Hospital Finance


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Hospital Finance

  1. 1. Financial Approach Maximizing Revenue while Containing Costs
  2. 2. Hospital Payors <ul><li>Rob’s Rules </li></ul><ul><li>We must know the pros and cons of each reimbursement system in order to direct time, money, and resources for profitability </li></ul><ul><li>Traditional hospitals rely on the profitability of private insurance to sustain losses in other payor groups </li></ul><ul><li>Excess profitability has caused operational inefficiency, inflated salaries, and poor FTE position control </li></ul>
  3. 3. Hospital A Payors <ul><li>Rob’s Rules </li></ul><ul><li>We must depend on Medicare and Medicaid to fund basic operations and develop deeper physician relationships to acquire more profitable business </li></ul><ul><li>Physician and Managed Care relationships can be deepened by producing positive patient outcomes </li></ul><ul><li>While expenses must be tightly controlled, we cannot undercut resources which have revenue generating potential, ie “we will not save our way to success” </li></ul>
  4. 4. Impacts on Revenue <ul><li>Rob’s Rules </li></ul><ul><li>Hospital A is in a position the generate substantial revenue through non traditional and traditional streams </li></ul><ul><li>Given the excess space and limited need for inpatient operations in the first 1-2, we can build rental revenue through downstream and complimentary providers </li></ul><ul><li>Volume of census will come with time and performance </li></ul><ul><li>Outpatient and ancillary/nonancillary revenues will help to sustain operations as we grow to a greater point of inpatient momentum </li></ul>Coder Case Manager Procedures Census Outpatient Revenue Rental Tenants Food & Beverage Physicians SBMC
  5. 5. Physician Documentation <ul><li>Rob’s Rules </li></ul><ul><li>Great documentation reduces compliance risks </li></ul><ul><li>Great coding happens through great physician documentation which can be driven through documentation specialists, case managers, administration, etc. </li></ul><ul><li>There are 2 kinds of doctors we want to work with: </li></ul><ul><ul><li>Those who actually document well </li></ul></ul><ul><ul><li>Those who will document what we teach – legally, morally, and ethically – to create revenue </li></ul></ul>Compliance Procedures Coding Revenue
  6. 6. Case Management <ul><li>Rob’s Rules </li></ul><ul><li>Financial Case Management is the only model to follow </li></ul><ul><li>Discharge plans must be safe, timely, and in accordance with best clinical and financial practices </li></ul><ul><li>Case management must carry UR functions and must watch every dollar spent and question overutilization, timely delivery of services, and direct care accordingly </li></ul><ul><li>Outliers must be managed in collaboration with specific downstream providers </li></ul>Outliers Care Planning UR Discharge Planning Revenue
  7. 7. Other Revenue <ul><li>Rob’s Rules </li></ul><ul><li>Rental tenants must share risk of self pay patients. All rental agreements must include a provision for self pay admissions as a percentage of total admissions from us as the host hospital </li></ul><ul><li>We must seek SNF, IRF, LTACH, and other downstream providers to solve discharge problems before they happen. In doing so, we insulate ourselves against the risk of non payment and outlier management </li></ul><ul><li>F&B and misc. revenues are needed as every penny counts toward survival </li></ul>Rental Tenants F&B InPatient Volume Outpatient Services Revenue
  8. 8. Expense Management <ul><li>Rob’s Rules </li></ul><ul><li>You cannot save your way to success </li></ul><ul><li>Most CEO’s, in an effort to control expenses, will undercut critical resources which are needed to generate revenue </li></ul><ul><li>Additionally most HCO’s have grown lazy and padded salaries and added positions under the auspices of “quality and patient outcomes.” Too few are willing to put forth the effort and drive a culture of quality through accountability </li></ul><ul><li>Hospitalists and mid-levels create quality of life for referring physicians and create billing opportunities through procedural work </li></ul>Land & Capital Hospitalists Ancillaries NonAncillaries Supplies Outsourcing Bad Debt SW&B Hospital
  9. 9. SW&B <ul><li>Rob’s Rules </li></ul><ul><li>As our largest expense, labor must be managed daily consistent with census and current financial position against plan </li></ul><ul><li>Core staffing gives us the ability to control expense while increasing business, ie our initial staffing pattern may be based on 30 patients and we use prn and agency staff the consistently grow to 40 before we raise the core staffing pattern </li></ul>Core Staffing Phase Growth Revenue Producing Employees Flat Organizational Chart Efficient Redundancy Lean Workforce
  10. 10. Lean Concepts <ul><li>Rob’s Rules </li></ul><ul><li>Why hire a CFO when all we need is a good controller? </li></ul><ul><li>Efficient redundancy allows us to hire a controller who also runs central supply and carries a tech for stocking and shelving </li></ul><ul><li>HR backs up reception and HIM backs up admissions – cross departmental training is essential </li></ul><ul><li>Outsourcing gives us the ability to pay a set cost ppd for a service and demand performance accordingly </li></ul><ul><li>Efficient Redundancy </li></ul><ul><li>Controller vs CFO </li></ul><ul><li>Outsourcing </li></ul><ul><li>Hospitalists & Mid-Levels </li></ul>
  11. 11. ThedaCare <ul><li>Rob’s Rules </li></ul><ul><li>ThedaCare is a hospital system in Wisconsin who has received national accolades for quality and patient outcomes </li></ul><ul><li>There are wildly profitable not because of who and how they are paid, but because they have created a data driven organization that scrutinizes processes multiple times daily </li></ul><ul><li>This continual focus on outcomes both clinical and financial are necessary to create operational excellence and profitability </li></ul>
  12. 12. Floyd Medical Center <ul><li>Rob’s Rules </li></ul><ul><li>Floyd Medical Center in Rome, GA, is one of those facilities above the Medicare break-even point. Part of that is because of wide-ranging and aggressive cost-cutting efforts, from early adoption of Lean and Six Sigma improvements to aggressive management of nursing salaries and utilization control. </li></ul>
  13. 13. University General Hospital <ul><li>Rob’s Rules </li></ul><ul><li>University General Hospital has had a colorful history and much can be said about where they have come from and where they are now </li></ul><ul><li>The brilliance of growth in their inpatient operations has been a function of: </li></ul><ul><ul><li>Taking care of doctors </li></ul></ul><ul><ul><li>Good marketing </li></ul></ul><ul><ul><li>Growth through outpatient surgery </li></ul></ul>
  14. 14. SSH - Longview <ul><li>Rob’s Rules </li></ul><ul><li>SSH – Longview is currently operating at just of $1000 ppd on revenues of close to $1500 ppd, this is over $100 ppd reduction from last year and an increase of over $300 ppd in revenue </li></ul><ul><li>82% Medicare Business </li></ul><ul><li>We have achieved these numbers through volume of census which diluted expenses and better case management as a product of physician documentation and coding </li></ul>
  15. 15. The Healthcare Solution <ul><li>Rob’s Rules </li></ul><ul><li>We exist, as a provider, at a point where physicians, payors, and patients converge </li></ul><ul><li>We are embarking on an era where some version of healthcare reform will create the following: </li></ul><ul><ul><li>More Patients </li></ul></ul><ul><ul><li>Less Reimbursement </li></ul></ul><ul><ul><li>Pay For Performance </li></ul></ul><ul><li>The time to prepare has already past, we must execute now </li></ul>Payors Patients Post-Acute Providers Physicians SBMC