CMS Proposed Rule Will Cut Medicare Spending by $760 Million

CMS recently released its proposed rule for changes to the Outpatient Prospective Payment System (OPPS) for FY19. In addition to a proposed 1.25 percent increase in hospital OPPS rates for FY19, CMS wants to reduce payment for hospital outpatient clinic visits at off-campus provider-based departments to 40 percent of the OPPS rate.   The “site-neutral” […]

Competition and Value Lead CMS Policy Priorities

The head of CMS outlined the agency’s policy shift to competition and choice in a recent interview.  Seema Verma noted, “Coming incentives will encourage Medicare beneficiaries to shop among providers, with those that have the lowest prices and deliver better-coordinated care gaining a competitive advantage.” (“Public Poll, Verma Reject Single-Payer,” HFMA Compass, July 27, 2018) […]

Advocates Want CMS to Increase APM Options for Clinicians

The recently released “massive” Medicare physician proposed payment rule included a “surprise” projection that alternative payment model (APM) participation may decline. Provider organizations are planning member briefings on the rule. (“Providers Examining Why APMs Are Expected to Stall,” HFMA Weekly News, July 23, 2018)   The proposed rule continues the implementation of revisions to physician […]

Executives’ Increasing Concerns About Hospital Costs Suggest Innovative Cost Control Measures

A recent survey of hospital/health system CEOs by a national healthcare consulting company reported that cost control is their top priority. CEOs responding to the survey noted “innovative approaches to expense reduction” as the second leading priority.   The survey results supported an April report from Moody’s Investors Service that the median operating cash flow […]

An Argument for Growing High-Value Service Lines

Hospitals/systems may be considering the pro’s and con’s of growing their service lines, even as they grapple with cost reduction strategies. Experts have noted the many benefits including increased patient volumes, improved health outcomes, increased market share and improved physician loyalty. If hospitals/systems focus on high-value service lines, a key benefit would be a significant […]

New Report: Readmissions Reduction Program Doesn’t Increase Observation Stays

Through Congressional direction and previous Administration initiatives, Medicare has implemented incentives to reduce hospital readmissions. One example is the Hospital Readmissions Reduction Program (HRRP), which financially penalizes hospitals with relatively high rates of Medicare readmissions.   One of the criticisms of the program has been the anticipation of an increase in the number of observation […]

Moody’s: Integrated Planning Essential for Financial Viability Part 2

We’re continuing the summary of the Moody’s Investors Service report on integrated planning and financial viability. Last week we covered investments in off-campus sites while maintaining high-margin inpatient services.   Today we focus on the remaining components of integrated planning: digitalization, investment in talent and operational and funding flexibility.   Digitalization   Information technology investments […]

Moody’s: Integrated Planning Essential for Financial Viability

Evolving industry pressures will require hospitals/systems to focus on their business strategies and prudent allocation of limited capital and financial resources.  Financial viability and competitiveness will require expanded patient access, digital efficiencies, top talent and financial flexibility.   Moody’s Investors Service analyzed each of the above components in its recent Sector-in-Depth, Flexibility, integrated planning key […]

Moody’s: Considerations for the Board’s Investment Committee

Balance sheet strength, measured on both an absolute and relative basis, as well as liquidity, significantly drives not-for-profit and public hospitals’ credit quality. Stock market growth over the last several years has been impressive. However, in keeping with historic trends, volatility—temporary market fluctuations or a short-term downturn—will trouble institutional investors in the near term, according […]

Moody’s: Preliminary Medians Show Declining Hospital Profitability

Moody’s Investors Service recently released its preliminary medians for 2017. The results show a continuing decline in not-for-profit and public hospitals’ profitability metrics. Margins hit 10-year lows—falling below levels seen during the last recession.   Profitability margins mark 10-year low. The median operating cash flow margin dipped to 8.1% as expense growth outpaced revenue growth […]