbers for public hospital companies are easily available in the companies' quarterly and annual financial statements, filed as required by the Securities and Exchange Commission. But investor-owned chains own only about 750 of the nation's 5,000 hospitals.
To get the not-for-profit picture, the CMS assembled bits of data from several sources, including analyses based on annual Medicare cost reports, the quarterly National Hospital Indicator Survey and studies by credit-rating agencies.
But cost report data are woefully outdated, with the most recent figures dating to 1999 (See related story, p. 68). Industry surveys, including the hospital indicator survey, are hampered by decreasing response rates, according to government sources. And credit-rating agencies track only hospitals and systems with outstanding debt.
`A little tricky'
"Getting good financial data on not-for-profits is a little tricky," acknowledges Lambert van der Walde, a former analyst at Salomon Smith Barney who was hired by the CMS last year to track the healthcare industry and a co-author of the hospital industry report, Healthcare Industry Market Update, Acute-care Hospitals, published in April. "They don't have uniform reporting requirements," van der Walde says. The lack of a reliable and timely data source is a nagging problem for policymakers and the increasingly volatile hospital industry.
An effort is under way to bring focus to the picture. Both the government and the industry are aligning behind an initiative to fashion a national hospital financial database from a system operated by the Colorado Health and Hospital Association, called DataBank.
Founded in 1985, DataBank has experienced a growth spurt since 1998, when the AHA began lending its financial support. DataBank now is licensed to hospital associations in 38 states, with each paying a $5,000 fee (See map, this page). That's an increase from 19 states in 1998.
The associations' hospital members, which pay nothing to participate, report their data monthly via the Internet and can use the system to generate benchmarking reports that compare their performance with peers (Feb. 19, 2001, p. 10). Some 1,400 hospitals are expected to be filing data regularly in DataBank by year-end.
In search of timeliness
Jack Ashby, hospital research director at the Medicare Payment Advisory Commission, which advises Congress on Medicare issues, told Modern Healthcare last week that hospitals participating in DataBank are being recruited to submit their data for the National Hospital Indicator Survey, which is commissioned by the CMS and MedPAC to give government policymakers a timely snapshot of hospital finances. The survey was commissioned after the AHA discontinued its monthly National Hospital Panel Survey of financial and utilization indicators in late 1998. At the same time, the AHA shifted its support to DataBank, which it believed would return a benefit to hospitals, which are overwhelmed by survey requests.
"We wanted to improve the response rate and reduce the survey burden for hospitals," says Don May, the AHA's senior associate director of policy.
Eventually, DataBank is expected to replace the indicator survey, which suffers from a low response rate, according to government sources.
Because of its larger sample size, DataBank would be more accurate than data from the indicator survey and would provide payer-specific data that policymakers crave, Ashby says.
MedPAC, which holds the seal of approval for industry data, is enthusiastic about the integrity of DataBank, even though it's not audited. "If we support good decisionmaking in general, we should support good data to back up that decisionmaking. That's true from the industry's standpoint and the government's," Ashby says.
The AHA has called DataBank an "increasingly important tool in the association's advocacy arsenal." Already, several state hospital associations have used DataBank information to lobby their state governments on such issues as prompt payment and Medicaid funding.
Peter Freytag, chief financial officer of the Colorado association, says DataBank is not a case of the fox guarding the henhouse, at least where Colorado policymakers are concerned. "Over the past 20 years of doing this we have demonstrated we are a reliable and accurate source of hospital data. That's why we no longer have a hospital data commission or a rate commission," he says.
Missing some big players
But DataBank has yet to become a truly national database. Twelve states, including some of the largest-California, Florida, Illinois and New York-have not joined. Some holdout states already have their own financial reporting programs. California, for example, has shunned DataBank because its hospitals already report data to the state. Joining DataBank "would be duplicative," says California Healthcare Association spokeswoman Jan Emerson. "California is so different that I'm not sure our hospitals would find it of real use (for benchmarking)," she says.
The Healthcare Association of New York State, which represents 220 hospitals, already conducts its own data collection and analysis but hasn't ruled out participation in DataBank, spokeswoman Monica Mahaffey says.
In addition, DataBank does not always get universal participation in states where hospital associations have signed on. Freytag estimates that while some states have 100% participation, others have rates as low as 65%. He says response rates depend on the commitment of state associations, which sometimes must prod hospitals to enter data.
In fact, DataBank has stopped pushing states to sign up, Freytag says. "We frankly would rather not have the state associations license the product if they don't have the kind of commitment that's necessary to make it successful," he says.
Officials hope to increase DataBank participation by maintaining it as an essential and easy-to-use hospital financial tool. This year DataBank plans to launch a national search engine to allow hospitals to compare their financial ratios and pilot an automated data-entry system, aimed at increasing speed and accuracy.
Despite its promise, no one is suggesting that DataBank will replace the highly detailed Medicare cost report, which is expected to be downsized somewhat in 2004 because of industry pressure regarding staffing resources needed to complete the annual reports.
Nor, May says, will it displace the AHA's venerable annual survey, which began in 1946 and which May calls "the mother of all surveys."
MedPAC has been dissatisfied with response rates for the AHA's annual survey, noting a falloff in reporting by investor-owned and urban public hospitals. Concerns about accuracy of some data prompted MedPAC to reduce its use of AHA survey data in its annual report to Congress this year.
According to the AHA, its survey response rate last year for community hospitals was 86%, still a "phenomenal level," May says. Although DataBank is useful for tracking up-to-the minute trends, the AHA survey offers a historical "baseline" for expenses, services, bed counts, utilization, staffing and a host of other items, May says.