Archive for the ‘Management’ Category

WE ALL NEED TO GET A LAWN MOWER

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 …

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Healthcare and the 6-napkin Roast Beef Po’boy

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 …

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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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The Direction of the U.S. Healthcare Services

The delivery of U.S. healthcare services is going through a profound change. Yet this change is occurring in the background and not apparent to the general public. The driving force behind this change is payment reform to healthcare providers for medical services delivered. The underpinning of this change is the reduction of cost in the delivery of healthcare services to make it more affordable. The initial step of payment reform has been the reimbursement models of Bundled Payments and Accountable Care Organizations. These new forms of reimbursement are forcing healthcare providers (hospitals, physicians and other care delivery services) to re-examine and redefine the delivery of services and working relationships. The changes being initiated are positive and took something extreme like payment reform to push organizations to look at how healthcare is delivered and make changes in the manner business is done. The outgrowth of these changes will be positive for our society by …

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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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Primary Care: The New King of the Schoolyard

It was a different story only five years ago.  For most medical students finishing their residencies and many in the medical profession, primary care as a medical field represented the ugly stepchild of the family and the last to picked in gym class.  The jocks and cheerleaders (e.i., cardiologists and radiologists) were looked up by everyone in the playground and were the kings/queens of the school.  And when compared to specialists, primary care physicians (PCPs) were in fact generally paid less and subject to working longer hours with many days filled with fevers and strep throat.  

However, that is dramatically changing in our post-reform environment.  With headlines like “recruitment demand high for primary care doctors” dotting newspapers and blogsphere, the field of primary care has emerged as the new “it” profession in medicine.  According to a 2010-2011 study by Merritt Hawkins, family practice and general internal medicine physicians were the top two …

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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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The Call for Fair Compensation

Periodically, the topic of nonprofit executive compensation arises. As a CPA working with healthcare organizations, I am often involved in structuring, reviewing and reporting on compensation plans for our clients.

On July 5, 2011, an article written by M. B. Pell was published in The Atlanta Journal Constitution addressing the topic of chief executive compensation at several tax-exempt, Atlanta area hospitals. In that article, a former state Department of Community Health Commissioner expressed an opinion that when a tax-exempt hospital’s CEO has a salary rivaling that of corporate executives, the charitable work [of such hospitals] is obscured by the pursuit of profit. The individual is quoted as saying [about high CEO salaries], “I think it makes a statement about what their priorities are, and I think that’s the bigger issue. It displays a lack of sensitivity for the communities they serve.” I disagree.

Tax-exempt organizations do not have shareholders in the …

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A Foundational Component to Reducing Healthcare Costs – Bundled Payments

The challenge of reducing healthcare costs in the U.S. is analogous to our country trying to be energy independent. Both are complex, achievable, will take time to solve and require a combination of solutions. Until we discover technological breakthroughs that cost effectively meets the market demand, challenges can be overcome with existing resources.

A foundational component to reducing the cost of healthcare is a reimbursement model for hospitals and physicians called “Bundled Payments”. This form of reimbursement addresses one of the underlying reasons for the escalating expense of healthcare. This is the misalignment of how hospitals and physicians are compensated. For example, hospitals are paid a set fee by Medicare for patients with a specific diagnosis. So regardless of how long a patient is in a hospital or the number of medical tests performed, the hospital is not compensated any more than the specified amount. Therefore, hospitals are incentivized to deliver …

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