Too Little, Too Late, Too Busy
The Problem: 40% of all hospitals operate in the red.
Of those hospitals in the red, those meeting all of the five high-risk criteria below are in fact at significant risk of shrinkage or closure:
1. Below $150MM in net patient revenues.
2. Five consecutive years of negative operating margins.
3. Three consecutive years of days cash on hand below 60 days.
4. Recent annual net incomes in negative territory.
5. Independent: a standalone hospital
These hospitals are in troubled waters that are about to get much worse. Please see below:
Hospitals under a $150MM in net patients revenues (NPR) are routinely confronting and implementing a pandemic of service reductions and closures for emergency care, critical care, labor and delivery, in-patient surgery, behavioral health, dialysis, pediatrics and more. Further, it’s not just service lines that are being cut, it’s entire hospitals that are closing at a national rate of one closure every 14.6 days, i.e.: more than two closures every month!
The good news is that’s it’s not much worse, the bad news is, it’s going to get much worse, as if that’s possible.
All the above service reductions and hospital closures will unavoidably and avoidably accelerate.
Among the many reasons for the exacerbation of the above scenarios will be the significant expansion of the Medicare Advantage program and its accompanying rapid increases in its prior authorization complexity and denial orientation.
In addition, where denials are not on the agenda, partial payments and underpayments will be. The additional, associated unaffordable costs of arbitration, litigation and consultation are substantive and agonizing.
Further, increases in so-called “site neutrality” payment recalculations will drive down hospitals’ inpatient revenues.
As well as a greater emphasis on hospital, risk-based “quality care”, where the hospital is at risk for meeting “quality criteria”, as defined and enforced ultimately by the hospital’s contracted carriers. Those hospitals not meeting the care quality criteria will be penalized with no or lower payments.
The new Administration is promising across the board 20% tariffs. The President can legally implement these tariffs without any Congressional or judicial approval. These new tariffs will increase hospital supply costs, in some cases dramatically. These added costs will ultimately be passed on to patients, as neither carriers nor hospitals will on their own absorb the costs, nor will Medicare or Medicaid.
Many of these newer approaches and their relatively rapid increases in implementation, both existing and coming, may fall under the rubric of “privatization”. That is, where control and cash is passed to private carriers using public funding, but on a far more extensive scale than exists currently. However, the major material costs will be passed on to patients, in the form of higher patient billings with more out-of-pocket costs. Medicare Advantage is Exhibit #1.
“Obamacare” subsidies will not be increased to cover these increased patient costs. In fact, members of the new Administration have openly discussed and advocated for “sunsetting” (via inaction) major ACA patient subsidies for 20 million Americans. This will result in 3.4 million people losing insurance coverage all together, many in areas where rural/small hospitals are the major hub of care.
Discussed ACA cutbacks in the new Administration place emphasis on “savings” from rollbacks of ACA Medicaid expansion. This would result in 2-4 million Medicaid recipients losing their Medicaid coverage. Many of these poor recipients are served at hospitals under $150MM in NPR.
The icing on the cake is that commercially insured growth, which can provide a survival margin for these hospitals, is at best flat lining, and at worse declining.
What Is to Be Done
For the most part, hospitals under $150MM in NPR do not have the resources, time, expertise or experience to confront these existing problems and what’s about to potentially overwhelm these already heavily at-risk hospitals.
Fortunately, contingency-based, hospital-experienced consulting firms do have the expertise and experience to remedy or at least ameliorate these potentially fatal hospital dynamics.
Microscope’s Margin Solutions has successfully served similarly situated hospitals with its Top Twenty Solutions:
These Solutions encompass a much broader, more effective, quicker, easier and lucrative approach to creating critical cash than is routinely done.
For example, our Revenue Generating Solutions Bundle goes way beyond traditional revenue cycle management and covers/implements, on an enterprise-wide basis, virtually every known way for semi-rural hospitals to easily gain new cash.
With our Revenue Bundle we do 90% of the work and charge on a purely contingent basis.
This positions us to contractually guarantee a semi-rural hospital a minimum net countable cash gain of at least 4% of the hospital’s NPR.
This is all on a zero-risk basis for the financially struggling, or about to be struggling hospital.
We have successfully served and mitigated many such semi-rural hospitals’ financial pains.
These hospitals under $150MM in NPR (and 100’s of others) are about to be confronted, if not already, by a tsunami of administrative/financial difficulties, the likes of which have not yet been fully understood or exposed.
Fortunately, we know and understand them and can enhance your profitable confrontational posture against them.
Doing “too little” is being “too late”. Being “too busy” will result in service reductions or worse.
We’d be pleased to discuss this no-risk, guaranteed, net dollar-generating approach with you.
For more information, please contact:
Rick Kunnes, MD
Managing Principal, Margin Solutions
MicroscopeHC, LLC
