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Hospital Finance

A little-known windfall for some hospitals, now facing big cuts

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Research corroborates that hospitals aren’t using the 340B program as intended.

  • The 340B program may have raised costs by encouraging care in 340B-eligible hospitals that could have been provided less expensively elsewhere
  • The program also encourages providers to use more expensive drugs
  • Medicare lowered the prices it pays for 340B drugs by 27%. But it does little to address how much insurers and individuals pay for prescription drugs or the value they obtain from them

How to tame healthcare spending? Look for 1% solutions

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A working paper published Monday proposes one possible fix. In the 1980s, Congress carved out a small group of hospitals from its normal rules for payment. These “long-term care hospitals,” which treated patients with tuberculosis and chronic diseases, could earn far more money than traditional hospitals and nursing homes if they cared for patients who stayed with them for an average of 25 days. Since then, the number of these hospitals has mushroomed, from a few dozens to more than 400, most run by two for-profit chains.

For years, analysts and policymakers have wondered about the value of these hospitals, which tend to treat very sick patients who need a lot of care, such as mechanical ventilation or dialysis. Several analyses have suggested that Medicare may be overpaying for their services. And Congress has made some small changes to limit the number of patients who are eligible for such care.

The new paper, from researchers at the Massachusetts Institute of Technology, Stanford University, and the University of Chicago, took a close look at what happened to patients as new long-term care hospitals opened around the country in places that had none.

The study, covering 1990 to 2014, found that when such a hospital opened, the odds increased that very sick patients leaving a normal hospital would end up going next to a long-term care hospital, generating a growing bill for both Medicare and the patients themselves. But the researchers found no benefit when it came to patients’ chances of dying or going home within 90 days.

The researchers concluded that the healthcare system could probably save a lot of money — around $5 billion a year — by paying the long-term care hospitals the same prices that are paid to skilled nursing facilities, the places that most long-term patients end up in when there is no long-term care hospital nearby.

Hospitals heavily increased prices from 2015 to 2016

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Axios combed through and combined spreadsheets of hospital charges and Medicare payments, which the Centers for Medicare & Medicaid Services posts annually and found:

  • For joint replacements, like hip and knee surgeries, prices are still all over the map. However, Medicare pays less than $13,000 on average for a joint replacement.
  • For-profit companies own (or used to own in 2016) nine out of the 10 hospitals with the highest list prices for joint replacement surgeries.
  • Memorial Hospital of Salem County, a small hospital in New Jersey owned by the publicly traded Community Health Systems, had the highest joint replacement price in the country in 2016 at $267,726.
  • HCA Healthcare, another for-profit hospital chain, owns two facilities that each charged more than $200,000 for joint replacements in 2016.
  • Many well-known not-for-profit hospital systems, like Cedars-Sinai in Los Angeles, also rank among the highest-charging hospitals for joint replacements.

Aside from the wide distribution in what hospitals charge for joint replacements, many hospitals also heavily increased prices from 2015 to 2016.

 

 

  • St. Francis Medical Center in New Jersey raised prices for joint replacement surgeries the most of any hospital in the country in 2016 — a 77% hike to more than $135,000.
  • More than 400 hospitals raised joint replacement prices by at least 10% in 2016.

Hospitals set prices at whatever level they want, well above what Medicare pays. While those prices often aren’t what patients pay, they still dictate what society at large pays for health care.

The large variation in hospital pricing gained awareness in 2013 when a Time article about hospital charges led the federal government to released data on hospital and physician payments. In addition, new studies show how market concentration factors into pricing. Hospitals have argued that charges are misleading because private and public health insurers don’t pay those amounts, but they still matter a lot. List prices are starting points, with no relation to cost, that is used in negotiations with private insurers. They also are the baseline for uninsured patients and people who have to deal with out-of-network bills — like this infamous case of a teacher in Texas.

 

 

 

To change nursing assignments and transform workforce management, hospitals need to plan differently!

Posted by | Healthcare Cost Savings, Hospital Finance, Innovation | No Comments

Massachusetts, New Jersey, Ohio, and Pennsylvania are getting ready to vote on legislation to mandate nurse-patient ratios like California did.

We learned from California that without a sound workforce planning methodology that can be consistently executed, hospitals won’t obtain the benefits of the increased staff [1].

The Nash Group SDM20/20™ planning methodology is proven to:

  • reduce labor cost $2M-$8M
  • dismantle consumption of premium dollars
  • advance patient placement and aggregation
  • improve patient disposition and reduce length of stay
  • increase staff retention 20%-40% and improve recruitment cycles
  • make workforce operations and schedules sustainable

[1] Petsunee Thungjaroenkul, Greta G. Cummings, Amanda Embleton, “The Impact of Nurse Staffing on Hospital Costs and Patient Length of Stay: A Systematic Review”, NURSING ECONOMIC$/Sep-Oct 2007, Vol. 25, No. 5

To lower cost, healthcare providers need to plan differently!

Posted by | Hospital Finance, Innovation, Nursing Staff, SDM20/20TM | No Comments

Unrealistic workforce management plans cost healthcare organizations millions of dollars in labor. As this cost continues to be pass to consumers through increases in insurance premiums, they are demanding sustainable changes.
Execution cost that normally accounts for 20% of the bottom-line of hospitals and 35% of outpatient facilities is where sizeable labor changes need to be acquired.
A workforce management planning methodology (see below) that can be consistently executed and that delivers between $2M and $8M in labor savings is mandatory to meet sustainable labor operations.

Think drug costs are bad? Try hospital and professional service prices!

Posted by | Hospital Finance, Uncategorized | No Comments

Some pharmaceutical companies said they’ll delay some of their price increases under pressure from the government. But hospitals and care professionals have made no such concessions, even though they make up a much larger share of total health care spending. Hospitals and care professionals are not going to hold off on price increases!

Drug makers pledges to hold price increases are political bandages with little real effect on patients’ pocketbooks, but hospitals and care professionals cost increases hit them harder! Hospitals prices have grown somewhat slowly over the past few years, but slow growth of high prices leaves high prices.

Some hospitals and health systems argue that they are limiting increases to below 3% annually, but the net effect is well over 5%. And the cost isn’t going up because we’re using more health care, but because of the prices we pay for those services.

Obamacare faces new life-threatening conditions

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Opponents of the Affordable Care Act have been busy. In the midst of several headline-making events on other issues, the Trump administration has instigated two major efforts to effectively do what Congress could not do earlier this year — repeal Obamacare.

The result is a laundry list of warnings for all health care consumers, not just those who buy insurance on the ACA exchanges. The moves are a return to the bad old days before insurers had to adhere to standard regulations that protected consumers from paying insurance premiums, only to find coverage wasn’t there when they needed it.

Here’s a closer look at the latest changes to the health insurance marketplace: [Article]

Electronic Health Records Were Supposed to Cut Medical Costs. They Haven’t!

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Despite the promise that electronic health records would cut billing costs, savings have yet to materialize, according to a major new study by researchers at Harvard Business School and Duke University.

The study, published in the February 20 issue of the Journal of the American Medical Association, looked at five types of visits: primary care visits, ER visits resulting in a patient discharge, general medicine hospital stays, outpatient surgical procedures, and inpatient surgeries.

Findings included:

– A primary care visit necessitated 13 minutes in billing and insurance-related activities, costing $20. The time and cost ramped up to 100 minutes and $215 for an inpatient surgery.
– Just the physicians’ portion of the time and cost spent on billing amounted to 3 minutes and about $6 for a primary care visit, up to 15 minutes and $51 for surgery.
– Physicians, who cost between $3 and $8 per minute, are doing administrative tasks that ascribe costing 50 cents a minute could do better, Kaplan says.

Hospitals offer big bonuses, free housing and tuition to recruit nurses

Posted by | Health News, Hospital Finance, Nursing, Nursing Staff | No Comments

Hospitals and other medical facilities are getting so desperate to recruit and retain nurses they’re offering all sorts of pricey perks and incentives.

“Five-figure signing bonuses, free housing, college tuition for employees and their children!”

“These are some of the grandiose examples we’ve heard from our members,” said Seun Ross, director of nursing practice and work environment at the American Nurses Association. “Who knows what employers will come up with next?”

America is undergoing a massive nursing shortage. Not only are experienced nurses retiring at a rapid clip, but there aren’t enough new nursing graduates to replenish the workforce, said Ross.

The nation’s aging population is exacerbating the problem. The American Nurses Association estimates the U.S. will need to produce more than one million new registered nurses by 2022 to fulfill the country’s health care needs.