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At the Margins

Our latest insight into health care margin improvement efforts

Keep your ‘golden child’ golden: Two ways to market-proof surgical services

Yaw Fellin September 16, 2014

Do you ever find yourself thinking about how great it would be to pare down your volumes of cardiac, orthopedic, or spine surgeries? Probably not. But it is likely you’ll be revisiting some basic assumptions about your procedural business in the near future—including whether or not more procedures are always a good thing.

The reason? Contracting models are exposing hospitals to new levels of performance scrutiny and risk. In today’s post, I’ll be looking at what these trends mean for the long-standing golden child of hospitals’ offerings—surgical services.

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Would you buy hip implants from your surgeons?

Brian Pellegrini September 11, 2014

Lots of CFOs I meet with worry about expensive supplies they’re buying for their surgeons. Not so many talk about supplies they’re buying from their surgeons. But this may change if a new form of physician entrepreneurship takes off. In what follows I’ll offer a quick overview and some examples of an emerging phenomenon known as the physician-owned distributorship, or POD.

Over the years I’ve seen some pretty interesting examples of legal workarounds for aligning physician and hospital incentives. Usually these deals promise improved cost performance; often they also draw scrutiny from the Office of the Inspector General (OIG). The same is true of PODs—companies with physician investors, often spine or orthopedic surgeons, that sell medical supplies to hospitals.

There are two important things to understand about PODs. First, the hospitals they sell to are often the same hospitals where their physician-investors practice. Second, POD physicians are often in a position to specify the very same supplies they’re selling.

Even though PODs need to clear challenging legal hurdles to operate lawfully, they do exist out in the real world. And if one does happen to appear in market, you’ll want to be prepared. By way of preview—and without pretense to judgment or recommendation—I thought I’d share with you some stories of how a handful of hospitals have responded.

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8 strategies to protect your margins, ranked by difficulty and impact

Robin Brand September 5, 2014

With pricing pressures, transitions in patient coverage, and the emergence of new competitors, your margins are more vulnerable than ever. Financial health depends on your performance in eight areas, from charity care to documentation.

So what’s an easy win versus a long-term goal?

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Rethinking charity care? Tightening your policies may not be a simple solution.

September 2, 2014

Nearly one year after consumers gained access to expanded health coverage under Medicaid and the public exchanges, many hospitals are questioning whether patients who refuse to purchase insurance coverage should be eligible to receive charitable discounts on their care.

A recent article published by Kaiser Health News notes that most hospital leaders across the country are considering whether their charity care policies should be tightened as a result of patients’ increased access to more affordable coverage options. One New Hampshire hospital profiled in the article has completely excluded from charity care eligibility all patients who qualify for, yet refuse to purchase, health coverage.

While restructuring eligibility criteria for charity care programs may seem like a natural response to an expansion in insurance coverage, our research suggests that the costs of a tighter charity care policy may outweigh the benefits.

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Focus on quality to protect your revenue: The evolving role of CDI

Samantha Hauger August 26, 2014

It’s a common theme in my discussions with CFOs and CEOs across the country: health care is moving from fee-for-service, volume-based reimbursement to quality-based reimbursement. The days of higher volumes equating to more revenue will soon be fully in our rear-view mirror.

This change may already be having a huge impact on your reimbursement. And if it hasn’t yet, it likely will soon: 75% of hospitals polled in a recent Advisory Board study expect to have shared savings contracts in place by 2017.

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Tell us where you stand with clinical documentation

August 15, 2014

While accurate physician documentation has always been critical to reimbursement, the transition to risk-based payments makes it essential to quality as well.

In light of this renewed focus on clinical documentation improvement (CDI) programs, we invite you to take our four-minute CDI survey to increase understanding about the current landscape.

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The critical item missing from your executive agenda

Ed Hock August 8, 2014

As we move towards a system of accountable care, executive priorities are shifting rapidly. Some agenda items have fallen off the list, while others have quickly leapt to the top. Where does accurate documentation of quality metrics fall on your list?

As I speak to executives across the country, more and more are telling me engaging with physicians to ensure high-quality documentation is at the top of their list. Why? Well, for one, we all know that properly documenting quality is critical for reimbursement. And now, with increasingly available quality reports and the shift towards performance-based payment, it’s never been more important to have top notch documentation.

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New penalties and cuts: How Medicare payments will change in 2015

August 6, 2014

CMS on Monday released the final rule for the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2015.

Overall, CMS projected that payments to acute-care hospitals would decrease by $756 million and that payment to long-term care hospitals would increase by $62 million.

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