Money tops the list

Re­form also wor­ries hospi­tal ex­ecs: ACHE sur­vey

Modern Healthcare - - The Week In Healthcare - Joe Carl­son

Through good years and bad, hospi­tal CEOs have kept a sharp eye on their or­ga­ni­za­tions’ bot­tom lines, and par­tic­u­larly on the ef­fects of gov­ern­ment health in­sur­ance pay­ments that they say don’t cover the full cost of care.

In an an­nual sur­vey of 525 hospi­tal CEOs, the Amer­i­can Col­lege of Health­care Ex­ec­u­tives re­ported that once again about three-quar­ters of all top ex­ec­u­tives ranked fi­nan­cial chal­lenges as their top con­cern in 2009, well above any other con­cern. The sur­vey, which was pro­vided to Mod­ern Health­care ahead of its Jan. 11 of­fi­cial release, found that 76% of CEOs re­ported that fi­nan­cial chal­lenges were among their top three con­cerns in 2009.

Over the past five years, the per­cent­age of ex­ec­u­tives who say fi­nan­cial mat­ters are the big­gest con­cern has re­mained fairly sta­ble, be­tween 67% and 77%, re­gard­less of whether the CEOs were reap­ing the ben­e­fits of record-break­ing per­for­mance on Wall Street or slash­ing jobs dur­ing the worst down­turn since the Great De­pres­sion.

The ACHE added a new cat­e­gory for the 2009 sur­vey of con­cerns: “health­care re­form im­pli­ca­tions.” And the per­cent­age of re­spon­dents who cited it— 53%—made it the sec­ond-most-cited worry among hospi­tal ex­ec­u­tives.

“The loom­ing health­care re­form im­pli­ca­tions are very hard to de­ci­pher, but I think every­one knows we’re go­ing to have to do more with less, and find cost ef­fi­cien­cies,” said Kevin Unger, pres­i­dent and CEO of 226-bed Poudre Val­ley Hospi­tal, Fort Collins, Colo. “The re­form dis­cus­sion makes every­one a lit­tle antsy, and they won­der what the fu­ture holds,” Unger said. (The pres­i­dent and CEO of Poudre Val­ley Health Sys­tem, Ru­lon Stacey, was nom­i­nated to be chair­man-elect of the ACHE.)

ACHE Pres­i­dent and CEO Thomas Dolan said re­form presents the great­est health­care lead­er­ship chal­lenge he has seen in his 40-year ca­reer, and the 53% fig­ure seemed low, in his opin­ion. “Health­care ex­ec­u­tives tend to look at the chal­lenges we have to­day,” Dolan said. “Quite frankly, there’s noth­ing you can do about the specifics of re­form.”

Round­ing out the top three con­cerns in 2009 was a peren­nial high-scorer, “care for the unin­sured,” with 37% of CEOs say­ing it was one of the top three is­sues for their hos­pi­tals. That was a de­crease from the 41% who re­ported the same in 2008.

Be­hind those three broad cat­e­gories, how­ever, CEOs re­ported a deep con­cern over low gov­ern­ment re­im­burse­ments. In a list of more-detailed re­sults within each main cat­e­gory, CEOs over­whelm­ingly cited gov­ern­ment pro­grams as their top area of con­cern within each of the three main cat­e­gories.

For ex­am­ple, un­der fi­nan­cial chal­lenges, CEOs com­plet­ing the sur­vey were asked to pick from among 10 spe­cific is­sues of con­cern. And as in years past, “Med­i­caid re­im­burse­ment” was the top se­lec­tion, with 87% say­ing it was their top fi­nan­cial worry.

Un­der health re­form im­pli­ca­tions, 91% said “re­duc­tion in Medi­care re­im­burse­ment” was their top spe­cific con­cern. And un­der the cat­e­gory of care for the unin­sured, “Med­i­caid” was cited by 91% of re­spon­dents as the top is­sue.

Even in good years, hospi­tal of­fi­cials say gov­ern­ment re­im­burse­ment is in­suf­fi­cient. The Amer­i­can Hospi­tal As­so­ci­a­tion re­ported in Novem­ber that in 2008, hos­pi­tals re­ceived an av­er­age of 89 cents of re­im­burse­ment for ev­ery $1 spent car­ing for Med­i­caid pa­tients. For Medi­care pa­tients, the fig­ure was 91 cents on the dol­lar (Dec. 7, 2009, p. 8). That left hos­pi­tals re­spon­si­ble for pro­vid­ing about $32 bil­lion in un­re­im­bursed pa­tient care in gov­ern­ment pro­grams in 2008, the AHA said.

Those short­falls were mag­ni­fied in 2009 by eco­nomic con­di­tions. Un­em­ploy­ment lev­els drove up Med­i­caid en­roll­ment by 2.6% na­tion­ally in 2008, the most re­cent year for which of­fi­cial CMS data are avail­able. In 2009, ac­cord­ing to a sur­vey by the Kaiser Fam­ily Foun­da­tion, the in­di­vid­ual states es­ti­mate that Med­i­caid en­roll­ment grew by 5.4% in fis­cal 2009, and is on track to grow by 6.6% in fis­cal 2010.

“Most of the state Med­i­caid bud­gets are stressed, and that’s go­ing to hold true for the next year or two,” said William Leaver, pres­i­dent and CEO of 10-hospi­tal Iowa Health Sys­tem in Des Moines. Mean­while, the fed­eral Medi­care bud­get ap­pears likely to come un­der in­tense cost pres­sure through the var­i­ous re­form pro­pos­als, which is a ma­jor con­cern for hospi­tal ad­min­is­tra­tors be­cause Medi­care can be the source of 40% to 50% of rev­enue for most providers.

One sliver of good news was found at the bot­tom of the ACHE CEO con­cerns list: the sharp de­crease in the num­ber of hospi­tal ex­ec­u­tives re­port­ing staffing prob­lems. Be­tween 2005 and 2008, “per­son­nel short­ages” were the fourth-high­est ranked con­cern fac­ing hos­pi­tals, with at least 30% of ex­ec­u­tives rank­ing the is­sue in their top three prob­lems each year. Yet in 2009, as the health­care job mar­ket tight­ened dur­ing the re­ces­sion, only 13% of CEOs re­ported the same con­cern—lower even than the 15% of ex­ec­u­tives who said “pa­tient sat­is­fac­tion” was one of their top con­cerns.

Dolan said the de­cline in CEOs con­cerned about a work­force short­age could be a cause for alarm, be­cause the eas­ing of the short­age was a di­rect re­sult of the re­ces­sion (May 18, 2009, p. 8), and it stands to be­come worse than it was be­fore the down­turn, de­pend­ing on how quickly secondary house­hold wageearn­ers like nurses re­turn to part-time work or quit al­to­gether.

“It’s go­ing to be a very chal­leng­ing decade in health­care,” Dolan said.

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