The Acute Care Inpatient Hospital

Posted on December 8, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding Hospital Types

By Calvin W. Wiese; MBA, CPA

According to Healthcare Organizations [Financial Management Strategies], an acute care inpatient hospital is a healthcare organization or “anchor hospital” in which a patient is treated for an acute (immediate and severe) episode of illness or the subsequent treatment of injuries related to an accident or trauma, or during recovery from surgery www.HealthcareFinancials.com

Complex and Sophisticated

Specialized personnel using complex and sophisticated technical equipment and materials usually render acute professional care in a hospital setting. Unlike chronic care, acute care is often necessary for only a short time. Measures of acute healthcare utilization are represented by three separate rates:

· rate of admissions per 1,000 patients;

· average length of stay per admission; and

· total days of care per 1,000 patients.

Assessment

http://www.HealthDictionarySeries.org

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

***

Filed under: Health Economics, Health Law & Policy, Practice Management | Tagged: acute care hospitals | 1 Comment »

Eight Fallacies of Managed Care

Posted on December 8, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

A Startling iMBA Inc., Report on Small Medical Practices

[By Dr. David Edward Marcinko; MBA, CMP™]

[By Hope Rachel Hetico; RN, MHA, CMP™]

[By Ann Miller; RN, MHA]

Webster defines a visionary as: “one who is able to see into the future”. Unlike some pundits, prescience is not a quality we claim to possess. To the purveyors of small medical practice gloom however, the future for physicians is a bleak “fate’ accompli”. If you are of this philosophical Ilk – we politely but firmly disagree. In fact, during a recent brainstorming session at the Institute of Medical Business Advisors www.MedicalBusinessAdvisors.com we arrived at some startling conclusions that challenge contemporary information. Therefore, “ceretas paribus” – all things being equal – these findings impute conventional wisdom and are called: The Eight Myths of Managed Medical Care.

MYTH 1: “Solo and Smaller Private Practitioners Will Die”

Economies of scale and prevailing Health Information Technology (HIT) systems may indeed force some smaller allopathic, podiatric or osteopathic practices, as well as some “surgical” specialists, into group or non-equity based practices. New “one-stop medical malls” are desirable to HMO’s because of their urgent or emergent care availability, myriad of provider types and quality assurance mechanisms. This will even happen in non-procedure based family practices, with internists and in currently spared rural areas as Integrated Systems Digital Networks (ISDN), Regional Health Information Organizations [RHIOs] and related computer transmission technology becomes more available and less expensive. But, routine medicine is ideally suited for the repetitive task orientation philosophy of many of HMO’s.

MGMT. TIP: If you want to remain a private or solo practitioner, re-engineering one’s office activities (cost drivers) to reduce steps that do not add value to your services is perhaps all that is needed to increase efficiency and net margins. Strive to reduce duplicated activities and redundant data transmissions and people tasks. Delegate responsibility and lower the decision making threshold to a need-to-know basis. Empower appropriate employees and make them accountable for their decisions, but do not give them responsibility without authority. As time progresses, steps to reduce variable and then fixed costs, can be implemented to further increase profit. Additionally, solo office practice is very amenable to out-sourcing onerous chores such as human resource management and accounting needs.

MYTH 2: “All Small Medical Practices Will be Purchased by Larger Companies”

This may be true for some aspects of comprehensive medical care. Fortunately, primary care has never totally been given its due and esteem by the medical community or AMA, and smaller practices do not appear to be corporate “takeover” targets. While this may happen in some exceptionally large practices, equity control or financial compensation should more than remunerate the owner-managers of such behemoth practices. Unfortunately, servitude to Wall Street is another matter to consider. Make no mistake however mere size does not encourage acquisition, just as solo practice does not entice appropriation by all management associations.

MGMT TIP: Use the engineering concept of Project Management (PM) and the Critical Path Method (CPM) to determine pivotal or slack steps in the flow of your office. Then modify your processes accordingly. GANNT charts, PERT graphs and Paretto diagrams are helpful visual and practical aides in this regard.

MYTH 3: “You Must Run Your Practice By the Financial Numbers”

Many so-called business experts preach the concept of financial “number -crunching”. In other words, how much revenue is derived, from how many patients per month, week and day, according to some estimated utilization rate? With this method, physicians are reduced to hourly “employees” and patients to “encounters”. Actuarial firms may even be hired to legitimize the numbers and suggest care standards. While it is important to consider financial tangibles, we must not forget that “numbers can lie”, and that the information from a computer spreadsheet is only as good as its input (GIGO = “garbage in-garbage out”). This is especially evident when one realizes that such firms are only thinly disguised benefits consultants, with a built in bias to cost reductions and rationed care. Therefore, be aware of the potential negative intangibles of a strict business output mentality and recognize that medicine is an intensively personal experience. Lowering the economic “per unit cost” of a widget may be desirable to a manufacturer, but price is only one aspect of good medical care. Other tangible or intangible concepts are often far more important and the negotiating side that first realizes what constitutes these trigger-points, instantly occupies the stronger competitive bargaining position.

For example, doctors should know the answer to many vital questions before entering into any contract negotiations. These include, but are certainly not limited to the following:

Doctor control and expectations
Contract exclusivity and inclusively
Utilization review, “carve-outs”, gag orders and termination clauses
And our personal pet peeve; NPI numbers and organizational fiscal data sharing.

Recall the often used example of selling airplane seats is a good way to illustrate the concept of intangibles. Let’s assume a plane has a capacity of 100 seats, 90 of which are sold at the normal ticket price of one hundred dollars; for a total revenue of $9,000. If total costs represent a break-even point of eight thousand dollars, a one thousand dollar profit is realized. Therefore, if any single remaining seat can be sold at a discount; more profit is generated since the plane will fly anyway.

Now, suppose there was a chance that one of the discounted seats will be bought by a terrorist bomber; would the additional marginal profit still be worthwhile? Of course not! Extending our analogy to the typical small medical office, some management guru’s might argue that a discounted HMO patient is better than no patient at all. But as a doctor, suppose your empty treatment room was filled by a noncompliant capitated diabetic patient with a foot infection, or a litigious prone patient? Tangible considerations aside, don’t the potential medical, legal and emotional entanglements of these situations exceed their marginal benefits? Of course they do! Philosophically, one could argue that these possibilities still exist in a fee-for-service environment and be quite correct.

Therefore, rest assured that we are not advocating the wholesale non-treatment or abandonment of patients in need. We are simply noting the capitalistic and very demoralizing human feelings of, “why bother”. Or, shall we accept the Socialistic epistemology of laborers who “pretend to work while the government pretends to pay?” Fortunately, primary care seldom presents with many significant moral challenges. Nevertheless, this tawdry rationing type scenario can, and does happen, in the hallowed halls of medicine; daily.

Need proof? An anonymous Medical Outcomes Study, a few years ago, from the New England Medical Center claimed that of specialists surveyed, one third believed that they provided worst care to HMO members than fee-for-service patients, not just because of any moral deficiency, but because the HMO reduced their access to medical resources. Now we ask; is anyone surprised?

MGMT. TIP: Running your practice solely by the numbers is insane and the rat race will lead you to an early grave as you try to do more, with less, and in less time. Rather, select your insurance contracts carefully and negotiate aggressively for the best deals, and limit your liability with exclusions and stop-lose parameters. Besides, there is no need to join every panel; be selective in your own favor. Recall, mutual contract concessions should benefit both parties, and a contract so negotiated should be mutually advantageous; but not equally advantageous. Aggressive business consultants do not incorporate the conventional wisdom of a “win-win” negotiated settlement. We negotiate to win for our clients and champion their success.

MYTH 4: “Capitation will Kill Fee-for Service Medicine”

All primary doctors do not have to practice deeply discounted capitated medicine. We estimate that only half of all internists will have to become low cost providers and many, either by design or happenstance already are. The remainder will successfully and profitably provide the specialty or value-added services that much of the public demands. HMO’s that do not offer these quality services will perish. The “cost shifting” to private insurance companies currently prevalent will not accelerate, because the population that chooses to retain traditional indemnity insurance will no longer allow it. Such health and quality conscious patients will revolt against high insurance premiums and refuse to be penalized for desiring comprehensive care and for pursuing a healthy life-style. Similarly, physicians who now bear “financial risk” for providing care to noncompliant patients will decide that the incentive to do so is not enough. Patients will be forced to bear their own financial risk as they become compelled to pay higher premiums, co-pays, surcharges or other penalties for unhealthy habits such as smoking, obesity or inactivity. Health care will come full circle by putting the financial burden back on patients.

A survey in Medical Interface a few years ago, revealed that overall, 21% of all capitated patients in a studied cohort rated their HMO as fair to poor, compared with 14% in traditional indemnity systems. Additionally, allow us to quote from Dr. Alain Einthoven, medical economist and author of the original Jackson Hole Managed Care Assemblage:

“Permutations of managed care will produce a dizzying array of benefit levels at varying price structures. HMO’s however will try to mislead the public, through intense advertising campaigns, into believing that all arrangements provide equal benefits at reduced costs. Medicine’s job is to prove the contrary to the middle class, since the well educated and affluent are becoming aware of the distinction and the poor have no choice”.

Myth 5: “Managed Care Will Socialize Medicine”

The Nixon administration advocated a type of socialized medicine back in the seventies. Obviously, the concept did not take root. In the nineties, the Clinton administration’s attempt to establish a national standard in its health reform package ended with similar disastrous results. In fact, about 80% of that reform package consisted of bureaucratic rules and regulations to force equality on a capitalistic system. Now, the Obama Administration may pursue a national healthcare agenda, although others argue that the marketplace has achieved the managed care socialism that politicians could not, thus far. As we see it however, the average American is fiercely competitive and not at all egalitarian. There will always be the “have and have not’s” in our society and strictly socialized medicine is not in our future. In fact, we believe that multilayered care will develop, which is just a little different than contemporary traditional insurance plans.

There will always be a basic level of marginal HMO care for the elderly and indigent sponsored by various local, state, national and charitable foundations. The blue collared working middle class will receive better care through PPO’s, MCO’s and PO’s physician managed plans. The bulk of activity for providers, payers and recipients will take place at this level. Note the caveat, “physician-managed”, since doctors will take back their place as maestro of the medical care symphony. The doctor-manager dichotomy will blur as physicians control their professional and economic lives and obviate the need for broker-middlemen-agents sucking huge profits out of the system at the expense of patient and provider.

MGMT. TIP: Notice how aggressively HMO’s are marketing their services to welfare recipients and aged Medicare patients. Likewise, notice how few managers, professionals, corporate executives, unions and politicians join these same HMO’s. Decide immediately your target market, and act accordingly. Remember, the affluent will always pay top dollar for truly quality care and assume independent personal financial risk for their health. The form of care rendered may be in the guise of a cafeteria benefits plan, FSA, HSA, MSA or some other similar arrangement; but it will undoubtedly occur as long as our tax structure favors the top economic tier through the business deductibility of medical fringe benefits. Therefore, medicine will not become socialized anytime soon.

MYTH 6: “Medicine is an Oversupplied Commodity”

Certain medical specialists are now in slight abundance but this situation will not last for more than the next five-ten years. Medical school admissions are currently up, but will decrease as administration information, and the socialism specter is filtered down to prospective students and the domestic economy improves. Additionally, the population will age and increase utilization rates for the remaining physicians but not reimbursement. More specifically, nurse practitioners, physical therapists and physician’ assistants will not negatively impact us in the long term. These extended care providers do not give the same level of care, nor do they provide the same knowledge and expertise that physicians provide. But, they have been used for more than two decades with positive results that will grow going forward. Moreover, do not confuse physician supply with the “commoditization of medicine”, since no product or service ever need become, or remain, a commodity.

For example, automobile tires have been branded (GoodYear), sneakers have been branded (Nike), microchips and potato chips (Intel-Lays) have all been branded. Water, a classic marketing example, as been re-branded many times in the form of Perrier, Evian, Poland Springs and Calistoga.

Thus, if the marginal benefits of junk food can be branded, the eternal human desire for health and its resulting happiness should not be a hard sell. As doctors and medical professionals, we must strive to promote health, longevity and life as a precious benefit to the public; not simply price.

MGMT. TIP: Either work hard to cultivate fewer, but more lucrative fee-for service patients with true value or service directed activities, or become a discount supplier; but do not attempt to be all things to all people. This mix has never been achieved in corporate America and you will not be the first to achieve it. Rather, chose your niche, be true to your self, and maintain your business strategy. A service mix of 2:1:1 (Discount-Value-Service) among the nation’s primary care providers will not only provide maximum profits for everyone, it will renew a lost sense of personal self-esteem.

“Doctors must create a market driven business strategy. This means to serve and assist the patient in whatever manner possible. HMO’s are absolutely wrong to think of medical care as a commodity–that a doctor is a doctor is a doctor. Patients want a successful treatment outcome, assurance and compassion–and this triad is not provided by commodity suppliers”

Myth 7: “Doctors Will No Longer Keep Patients Waiting”

This is the first true statement in our discussion. The perception that patients have about their medical care is becoming increasingly important. Patient-clients, benefits managers and payers all want prompt service for their employees. If you are not timely now, you are likely inefficient as well as rude. Therefore, scheduling promptness is an important, albeit incorrect, measure of medical quality.

On the other hand, one can hardly argue with any provider who chooses not to wait for habitually late patients who are tardy, impolite, condescending or otherwise inhospitable. A poor demeanor should just not be tolerated by any practitioner. In business verbiage, “the marginal benefit of such patients – do not justify their marginal cost”.

For example, would you rather miss your young son’s theatrical debut awaiting a new fee-for-service patient, or a capitated – or socialized – patient? Again, the prudent human being would choose the former without any real moral dilemma. Bilateral collaborative human respect will always prevail.

MGMT. TIP: Schedule like-patient activities in blocks of time to increase efficiency. Do not be too rigid, but by scheduling similar conditions/procedures together, assembly-line efficiency is achieved without assembly line mentality. Time is then emancipated for more revenue enhancing efforts; or leisure activities. Bundling ‘activity-drivers’ is one of the most efficient methods any organization can use to reduce production time. It is a concept embraced by producer organizations and deficient in most service organizations.

MYTH 8: HMO’s are the Future of Medical Care in the US?

Highly structured, capitated or full risk HMO’s are already becoming passe’. Their demise will be further accelerated by such growing entities as: Preferred Provider Organizations (PPO’s), personal Medical or Health Savings Accounts (MSA’s and HSAs) and true Medical Provider Service Networks (MPSN’s). By a true MPSN, we mean a medical care organization, run by physician-managers who contract directly with employers, rather than through an intermediary or middleman who take a percentage of the fee for business services.

Need testimony? In Minneapolis, a bastion of HMO care, there is an employer initiated drive to contract directly with physician groups, since HMO’s there seem no longer very interested in managing either for patient care or company welfare, but only for their own bottom line dollar.

MGMT TIP: First, get out of medical school, get through your residency and get Board certified as soon as possible. Take advantage of technology to achieve these goals. Then, enroll in law school, business school or take management and computer instruction courses to re-educate, re-engineer and retrain yourself with the needed organizational tools of the future. You will not survive without them because the bar to a new level of medical care has been raised in this decade.

“In the very near future, physicians will learn about business, accept its material risks, regain influence and take back their rightful control of the Healthcare complex.”

Although we still need actuarial and accounting data, working capital, organizational skill, marketing techniques and correct product pricing, we believe physicians, employers and patients of the future will look back on 2010 and recognize it as the turning point in the current healthcare imbroglio. Therefore, be forewarned and forearmed.

Assessment

As medical practitioners and healthcare consultants, we face the same managed are issues as you do. And, although we may have a particular economics acumen and business management expertise, we should never loose sight of the facts that, above all, medical care should be delivered in a personal and humane manner, with patient interest rather than self interest, as our guiding standard.

“Fools ignore complexity. Pragmatists suffer it. Geniuses remove it.”
-Alan Perlis [Creator of ALGOL, an early software programming language].

Conclusion

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Filed under: Health Economics, iMBA, Inc., Managed Care, Op-Editorials, Practice Management | Tagged: Managed Care | 2 Comments »

The Long-Term Care Hospital

Posted on December 7, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding Hospital Types

By Calvin W. Wiese; MBA, CPA

According to Healthcare Organizations [Financial Management Strategies], a long term care hospital provides assistance and patient care for the activities of daily living (ADLs), including reminders and standby help for those with physical, mental, or emotional problems. This includes physical disability or other medical problems for three months or more (90 days) www.HealthcareFinancials.com

The ADL Criteria

The criteria of five ADLs may also be used to determine the need for help with the following: meal preparation, shopping, light housework, money management, and telephoning. Other important considerations include: taking medications, doing laundry, and getting around outside.

Assessment

www.HealthDictionarySeries.com

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Domestic Economy Sickens Hospitals

Posted on December 5, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

AHA Reports Negative Financial-Operating News

Staff Reporters

Many hospitals are seeing the effects of the economic downturn. More than 30% of respondents to a recent American Hospital Association [AHA] survey reported a significant decline in patients seeking elective care and 40% reporting a drop in admissions overall. The majority of hospitals also noted an increase in patients unable to pay for care.

DATABANK Results

The report is based on survey results from 736 hospitals and information from DATABANK, a Web-based reporting system used in 30 states to track key hospital trends:

Falling profit margins to [-] 1.6% – from [+] 6.1% year-over-year
Medicare and Medicaid patient care is growing
Reducing administrative costs (60%), staff (53%) and services (27%)
Borrowing for facility and technology improvements has decreased

Capital investments are also being postponed or delayed:

56% delayed plans to increase capacity;
45% delayed purchase of clinical technology or equipment; and
39% delayed investments in new information technology.

Assessment

The report was based on data from two major sources. A survey, “The Economic Crisis: Impact on Hospitals,” provides data from 736 hospitals from late October 2008 through Nov. 10, 2008. DATABANK figures represent early results from 557 hospitals reporting data for July through September 2007 and 2008 as of Nov. 11, 2008.

Conclusion

And so, your thoughts and comments on this Executive-Post are appreciated. How [much] has the economy affected your healthcare organization?

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Sources of Scarce Hospital Capital

Posted on December 4, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Tough Funding in Difficult Times

By Calvin Wiese; MBA, CPA

Staff Writers

In general, hospitals have three sources of capital available to them: [1] equity from earnings, [2] equity from donations, and [3] long-term debt. And, the general domestic economic cycle may either exacerbate or retard capital raising efforts for all healthcare organizations. Today, the hospital capital funding acquisition scenario is difficult indeed.

Earnings Equity

Earnings generate cash, and a portion of that cash is available to fund capital investments. Besides funding capital investments, cash generated from earnings is used to fund working capital. As operations grow, more working capital is required to fund the difference between the operating receivables and operating payables since days of revenue in receivables tend to be a good deal higher than days of expense in payables. Additionally, cash on hand [COH] should increase as operations grow so that days of cash remain constant or increase. Once working capital has been adequately funded, any remaining cash generated from earnings is available to invest in capital.

Not-for-Profit Entities

Most not-for-profit hospitals engage in active fundraising to generate donations. Donations are a good source of capital in certain markets. Often, fundraising initiatives are less useful than they appear due to the costs expended in the fundraising activities. It is important to ensure that all the costs incurred in fundraising activities are properly attributed.

Borrowing

Borrowing long-term debt has been an important source of capital for hospitals and will continue to be. Debt is particularly attractive due to the low cost associated with borrowing on a tax-exempt basis. Long-term debt, borrowed on a tax-exempt basis, is probably the lowest cost form of capital available to hospitals. Tax-exempt borrowing is fairly complex due to the tax regulations affecting it. Because of its complexity, the costs associated with these transactions are quite high, making it less practical for small borrowings www.HealthcareFinancials.com

Special Borrowing Transactions

Finally, tax-exempt borrowing transactions require many lawyers and high-priced investment bankers. Credit rating agencies and credit enhancers are also typically involved. Accessing the tax-exempt markets requires a good bit of sophistication and expertise. Despite these requirements, this capital is highly attractive to hospitals and should be used whenever possible.

Assessment

Currently, as the adverse business cycle grinds on, and the – now official – recession deepens, credit rating agency Fitch has just changed its not-for-profit hospital sector view to negative, from a previously stable status. And, Hospital Corporation of America [HCA] is resorting to potentially risky payment in kind (PIK) debt swaps to keep its bonds afloat.

Conclusion

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Hospitalist Model Outcomes Study

Posted on November 29, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

The Human Resource Management Report

Staff Reporters

According to a study published in Human Resource Management, hospitals that employ the hospitalist model-of-care delivered better patient outcomes.

The Study

The study explored the differences between hospitalists and traditional models of care, measuring performance outcomes in more than 6,000 cases at Newton-Wellesley Hospital in Massachusetts between July 2001 and July 2003. At the time of the study, hospitalists treated approximately one-third of the hospital’s patients, and private practice physicians treated the remaining two-thirds.

The Results

Compared to the traditional approach, researchers found that the hospitalist model:

Decreased the length of patient stay by about half a day and reduced costs to the hospital by $655 per patient;
Reduced the risk of re-admission by 41.8 percent, a key measure of quality performance in hospitals;
Improved coordination of care 13.2% by increasing the strength of relationships between physicians and other members of the care provider team.

Assessment

The study was reported in the Society of Hospital Medicine, on November 17, 2008

Conclusion

What do you think? As always, your thoughts and comments on this Executive-Post are appreciated.

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Health Administration Terms: www.HealthDictionarySeries.com

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Mercer Study Says CDHPs Rising

Posted on November 28, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

HSA / HRA Offerings Jump at Large Employers*

[By Staff Reporters]

	2005	2006	2007	2008	Very likely to offer in 2009
Small Employers (10-499 employees)	2%	5%	7%	9%	14%
Large Employers (500 or more employees)	5%	11%	14%	20%	25%
Jumbo Employers (20,000 or more employees)	22%	37%	41%	45%	45%

*Based on either a health savings account or health reimbursement arrangement.

Source: Mercer 2008 National Survey of Employer-Sponsored Health Plans. www.mercer.com

Conclusion

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Hospitals Financially Ailing

Posted on November 25, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Economic Slowdown Cited as Causative

Staff Reporters

According to the Associated Press, November 20, 2008, the current dismal economy has American hospitals ailing. New data shows declines in overall admissions and elective procedures, plus a significant jump in patients who can’t pay for care.

AHA Study

According to a survey by the American Hospital Association [AHA], hospitals also have been hurt by losses on their investments due to the turmoil on Wall Street. Many are finding it more expensive to borrow money, while some of the hardest-hit hospitals began reducing staffing and services as early as last spring and more will follow.

Assessment

The AHA survey also found that 67 percent of hospitals saw some drop in elective procedures, with 6 percent seeing a significant drop; 63 percent saw some decline in overall admissions, with 9 percent seeing a bigger drop; while inpatient and outpatient surgeries and emergency department visits were all down roughly 1 percent in the third quarter.

More info: www.HealthcareFinancials.com

Conclusion

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The National Health Care-Scare

Posted on November 24, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

The Markets and Health Economics

By Dr. David Edward Marcinko; MBA, CMP™

As a centrist fiscal conservative – social liberal – I tend to side with libertarian issues and not political parties. Nevertheless, I was dismayed with the recent presidential election and wondered what impact it would have on the stock markets. Mr. Market replied with haste.

The Question

In the short term, the stock market collapsed back in September when most pundits opined that President-elect Barack Obama would become our new leader. In fact, the DOW has not seen its current lows since 1998, or so.

More specifically, according to one analyst from Wall Street – Paul Shread – “the Dowshould have strong support between here and 7000, which would cover the 1998 and 2002-2003 lows (7200-7400), the 50% decline mark (7100) and the October 1997 low (6971). This would be a very important place for the market to make a stand.” But other chartists see the markets falling even further, with the S&P dropping as low as 400. Why is this?

The Answer is Uncertainty, Doubt and Fear

While the mounting credit default swap and mortgage crisis has had a major role in sinking stocks, some speculators worry that Obama will follow through on promises to raise income taxes on dividends and capital gains; eliminate the estate tax exemption, rescue the auto-industry and the: airlines, home builders, furniture, footgear and apparels, textiles, glassware, tobacco, beer brewers and perhaps a few others, and generally make it difficult for private employers to resist unionizing drives. In other words – there is a rising level of fear, doubt and uncertainty over the seeming potential of Keynesianism and governmental guarantees and protectionism – rather than the opportunities of capitalism. All disguised in the “cloak of change”.

Enter the Politicians

Some economists – tax and policy experts – fear that if Obama, Speaker Nancy Pelosi and Senate Majority Leader Harry Reid bailout these manufacturing segments instead of filing for Chapter 11, the country may face a very long recession. Just look to Japan some two decades ago, when the country bailed out its failing banks and corporations instead of letting them fall so that innovative competitors could take their place.

According to Niall Ferguson, a scholar who has studied the relationship between political, banking and financial fortunes –”you can stick money into every orifice of the big banks — their mouth, their nose, their ears, wherever — but if they can’t make loans because they have to reserve against future losses, and if they won’t make loans because there’s a recession, it won’t do any good,” Ferguson says. “If they can’t lend, there’s no money multiplier — they’re stuck, they’re zombies. It’s Japan all over again.” And, some ghoulish traders are indeed hoping for a deep recession. Today, Japan is still in worse shape than we are.

Phoenix Rising

Following such a debacle, the failed companies might then re-organize with some of their current workers under revamped union contracts. Reorganization, new labor contracts and new employee and retiree health benefit plans would make them competitive and profitable after emerging from bankruptcy; much like the proverbial Phoenix.

National Health Insurance, et al

Our physician clients and investors also are also worried that if national health insurance becomes a reality, defense spending is reduced and/or onerous regulations imposed on the surviving banks and Wall Street, the economy will be in for ride rougher than the one we have experienced to-date. No wonder a recent poll suggested that more than half of all doctors did not encourage their offspring to follow their career footsteps.

Other pressing issues for the medical profession, according to the HealthCare Group – Co-Chaired by Angela Braly of Wellpoint Inc., Dr. Denis Cortese of the Mayo Clinic, Jeffrey Kindler from Pfizer Inc., and Dr. Daniel Vasella from Novartis AG – include tort reform,defining and measuring medical value, payment reform, and building the health care workforce of the future with an emphasis on primary care, nursing and other allied health professionals. Moreover, true healthcare reform must involve integrating issues like Single Payer Systems, Consumer Directed Health Plans, Pharmaceutical Price Competition, Advanced Electronic Medical Records, and Quality & Outcomes Disclosure, etc.

The Obama Cabinet

President-elect Obama’s staff and cabinet appointments will also offer important clues for the markets, going forward. In addition to Rahm Emanuel, as the President-elect’s Chief of Staff, hearsay suggests Laura Tyson or Bill Richardson for Secretary of Commerce, Hillary Clinton as Secretary of State and Timothy Geithner as Treasury Secretary. Other considerations include Renee Glover for Secretary of Housing and Urban Development [HUD], Max Cleland as Secretary for Veteran’s Affairs, Janet Napolitano for Homeland Security, Jim Jones as National Security Advisor; and Richard Danzig and/or Chuck Hagel for other Cabinet Posts. Yet, Tom Daschle as Secretary of HHS is not exactly an “agent of change”, as the term is commonly understood.

Assessment

As the world’s markets sink, the pressure on our new administration will be to clarify these issues. Only then, will a stock market bottom be reached, and the dismal economy begins to reverse itself. Hopefully, the health care-scare will then be mitigated.

Conclusion

Your thoughts and comments on this Medical Executive-Post are appreciated.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Filed under: Health Economics, Health Insurance, Health Law & Policy, Insurance Matters, Managed Care, Research & Development | Tagged: economy, markets, national healthcare | 2 Comments »

The Healthcare Capital Budgeting Crisis

Posted on November 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Your Vote Counts

Staff Reporters

Did you know that South Carolina’s Department of Health and Environmental Control [SCDHEC] will likely close some of its rural health clinics due to the state’s budget woes? It’s true; according to reports from The State of Columbia, SC. Moreover, the SCDHEC would also offer early retirement to its employees.

Hospital Bankruptcies

On another front, hospitals filing bankruptcy last quarter included: a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, Lincoln Park Hospital in Chicago, and four hospital system Hospital Partners of America, in Charlotte.

Private Medical Practice Impact

And, according to consultants from the Institute of Medical Business Advisors, in Atlanta [www.MedicalBusinessAdvisors.com], similar negative impacts have occurred in private medical practices, and clinics, as well.

Assessment

Will the current economic crisis have a chilling effect on your healthcare organization’s capital spending?

Conclusion

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Filed under: Health Economics, Health Insurance, Healthcare Finance, Surveys and Voting, Uncategorized, Voting Polls | Leave a comment »

Consumer-Driven Healthcare

Posted on November 20, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

An Emerging Trend Vital to Hospitals

[By Staff Reporters]

According to Associate Professor Gregory O. Ginn; PhD, MBA, CPA, MEd., of the University of Las Vegas, an important emerging trend today is consumer-driven healthcare [CDHC] as patients become more knowledgeable and demanding about the quality of care they receive.

Definition

According to the Dictionary of Health Insurance and Managed Care, CDHC refers to health insurance plans that allow members to use personal Health Savings Accounts (HSAs), or similar medical payment products to pay routine health care expenses directly, while a high-deductible health insurance policy protects them from catastrophic medical expenses. High-deductible policies cost less, but the user pays routine medical claims using a pre-funded spending account, often with a special debit card provided by a bank or insurance plan. If the balance on this account runs out, the user then pays claims just like under a regular deductible. Users keep any unused balance or “rollover” at the end of the year to increase future balances, or to invest for future expenses.

Benefits Managers and Corporate America

Benefits managers in particular are proponents of consumer-driven healthcare. They argue that employers should focus on which plans create the most value, go with quality, get employees to pay more, and move to a defined contribution approach. The concept of consumer-driven healthcare is being implemented in employer strategies to change participant and provider strategies. This trend stimulates competition among providers based on both price and quality and forces providers to offer more information about cost and quality. Providers who successfully differentiate their strategies to respond to this trend may benefit financially.

Hospital Operations

Consumer-driven healthcare will have major ramifications for the operations management function in hospitals. In order for hospitals to compete on both price and quality, they will need to develop greater flexibility in order to differentiate their service offerings. Such flexibility is not likely to occur without sophisticated information systems that allow for data integration.

Assessment

Of course, considerable staffing and training changes may be in order to provide this type of service.

***

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Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance | Tagged: CDHC, consumer driven health care | 6 Comments »

Healthcare Financials [Cash-Flow] Alert

Posted on November 17, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

The Cash-Crunch is On

By Dr. David Edward Marcinko; MBA, CMP™

Healthcare organizations have significant short-term financing needs and are constantly rolling over large sums of commercial paper to finance accounts receivable [ARs] to pay their bills, vendors, debts, payroll and investors in the form of dividend payouts or retained earnings and disbursements, etc.

But, because of the dismal economy and current credit-crunch, physician executives, healthcare administrators, hospital CEOs and all CXOs seem to be asking the same questions these days:

· If short-term financing suddenly becomes difficult to obtain, how will hospitals cope?

· What precautions can healthcare organizations take to prevent trouble down the road?

· Can the health industry turn to the Federal Reserve or US government for assistance?

· What else can we do as medical practitioners and/or as business owners/managers?

Cause and Effect

To first understand root cause-and-effect of the credit squeeze, consider that at the beginning of 2008 there were five major investment banks in the US. By October only two remained in hybrid form, and credit was stifled. What caused this major change was the so-called sub-prime mortgage security debt problem? Its’ prime catalysts was a financial derivative called a credit default swap (CDS) – which caused both the remaining investment and most commercial banks – to virtually stop their lending practices.

Credit Default Swaps [What they are – How they work]

According to the Dictionary of Health Economics and Finance, a derivative is a financial instrument that derives its value from another instrument www.HealthDictionarySeries.com

Derivatives can range from financial securities as simple as a stripped bond, or pooled mortgage, to extremely complex securities customized for a particular risk management need. And, some physician-executives know that perhaps the simplest form of derivative is a short-sale, where a bet is placed that some owned asset will go down, so that you are covered whichever way the asset moves.

Example:

Why? Because these contracts were not securities per-se and no oversight was necessary. The instrument does not even need to be associated with the buyer or the seller of the contract.

The Wall Street Gurus

And so, it seems that the smart financial folks on Wall Street that designed derivatives and credit default swaps, forgot to ask one thing; what if the parties on the other side of the bet didn’t have the [mortgage] money to pay up? As a result of this “amorphous toxicity default”, the short term commercial paper markets reached a three-year low of $1.6 trillion, in September 2008, as money-market fund managers – typically huge buyers of commercial paper – became extremely risk averse.

Some Possible Cash Crunch Solutions for Hospitals

Possible solutions to the cash-crunch involve passive external, and more active internal, strategies:

1. The EESA

Traditionally, hospitals find commercial paper a less expensive liquid alternative to traditional asset-based borrowing. Commercial paper is a short-term promissory note issued by a hospital or other entity to raise short-term cash; either asset-backed or unsecured. The issuer of the note agrees to repay borrowed money within a range of one to 270 days, with 30 to 180 days being the most popular maturities.

2. The Fed’s Next Financing Gambit

Another program offered by the US Federal Reserve was to buy commercial paper as a means to increase access to funding and free up frozen credit markets. Clients, like hospitals and healthcare systems, with huge short-term funding needs are eager to take up the offer amid the difficulty in accessing credit. The new Commercial Paper Funding Facility (CPFF) provides a backstop to the commercial paper market that has been brought to a standstill, even for those industries – like healthcare – that are seemingly far removed from the financial sector. The CPFF will remain in place until Apr. 30, 2009, at which point the Fed Board of Governors would need to vote to extend it if necessary.

3. Interest Rates and the FOMC

Finally, the Federal Reserve cut interest rates at the Federal Open Market Committee [FOMC] meeting of October 29th; the second time this month. Overnight lending rates were lowered from 1.5% to 1.0%.

Other Intrinsic Financing Strategies

Other, more organizationally intrinsic, sort-term financial strategies that may be used by some hospitals to accelerate their own cash conversions cycles [CCCs] include: [1] shortening the average inventory holding period (ending inventory divided by revenues per day), and shortening the collection period (ending ARs divided by revenue per day). This is not an easy task however, but may be accomplished by streamlining and efficiently accelerating three key areas:

1. Patient access made up of all the pre-registration, registration, scheduling, pre-admitting, and admitting functions.

2. Health information technology management consisting of chart processing, coding, transcription, correspondence, and chart completion.

3. Patient financial services which includes all business office functions of billing, collecting, and follow-up post-patient care. These functions are optimized with automated biller queues to improve and track the productivity of each biller; claims scrubbing software to ensure that necessary data is included on the claim prior to submission; and electronic claims and reimbursement processing to expedite the payment cycle.

Moving to Cash

Under current pressure from the troubled economy, hospitals can also turn to their investment cash flow as a source of short term capital financing by focusing attention on managing and rebalancing investment portfolios. Although investment income typically is viewed in a hospital’s capital budget, it may be used as supplemental cash generated from operating activities in an emergency. This is accomplished by:

· allocating a greater proportion of invested assets to cash and short-term investments,

· seeking marginally higher returns from other investment classes like mutual funds and real estate investments.

Non-Profit Fund Raising

Of course, not-for-profit hospitals can accelerate fundraising to generate cash donations. Donations are a good source of quick capital in certain markets. However, one must be aware of expended fundraising costs and it is important to ensure that all the costs incurred in fundraising activities are properly attributed.

Assessment

For more info: www.HealthcareFinancials.com

Conclusion

Please subscribe and contribute your own thoughts, experiences, questions, knowledge and comments on this topic for the benefit of all our Executive-Post readers.

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Health Administration Terms: www.HealthDictionarySeries.com

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Filed under: Breaking News, Career Development, Health Economics, Healthcare Finance | Tagged: cash flow crunch, financial derivatives | 2 Comments »

Hospital Administrative Systems

Posted on November 16, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

ROI Economics of Non-Clinical Information Systems

Staff Reporters

Unlike clinical or health information systems [CIS] or [HIS], nearly all hospitals have at least some functions computerized in a technology administrative information system environment.

Usual Functions

According to Brent A. Metfessel; MD MS, typical functions of any health or hospital administrative information system [HAIS], include the following, which may impact return on investment [ROI] economics:

admission scheduling;
accounts payable and receivable;
patient and payer billing;
patient demographic information such as name, unique identifier, age, gender, reason for admission, and other data items;
staffing and staff scheduling;
pharmacy inventory;
internal finance, budgeting and accounting;
patient census; and
facility maintenance.

Invoicing and Billing Functions

Billing functions are another area where a hospital can obtain more immediate ROI. Often, newly implemented billing systems can provide a hospital with a positive ROI within the first year of active system use. Automating the billing functions, such as the Centers for Medicare and Medicaid Services (CMS) UB-92 claim submission form, can save several FTEs per 100 beds.

Administrative functions are one of the areas where computerized systems can lead to significant revenue increases, as a quicker turnaround time and computerized entry of patient information can lead to improved coding quality and efficiency.

Example:

One hospital in the southern United States enhanced its surgery departmental billing system, reducing the billing turnaround from a three- to four-day cycle to a 24-hour process, leading to a significant increase in revenue. More accurate and complete coding also leads to an increase in the revenue stream as more secondary diagnoses are entered and overly general primary diagnoses are given more specific International Classification of Diseases (ICD-9) codes.

Assessment

More info: www.HealthcareFinancials.com

Conclusion

As always, your thoughts and comments on this Executive-Post are appreciated.

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Filed under: Health Economics, Information Technology | Tagged: information systems | 1 Comment »

About Practice Valuation On-Site Visits

Posted on November 14, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Establishing Medical Practice Value

Staff Reporters

One effective means for any valuation professional to confirm his or her understanding of medical business value, and how internal controls over financial and managerial reporting are designed and operated in a practice, is to evaluate and test its effectiveness, in-situ.

Purpose of the Visit

According to valuation experts Robert James Cimasi, Tim Alexander and Todd A. Zigrang, of Health Capital Consultnts, LLC in St. Louis MO, the following information specific to the medical entity should be gathered by the financial executive, valuation expert or healthcare consultant. This information may be obtained through an interview, questionnaire, but preferably the on-site visit:

Background Information: Include such information as the number of years the entity has operated at its current location and in the community, as well as the office hours.
Building Description: Include the location (urban/suburban), proximity to hospitals and other medical facilities, and its size, construction, electrical and computer wiring, age, access to parking, and so on.
Office Description: Determine ownership or lease details, the square footage and number of rooms, and a description of different office areas. These should include, where applicable: x-ray, pharmacy, laboratory, exam rooms, waiting rooms, and other areas.
Management Information Systems: Document types of hardware and software and the cost, age, and suitability of all components, including their management functions, reporting capabilities, and integration between programs.
History of the Entity: Give the date founded and by whom, the number of full-time equivalent (FTE) physicians in practice by year, the physicians who have joined and left the entity, the dates they practiced and their relationship and practice arrangement with the entity.
Staff Description: Include the number and types of non-physician positions and the tenure and salary of all current employees.
Competitive Analysis: Include details of hospital programs impacting practice, growth or decline in the volume of business and the reasons, association with other physicians, competitive strengths and threats, the number and volume of procedures performed, any change in the number and volume, and the corresponding fees.
Patient Base Information: Encompass income distribution and percentages from different payers, the number of new patients and total patients seen per week, the age mix of patients, the number of hours spent in patient care per week, and the number of surgeries performed.
Managed Care Environment: Detail the terms and conditions of all managed care contracts including discounts and withholds, the impact on referral patterns and revenues, willingness to participate in risk sharing contracts and capitation, and the entity’s managed care reporting capabilities.
Hospital Privileges and Facilities: List all hospital privileges held and the requirements for acquiring privileges at the different local hospitals.
Credit Policy and Collections: Include practice policies for billing and payment, use of collection agencies, acceptance of assignment, other sources of revenues, and an aged breakdown of accounts receivable.
Financial Management: Include cash management procedures and protections, credit lines and interest, controls to improve payment of accounts payable, late payment frequency, formal or informal financial planning methods, and budgeting processes.
Operational Assessment: Include practice governance structure, responsibilities and procedures for performance, conflicts, recruitment, outcomes measures, case management, reimbursement, income, continuing medical education (CME), credentialing, and utilization review.

Assessment

Be sure to allow for discussion of overall relationships with physicians in the community, practice concerns, and needs.

For more info: Consult the chapter: Research and Financial Benchmarking in the Healthcare Industry, by the same authors, in www.HealthcareFinancials.com

Conclusion

And so, your thoughts and comments on this Executive-Post are appreciated.

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Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Filed under: Health Economics, Practice Management, Practice Worth | Tagged: medical practice worth, practice appraisal, practice valuation | Leave a comment »

The Re-Emergence of Medical Capitation?

Posted on November 13, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Re-Thinking Fixed Payment Medicine

[By Dr. David Edward Marcinko; MBA, CMP™ ]

[By Hope Rachel Hetico; RN, MHA, CMP™]

In February 2008, the industry leading California legislature passed “Welfare and Institutions” Code Section 14105.19. It required a 10% fee-for-service payment reduction to Medi-Cal physicians and mental healthcare providers. The new law took effect on July 1, 2008 and the rush seeking managed care capitated contracts was on.

Capitation Back-in-the-Day

Yet, only a decade ago, astute physician executives and healthcare administrators thought it incredulous that they should accept pre-payment for unknown commitments to provide an unknown amount of medical care or health services. It seemed to create an unnatural and difficult set of incentives where fewer patients were seen, and less care rendered. It never equated to additional reimbursement. And, more than a few medical providers and healthcare facilities had a natural aversion to capitated, fixed payment or contractual medicine. It had always been associated with the worst components of managed care; hurried office visits and soul-less physicians.

Fixed Payments Re-Emerging

Today, the national conversion to a modified form of capitation financing is again re-emerging as a marketing force, and not merely a temporary healthcare business trend. More than 40% of all physicians in the country are now employees of a managed care organization that uses, or is re-considering, actuarially-equivalent medical capitation.

The Promise?

Has medical capitation reimbursement finally fulfilled its promise as a quality improving and revenue enhancing machination; or is it just another managed care cost reduction strategy that financially squeezes doctors and hospitals, and limits patient care and choice? To answer this query, one needs to review the Stark Laws.

Whole-Sale Medicine

Curiously, Stark Laws I, II and III were created to eliminate self-referral concerns potential leading to excessive medical care and fee-for-service payments. Ironically, these types of economic enriching paradigms of less-care were perfectly acceptable. Many, also never understood how a commitment to treat an entire patient population cohort could be made with little or no actuarial information. Hence frustration was the initial exposure of many medical providers to capitated reimbursement; also known as “wholesale medicine.”

Aligned Incentives

But, since inception, more modern medical cost accounting endeavors have gradually demonstrated that capitation has some advantages over traditional fee-for-service care. For example, it can create and align incentives that help patients, providers and payers by limiting their contingent fiscal liabilities. So, capitation in the current credit-deprived nationally economy is increasingly being viewed in a more positive way. More importantly, those healthcare organizations and providers that embrace it may thrive going forward; while those opposed may not!

Assessment

So, how should physician and nurse executives, administrators, CXOs, managers and financial advisors navigate these treacherous fixed-payment waters? One sound approach is to rely on a leader in the hospital, medical clinic and healthcare administration publication industry. Our 2-volume, 24 chapters, quarterly journal-guide is relevant to the entire fluctuating healthcare space and can be a valuable navigation tool – in these troubling economic times.

Capitation “ReDux” – Part Two

MORE: Capitation & Actuarial Medical Econometrics

Conclusion

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Filed under: Health Economics, Managed Care, Op-Editorials, Practice Management, Research & Development | Tagged: capitation, fixed payment medicine, wholesale medicine | 10 Comments »

Non-Profit Hospitals Seeking Financing

Posted on November 13, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Association of Debt Financing with Not-For-Profit Hospitals

[By Dr. David Edward Marcinko; MBA, CMP™]

US not-for-profit hospitals undertook unprecedented amounts of debt in the mid-to-late 1990s. This happened because sparse corporate finance theory – and the modicum of economic literature on hospital financing at the time – suggested that debt constrained hospitals’ capacity to deliver uncompensated care.

Little Research

Yet, few health economists empirically evaluated the potential association of debt financing with uncompensated medical care. Of the first perhaps – in our space – was Stephen A. Magnus; PhD, MS Assistant Professor, Department of Health Policy and Management, University of Kansas School of Medicine; Dean G. Smith, PhD, Professor and Chair, Department of Health Management and Policy, University of Michigan School of Public Health; and John R.C. Wheeler, PhD, Professor, Department of Health Management and Policy, University of Michigan School of Public Health [personal communication].

Multi-State Statistical Analysis

In one of the first statistical analyses of a multi-state sample of audited hospital financial statements in 1997 – and ultimately published in the Journal of Health Care Finance in 2004 – the researchers found that hospital debt levels predict higher levels of uncompensated care.

More Tax-Exempt Debt Issued

As further studies yielded similar results over time; hospital boards, policy makers and regulators concerned with the provision of uncompensated care encouraged hospitals to issue more debt. This encouragement was provided through explicit flexibility, such as removing requirements for hospitals to issue tax-exempt bonds through state finance authorities and/or removing the project financing constraint. Likewise, hospital CFOs and physician-executives who managed their organizations’ financial risk, benefited from a realization that optimizing the sources of financing did not impede mission-related objectives.

Assessment of Temporal Trade-Offs

Relationships between hospital operations, including uncompensated care, and capital structure represent a fruitful area for future investigations. A key issue to explore is the possibility of inter-temporal trade-offs. Higher levels of debt may initially help to fund public services like uncompensated medical care, but debt repayment eventually could limit a hospital’s ability to provide core community benefits.

Bankruptcies

Up until the recent financial meltdown and credit market freeze, even current studies still seemed to offer no evidence to support concerns that debt had a negative impact on uncompensated care. However, hospitals filing bankruptcy in the fourth quarter, of 2008 included: a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, Lincoln Park Hospital in Chicago, and four hospital system Hospital Partners of America, in Charlotte.

Assessment

On the other hand, research results simply may have reflected the unusual economic and stock-market conditions prevailing in the mid 1990s; that are certainly not present today.

Channel Surfing the ME-P

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Health Economics, Healthcare Finance, Research & Development | Tagged: charity care, pro bono care, uncompensated health care, uncompensated medical care | 3 Comments »

About Suicide Economics

Posted on November 12, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Thinking the Unthinkable

By Dr. David Edward Marcinko; MBA CMP™

Staff Reporters

According to the Wall Street Journal, November 5, 2008, voters in Washington State just passed an initiative legalizing physician-assisted suicide.

Passed by a Margin of 3:2

A state measure known as “Initiative 1000” passed by a margin of 59% to 41%, making it legal for doctors to prescribe a lethal dose of medication for patients with less than six months to live. The law is packed with provisions intended to limit the practice. For example, patients must make two separate requests, orally and in writing, more than two weeks apart; must be of sound mind and not suffering from depression; and must have their request approved by two separate doctors.

The Oregon Experience

However, doctors are not allowed to administer the lethal dose. In Oregon, the only other state with a similar law, some 341 patients have committed physician-assisted suicide in the 11 years the law has been in effect.

Economics of Assisted Suicide

Decades ago, the economist John Maynard Keynes’s suggested that saving may be a private virtue, but a public vice. According to Keynes, a community that seeks to increase its rate of saving would end up impoverishing itself and actually saving less. But, the community that increases its consumption at the expense of saving would end-up being richer and saving more. This proposition is frequently stated in macroeconomics textbooks as the “paradox of thrift.”

Assessment

The average lifespan, in the US, was about 67 years when Medicare was passed. It is about 78 today. Rising healthcare costs are led by this longevity. In other words, death financially supports survivors.

Conclusion

And so, is “Initiative 1000” a human socio-economic metaphor for the “thrift-paradox”; please opine and comment?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Filed under: Health Economics, Health Law & Policy, Op-Editorials | Tagged: paradox of thrift, suicide | 4 Comments »

Health Economists and the Economy

Posted on November 12, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

“The Not-So-Dismal Science”

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Economics was labeled the “dismal-science” by Thomas Carlyle a century ago. Since then, its tradition of negativity carries into the present recessionary environment. As the corporate credit and home mortgage crisis escalates, the financial and pharmaceutical industries implode and the population ages, hospitals are shuttered, re-sized or merely struggle onward with trepidation. And, daily, the media focuses on the increasing number of our citizens without health insurance.

To “Afflict the Comfortable and Comfort the Afflicted”

Such media coverage is expected entering into a general economic contraction, recession and/or depression for the healthcare sector, and economy as a whole.

But, in their zeal to “afflict the comfortable and comfort the afflicted”, the media victimizes the for-profit class, while it champions public hospitals, not-for-profit clinics and nanny-state medical care. The news is pre-occupied with calamity even when the health sector is fundamentally strong.

A Print Guide for us All

OK, premium print guides like Healthcare Organizations [Financial Management Strategies] know that bad news draws more subscribers than good news.

When all is well, physicians, executives and administrators are not keen on constructive change. There are also fewer reasons to log-on to this Medical Executive-Post blog. It’s all a matter of perspective!

Q: But, why is the media’s take on economic issues so important?

A: Because it has significant impact on how patients view the entire healthcare industrial complex! It influences how doctors, insurers and politicians adjust their own lobbying and legislative initiatives. And, it governs how CFOs invest in capital expenditures, as well.

Historical Review

Yet, media glare on our industry is not new. It began in 1963 with the article “Uncertainty and the Welfare of Medical Care,” and again in 1972 when Nobel Laureate Kenneth J. Arrow PhD shocked academe’ by identifying health-economics as a separate and distinct field. He codified seemingly disparate insurance, econometric, statistical, business and financial management principles for us all. And, he argued that the marketplace was incapable of insuring against the uncertainties we face in the healthcare arena.

Another View

Of course, the opposing viewpoint argues that, without the existence of a competitive market, individuals lose their freedom to choose, or are allowed to consume medical care for “free.” Therefore, the marketplace cannot learn what an individual values most. Nevertheless, to informed executives and our readers and subscribers, Arrow served as progenitor to the modern strategic health advisory era. In 2004, he was awarded the National Medal of Science for his innovative views.

Economy as Excuse for Self-Pity

Unfortunately for some hospitals, disinformation and exaggeration about health economics is just the excuse needed for self-pity, or to reduce or cease operations. “It’s not our fault, we can’t compete in a free-market economy and our patient satisfaction rates are falling. The malaise is sapping our morale”; etc, and ad nausea

A More Positive Approach

For others, there is the more positive proactive track of your editors, contributing authors and enlightened consultants.

Example:

In a recent budget meeting, one young hospital CFO cautioned physician-executives and healthcare administrators to watch every dollar in anticipation of a softening economy. Yet, his more seasoned CEO responded:

“Fiscal prudence is important, but if you are asking me to take my foot off the gas pedal, my position is that we should choose not to participate in this recession.”

He further opined that we all must anticipate changing cycles, recessions and adverse demographics. But, let’s not make it a self-fulfilling prophecy. It is the astute CEO who realizes that strong financial statements lie in effective negotiation skills and the management of revenue cycles.

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And conversely, that strong entity management and informed decision-making is the basis of an enhanced revenue cycle. In practical terms, this means understanding the process and targeting core aspects revenue growth to fine-tune and support the entire healthcare enterprise.

And so, if you are not a subscriber to this blog, or to our print journal, we trust you will review, communicate, use and profit from both. Let Healthcare Organizations [Financial Management Strategies] enhance your knowledge of modern [new-wave] health-economics, finance and collaborative medical management and avoid its confusion with the traditional [non-Healthcare 2.0] dismal-science.

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Conclusion:

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Filed under: Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance | Tagged: kenneth arrow | 3 Comments »

Securitizing Social Security?

Posted on November 8, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Socialize Medicare, Too?

[By Staff Reporters]

Social security and Medicare are always topics of discussion by healthcare administrators, physicians, advisors and related financial executives.

Investing Off the Radar Screen

But, with stocks depressed, why has the idea vanished off the radar screen? If the idea is to buy low and sell high, why isn’t it now, in the middle of a bear market, an even better idea?

Buy Low

Financial writer Jim Jubak, who is not formally an economist or even involved in healthcare, brought this up in his web column recently. His specific question, sent in by a reader, was a good one: Why isn’t anyone talking about putting Social Security money into stocks now that they’re down 40% from their October 2007 highs?

Assessment

And, what about a portion of Medicare?

Conclusion

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Filed under: Health Economics | Tagged: social security | 1 Comment »

Healthcare Credit Squeeze

Posted on November 7, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Seeking Commercial Paper

By Dr. David E. Marcinko; MBA, CMP™

Hospitals and healthcare organizations have significant short-term financing needs and are constantly rolling over large sums of commercial paper to finance accounts receivable [ARs] to pay their bills, vendors, debts, payroll and investors in the form of dividend payouts or retained earnings and disbursements, etc. But, because of the dismal economy and current credit-crunch, physician executives, healthcare administrators, hospital CEOs and all CXOs seem to be asking the same questions these days:

If short-term financing suddenly becomes difficult to obtain, how will hospitals cope?
What precautions can healthcare organizations take to prevent trouble down the road?
Can the health industry turn to the Federal Reserve or US government for assistance?
What else can we do as medical practitioners, CFOs and/or physician executives?

Cause and Effect

Credit Default Swaps [What they are – How they work]

According to the Dictionary of Health Economics and Finance www.HealthDictionarySeries.com, a derivative is a financial instrument that derives its value from another instrument. Derivatives can range from financial securities as simple as a stripped bond, or pooled mortgage, to extremely complex securities customized for a particular risk management need. And, some doctors know that perhaps the simplest form of derivative is a short-sale, where a bet is placed that some owned asset will go down, so that you are covered whichever way the asset moves.

Example:

In an institutional example, a party would enter into a credit default swap contract with an insurance company, investment or retail bank; largely mortgage backed-securities. Payment of premiums insured the default. In the event of obligation default, the bank would satisfy the contract. But, it is significant that in these transactions there was no federal or state regulatory body supervising them. Why? Because these contracts were not securities per-se and no oversight was necessary. The instrument does not even need to be associated with the buyer or the seller of the contract.

Wall Street Gurus [nyuck! nyuck! nyuck!]

And so, it seems that the smart financial folks on Wall Street that designed derivatives and credit default swaps, forgot to ask one thing; what if the parties on the other side of the bet didn’t have the [mortgage] money to pay up? As a result of this “amorphous toxicity default”, the short term commercial paper markets reached a three-year low of $1.6 trillion, in September 2008, as money-market fund managers – typically huge buyers of commercial paper – became extremely risk averse.

Some Possible Cash Crunch Solutions for Hospitals

Possible solutions to the cash-crunch involve passive external, and more active internal, strategies.

The EESA

Externally, for example, President Bush signed into law the Emergency Economic Stabilization Act (EESA) [Pub. L. 110-343, Div. A] On October 3, 2008. Commonly referred to as a bailout of the US financial system, it authorized the US Treasury to spend up to $700 billion to purchase distressed assets like CDSs and mortgage backed securities from the nation’s banks to free up the commercial paper market. Nine of the nation’s biggest banks have already received $125 billion of the Treasury’s $250 billion banking earmark, with $35 billion more going to various regional banks to increase liquidity. Traditionally, hospitals find commercial paper a less expensive liquid alternative to traditional asset-based borrowing. Commercial paper is a short-term promissory note issued by a hospital or other entity to raise short-term cash; either asset-backed or unsecured. The issuer of the note agrees to repay borrowed money within a range of one to 270 days, with 30 to 180 days being the most popular maturities.

The Fed’s Next Financing Gambit

Another program offered by the US Federal Reserve was to buy commercial paper as a means to increase access to funding and free up frozen credit markets. Clients, like hospitals and healthcare systems, with huge short-term funding needs are eager to take up the offer amid the difficulty in accessing credit. The new Commercial Paper Funding Facility (CPFF) provides a backstop to the commercial paper market that has been brought to a standstill, even for those industries – like healthcare – that are seemingly far removed from the financial sector. The CPFF will remain in place until Apr. 30, 2009, at which point the Fed Board of Governors would need to vote to extend it if necessary.

Interest Rates and the FOMC

Finally, the Federal Reserve cut interest rates at the Federal Open Market Committee [FOMC] meeting of October 29th; the second time that month. Overnight lending rates were lowered from 1.5% to 1.0%.

Other Intrinsic Financing Strategies

Other, more organizationally intrinsic, sort-term financial strategies may be used by some hospitals, and medical clinics, to accelerate their own cash conversions cycles [CCCs]. This is not an easy task however, but may be accomplished by streamlining and efficiently accelerating three key areas:

Patient access made up of all the pre-registration, registration, scheduling, pre-admitting, and admitting functions.
Health information technology management consisting of chart processing, coding, transcription, correspondence, and chart completion.
Patient financial services which includes all business office functions of billing, collecting, and follow-up post-patient care. These functions are optimized with automated biller queues to improve and track the productivity of each biller; claims scrubbing software to ensure that necessary data is included on the claim prior to submission; and electronic claims and reimbursement processing to expedite the payment cycle.

Moving to Cash

Under current pressure from the troubled economy, hospitals and clinics can also turn to their investment cash flow as a source of short term capital financing by focusing attention on managing and rebalancing investment portfolios. Although investment income typically is viewed in a capital budget, it may be used as supplemental cash generated from operating activities in an emergency. This is accomplished by:

allocating a greater proportion of invested assets to cash and short-term investments,
seeking marginally higher returns from other investment classes like mutual funds and real estate investments.

Non-Profit Fund Raising

Of course, not-for-profit hospitals and clinics can accelerate fundraising to generate cash donations. Donations are a good source of quick capital in certain markets. However, one must be aware of expended fundraising costs and it is important to ensure that all the costs incurred in fundraising activities are properly attributed.

Assessment

Related info: www.HealthcareFinancials.com

Conclusion

Your comments on this topic are appreciated. Is this one reason why the financial markets dropped more than 900 points in the last two days; or since election day?

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Filed under: Health Economics, Healthcare Finance, Op-Editorials, Practice Management | Tagged: credit squeeze, financial derivatives | Leave a comment »

Barack Obama and Health Policy

Posted on November 6, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

What Do -U- Think?

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

First it was Nixon’s supply-side national healthcare proposal; then it was managed care and HMO’s; next came HillaryCare, and finally the Republican’s “Contract with America”. So, will the next domestic healthcare policy initiative be; “Obama Care?”

Number 44 is Official

Now, that the United States has officially elected Barack H. Obama – the 44th president with 62 million popular votes – what does it mean to you as a doctor, financial advisor, politician, healthcare administrator, CEO, physician or nurse executive? And, what will this mean for – healthcare policy and administration – patients and virtually all of us going forward?

Election

After nearly two years of campaigning – countless debates about McCain versus Obama’s health plan – and the possibility of reform; the US has a president-elect and put Democratic majorities in both the House of Congress and the US Senate.

Opinions Vary

And so, what do you predict the next four years will bring? This is your chance to reflect, comment, opine and debate. Please share your thoughts, and let’s get a vigorous discussion going. Medical practitioner input is especially appreciated.

Assessment

Don’t forget to integrate your opinions with the current dismal economic scene; include challenges like the aging population, personal biomedical and genetic engineering initiatives, and related competitive healthcare 2.0 concepts. As an inside – or outsider – what is the future?

Conclusion

Your thoughts and comments on this Medical Executive-Post are appreciated.

Conclusion

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Filed under: Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, Surveys and Voting | Tagged: barack obama | 1 Comment »

Healthcare Business Information Review

Posted on November 5, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Breaking News – “U Can Use”

Staff Reporters

Mental Health Policy: The Senate adopted HR.-6049 with mental-health parity. Bipartisan lawmakers are working to make the bill law before 2009.

Regulations: Under new Medicare regulations, doctors, with a financial stake in hospitals, must tell referred patients about ownership links.

Compliance: CMS proposed October 1, 2011, for full implementation of the International Classification of Diseases, Tenth Revision (ICD-10), code sets.

Policy: Congress [S. 2041 and HR 4854] is considering changes to the False Claims Act that could lead to more vigorous qui tam litigation.

Accreditation: CMS approved Norwegian company Det Norske Veritas [DNV] to accredit hospitals for Conditions of Participation [COP] standards. Authority to also certify ISO 9001 compliance runs, through 2012.

Bankruptcy: Hospitals filing bankruptcy this quarter include: a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, Lincoln Park Hospital in Chicago, and the four-hospital-system Hospital Partners of America, in Charlotte.

Insurance: First Professionals Insurance Company told the SEC that it held securities with an amortized cost of $4.1 million in Lehman Brothers, $2.1M in American International Group, $2.5M in Morgan Stanley, $2.1M in Washington Mutual and $300,000 in Fannie Mae.

Business: Emdeon, a developer of revenue and payment cycle health management products, acquired the patient statement business of GE HIT.

Finance: Minnesota’s HealthPartners new Web tool provides prices for 83 procedures in its primary care and radiology network.

More info: www.HealthcareFinancials.com print-journal and November 2008 – February 2009 issue: http://healthcarefinancials.com/Nov08Jan2009.aspx

Disclosure: Dr. David Edward Marcinko is the editor of Healthcare Organizations: [Financial Management Strategies].

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Filed under: Breaking News, Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance | Tagged: healthcare business, healthcare economics, Healthcare Finance | Leave a comment »

The Healthcare Financial Crisis

Posted on November 4, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Will the Economy Affect the Healthcare Industry?

By Dr. David Edward Marcinko; MBA CMP™

Publisher-in-Chief

The past decade has seen the healthcare industry move toward, away, and then back to capitation which is a system that provides a: “1) Method of payment for health services in which a physician or hospital is paid a fixed amount for each person served regardless of the actual number or nature of services provided, (2) A method of paying health care providers or insurers in which a fixed amount is paid per enrollee to cover a defined set of services over a specified period, regardless of actual services provided, and (3) A health insurance payment mechanism that pays a fixed amount per person to cover medical services,” according to the Dictionary of Health Insurance and Managed Care www.HealthDictionarySeries.com

Others simply called it “wholesale medicine.”

The Last Decade

Only a decade ago, astute physician executives and healthcare administrators found it hard to believe that they would ever accept pre-payment for unknown commitments to provide an unknown amount of medical care. They argued that it would mean fewer patients seen and less care rendered. More than a few medical providers and healthcare facilities had a natural aversion to capitated, fixed payment or contractual medicine. It had always been associated with the worst components of managed care — hurried office visits and soul-less physicians.

Today’s Marketing Force

Today, a modified form of capitation reimbursement is re-emerging as a market force, and not merely a temporary healthcare business trend. More than 40% of all physicians in the country are now employees of a managed care organization that uses, or is re-considering, actuarially equivalent medical capitation in a reincarnated form.

Legislative Example:

For example, in February 2008, the California legislature passed Welfare and Institutions Code section 14105.19. It required a 10% fee-for-service payment reduction to Medi-Cal physicians and mental healthcare providers. The new payment reform law took effect on July 1, 2008. The Centers for Medicare and Medicaid Services plan to launch similar demonstration projects in Colorado, New Mexico, Oklahoma and Texas in January 1, 2009. The rush to find capitated contracts may be on once again.

Is Capitation the Answer?

Has capitation finally fulfilled its promise as a quality-improving and revenue-enhancing model? Or is it just another cost reduction strategy that squeezes doctors and hospitals, and limits patient care and choice during this financial crisis? To answer this query, one needs to review the Stark Laws.

Stark Laws I, II and III

Curiously, Stark Laws I, II and III were created to eliminate concerns that self-referral could lead to excessive medical care and fee-for-service payments. Ironically, this system, with its potential for self-enrichment, had long been perfectly acceptable. Many also never understood how a commitment to treat an entire patient population could be made with little or no actuarial information. Hence, frustration was the initial reaction of many medical providers to capitated reimbursement.

Capitation Advantages

Contemporary medical cost accounting has demonstrated that capitation has some advantages over traditional fee-for-service care. For example, it can create and align incentives that help patients, providers, and payers by limiting their contingent fiscal liabilities. In the current credit-deprived economy, capitation is increasingly being viewed in a more positive way.

Where Are We Heading?

How should physician and nurse-executives, hospital administrators, CXOs, managers and financial advisors navigate these treacherous fixed-payment waters? What’s the trend?

Micro-capitation … Is the Word … Is the Word!

What is it — and how does it work? Most importantly, how can a healthcare organization profit by it?

For the financial cognoscenti, micro-capitation [termed by Scott Shreve; MD – personal communication] focuses on medical conditions, or subsets of clinical conditions rather than traditional CPT® codes or MS-DRG patient activities. Care is delivered in discrete “self-organized medical care packages,” not patient care packages, as before. This creates a true healthcare marketplace where price, quality, and medical outcomes can be compared side-by-side, or provider-by-provider, or facility-by-facility.

New Level of Expertise

For instance, services provided by vertically or virtually integrated medical teams would enable a new level of expertise. High-volume providers would develop additional experience, which would enable them to introduce innovations and efficiencies in a classic economies-of-scale cycle. With additional delivery and outcomes experience, providers would be much more willing to put out a set-fee for a standard grouping of clinical services, because they would have confidence in their ability to deliver care for that price.

Still Capitation, but Better

Philosophically, this is still capitation, but it is distinguished by a finer “micro-capitation” at the medical condition level (lowest common unit of care delivery that can be measured), not the patient level. So, the healthcare delivery marketplace is again attempting to control economic risk — not with toxic credit default swaps [CDSs] or other financial derivatives, but by moving to micro-capitated “units” that can be understood, measured, and marketed.

Assessment

As the domestic corporate credit crisis escalates, the pharmaceutical industry implodes, the population ages, and the media focuses on the increasing number of uninsured citizens, a growing number of hospitals are shuttered, re-sized, or struggling onward with trepidation. Nevertheless, by considering alternate reimbursement models, like microcapitation and others, healthcare organizations might again thrive going forward.

More info: www.HealthcareFinancials.com print-journal and November 2008 – February 2009 issue: http://healthcarefinancials.com/Nov08Jan2009.aspx

Conclusion

Your comments are appreciated.

Disclosure: Dr. David Edward Marcinko is the editor of Healthcare Organizations: [Financial Management Strategies].

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Filed under: Health Economics, Health Law & Policy, Healthcare Finance | Tagged: capitation, micro-capitation | Leave a comment »

For-Profit versus Not-For-Profit Healthcare

Posted on October 27, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

An Often Contentious Problem

[By Staff Writers]

In general industry, as well as in healthcare, there has been a longstanding discussion on the relative efficiencies of for-profit businesses versus not-for-profits, which concerns the very merits of competition itself.

The Studies

According to Robert James Cimasi MHA, ASA, AVA, CMP™ of Health Capital Consultants in St Louis, a number of recent studies, some more controversial than others, have investigated the effect of tax status on the relative costs and quality of services at these different types of hospitals.

For example, Bob Cimasi of www.HealthCapital.com reported that one study, published in the New England Journal of Medicine (NEJM), compared Medicare spending (adjusted for local costs, patient demographics, and the types and numbers of local healthcare providers and facilities) in markets with only non-profit hospitals, only for-profit hospitals, and those with both types.

The results for the years studied, 1989, 1992, and 1995, showed that the government spends more for every type of service studied (hospital, physician, home health, and other facility services) in those areas with only for-profit hospitals. Costs for areas with only not-for-profit hospitals were the lowest, with spending in markets with both for-profit and not-for-profit hospitals falling in the middle of the range.

This study also tracked adjusted mean per capita spending for hospitals that had a change in their tax status.

For the period of the study, 1989-1995, they found that areas where all hospitals were non-profit, and remained so, had cost increases of $866, compared with $1,295 for areas where non-profits converted to for-profit status. Areas with only for-profit hospitals had cost increases of $1,166 from 1989-1995, whereas those which changed to non-profit hospital areas had the smallest cost increases of $837.

These results may indicate that the tax status of hospitals affects the costs of health services provided by physician providers and other healthcare facilities. Further, this reported effect, if real, may be considered by many to be detrimental to the public good. In the six years examined by this study, the difference in costs between these market types was indicated to have grown from 12.7% to 16.5%. In 1995, annual Medicare spending was $732 higher per enrollee in markets with only for-profit hospitals than in non-profit markets. This difference may be extrapolated to $5.2 billion dollars in total extra annual costs to Medicare.

Even More Studies

Other studies, according to Cimasi, have examined these cost differences and have found them to result from increased administrative and ancillary services costs. For-profits appear to spend less on personnel, charity care, hired help, and length of stay than not-for-profits. Moreover, spending differences are reflected in measurements of outcomes and quality. A study of death rates has presented them to be 6-7% lower in not-for-profit hospitals as compared to for-profits and 25% lower for teaching hospitals.[1]

The fact that costs in those markets with both for-profit and not-for-profit hospitals were in the middle of the range may be interpreted as resulting from the averaging of costs from these different classifications of organizations. However, the behavior of the not-for-profit class was apparently also affected by this “competition” with for-profits in mixed markets. For example, studies have shown that charitable care by non-profits in these markets is reduced to levels similar to those provided by for-profits.

The NEHJM Editorial

A NEJM editorial, several years ago, discussing several hospital costs studies attributes these higher costs to a lack of competition (or other motivation such as charity) that might act to prevent for-profit companies from seeking to maximize their profits at the cost of the public good.

“Market medicine’s dogma, that the profit motive optimizes care and minimizes costs, seem impervious to evidence that contradicts it.” Then further, “The competitive market described in textbooks does not and cannot exist in health care for several reasons.”[2]

Thus, even if competition could improve care and lower costs, this isn’t happening because expected results from competition are missing in the healthcare markets.

Competition

An examination of hospital competition is also of interest, as many hospital markets are too small to support more than one hospital (a monopoly) or more than a very few competing organizations. The authors of the NEJM editorial went on to cite hospital monopolies and “virtual monopolies” as one of the barriers to competition, stating that roughly half of Americans live in markets too small to support medical competition and that for-profit chains have focused acquisitions on these markets.

More Barriers

The next barrier discussed is constraints on consumer demand imposed by illness. The authors point to the difficulties consumers have in comparing costs, outcomes, and quality in order to choose among competing services.

Lastly, the fact that the government makes the purchasing decisions and pays the majority of healthcare costs, rather than the consumers or employers who are using the services, is presented as a significant barrier to competition.

Assessment

Many healthcare planners find these studies to be a stark illustration of the argument that the benefits of competition for profits are lost whenever competitive market controls are absent to prevent the abuses of profiteering. As one might expect, for-profit hospital companies might point out that this is the case for both not-for-profit and for-profit dominated markets.

References:

1. Wolfe, S. M., M.D., Editor, “Hidden Rip-off in U.S. Health Care Is Unmasked In New England Journal of Medicine Articles.” Health Letter 15: 9, Public Citizen Health Research Group, (Sept. 1999):

2. Woolhandler, S. and Himmelstein, D. U. “When Money Is the Mission — The High Costs of Investor-Owned Care.” NEJM 341: 6 (Aug. 5, 1999): 444

Conclusion

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Filed under: Health Economics, Health Law & Policy, Healthcare Finance, Practice Management, Research & Development | Tagged: for-profit hospitals, not-for-profit hospitals | 9 Comments »

Ayn Rand on Domestic Health Care

Posted on October 9, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Right or Privilege? [The Beat Goes On!]

By Staff Writers

After watching the presidential debate last night, we were struck with two divergent opinions, on the status of domestic healthcare, from the candidates.

Barack H. Obama

Obama says healthcare is an American “right”.

John S. McCain

McCain opines that healthcare is a personal “responsibility”

Ayn Rand

The objectivist philosopher Ayn Rand opines thusly.

Link: ayn-rand-healthcare

Assessment

And so, what do you think about this contentious topic?

Conclusion:

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Filed under: Ethics, Health Economics, Health Law & Policy, Op-Editorials | Tagged: Ayn Rand | 5 Comments »

“Reasonably-Preventable” Conditions

Posted on October 6, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

More Payment Reductions from Medicare

[Staff Reporters]

Medicare has implemented its new policy of halting payment to hospitals for the added cost of treating patients who are injured in their care.

Reasonably Preventable

According to the New York Times on October 1, Medicare has put 10 “reasonably preventable” conditions on its initial list, including:

patients receiving incompatible blood transfusions.
developing infections after certain surgeries.
undergoing a second operation to retrieve a sponge left behind from the first.
developing serious bed sores.
developing urinary tract infections caused by catheters, and;
suffering injuries from falls.

Congressional Mandates

The Congressionally mandated Medicare measure is not projected to yield large savings – $21 million a year, compared with $110 billion spent on inpatient care in 2007. But, officials believe that the regulations could apply to several hundred thousand hospital stays of the 12.5 million covered annually by Medicare, while the policy will also prevent hospitals from billing patients directly for costs generated by medical errors.

Assessment

Over the last year, four states Medicaid programs have announced that they will not pay for as many as 28 “never events,” joining some of the country’s largest commercial insurers, including WellPoint, Aetna, Cigna and Blue Cross Blue Shield plans in seven states.

Channel Surfing the ME-P

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
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Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Breaking News, Health Economics, Healthcare Finance, Quality Initiatives | 10 Comments »

Hospital Acquired Conditions

Posted on October 5, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Survey from Aon Insurance Corporation

Staff Reporters

According to a new analysis by insurance giant Aon Corporation, hospital-acquired conditions accounted for 12.2 percent of total legal-liability costs incurred by health care facilities in 2007.

Top Four Injury Claims

In addition, according to a brief about the Aon study in Modern Physician, one out of six claims against health care facilities was associated with hospital-acquired conditions, in 2007. Claims for these injuries were the most frequent of the four hospital-acquired condition categories:

Infections
injuries,
pressure ulcers, and
foreign objects left in the body after surgery.

Assessment

Costs of claims associated with pressure ulcers were the most expensive for health care facilities, which paid about $145,000 on average in claims for that condition. Aon analyzed nearly 78,000 claims with a total $9.3 billion of incurred losses for its professional liability report, which included information from more than 1,200 facilities that provided loss and exposure data.

Conclusion

Your thoughts and comments are appreciated; especially by our physician, medical quality improvement, risk management and insurance agent readers and subscribers.

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Filed under: Health Economics, Health Law & Policy, Professional Liability, Quality Initiatives, Risk Management, Surveys and Voting | 1 Comment »

Hospital Charge Reports

Posted on September 26, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Charging the Poor – More?

Staff Reporters

According to a new report from the Agency for Healthcare Research and Quality [AHRQ], on September 18, 2008, hospital charges increased in 2005 – the latest reporting period.

Charges; Not Actual Costs

Hospital charges – what patients are billed for their rooms, nursing care, diagnostic tests and other services; and not actual costs – jumped from $873 billion in 2005 to $943 billion in 2006.

www.HealthDictionarySeries.com

Data Summary and Survey Results

Between 2005 and 2006, hospital charges increased by:

$38 billion to $44 billion – 15 percent for people with no insurance.
$124 billion to $135 billion – 9 percent for Medicaid patients.
$411 billion to $444 billion – 8 percent for Medicare patients.
$272 billion to $287 billion – 6 percent for patients with private insurance.

Assessment

The steep increase occurred even though hospitals admissions increased only slightly, from 39.2 million to 39.5 million. And, it is interesting to note that charges for uninsured and Medicaid patients, those presumably least able to pay and/or protest, rose more than charges for those with private insurance or Medicare?

Conclusion

Your thoughts and comments are appreciated. Is this fair, not fair, an example of “reverse-charge” shifting, or something else?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Filed under: Health Economics, Health Insurance, Healthcare Finance, Surveys and Voting | Tagged: AHRQ | Leave a comment »

Adam Smith on Health Economics

Posted on September 25, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

A Fictional Interview

By Darrell Pruitt; DDS

Adam Smith, former 18^th century Scottish economist, is with me in the cyber-world today. He wrote his theories on economics around the time of the birth of our nation. His book, “An Inquiry into the Nature and Causes of the Wealth of Nations,” predates the word “capitalism” as well as “economist,” by several decades.

Yet his common sense wisdom, like that of many post-Renaissance thinkers of his day, still stands tall and true against time.

Welcome Mr. Smith:

Q: I have just a few questions that I was hoping you could help me with. The first question is one that is so basic, yet it causes more acute embarrassment than most doctors can tolerate. I happen to have lifelong immunity to such silly feelings.

Mr. Smith, why are professionals paid so much in comparison to other trades? Please use the English you are comfortable with.

A: “We trust our health to the physician; our fortune and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. The long time and the great expense which must be laid out in their education, when combined with this circumstance, necessarily enhance still further the price of their labour.” [Smith (1776) Book I, Chapter 10]

http://www.econlib.org/library/Smith/smWN4.html#B.I,%20Ch.10,%20Of%20Wages%20and%20Profit%20in%20the%20Different%20Employments%20of%20Labour%20and%20Stock

Q: I’m glad you said that instead of me (someone in the room chuckles.) For whatever reason, doctors in modern society have remained silent while stakeholders, who are not accountable to patients, crowded them away from the bargaining table. To tell the truth, what you might call stakeholders’ unenlightened self-interest seems a lot like tyranny. What can doctors do about it? I know that in your day, organizing labour (oops, you got me doing it now) could get one quickly killed. Since then labour movements have come and gone in American society. What are your thoughts about unionized healthcare professionals?

A: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”[ibid]

Comment: If I understand you correctly, Mr. Smith, you are saying that even though law should not deprive citizens of the freedom to assemble, which, by the way is now a civil right over here in the new world, the government would be wise to not render it necessary for professionals to do so because it would be impossible to prevent conspiracy against the public. Let’s hope it doesn’t come to that.

Now, let me show you evidence that our nation’s leaders, in an honorable effort to hold down the cost of healthcare for the common good, actually forgot that part of your lesson sometime over the last couple of centuries. It is thru a contrivance known as pay-for-performance [P4P}.

P4P

Pay for Performance (P4P), not known in your time, is one of the four cornerstone goals for healthcare reform that our President Bush described in his Executive Order. He officially calls it “Aligning incentives so that payers, providers, and patients benefit when care delivery is focused on achieving the best value of health care at the lowest cost.” I know you probably have never experienced the magic quality of “buzzwords” before, and the whole sentence is probably leaving with a dry mouth, wondering what “Aligning incentives” is really about. Don’t feel bad. This dialect of modern English is difficult for modern doctors to understand as well.

To put it simply, Bush and his buddies put together an intricate artificial market system where the quality, price and demand will all be controlled by people other than doctors and their customers.

Wait. Please, don’t hang up on me. I can completely understand why you don’t like it, Mr. Smith. Get this: I hear Stalin is pissed that Bush stole his idea of vertical collectivism. I also think it smells a lot like borscht with turnips. So, let’s move on.

Q: Finally, Mr. Smith, considering there is already unwanted and expensive interference in our nation’s healthcare system that eliminates natural competition between healthcare providers even before our nation turns to universal care, do you think it is unrealistic to imagine that a year from now consumers could demand black market dentistry rather than wait in lines for regulated dentistry?

A: “Particular acts of parliament, however, still attempt sometimes to regulate wages in particular trades and in particular places. Thus the 8th of George III prohibits under heavy penalties all master tailors in London, and five miles round it, from giving, and their workmen from accepting, more than two shillings and sevenpence halfpenny a day, except in the case of a general mourning.

Whenever the legislature attempts to regulate the differences between masters and their workmen, its counselors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.” [ibid]

Assessment

Damned counselors!

Thank you; Adam Smith!

Conclusion

Your thoughts and comments on this artifice are appreciated.

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Filed under: Ethics, Health Economics, Interviews, Op-Editorials | Tagged: adam smith, economics, Health Economics, Investing | 2 Comments »

When an ER – Is Not an Emergency Room

Posted on September 22, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

About “InQuickER”

[By Dr. David E. Marcinko; MBA, CMP™]

[By Prof. Hope Rachel Hetico; RN, MHA, CMP™]

Visits to emergency rooms climbed to a record high of 119.2 million in 2006, up from 115 million in 2005; with an average of 227 visits per minute, according to a new report from the Centers for Disease Control and Prevention [CDC]. So, it’s not surprising that “InQuickER” is a new service of Emory-Adventist Hospital [EAH] in Smyrna, Georgia.

How it Works

According to the hospital’s website, patient may schedule his or her trip to the emergency room through an open access process that takes three steps.

1. Reserve an appointment time through the InQuickER website when emergency care for a non-life-threatening issue exists. The site shows the soonest possible time to be seen. You can either reserve that time or choose another time more convenient for you; up to 6 hours later than the first available time. All you need do is briefly describe the injury or illness, and the ER will waiting for you to arrive.

2. Time is saved by filling-out an online registration with medical history that includes allergies and current medications. This allows patient’s to bypass front-desk registration and go straight to a ready and waiting treatment room upon arriving.

3. A printable appointment confirmation slip, with driving directions, completes the online transaction.

Guaranteed or it’s Free

Be seen in 15 minutes or less — or you don’t pay!

The cost for this premium service is $24.99. Of course, regular charges for diagnosis, treatment, consultants and admission may still apply. Online visitors are admonished to visit the website for additional terms and conditions.

The SIMPLE Button

The average time spent waiting for treatment in an emergency room in a United States is 3.2 hours. So, EAH wants to make life easier by allowing patients to wait in the comfort of their own homes. According to EAH, it’s really that simple.

But, is it really as easy as the SIMPLE button of retail giant, Staples, might suggest? Or, is this an economic operating-room, in-patient, or out-patient-poaching tactic?

Three Key Points

1. Patients don’t always know whether their conditions constitute an emergency.

2. What’s the optimal rate of “inappropriate” ER visits as the surgical analogy of appendicitis comes quickly to mind.

3. How harmful are inappropriate ER visits, as opposed to ER closure due to unfunded EMTALA or other initiatives?

Open-Access Scheduling

The concept of open-access scheduling is not new, and should be embraced more than it is by the medical community. Many feel the public is clamoring for it. But, is it appropriate for emergency room use? Or, is this an artifice just a clocked marketing gimmick.

And, what new term shall we give to “real emergency rooms?” Can the public even marginally discern the term’s meaning, given the gross abuse of other potentially life saving healthcare mechanisms like 911 calls; as demonstrated by one Reginald Peterson, of Florida, who called the service – twice – because his spicy Italian Subway® sandwich was missing its sauce?

One also wonders how local hospital staff members, and surrounding primary care doctors, internists and related front line practitioners; as well as walk-in and retail-clinics feel about this service; competitive threat or community boon? Is the idea of a non-emergent – emergency – an oxy-moron; muck like the term “jumbo-shrimp”?

Patient Computer Access?

Do the usual homeless, tired, hungry and mentally deranged patients typically seen in inner city ERs have computer access, or “homes to wait in comfort?”

And, wasn’t the managed care revolution, with its no and low-cost copays supposed to put an end to “ER-squatters?”

Assessment

We believe this business strategy will work because of its affluent location, in North-West Atlanta. It will save the ER money and earn income for the hospital. Suburban patients and soccer moms will also love it. But, as young students, we worked in the ER admissions departments of the old Cook County Hospital in Chicago; and Pennsylvania Hospital on Pine Street in Center-City Philadelphia [City of Brotherly Love]. And, we don’t think the scheduling concept would work there; then or now; nor here at Grady Memorial Hospital in Atlanta. Please opine and comment.

Conclusion

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***

Filed under: Career Development, Health Economics, Health Law & Policy, Information Technology, Managed Care, Practice Management | Tagged: ER | 12 Comments »

Seeking Writers and Contributors

Posted on September 16, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Business of Medical Practice [third edition]

Ann Miller; RN, MHA

Project Manager

As readers of the Executive-Post may know, our textbook the Business of Medical Practice is a best seller.

http://www.springerpub.com/prod.aspx?prod_id=23759

Accordingly, we wish to personally invite all subscribers to contribute to our third edition now in progress. New and prior chapters are still available for updating; for a low-effort but high-yield contribution. We have others ideas for this peer-reviewed publication, as well.

Our goal is to help physician colleagues and medical executives benefit from nationally known experts as an essential platform for their success in the healthcare industry. And so, please advise and thanks again for your consideration and possible contributions. Feel free to email me 24/7 for more information MarcinkoAdvisors@msn.com

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How Doctors Get Paid

Posted on September 12, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

It’s all about Flow [Part 1]

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Most patients don’t have a clue about how doctors get paid; it’s not by magic.

Yet, a number of different steps occur during the processing of a medical claim as can be seen in the flow chart below. Each step within the process can be mapped out and each is subject to claim payment-or-claim abortion or rejection.

The steps can also be subjected to a number of variables, depending on a number of different factors including staff competency, time, outside vendors, information management, management decisions in general, or regulatory requirements.

Flow Chart

Of course, any one of these points could lapse, causing the entire process to break down. Like treating patients, when the process has no variables, the end result is very predictable, such as in the flow chart below. When there are variations the end results can be very different.

Treatment is Only the Beginning

Doctor gets the chart

↓

Doctor evaluates patient

↓

Doctor documents visit

↓

Doctor marks billing slip

↓

Doctor gives slip to patient

↓

Patient gives slip to billing clerk

↓

Billing clerk enters information into computer

↓

Office staff submits claim to insurer

↓

Third party payor/Insurance company receives claim

↓

Insurer adjudicates claim

↓

Reimbursement transmitted (electronic or mail) to practice

↓

Reimbursement entered (posted) into practice management system by office staff.

There are two things that you need understand in order to implement an efficient compliance program.

1] The first is the processes needed to run the organization and the desired outcome of those processes.

2] And second, if the process needs improvement, what can be done to make the process function better?

Office Efficiency Checks

Most small medical and dental practices or clinics have a number of checks and balances in place to control variation.

In an example of an inefficient operation, one practice had the physician-executive open every envelope that came into the office. This was done because of a concern that if someone else did it, then something could go missing.

However, the doctor would then turn the mail over to the payment posting person, who would enter claims into the system. Sometimes the person who entered the claims would become busy with other duties and would not be able to enter claims for a couple of days. This proved to be an inefficient method of managing the billing process for the organization.

Assessment

A possible solution is to have one person in the front office to open the mail, organize the contents based on who needs to deal with the information (such as claims, refusals, or requests), and then distribute them accordingly.

More on how physcians get paid.

Part 2: https://medicalexecutivepost.com/wp-content/uploads/2010/02/how-doctors-get-paid-in-2010.pdf

Conclusion

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***

Invite Dr. Marcinko

Filed under: Health Economics, Health Insurance, Healthcare Finance, Practice Management | Tagged: super bill | 18 Comments »

Determining Medical Fees

Posted on September 11, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Reflecting Worth and Reality

By Dr. David Edward Marcinko; MBA, CMP™

Despite changes in insurance models, a healthcare provider’s fees should reflect what the doctor feels his or her services or procedures are worth. The type of insurance that the patient has should not play an influencing factor in either the fee determination or services rendered.

Additionally, fees should not vary based on the patient’s insurance type, or what the patient’s managed care contract determines is the maximum payable allowance.

Deterring Factors

Determining a professional fee for a given service takes into account many factors including the professional work performed, non-clinical work performed, unusual skills required, time for service, practice expenses (e.g., staff salaries and benefits, disposable items, rent, utilities, etc.), risk, as well as direct (surgical global care) and indirect (communicating with other health professionals, laboratory finding evaluation, review of x-rays, etc.) follow-up care.

Provider Determined

In establishing professional fees, the operative phrase is “provider determined.” While the input from knowledgeable experienced staff is certainly desirous, the ultimate responsibility for determining fees rests on the shoulders of the healthcare professional providing the service. Of course, the medical treatment administered, and for which reimbursement is sought, is assumed to be performed on the basis of medical necessity and effectiveness.

The Import

So why are reasonable fees and reimbursement for services important?

Well, medicine is a business whether physicians like to admit it or not. Businesses that are not profitable do not remain businesses for long. Today, most healthcare professionals will admit they are working harder, more hours, seeing more patients to maintain practice revenues. Even so, in many cases, expense increases are outpacing revenue increases. In an age of managed care, even Marcus Welby, MD would have to work harder.

Getting Started

Actually reviewing the annual Medicare rules and regulations found in the year ending Federal Register is a good place to start. That issue printed between November 1 and December 15 of each year lists all the CPT® codes and their Centers for Medicare and Medicaid Services (CMS) (formally Health Care Financing Administration-HCFA) determined relative value units (RVUs). The RVUs are procedure comparable.

Case Example:

You can assume if, for example, a free muscle flap procedure using microvascular techniques is valued at 68.65 total RVUs, it would be relatively more complicated procedure than a simple repair of a small laceration at a total 4.34 RVUs. You would price your procedure fees accordingly.

Generally, if a managed care allowance exceeds what you have billed; your fee is unreasonably low. The true test of reasonableness is your comfort (emotional as well as economic) level in charging the cash patient the same fee. If you feel it is in the “reasonable” range, and you are not consistently writing off 98% of your charges, it probably is reasonable. Under a managed care fee schedule, the service billed amount generally only has significance when the fee charged is less than the contract allowance.

Assessment

In that case, the MCO allowance is reduced to the lesser amount billed. The physician’s fees should not be lower than the highest contractual reimbursement rate.

Conclusion

Your informed opinions and comments are appreciated. How do you determine professional medical provider fees?

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Filed under: Health Economics, Health Insurance, Healthcare Finance, Practice Management, Practice Worth | Tagged: medical fees | 1 Comment »

Medical Coding Definitions

Posted on September 10, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding CPT® Methods

By Patricia Trites; PhD

www.HealthcareFinancials.com

The American Medical Association Physicians’ Current Procedural Terminology manual (commonly known as the CPT® manual) is the recognized coding manual used by healthcare providers to bill third party payers.

CPT Codes

No quantitative values are assigned the CPT® codes contained within the CPT® manual. Each third party payers determines a value, whether a direct dollar or unit value, for each CPT® code. Each CPT® code represents a service, procedure, test, or study.

The CPT® manual attempts to define each of the codes specifically by individual descriptive phrases, and generally utilizing guidelines, rules, and definitions related to code groupings: medical, surgical, pathological, and diagnostic services. Third party payers develop for internal use additional protocols, guidelines, rules and definitions.

Assigned Values

The value assigned to each CPT® code is based on a determined amount of work, practice expense and risk inherently bundled into the service or procedure. Each procedure or service is further defined as a body of work made up of multiple lesser components all valued within the main CPT® code.

Case Example:

As an example, if the surgical lengthening of a leg tendon is the main procedure to performed, it would be assigned a unique CPT® code. Within the tendon lengthening code definition and assigned value would be included (bundled or “packaged”) seemingly obvious lesser procedures available to the surgeon in achieving the ultimate goal of the tendon lengthening. These lesser procedures include the incision itself, retraction of vital structures, tying off small vessels, suturing the tendon in a lengthened position, closing the soft tissue in layers, suturing the skin, application of a dressing, and application of a posterior splint.

Modifications

While some surgeons in a particular case may not need to tie off small vessels because no vessels interfered with the surgical exposure, or maybe they had to tie off two more vessels than they usually have to do, or they may elect not to apply a posterior splint, or the procedure takes twenty minutes more because a required instrument falls on the floor and needs to be re-sterilized, the overall code value of the tendon lengthening procedure does not change.

Essentially with the exception of minor modifications, one way or another, the main procedure remains essentially the same. Those minor modifications or variations in technique would be included in what would be called the global surgical description and allowance. Not all potential secondary or minor procedures need to be performed to fully reimburse the primary procedure.

Billing Fragmentation

The fragmentation, breakdown or unbundling of the main or primary procedure through the billing of each secondary procedure is billing abuse at best, intentional double billing at worse. Bundling is also addressed in the Correct Coding Initiative [CCI] issued by the Centers for Medicare and Medicaid Services [CMS]. This is a quarterly publication that lists the procedures and/or services that cannot be billed on the same day for the same patient.

Assessment

Healthcare providers intentionally billing unbundled services may be committing fraud or abuse.

Conclusion

Your thoughts and comments are appreciated.

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

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Filed under: Health Economics, Health Insurance, Health Law & Policy, Managed Care, Practice Management | Tagged: CPT codes | 1 Comment »

The Healthcare Whistleblowers

Posted on September 5, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

A New DOJ Report

[By Staff Reporters]

According to the Deportment of Justice [DOJ], $9.3 billion was recovered from health care providers accused of defrauding the states and federal government the past decade.

The Study

The department ramped up efforts in the 1990s to combat healthcare fraud by using private citizens with insider knowledge of wrongdoing. They now initiate more than 90 percent of the department’s lawsuits focusing on fraud in health care, and receive between15 percent and 25 percent of the amounts recovered.

The Results

According to an Associated Press report on September 2, of the $9.3 billion recovered between 1996 and 2005, whistle blowers got more than $1 billion. And, while the number of claims dropped in recent years, recovery amounts have soared – jumping from about $10 million a case in 2002 to $50 million by 2005.

Assessment

The reason for this up-tick was the late addition of pharmaceutical manufacturers to the list of defendants.

Conclusion

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HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
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INSURANCE:Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Drugs and Pharma, Health Economics, Health Law & Policy, Healthcare Finance, Practice Management | Tagged: health fraud, whistleblowers | 54 Comments »

Coming Healthcare Worker-Shortage

Posted on August 27, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

It’s All in the Demographics

[A New AAHC Report]

[By Staff Reporters]

Current domestic policies will not avert a US health work-force crisis, according to a new report released by the Association of Academic Health Centers [AAHCs]. Moreover, it recommends developing a national planning body to unite efforts to slow/end work-force shortages.

The Report

The association’s report, “Out of Order, Out of Time: The State of the Nation’s Health Workforce,” points to a long and growing list of challenges. These include projected shortages in primary care and nursing; as the baby-boomer wave of retiring physicians and increasing medical needs of the growing elderly population exacerbate.

Lifestyle Preferences

Also, as reported in the American Medical News, on August 25, other issues fueling shortages of health-care workers include lifestyle preferences (regular work hours and family), economic disparities, rising medical school debt loads, and a dwindling pool of medical school faculty, with fragmented health care work-force policymaking.

Assessment

If this all isn’t enough to discourage new entrants from joining the healthcare industry, the plummeting value of present-day small-to-medium sized private medical practices just might.

In fact, our Publisher-in-Chief, Dr. David Edward Marcinko was recently interviewed by the American Medical News on this very topic. And, the un-edited version of that interview will appear in an upcoming issue of the Medical Executive-Post, shortly after AMNews publication.

Channel Surfing the ME-P

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

PRACTICES: www.BusinessofMedicalPractice.com
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CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Career Development, Health Economics, Research & Development, Surveys and Voting | Tagged: healthcare work force | 3 Comments »

Next-Gen Health Accountants and Tax Advisors

Posted on August 19, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Avoiding the “Managed Care Ripple Effect”

By Dr. David Edward Marcinko; MBA, CMP™

The healthcare industrial complex represents a large and diverse industry, and the livelihood of other synergistic professionals who advise doctors depend on it as well. These include CPAs, tax specialists and Enrolled Agents [EAs] who themselves wish to avoid the collateral ripple effects of the current healthcare debacle.

Unappreciated CPAs Working Diligently

The nation’s 330,000 or so CPAs know little about the new healthcare dynamics and managerial accounting mechanics. Many often feel as though they are laboring away in obscurity and that their doctor clients do not appreciate what they do or how hard they work.

If you are a CPA, your workweek is ridiculously long, especially January through April; and you often deliver bad news to your clients. You do not earn a generous salary, but you do receive their ire for your efforts.

The Epiphany

So, you begin to scratch your head and ponder, quietly at first, and then out loud. Perhaps managing the medical practice(s) of a physician, or providing consulting services to other medical professional is a business and financial planning opportunity that won’t require a new client base? You can keep your accounting practice during the first four months of the year, and supplement your income with something that may actually earn more than you are making now.

A light then goes off in your head, epiphany! Enter the CPA/PFS designation, exhorting doctor clients to “never underestimate the value”, through an additional 750 hours of financial planning experience and a six-hour comprehensive examination.

New Wave Terms and Definitions

However, new-wave terms such as capitated medicine; per member-per month fixed fees; payment withholds; activity based costing with CPT codes; utilization and acuity rates; and other investment, business and economic nomenclature is likely quite unfamiliar to you.

Furthermore, you may not have the temperament to be a fiduciary, responsible for the financial affairs of others. Then you realize that MBAs and actuaries may actually be the new denizens of the healthcare bean counting and practice management scene. Rather than present numerics of the historic past, they make logical and mathematical inferences about the future. Slowly, you realize that this has occurred because these professionals are proactive, not reactive, as the accounting profession is loosing its premier advisory position within the medical profession.

And, since some doctors are paid a fixed fee amount, regardless of the number of services performed, these futuristic projections are the most important accounting numbers in healthcare today.

Assessment

In fact, your research suggests that as a result, there are now several accountant managers and broker-dealers on the investment scene, as well as an increasing number of accounting-financial planning firms, such as Miller Ray & Houser Business Advisors and CPAs, in Atlanta, who set up a separate investment advisory firm to which they refer clients.

Moreover, the AICPA is providing encouragement to CPAs who wish to provide more professional client services by building a financial planning practice for the new millennium.

Disclaimer: Dr. Marcinko, a member of the Microsoft accounting network, is Founder of the Certified Medial Planner™ program for all fiduciary advisors in health economics, finance and medical practice management www.CertifiedMedicalPlanner.com

Conclusion

Your thoughts are appreciated; please opine?

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Eroding Doctor-Patient Relationships

Posted on August 6, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

The “Bed-Side Manner” Deterioration Continues

[By Staff Reporters]

A growing chorus of discontent suggests that the once-revered doctor-patient relationship is on the rocks.

Results

About one in four patients feel that their physicians sometimes expose them to unnecessary risk, according to data from a Johns Hopkins University [JHU] study published in the journal, Medicine, while two recent studies show that whether patients trust a doctor strongly influences whether they take their medication, according to the New York Times, on July 29, 2008.

Tell-all-Books

In bookstores, there is now a new genre of “what your doctor won’t tell you” books promising previously withheld information on everything from weight loss to heart disease, while the Internet is bristling with frustrated comments, blogs, text-messages and wiki’s, etc., from patients.

Raison Detra’

Reasons for the frustration include declining reimbursements and higher costs that give doctors only minutes to spend with each patient, news reports about medical errors and drug industry influence fueling patients’ distrust, and the rise of direct-to-consumer drug advertising and medical Web sites that have taught patients to research their own medical issues and made them more skeptical and inquisitive.

Of course, related quality improvement initiatives seem to be loosing ground.

Assessment

One can only wonder if more extensive use of physician-extenders; like PAs, CRNAs, CNMWs, NPs and DNPs are part of the solution; as well as well-trained limited licensed providers like podiatrists, dentists, optometrists and psychologists; along with walk-in, on-site and retail medical clinics, etc?

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

***

Filed under: "Doctors Only", Career Development, Health Economics, Managed Care, Marketing & Advertising, Practice Management, Quality Initiatives, Surveys and Voting | Tagged: bedside manner, JHU | 2 Comments »

Blue Cross – Blue Shield Administrative Survey

Posted on August 3, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Cost Trends Demonstrate a Decline in 2007

By Douglas B. Sherlock; CFA

PRESS RELEASE REPORT

Gwynedd, Pennsylvania

The per-member [pm] administrative cost growth for BC/BS declined from 6.1% in 2006, to 4.3% in 2007. Adjusted to eliminate the effect of a shift in product mix, administrative expense growth declined from 6.5% in 2006 to 2.5% in 2007. Administrative expenses were 10.4% of premium equivalents in 2007. And, plans reported total administrative expenses of $25.36 PMPM.

All cited values exclude investment and non-operating income and expense, income taxes and miscellaneous business taxes.

Sherlock Expense Evaluation Report

These results are excerpted from the Sherlock Expense Evaluation Report, a benchmarking study comprising the results of 23 Blue Cross Blue Shield Plans surveyed by the Sherlock Company. More than 90% of participants also participated in the prior year’s survey and nearly 80% have five or more years of experience participating in our benchmarks.

Benchmarks and Metrics

The Sherlock Company benchmarks include thousands of operational and financial performance metrics. Besides Blue Plans, other universes include Independent / Provider-Sponsored plans, Medicare Advantage plans, Medicaid plans and larger plans. Collectively, the 46 plans serve approximately 36 million insured Americans.

Administrative Growth

The growth in administrative expenses ranged from a high of 10.0% for Medical and Provider Services to a low of 0.2% for Corporate Services.

In fact, the Sherlock Company said that, “The increasing emphasis of these Plans on Medicare Advantage had a profound effect on their expense trends. After holding constant the product mix, corporate service costs per member declined by 6.2% and provider and medical management costs increased by 2.2%.”

Assessment

Additional information is available in the Sherlock Expense Evaluation Report. We have also published a summary in July 2008 edition of the Plan Management Navigator accessible at www.sherlockco.com/docs/navigator/navigator-08-07.pdf

Conclusion

Your thoughts and comments on the above findings are appreciated? Do they agree, or disagree, with your factual or heuristic cost impressions of this institutional space?

###

The Sherlock Company www.sherlockco.com based in Gwynedd, Pennsylvania, provides informed solutions for health plan financial management. Since its founding in 1987, Sherlock Company has been known for its impartiality and technical competence in service to its clients.

Contact: Douglas B. Sherlock; CFA for more information.

215-628-2289, sherlock@sherlockco.com or visit www.Sherlockco.com

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CMS to Bonus Doctors for PQRI

Posted on July 31, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

July – December 2007 Reporting Period

[By Staff Reporters]

According to Anne Zieger, of Fierce Health Finance, the Centers for Medicare and Medicaid Services [CMS] will pay out more than $36 million in monetary incentives to medical providers who reported data on quality of care delivered between July 2007 and December 2007; as part of its Physician Quality Reporting Initiative [PQRI].

Physician Quality Reporting Initiative [PQRI]

Under the PQRI, healthcare providers who choose to participate get bonuses of 1.5 percent of their total CMS payments during the reporting period in which they reported quality data.

Assessment

Average payments for the most recent period range from $600 for individual physicians to $4,700 for groups. The largest payment CMS plans to make to a practice is more than $205,700. Solo physicians, physician group practices, and other PQRI-eligible professionals should receive their payments by August, according to the agency.

Source: CMS press release

Conclusion

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Filed under: Career Development, Health Economics, Health Law & Policy, Healthcare Finance, Quality Initiatives, Surveys and Voting | Tagged: CMS, P4P, physician bonus, PQRI | 14 Comments »

RAC Contractors to be Identified

Posted on July 19, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

CMS Aims to Reduce Fraud

[By Staff Writers]

This month, the Centers for Medicare and Medicaid Services [CMS] will name the auditing firms that will review hospitals’ books for payment mistakes, while hospital officials say results in other states suggest the auditors will give priority to recovering overpayments.

The RAC Program

Under the so-called Recovery Asset Contractor [RAC] program, CMS pays auditors a fee based on the amount of improper payments discovered.

Hospital officials worry this “bounty hunter” approach – the second for CMS after medical practice audits – will create a bias in auditors to focus only on collecting government overpayments, reported the Pittsburgh Business Times on June 16, 2008.

Pilot Program Results

Some hospitals point to a pilot audit program in New York, Florida and California, which found $357.2 million in overpayments and just $14.3 million in underpayments. Medicare estimates its error rate at 3.9 percent in 2007, down from 9.8 percent in 2003, but still totaling $10.8 billion in improper payments

Assessment

Is this another instance of brute intimidation or just honest review?

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

PRACTICES: www.BusinessofMedicalPractice.com
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ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Health Economics, Health Insurance, Healthcare Finance, Insurance Matters, Practice Management | Tagged: CMS, Health Economics, health fraud, Healthcare Finance | 7 Comments »

Doctors Unite!

Posted on July 10, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

On the “Open Letter from America’s Physicians”

By Dr. David Edward Marcinko; MBA, CMP™

Publisher-in-Chief

As we have seen in this healthcare-charged election season, almost every form of political activism or debate has moved online. So, it is no surprise that a coalition of disgruntled physicians would electronically socialize and network together, as seen with www.sermo.com

About Sermo – Peer 2 Peer Doctor Network

First billed as a physician’s only online community, where 65,000 doctors around the nation exchanged the latest medical insights with each other to improve patient clinical outcomes, some portions of the Sermo community have morphed into a kind of political action committee [PAC] representing a particular flavor of zealot doctor activist.

Political Activism

And, not to miss out on a marketing opportunity, Sermo has allowed itself to be used as a vehicle for an open letter signed by physicians, decrying the state of domestic healthcare, that’s only going to get more public.

According to Mr. Matthew Arnold of Medical Marketing & Media, the letter is a physicians’ manifesto of sorts, composed by selected Sermo doctors demanding an end to intrusive insurers and overzealous regulators. To date it has garnered 5,200 signatures in the several weeks since it was posted on www.mmm-online.com

So, You Want a Revolution?

According to Arnold, “There’s a sense of revolution in this,” said Dr. Daniel Palestrant, founder and CEO of the physician social networking site, which boasts around 70,000 members. “It’s doctors coming together for the first time, voicing discontent with the representation they’ve had to date, and making it clear to the public that the quality of care is going to be suffering based on some of these outside forces.” http://www.mmm-online.com/Fed-up-Sermo-docs-draft-manifesto/article/112006

Doctors Unite

The “Open Letter from America’s Physicians,” hosted at www.doctorsunite.org blames “The insurance industry’s undue authority and oppressive control over healthcare processes,” “Excessive and misguided government regulation” and “The practice of defensive medicine in response to a harmful and costly legal environment” for America’s healthcare crisis, and vows: “We, the physicians of the United States, will no longer remain silent. We will not tolerate a healthcare system where those without medical expertise or genuine interest in our patients’ health have absolute control.”

Assessment

As almost every other form of political activism has moved online, don’t be surprised to see more websites, blogs, wikis or social e-communities like this. Of course, if the details get specific, it’s tricky to know whether the coalition of disgruntled doctors will stay together, and/or whether Sermo will emerge as representing a new breed of doctor “turned-political-pundit.”

Conclusion

And so, is political activism an appropriate initiative for the medical community; why or why not?

Might it be considered more self-serving; or more patient centric? Your thoughts and comments are appreciated.

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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Filed under: "Doctors Only", Health Economics, Health Insurance, Health Law & Policy, Healthcare Finance, Op-Editorials | Tagged: Add new tag, sermo | 3 Comments »

Ending Governmental Barriers to e-Prescribing

Posted on June 28, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

AMA’s – HOD Wants End to Governmental e-Prescribing Barriers

[By Staff Writers]

According to Modern Healthcare [June, 2008] the American Medical Association’s-House of Delegates [HODs] adopted a resolution calling for an end to government-imposed barriers to e-prescribing.

The Resolution

The resolution called for the removal of all federal Medicare and state Medicaid requirements mandating the use of paper prescription forms for certain drugs – that the AMA initiate discussions with the federal Drug Enforcement Administration to allow e-prescribing of schedule 2 drugs – and that Medicare or Medicaid payments not be contingent upon adoption of e-prescribing.

Assessment

The resolution also called on the AMA to work with federal and private entities to ensure universal acceptance by pharmacies of electronically transmitted prescriptions.

Assessment

Should we really bite the [Medicare] “hand that feeds us?”

Conclusion

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Concierge Medical Practice Fee-Setting

Posted on June 18, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Pricing Decisions for Medical Providers

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Professional fee-setting and related pricing decisions for a concierge medical practice, like most businesses rather than most medical-entities, is complex and will significantly affect the doctor’s profits.

New Markets

When a concierge medical practice is first introduced into a local market, the physician-executive must make a choice between charging higher fees in order to recoup practice launch and development costs quickly; or charging lower fees and/or annual retainer subscriptions and extending his/her losses into the growth stage of the practice’s life-cycle.

This is why consultants and franchisor’s suggest that it may be better to convert an existing practice in-situ, to a concierge model; than start the concierge practice from de-novo, scratch. Nevertheless, the choice should be a conscious one; rather than automatically made by default.

And, the decision will depend upon how target patients are expected to view the practice and its carefully selected medical services.

Premium Pricing Strategy

If there is “premium-status or swagger” attached to concierge medical practice ownership, then a “price-skimming” approach might be used. Price skimming, by definition, means setting initial professional fees high in order to achieve profits sooner; and then lowering them as the practice matures. Doctors who use this strategy will experience profits during the introductory stage of the concierge practice’s life cycle, and then reap organizational and operational economies of scale, down-line.

Early Adopter Strategy

If status is not an issue, the doctor may decide to charge lower fees in an attempt to achieve more rapid market local penetration and faster movement into the more profitable early-adopter stage.

A word of warning! If you set initial fees much lower than a price you can maintain and still make a profit, or have adequate working-capital set aside, it is imperative that you make the patient-subscriber aware of the fact that this initial low price is a special promotion that will be increased when over. Patients do not react very positively to unexpected large price increases and may believe the doctor is simply engaging in gouging activity.

Competition

If a doctor has competitors in the local marketplace, s/he can price services above, equal to, or below them.

Fees above one’s competitors implies that services are superior and deserve higher fees; while pricing below the competition level can imply the doctor is proving extra-value to patients in terms of cost-savings.

Pricing at the competitive level is the hardest strategy to follow for any concierge medical practice, but is the only appropriate one in an environment of pure competition. This is typically not yet the case for CM in most areas, to-date.

Assessment

Before settling on a specific fee schedule for your practice, make sure that you know the type of competitive environment that surrounds you and whether demand for your concierge medical services is elastic or inelastic.

Conclusion

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Hospitals Avoiding Non-Emergency Care

Posted on June 13, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Reducing Emergency Department Workloads and Expenses

[By Staff Writers]

As most Medical Executive-Post readers know, hospitals are under more intense pressure than ever to avoid bad-debt expenses and reduce write-offs. For example, according to one study, total emergency room visits, classified as non-urgent conditions increased from 10 percent 1997 to 14 percent in 2006, according to research by the Center on Studying Health System Change [CSHSC].

Collection Strategies

One collection strategy is to pro-actively ask for payment up-front, or vigorously pursue claims after the bill has been incurred; using either in-house or outsourced collection agencies. Another novel idea is to auction-off patient ARs, as previously mentioned here:

Link: https://healthcarefinancials.wordpress.com/2008/06/09/hospitals-auction-debt/

It’s Called Triage

But, yet another “new-wave” method for Emergency Departments [EDs] is to determine [remember the concept of triage] that patient’s who don’t need costly care, don’t receive it. That’s why, in part, a growing number of hospitals are working to redirect non-urgent care patients away from costly ED care and over to outpatient clinics.

This concept is a derivative of the “onsite / remote step-down units” proposed by our managing-editor Hope Rachel Hetico; RN, MHA, CMP™ several years ago.

Clinical Care Strategies

To address such issues, hospitals are adopting these and other strategies targeting non-urgent patients coming to the ED.

For example, according to FierceHealthFinance, some have shifted nurse practitioners to screen patients, and to set appointments with outpatient caregivers, and primary care doctors for those who need it.

When patients with non-urgent issues return repeatedly, such nurses can help the ED create care plans that set the patient up with medical homes.

In some cases this can change ED patient inflow dramatically; one Miami ED for example, referred an average of 50 patients a day to clinics over 18 months, according to the report.

Assessment

Of course, we are long-time proponents of the nurse practitioner, and DNP, models.

Stemming the Primary Care Exodus with DNPs.

Link:https://healthcarefinancials.wordpress.com/2008/05/29/stemming-the-primary-care-exodus/

Conclusion

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Hospitals Auctioning Patient Debt

Posted on June 9, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Online Sale of Patient ARs

Staff Reporters

In another sign of the contracting economic times, FierceHealthFinance is reporting that some struggling hospitals are using the internet as a new channel to cut their write-offs, and bad debt ratios which lower stock prices, if publicly-held.

Exit the Debt Collectors – Enter the Auctioneers

Rather than simply hiring agencies to collect patient bills, some hospitals have begun to put ARs up for auction online. Bidders on the debt include the same agencies that serve the hospitals, some of which provide guaranteed payments to hospitals in exchange for access to the debt. The auctions are also attracting other companies that buy the debt outright.

Intermediary Channels

Many of these auctions are run through intermediary channels like www.ARxChange.com, a TriCap Technology Group site; while others use www.medipent.com Medipent LLC. The companies vet collectors to see that they will use the right tactics before participating in auctions, and also, try to make sure they comply with the hospital standards for collections. Also, hospitals have the final say over who bids on their accounts.

Critics

Despite safeguards, some critics argue that auctions change the dynamics of hospital collections, unfavorably. Usually, collectors are paid a percentage of what they collect, sometimes more when they collect more. But, in many of these cases, winning bidders get to keep all of the money they collect. This gives them a greater incentive to be aggressive in their tactics, according to the Wall Street Journal.

Assessment

When will debt-auctioning filter down to the individual clinic and medical practice level? “It is only a matter of time”, according to industry expert Hope Rachel Hetico; RN, MHA, CMP™ of Atlanta, Georgia

Conclusion

Your thoughts, opinions and comments are appreciated?

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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Filed under: Accounting, Health Economics, Healthcare Finance, Managed Care, Taxation | Tagged: ARs, debt collections | 1 Comment »

Survey on Convenient Care Medical Clinics

Posted on June 8, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Possible Solution to the Healthcare Dilemma?

Staff Reporters

Another new survey suggests that convenient care medical clinics (CCMCs) could be a potential solution to health care issues, if fears can be alleviated; at least in the Keystone State.

The Survey

The survey by Widener University in Elder Pennsylvania, found that while baby-boomers aged 43 to 64 were most interested in using these clinics, many also expressed concerns regarding the quality of care likely to be delivered.

Aged played a significant role in a person’s likelihood of using a CCMC: among respondents aged 43 to 49, more than half (54 percent) were very likely or somewhat likely to use the clinics, while that number dropped to a mere 25 percent among those over 80 years of age.

Assessment

Access to health insurance influences an individual’s likelihood of using a CCMC: the percentage of respondents who were very likely or somewhat likely to use a CCMC was higher among individuals without health care insurance, than among those with insurance (65 percent versus 40 percent).

Women in the survey indicated they were very likely to worry about misdiagnosis (25 percent), yet they were more inclined to use these types of facilities than men (43 percent versus 37 percent).

Please visit related Executive-Posts for more information on this emerging topic.

Conclusion

Your thoughts and comments on the above survey are appreciated? Is the CCMC concept revolutionary, or merely evolutionary, and how do DNPs fit in the model?

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Healthcare Organizations: www.HealthcareFinancials.com

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Filed under: Career Development, Health Economics, Health Insurance, Insurance Matters, Managed Care, Quality Initiatives, Surveys and Voting | Tagged: retail clinic surveys | 1 Comment »

The Dartmouth Atlas Project

Posted on June 6, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Documenting Medical Resource Variations

Staff Reporters

For more than 20 years, the Dartmouth Atlas Project [DAP] has documented glaring variations in how medical resources are distributed and used in the United States.

Purpose

According to its website, the project uses Medicare data to provide comprehensive information and analysis about national, regional and local markets, as well as individual hospitals and their affiliated physicians.

Information Uses

These reports, used by policymakers, the media, health care analysts and others, have radically changed the understanding of the efficiency and effectiveness of our health care system. This valuable data forms the foundation for many of the ongoing efforts to improve health and health systems across America.

Assessment

This website provides access to all DAR reports and publications, as well as interactive tools to allow visitors to view specific regions and perform their own comparisons and analyses. It is well worth a look by all healthcare stakeholders, and Executive-Post readers.

Link: http://www.dartmouthatlas.org

Conclusion

Your thoughts and comments are appreciated.

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Wal-Mart Health Care

Posted on May 30, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Healthcare’s New [Old] Innovative Disruption

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

So, the American Medical Association [AMA] couldn’t or wouldn’t do it; nor could/would the American Osteopathic Association, American Podiatric Medical Association, American Dental Association or any combination thereof.

Neither could/would Hillary Clinton in 1992, nor the US Congress, US Senate, Insurance Association of America [“Big I”], AARP, or plethora of other national organizations, medical trade unions and/or policy-makers.

One is not even sure the current crop of presidential candidates can “do it.”

What it is?

So, what am I talking about?

Why, free-market driven, non-universal [government sponsored] healthcare competitive reform; of course!

And maybe; just maybe; Wal-Mart can do-it?

The Wal-Mart Way

Look, clinics in giant wholesale stores are not new. The optometrists have been there for decades, nobly triaging and providing basic eye-care, but with a certain disdain from “real-doctors” and some patients.

But, all that is fading with the dearth of family practitioners, and rise of on-site and walk-in retail clinics staffed with nurse practitioners, Doctor-Nurse Practitioners [DNPs] and the like. The movement is both gaining traction as well as gravitas. And, the medical kiosks are increasingly being staffed by physicians.

Moreover, with the economy flagging, cheap generic drugs available, convenient hours and locations in many stores, electronic medical records, consumer directed health plans with high-deductibles and private paying patients; Wal-Mart may just have the marketing power to provide some modicum of basic healthcare for many of our nation’s uninsured, or under-insured.

And, imbued with the belief that capitalism always finds a way to wring out marketplace excesses in any industry – albeit slowly – I call the initiative “a perfect-storm of market-place reform.”

Vilfredo Pareto – ReDeux

Perhaps, by being so huge, Wal-Mart understands Pareto’s Law and realizes that many patients get better because-of, or in spite-of, the doctor’s intervention. This was the original promise of managed care that went awry; differentiating and treating the trivial many ills – from the vital few serious diseases.

The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor scarcity) states that, for many events, 80% of the effects come from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common benchmark in business; e.g., “80% of sales come from 20% of clients.”

Wal-Mart has studied the market and knows where the price and break-points are.

And, when 80% of healthcare expenditures are spent in the last 12 months of life, maybe there really is a better way; The Wal-Mart Way.

Assessment

And Wal-Mart isn’t stopping here. In April, it opened the first of its walk-in health clinics in stores in Atlanta, Dallas and Little Rock, Ark. This joint venture with local hospitals will build up the almost 80 clinics already in place in Wal-Mart stores. The goal is 400 co-branded clinics by 2010.

Wouldn’t Sam, and I don’t mean “Uncle”, be proud of the above accomplishments?

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Career Development, Health Economics, Managed Care, Op-Editorials | Tagged: retail medical clinics, Wal-Mart | 5 Comments »

Hospital, Clinic and Physician Pricing

Posted on May 20, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Emerging Medical Transparency Initiatives

By Prof. Hope Rachel Hetico; RN, MHA, CMP™

In 2007, federal and state legislatures first called for hospitals across the country to make their prices “transparent.”

Definition

The term transparency was defined as the full, accurate, and timely disclosure of hospital charges to consumers of healthcare, as well as the process employed to arrive at those fees. Moreover, transparency does not merely involve publishing a list of prices and fees.

Essentially, hospital CXOs and physicians must also be able to present their prices in a manner that is understandable to the general public and they must be prepared to explain the rationale behind their charges.

State of the States

Currently, at least 33 states have already proposed or passed legislation regarding publication of hospital charges.

For example, the average cost for a hip, knee or ankle joint replacement is $38,443; while a heart valve operation is $124,561and a back fusion is $60,406. Torrance California based HealthCare Partners now notes on its Website that it charges $15 for flu vaccines, $61 for a chest X-ray, while a colonoscopy costs $424.

And, right here in Atlanta, Emory University at Johns Creek Hospital is now advertising its obstetrics, anesthesia, pediatric and childbirth delivery services in bundled financial packages for private pay patients, and those with HSAs, MSAs and HD-HCPs, etc. In fact, the program was promoted on TV this day, by it first-ever CEO. Located in the heart of the City of Duluth in North Atlanta; Emory Johns Creek is a 110-bed, all private room hospital. It features a comprehensive range of services from 24/7 ER, surgery using the latest stealth technology, 64 slice CT, MRI, nuclear medicine and interventional procedures. The “Birth Place” gives women and their families a high touch, luxurious alternative with the peace of mind of a Level III Neonatal Intensive Care Unit [NICU].

http://emoryjohnscreek.patientfinancialresource.com/CustomPage.asp?pagename=Home_Behavioral

Assessment

Such financial and economic initiatives demonstrate increasing industry competition with advancing patient empowerment, with other innovations like concierge medicine, onsite and retail medical clinics, etc.

Conclusion

What are your thoughts, experiences and comments on the above emerging issue of medical pricing transparency?

Related Information Sources:

Medical Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Filed under: Career Development, Health Economics, Managed Care, Marketing & Advertising | 2 Comments »

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2. The Fed’s Next Financing Gambit

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Such media coverage is expected entering into a general economic contraction, recession and/or depression for the healthcare sector, and economy as a whole.

A Print Guide for us All

OK, premium print guides like Healthcare Organizations [Financial Management Strategies] know that bad news draws more subscribers than good news.

When all is well, physicians, executives and administrators are not keen on constructive change. There are also fewer reasons to log-on to this Medical Executive-Post blog. It’s all a matter of perspective!

Q: But, why is the media’s take on economic issues so important?

A: Because it has significant impact on how patients view the entire healthcare industrial complex! It influences how doctors, insurers and politicians adjust their own lobbying and legislative initiatives. And, it governs how CFOs invest in capital expenditures, as well.

Historical Review

Another View

Economy as Excuse for Self-Pity

A More Positive Approach

For others, there is the more positive proactive track of your editors, contributing authors and enlightened consultants.

Example:

In a recent budget meeting, one young hospital CFO cautioned physician-executives and healthcare administrators to watch every dollar in anticipation of a softening economy. Yet, his more seasoned CEO responded:

“Fiscal prudence is important, but if you are asking me to take my foot off the gas pedal, my position is that we should choose not to participate in this recession.”

He further opined that we all must anticipate changing cycles, recessions and adverse demographics. But, let’s not make it a self-fulfilling prophecy. It is the astute CEO who realizes that strong financial statements lie in effective negotiation skills and the management of revenue cycles.

And conversely, that strong entity management and informed decision-making is the basis of an enhanced revenue cycle. In practical terms, this means understanding the process and targeting core aspects revenue growth to fine-tune and support the entire healthcare enterprise.

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The Fed’s Next Financing Gambit

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About “InQuickER”

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Pricing Decisions for Medical Providers