At the Margins

Our latest insight into health care margin improvement efforts

A proposed $900M cut to 340B payments—and other early impressions from the 2018 Outpatient Proposed Rule

by: Eric Fontana, Kenna Hawes, and Jamie Landsman July 14, 2017

Late Thursday, CMS released its outpatient payment proposal for CY 2018. We're busy reviewing the 664-page regulation, and we'll lay out all the key details in a webconference on August 7 (register here). 

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What CFOs need to know about employed physician compensation

Hamza Hasan , Sarah O'Hara July 5, 2017

Is your health system employing more physicians these days?

If so, you're not alone. According to one recent study, the number of physicians employed by health systems grew by 50% between 2012 and 2015. And this trend is only expected to continue, as physicians seek greater work-life balance and protection from the challenges of a changing reimbursement landscape.

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You're probably leaving $22 million on the table. Here are 4 things to do about it.

Jim Lazarus June 29, 2017

On my way back from HFMA's Annual National Institute (ANI), I found myself trying to unpack an interesting conundrum in hospital and health system financial performance.

We know that hospitals have seen healthy margins the past few years despite reimbursement cuts—largely as a result of successfully containing costs and the Affordable Care Act's coverage expansions. But at the same time, revenue cycle performance has lagged and the cost to maintain even flat performance has ticked upward.

So what explains this tension? I believe hospitals I work with have been missing a huge opportunity by focusing on cost at the expense of inflecting revenue cycle performance.

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Why Medicare's PACT policy may cost you more than P4P

by Eric Fontana and Lulis Navarro June 16, 2017

Although the average hospital foregoes more revenue due to Medicare's Post-Acute Care Transfer (PACT) policy than its pay-for-performance programs, hospital finance teams rarely pay PACT the attention it deserves.

PACT reduces Medicare inpatient reimbursement whenever patients assigned to any of 280 separate MS-DRGs are discharged to qualifying post-acute care settings more than one day earlier than the national average. The policy was introduced nearly two decades ago to constrain Medicare spending growth as hospitals shifted patient care to the post-acute space. Our analysis of the most recent Medicare data indicates that 6% of Medicare discharges trigger such a payment reduction.

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Putting workforce productivity in perspective: Are you taking what matters into account?

John Johnston, CPA, MHA June 14, 2017

John Johnston, CPA, MHA

It seems barely a week goes by in the news lately without a story of a health system announcing they need to cut labor costs—and significantly.

Even in the absence of dire immediate financial circumstances, executives are anticipating the need to shore up margins as a hedge against an uncertain future. At roughly half or more of the typical hospital's total operating budget, workforce constitutes by far the largest expense category, so the road to significant cost reduction will inevitably lead to workforce expenditures.

With staffing levels already leaner than in previous eras of cost reduction, this is a challenge; very little low-hanging fruit remains. Maximizing the efficiency of clinical and non-clinical staff is at center stage and with it the imperative to set—and meet—productivity targets that optimize the output of our most valuable and most expensive asset: our people.

Progressive organizations are working to develop productivity targets that are ambitious yet sustainable by taking a multidimensional approach that answers three questions:

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3 hospital 'big wins' that could net millions in new revenue

June 13, 2017

The Daily Briefing's Josh Zeitlin sat down with James Green, a National Partner within Advisory Board's Revenue Cycle Management Division, to discuss how hospitals should respond to financial headwinds.

Question: James, hospital budgets are tightening—according to Moody's latest report, expenses are growing faster than revenue, a big reversal from last year. What do hospital leaders need to know?

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Map: What the AHCA could mean for your hospital's finances

Eric Fontana June 2, 2017

Amid the new Congressional Budget Office (CBO) analysis of the House-passed American Health Care Act (AHCA) and the Senate's ongoing health care discussions, we've received many questions from our members about how insurance coverage and hospital financial performance have changed since the passage of the Affordable Care Act.

Many are anxious to see how key hospital financial metrics may be impacted if Medicaid expansion is rolled back and commercial insurance coverage declines, as would be expected if the AHCA becomes law.

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How 2 decades of for-profit experience helped this CFO turn rev cycle around at Missouri Delta

by Eric Fontana and Jordan Kreke May 30, 2017

Millions of Americans depend on independent rural hospitals for health care, but these providers often face significant financial challenges. After more than 20 years in the for-profit hospital sector, Gregory Carda joined Missouri Delta as Chief Financial Officer in 2015. We recently sat down with him to discuss how he and his team have used their experience at larger organizations to rationalize financial operations and improve margin performance.

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