Monday, February 24, 2014

Getting lean and mean...


Rural hospitals serve 54 million people in the United States.  This is 1/6 of the nation’s population.  One would think that with that number rural hospitals would be more profitable.  However, this is difficult due to the fact that 9 million of the 54 million are Medicare recipients.  According to the American Hospital Association (2014), rural hospitals have the lowest profitability in terms of Medicare profit margins. 
Couple the inability for rural hospitals to negotiate favorable insurance contracts, Obamacare, the cost of needed (government mandated) IT investments, and the increasing self-pay patients; rural hospitals struggle to be profitable. 

MPMC is no different from the typical rural hospital.  Large insurers such as United Health Care reimburse us lower than the Medicare rate on majority of the care we provide to their members.  Considering the number of United Health Care patients we see is as high as 25%, this is a considerable dollar amount.  This is where MPMC’s affiliation with Centura Health (CH) comes into play.  CH has the ability to use its’ large size and clout to negotiate much more favorable terms with United Health Care. 

Kelly, T. (2010) states that “Systems with 50 hospitals have more leverage in negotiating with a health plan, whether it be a small regional in their area or one of the large nationals, than a stand-alone smaller rural hospital has.”
Obamacare, or the Affordable Care Act, has created another monster of its’ own… In order to afford the plans presented and meet the criteria to be insured patients are signing up for low premium- high deductible health care plans.  This means that patients who come into the ER have to meet 5 to 7,000 and sometimes even 10,000 dollar out of pocket expenses before their insurance picks up the rest.  This is difficult for most patients to pay for. 

With the above mentioned, MPMC has a great deal of money outstanding, or in accounts receivable (a.k.a days in A/R), that is owed to us.  This number is in the 7-8 million dollar range.  In this between 40-50% of this are self-pay accounts.  What is interesting is that self-pay (non-insured) is only 10-12% of the patient load, but they account for nearly half of the money owed to MPMC.  The chances of MPMC seeing most of this money are not good.  In short, MPMC cannot pay its’ bills if patients do not pay their bills. 
Next, the AHA (2014) has stated that the increased regulations and need to implement expensive information systems creates strain on the profitability of small hospitals.  It is common knowledge that MPMC has had IT and EHR struggles in the past.  With the affiliation with Centura Health, we have a partner that is committed to providing us with an IT and EHR system that works well.  Also, with The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009, MPMC can recoup 85% of the cost of the system.  That means that the entire cost of the entire system, nearly 2.25 million dollars, will be paid back by the federal government.

While most of this sounds like doom and gloom MPMC does have a plan to be profitable.  This includes:

1.      Implement urgent care services for low level ED visits that require payments up front before services are rendered

a.       Up to 55% of our ED’s are self-pay and most pay nothing

2.      Improved revenue cycle through checks and balances, and move to Centura EHR and revenue cycle systems

3.      Adjusting staffing models to become Lean (or Leaner)

4.      Re-negotiating insurance contracts with Centura’s clout.

a.       Currently United Health Care reimburses us about 40% for the cost our services

b.      All other insurers reimburse 85-95% of our costs

c.       This would mean a large increase in revenue

d.      This is already underway

5.       Selling assets that are not used

6.      Implementing a price increase to become competitive

a.       MPMC has not implemented one in 3 years

b.      Currently some of MPMC’s prices are at 30% of the prices of other hospitals of our size and region, according to Craneware (leading chargemaster software in US)

c.       A discharge from St Anthony’s in Lakewood averages around $70K, MPMC around $7k

d.      A CT scan in Summit costs about $3200, MPMC is $1600

7.      Increasing more referrals to Centura facilities to get them returned for increase swing bed days and services that can be done at MPMC

a.        This includes keeping more patients here for care rather than referring out to other facilities
Those are some of the plans of action that the senior leadership team has identified to become more profitable and sustainable.  In the next two weeks we (senior leaders) will be holding mandatory town hall meetings at various locations to better communicate the issues and address the concerns. 

Thanks for all you do!

 

References

American Hospital Association (2014). Rural health care. Retrieved from: http://www.aha.org/advocacy-issues/rural/index.shtml

Kelly, T. (2010). Small hospitals face heavy weather. Managed Care. Retrieved from: http://www.managedcaremag.com/archives/1003/1003.smallhospitals.html

 

 

Monday, February 17, 2014

A new way of communicating.


As Middle Park Medical Center continues to expand our services to the residents of our communities, the leadership team strives to communicate effectively and often with the MPMC family. We want you to be apprised of the hospital’s happenings without being inundated with emails.

To that end, “all MPMC” will be going through myself and Michelle Balleck, Director of Marketing and Public Relations. We will then be condensing most emails that need to be shared hospital-wide into one weekly email that will arrive in your inbox each Monday. We will make this email simple, to-the-point and bulleted for your ease of reading.

When you have messages that need sent to the entire staff, please send them to "All MPMC" all_mpmc@mpmc.org for inclusion. Messages need to be sent to this email by 8 a.m. Mondays to be included in that week’s organization-wide email.

Exceptions will be made, and emails sent immediately, for any issues that necessitate immediate attention or action.

Please stay tuned as we roll out more communication tools to help us all stay connected over the coming months.

Do not hesitate to contact myself, Michelle Balleck, or any member of the leadership team with your questions or feedback. We want to share information in an effective and efficient way and help MPMC be the best that it can be.