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January 16, 2012

A Snapshot: Is Free Care in Minnesota What It Appears?

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With any luck, we’ve finally left the worst of the financial crash behind, and with it the financial challenge posed by large numbers of medically indigent patients.  A recent report from Minnesota’s hospital trade group underscores how bad things were for patients. It also suggests that the hospitals may not quite be as charitable as they claim.

According to the report, the level of free or discounted care provided by the state’s hospitals shot up 27 percent in 2010, driven largely by falling state coverage and rising unemployment.  The Minnesota Hospital Association said that state hospitals provided $226 million in charity care last year, along with $498.5 million expenses generated by Medicaid patients receiving discounted care that wasn’t reimbursed.

OK, let’s break this down. We’ve got, very broadly, $750 million in direct charity care expenses among 135 hospitals.  While I don’t know exactly what they grossed in 2010, we can be pretty sure it exceeds that figure by at least three or four orders of magnitude.

Sure, several million in charity care per hospital is enough to erode the slim margin most hospitals cope with year to year.  On the other hand, we know it’s not a simple matter of money in, expenses paid for charity care.  The accounting gets more complicated than seven-way chess, and let’s admit it, some of the numbers are a bit dicey at best.

Now, I’m not suggesting any individual hospital is gaming the system worse than others. But I am suggesting that if this is the best they can come up with, they’d better get cracking. Neither the IRS or Congress has much patience for charity care numbers that don’t add up, and municipalities (at least in Illinois) are getting into the “yank the tax exemption” act too.

Bottom line, you better keep your nose clean and those charity care numbers better be above board. If you’re not already, it’s time to avoid accounting tricks and play it straight.

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December 19, 2011

Small-Hospital Mergers A Signal That Crisis Is Upon Us

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If you’re wondering how healthy an industry is, look at how many smaller players are selling out. And if the smaller players are bailing like rats from the proverbial ship, consider that industry to be in crisis. That’s my theory, anyway. Read on and see if you agree.

You know, when I watched Community Health Systems and HCA and Tenet doing their little dances on the catwalk a few years ago, tendering offers and buying up sinking ships, I thought hey, that’s what big chains do. Didn’t register much.

One year ago, when I watched VC firm Cerberus Capital Management pick up Boston’s Caritas Christi chain, I saw signs of hospital desperation. After all, VC firms don’t sink their money into companies that offer a small, predictable return;  in this case, they acquired financially distressed properties with a very substantial upside.

So, what of this year?  Merger mania continues $7.3 billion of total healthcare-related M&A this year. (For more background, check out this hospital M&A list from business information provider Hoover’s. It’s been a wild year, and next year is likely to keep up the pace.

I’m not really surprised by the merger mess, and I doubt you are either. After all, hospitals have been running at minimal or even negative margins for many years, and now that health reform is breathing down everyone’s necks the pressure is climbing. The question is what this means for the industry.

Consider that one John Reiboldt of investment bank Coker Capital Advisers called the single stand-alone hospital a “concept of the past” at this year’s HIMSS event. Even if he’s wrong — or ahead of himself — the folks in his industry  are clearly poised to strike. And they’ll be making offers beleaguered single- and small-chain hospitals can’t refuse, capice?

October 17, 2011

Washington Hospitals Sue Over Cruel and Unusual Medicaid ED Visit Limits

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I’ve heard of some draconian budget-cutting measures, but the following, proposed by officials in Washington state, just about takes the cake. Good to see that the state’s hospitals, along with its doctors, are rightfully attempting to slam the door shut onMedicaid planners’ obscene antics.

A new state plan in Washington proposes to limit payment for Medicaid patients’ emergency department visits, on the extremely dubious assumption that such patients can self-diagnose whether they ought to be there in the first place. Not only is this program unlikely to save any real money (unless you count the money saved by not having to care for dead beneficiaries), it assumes that emergency department staffers are adding useless layers of expertise so often that their services should be choked back dramatically. The truth is, there’s boatloads of evidence that the poor aren’t the biggest users of ED services for non-emergent conditions, but I suppose these state penny-pinches wouldn’t be bothered by the facts.

Get this. The state’s Medicaid folks want to cover only three “non-emergency” visits per year — enough of a disincentive to prevent people from going in the first place — but it doesn’t end there. The plan would classify more than  700 diagnoses as “non-emergent,” including (wait for it) chest pain, abdominal pain and breathing problems.  So, I take it that pregnant women, infants, children, the disabled and the mentally ill are supposed to decide with a home thermometer and a bit of prayer whether they’re actually in danger?

According to the folks suing the state, which include the state medical association, hospital association and chapter of the American College of Emergency Physicians, this program not only endangers patients, but also has thrown a cloud of smoke around payment issues. Specifically, the plaintiffs argue that the state is threatening patients that they’ll be billed directly, while EMTALA and state charity care laws prohibit patient billing.

Folks, if I were a hospital executive, I’d be suing to avoid legal and political messes that will arise here, sure. But I’d be sick to my gut about what such rules would mean to real people, too. I truly hope that’s what the suing hospitals have in mind.

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August 22, 2011

Another safety-net hospital on life support: Miami’s Jackson Memorial on its last legs?

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You know, no matter many how many times  you watch it happen, it’s always an ugly spectacle.

When a safety-net hospital goes under because, well, being a safety net costs a ton, the poor are left with less than nothing. Worse, along the way, the hospital often slips from being an inelegant but functional resource to a nasty, scary place you wouldn’t send your worst enemy.

I was truly sorry to read that Jackson Memorial Hospital of Miami — a sprawling, 1,550-bed campus which still houses outstanding programs like the Bascom Palmer Eye Institute and the Ryder Trauma Center — seems to be moving rapidly from quick to dead.

The giant public entity, which serves as the primary teaching hospital for the University of Miami Miller School of Medicine, has faced plenty of controversy of its time, including accusations that some of its poor clientele were allowed to die for lack of followup care. That, of course, is an extremely serious matter.

But for most of its life, Jackson did at least offer the roughly 650,000 uninsured of Miami-Dade county an alternative to going into hock in the pricey EDs run by its competitors. It went through a colorful string of outspoken leaders, none of which seemed to share the same vision for the place, faced lawsuits and immigration issues and politics galore, but continued to stay afloat.

Those days, it seems, are over. According to a recent Miami Herald article, the Jackson Health System lost $337 million over two years, despite taking in $350 million a year from sales and property tax revenue alone.

This week, the system announced that it was hiring new leaders to step into the top administrative roles at JHS.  But in a system where its own employees refuse to get their care on site, I get the feeling that “changing deck chairs on the Titanic” covers things. What a shame.

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