HealthLeaders Media Finance - May 5, 2008 | Employers Get a Grip View as a Webpage | Subscribe for Free
Employers Get a Grip
Philip Betbeze, Senior Editor-Finance

Despite the wailing about the decline in availability of employer-funded healthcare (down from 69% of employers in 2000 to 60% today), employers that remain in the healthcare business seem to suggest by their actions that they don't anticipate leaving that responsibility by the roadside anytime soon. [Read More]
  May 5, 2008

Editor's Picks
Leavitt: Medicare "drifting toward disaster"
All right, well, tell us something we didn't already know. Various federal officials have been warning about the problems with Medicare spending as the biggest domestic problem we're likely to face as a nation in the coming decades. But what's been done to check its growth? Not much other than a few innovative demonstration projects that have shown varying levels of success. But those won't move the needle much without serious legislative backing. A speech I heard by former Senate Majority Leader Bill Frist at the CIT Healthcare conference in New York last week presented basically the same grim forecast. Frist mentioned that he tried as majority leader to focus the Bush administration on Medicare rather than Social Security (a push that also failed, by the way) but was rebuffed. The next president likely won't have that luxury. Medicare is already projected to be 3.3% of GDP in 2009. [Read More]
Hospitals face financial squeeze
More than half of U.S. hospitals are "teetering on the brink of insolvency," according to a report by influential financial restructuring firm Alvarez & Marsal. The report says 2,000 of the roughly 3,900 hospitals the firm studied don't make any profit treating patients. Not many hospitals go out of business though, as I heard when I interviewed A&M's Guy Sansone, who structured St. Vincent's Medical Centers in New York City, for a story last fall. Perhaps a few should. The state of New York has had some successes with its Berger Commission, which has recommended some hospitals close so that others will be able to make it financially. [Read More]
Healthcare somewhat immune to CMBS financing problems
The abrupt freeze in the commercial mortgage-backed securities market will probably only reach $30 to $40 billion, its lowest level since 1997. That retrenchment has dramatically affected the amount of financing available for the commercial real estate market, says Cain Bros. commentator Alfonzo Leon, with the possible exception of healthcare. Why? First, because the niche is only 0.4% of the total market, behind, yes, mobile homes, at 1.4%. Second, because of geographic diversity healthcare never much relied on the CMBS market for financing. So a ray of good news for healthcare transactions in a bad economic climate. There's also a nice article in here by Mike Fitzsimons about the use of leverage to pump up the potential returns of "other people's money," which kind of got us all into this mess in the first place. [Read More]
Separate managed care deals ordered for merged IL hospitals
In what looks like a final, final decision, as an old editor of mine used to say, the Federal Trade Commission has made official what is essentially a compromise between it and Evanston Northwestern Healthcare over a dispute raised about hospital prices in the area after ENH acquired Highland Park Hospital several years ago. I wrote about this issue when the compromise was first announced in a case the healthcare system still insists was based on shaky legal ground and was motivated by a few small health plans. The deal likely means little, if any, lost revenue for the combined hospitals. But the lawyers got rich, so everyone's happy, right? [Read More]
Cost of insurance far outpaces income
More bad news, but who didn't know this already. I know it's true for my family. Can't wait 'til I'm paying for me, my wife and kids. I'm sure most of you can relate. Sort of the same problem Medicare is facing. More and more of the cost is being borne by fewer and fewer people. At least I can get insurance. It's all unsustainable, but what's the breaking point? I have a feeling we're closer to it than ever before. [Read More]
Finance Forum
Red Flags for Fraud
The American College of Healthcare Executives Code of Ethics states that the healthcare executive shall, within the scope of his or her authority, "prevent fraud and abuse and aggressive accounting practices that may result in disputable financial reports." But how can an executive even hope to detect this growing phenomenon, much less prevent it? HealthLeaders Media contributor Richard Gray outlines potential red flags that could indicate fraud and that may protect your organization from an expensive problem. [Read More]
Finance Headlines
One in four uninsured eligible for aid but not enrolled
HealthDay/Washington Post - April 28, 2008
Cash before chemo: Hospitals get tough
Wall Street Journal (subscription required) - April 29, 2008
Georgia hospital finds open-heart program partner
Atlanta Journal-Constitution - April 30, 2008
Mansfield (TX) hospital announces $37 million, 2-phase expansion
Fort Worth Star-Telegram - April 29, 2008
Flu season can be windfall for hospitals, hardship for health plans
The Tennessean - April 30, 2008
McCain seeks tax credit for healthcare
AP/Yahoo News - April 29, 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

Princeton Community Hospital, Princeton, WV

Rating: B1
Outlook: Stable
Affected Debt: $40.9 million
Agency: Moody's Investors Service
Remarks: Upgraded from B2 because of three-year track record of stabilization of operations and material improvement in liquidity measures.
[Read More]
Audio Feature

Alternative Financing: The market for auction-rate debt dried up in February due to the credit crisis, sending scrambling many hospital CFOs who had been attracted to the low interest rates and purported low risk from such debt vehicles. Alternative financing is available to escape from the sky-high interest rates that came about as auctions failed and the auction-rate bonds reset, but finding the right solution can be problematic. Many of the hospitals caught in this vise wanted alternatives as quickly as possible, but the quickest option for frazzled CFOs might not always be the best solution. Randy Waring, hospital market leader for GE Healthcare Financial Services, talks about the options available to CFOs who are looking for lower risk, lower interest rates, or both. [Listen Now]