9 Ways Hospitals Can Reduce Debt
<img class="aligncenter size-full wp-image-2512" src="https://mdthinks.com/wp-content/uploads/2017/12/9-ways-hospitals-can-reduce-debt.jpg" alt=" 9 Ways Hospitals Can Reduce Debt – Health Care Financing "width =" 424 "height =" 283 "/> Health care reform has had an impact Dramatic on the reimbursement of hospitals.Now insured under the Affordable Care Act, deductible health insurance plans can leave patients run out of money after costly care episodes. patients can not pay for the services they receive, At the same time, hospitals are faced with lower reimbursements and a shift from outpatient inpatient care, leaving some with property and beds that are no longer financially productive.
Take community health systems for example. Overburdened by $ 15 billion in debt, the Franklin (TN) -based hospital chain sold a joint venture of four hospitals and separated 38 hospitals into a separate entity, Quorum Health Corp., earlier this year. Recently, the system signed agreements to sell 17 additional hospitals.
According to Patrick Pilch, head of BDO Consulting's health consulting practice, many hospitals and health systems do not fully control their costs of care and thus lose money. "Understanding your costs of care and your cost of capital is imperative," he told Healthcare Dive. "Then align that with a future strategy – it's there that you'll get out of debt."
Hospitals should look at their assets, their business plan, their market, and their supply chain, and see how they align with their capital strategy, says Pilch . With interest rates expected to rise, inferior hospitals will have more difficulty obtaining capital. "If you have a lot of capital that is not working well, you are in a state right now," he adds.
Here are nine ways hospitals can work on debt:
1. Understand your costs of care.
Hospitals make money by taking care of patients, so their debt must be clinically proportional to the types of services they provide, Pilch says. If a hospital has significant needs in surgery, it will take a lot of operating rooms, which are expensive to implement and maintain. If income is not affected, the hospital can not make payments and may default on its obligations. Ensure that the capital structure is appropriate to the model of care required or the risk profile of patients treated by the hospital.
2. Improve the coding of ICD-10 on claim forms.
Bill Bithoney, CEO of BDO and Medical Director of his health care consulting firm, says failing to code correctly and not coding the time the doctor sees for the patient or for interactive effects can make it fall repayment rates. For example, coding for malnutrition in an HIV-infected patient suggests that the patient needs intense intervention and not standard care.
Training doctors to code correctly for concomitant conditions and effects is critical to improving the profitability of a hospital, he says.
3. Renegotiate rates with insurers.
Larger and more prestigious hospitals and health systems can get much higher reimbursements from private payers than less prestigious systems, even in the same geographic area. Hospitals can increase volume and income by convincing Medicare plans to increase rates, and then refer patients to the least expensive hospital.
4. Increase efficiency and productivity.
Another thing that hospitals can do is make sure nurse practitioners, nurses, licensed practical nurses and other clinicians work on top of their license. For example, nurse practitioners can perform many of the tasks of a doctor, but at a lower cost.
Hospitals can also increase efficiency by integrating EHR systems with pharmaceutical protocols and clinical guidelines that promote best practices, Bithoney says.
"The recent cuts to reimbursement are forcing health systems to improve their efficiency," he adds, adding that "0.8% per year over the next five years would be a minimum. what people will have to do just to stay level. "
5. Manage the risk.
This is something that all hospitals have to do as part of the Medicare Access and CHIP Reauthorization Act 2015 (MACRA), but it's also a good way to reduce costs and costs. Eliminate debt. Focusing on high-risk patients to reduce expensive hospital stays can have a quick return on the bottom line. Combining this with close networks of quality, low-cost physicians could increase the number of referrals from Medicare plans and improve reimbursement rates.
6. Refinance or restructure to reduce debt.
Hospitals can also work with capital market organizations to see if there are ways to refinance or restructure to reduce the debt burden, says Rick Gundling, vice president of financial practices at Health care.
When they decide to fund a capital project, hospitals must determine whether they have enough internal reserves to fund it or whether they have to borrow and repay that amount. If interest rates are low, it may be advantageous to go into debt, says Gundling.
7. Obsolete property.
"Many hospitals are stuck with tons of inpatient real estate that is becoming less used and less profitable," says Bithoney. "Converting some of that into money, monetizing that, then buying or building places where patients will start growing as outpatient surgery centers and skilled nursing facilities is going to be very beneficial."
This is what Kindred Healthcare did when it left the specialty nursing sector to expand to home health. The health services company, which also operates hospitals, reported a loss of $ 685.6 million in the third quarter. The divestiture of its skilled nursing business is expected to reduce its annual rent obligations by $ 90 million and its annual capital expenditures by $ 30 million, not to mention millions of dollars in corporate and divisional overhead costs. .
8. Reduce "bad" debt.
To increase the chances of getting paid, some hospitals train patient access staff to identify patients who may be in default and set up payment plans at the same time. point of service. Some hospitals have also set up a space to enroll uninsured patients in Medicaid, says Bithoney.
9. Join a health system.
"Health systems can achieve significant efficiencies rather than being a single hospital," says Bithoney. "You have the finances of the whole system, you have the creditworthiness of the whole system behind you and lower interest rates are available."