Healthcare

Hospitals are investing more in creating outpatient service departments to meet rising patient demand while simultaneously reducing inpatient surgical procedures and generating new sources of revenue. In many cases, the creation of these departments involves the acquisition of private physician practices’ ancillary service lines. Often, the hospital enters into an employment arrangement with the physicians of the once physician-owned private medical practice.

As discussed in a previous post, Practice "Bifurcation" Can be Risky Business, the Stark law is implicated in these post-acquisition employment arrangements because physician compensation is required to be consistent with fair market value.

Are you wondering about the status of your Medicare Disproportionate Share Hospital (DSH) payments in light of the recent Allina DSH court ruling? You’re not alone.  An April 2014 ruling from a U.S. Court of Appeals for the District of Columbia Circuit upheld a previous ruling that a Health and Human Services (HHS) rule change in 2004 (codified in 2007) was procedurally defective. The lawsuit had to do with a rule change the HHS made to determine DSH payments in 2007. The hospitals claimed there was not proper notification. Although the court ruled favorably for the hospitals, what happens next is still unknown. 

The appeals court included instructions in the ruling that gave the HHS room to reach the same policy decision through administrative adjudication. The bad news for providers is that adjudicatory findings can be applied retroactively. The Centers for Medicare and Medicaid Services (CMS) has not yet issued a definitive guideline on how to retrofit the reimbursement fractions for the years in question. 

Now that we have easier access to Electronic Health Records (EHR), it should be easier than ever to use data to find best practices and reduce variations in care that hurt patient outcomes. Right? 

In theory, that’s right. In practice, it’s a whole other ballgame. EHR is a great repository of information but it does not magically perform analytics. Also, how do you grade the usefulness of data and how and when it is collected? 

Here are 3 areas to evaluate whether the data you are accumulating can drive better health care decisions for the patient and improved processes and efficiency for hospitals and providers: 

Many rural hospitals are struggling in the new health care marketplace. Reimbursement from government and (soon) private payors is now more dependent on providing a collaborative and leaner process that rewards reducing variations in patient care and treatment in the appropriate setting. Additionally, hospitals in states that have opted out of receiving Affordable Care Act (ACA) funding face increased costs with no funding to cover them. 

The consequences of a shift in the Fee-for-Service (FFS) revenue model to outcomes-based compensation is creating a tsunami of change for hospitals. Let’s look at how this shift is affecting the valuation of hospitals in a buy or sell situation. 

In an FFS revenue model, valuations were based on how much revenue generated was attributed to volume. That is all changing with the Affordable Care Act (ACA). Today, hospitals face a variety of issues that impact day-to-day operations and the bottom-line:

• Declining inpatient volumes
• Lower reimbursement rates  per patient from Medicaid and Medicare with private payors starting to follow the trend
• The advent of high deductible plans in private pay
• Changing diagnosis codes
• Enhanced regulatory vigilance 

These factors contribute to a financial model where  operating expenses are outpacing revenue.

Here is a round-up of health care stories that are catching our interest this week.

Is the Health Care Workforce Prepared for an Increase in Alzheimer Patients?

The April issue of Health Affairs is devoted to the latest research and thinking about Alzheimer’s disease. Alzheimer’s cases already overwhelm health care facilities and families. The challenge is expected to worsen with an increase from 5 million cases in 2013 to 13.8 million cases in 2050. Here is detailed look at how to increase and train a work force that is prepared for the challenge. 

There are a flurry of stories lately about telemedicine and they are not just in health care publications. Whether it is the New York Times or Forbes or other major outlets, telemedicine is being talked about and here’s why:

There have been serious, but somewhat quiet experiments going on for years around using bundled care to improve patient outcomes and cut costs. Prepare for some noise as states like Arkansas start figuring out the formula for making it work. The spotlight on bundled care as a potential successor to the Fee-for-Service (FFS) model is getting brighter driven by the Affordable Care Act (ACA) and the search for new payment models that can support the high costs of offering health care benefits to an expanding (and aging) population.