Ballooning costs, government mandates were hospitals' biggest challenges in 2018

Financial challenges, government mandates, patient safety and quality and personnel shortages topped hospital executives' concerns in 2018, according to an annual survey from the American College of Healthcare Executives.

The top four spots have stayed the same since at least 2015. This year's respondents were directed to rank 11 challenges in order of how pressing they are. A new category, behavioral health and addiction issues, ranked fourth on the list. Within that category, 82% of respondents cited access to counseling as an area of concern, according to ACHE CEO Deborah Bowen.

"I think it just emphasizes the fact that there is a lot on the plates of leaders today and there is a lot of synergy in terms of the types of problems we're trying to navigate through," Bowen said. "I think a lot of leaders are making progress reducing costs and improving quality."

ACHE sent its survey in June to 1,402 community hospital CEOs, all ACHE members, Bowen said. Of those, 355 responded, or 25%.

Within financial challenges, 70% of respondents cited the increasing costs of staff and supplies as an issue for their hospitals, and 59% cited reducing operating costs as another. Respondents could check as many issues as desired.

Jeff Goldsmith, national adviser with the consultancy Navigant, said that doesn't surprise him one bit. Providers have been blindsided by the fact that revenues are growing at a slower pace than they have in years and they're also struggling to bring down expenses, he said.

"That has meant serious operating income challenges," he said.

Part of the problem is the country's record-low unemployment, which Goldsmith said is likely driving down labor participation among nurses and other frontline caregivers. The high cost of specialty drugs has also been a problem, he said.

Medicaid reimbursement, including the adequacy and timeliness of payment, was the second most cited issue under financial challenges, with 68% of respondents reporting it as a problem. Medicare reimbursement came in sixth place, with 49% of respondents citing it as an issue. Goldsmith said he found that surprising, as American Hospital Association data show hospitals lose more money on Medicare than Medicaid. In 2017, for example, the AHA says Medicare underpayments totaled nearly $54 billion, while Medicaid underpayments were nearly $23 billion.

Bowen said CEOs were likely reflecting on the higher uncertainty around Medicaid reimbursement, especially in states with shifting political leaders. Medicaid reimbursement topped the list of financial challenges in the 2017 survey.

Under government mandates, which tied with patient safety and quality for second place, 70% of respondents cited CMS regulations as an issue for their facility. They're likely referring to disproportionate share hospital payments, value-based payment initiatives, readmissions penalties and hospital-acquired infection regulations, among others.

The regulations providers are required to follow leads to a lot of what Goldsmith calls "pajama time," or the time spent completing clinical documentation after dinner, which he said contributes to burnout.

"There is no pay attached to that pajama time," he said. "It's time spent away from your family and it's also not patient care."

Bowen wasn't familiar with the phrase, but said hospital administrators face a similar burden.

Kevin Locke, principal-in-charge of DHG Healthcare's Transformational Solutions suite, said although the CMS has recently become clearer with respect to its strategy and philosophy on alternative payment models, providers still aren't quite sure how they're going to capture revenue under those formats.

"Because we're still in the exploration stage, we're not sure what's going to stay, what's going to go and how best to modify our practice patterns so that we're capturing as much revenue in those as possible," Locke said.