Developing an Integrated Financial Plan

The Mountain States Health Alliance Path to Breakeven Performance

Topics: Margin Performance, Finance, Medicare, Reimbursement

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This white paper guides finance executives in developing a strategy for recovering future margins, including:

  • Understanding the baseline margin scenario
  • Identifying improvement categories
  • Setting discrete margin improvement goals
  • Ensuring hospital executives are accountable for progress
  • Revisiting the framework periodically

Study in Brief

Hospitals face a difficult margin environment over the next decade, with slower reimbursement rate increases, shifting coverage from private to public payers, and continued cost escalation combining to place pressure on operating margins. Unless hospitals change their practice in response to these pressures, they will face steep losses, particularly for Medicare patients. Advisory Board research suggests the operating margin of an average hospital could decrease by two percentage points annually through 2021.

Many senior finance executives believe that current trends are unsustainable, yet few have mapped a concrete strategy, complete with goals and assignments, for breaking even on Medicare patients and generating sustainable overall margins. In our exploration of this issue, we were impressed by the efforts of the finance team at Mountain States Health Alliance (MSHA) to map a migration plan for achieving Medicare breakeven.

The following case study examines the steps taken by the finance team at MSHA to develop a sophisticated and dynamic 10-year financial plan for ensuring the system’s future viability.

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