Top executives at some of the largest U.S. health systems with some of the strongest balance sheets flew to New York this week to meet for two days with bankers, credit analysts and investors at the Non-Profit Investor Conference, now in its 11th year. One after another, system executives stood before a crowded (in some cases overflowing) room to review their finances and operations and take questions from analysts.
Or so I am told. I roamed the hallways of the Waldorf-Astoria hotel. Media are excluded from the sessions and are left to waylay executives as they stop for coffee or move from one room to another.
Had I been allowed through the doors, I would have heard repeatedly about efforts to improve quality and curb costs ahead what executives expect to be leaner years to come under health reform, said those I ambushed. Fairview Health Services squeezed $63 million from its labor costs last year but “a lot of easy stuff has been taken out” and further savings must come from more efficient care, said James Fox, finance chief for the Minneapolis system. Fairview joined a pilot that will tie hospital payment to quality and cost-controls and position the seven-hospital system to seek similar payments from Medicare under healthcare reform.
Most did not estimate how millions of newly insured and planned cuts to Medicare hospital payments would affect revenue or margins. But a few did.
Ascension Health, the nation's largest not-for-profit health system, projected the 75-hospital system's share of the $155 billion in reduced Medicare and Medicaid spending on hospitals in the coming decade: $2.5 billion, or 1.6% of the total. Texas Health Resources executives projected revenue for the 13-hospital will drop by $14.9 million before any gains under reform materialize in 2013. Overall, the Arlington, Texas-based system will see revenue decline by roughly $90 million over the coming decade.
Scottsdale (Ariz.) Healthcare, which owns three Arizona hospitals, estimated revenue of $45 million from newly insured patients but an $85 million loss as Medicare curbs hospital reimbursement, said the system's chief financial officer, Todd LaPorte.
