HealthLeaders Media Finance - June 2, 2008 | The Truth About Cross-Subsidization View as a Webpage | Subscribe for Free
The Truth About Cross-Subsidization
Philip Betbeze, Senior Editor-Finance

Cross subsidization isn't difficult to understand. As hospital leaders, you know that you have a multitude of money-losing services that you must provide for patients that are either required by law (emergency services, for example) or can't easily be eliminated for a variety of reasons (your commitment to improving your community's health). But it only works if you're making enough margin on the profitable services so that you can continue as a going concern. That model is rapidly becoming a dinosaur, however. [Read More]
  June 2, 2008

Editor's Picks
Let Wal-Mart fix healthcare
I can already hear the gasps from you from that headline. Here we have an interesting commentary by one of my favorite stock market commentators, in which he advocates for the "Wal-Mart-ization" of healthcare. In this case, I think he's a little off base. Never underestimate the power of Wal-Mart to force big changes in any business, but healthcare's a heavy lift if there ever was one. Plus, the claimed inroads the giant retailer has made in drugs and EMR may be interesting, but my recent reporting indicates Wal-Mart has made less progress than the hype would suggest in the area of walk-in clinics. [Read More]
Consumer's Union to rate hospitals
Everyone seems to want to get on the hospital rating bandwagon these days, and Consumer's Union, the quality rater for everything from new cars to toasters, is no different. The "no advertising" mantra of the organization should translate well to healthcare ratings, but rating hospital quality is substantially more difficult than rating the quality of a few different brands of mattresses. I do like the "treatment aggression scale" that CU is implementing. I haven't seen anyone else trying to rate healthcare quality using any type of similar scale. I have but one question: What's the equivalent of a high-speed rollover test in healthcare? [Read More]
New Jersey's urban hospitals may take huge hit in charity aid
Under a sweeping plan to revamp the way charity care money is distributed in the state, New Jersey's governor has proposed wiping out charity care payments to as many as 22 hospitals in the state. Some hospitals would receive more money under the plan, but overall, funding for charity care would decrease. Jersey City Medical Center would suffer the largest single cut, $42 million, a 50% reduction. The new plan is intended to target charity funding to hospitals that "need it most," in other words, those that provide a disproportionate amount of charity care. Seems fair to me. [Read More]
Critics queasy over Illinois hospital mergers
Consolidation in healthcare is bad for consumers. That's the conclusion reached by many in this story about the recent spate of hospital mergers in Illinois. But it's good for hospitals, some of which faced closure if they hadn't been acquired. The argument is that local monopolies can be formed more easily among hospitals than in other industries, which is true. Anyone who thinks price increases in Illinois from recently merged healthcare entities won't be monitored closely by the Federal Trade Commission is dreaming, though the agency's record of successful prosecutions of what it charges as monopoly in healthcare is suspect, at best. [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
Hospital's cuts sow anxiety in South Los Angeles
Los Angeles Times - May 29, 2008
Negotiators named in bid to find buyers for Maryland county's hospital system
Washington Post - May 29, 2008
Cape Cod Healthcare's new hospital chief will confront revenue woes
Boston Globe - May 28, 2008
Survey: Spending doesn't improve patients' perception of care
HealthDay/Washington Post - May 28, 2008
SEC backs healthcare balloting
New York Times - May 27, 2008
Tennessee healthcare firms renew interest in acquisitions
The Tennessean - May 27, 2008
Sponsored Headlines

HIPAA Security Compliance: News, analysis, and training advice that you need in one dependable resource. Qualify for a free, 1-year subscription.

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

Catholic Healthcare West, San Francisco

Rating: A
Outlook: Positive
Affected Debt: $3.6 billion
Agency: Standard & Poor's
Remarks: Positive outlook due to expectations of continuing solid operational profitability.
[Read More]
Audio Feature

Analyzing Medicare: Congress may step in from time to time to limit their impact, but further Medicare cuts in the long-term future seem inevitable. Bill Richburg is one of the nation's leading experts on Medicare payment, and the director of government programs and compliance for Accuro Healthcare Solutions. Richburg, a former hospital CEO, CFO, and CIO, advises hospitals and physician groups how to accurately identify both overpayments and underpayments from Medicare to improve their financial performance and the integrity of their financial reporting. Bill talks about the prospects for future Medicare cuts and discusses how hospitals can retool to try to replace some of that lost revenue, the topic of my cover story coming up in the June issue of HealthLeaders magazine. [Listen Now]