One of our community hospital clients decided to focus their organization on Medicare profitability after an analysis we did during a physician alignment strategy engagement showed that Medicare revenue only covered 92 percent of their organization’s Medicare costs.
While 92 percent may be better than at most hospitals, they still felt it could create a challenge in the long run because:
- The Medicare population is growing.
- Patients newly insured under healthcare reform and the insurance exchanges will very likely be covered by insurance products that pay close to Medicare rates.
- It is likely that Medicare rates will be cut as part of the Federal budget discussions.
- There is potential for the Health Insurance Exchanges to create downward pressure on private rates.
The client’s strategy incorporates two main thrusts. First, they are evaluating costs and processes within the hospital to define savings opportunities. Second, hospital leadership is working with employed physicians and the private medical staff to define how care processes can be changed to reduce resource consumption, while preserving or improving quality. This is being supplemented by a detailed data analysis from HSG, which outlines where the gaps are in regard to getting to Medicare profitability.
Our client is moving up the Physician Alignment Pyramid, and beginning to leverage their relationships with physicians and physician employment activities to focus the medical staff on beneficial clinical integration efforts.