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Top 10 Diagnostic Related Groups

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

High Volume Medicare DRGs

[Staff Writers]

The ten highest volume Medicare DRGs represent about 30% of total Medicare patients. Each of these higher volume DRGs represent from about 2% to 6% of total Medicare volume.

***

	DRG	DRG Description	% Total	Rel Wt
1	127	Heart Failure & Shock	5.99	1.0234
2	089	Simple Pneumonia & Pleurisy Age>17 w/CC¹	3.85	1.1447
3	014	Specific Cerebrovascular Disorders except TIA	3.18	1.2056
4	430	Psychoses	3.18	0.9153
5	088	Chronic Obstructive Pulmonary Disease	3.11	1.0067
6	209	Major Joint & Limb Reattachment Procedures, Lower Extremity	2.78	2.3491
7	140	Angina Pectoris	2.33	0.6241
8	182	Esophagitis, Gastroent & Misc Digest Disorders Age>17 w/CC¹	2.09	0.7617
9	174	G.I. Hemorrhage w/CC¹	2.07	0.9657
10	296	Nutritional & Misc Metabolic Disorders Age>17w/CC¹	1.93	0.9313

Source: Health Care Financing Administration [CMS] 2005

Conclusion

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Filed under: Health Economics | Tagged: Health Care Finance | 1 Comment »

Of Financial Footnotes and Fine-Print

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

Financial Statements Review for Physicians

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Of course, it is important to read the fine-print and understand the footnotes when reviewing all four consolidated financial statements or studying an annual business report.

And, these four consolidated statements are:

Balance sheet
Net-income statement
Cash Flow Statement
Statement of Retained Earnings

However, it is seldom done by the physician, financial manager or healthcare executive. Yet, the footnotes to financial statements and fine print of annual reports are often packed with meaningful information.

Footnote Highlights

The following are some usual footnote highlights for healthcare entities:

Significant accounting policies and practices – Public healthcare companies are required to disclose the accounting policies that are most important to the portrayal of the company’s financial condition and results. These often require management’s most difficult, subjective or complex judgments.
Income taxes – The footnotes provide detailed information about the healthcare company’s current and deferred income taxes. The information is broken down by level – federal, state, local and/or foreign, and the main items that affect the company’s effective tax rate are described.
Pension plans and other retirement programs – The footnotes discuss the healthcare company’s pension plans and other retirement or post-employment benefit programs. The notes contain specific information about the assets and costs of these programs, and indicate whether, and by how much, the plans are over-or-under funded.
Stock options – The notes also contain information about stock options granted to officers and employees, including the method of accounting.

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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Statement of Retained Earnings [Shareholder’s Equity]

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

Financial Statement Review for Physicians

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Statement of Retained Earnings or Shareholder’s Equity [Statement of Changes in Unrestricted Net Assets] is only one of four financial statements.

The four consolidated financial statements are:

Balance sheet,
Net-income statement,
Cash flow statement, and
Statement of retained earnings.

The Statement of Shareholder’s Equity is the newest statement that lists changes that occurred the previous year.

The major elements of stockholders’ equity include capital stock, paid-in capital, retained earnings, treasury stock, unrealized loss on long-term investments, and foreign currency translation gains and losses.

Assessment

Shareholders equity sometimes called capital or net worth. It represents money that would be left if a company sold all of its assets and paid off all of its liabilities.

This leftover money belongs to the shareholders or the owners of the hospital, clinic, practice or other healthcare entity.

Conclusion

And so, do you understand and review your financial statements regularly; why or why not?

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Statement of Cash Flows [SCFs]

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

Financial Statement Review for Physicians

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief ]

Did you know that the Statement of Cash Flows [SCFs] is only one of four financial statements? Yep; it is true.

The four consolidated statements are:

Balance sheet,
Net-income statement,
Cash flow statement and,
Statement of retained earnings.

The SCF summarizes the affects of a medical practice or health entity on cash balances and/or liquidity from these three activities:

Operating activities: Including cash inflows (ARs, receipts, donations, accrued expenses, interest, and dividends) and outflows (inventory, prepaids, supplies, and loans) – this is where the majority of hospitals or medical practices generate most of their revenues from patient services and to a lesser degree from grants or other contributions, etc;
Investing activities: Including the disposal or acquisition of non-current assets, such as equipment, loans or marketable securities; and,
Financial activities: Generally including the cash inflow or outflow effects of transactions and other events, such as issuing capital stock or notes involving creditors, owners, or shareholders.

Assessment

Prior to 1988, the formal SCF was known as a Statement of Changes in Financial Position and projected estimated cash flows by month, quarter, and year, along with the anticipated timing of cash receipts and disbursements.

Conclusion

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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

***

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Net Income [P&L] Statements

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

Financial Statements [A Review for Physicians]

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Net Income [Profit-and-Loss Statement] Statement [NIS] is only one of four financial statements.

The four consolidated statements are: balance sheet, net-income, cash flow and retained earnings.

The NIS reflects the following in a medical practice or healthcare business entity:

Income from patient services, plus revenue from research grants, educational programs, gift and cafeteria sales, office space and parking lot rental, and investment income; and,
Expenses including general overhead, non-operating expenses like salaries and wages, fringe benefits, supplies, interest, professional fees, bad debts, depreciation, and amortization.

Increases in working capital, current assets, the retirement of debt, and investment in new fixed assets are not considered in the Net Income Statement [NIS].

Assessment of Accounting Differences

Definitional differences do occur, however, in the income statement.

For example, the NIS may report physician compensation and benefits in the expense category, during a period of time.

Small physician practices, on the other hand, may report income and expenses on a “cash accounting” basis reflecting income actually received and expenses actually paid.

The “accrual method” of accounting records expenses when they are incurred and income when earned, not when paid or received as in the cash method.

The cash method is easier, but the accrual method is more accurate and most healthcare entities use this method. Accrual accounting will increase going forward because of the nature of discounted contracts, capitated contracts, or other fixed reimbursement arrangements.

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
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Filed under: Investing | Tagged: balance sheet, cash flows, current assets, david marcinko, financial statements, Health Care Finance, net income statement, profit and loss, retained earnings, working capital | Leave a comment »

Balance Sheet [Statement of Financial Position]

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

Financial Statements Review for Physicians

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Balance Sheet [BS] is one of four financial statements that report a medical practice or healthcare entities financial position in terms of its assets, liabilities, and shareholder/owner equity, at a specified point in time.

The four consolidated statements are: balance sheet, net-income, cash flow and retained earnings.

Included on the Balance Sheet are the following line items:

Fixed assets include property, buildings, furniture, and equipment.
Current assets include those that can be converted into cash within a short period of time, typically within a year; such as Accounts Receivable (AR), checking accounts, cash equivalents and investments, money funds, inventory and pre-paid expenses; other long term assets like intangibles (and goodwill).
Current liabilities and Accounts Payable (AP) are to be paid within the fiscal year, and include short-term debts, salaries and wages, accrued expenses and other notes.
Short-term liabilities are loans repaid over one year.
Long-term liabilities are loans repaid over many years.

Assessment

Ownership is shown in the form of retained earnings or medical practice equity and represents the difference between the total assets and total liabilities of the unit.

Working Capital is a key concept in cash flow analysis. Working Capital is the difference between current assets and current liabilities [WC = CA – CL].

An increase in working capital implies (-) cash flow; a decrease implies (+) cash flow.

Cash position, or liquidity, is measured by changes in working capital, not the level of working capital.

Conclusion

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MS-DRG Classification System

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

Upgrading the DRG Scheme of the Mid-Nineties

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Centers for Medicare and Medicaid Services [CMS] just adopted as final its proposal to restructure the older 538 Diagnosis-Related Groups (DRGs) to 745 new MS-DRGs (Medicare Severity-adjusted Diagnosis Related Groups) to better recognize severity of patient illness.

According to the CMS and the consulting RAND corporation, the newer MS-DRGs more accurately capture resource utilization by splitting the large number of former DRGs into three different categories based on the presence or absence of diagnoses classified as “major complication or co-morbidities” (MCC), “complications or co-morbidities” (CC), or “without MCC/CC” (Non-CC).

Phase-In Period

The MS-DRGs will be phased in over a two-year period, rather than at one time, as originally proposed.

For the first year of the transition (FY 2008) half of the relative weight for each MS-DRG will be based on the current DRG relative weight and half will be based on the new MS-DRG relative weight.
For the second year (FY 2009), the relative weights will be based entirely on the MS-DRG relative weight.

IPPS and Budget Neutrality

CMS adopted its proposal to reduce the In-Patient Prospective Payment System [IPPS] standardized amounts by 4.8% to maintain budget neutrality and account for expected changes in coding and documentation.

Instead of applying a 2.4% adjustment over a two year period as proposed, CMS will apply an adjustment of -1.2% for FY 2008 and based on current projections will apply adjustments of -1.8% each year to the IPPS standardized amounts for FYs 2009 and 2010.

Assessment

The final rule will implement Section 5001(c) of the Deficit Reduction Act of 2005 (DRA), which requires the secretary to select at least two conditions that are (a) high cost or high volume or both, (b) result in the assignment of a case to a DRG that has a higher payment when present as a secondary diagnosis, and (c) could reasonably have been prevented through the application of evidence-based guidelines by October 1, 2007.

Conclusion

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MGMA Reimbursement Report

Posted on March 15, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Charting Medicare Uncertainty in 2008

Staff Writers

According to the Medical Group Management Association [MGMA], physician group practices nationwide are reacting to an uncertain reimbursement environment and the failure of Medicare physician payments to keep pace with the cost of delivering care.

Uncertain Economics

As a result of a six-month adjustment to Medicare payments, the looming 10.6 percent cut scheduled for July 1 2008 – and an additional 5.4 percent cut to physician reimbursement scheduled for January 2009 – physicians and medical practices are considering reducing beneficiary access further and making operational sacrifices.

Assessment

Nearly 24 percent of respondents indicated that as a result of the financial uncertainty created by the temporary adjustment to Medicare physician payments – and pending 10.6% reductions scheduled for July 2008 – they had either begun limiting or not accepting new Medicare patients.

And, nearly half (46 percent) of respondents said they would have to stop accepting and/or limit the number of Medicare beneficiaries their practices treat.

Conclusion

And so, how will you deal with the diminishing reimbursement environment in a changing regulatory and economic milieu; please be specific with your comments?

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Of Medical Payment Paradigm Shifts

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

Reimbursing Clinical Value – Not Medical Errors

By Dr. David Edward Marcinko; MBA, CMP™

[Editor-in-Chief]

At our quarterly institutional print-guide: Healthcare Organizations [Financial Management Strategies], we strive to affect positive economic change in the enterprise-wide healthcare ecosystem and to optimize patient outcomes.

And so, the Centers for Medicare and Medicaid Services (CMS) seismic decision not to reimburse “Never-Events” after October 1 2008, seems a wise one. Simply stated, in no other industry are frank mistakes reimbursed or tolerated by customers!

Non-Payments for Never-Events

Under the new policy, hospitals will stop requesting payment for the 27 National Quality Forum defined Never-Events listed in our last print issue – including wrong-site and wrong-patient surgery, patient death or disability due to wrong use of blood or blood products and medication errors – as well as related follow-up care to ameliorate such errors, if possible.

And, the list will likely expand going forward.

Developing Trends

More imminently as a vanguard, the Massachusetts Hospital Association (MHA)announced that it will no longer charge patients or health plans for treatments required to address NEs. The announcement makes it the second state whose hospitals have voluntarily made the pledge, following a September 2007 announcement by Minnesota’s HealthPartners – who not only requires its network hospitals to report errors to state governments – but also won’t let hospitals bill patients.

Thus, an economic trend may be developing in the industry as a strategic competitive advantage.

Future Pressures

In the future, all covered entities may come under similar pressure as private insurers are gradually beginning to rule out payment for NEs. And, eventually as the trend evolves, hospitals and clinicians may end up eating the fee when more-minor errors occur; while allied healthcare providers, clinics and hospitals may adopt a proactive stand on the entirely logical issue well ahead of the deadline.

Why Now?

Q: Yet, why have public and private facilities and payers been indifferent to this basic business concept, until now?

A: Perhaps the answer rests in human inertia.

According to science historian Thomas Kuhn, such paradigm dislocations do not occur until defenders “can no longer evade anomalies that subvert the existing tradition.” To date, the suggestion that domestic medicine is inefficient and wastes money was merely an inert one.

But, the notion that it injures patients too; is not. These “Never-Events”, defined as incidents that are not supposed to happen, spring more from human foibles than any evidence-based medical disaster. Of course, quality experts posit that public reporting of never-events is not meant to be punitive, but will promote correction among healthcare organizations and providers.

The Bigger Picture

Nevertheless, the bigger epiphany lies in revising a certain mindset that existing medical payment schemes were not only appropriate, but somehow immutable to the laws of supply-demand. The rise of consumer directed healthcare, retail clinics and concierge medical practices seem to suggest otherwise when the patient is fully informed.

Only time will tell which “economic behavior” is prudent of course; although the absolute prohibition against clinical never-event outcome is clear, as we recall the admonishment “Primum non nocere”, or the fundamental medical precept of Hippocrates (ca. 460-ca.377 BC) to “First do no harm.”

Assessment

As insightful institutional subscribers to our print-guide – and readers of this complimentary companion personal economics blog – we trust that you and your hospital, medical clinic or healthcare entity will review, communicate, use and profit by this information.

Moreover, let Healthcare Organizations: [Financial Management Strategies] reduce your resistance to future paradigm shifts that bespeak modernity, safety, economic utility, patient empowerment and common-sense.

PS: Don’t forget to “review-read-rave and rant” online at this new companion web-log and communications forum. Your cogent thoughts, and informed opinions, are always appreciated.

Conclusion

Let us know what you think about this or any related issue?

Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA – Editor and Publisher-in-Chief – is available for speaking engagements. Contact him at: MarcinkoAdvisors@msn.com

Filed under: Career Development | Tagged: Health Care Finance | 2 Comments »

Healthcare Tourism

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

Status Report for Thailand

[By Staff Writers]

[The Clear State Report]

thailand_healthcare_toursim.pdf

Medical Tourism and Values Based Health Insurance

Assessment

Feel free to comment and opine on the above report?

Channel Surfing the ME-P

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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: Career Development | Tagged: Health Care Finance | 2 Comments »

Explaining MS-DRGs

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

New CMS Healthcare Finance Rules for Fiscal 2008

By Dr. David Edward Marcinko; MBA, CMP™

Publisher-in-Chief

The Centers for Medicare & Medicaid Services (CMS) just released the final Inpatient Prospective Payment System [IPPS] rules for fiscal year 2008. The lengthy official version was published in the Federal Register on August 22, 2007.

The good news is that overall Medicare payments to hospitals should increase by an average of 3.5%. The bad news is a plethora of additional compliance regulations.

A Brief Review

And so, since it has been said that brevity is the surest route to perusal, the most important of these new payment and policy provisions include:

A 3.3% market basket increase
Additional hospital quality measure reporting requirements in 2008 in order to qualify for the full market basket update in FY 2009
Final implementation of phase-in changes begun in FY 2007 to base DRG relative weights on estimated hospital costs rather than hospital charges
A high cost outlier threshold of $22,650, down from $24,485 in FY 2007
The launch of 745 new Medicare-Severity DRGs (MS-DRGs) which replace the current 538 DRGs over a two-year period; and “behavioral-offsets” reduce payments by 1.2% to account for expected coding change practices
Require hospitals to report on eight preventable admission conditions that would not be paid at a higher rate unless present on admission in 2009
New ownership disclosure requirements for physician-owned specialty hospitals (Stark III)
New hospital disclosures requirements on how to handle emergency medical situations when no physician is present.

Enter the MS-DRGs

Perhaps the biggest changes relate to the revisions of certain long-term care hospital policies, including the transition to the MS-DRG system over two years, refinements to the relative weights for the DRGs, and application of a budget neutrality factor to the annual rate update (but not the “behavioral- offset” that will apply to acute hospital payments).

Assessment

Therefore, let all related information in our two-volume print subscription publication Healthcare Organizations: [Financial Management Strategies] guide your leadership decisions with alacrity.

Conclusion

How will the above new rules and regulations affect you and/or your healthcare institution? Your cogent thoughts, and informed opinions, are always appreciated.

Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA – Editor and Publisher-in-Chief – is available for speaking engagements.

Contact him at: MarcinkoAdvisors@msn.com

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Does Professional Courtesy Still Exist?

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

Understanding the Waiver of Co-pays and Deductibles

By Patricia A. Trites; PhD, MPA, CHBC, CMP™ (Hon)

Professional medical courtesy and the waiver of co-pays and deductibles is a very controversial subject to healthcare practitioners.

It appears to most people that it should be up to each physician to decide if he/she wants to waive payment for their services or to discount the service. Unfortunately, this practice may be illegal in most instances.

And, there are only a few instances when this “tradition” is legally allowable, such as in the case of indigence of the patient or when the practitioner provides services to an immediate relative or household member.

DHHS Definition

According to the Department of Health and Human Services [DHHS], the “routine waiver of deductibles and co-payments by charge-based providers, practitioners or suppliers is unlawful because it results in:

false claims,
violations of the anti-kickback statutes, and
excessive utilization of items and services paid for by Medicare.”

When the patient has insurance other than Medicare, waiving the co-payment, deductible or the entire charge is violating both the insured’s contract with their insurance company and the physician’s or other provider’s contract or participation agreement.

Exceptions

Financial or medical indigence is an exception. The provider may reduce or waive his/her fee, if the rules are followed. But, a simple statement by the patient that they are unable to pay their share of the service is not enough.

Medicare requires that the provider ask and document the answers to these specific questions.

Does the patient have any other source that may be legally responsible for his/her medical bills?

Examples: Medicaid or Legal Guardian

Can the patient provide information for the practice to perform an analysis of total resources?

Examples:

Assets (only those convertible to cash and unnecessary for the patient’s daily living), Liabilities, and Income and Expenses.

Assessment

Such patient information should be reviewed annually and documented in the financial file.

Conclusion

And so, have you ever run afoul of the law by granting a patient professional courtesy? Do you still grant PC at all?

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Filed under: Managed Care | Tagged: Health Care Finance | Leave a comment »

FFS versus Capitated Payments

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

Understanding Changes in Medical Payment Delivery Models

Dr. David Edward Marcinko; MBA CMP™

[Publisher-in-Chief]

As healthcare insurance payments have shifted from the older fee for service model, to the newer managed care capitation models, the following characteristics may be observed

Shifting from Retail to Wholesale Medical Models

Full fee for service rendered as medical payment
Illnesses and diseases treated retroactively
Individual patients were treated
Active and acute diagnoses were made
Medical care rendered in the office or hospital setting
Referrals to specialist were made in difficult cases.

Contemporary (Managed Care-Capitation) Methodology

A Per Member/Per Month medical capitation model requires the payment of a fixed sum of money to a medical provider to cover a defined set of health care services for an individual enrollee, over a defined period of time.

Under PM/PM capitation, the doctor assumes the risk for the incidence (utilization rate) of medical conditions requiring procedures specified in the MCO contract.

PM/PM Characteristics:

Discounted payment from HMO’s and MCO’s
Illnesses are prevented proactively
Population cohorts are treated collectively, not individually
Chronic diseases are intervened before acute disease exacerbates
Care rendered in networks, the home or other sub-acute care facility
Outcomes are evaluated based on results, not specialty care.

Assessment

Under PM/PM capitation, the MD is at risk for: (a) utilization and acuity (b) actuarial accuracy (c) cost of delivering medical care, and (d) adverse patient selection.

Conclusion

Do you participate in any capitated health insurance plans which have been making a comeback, of late? What has been your experience with them?

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Filed under: Managed Care | Tagged: Health Care Finance | 3 Comments »

Traditional Methods of Healthcare Finance

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

A Brief Historical Review of Delivery

Dr. David Edward Marcinko; MBA CMP™

[Publisher-in-Chief]

Prior to 1970s, the healthcare reimbursement system was not a monolithic complex and most Americans received their healthcare through one of five third-party organizations: (1) Blue Cross/Blue Shield (pre-paids), (2) Commercial insurance (private) companies, (3) Medicare (federal-elderly), (4) Medicaid (state-poor) and (5) CHAMPUS (military).

Four Fragmented Participants

The four participants in this fragmented system were; the patient (consumer), the physician (provider), the employer (buyer or payer) and one of these third-party intermediaries (TPIs).

Moreover, the doctor-patient relationship was often muddled by the third parties who became brokers between MD and patient; both who merely sought to understand: (a) who was responsible for payment; (b) how the MD would assist the patient obtain reimbursement, and, (c) how to establish the ultimately responsible party?

Commercial Insurance and the CPI

In the meantime, commercial insurance medical costs were accelerating at a rate greater than three times the Consumer Price Index [CPI], a measure of goods and services in a market basket intended to be representative of a typical patient’s purchases.

There was no single reason for medical cost escalation, but many economists believed the following circumstances conjoined at one point in time to increase health care costs dramatically. Important factors include the following:

1. Law of Supply and Demand (increasingly too many doctors chasing too few patients).

For example, Milliman & Robertson, the actuarial firm, estimated that only about 70% of physicians actively practicing medicine in the United States are necessary; a decade ago. The same situation is true for other healthcare employees. Mergers, acquisitions, outsourcing, closings and consolidations have only exacerbated the situation.

2. The US Federal Budget Deficit is about 3.5 trillion dollars, since income is 1.5 Trillion Dollars and outflow is 5 Trillion Dollars.

On the other hand, the budget surplus that existed several years ago was dissipated by 2005, thanks to the flagging economy and War with Iraq.

Additionally, the federal budget further demonstrates the severity of the healthcare cost problem as a percentage of the national budget:

Social Security = 21%
National Debt Interest = 20%
Medicare and /Medicaid = 16%
Defense Spending = 15%
Domestic Spending = 15%
Miscellaneous Spending = 11%
International Spending = 2% 3.

Increased administrative costs and advancements in health information technology. The primary use of new technology has been in the areas of diagnosis and treatment.

However, HMOs also use technology to increase operational efficiency and reduce costs. The price paid is in the loss of jobs or reduction in the skill level needed to perform certain tasks, formerly done by trained technicians, nurses or physicians.

4. Malpractice phobia, misinformed patients, hungry trial lawyers and class action lawsuits.

The median malpractice award for all medical negligence claims increased by 14% since 2000, and in childbirth cases was $1.3 million, more than double the median for any other type of medical malpractice verdict.

Assessment

According to some industry pundits, even seemingly small healthcare premium amounts matter.

For example, the difference between a high and lost cost health care plan is about $20-25 per member/per month. Nevertheless, low cost provider groups gained enrollment, as high cost providers lost enrollment at this level; in one study.

Conclusion

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

MarcinkoAdvisors@msn.com

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Filed under: Healthcare Finance | Tagged: Health Care Finance | 1 Comment »

The Preferred Provider Organization

Posted on February 15, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding PPO’s

Dr. David Edward Marcinko; MBA CMP™

Publisher-in-Chief

A preferred Provider Organization (PPO) is a bridge between traditional indemnity insurance and an HMO, and consists of several different types. It attempts to feature the provider choices seen in indemnity insurance, with the non-risk cost reductions seen in HMOs.

PPO Variations

Two similar entities, known as the Exclusive Provider Organization (EPO), and the Point of Service or Swing Out Plan (POS or SOP), consists of an exclusive provider panel who have agreed to accept a deep discount in their medical fees in return for the volume of patients the plans can provide to them.

Assessment

A combination of the above type models has been very successful for many employers, and this model is not as restricted by the HMO Act.

A payment time-line for a typical PPO may look something like the following:

Healthcare Provider bills PPO —> PPO bills company –> Company pays PPO —> PPO pays Provider

Conclusion

Which plan type above do you favor?

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

Terms: www.HealthDictionarySeries.com

Filed under: Managed Care | Tagged: Health Care Finance | Leave a comment »

Non-Profit Hospitals and CEO Salary

Posted on February 1, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

The Connecticut State Challenge

[By Staff Writers]

The state of Connecticut has 31 hospitals that are economically struggling.

The Report

In fact, according to a 2006 report – led by Governor M. Jodi Rell – more than half of the state’s non-profit hospitals ran deficits while the rest generated below-adequate surpluses. Financial help has been slow from the state’s insurance programs.

The Findings

And so, the question raised by the state task force was whether these same hospitals should be paying CXOs steadily increasing salaries?

Examples:

Salaries paid to top CEOs at the state’s hospitals grew 95 percent between 2002 and 2006, with some topping $1 million.
Hartford Hospital President and CEO John Meehan made just over $1 million in 2006, up 27 percent from 2002.
The salary of Robert Kiely, CEO of Middlesex Hospital in Middletown, climbed 82 percent, from $511,220 in 2002 to $932,923.

Assessment

In their defense, the hospitals stated they must compete with national salary levels to recruit top talent. And so, what is your opinion on the matter; is there a dichotomy between medical-mission and personal profit-margin?

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

DICTIONARIES: http://www.springerpub.com/Search/marcinko
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: Healthcare Finance | Tagged: Health Care Finance | 7 Comments »

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