Provision of pharmaceuticals in Australian hospitals: equity of access?

In Australia, medicines are funded under a complex set of financial arrangements. Currently there are dual funding arrangements in public and private hospitals that can lead to differences in patient access to medications. There are considerable concerns about the consequences of the fragmentation and "lack of cohesion of the system". Some decision-makers consider there are inequities because of the funding models in place. What follows is a description of this system.

Implementing an Intravenous Insulin Protocol in Your Practice: Practical Advice to Overcome Clinical, Administrative, and Financial Barriers

Diabetes mellitus is the fourth most common comorbid condition among hospitalized patients, and 30% of patients undergoing open-heart surgery have diabetes. The link between hyperglycemia and poor outcome has been well described, and large clinical trials have shown that aggressive control of blood glucose with an insulin infusion can improve these outcomes. The barriers to implementing an insulin infusion protocol are numerous, despite the fact that doing so is paramount to clinical success. Barriers include safety concerns, such as fear of hypoglycemia, insufficient nursing staff to patient ratios, lack of administrative and physician support, various system and procedural issues, and resistance to change. Key steps to overcome the barriers include building support with multidisciplinary champions, involving key staff, educating staff, and administrators of the clinical and economic benefits of improving glycemic control, setting realistic goals, selecting a validated insulin infusion protocol, and internally marketing the success of the protocol.

[Management and accounting solution required in clinical laboratory department in the hospital and the balanced scorecard (BSC)]

This is to describe required accounting knowledge and the techniques for the clinical laboratory department management level people to operate their division from the viewpoint of management. Especially, the necessity and the efficacy of the BSC implementation in the clinical laboratory department are being explained.

High stakes: avoiding risks associated with vendor discounts

The federal government has long been concerned about several types of discount arrangements, some of which are increasing in sophistication, including: Swapping. Bundling. Tiered discounts. Free use of high-end equipment in return for protocols or data.

Is your hospital's tax-exempt status at risk?

The IRS has proposed changes to Section 501(c)(3) of the Internal Revenue Code that could affect the tax-exempt status of not-for-profit healthcare organizations. Healthcare financial managers should ensure that their organizations maintain compliance with the tax-exempt requirements and remain above reproach, particularly in the areas of: An organization's intent for public service. Implications of Section 4958 on the organization's tax-exempt status. Political activities. Operating an affiliated business.

Prospective casemix-based funding, analysis and financial impact of cost outliers in all-patient refined diagnosis related groups in three Belgian general hospitals

This study examined the impact of cost outliers in term of hospital resources consumption, the financial impact of the outliers under the Belgium casemix-based system, and the validity of two "proxies" for costs: length of stay and charges. The cost of all hospital stays at three Belgian general hospitals were calculated for the year 2001. High resource use outliers were selected according to the following rule: 75th percentile +1.5 xinter-quartile range. The frequency of cost outliers varied from 7% to 8% across hospitals. Explanatory factors were: major or extreme severity of illness, longer length of stay, and intensive care unit stay. Cost outliers account for 22-30% of hospital costs. One-third of length-of-stay outliers are not cost outliers, and nearly one-quarter of charges outliers are not cost outliers. The current funding system in Belgium does not penalize hospitals having a high percentage of outliers. The billing generated by these patients largely compensates for costs generated. Length of stay and charges are not a good approximation to select cost outliers.

Early Effects of the Prospective Payment System on Inpatient Rehabilitation Hospital Performance

OBJECTIVE

To assess changes in utilization and financial performance for inpatient rehabilitation facilities (IRFs) that shifted from Medicare's cost-based payment system to the IRF prospective payment system (PPS).

DESIGN

A pre-post nonequivalent comparison group design. The intervention group included IRFs that changed to the PPS in fiscal year 2002. The comparison group included IRFs that were paid under the cost-based system.

SETTING

IRFs in the United States.

PARTICIPANTS

Final sample included 120 IRFs, with 26 IRFs in the comparison sample.

INTERVENTIONS

Not applicable.

MAIN OUTCOME MEASURES

Outcome measures included utilization (length of stay [LOS], total discharges, Medicare discharges) and financial performance (revenue, expenses, profitability, Medicare payment and cost).

RESULTS

PPS IRFs experienced a smaller decline in LOS, whereas Medicare cost per discharge increased at a lower rate. PPS IRFs reduced operating costs per discharge, whereas profit margin had a greater increase.

CONCLUSIONS

IRFs under PPS implemented cost controls that lead to lower operating costs below the fixed payment to profit under PPS. Discharge growth for PPS IRFs was similar to the comparison group. PPS facilities did not implement a strategy that attempted to admit more patients to increase Medicare payments.

What's on your plate? Ten top issues for 2006

Here, in order of importance, are the top 10 things to think about-and act on-in 2006: Balancing clinical and financial issues, Getting ready for pay for performance, Implementing the electronic health record, Making your pricing transparent, Boosting your revenue cycle, Developing different ways to access capital, Increasing transparency in financial reporting, Getting your charity care policies and procedures in order, Improving leadership skills, Dealing with staffing shortages.

Hospitals and health systems: the best of times and the worst of times

Hospitals and health systems, whether general acute care hospitals or specialty-driven hospitals, are attempting to prosper in a unique time. This year, hospitals throughout the country will see increased reimbursement for hospital inpatient services, rather than decreased reimbursement. Many hospitals are examining a multitude of options for debt financing and a number of the nation's hospitals are in the process of renovating, expanding, or replacing their current hospitals. Further, more private equity and venture capital funds are pursuing hospital investments than seen in several years. Despite the positive signals stemming from many of the country's hospitals, this remains a time of tremendous uncertainty and risk in the hospital industry. This article discusses five strategic and development issues facing many hospitals and addresses how hospitals can prepare for the future should the current climate, supportive of growth, development, investment, and debt financing, change.

An evaluation of charity care for tax-exempt hospitals engaging in joint ventures

The study examines whether the level of charity care and financial stability contribute to a nonprofit hospital's motivation for partnering with a for-profit hospital through a joint venture. The Internal Revenue Service (IRS) has heightened its scrutiny of joint ventures within the health care sector. Considering recent calls to investigate the merit of the tax-exempt status of hospitals engaged in joint ventures, this research will assist policy makers in the evaluation of nonprofit hospitals. Constituents will continue to question whether joint ventures contribute to a reduced focus on charitable activities. Results indicate that the propensity to engage in a joint venture significantly increases with increased levels of charity care. Furthermore, nonprofit hospitals with lower profitability are more likely to engage in joint ventures. These results are useful to policy makers when evaluating the level of charity care provided by hospitals seeking alternative strategic alliances. Considering many critics allege hospitals are reducing the provision of charity care to the community, it is imperative for management to be conscious of the impact of joint ventures on the provision of charity care.

Alternatives: the right medicine for your portfolio?

Because they often play an active role in developing their portfolio companies' strategies, private capital investment managers can add significant value to companies in their portfolio. The relative inefficiency of private capital markets can give savvy investors an edge that they can not so easily gain in the more efficient public markets. Originally created as a means to reduce volatility, hedge funds should not be seen as the high-risk bets that they are widely perceived to be. Most hedge funds actually are concerned with protecting downside risk.

A model for quantifying quality initiatives in intensive care

A balance should exist in health care organizations between the focus on cost containment and quality improvement efforts. This is particularly important in relation to critical care in that intensive care units (ICUs) absorb a significant proportion of the hospital's budget. The purpose of this article is to present a model that can be used to quantify the financial value to the institution of quality ICU outcomes achieved as a result of implementation of ventilator bundle initiatives. This one-bed ICU model illustrates the value of improving the care for one patient and cost, quantifying the outcomes that result through a focus on cost savings, revenue enhancement, and cost avoidance.

Profitable versus unprofitable expansion of trauma and critical care surgery

BACKGROUND

The American Association for the Surgery of Trauma has proposed that the specialty of trauma and critical care include emergency surgery. We assessed whether this change will have an impact on the financial challenges that this specialty confronts, including inadequate reimbursement for efforts exerted.

METHODS

Over a 2-year period, we collected financial data on 6 trauma and critical care surgeons. Three included emergency surgery as part of their practice, but no private elective component. The other 3 included both emergency surgery and a private elective component.

RESULTS

Trauma and critical care surgeons who had included emergency surgery but no private elective component had significantly lower charges (5,941,482 US dollars vs 9,209,535 US dollars), collections (1,439,913 US dollars vs 2,973,319 US dollars), generated relative value units (50,440 vs 80,327), generated reimbursement per relative value units (28.55 US dollars vs 37.02 US dollars), and margins (0.20 US dollars vs 1.48 US dollars) than their counterparts who had an elective surgery component.

CONCLUSION

The addition of emergency surgery did not improve the financial viability of trauma and critical care as a specialty. Without significant hospital or governmental financial support, the only viable financial option is to develop a substantial private practice that cross-subsidizes the practice of trauma and critical care. The appropriate professional bodies should incorporate changes in work processes that will allow the specialty to survive professionally but also financially.

Cost Unit Accounting Based on a Clinical Pathway: A Practical Tool for DRG Implementation

Setting up a reliable cost unit accounting system in a hospital is a fundamental necessity for economic survival, given the current general conditions in the healthcare system. Definition of a suitable cost unit is a crucial factor for success. We present here the development and use of a clinical pathway as a cost unit as an alternative to the DRG. Elective coronary artery bypass grafting was selected as an example. Development of the clinical pathway was conducted according to a modular concept that mirrored all the treatment processes across various levels and modules. Using service records and analyses the process algorithms of the clinical pathway were developed and visualized with CorelTM iGrafix Process 2003. A detailed process cost record constituted the basis of the pathway costing, in which financial evaluation of the treatment processes was performed. The result of this study was a structured clinical pathway for coronary artery bypass grafting together with a cost calculation in the form of cost unit accounting. The use of a clinical pathway as a cost unit offers considerable advantages compared to the DRG or clinical case. The variance in the diagnoses and procedures within a pathway is minimal, so the consumption of resources is homogeneous. This leads to a considerable improvement in the value of cost unit accounting as a strategic control instrument in hospitals.

Top 10 questions for rural, community hospital CFOs

Want an easier way to keep tabs on your revenue cycle? CFOs and business managers at rural, community hospitals will find these 10 questions handy when developing action plans to correct underperforming areas.

Cost estimation when time and resources are limited: the Brief DATCAP

The Drug Abuse Treatment Cost Analysis Program (DATCAP) was designed in the early 1990s as a research guide to collect and analyze financial data from addiction treatment programs. The addiction research community could clearly benefit from a version of the DATCAP that reduced the time and effort required for its administration without compromising the integrity of its cost estimates. This paper introduces the Brief DATCAP and presents some preliminary findings. Initial feedback from respondents suggests that the Brief DATCAP is understandable, and easier and quicker to complete than the DATCAP. More importantly, preliminary results indicate that cost estimates from the Brief DATCAP differ from those of the longer DATCAP by less than 2%. These results have important research and policy implications because a shorter yet reasonably accurate cost instrument will enhance the feasibility and precision of future economic evaluations of addiction interventions.

The Financial Return on Magnet Recognition

There are many ways the Education Department may bear some of the expenses of Magnet application, and they should be budgeted accordingly. However, there is a great return on the investment of educating and developing the staff, and the Education Department can share in that success.

Maximizing Reimbursement From Trauma Response Fees (UB-92: 68X) ??? Lessons Learned from a Hospital Comparison

BACKGROUND

The trauma response fee (UB-92:68x) recently has been approved, to be used by hospitals to cover expenses resulting from continuous trauma team availability. These charges may be made by designated trauma centers for all defined trauma patients when notification has been received before arrival (eligible pt). This study compares two trauma centers' performance in collecting this fee help define methodologies that can enhance reimbursement.

METHODS

Our trauma system uses two hospitals (A and B) that are designated as the Level I trauma center for the region on alternate years. This allows hospital performance comparisons with relatively consistent patient demographics, injury severity, and payer mix. Data were collected for a one-year period beginning on January 1, 2003 and included charges, collections, and payer source for the trauma response fee. This time frame allowed the comparison of two six-month sequential periods at each trauma center.

RESULTS

Out of a total of 871 trauma patients, 625 were eligible for the trauma response fee (72%): hospital A = 65% and hospital B = 77%. Total trauma response fee charges for both centers were 1,111,882 dollars with collections of 319,684 dollars (28.8%). The following payer sources contributed to the collections: Indemnity insurance (77.4%), Managed Care (22.1%), Medicare (0.3%), and Medicaid (0.2%). No collections were obtained from any self-pay patient. Eligible patients were charged a trauma response fee much less frequently in Hospital A than B (29.35% versus 95.2%) but revenue / charge ratios were equivalent at both hospitals (0.32 versus 0.28). These differences resulted in markedly enhanced revenue for each eligible patient in Hospital B compared with A (735 dollars versus 174 dollars)

CONCLUSIONS

Enhanced collection by hospital B was a result of a higher charge, compulsive billing of all eligible patients, and emphasis on pre-admission designation of trauma patients. Effective billing and collection process related to trauma response fees results in substantial additional revenue for the trauma center without additional expense.

Show me the money! Factors to consider when looking to finance a RNFA position

Increasingly hospitals are looking to the Registered Nurse First Assistant (RNFA) position as a means to ensure readily available, qualified assistance for a patient's surgical intervention. Each year, in Canada, the number of RNFAs grows. As more individuals learn about the benefits of the position, through either direct experience or published reports, interest in the role increases. This, coupled with the reality of physician shortages, is bringing the RNFA role to the forefront in numerous hospitals across the country. Funding the position is one of the largest challenges that hospitals, and RNFAs, face in converting a recognized need into the reality of a paid RNFA position.

Evidenzbasiertes Klinikmanagement auf Grundlage der psychiatrischen Basisdokumentation

OBJECTIVE

The study aimed to demonstrate how data from the psychiatric basic documentation system (DGPPN-BADO) are able to support the hospital management in making evidence-based decisions.

METHODS

Data from 14 327 psychiatric in-patients in the years 1997, 1999 and 2001 were analysed.

RESULTS

About 40 % of patients were admitted without any medical sending, 20 % were referred by a general practitioner and 10 % by a psychiatrist in private practice. Between 1997 and 2001 an increase of patients with affective disorders and personality disorders was found. Comparing 1999 to 2001, patients showed greater deficits in their psychosocial capability (measured with GAF) at admission, but also at discharge. Outpatient aftercare was recommended to more than 80 % of in-patients, about 50 % by a general practitioner and about 33 % by a psychiatrist in private practice. 10 % of patients were cared by the own outpatient clinic.

CONCLUSIONS

Data from the psychiatric basic documentation system could be shown as being relevant for evidence-based hospital management ensuring an effective and efficient in-patient treatment.

[Management of hospitals in the prospective payment system]

Since last year a prospective payment system, the so-called "diagnosis procedure combination" system has been implemented at 82 hospitals, and this fiscal year national universities and national hospitals became independent agencies. Furthermore, a new postgraduate training and education system started this year. Now it is time for hospitals to transform into institutions that are opted for by health professionals, patients, and medical students. Every hospital has to transform into a hospital that provides safe health care with a minimal number of medical errors and delivers care with a degree of information, transparency and logicality that will fully satisfy patients. That care must also be distinguished by efficiency giving proper consideration to costs. For this purpose, all hospital staff including physicians, nurses, technicians, pharmacists, dietitians, and clerical staff have to pursue health care as a team. In a comprehensive health care system, practice of team-based care is imperative. As we think that the implementation of critical paths (or clinical paths) will be a strong impetus for team-centered care and, especially important, for a change in the mindset of the physicians, we have addressed this subject.

Determining benchmarks for evaluation and management coding in an academic division of general surgery1 1No competing interests declared

BACKGROUND

Academic divisions of general surgery are facing ever-increasing financial pressures. Cost-cutting is a common approach to maintaining profitability, but strategies to increase revenue should not be ignored. One specific avenue for enhanced revenue generation in general surgery is that of coding for evaluation and management (E&M). Although this is the financial life-blood for many of the consultative services in departments of medicine, E&M coding is an often neglected and misunderstood component of surgical care.

STUDY DESIGN

The financial records for the Division of General Surgery were reviewed for the period of January 2001 to June 2003. Specifically, charges and receipts for inpatient procedures and hospital visits (CPT codes 99231, 99232, and 99233) were determined. The analysis was limited to surgeons with a primary clinical focus based at the University hospital rather than the neighboring community or Veteran's Affairs hospitals. In addition, ICD-9 and All Patient Refined Diagnosis Related Groups (APR-DRG) data were analyzed to determine the surgeon-specific number of inpatients and inpatient-days with more than one ICD-9 code or secondary ICD-9 codes, or both, or an APR-DRG severity of illness score of 2, 3, or 4. These categories were defined to determine the number of inpatient-days for which E&M coding could be billed for management of secondary medical diagnoses.

RESULTS

Analysis demonstrates that actual E&M charges were 40% to 47% of predicted minimums for E&M charges for the period under study. In theory, this result translates into an annual gain in receipts of 400,000 dollars to 600,000 dollars.

CONCLUSIONS

We conclude that the ICD-9 and APR-DRG models may serve as benchmarks to determine the limits for E&M revenue stream, and E&M coding may represent an underutilized source of revenue among academic departments of surgery.

Analysis of the expenses linked to hospital stays: how to detect outliers

When hospital financing depends on a budget which in turn depends on the pathologies being treated, it is necessary to detect hospital stays which show discrepancies between the resources they consume and the medical characteristics they present. Deterministic nonparametric frontier models are used to rank hospital stays according to their expenses taking into account the severity of the patients' conditions. As these models are very sensitive to the extreme stays, a robust frontier model, the order-m frontier is used. The too-efficient stays are highlighted and described. The mean expenses are estimated after excluding too-efficient and inefficient stays. This mean is higher than the mean estimated by using classical trimming rules.

Business planning. Reasons, definitions, and elements

The Johns Hopkins Hospital and Health System has developed a centralized business planning structure that provides for creativity while incorporating a system of checks and balances. Combining standardization with flexibility allows for customization and variability. Using a team approach, the organization allows key players to contribute their experience and expertise to the planning for each new project.

Optimization of operating room allocation using linear programming techniques

BACKGROUND

New and innovative approaches must be used to rationally allocate scarce resources such as operating room time while simultaneously optimizing the associated financial return. In this article we use the technique of linear programming to optimize allocation of OR time among a group of surgeons based on professional fee generation.

STUDY DESIGN

For the period of December 1, 2000, to July 31, 2002, the following individualized data were obtained for the Division of General Surgery at Duke University Medical Center: allocated OR time (hours), case mix as determined by CPT codes, total OR time used, and normalized professional charges and receipts. Inpatient, outpatient, and emergency cases were included. The Solver linear programming routine in Microsoft Excel (Microsoft Corp.) was used to determine the optimal mix of surgical OR time allocation to maximize professional receipts.

RESULTS

Our model of optimized OR allocation would maximize weekly professional revenues at 237,523 US dollars, a potential increase of 15% over the historical value of 207,700 US dollars or an annualized increase of approximately 1.5 million US dollars.

CONCLUSIONS

Our results suggest that mathematical modeling techniques used in operations research, management science, or decision science may rationally optimize OR allocation to maximize revenue or to minimize costs. These techniques may optimize allocation of scarce resources in the context of the goals specific to individual academic departments of surgery.

2002 Executive Compensation Survey. Can money buy happiness?

Executive Compensation Survey shows that health care salaries are going up and job satisfaction is going down. What can boards do?

Insuring healthcare organizations against environmental liability

Healthcare organizations' profitability can be severely affected by an environmental incident for which the organization is liable. Environmental insurance can help healthcare organizations protect their businesses. Healthcare organizations often purchase a standard pollution and remediation expenses, expenses related to bodily injury and property damage, and legal expenses. Insurance policies also can be tailored to meet an organization's specific types of environmental-liability exposure.

Activity cost analysis: a tool to cost medical services and improve quality of care

This paper suggests an activity-based cost (ABC) system as the appropriate cost accounting system to measure and control costs under the microstatistical episode of care (EOC) paradigm suggested by D. W. Emery (1999). ABC systems work well in such an environment because they focus on activities performed to provide services in the delivery of care. Thus, under an ABC system it is not only possible to accurately cost episodes of care but also to more effectively monitor and improve the quality of care. Under the ABC system, costs are first traced to activities and then traced from the activities to units of episodic care using cost drivers based on the consumption of activity resources.

CFO compensation reaches record levels

HFMA's 2001 CFO compensation survey finds that CFOs of hospitals and health systems are receiving higher compensation today than ever before. The current average compensation of $127,00--15.5 percent higher than was reported in a similar survey conducted in 1999--is the highest ever recorded by HFMA. Moreover, comparison of the 2001 findings with results of previous surveys shows that the earnings gains for CFOs over the past two years are stronger than they have been at many times in recent history. Factors that were found to influence CFO compensation in 2001 are location, years of service, number of employees reporting to the CFO, supervisory responsibility at the system versus hospital level, experience, and gender. Significant findings of the survey were that the average earnings of CFOs in urban areas are nearly twice those of CFOs in rural areas and that the average difference between earnings of male and female CFOs narrowed from $45,100 in 1999 to $36,800 in 2001.

Cost segregation of assets offers tax benefits

A cost-segregation study is an asset-reclassification strategy that accelerates tax-depreciation deductions. By using this strategy, healthcare facility owners can lower their current income-tax liability and increase current cash flow. Simply put, certain real estate is reclassified from long-lived real property to shorter-lived personal property for depreciation purposes. Depreciation deductions for the personal property then can be greatly accelerated, thereby producing greater present-value tax savings. An analysis of costs can be conducted from either detailed construction records, when such records are available, or by using qualified appraisers, architects, or engineers to perform the allocation analysis.