HealthLeaders Media Finance - April 28, 2008 | Creative Destruction View as a Webpage | Subscribe for Free
Creative Destruction
Philip Betbeze, Senior Editor-Finance

The smarter big companies that want long-term success don't want to be overly dependent on just a few products that can be easily copied, thus throwing their business into a tailspin. To help fight this complacency, smart leaders spend considerable effort on creative destruction-that is, working to figure out how to make obsolete a product, service, or business model that they've spent so much time developing and protecting. Seems counterintuitive, but it works. [Read More]
  April 28, 2008

Editor's Picks
Some predict return to double-digit healthcare inflation
Several healthcare experts are predicting a return to double-digit healthcare cost inflation, as measured by insurance premiums, as tools that have slowed cost growth over the past several years lose their effectiveness. That's troubling to a huge degree, considering that even at their lowest levels (a 6.1% increase in 2007), medical cost increases easily outstripped inflation and any rise in worker salaries. Costs have grown 78% since 2001, and Paul Ginsburg of the Center for Studying Health System Change predicts costs will have to rise significantly in coming years, in part because of the recent hospital building boom, self-referral incentives, and a tapped-out strategy of cost-shifting to employees. I looked for a ray of light in this story, but I couldn't find one—except for the fact that if you're a hospital senior leader, it might be good for business. One CFO I know predicts that despite the economic drag such spending might cause businesses and consumers, there's plenty of room for cost growth in healthcare. He says his models show that healthcare spending might easily reach 30% of GDP before people will be willing to significantly cut back. It's around 16% now, and widely accepted models say it will reach 20% by 2016. [Read More]
Singapore hospitals added to U.S. network
Some U.S. hospitals may be surprised to find that they will soon be facing a broader array of international competitors, according to this story by our own Rick Johnson about South Carolina insurer Companion Global Healthcare, which recently added three hospitals operated by ParkwayHealth in Singapore to its network. Personally, I wouldn't do it unless the insurer shared with me some of the windfall they're likely to get from my choosing to have surgery overseas, but some certainly don't look at the idea in such a calculating way. There are those who scoff that medical tourism could put a dent in their bottom lines, but it doesn't take much movement from the insured population to make that dent, and this trend appears to be moving faster than anticipated. [Read More]
Florida bill seeks to clarify medical services pricing
A new bill under consideration in the Florida legislature would require pricing information to be published on a state Web site for 150 of the most common medical procedures. Advocates argue that the pricing information, which would be list prices, not discounts negotiated by insurers, would better allow the uninsured to negotiate their bill prior to receiving service. While the Florida Hospital Association does not oppose the bill, it argues that hospitals are being singled out, noting that very little information is available about retail drug prices, health plans, or physicians. They have a point. In order for consumers to be able to negotiate, all players need price transparency throughout the healthcare supply chain. Anyone listening regarding those onerous contracts hospitals have to sign regarding disclosure of medical device prices? [Read More]
Leader at Los Angeles medical center is out, with benefits
Antionette Smith Epps, the CEO of what was once Martin Luther King Jr./Drew Medical Center in Los Angeles, quit her job last week but was given a one-year's salary severance package anyway. The troubled facility is part of the county's public healthcare system, and during her tenure since 2005, the facility failed a federal inspection, lost its funding, and subsequently was transformed from a major hospital with 1,500 employees and a $300 million budget to an outpatient facility with 800 employees. I'm not looking to resign by any means, but if I could fail at my job and still get one year's salary when I voluntarily resign—especially one year's salary as CEO of a medical center, which included $261,000 and a county car--I might change my mind. [Read More]
Finance Forum
The Bigger Picture: Seeing Beyond the Bottom Line for Business
VHA Inc. is introducing its Corporate Citizenship & Sustainability Scorecard as a way for healthcare companies—for-profit or nonprofit—to show accountability, sustainability, and transparency for its business. Curt Nonomaque, VHA's president and CEO, says businesses need to be able to see beyond the bottom line to achieve the benefits from such a focus. [Read More]
Finance Headlines
Hospital planned for Lake Worth, TX, area
Fort Worth Star-Telegram - April 23, 2008
Possible buyer emerges for Illinois hospital
Chicago Tribune - April 23, 2008
Alabama board rejects beach-community medical center
Birmingham News/Press Register - April 24, 2008
CIGNA to stop hospital reimbursements for medical mistakes
AP/Yahoo News - April 18, 2008
Upcoming Events
HealthLeaders Media News - April 28, 2008
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From HealthLeaders Magazine
Faith in the Hospital
HealthLeaders April 2008 In a shifting healthcare world, faith-based systems face a new set of challenges in their quest to stay true to their mission. [Read More]
Money Talk

A look at one hospital's struggles to improve

Holy Spirit Hospital, Harrisburg, PA

Rating: BBB
Outlook: Stable
Affected Debt: $52.9 million
Agency: Standard & Poor's
Remarks: Outlook revised from negative because of reduced operating losses.
[Read More]
Audio Feature

Rewarding Quality: Barry Arbuckle, CEO of MemorialCare Medical Centers in Long Beach, CA, talks about the importance of developing quality measurement tools that are as robust as financial measurement systems that have been in place for years. Arbuckle argues that the two metrics are becoming tied closer and closer together as hospitals are more frequently rewarded financially for quality patient outcomes. [Listen Now]
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