HealthLeaders Media Finance - January 28, 2008 | An Agency of Their Own View as a Webpage | Subscribe for Free
An Agency of Their Own
Philip Betbeze, Senior Editor-Finance

Sometimes, when writing a story for the monthly magazine, HealthLeaders, you just don't get enough space to tell the whole story. That's not a problem here on the World Wide Web, so it's nice to have this space as an outlet when word counts conspire to wreck my storytelling. Which brings me to the case of St. John Health in Warren, MI, a five-hospital system that recently trashed its old model of relying on agency nurses for much of its contingent staffing needs. You can read about the details in the finance section of the February issue of HealthLeaders, but I wanted to share a little more about what these people have achieved. [Read More]
  Jan. 28, 2008

Editor's Picks
Cost of health initiative up $400 million in Massachusetts
Beware of legislators bearing cost estimates. That's the message I take from news that the much-hailed Massachusetts plan that requires its residents to obtain health insurance may be $645 million in the hole over the next two years. While the plan may ultimately be a success in that the state's residents will have coverage and Massachusetts hospitals won't have to go begging for payment, any notion that such things can be done on the cheap seems officially out the window with the revelation that 2009 cost estimates for the program are off by $400 million. This year's costs are projected to exceed estimates by a mere $245 million. Bet you can guess who will bear most of the cost increase. For the answer, click here. [Read More]
Ex-Triad execs in Plano target community hospital turnarounds
It didn't take long for Denny Shelton, former CEO of Triad Hospitals Inc., and his compatriots to gather funding to start another hospital chain after theirs was bought out from under them for nearly $7 billion by Community Health Systems in 2007. Like Triad once did, Legacy Hospital Partners will start doing partnerships and joint ventures with nonprofit community hospitals with $500 million from CCMP Capital Advisors LLC, the private equity arm of J.P. Morgan Chase and the Canadian Pension Plan Investment Board. With available debt, the purchasing power of the new company will be about $1.5 billion. [Read More]
Hospital industry may hit rough patch, Moody's warns
I had thought about doing a short column on this report, but the Chicago Tribune beat me to it. Basically, it's just an outlook on the prospects for the hospital industry for 2008, full of the usual caveats. I agree that the prospect for further reimbursement pressure is there. But in general, hospitals have been making great strides at cleaning up their balance sheets, and have spent more prudently while the times were good over the past few years. Any borrowing they've done was at good terms given the easy credit of the past two years. That said, hospitals are marginally more exposed to the economy than they have been in the past, with a gradual increase in reliance on payment directly from patients. [Read More]
Blue Cross proposes fix for uninsured Americans
Maybe now the final domino has dropped in helping make private health insurance more applicable to the modern employee--giving individuals similar tax credits that big business gets for insuring their workers. In what amounts to a blueprint for lawmakers, the Blue Cross Blue Shield Association, whose state members insure about 100 million Americans, says it will support tax credits aimed at making health insurance more affordable for individuals. [Read More]
Developer strikes deal to buy half-finished HealthSouth 'digital hospital'
It looks like disgraced former HealthSouth head Richard Scrushy's monument to hubris appears on the brink of being turned into a retail and shopping paradise. As HealthLeaders editor Jim Molpus, who passes by the complex at least four times a year, wrote back in the fall in HealthLeaders magazine, the 104-acre property was put up for sale months ago because it was "poorly designed for what we need and more opulent than what I am comfortable with," according to HealthSouth CEO Jay Grinney, who was brought in to clean up the mess that Scrushy and his lieutenants made of the company. Here's hoping Jim will have something more pleasant to look at during his trips, and that this monument to healthcare waste will at least be camouflaged in the future. HealthSouth's corporate headquarters will remain at the site and it will retain an interest in the development. [Read More]
Finance Forum
Beyond the Financial Rewards of Pay-for-Performance
Pay-for-performance is a fundamental change in payment methodology that could transform how healthcare is delivered more than the current prospective payment system and managed care plans. Pay-for-performance programs, which are designed to align healthcare payments with clinical best practices and quality thresholds, are becoming commonplace across the country. Levels of adoption suggest that pay-for-performance is likely to stay and may eventually be rolled out across most payers. [Read More]
Finance Headlines
Massachusetts Blue Cross plans major overhaul of how it pays docs, hospitals
The Boston Globe - January 22, 2008
Second Michigan health system to post prices, quality of common procedures
The Detroit Free Press - January 22, 2008
California opens Web site for hospital discounts
San Francisco Chronicle - January 23, 2008
Panel to find ways to keep San Francisco hospital open
San Francisco Chronicle - January 24, 2008
Upcoming Events
HealthLeaders Media News - January 28, 2008
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From HealthLeaders Magazine
Claiming Their Due
HealthLeaders December 2007 Many providers struggle to bill for services amid a maze of contractual allowances, but sophisticated software is helping some hospitals and physician groups better manage the time value of money. [Read More]
Money Talk

A look at one hospital's struggles to improve

Bon Secours Health System, Marriottsville, MD

Rating: A3
Outlook: Positive
Affected Debt: $1.06 billion
Agency: Moody's Investors Service
Remarks: Outlook raised from stable because of favorable 2007 performance with a 3.3 percent operating margin. Improved debt service coverage after divestiture of Michigan and New Jersey assets. [Read More]
Audio Feature

Strategy Trumps Finance: As CFOs in any industry can attest, you have to make sure you get the numbers right. If you don't--thanks to Sarbanes-Oxley--the penalties can be intense, including jail time if you happen to work for a public company. But as Spectrum Health CFO Michael Freed says in this audio interview, strategy trumps finance. To be effective in modern times, a CFO has to develop a financial plan that helps the CEO achieve the goals he's outlined in his strategy. To the extent he or she can, Freed says, the CFO's job is to give the CEO enough time and warning to adapt his or her strategic plan to fit the financials. I hope you'll enjoy this enlightening clip from a trusted adviser of mine.
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