Archive for the ‘Finance’ Category

As we approach the half-way point of 2012, an important court case that will dramatically affect the healthcare industry is about to be decided. Next month, the United States Supreme Court is scheduled to decide the constitutionality of the Affordable Care Act. The Supreme Court has heard oral arguments on and may decide the following issues:

1) Whether the penalty for noncompliance with the individual mandate is equivalent to a tax.
2) Whether the individual mandate is legal.
3) Whether the individual mandate is illegal, whether the rest of the Affordable Care Act is also illegal or whether it is severable from the individual mandate.
4) Whether Congress illegally required states to expand the Medicaid program.

Unfortunately, due to the various burdens employers and state governments face in complying with the Affordable Care Act, not all of these issues may be decided as soon as we hope. If the Supreme Court determines the penalty for noncompliance with the individual …

Continue reading Taxes – Do We Know One When We See One? »

Are those broken eggs in your basket? It’s a great time to check!

Continue reading The Path of Least Resistance….or Fiduciary Responsibility »

There’s been a great deal of debate regarding mergers in healthcare. For regional or smaller community hospitals, their viability in many cases may depend heavily on larger economies of scale. What about doctors, physician practices and outpatient centers?  From a lender’s perspective, there is definitely strength in numbers!  

As shrinking reimbursement becomes the 800 pound gorilla for all healthcare providers, we have to look towards improving efficiencies to survive. From throughput and case management to materials management and contract negotiations, providers have to find ways to improve across the board and cut waste within their existing processes. On top of improved efficiencies, they have to continually drive volume growth.   Procedure rooms with the lights off during operating hours at an ASC are critical dollars missed.  On one side of town there’s a patient waiting 3 days or more for a scan and on the other side of town there’s a CT sitting idle. 

Single …

Continue reading STRENGTH IN NUMBERS »

In general, the letter requests that the IRS make Part V, Section B optional for 2011 (as the IRS did for 2010) to allow additional time to work through the application of these rules to a diverse group of charitable hospitals, to eliminate redundancies that have no clear relationship to the statutory requirements of the law or that do not result in a clear benefit to the public, and to simplify reporting for increased understanding (and to eliminate unneeded paperwork).

Continue reading Red Tape -Why does an Undermanned Agency Create Unnecessary Work? »

It’s not what I say, but what you hear that has meaning for you. In all situations, clear communication is paramount to success and efficient operations. The ability to work together, understanding and leveraging different skill sets, leads to a better work flow.  Knowing your strengths and weaknesses, and knowing when the time and situation are right for turning over control to a trusted partner, will help strengthen your competitive advantage and greatly improve your chances of success in the most challenging sector of business.  We all need to get a lawn mower! 

If what you say and what people hear are two different things, you’re in trouble. Creating clear and concise channels for communication and protocol on top of a foundation of trust and confidence go a long way.  About the title of this post, I actually suggested, “We all need to get along more,” as in get along better, communicate better, find a balance of mutual respect.  But the person to whom I was speaking …

Continue reading WE ALL NEED TO GET A LAWN MOWER »

Capital planning for the unexpected

I was enjoying my New Orleans’, 6-napkin roast beef po’boy, carefully avoiding the anticipated drip down my shirt and realizing how healthcare and this dripping sandwich have a lot in common. Healthcare is challenged from every angle and the constant, multi-front battle creates opportunity for waste, inefficiency and non-compliance.  Improving in one area almost certainly leaves another vulnerable.  If a provider gets caught up, legislation changes or reimbursements get slashed.  The drips in the napkin are an acceptable casualty because we know we can’t possibly keep it all in the bread.  But what about the drips down the chin? What about the drips on the shirt, embedded deeply in the fabric’s fibers and potentially causing permanent stain?   As the pendulum shifts from doing more with more, to doing more with less, and finally doing less with less, are we finding healthcare on an unsustainable trajectory?

While healthcare has always …

Continue reading Healthcare and the 6-napkin Roast Beef Po’boy »

For a number of years federal laws and legislation related to anti-kickback restrictions, often referred to as “Stark Laws”, have restricted the ability for physicians to own inpatient healthcare facilities, such as acute-care hospitals, long-term care facilities, etc.  The primary impetus behind the Stark Laws was to limit the ability for physicians to refer patients to an entity that the physician has a financial interest of some sort; this could include equity ownership, creditor or incentive-based compensation arrangements based on referrals.  In case you are not familiar with the inner workings of the healthcare industry, this is generally referred to as “self-referrals”.

Just recently the Centers for Medicare and Medicaid Services (CMS) released a “final rule with comment period” relating to regulations around physician-owned hospitals.  The changes were relatively minor, making slight modifications to the “process through which physician-owned hospitals …

Continue reading Give Physicians a Chance to do Something About Improving Healthcare »

Under provisions of the Patient Protection and Affordable Care Act (the “Affordable Care Act”), beginning in 2014, many employers that currently offer health insurance may no longer do so. The Affordable Care Act does not require employers to offer health insurance coverage. Instead, it penalizes large employers that do not offer minimum essential coverage or coverage that is not considered affordable

Continue reading Employer Sponsored Health Coverage – What Changes Are Coming? »

Moody’s continuing negative outlook for the entire sector of healthcare certainly plays a part in the “flight to quality.”  We’ve discussed previously that the largest lenders in healthcare have moved up stream, providing ample capital and solutions to the highest investment grade providers.  This is certainly beneficial to these larger, or financially strongest hospitals and systems because it has caused a rate compression of unprecedented levels.  That means the spread over the lenders cost of funds is deeply reduced from normal, target spreads.  This results in lower profit for the lenders for these loans, but the trade off is the greater security of the largest and most stable credits in the sector.   What about the rest of the sector and what are some creative approaches to solve current capital needs?

The rest of the sector is largely left underserved.  The community hospitals or smaller systems either un-rated or non-investment grade are turning largely …

Continue reading Flight to Quality: The Banking Crisis and Healthcare »

So often hospitals think of growth in terms of dollars and sense.  When a hospital administrator evaluates opportunities to expand their services, the metric that frequently carries the most weight in deciding whether to commit funding to a project is a financial one, like return on investment.  

This isn’t necessarily wrong.  Even for nonprofit systems that are seen as the stalwarts of their community and provide millions of dollars in charity care year-over-year, the old truism “margins = mission” is still relevant.  In order to fulfill even the most high-minded mission, hospital leadership must be financially responsible and take caution in committing funds to any venture that may lose money, as it will inevitably hold larger consequences for the entire system (whether in terms of credit ratings, solvency issues, community perceptions, etc).  

However, as frequently reported in the press, we know that there still exists a substantial need for better and more …

Continue reading The Case for Metrics in Improving Access »