Community hospital CEOs continue to fret over finances
CEOs of community hospitals were most worried about their organization's finances in 2017, particularly uncertainties around Medicaid reimbursement and rising costs, a new survey from the American College of Healthcare Executives found.
The survey, which included responses from 299 community hospital CEOs across the country, found financial concerns outranked all other issues hospital leaders faced last year, a consistent finding of the ACHE's annual survey.
Yet more hospital CEOs said it was a concern last year compared to previous years. "What that tells me is worries are really tightening around financial challenges," said Ani Turner, co-director of sustainable health spending strategies at the Altarum Institute.
About 71% of CEO respondents said their greatest financial stress was Medicaid reimbursement including adequacy and timeliness of payments.
Turner said a major culprit for that concern was likely the CMS' decision last year to follow through with a rule that cut Medicaid disproportionate-share hospital payments by $43 billion from fiscal 2018 through 2025.
"For a while, hospitals were getting reimbursed for care that was uncompensated, which was partly responsible for healthy profit margins," she said. With the rule in effect "that's going to cause some tightening, particularly among hospitals who see a large share of uninsured and Medicaid patients."
Medicaid payments are also lower than commercial insurance, so hospitals in states that expanded Medicaid are seeing lower reimbursement, said Chuck Alsdurf, director of healthcare finance policy at the Healthcare Financial Management Association.
Hospital CEOs were also worried about growing costs for staff and supplies. Turner said this makes sense since a record-low unemployment rate is likely pressuring hospital leaders to raise wages.
The second largest worry for hospital CEOs was government mandates, largely because of CMS regulations and regulatory uncertainty, the ACHE survey said.
"Policies around (Medicare and Medicaid) are critical to so much reimbursement that hospitals face, it makes sense that would be a big concern," Turner said.
A change in administration last year probably caused significant uncertainty as well because policies can drastically change under new leadership, she added. Big regulatory changes did happen to some extent last year, particularly the move by the CMS to cancel mandatory bundled payments.
The rising complexity associated with CMS value-based payment programs like MACRA is likely causing challenges, too, Alsdurf said. MACRA "is a new program, so you have to learn it … and it's creating an awful lot of paperwork."
The third major challenge for hospital CEOs in 2017 was personnel shortages, particularly among registered nurses and primary-care physicians.
Turner noted primary-care doctors "are often the gateway to bringing the patients into the system, so that is why they are so desirable."
Along with finances, clinician shortages will likely continue to be a major source of stress for hospitals in the years to come, she said.
Quality and safety issues ranked fourth on the list of concerns for hospital CEOs, which is a drop from last year where it ranked third. Turner said quality and safety might be less of a focus for leaders because "other concerns have become more immediate, with all of the uncertainty that so significantly affects payment, they have to be focusing on that in the short term."
Alsdurf disagreed, noting that the CMS' value-based purchasing programs align quality improvement with payment so hospitals are still paying attention to those issues. "It is the administrative burden to keep track of these programs" that is weighing on leaders right now, he said.
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