Archive for the ‘Finance’ Category

Give Physicians a Chance to do Something About Improving Healthcare

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 …

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Employer Sponsored Health Coverage – What Changes Are Coming?

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

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Flight to Quality: The Banking Crisis and Healthcare

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 …

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The Case for Metrics in Improving Access

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 …

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Accountable Care Organizations – Is the IRS Impeding Needed Health Reform?

Due to the significant capital required to operate an ACO, the IRS should allow investments in preferred stock by larger organizations to facilitate the participation of physicians as investors.

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Impact of Repealing the Sustainable Growth Rate

As the summer heat subsides and the leaves are starting to brighten, the debate over healthcare reform in Washington only continues to heat up.  Last week, the Medicare Payment Advisory Commission (MedPAC) released a draft proposal that recommended to Congress to repeal the Sustainable Growth Rate (SGR), which had previously proposed to cut physician reimbursement by 30% as of January 1.  The SGR has been at the center of the debate over Medicare reimbursement since 2005 when the first cuts were recommended by MedPAC.

The conflict with the SGR has always been that it does not account for the rising costs of providing care, nor does it have any mechanism for inflationary adjustment.  As such, for the past few years, Medicare has been forced to recommend payment cuts to Congress, which were prevented only by legislative action to prevent the cuts from going into effect.

With the elimination of the SGR and the prevention of the 30% cuts, this means that there will be a …

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The Importance of Capital in Building Atlanta as the Center of Healthcare Technology

Many people in Georgia may not realize this, but we represent the largest cluster of healthcare information technology (HCIT) companies than any other region of the country, measured by revenues and market capitalization.  This includes Silicon Valley, Boston and Nashville, all of which are major geographic hubs for technology and/or healthcare companies.  Over the past ten years or so, Atlanta has become the hub for the HCIT community, a growing sub-sector of the healthcare industry that many consider to be one of the most critical and vital components to America’s future healthcare delivery model, based on where today’s system is currently heading.

Unfortunately, Atlanta’s leading role in what is turning out to be perhaps the most vital piece of the healthcare reform discussion and a major target of billions of stimulus dollars is new information to most within the North Georgia area, as well as outside this region.  What’s more, we are currently in one of the most …

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Hospitals: You’re all Investment Grade anyway….right?? Maturing bonds aren’t an issue….are they?

“I’ll be glad when the markets get back on track….What worries me now though is that they may already be on track; it’s just a different track.”

Refinancing G.O. bonds, replacing VRDO’s, eliminating the risk of your floating rate instruments and bringing stability back to your capital planning could be critical first steps in helping your hospital or system navigate these troubled waters. In fact, through a private placement you may save thousands and immediately improve cash flow. Today more than ever, the more relationships you have in lending will help ensure you have viable options for your continuing success and survival.

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Healthcare Reform is missing the mark to reduce a key driver of healthcare costs

Healthcare Reform is missing the mark to reduce a key driver of healthcare cost, chronic diseases. It does not contain a strategy or approach to control or reduce the costs associated with chronic diseases. A chronic disease is a medical condition that cannot be cured and usually lasts a lifetime. An example of a chronic disease is Diabetes. The CDC estimates that seventy five percent of U.S. healthcare costs can be attributed to chronic diseases and is responsible for seven out of ten deaths. There is also the associated cost of disability with chronic diseases that takes productive people out of the workforce. When this occurs, a financial burden is placed on their family and subsequently the U.S. healthcare system.

Healthcare reform under the stewardship of the current administration and Centers for Medicaid and Medicare Administration (CMS), are testing various healthcare delivery models and forms of payment such as an Accountable Care Organization (ACO) and Bundled …

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Spending to IMPROVE your bottom line

Counterintuitive? Not at all! Keeping up with your clinical life-cycle and leveraging the latest technology is paramount to your ongoing success. Most, if not all hospitals are coming off a long spending freeze in reaction to the continuing recession. Getting your purchasing back on track, upgrading equipment and taking advantage of the latest technology to improve efficiencies and profitable revenue, will positively impact your bottom line.

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