Archive for June, 2011

M&A Activity on the Rise, Georgia No Exception

According to the consulting firm Irving Levin Associates, hospital merger and acquisition deals have experienced a significant boast in the past year and half.  As seen below, the number of deals increased by 40% from 2009 to 2010, where total deal value rose from $1.7 billion to $12.6 billion for that same period.  This year is set to continue the pace, having 23 deals in the first quarter alone.  M&A Activity

This comes as no surprise to hospital leaders.  From a recent survey by HealthLeaders Media (“Hospital Mergers and Acquisitions:  Opportunities and Challenges,” November 2011), 86 percent of hospital leaders are expecting increased acute care M&A activity across the next 12 months.  In addition, 87 percent expected the Patient Protection and Affordable Care Act, if enacted, will drive volume.  That same survey showed that the top three physician specialties for M&A activity are hospitalists (70%), primary care (69%), and cardiology (66%).     

How do we here in Georgia stack up to …

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The Value of Good Auditors

As I discussed in my first blog, revenue recognition is a fertile area for healthcare financial fraud.  What measures can be taken to prevent this problem.

The potential of being caught most often persuades likely perpetrators not  to commit the fraud.  Stated another way: if you think there is a good chance of being caught you will not commit fraud.  The potential of being caught and the existence of a thorough control system are critical to any effective fraud prevention program.  It is best to be proactive rather than reactive. At Healthsouth the first time we fraudulently adjusted our revenues we  discussed the chance of being caught. All involved agreed we did not think what we were doing would attract the auditor’s attention.

The audit committee of the board must be staffed with people with some understanding of healthcare revenue recognition.  These board members must spend more time at the  company than just board and committee meetings.  The directors must have …

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Expanded Exemption Standard for Hospitals

Since 1969, the tax-exemption requirements for nonprofit hospitals have been known as the community benefit standard. This standard requires nonprofit hospitals to operate for the overall benefit of the community served by the hospital.  (Please note that for purposes of this discussion, the term nonprofit is a legal term signifying the status of incorporation under state law. Nonprofit status is distinguishable from tax-exempt status which is determined under the Internal Revenue Code.)

In general, under the community benefit standard a nonprofit hospital should: (1) have a board of directors that represents the interests of the community; (2) operate an emergency room 24 hours a day, 7 days a week open to all patients regardless of their ability to pay for such health services; (3) participate in public health programs and provide care in a nondiscriminatory manner  to all other individuals able to pay the cost of medical services; and (4) reinvest any net earnings into new …

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Accountable Care: A Culture and Payment Change

In today’s environment, Providers are generally paid a fee for each service rendered. Therefore, Providers increase revenues by increasing patient visits and working longer hours to see more patients a day. However, the Centers for Medicare and Medicaid Services (“CMS”) policy and program initiatives have been driving to a new model, Accountable Care. Accountable Care takes the old model of fee for service and turns it upside down.

Under an Accountable Care program, Providers are paid based upon their quality outcomes. The Patient Protection and Affordable Care Act (“Healthcare Reform Act”) created the Shared Savings Program which is an Accountable Care Organizations (“ACO”). The ACO model is intended to require Providers to create a new legal organization that is financially and clinically integrated. This clinical and financial integration is intended to coordinate care among hospitals, physicians and suppliers as well as integrate reporting on financial and …

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Clinical Integration and the Healthcare System of the Future

When one speaks on topics like healthcare reform and the future model of healthcare delivery in the United States, we will often hear about innovative technologies that are going to revolutionize the healthcare system and solve all of its inequities.  Technologies that tell your elderly family members when to take their medication; or, tools that allow people to track their medical history via the Internet – these types of things are often presented as the future of the US healthcare system.  The multitude of innovative solutions flooding into the industry on a daily basis promise to enhance the quality of healthcare services and decrease costs associated with these services for patients.

Technological innovation will be a critical component of any US healthcare model that is adopted in the future.  Our medical services are too vital not to embrace advanced tools, resources and technologies that can absolutely make the system better.  But aside from technology’s role in the …

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Change is underway and there are positive signs

Whether the “Patient Protection and Affordable Care Act” (a.k.a. Obamacare) is upheld or repealed, the undercurrent of change is underway. Not the type of change where government mandated healthcare insurance is overseen by a new regime of government bureaucrats and the tax payers ultimately pay the bill. I am referring to a positive change that is the reengineering of healthcare delivery. If you are thinking this is code for the rationing of healthcare, you’re wrong. It is a fundamental change in the thinking of how healthcare delivery can be improved while reducing costs and making it more affordable. Like any business, decisions are made based upon how we are compensated. As any company wants to drive a business in a strategic direction, they need to align the goals and compensation across an organization. Revision in compensation for healthcare services is one of the catalyst’s that is creating this alignment in rethinking the delivery of healthcare. 

Historically the …

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All Roads Lead To Here

” Reform of the health care financing and delivery system is inevitable.” I wrote those words in 1991.  I made that prediction based on economics: health care cost inflation had average twice the rate of general price inflation since the end of World War II; 2 million Americans had lost employment based health insurance in the preceding year; and access to care was becoming a major issue as hospitals closed in increasing numbers.

My prediction was not radical or out of the mainstream, yet it took almost 20 years to come true. The delay was due in part to politics, but it also resulted from a change in economic fundamentals for the health care system: health care cost inflation moderated, the economy grew extremely fast; and the resulting  tight labor market led to an increase in employment-based health insurance coverage. In fact, in the late 90s the US experienced one year in which the number of uninsured did not grow for the only time since the Census bureau has been …

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ACOs, EHRs and small practices

ACOs will require more than an EHR for practices to be successful within this model of care. We must assure that we develop programs that will help small practice become successful and remain independent.

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Are Medicaid Incentives a Good Idea?

The Federal Healthcare Reform bill includes a $100 million grant to reward Medicaid Recipients for Healthy Habits. While States have some flexibility in how to institute the programs, the programs must address one of the provided prevention goals: tobacco cessation, controlling or reducing weight, lowering cholesterol, lowering blood pressure, and diabetes prevention and management. In return, successful Medicaid recipients will receive some sort of financial incentive.

While it has been argued by many that a key to Healthcare Reform is preventative care, behavioral incentive programs have been largely untested in this demographic. This begs the question whether or not these incentive programs are the best use of the Federal Grant monies? If the Federal Government wants to encourage preventative care, would the $100 million not be better invested in the creation of community programs catered to these goals?

There is also little research on the long term effects of these …

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Taxpayers Deserve to Know What They are Paying For

When taxpayers are footing the bill, the cost of goods or services should be transparent.  From coffee shops to beauty shops and wherever seniors gather throughout America, the talk these days is about modern science and how those who have been in pain for years can now have routine knee or hip replacements.

Other medical devices such as pacemakers and stents are extending the lives of and improving the quality of life for older Americans. As the first of 78 million baby boomers begin to retire this year, they will enroll in Medicare and many will have these procedures.

The problem is the federal government is paying top dollar for anything from a titanium shoulder to a spinal implant. Medical device manufacturers require hospitals to sign confidentiality agreements that make it impossible for hospitals to disclose or document the cost of devices in order to inject true price competition into the $153 billion medical device marketplace. Some physicians earn consulting fees for …

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