HealthLeaders Media Finance - May 19, 2008 | Readers Write View as a Webpage | Subscribe for Free
Readers Write
Philip Betbeze, Senior Editor-Finance

I've gotten a heck of a lot of mail lately, so I thought I would share it with you as I do my spring cleaning with the beginning of summer approaching. Incidentally, we won't be publishing HealthLeaders Media Finance next week because our publication day is Memorial Day. Lucky me—the rest of our editors still have to do their weekly e-zines. But they'll get their revenge on Labor Day. [Read More]
  May 19, 2008

Editor's Picks
High health costs due to power of care systems
Look out for stuff like this, hospital leaders. As much as you try to increase your market share and negotiating power so you can make that 5% margin you need to keep your head above water, people are watching you. At least in Milwaukee, health systems are getting the blame for rising healthcare prices. Apparently, there is a lack of competition because of market consolidation. Health savings accounts are touted as the solution to the Milwaukee oligarchy, as I've just dubbed it. [Read More]
Gainsharing works, but is it big enough to matter?
A five-year study that included more than 220,000 patients shows that giving doctors cash rewards to reduce hospital spending helps control costs with compromising patient care. The study in the journal Health Affairs, showed that gainsharing in the cardiac catheterization arena saved hospitals an average of 7.4% on that service line. But given the restrictions surrounding gainsharing, programs, I've heard many leaders say that versus a straightforward alignment strategy that doesn't need OIG approval, such as physician employment, gainsharing is tough to implement for the return it promises. [Read More]
Chicago's Evanston Northwestern back on acquisition track
It must feel like freedom for Evanston Northwestern's leadership team, who over the past several years spent so much time in the Federal Trade Commission's unwelcome spotlight that they probably got sunburn. But the system is clearly back to buying its neighbors as it announced it will acquire Rush North Shore Medical Center in Skokie for $95 million. Evanston Northwestern caught heat from the FTC for alleged anti-competitive behavior in its acquisition of Chicago's Highland Park Hospital, but eventually prevailed. Good to see its past troubles haven't deterred its future. But as you can see in the following link, they ought to tread lightly, as the FTC has not retreated meekly to its hole as far as hospital acquisitions are concerned. [Read More]
FTC moves to block Virginia hospital merger
Both the Federal Trade Commission and the Virginia attorney general will move to block an attempted merger between Northern Virginia's largest hospital chain and Prince William Hospital in Manassass, VA. They contend the merger would lead to increased healthcare costs and reduced coverage for the state's residents. If approved the merger would mean Inova would control 73% of the hospital beds in Northern Virginia. [Read More]
Cleveland Plain Dealer
Here's a knock to the old hospital budget, but I have a feeling the Cleveland Clinic can afford it. The 32 students entering the Cleveland Clinic Lerner College of Medicine at Case Western Reserve University will get a tuition-free education courtesy of the Clinic. The idea is that paying the $43,500 annual per-student tuition at the school will allow students to freely choose less well-compensated specialties if they like because they won't have a huge medical debt hanging over their heads when they graduate. Other medical schools are also apparently investigating ways to reduce the cost of tuition to combat an anticipated future shortage of physicians. [Read More]
Finance Forum
Ask These Questions Prior to an Acquisition
Healthcare industry mergers and acquisitions have achieved record-high volumes since the fourth quarter of 2007. But approximately two-thirds of recent mergers and acquisitions across all industries failed to achieve their anticipated results, and of those, one-third actually destroyed value. HealthLeaders Media contributor Richard Quinlan says such mistakes can be avoided through 10 simple questions that need to be asked throughout the consideration process involving a merger or acquisition. [Read More]
Finance Headlines
Former Atlanta hospital CEO sues, saying firing 'malicious'
Atlanta Journal-Constitution - May 13, 2008
Taking a closer look at St. Louis-area hospitals’ profits
St. Louis Post-Dispatch - May 14, 2008
Hospital rate increase wins approval in Maryland
Baltimore Business Journal - May 14, 2008
$887.4 million bond for San Francisco General Hospital
San Francisco Chronicle - May 14, 2008
Connecticut Hospital fined for overcharging Medicare program
Hartford Courant - May 13, 2008
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From HealthLeaders Magazine
Shared Success
HealthLeaders May 2008 Crafting a true partnership—often with a perceived competitor—is a complex task. Here's how some hospitals are doing it. [Read More]
Money Talk

A look at one hospital's struggles to improve

Boulder Community Hospital, Boulder, CO

Rating: A2
Outlook: Stable
Affected Debt: $175 million
Agency: Moody's Investors Service
Remarks: Outlook revised from negative thanks to full recovery of the operational disruptions experienced due to the loss of a Kaiser contract in the 2005 fiscal year.
[Read More]