CHICAGO, May 18, 2012 /PRNewswire/ -- Alluding to events that faced the Titanic, Ken Perez, MedeAnalytics' senior vice president of marketing and director of healthcare policy, today told an audience of healthcare executives that hospital finances are facing a multi-year "perfect storm" in a sea of uncharted icebergs, and that the key to survival will be vigilance, scenario planning, and a continued focus on improvement of care delivery. He delivered his remarks at the 2012 Becker's Hospital Review Annual Meeting at the Hotel Allegro in Chicago, Ill. MedeAnalytics is a leading provider of healthcare performance management solutions.
In his presentation, "Key Developments in Medicare Reimbursement and the Implications for the Delivery of Care," Perez summarized the societal, legislative and market context of current healthcare economics. He provided a brief review of the history of Medicare and its significance to hospitals, described planned and potential cuts to Medicare reimbursement, and concluded with a number of recommendations for hospitals.
Perez told the audience that today's unprecedented hospital financial challenges are the result of the combination of multiple factors: Affordable Care Act (ACA)-mandated reductions, likely cuts to Medicare as a result of the Budget Control Act of 2011 (the "debt deal"), sustainable growth rate (SGR) assumptions and the potential ramifications of a permanent "doc fix," the rise of risk-based reimbursement, and pressure from commercial payers. "These challenges will constitute a significant threat to hospital finances for many years," said Perez. "Because of the complexity and escalating impact of reductions to Medicare reimbursement in the future, it is important to understand, monitor and take steps to mitigate the adverse effects of the reductions."
Hospital Impact: Annual Reduced Medicare Payments of $5 Million Per Year from FY2013 to FY 2021
Perez estimates that for the nine-year period of FY2013 to FY2021, payments to hospitals will be sliced by $156 billion or more as a result of just the sum of ACA-mandated reductions (negative revisions and productivity adjustments to the IPPS market basket update) and hospitals' proportional share of the two- percent cut to Medicare mandated by the debt deal's sequestration process. Collectively, these cuts would translate into a reduction of approximately $5 million for the average hospital per year, relative to pre-health reform conditions.
Strategies to Offset Medicare Reimbursement Reductions
Perez concluded his presentation by sharing a number of strategies that are proven best practices to help hospitals reduce costs and create efficiencies, including: 1) forming financial-clinical partnerships; 2) performing a detailed margin analysis; 3) engaging with service line managers and physicians; 4) revamping care coordination; 5) ensuring efficient operating room utilization; and 6) improving emergency room operations.
MedeAnalytics Resource Centers
As a service to the healthcare industry, MedeAnalytics has created a number of resource centers designed to contribute to the conversation about significant healthcare delivery issues and their solutions. These resource centers include: Supreme Court Review of Health Reform, Sustainable Growth Rate, Medicare Zero™(an analytical approach to improve Medicare margins to breakeven or better), Value-Based Purchasing, ICD-10, Accountable Care Organizations, and more.
Founded in 1994, MedeAnalytics delivers performance management solutions across the healthcare system—including hospitals, physician practices and payers—to ensure accountability and improve financial, operational and clinical outcomes. For more information, visit www.medeanalytics.com.