U. of Mary­land sys­tem thrives de­spite state pay­ment shake-up

Modern Healthcare - - REGIONAL NEWS - —Beth Kutscher

Bal­ti­more-based Univer­sity of Mary­land Med­i­cal Sys­tem im­proved its fi­nan­cial per­for­mance in the past year, de­spite the state’s first-in-thenation experiment with hos­pi­tal global bud­get caps.

The sys­tem re­ported an op­er­at­ing sur­plus of $118.1 mil­lion on $3.4 bil­lion in rev­enue for the year ended June 30, com­pared with an op­er­at­ing sur­plus of $48.2 mil­lion on $3 bil­lion in rev­enue last year. Its op­er­at­ing mar­gin jumped to 3.5% from 1.6%.

The sys­tem’s im­prove­ment in topline rev­enue was largely be­cause of its De­cem­ber 2013 merger with Up­per Ch­e­sa­peake Health Sys­tem, whose ad­di­tion led to an over­all 3.4% in­crease in ad­mis­sions year over year. But in­pa­tient vol­ume re­mained flat or de­clined at most of the Univer­sity of Mary­land’s 11 hos­pi­tals, while out­pa­tient vis­its rose 9.8%.

The new hos­pi­tal global bud­get pay­ment model in Mary­land, ini­ti­ated in Jan­uary 2014, is de­signed to con­trol healthcare spend­ing. It caps in­pa­tient and out­pa­tient rev­enue growth at 3.58% an­nu­ally. The fixed pay­ment is ad­justed for pa­tient vol­ume changes, in­fla­tion and other fac­tors, but aims to in­cen­tivize hos­pi­tals to re­duce costs in­stead of at­tract­ing new ad­mis­sions.

The Univer­sity of Mary­land did take a hit to its bot­tom line from the volatil­ity in the fi­nan­cial mar­kets, which led to in­vest­ment in­come losses. It ended the year with $95.1 mil­lion in to­tal sur­plus for 2015, com­pared with a to­tal sur­plus of $225.9 mil­lion in the pre­vi­ous year.

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