HealthLeaders Media Finance - February 25, 2008 | The "Worst" Healthcare Payment Scheme View as a Webpage | Subscribe for Free
The "Worst" Healthcare Payment Scheme
Philip Betbeze, Senior Editor-Finance

Many are still rightly skeptical about the potential of consumer-directed healthcare. Cynics see it as a chance for employers to cut their exposure to healthcare costs. Realists say to ensure that consumer-directed care works, at least initially, companies will have to spend at least as much as they currently do on managed care--at least until their employees are comfortable with their expanded decision-making. Optimists say that CDP is a tidal wave that will remake healthcare into a quality-based industry, governed by the efficiency of the marketplace. Oh, and by the way, saving money along the way. [Read More]

  Feb. 25, 2008

Editor's Picks
Hospitals hit hard by frozen bond markets
I'll hit this topic a little more in depth next week, but if credit markets don't loosen up soon, this could be a serious problem for hospitals and other municipal borrowers. Heck, who am I kidding, it's already a serious problem. And it's not directly of hospitals' own doing. It's all come from the mispricing of risk in areas of the market that ordinarily have nothing to do with the boring old municipal bond market. But because of bad bets by municipal bond insurers, which pretty much nobody has any faith in anymore, hospitals in Minneapolis and across the country are facing serious financial pain as they are unable to refinance their auction-rate securities. [Read More]
Union attacks Boston hospital's accounting standards
Beth Israel Deaconess Hospital's accounting standards don't measure up, says the Service Employees International Union. The union has a beef with how the hospital--and many others--commingle bad debt expenses with charity care in its accounting statements, violating the standards of the Sarbanes-Oxley Act. Of course, as a nonprofit, Beth Israel--like other nonprofits--isn't bound by the Act's provisions. But the bad publicity surrounding the union's public condemnation of the practice might force the hospital's hand. The union wants Beth Israel to restate its 2005 and 2006 financial reports to exclude bad debt from its charity care calculations. SEIU has no presence at the hospital. [Read More]
Farewell to a time of plenty?
Could these be the best of times for health insurers? According to this report, yes, but there are a host of dark clouds on the horizon. In a nutshell, health plans are seeing limited future opportunities to consolidate, Medicare Advantage plans aren't likely to be as lucrative in the future, and building out in the individual market increasingly looks like a down-and-dirty way to grow. This report is meant for a health plan executive audience, but hospital and physician practice executives could gain a lot of insight on how they might be "managed" in the near future. I get a lot of great insight from these occasional white papers from Cain Brothers. I usually don't tout them in this space, but this one deserves to be looked at. You may have to register to read the full report. [Read More]
On hope and faith, Fulton commissioners approve transition plan for Atlanta's Grady
The latest chapter in the long-running saga of Atlanta's teetering public hospital is more hopeful than some in the recent past. If and when the commissioners of both counties that fund Grady Memorial Hospital finally allow a management reorganization that will put the hospital under the auspices of a new nonprofit board, perhaps the fiscal healing can begin. Fulton County commissioners have already approved the transition of operational control from the old hospital board to a new nonprofit board. All that is left is for DeKalb commissioners to do the same this week. Supporters of the plan hope the new board of community and business leaders will help turn around a hospital that has lost millions each of the past 10 years. Here's "hoping" they succeed. [Read More]
Florida hospitals not happy as Cleveland Clinic and Hopkins move in
How would you like it if two elite medical institutions moved into your backyard and started siphoning off your best-paying patients? Well, south Florida hospitals and doctors don't like it either. But it appears there's little they can do about it. Through clinics in the area, Hopkins and Cleveland Clinic are tapping into demand for healthcare from the well-off. In Hopkins' case, patients fly to Baltimore for complicated services like surgery, which, many doctors and hospitals argue, takes revenue that would help buffer the cost local hospitals incur to treat the uninsured. [Read More]
Finance Forum
Accounts Receivable Alert: The Significant Impact Potential of New Medicare Payment Reforms
Medicare and Medicaid Services finalized two payment reforms in August 2007, which took effect Oct. 1. These changes could have a significant impact on your organization's accounts receivable and medical records processing. In order to lessen their impact, it is important to understand the nature of the reforms and make appropriate alterations to your internal processes. [Read More]
Finance Headlines
Paying patients test British healthcare system
New York Times - February 21, 2008
High costs drive online prescribing push
AP/Yahoo! News - February 20, 2008
Group wants to buy East St. Louis hospital
St. Louis Post-Dispatch - February 21, 2008
Indiana docs, hospitals get payment break for malpractice fund
Chicago Tribune - February 19, 2008
Upcoming Events
HealthLeaders Media News - February 25, 2008
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From HealthLeaders Magazine
Love Thy Vendor?
HealthLeaders February 2008 Providers and IT suppliers don't get along, right? You can build a partnership of trust with your vendor--and actually get what you pay for. Here's how. [Read More]
Money Talk

A look at one hospital's struggles to improve

Ascension Health

Rating: Aa1
Outlook: Stable
Affected Debt: $4.3 billion
Agency: Moody's Investors Service
Remarks: Rating upgrade from Aa2 primarily because of fundamental strengths as the nation's largest nonprofit health system, leading to three years of higher operating cash flow margins. [Read More]
Audio Feature

Led Out of the Wilderness: Obstetrics is a service that Paul Kronenberg, MD, feels his hospital can hang its hat on. Though not as profitable as other more glamorous services, the CEO of Crouse Hospital in Syracuse, NY, felt that obstetrics was where he could build a base for the formerly struggling hospital among women, who make most of the decisions for their families regarding healthcare. Kronenberg, a longtime medical staff leader at Crouse, came aboard as CEO after two failed turnarounds. In this podcast, Kronenberg talks about how, with the help of a dedicated group of leaders, a focus on obstetrics helped led Crouse out of the wilderness.
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