This is a good-though not a great-time to run a hospital company. An American Hospital Association report finds that 2002 hospital profits, fueled by growth in utilization, increased for the first time in six years. The good news may have continued in 2003, as wholesale hospital prices rose 5.7%, and it may keep going in 2004 and beyond, as Medicare pays hospitals more.
Gatekeepers are waving more patients through to inpatient care. Whether that is because of higher acuity or patient demand, we don't know. Lengths of stay leveled off in 2002 after a long decline, and the emergency room is growing fast as a primary venue for care.
The demand for services has hospitals in expansion mode. Though the number of general acute-care hospitals rose only slightly in 2002 and bed counts actually declined, every indicator points to the total number of hospitals and beds increasing for 2003 and beyond as billions of dollars of general and specialty hospital construction come online.
Every silver lining, however lustrous, must have a cloud around it. Unless there is a serious decline in the rate of healthcare cost increases, the pressure on employer-sponsored health insurance will become overwhelming. Employer premiums are rising by 12% this year, and employees' out-of-pocket costs for premiums, deductibles and copayments are rising even faster. More people are opting out of this costly coverage, which for hospitals will mean higher-acuity patients with less means to afford care, thus increasing bad debt.
Also troubling is that hospitals' costs are rising almost as fast as their revenues, putting more pressure on executives already challenged by regulations and the need to improve technology in order to compete.
At some point, this system of rising costs and premiums breaks down, unless the pattern changes. As we have said so often on this page, we need systemic reforms to improve efficiency and clinical quality. Preventive care and disease management must become the norm to control the most expensive medical conditions. And investment in information technology to track medical care and its outcomes is of paramount importance. To save money, you often must spend it, and payers must help that happen.
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Modern Healthcare and the Healthcare Information Management Systems Society are pleased to announce the 2004 CEO IT Achievement Award. The award, given out last year for the first time, recognizes one or more healthcare industry chief executive officers for their leadership and commitment to using information technology to advance their organization's strategic goals. In its first year, the competition drew 51 nominations.
The recipients of the 2003 CEO IT Achievement Award were George Vecchione, president and CEO of Lifespan in Providence, R.I., and Pete Velez, executive director of Elmhurst (N.Y.) Hospital Center and senior vice president of Queens Health Network.
This year's competition will be conducted exclusively online. Candidates will submit their nominations and supporting material online, and a panel of judges selected by Modern Healthcare and HIMSS will review the nominations.
The application for this year's CEO IT Achievement Award will be available on the HIMSS Web site, himss.org, by the end of January. The submission deadline is March 8. Modern Healthcare will announce this year's winner or winners in its April 26 issue, and the magazine will profile the winner or winners in a special supplement to be published with its June 14 issue. The winner or winners will also be honored at a banquet held in conjunction with the HIMSS Summer Conference to be held June 14-15 in Las Vegas.
For more information about the 2004 CEO IT Achievement Award, contact David Burda, editor of Modern Healthcare, at 312-649-5439, or Erica Pantuso, director of member relations at HIMSS, at 312-915-9277.