New Issues Emerge in Healthcare Finance

I missed the meeting late last month of the Healthcare Financial Management Association's Annual National Institute (HFCA ANI to the initiated). Fortunately, however, the invaluable Anne Zieger of Fierce HealthFinance did make it, and reported on new challenges in managing hospital and healthcare-system finances from Las Vegas:

• Hospital CFOs are increasingly required to address a broad range of healthcare-policy issues in addition to their core financial responsibilities. Among them: The increasing numbers of under- and uninsured patients; pay-for-performance initiatives that cost more but so far haven't improved the quality of care; a new technology arms race that may trigger a new wave of hospital consolidation; and demands for transparency and proof of community benefit. (The related Ernst & Young report [PDF link] is available at the company's Web site.)
• Yet another ranking of hospital quality and cost-effectiveness gave medical systems high marks for quality, but mixed reviews on costs (which are notoriously opaque). See also the WSJ Health Blog, which among other things points out that this report -- like many others -- measures hospital quality by looking at "process" improvements such as giving patients aspirin following heart attacks, and not by examining whether patients got better or survived.
• Surviving increasingly aggressive Medicare cost-recovery audits is emerging as a major concern of hospitals. Consultants suggested several tactics that included getting administrative systems in order, conducting proactive error and fraud reviews, and establishing "utilization review plans" that measure care against Medicare guidelines.
• Competition for outpatient services is heating up in new areas, including dialysis, eye surgery, diagnostic imaging, radiation treatment and physical rehabilitation services. As a result, hospitals are trying to forge closer relationships with doctors (including by boosting their acquisition of physician practices) and building out new outpatient clinics to serve as "feeder" systems. (We're previously written about some of these trends in the context of physician-owned specialty hospitals.)
• Paying physicians at hospitals is more complex than it seems. The basic problem: Hospitals want to attract doctors with high payments -- which in most cases involve non-salary compensation -- but have to avoid looking like they're paying kickbacks for patient referrals. Surprise -- that means lots of benchmarking against national and regional total-compensation standards.