Money tops the list
Reform also worries hospital execs: ACHE survey
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.