Your SlideShare is downloading. ×
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Hospital Profitability   Implications Of Health Reform
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Hospital Profitability Implications Of Health Reform

1,350

Published on

Short presentation on the current financial condition of hospitals, effects of healthcare reform, and long term implications of healthcare cost reduction. Includes many facts and a bit of shameless …

Short presentation on the current financial condition of hospitals, effects of healthcare reform, and long term implications of healthcare cost reduction. Includes many facts and a bit of shameless promotion of HPA.

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,350
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
26
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • What about the added revenue from the newly insured? These will be the least profitable patients. Half will be Medicaid patients, which are unprofitable.
  • Transcript

    • 1. U.S. Hospitals are in the Leading Edge of an Economic Storm
    • 2. Overview Short term: Many hospitals are financially struggling now due to the economic downturn. Medium term: The impact of Healthcare Reform has not yet occurred. It will be significant. Long term: The U.S. will have to address its enormous healthcare cost problem. When it does, the impact on hospitals will be huge.
    • 3. Short Term Snapshot (Pre-Healthcare Reform)
      • At the peak of the downturn, over 50% of U.S. hospitals ran negative operating margins (1)
      • 43% of U.S. hospitals plan to revise construction plans in the next 1-2 years to conserve capital (2)
      • Many have had challenges accessing capital (2)
      • Nearly half of mid-size hospitals report a higher cost of debt (2)
      • Sources:
      • Thomson Reuters
      • HFMA: ANI 2010
    • 4.
      • August 09, 2010
      • “ Warning of ‘unintended consequences’ for a fragile economy, the AHA expressed strong disappointment in the Centers for Medicare & Medicaid Services' (CMS) recent decision to cut $3.7 billion in fiscal year (FY) 2011 payments to hospitals - a cut triggered by a 2.9% "coding offset" - in the final FY 2011 inpatient prospective payment system (IPPS) rule.
      • The final IPPS rule "cuts billions of dollars from the health care system at a time when patients are sicker and more people are losing coverage due to the economic downturn," AHA President and CEO Rich Umbdenstock said.”
      • http://www.ahanews.com/ahanews_app/jsp/display.jsp?dcrpath=AHANEWS/AHANewsArticle/data/AHA_News_080910_economicfallout&domain=AHANEWS
      Bigger Changes are Underway
    • 5. Medium Term: Hospitals’ share of the Health Reform cost Source: HFMA, June 1, 2010 Author: Chad Mulvany, Technical Manager, HFMA Washington, D.C., office “ Approximately one-half of the legislation’s estimated $938 billion cost is financed through savings generated from the healthcare system. Of the cuts, hospitals shoulder $149 billon…”
        • Cost to Hospitals over 10 years:
        • $156.7K per staffed bed
        • $31.3 million for a 200-bed hospital
      “ Healthcare Reform: The Good, The Bad, and The Transformational”
    • 6. Long term: The U.S. cannot afford its healthcare system
      • Healthcare as % of GDP
        • U.S. - 16%
        • #2 (France) – 11%
      • Annual healthcare spending per person
        • U.S. - $7.3K
        • #2 (Norway) – $4.8K
      • Healthcare spending vs. workers’ incomes
        • Growth in health insurance premiums since 1999 – 119%
        • Growth in income since 1999 – 34%
      • Adjusting for wealth and other factors, the U.S. spends $650 billion too much on healthcare
        • Source: McKinsey Global Institute estimate.
    • 7. The Healthcare Reform Bill is not intended to bring down total spending. Planned cost reductions are intended to offset the $938B cost of insuring 32M more people. Best case: Healthcare Reform Bill is cost neutral. What happens when the U.S. gets serious about reducing healthcare spending?
    • 8. A Cost Reduction Scenario Healthcare spending vs. GDP returns to its 1990 level (12%) by 2020
      • Inpatient care as % of total healthcare decreases by 4%*
      • Annual inpatient care spending decreases by…
        • $57K per bed by 2015
        • $123K per bed by 2020
      • Implications for a 200-bed hospital…
        • $11.5 million in additional annual revenue reduction by 2015
        • $24.6 million in additional annual revenue reduction by 2020
      • U.S. would still be higher than any other nation today
      • Sources/Assumptions:
      • * “Imagining 16% to 12%: A Vision for cost efficiency, improving healthcare quality, and covering the uninsured”, Milliman Research Report, 2009.
      • There are 951,045 staffed beds in U.S. Hospitals, per AHA “Fast Facts on US Hospitals”
      • Assumes real GDP growth rate of 2.5%
    • 9.
      • While few hospitals are prepared for such changes, there are ways for almost any hospital to improve its P&L and strengthen its financial foundation without risk.
      • Maximize revenues
        • Operating Revenue - Revenue Cycle Management
        • Non-operating Revenue – Treasury Services
      • Drive down operating costs
        • External spending – Strategic Sourcing
        • Labor costs (Headcount, Salaries)
          • Non-Patient Care Services – Business Process Outsourcing
      • For more information, please visit www.HospitalPerformanceAlliance.com
      • Email
        • [email_address]
    • 10. Past Projects Annual Client P&L Impact Client Description Project Type P&L Impact (Revenue) P&L Impact (Oper Cost) 110-bed Community Hospital, Southeast Pricing Analytics +$2.2 million Large Health System, FL Pricing Analytics +$9.8 million 184-bed Community Hospital, Southeast Pricing Analytics +$5.0 million 80-bed Community Hospital, Rocky Mtns Pricing Analytics +1.2 million 400+ bed University Hospital, TX Pricing Analytics +2.0 million Large Univ. Hospital Broad Strategic Sourcing ($11 million) 31-hospital system Narrow focus on telecom, wireless, wide area networking ($3.5 million) Large Trauma Center Broad Strategic Sourcing ($6.5 million)
    • 11. P&L Improvement through Innovation

    ×