News

SPOTLIGHT: Medical costs an obstacle for 25 percent of Americans

Anne Zieger — Wed, 01 Jul 2009 01:02:40 -0400

Not surprisingly, consumers in the U.S. continue to struggle with their medical expenses, research suggests. Almost 25 percent of Americans reported having trouble paying their medical bills last year, according to a new survey from the Robert Wood Johnson Foundation. Meanwhile, 22.4 percent said that they or a family member delayed seeing a doctor when necessary due to cost concerns. Article

Study: Cancer drugs shouldn't cost more than $20K per month

Anne Zieger — Wed, 01 Jul 2009 00:57:20 -0400

Of late, there's been a lot of discussion over the astronomical price of cancer drugs, some of which can hit $100,000 per year. Given that they only extend patients' lives a short while in most cases, some experts have argued that the slim benefit simply isn't worth the price, as cold as that may sound. After all, at current prices it would cost $440 billion to extend the life of the 550,000 patients who die of cancer by one year.

This week, however, a new study has come out which attempts to offer some guidelines as to which types of treatments might actually be worth the price. The authors, who are from the National Cancer Institute and NIH, suggest that a cancer drug shouldn't be developed unless it will cost patients less than $20,000 for a standard course.

However, 90 percent of cancer drugs approved in the past four years cost more than $20,000 for only 12 weeks of treatments, researchers note. This begs the question of whether pharmaceutical companies can do more to lower costs, they suggest.

To learn more about the study:
- read this Wall Street Journal health blog item

Group forms trust to buy medical properties

Anne Zieger — Wed, 01 Jul 2009 00:30:19 -0400

As we've written in the past, the picture is a bit fuzzy as to when medical office buildings will become cash cows again, but things seem to be improving. One sign can be found in the formation of a $40 million medical property investment fund by healthcare real estate firm Oman-Gibson Associates.

The Nashville-based firm, which is looking to acquire new medical office buildings and specialty medical clinical space, says that this is an ideal time to buy such properties, due to the recent tightening of credit markets. These include outpatient acre facilities such as ambulatory care centers, cancer centers, cardiac and vascular centers, laboratories and urgent care centers.

Execs also note that healthcare offers a stable niche in which investors can find strong returns. Still, to make sure returns on equity are strong, the firm will take a conservative position, establishing a equity to debt ratio of 40 to 50 percent.

To learn more about this plan:
- read this Healthcare Finance News article

Related Articles:
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Medical real estate still healthy
Despite real estate woes, healthcare REITs doing well

Blues see $350M gain from anti-fraud investigations

Anne Zieger — Tue, 30 Jun 2009 23:59:25 -0400

It's not just CMS getting down and dirty to fight fraud: A new report from the Blue Cross and Blue Shield health plans says that the group recovered almost $350 million last year through anti-fraud investigations. That's an increase of 43 percent over the prior year, the report notes.

The Blue Cross and Blue Shield Association's National Anti-Fraud Department said the recaptured funds were drawn from issues including false claims, improper billing practices and non-covered procedures. About 57 percent of fraud investigations touched on professional services and facilities, 9 percent were healthcare facilities, 12 percent related to members and 6 percent to pharmacy issues.

The group is trying to hack away at the substantial sums lost to fraud. Each year, the group estimates some 3 percent of healthcare spending is lost to fraud. Among the fastest growing areas subject to fraud is medical theft, it reported.

To learn more about these efforts:
- read this Modern Healthcare article (reg. req.)

Moody's leery of uncompensated care backlash

Anne Zieger — Tue, 30 Jun 2009 22:25:28 -0400

Moody's Investor's Service is nervous about what the next few quarters will bring for investor-owned hospitals. In a recent report, it noted that such companies could take a serious hit to their income statements if uninsured patient volume increases or collections decrease.

It's hard to tell whether such charges may occur given the public information it has, Moody's said, but to date, figures like bad-debt expenses, accounts receivable stats and cash flow aren't being bruised by uncompensated care expenses as of yet. However, it's also said that it's not expecting stimulus funds to bolster hospitals much either.

This report follows the same story line as a previous one from March, in which Moody's predicted that for-profits would continue to deteriorate financially through 2009. It cited the swamped economy, fallen patient volumes and expanding bad debt as reasons for concern, predicting that patient volume was likely to remain lowered and bad debt high with the economy in turmoil.

All that being said, it's notable that at least one investor-owned company, Tenet Healthcare Corp., posted a $178 million profit for the first quarter of this year, compared with a loss of $31 million during the same period last year. Revenue rose 5 percent to $2.28 billion.

To learn more about Moody's outlook:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
Moody's: Stimulus may not have big healthcare impact
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Survey: Use of health savings accounts growing

Anne Zieger — Tue, 30 Jun 2009 22:20:31 -0400

A new survey suggests that health savings accounts are becoming increasingly popular, with the number of accounts and level of assets rising steadily. A new study from Celent reported that the number of HSAs increased 46.1 percent between January 2008 and January 2009, and their asset base grew by 62.6 percent.

Average account balances grew by only 13 percent, to $1,561, but that number was dragged down by the 18 percent of accounts with a zero balance and a failure of banks to purge inactive accounts. Future numbers should look different, with a relatively high number accounts being created in January 2009.

Investments as a percent of total assets, meanwhile, fell off 5 percent, due to a mix of recessionary pressures, unemployment and declining investment values.

Another piece of survey data was that debit cards--while attached to almost all HSAs--are only used for 66 percent of funds disbursed. Checks account for 20 percent of volume.

To learn more about this survey:
- read this Healthcare Finance News piece

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SPOTLIGHT: HHS releases $6B in CHIP funds

Anne Zieger — Wed, 24 Jun 2009 10:59:30 -0400

HHS has released $6 billion in new funds for the Children's Health Insurance Programs for fiscal 2009. The funds are available thanks to the Children's Health Insurance Program Reauthorization Act of 2009, which was signed by President Obama this year. The bill also updates the financial allotment formula to better reflect project state and program spending through fiscal 2013. Article

Doctors getting signing bonuses more often

Anne Zieger — Wed, 24 Jun 2009 10:56:07 -0400

CFO, be prepared. While doctors' salaries may not be climbing quickly, it's getting more common for them to get substantial signing bonuses. A new study by Merritt Hawkins & Associates, drawing on 3,000 physician searches in 47 states, concluded that 85 percent of searches offered a bonus during the period studied.

Signing bonuses averaged $24,850 for the year ending March 31, up 46 percent from 2004-05. This is on top of income guarantees and base salaries.

Base salaries for the most commonly recruited specialties included $173,000 for family practice; $184,000 for family practice with obstetrics; $186,000 for internal medicine; $201,000 for hospitalists; and $321,000 for general surgery.

To learn more about this trend:
- read this Wall Street Journal blog item

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Medical office properties still a good investment

Anne Zieger — Wed, 24 Jun 2009 02:51:31 -0400

In recent times, commercial office building managers have faced serious challenges brought by the recession. Despite these pressures, medical office buildings continue to perform better than the market, industry experts say. In fact, medical office buildings are a critical asset for some hospitals, who can still sell the buildings at a reasonable price to generate much-needed capital.

Unlike commercial buildings, medical office building prices have remained relatively stable--a good thing in a market where prices have fallen substantially. Another reason buyers like medical office investments is that physician tenants tend to take long leases, which makes it far more likely that building owners can anticipate steady cash flow. (Of course, physicians with good credit are especially attractive.)

Still another benefit to medical office buildings is that the health sector is less prone to fluctuations when the economy goes sour, investors stay. And even better, with procedures moving to the outpatient setting, medical offices are an even more stable bet.

It's true that sales of medical buildings dropped 20 percent in 2008, but sales of other types of commercial real estate fell 51 percent during the same period. All this suggests that while medical buildings are far from a fool-proof investment, they still seem to offer benefits for everyone in the picture.

To learn more about this story:
- read this American Medical News piece

Related Articles:
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Case study: WA hospital confronts cost challenges

Anne Zieger — Wed, 24 Jun 2009 02:24:55 -0400

At Skagit Valley Hospital, they're going through the same intense struggle to survive as peers across the country. Like many other hospital leaders, managers at the Mount Vernon, WA facility were forced to make significant cutbacks. Despite making a 5 percent cost reduction, patient access leaders have been able to implement needed changes while continuing to support patients.

In the patient access department, manager Michele Hill, CHAM, found several ways to cut costs. They included reducing monthly staff meetings to quarterly meetings, finding cheaper but more patient-friendly armbands that resulted in a $10,000 annual savings, and centralizing patient access services to create an efficient team capable of being deployed organization-wide. Hill also deployed staff to shifts with greater volumes, and eliminated all travel for 2009.

Unfortunately, these changes weren't quite enough. The hospital also implemented a wage freeze and cut 64 hours of work between May 1 and December 31. Skagit Valley also made staff cuts, though most came from not filling vacant positions. To make the pay and staff cuts sting less, employees have agreed to take no lunch, except when things are particularly slow. At each step, Hill and other managers have worked with their staff to find solutions that employees can accept.

Despite these stresses, working closely with the staff has helped everyone cope, Hill says: "By involving the team in decision-making processes...I have buy-in, and greater success, because they own it."

To learn more about this story:
- read this Health Leaders Media article

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Study: Physician compensation not keeping up with inflation

Anne Zieger — Wed, 24 Jun 2009 01:58:16 -0400

Last year, just about everyone took a hit from the U.S. economic crisis. Apparently that includes physicians, both primary-care physicians and specialists, whose overall compensation didn't keep up with inflation in 2008, according to new research by the Medical Group Management Association.

According to the MGMA's survey data, primary-care compensation saw a 2 percent increase--or negative-1.73 percent adjusted for inflation, to a median of $186,044. Specialist compensation, meanwhile, rose 2.19 percent, or negative-1.59 percent adjusted for inflation, to a median of $339,738. Meanwhile, U.S. inflation in 2008 hit 3.8 percent.

Among primary-care specialties, internal medicine did the worst on this measure, with an increase of less than 1 percent last year, or negative-3.37 percent when taking inflation into account. Among specialists, meanwhile, emergency medicine physicians, dermatologists and general surgeons fared the worst, with declines of as much as 3.2 percent after inflation.

These results conflict with a recent report by Sullivan, Cotter and Associates that said physicians saw a 2008 compensation increase of around 4 percent. So judge for yourself what's going on here, bearing in mind that MGMA represents physicians. (Who has an incentive to suggest that doctors are underpaid?)

To learn more about this data:
- read this MGMA press release

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Some medical practices stop taking credit cards

Anne Zieger — Wed, 24 Jun 2009 01:55:10 -0400

Many patients are being currently forced to finance their co-payments and deductibles with credit cards. But in about one-third of practices, they don't have that option as increasingly more practices are deciding not to accept credit cards, American Medical News said in an article.

According to a recent survey by SK&A Information Services, 28 percent of practices didn't accept plastic as of this April. The figure comes from a telephone survey of 202,650 physician offices nationwide on behalf of a credit card company. The highest rate of acceptance was in plastic surgery, with 91 percent accepting credit cards. Pathology was the lowest, with 21 percent. About 72 percent of family practices accepted credit cards, with internists at about 53 percent and geriatricians at 32 percent.

While SK&A didn't ask practices why they refused credit cards, researchers have concluded that the main reason is growing credit card fees, which suck up 3 to 4 percent off every payment. (Practice managers and consultants have drawn the same conclusion.)

Industry experts, however, say this might be short-sighted, arguing that any lost money is more than made up by collecting more money overall, and spending less time and money to bill and collect via mail. For example, one consultant cites a practice that went from collecting 15 percent of co-pays on the spot in 2007 to 40 percent in 2008, well more than it needed to make up for transaction fees and the $500 machine needed to process the cards.

To learn more about this issue:
- read this American Medical News piece

HFMA ANI 2009: Revenue cycle management rules the day

Anne Zieger — Wed, 17 Jun 2009 14:21:16 -0400

Readers, I'm about to board a plane to leave lovely Seattle and head back to our Washington, DC headquarters, but before I go, I'll share with you my impressions of HFMA ANI 2009. What a great show: lots of great ideas to consider, thoughtful audiences at sessions and a manageable conference space. There was a bit of a vendor overload on the exhibit floor, but that's to be expected, no?

My key takeaways from the show include the following:

* Revenue cycle management topics were by far the most interesting thing at the show. Banks, investment funds and technology vendors are well aware that if providers can't cut costs any more, and can't borrow money easily, collecting money quickly and easily is key. Where collecting from self-pay patients isn't working, new factoring schemes are blossoming, too.

* Making it easy for patients to pay--particularly through well-placed kiosks and web portals--seems to be a winning strategy for hospitals. (See our case study on how Adventist Health has built self-service volume despite doing virtually no little marketing.)

* Capital markets continue to be very tight, and there's no magic bullet for improving your credit rating and access to funding. Solutions that the consulting pros offered were the same old song, including consolidation, improving care quality and the like. (The Build America bonds offered under the stimulus plan may not be any help, as they offer irregular cash flow, according to one speaker.)

* Beware the RACs: They're as tough as you expect them to be. But obsessive preparation through internal chart reviews and case management, plus connecting with a physician adviser for review, can help in winning RAC challenges.

If you were at the show, I'd love to hear what you noticed, what you learned, and especially, how you plan to respond. I realize that with reform looming, some of you are taking a wait-and-see posture, but life goes on regardless of what the wise men and women do on the Hill. So tell me: Are you ready for what's next? - Anne

SPOTLIGHT: Patient care rationing squeezes medical practices

Anne Zieger — Wed, 17 Jun 2009 14:06:16 -0400

With patients delaying or avoiding care entirely due to financial troubles, medical practices are finding that their revenues are falling, with many forced to take harsh steps to cut costs. Not only has volume fallen, but practice patterns have changed, with many physicians caring for more Medicaid patients. Article

GE offers interest-free loans to boost EMR spending

Anne Zieger — Wed, 17 Jun 2009 13:52:04 -0400

GE has begun offering no-interest loans to hospitals and doctors buying its GE Centricity EMR and enterprise technology, a program that is part of its "Healthymagination" initiative. Not only are the loans offered at zero interest, providers can also delay payments on their purchases. The loans are being financed by GE Healthcare and GE Capital.

By offering the program, dubbed Stimulus Simplicity, GE promises to make sure EMRs are certified by certification body CCHIT, which will be required for providers to get federal stimulus dollars. GE executives say these loans should lower barriers to EMR adoption, including worries about EMR standards and interim funding issues.

GE has set aside $100 million for the project, a paltry amount by finance services standards but presumably enough to get the ball rolling. (Our guess is that GE will have to expand the heck out of this one.)

To learn more about the program:
- read this Healthcare Finance News article

Group wants new incentives for e-ordering imaging

Anne Zieger — Wed, 17 Jun 2009 13:41:37 -0400

Right now, there's a clear consensus that private and public health plans should reward the use of e-prescribing, which has been shown to improve safety and cut costs. Now, a group is arguing that these incentives should include rewards for electronically ordering diagnostic imaging tests, too.

The Imaging e-Ordering Coalition, which includes the Center for Diagnostic Imaging, GE Healthcare, Merge Healthcare and Nuance Communications, contends that e-ordering of imaging will simplify physicians' decisions are made and preserve the doctor-patient relationship, while still verifying that procedures are appropriate and safe.

While this sounds noble, the group's real goal is arguably to help stem the growing use of radiology benefits management, which many doctors see as intrusive and inappropriate. Meanwhile, it also wants to act as a resource for Medicare on an imaging demonstration project, and work with radiology interests to set standards for e-ordering technology and procedures.

To learn more about the coalition:
- read this Modern Healthcare item (reg. req.)

MedPAC wants physician payment incentives changed

Anne Zieger — Wed, 17 Jun 2009 13:31:41 -0400

In an announcement likely to be taken seriously--as its recommendations may soon be implemented automatically--MedPAC has released a report suggesting that Medicare change the way it pays providers boost care coordination and efficiency. The commission contends that current incentives reward volume instead of value.

To address these issues, MedPAC called for a greater focus on graduate medical education, which it argues could support and promote new Medicare incentives. It also looks at accountable care organizations as a means of improving quality, lowering cost growth and increasing care coordination.

The commission also examined self-referral on imaging, and concluded that physicians are more likely to order imaging tests and incur higher costs if they invest in imaging equipment. This conclusion squares with previous academic studies.

To learn more about this story:
- read this Healthcare Finance News piece

Women over 45 more likely to commit fraud, embezzlement

Anne Zieger — Wed, 17 Jun 2009 13:24:22 -0400

To combat fraud and embezzlement in your organization, be aware: women over the age of 45 are most likely to such acts. This includes everything from taking office supplies to stealing checks, according to one presenter at this week's Healthcare Financial Management Association conference.

Their reasons for committing these crimes include a need for money, revenge against employers they consider unfair and the thrill of meeting the criminal challenge, according to J. Verne Singleton, CEO of the Eating Disorder Center of Denver. Some triggers for such behavior include performance-based awards, which may stir jealousy, and acute financial needs.

Providers who are victimized by these crimes often have non-existent or ineffective internal controls, a decentralized organizational structure in which execs don't know enough about operations, and a weak disciplinary structure.

To avoid fraud, implement internal controls and strict accounting measures, change computer passwords and locks, have employees sign requisitions, enforce vacations and rotate employees through various duties, Singleton says.

To learn more about this issue:
- read this Healthcare Finance News piece

SPOTLIGHT: Measuring MD performance won't lower costs

Anne Zieger — Wed, 10 Jun 2009 01:20:33 -0400

Measuring physician performance probably makes sense, but doing so isn't a cure all. For one thing, taking such measures without improving quality may not do anything to lower costs, according to a new study by the Center for Studying Health System Change. Article

Case study: MS hospital can't use facility as financing collateral

Anne Zieger — Wed, 10 Jun 2009 01:09:36 -0400

Everyone's considering innovative moves to finance new construction, given the sharp limits on the bond deals that used to fuel many such deals. But recently, one hospital found that it wouldn't be able to implement one strategy it had in mind.

Neshoba County General Hospital and Nursing Home in Mississippi wanted to execute a deed of trust on the property that constitutes the hospital campus as a means of getting construction financing. The hospital wants to build a new 54-bed county facility, one option for coping with the fact that its main buildings are aging quickly. That could take as much as $100 million, trustees estimate.

However, plans to finance it by pledging land didn't fly with state officials. The state's Attorney General has just released a ruling that it can't get financing that way, saying that state law allows trustees of community hospitals to borrow against equipment and assets, but not real property.

To learn more about the ruling:
- read this piece in The Neshoba Democrat

Survey: Non-profits see dismal 2008 results

Anne Zieger — Wed, 10 Jun 2009 00:41:43 -0400

Non-profit hospitals had a dismal year in 2008, with investment losses sapping whatever margins they were able to squeeze out of operational improvements, according to the results of a new survey compiled by trade publication Modern Healthcare.

The survey, which included data from 203 multihospital health systems, showed that the group of religious, secular and locally-run government systems had overall net losses of about $5.9 billion. The average system showed a $31 million net loss for fiscal '08, the worst performance in recent memory.

This contrasts sharply with the dozen for-profit systems that participated, which did much better, if not incredibly well. The systems had a net income of $123 million for fiscal '08. For-profit hospital systems nationally, including large systems like Tenet and HCA, had overall net income of $1.5 billion.

Perhaps in bad times, running hospitals on a mass scale offers economies, while in better times, more intimate relationships with customers are more fruitful? Not necessarily. What was more significant was that for-profits have two big advantages over non-profits: they don't rely on variable-rate bonds, which have been in the doghouse of late, and they don't maintain large equity portfolios.

To learn more about these results:
- read this Modern Healthcare piece (reg. req.)

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CA system's contract measures OK'd, bond charges dropped

Anne Zieger — Wed, 10 Jun 2009 00:01:53 -0400

Recently, a San Diego-area publicly-owned integrated delivery system known as the Palomar Pomerado Health District was accused of misusing bond funds. The accusation was related to the air of secrecy around its contract with Kaiser Permanente, a posture that allegedly violated state public disclosure requirements. Now, however, after 10 months of investigation, a grand jury has concluded that Palomar Pomerado had done nothing to justify the accusation.

Thanks to a local ballot initiative, Palomar was the beneficiary of a 2004 bond issue providing funds of up to $496 million for capital improvements to its facilities. More recently, when it released Kaiser contract documents that included redacted details--including how much money was involved--critics charged that it was involved in something shady that compromised its receipt of the bond money. They suggested that it should have revealed the contract when the bond issue vote was pending.

Palomar executives, for their part, contended that the contract details were trade secrets, and that releasing them would put the system at a competitive disadvantage relative to other hospital systems in the region.

The grand jury agreed, saying that the system was "following prudent business practices," and even seemed a bit surprised by the entire mess. "The grand jury found nothing to suggest there was anything out of the ordinary about the Kaiser Permanente contract," said grand jury report, which actually praised the system's operations.

To learn more about the issue:
- read this San Diego Union-Tribune piece
- read the grand jury report (.pdf)

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Report: Hospital IT spending to hit $6.8B by 2014

Anne Zieger — Tue, 09 Jun 2009 23:32:25 -0400

With federal stimulus payments encouraging spending, U.S. hospitals' investment in IT should see healthy growth over the next five years, according to new research released by HIMSS Analytics. Spending should climb from $4.7 billion this year to $6.8 billion in 2014, growing at a compound annual growth rate of 7.5 percent, researchers predict.

Investments will focus on clinical automation, along with changes related to the ICD-10-CM codes for claims and the new 5010 standards for electronic claims. The report predicts that hospitals will invest 43 to 48 percent of their total capital budgets on IT this year, a substantial amount, but less than they spent in 2007, HIMSS notes.

Still, the numbers suggest that spending on IT is recovering from a dramatic slump seen in 2008, when investments were $3 billion to $6 billion lower than HIMSS Analytics had predicted. It's not surprising that spending was low last year, researchers note, given that hospital bond serving expenses were high and endowment funds were sapped by stock market turmoil.

To learn more about this trend:
- read this Health Data Management piece

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Hospital lobby asked to look for healthcare savings

Anne Zieger — Tue, 09 Jun 2009 23:23:33 -0400

Can hospitals really deliver healthcare savings? The Senate Finance Committee is asking them to deliver, specifically by finding ways to shave costs off of Medicare and Medicaid over the next decade. The idea is to pay for the cost of pending health reform. In theory, the idea is always to do so by improving care or efficiency, but in reality hospitals are likely to take it on the chin, as usual.

Finance Committee staffers are meeting with American Hospital Association reps, as well as people from the Federation of American Hospitals and the Catholic Hospital Association to figure out just how to pull off this trick. The Finance staffers don't just want cuts, however, they want cuts that the Congressional Budget Office can actually measure.

Washington lobbyists outside of the hospital industry are betting that the cuts could add up to as much as $220 billion over the next 10 years. That's a nice number, though it doesn't do much to defray the $2 trillion promised by the parties to the recent cost-cutting announcement.

The downside of all of this is that with cost-cutting this extreme, there'd probably be Medicare and Medicaid reimbursement cuts, something that could do serious harm to an already shaky system. Not a pretty picture--finance people being asked to design their own noose.

To learn more about the discussion:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
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SPOTLIGHT: Harvard mobile van saves health system $20M

Anne Zieger — Wed, 03 Jun 2009 10:19:08 -0400

Harvard Medical School has run a "curbside clinic" van for 17 years, offering free tests and health counseling in low income neighborhoods. This, of course, is a great community service. What's interesting, however, is that it's also a major health cost saver. A new study concludes that the van saved the healthcare system about $20 million last year by getting patients with poor healthcare access to avoid emergency department care. Article

New Hampshire hospitals face financial trouble

Anne Zieger — Wed, 03 Jun 2009 10:11:07 -0400

Another depressing story from the hospital front lines, this time from the state of New Hampshire. A new survey from the New Hampshire Hospital Association concludes that a full 85 percent of its members are still seeing their financial health decrease thanks to the recession. That's a downer, particularly when you consider that 95 percent have tried to reduce costs by lowering overhead and cutting staff members.

The survey also offered some insight into what's pushing these hospitals into the mud. It found that 60 percent of community hospitals were seeing increases in the volume of uninsured patients pouring into their emergency departments. Another blow was uncollectible fees; 70 percent of hospitals said more patients couldn't pay for care during the first three months of 2009 versus the first three months of last year.

Meanwhile, 48 percent said that their ability to fund capital projects, like health IT upgrades and facility improvements, has gotten worse; 43 percent said things had not improved.

Despite this, hospitals are still under pressure to meet community health needs, and those needs are increasing. Demand for clinics, screening and outreach activities is increasing, while charitable contributions are falling, hospitals said.

To learn more about the survey:
- read this HFMA News item

Related Articles:
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Survey: One-third of doctors don't accept credit cards

Anne Zieger — Wed, 03 Jun 2009 09:58:21 -0400

A new survey suggests that one of the key components in making high-deductible plans work--the ability to collect those deductibles easily--isn't in place for many medical practices.

The survey, by SK&A Information Services, found that while the number of practices accepting plastic climbed 5 percent over last year, 33 percent of the country's medical practices still don't accept credit cards for payment. The survey, involving telephone interviews with 202,650 physician offices, was conducted in April of this year.

Researchers found that physicians are reluctant to accept such payments because patients are being slammed by high interest rates, not to mention that many patients simply can't qualify for credit cards in the first place. In other words, doctors aren't accepting the cards because they're too much trouble for patients, the data suggests.

The survey concluded that plastic surgeons are most likely to take credit cards, with 91 percent of offices accepting them, followed by opthalmology, at 84 percent, bariatrics, at 83 percent, and otolaryngology, at 83 percent. Pathology offices were the least likely, at 21 percent acceptance.

To learn more about this survey:
- read this Healthcare Finance News piece

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Tenet wants to buy back $1B in senior notes

Anne Zieger — Mon, 01 Jun 2009 15:59:59 -0400

Tenet Healthcare Corp. seems to think it has a chance of selling $1 billion worth of bonds, despite the still-reeling bond market. The company has made an offer to repurchase up to $1 billion in existing notes, contingent on its ability to sell new bonds that equal the amount it's buying.

This is one of a few moves Tenet has made to reduce its massive debt exposure. Earlier this year, it closed a deal that got rid of $1.4 billion in bonds due in 2011 and 2012, with about $700 million in bonds due in 2015 and 2018. Execs said they made the move to ensure the company could remain liquid, even if the bond markets stayed troubled.

In other news, Moody's Investors Service has assigned a B1 rating to Tenet's proposed offering of $450 million in senior secured notes, and affirmed its B3 Corporate Family and Probability of Default ratings, along with the Ba3 rating on its revolving debt. The ratings for its existing senior secured and unsecured notes have been placed under review for possible downgrade. If the $1 billion offer goes through, Moody's expects to downgrade ratings on Tenet's senior secured notes.

To learn more about Tenet's financial position:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
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HFMA releases model charity-care policy for non-profits

Anne Zieger — Mon, 01 Jun 2009 15:27:11 -0400

The Healthcare Financial Management Association has released a model charity-care policy, in a move that is likely to help non-profit hospitals to prepare for tighter IRS scrutiny of their charity care policies. A more uniform charity-care policy among non-profits is likely to be helpful politically, as well, as excise taxes on badly-behaving non-profits are on the table in Congress.

The policy defines charity care as costs for care that "[are] never expected to result in cash inflows." The model policy specifies that patients who are eligible for subsidized or free care are uninsured, under insured, ineligible for government programs or otherwise unable to pay for medically necessary care.

It recommends various methods for determining need, as well, including an application, credit scoring or use of other public information, an asset assessment and prior payment history. Other alternative criteria it recommends include homelessness; residence in low-income or subsidized housing and participation in state-subsidized aid programs such as food stamps. In these situations, only discounts of 100 percent are appropriate, it says.

The policy didn't set threshold household income levels for eligibility, but it might yet have to make such recommendations. Otherwise, with states setting their own criteria, it might lose its opportunity to set the standard.

To learn more about the policy:
- read this Modern Healthcare piece (reg. req.)

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Fitch: Investor-owned hospitals have strong operating earnings

Anne Zieger — Mon, 01 Jun 2009 15:24:12 -0400

Things have been incredibly tough over the past couple of years, both for non-profit and investor-owned hospitals. But despite decreasing patient volumes, rising bad debt and price pressures, investor-owned hospitals have managed to post strong operating earnings for the quarter ended March 31, according to Fitch Ratings.

In a recent report, Fitch notes that EBITDA was up 10 percent for the 12 months ended March 31, as compared with the previous year's period, despite the pressures they face. Given this success in boosting operating earnings, the companies have been able to lower their debt-to-EBITDA ratios by 5 percent in the three months between Dec. 31 and March 31 alone, Fitch said.

Fitch notes that part of the reason such hospitals have stayed afloat may be cost controls. Investor-owned firms have cut or canceled employee merit increases, benefits and the use of contract labor, and some have ratcheted down supply and malpractice costs.

To learn more about this report:
- read this Modern Healthcare piece (reg. req.)

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