Healthcare Finance 101 – March 23 Session and April 20 Session – Networking Lunch for All Members Held after each Session
This event is a "must" for those starting in healthcare finance, or if you want to learn more about another area of finance. Attendees will receive a well-rounded overview in each of three healthcare finance sessions. As an attendee you will be able to expand your healthcare finance knowledge, which will benefit a wide range of roles that are involved in healthcare finance.
March 23 - Aurora Health Care - Summit
April 20 - Bellin Health – Green Bay
NETWORKING LUNCH: WI HFMA members are invited to join for a complimentary lunch following each session. (You do not need to attend a session to attend the networking lunch).
On March 23 the lunch will be held at Water Street Brewery in Delafield starting at 12:30 pm. Enjoy a casual setting in this renowned brew pub while getting to know other members from your area.
On April 20 you are invited to join for a complimentary lunch at 1919 Kitchen & Tap – Lambeau Field Sports Bar starting at 12:30 pm.
Click Here for the session brochure, session registration and networking lunch
The healthcare provider community has been distracted from its central role of providing quality clinical care. Instead, providers and hospital financial executives are grappling with insurers under pressure, uncertainty about the future of Medicaid and healthcare policy, and the uneasy emergence of consumers as the third-largest payer of healthcare services.
Acknowledging the need to bridge the patient finance gap, more and more healthcare systems and physician practices are vetting patient finance and engagement partners. Finding patient finance partners that can help navigate the two most highly-regulated industries in America---healthcare and financial services---is a significant task. One criteria that should actually be front and center is the compliance function.
It's not easy for providers to know how to evaluate vendors from a compliance and regulatory perspective. Since there is no abdicating compliance risk, the best approach is to find service providers who are capable of helping shoulder the load, and who are equally committed to helping patients get and keep access to the care they need, when they need it.
Revenue cycle leaders need to keep patients engaged, improve financial performance and simultaneously comply with a litany of laws and regulations. Where should one focus during the patient finance vendor RFP process?
Fluency in compliance
Providers may not realize that if they're offering payment plans greater in term length than four months, the Consumer Financial Protection Bureau (CFPB) considers it a loan, even if the interest rate is 0%. The consumer protections governing these loans are robust, thanks in part to the hangover from the subprime lending fiasco, which caused regulators to paint all lenders with broad strokes. Vendors need to know the issues and how they apply to the revenue cycle. They should be expert in an exhaustive list of rules including (but not limited to) those set forth by the CFPB, the Truth in Lending Act, Gramm-Leach-Bliley Act, and a host of other protections, of course including HIPAA.
Many healthcare providers don't realize that the charters governing a finance vendor's banking partners matter. Those vendors operating under a federal charter are governed by a higher standard than those operating under state charters. Not all state charters are as stringent, and a banking partner relationship does not necessarily mean rigorous risk management protocols are in place. Compare the protections of federal vs. state banking charters and consider the risk exposure of not engaging a vendor partnered with a bank operating under a federal charter.
Right-size investment in compliance oversight
What does a compliance-centered culture look like? Look for partners who:
Few would argue that offering patient finance options is supposed to bridge not just the affordability gap, but also the relationship gap between patient and provider. Since a great clinical experience can be ruined by the financial hangover, it's especially important to engage vendors who keep the patient-provider relationship at the center of the patient experience. Beware the vendors who send, for example, statements with their own logos or their banking partner logos on their invoices, instead of the healthcare provider's. It's the patient-provider relationship that should stay in first place, assuage any worries and make the consumer feel valued and cared for. Look for vendors who will keep their provider clients' brand identity and brand promise front and center.
Focus on patient engagement
If your patient finance partner is taking the right approach, they're not calling patients to address an unpaid bill or a specific encounter. Instead, they call to keep patients feeling valued and cared for. They're calling to talk about empowering patients to get care when they need it on an ongoing basis, and to offer a way to manage that ongoing empowerment with a revolving line of credit or another financial service. This is not volume work; this is quality work.
As the self-pay crisis reaches the tipping point, there will be even more vendors in this space offering patient financing without the proper compliance and regulatory underpinnings. Conscientious partners will have protocols in place to ensure that consumers are treated fairly and providers aren't overburdened by risk. Make sure you take the time to vet and engage a vendor who has ALL the appropriate compliance and regulatory mechanisms in place to protect consumers and providers alike.
By Berta Alicia Bustamonte
In an ever-evolving environment, hospitals and health care systems in the United States are steering away from a fee-for-service (FFS) model. While FFS has exhibited value, it also has the potential to create perverse incentives. Recognizing the incentive problems with FFS, the Center for Medicare and Medicaid Innovation (CMMI) introduced several models over the past few years that have challenged participants in the health care system.
The biggest change was a shift to value-based reimbursement, meaning a search for better health outcomes at a lower cost. The value-based reimbursed model calls on a fee-for-value (FFV) strategy and involves shifting the financial and clinical risk from the payer to the provider. Providers are rewarded based on the quality and efficiency of care, as well as their ability to contain costs1. As the transition to a FFV approach ramps up, providers are being held accountable for leading this change in the care continuum. So what does the shift to FFV mean for hospitals and health care systems?
The Challenge with Change
“Value-based reimbursement success hinges on a cost effective operation,” explained Steve Mombach, Senior Vice President at TriHealth. “That means doing more with less. Reviewing programs with a less than effective bottom line, driving toward our mission of quality care, lowering costs and enhancing patient satisfaction.”
The transition to FFV also requires time and a thorough understanding of patient populations1. Gaining provider buy-in can be an obstacle, as value-based contracts alone will not change the delivery system1. Value-based payment incentives are another key factor in success, but growths in revenue available to providers through value-based reimbursement have been gradual1. Financial rewards tied to the FFS model can cause reluctance from providers to change what has been a profitable - although challenging - system 1 (Figure 1).
Figure 1: Hybrid FFS and FFV Model to Generate Revenue2
“There are many challenges with the transition to value-based reimbursement, but the key is ensuring our team members and physicians realize we are in a new reality. Population health is a new way to deliver care, a new model for reimbursement and an opportunity to deliver the most cost effective, quality care, known as the triple aim,” said Mombach. “TriHealth has several initiatives tied to population health, cost savings and retaining business within the system. We are very active and conscious of the changing reimbursement that is on us now. Changes to care processes impact reimbursement with the 340B Drug Pricing Program (340B), with new centers opening that can no longer be treated as hospital-based and insurance companies driving business to less expensive venues.”
As organizations continue to transition to value-based care, it also is important to note the greater emphasis being placed on the strength of hospital boards and management. Creditors and analysts are now more interested in seeing that an organization is planning than they are in knowing the specific details of the plan. Key questions are:
The challenges mentioned above can be daunting. No longer can a hospital board or management get by with vague assurances to questions about planning for a vastly different payment structure. However, over time, the FFV programs likely will affect providers, beneficiaries and lenders in a positive way. The programs give health care providers the opportunity to stand out from a quality of care, service and hospitality perspective by making global initiatives to enhance their operations. This methodology forces health care providers to refocus and reconsider their “why” statement (“why we are here and why are we doing this?”). Hospitals and other health programs were created to care for the sick by those who had a passion for helping others. Effectively implementing FFV programs within a health care organization returns to the original principles that guided the creation of health care in society today.
Brad Granger is vice president of operational and clinical underwriting with Lancaster Pollard in Columbus. He may be reached at firstname.lastname@example.org.
According to Black Book’s 2017 Revenue Cycle Management survey, a staggering 82% of medical providers and 92% of hospitals plan to abandon ‘time-intensive, error-prone, manual efforts to back-end process and reconcile bills’ by Q4 2018.
This data point is among other eye-popping insights found in a compilation of two focused polls conducted among consumers and healthcare providers.
The results confirmed what many revenue cycle professionals have observed anecdotally: There is an acute need for more medical debt financing options, early-cycle patient engagement, analysis of consumers' propensity to pay, and cost transparency. Black Book collected data between April 1 and September 30, 2017 from 2,698 healthcare providers, plus a focused group of 850 healthcare consumers insured under high deductible health plans (HDHPs).
The research study is designed to report trends in consumer satisfaction and patient experiences, outline payment challenges, and identify best corrective strategies for healthcare providers. The consumer portion of the survey aimed to determine how patient responsibility for medical costs, which shifted from employers to patients, is impacting uncollected provider revenue.
Among the survey’s other key findings:
What exactly is a micro-hospital? Obviously it is a smaller version of a traditional hospital, but like most things in the health care space, it is far from that simple. Below, we explore the growing emergence of micro-hospitals and detail how they are finding their niche in the health care system.
Micro-hospitals typically operate seven days a week, 24 hours a day, and on average are 30,000 to 40,000 square feet in size with eight to ten inpatient beds for short-stays and observation. Most micro-hospitals are small-scale, fully licensed inpatient facilities. In general, no two micro-hospitals are exactly the same in design or services provided, but the majority of micro-hospitals tend to be located in areas and markets that are unable to support full-service hospitals. As such, micro-hospitals may be viewed as a low-cost entry into smaller markets, with the ability to expand services as needed. Micro-hospitals are designed to accommodate overnight stays but are primarily used to assess and treat lower-acuity inpatient medical conditions closer to a patient’s home and in a more cost efficient manner than a full-service hospital.
Treatment costs at micro-hospitals are typically below that of a full-service hospital but higher than urgent care centers. Although micro-hospitals are able to treat a wide range of conditions due to having inpatient beds, the goal of a micro-hospital is not to be a one-stop shop. Rather, most micro-hospitals seek to treat the majority of care required by the community (up to 90% of treatments in some cases), but not the higher end of the acuity spectrum. Commonly, but not always, micro-hospital stays longer than 48 hours are sent to facilities that are capable of handling higher-acuity patients.
CharacteristicsTypically, a micro-hospital is located within 20 miles of a full-service hospital to ensure an efficient transfer process for high-acuity patients. Additionally, markets are evaluated for potential service gaps where demand for full-service facilities is insufficient. Micro-hospitals are well suited to fill the void that exists between freestanding emergency departments (EDs) and full-scale hospitals by providing easy access to care with minimal waiting time.
Micro-hospitals and freestanding EDs are similar in that they both provide emergency care, however micro-hospitals also admit and guide patients to other appropriate care settings. Micro-hospitals, in some aspects, may be viewed as an extension of the freestanding ED model since most freestanding EDs need to be tied to a fully licensed hospital facility. Micro-hospitals, on the other hand, are fully licensed.
Micro-hospitals have sets of core services typically including emergency care, pharmacy, lab, and imaging. The rest of the services may be tailored to the needs of the community. Common services offered also include primary care, dietary services, women’s services, and low-acuity outpatient surgeries.
Advantages and Disadvantages The most obvious advantage micro-hospitals have over larger hospitals is their ability to offer quicker and more convenient access to services. Specifically, one of the major advantages of micro-hospitals over other medical care centers is the fact that they are able to connect patients with specialty and primary care physician networks. For example, one micro-hospital in Las Vegas has a second floor with separate specialty and primary care physician offices to which patients could be referred. Other advantagesinclude reduced wait-times, higher reimbursement than an urgent care center, decreased physician burnout compared to higher-acuity settings, and more customizable services to fit the needs of a specific population.
Conversely, one of the major disadvantages for micro-hospitals is the fact that they are limited to treating lower-acuity conditions. Often, micro-hospitals are not fully equipped to handle extreme medical situations such as heart attacks or life-threatening injuries from car accidents. Some of these patients may need to be transferred to larger facilities that are better equipped to handle high-acuity cases. Hence, the most successful micro-hospitals will have strong referral networks or be utilized as a cog in a larger health care delivery network.
Current OutlookAs of the first quarter of 2017, micro-hospitals had a presence in 19 states, including Colorado, Arizona, and Texas. A common characteristic that many of those 19 states share is that a certificate of need (CON) is not required in order to build a facility. CONs can be a lengthy, complex process, thus states without that requirement are at an advantage. One of the major reasons for the growing popularity of micro-hospitals is that they are less expensive to build (most fall into the range of $7 to $30 million) and have an abbreviated construction period compared to full-service hospitals, allowing health care services to be delivered to patients sooner.
Similar to fully licensed hospitals, micro-hospitals have multiple financing options available to them including taxable and tax-exempt bonds, the U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) Sec. 242 program, private equity, real estate investment trusts (REITs), joint venture (JV) partnerships, and bank debt financing. In a recent example of a JV transaction, Emerus Holdings Inc., the largest operator of micro-hospitals in the nation, entered into an agreement with Allegheny Health Network (AHN), a Highmark Health Company, to fund the construction of multiple facilities using the Emerus neighborhood hospital concept. The Emerus neighborhood concept facilities are fully licensed hospitals that offer an array of onsite clinical services, an ED, 10 to 12 inpatient beds, diagnostic care, primary and specialty care.
In another recent example of new development, Mercyhealth announced plans to build a micro-hospital in Crystal Lake, Illinois. The plan consists of constructing a 13-bed facility with private inpatient and intensive care beds, two operating rooms, and ancillary services. As the city of Crystal Lake does not have an ED, the new micro-hospital will offer 24/7 emergency services. The facility is expected to open in 2020.
In Ohio, MetroHealth is proceeding with a plan to build a 12-bed micro-hospital in Cleveland Heights. The 12,000 square-foot facility will be constructed in a previously unfinished space within the existing MetroHealth 24-hour ED. The location should make coordination with the ED efficient, as ED patients can be admitted to the micro-hospital for observation. The maximum stay will be longer than most micro-hospitals at 124 hours.
CMS GuidanceEffective on September 6, 2017, the Centers for Medicare and Medicaid Services (CMS) provided guidanceregarding the requirement that a hospital participating in the Medicare program be “primarily engaged” in inpatient services in order to be considered by Medicare as a hospital and receive reimbursement for services rendered. Under this new guidance, CMS designates a facility as a hospital based on factors such as average daily census, average length of stay and number of off-campus locations. As a baseline for compliance, CMS will require that a facility have at least two inpatients at the time of a survey as a prerequisite for a survey to be conducted. If the facility has less than two inpatients, surveyors will review admission data while on-site and will proceed with the survey if the data demonstrates an average daily census of at least two patients, and an average length of stay of at least two midnights over the prior 12 months.
Due to constant changes in regulation regarding micro-hospitals, some hospital systems have been selective in opening hospitals in specific geographic and demographic areas. For example, Emerus has strategically positioned hospitals in zip codes with higher median incomes, more commercial coverage, and areas that are exhibiting rapid population growth. Additionally, Emerus has been expanding its network of micro-hospitals by forming strategic partnerships with larger health care organizations, including Dignity Health, Baptist Health, SCL Health, Hospitals of Providence, and Baylor Scott & White Health.
The growing interest in micro-hospitals is likely to endure as the health care industry continues to undergo changes while promoting an over-arching trend towards specialization in patient care. Providers and investors interested in micro-hospital development should pay close attention to demographics, the type of services to be provided, design of the facility, and the available sources of capital as part of the due diligence process. Partnering with an experienced operator may be a way to minimize risk and implement best practices for those new to the micro-hospital space.
Provided by Lancaster-Pollard
Bruce Lorenz, Chair