Browse by Topic
Learn more about the healthcare finance industry's leading professional association. Find out why our members rely on HFMA as their go-to source for insight and information.
Members have many options for helping them advance their careers. Conferences, seminars, eLearning, certification, and more -- our education and events will keep you motivated.
On February 10-12, Physicians, Payers, and Providers will discover strategies for implementing value-based payment arrangements with both private and public sector payers.
Stay up-to-date in a rapidly changing industry in New Orleans (Mar. 7-9) or Chicago/Rosemont (Apr. 20-22). Register early and save.
Focus on the essentials. Develop strategies that deliver results. Redefine the boundaries of your success. Find out what’s driving innovation at ANI. Register by 2/29, save $150.
Our newsletters offer targeted articles with
technical how-to details and thought-provoking insights from healthcare finance
leaders and industry experts.
Get the perspectives of leading healthcare finance professionals on today's hottest issues.
Information about leading vendors helps your buying decisions.
Forum members can network during live webinars or access a library of past webinars on topics such as ICD-10 implementation, CMS audits, bundled payment, charity care, KPIs, and more.
An ever-expanding collection of spreadsheets, policies, job descriptions, checklists, and more that you can adopt and adapt.
Forum members can submit vexing questions to a panel of experts using our Ask the Expert service.
Your source for employment solutions.
Find new employment opportunities or
reach out to qualified candidates.
Distinguish yourself as a leader among your peers and advance your career by earning certification in our healthcare finance programs.
Get an objective third-party evaluation of products and services used in the healthcare finance workplace.
MAP App is a web-based application that helps organizations improve revenue cycle performance based on industry-standard metrics called MAP Keys.
Find suppliers and products in this comprehensive vendor directory for healthcare finance professionals.
Guidance for understanding and communicating about the price of health care.
Transformation toward value-based healthcare is reshaping the delivery of care, patient expectations, and payment structures.
Improve your revenue cycle performance through standard metrics, peer comparison, and successful practices.
By Tanya K. Hahn
The end of 2010 saw the expiration of a number of options for hospitals seeking financing for capital projects. These temporary measures stemmed from the American Recovery and Reinvestment Act (ARRA) and other Congressional action, and they leave hospitals with yet another shift in the financing landscape that requires re-examination of available avenues.
Build America Bonds no longer exist (though legislation has been proposed to extend them), the higher bank-qualified bond limits authorized by ARRA have reverted to lower levels, and the Federal Home Loan Bank can no longer support tax-exempt hospital financing.
Yet the changes to these options have not left holes behind: rather, they leave a different set of financing options to consider in 2011.
This is a sample article from HFMA's subscription newsletter, Strategic Financial Planning, which helps senior financial leaders respond to reform and federal/state budget cuts, improve strategic planning, access and allocate capital, identify and respond to risk, and take advantage of growth opportunities.Learn more and subscribe to Strategic Financial Planning.
In 2009 and 2010, Build America Bonds (BABs) provided governmental hospitals with a 35 percent subsidy on their interest cost. The program was designed to provide an alternative to tax-exempt bonds, which were not-and still are not-providing the interest rate advantage they traditionally have.
In 2011, municipal hospitals in strong communities can try to leverage taxing authority and government relationships to reduce interest rates. They can consider issuing rated or unrated bonds, or pursuing enhancement to improve a credit rating. Some communities may have unfunded general obligation monies that could be applied to a hospital project without a new taxpayer vote. Hospitals seeking new general obligations must be mindful of the time necessary to bring a vote to the ballot; this is generally not an option for projects with a rapidly-approaching start date.
Bond insurance is still available to government hospitals that can back the insurance with a general obligation pledge, though generally the bond insurer will limit the enhancement to hospitals with revenues of over $50 million.
It is critical for hospitals relying on their tax bases to "stress test" their debt capacities prior to issuing bonds or seeking credit enhancement. Evaluate the impact of a material drop in the tax base on the current operations cushion and on the ability to repay the planned debt. In addition, the amount of debt per capita will be a major issue for investors and rating agencies if the project is located in an area where employment opportunities are concentrated among a small number of employers.
The Federal Home Loan Bank (FHLB) consists of 12 independent entities that lend to local community banks. Most are rated AAA. For the past couple of years, the FHLBs have been permitted to credit-enhance a hospital's tax-exempt debt when an unrated or low-rated bank provided a letter of credit. This meant local banks could provide hospitals investment-grade credit enhancement usually available only from larger banks. A local bank's familiarity with a hospital's community impact may make it more willing than a large bank to participate in a project.
In 2011, the FHLB can still enhance hospitals' taxable debt issuances, but not tax-exempt debt. Since fixed-rate tax-exempt debt is not providing the cost break it usually does, the taxable FHLB option is still a good one. Further, taxable bonds require fewer upfront closing costs, and there are fewer restrictions on the use of bond proceeds. This is a lesser-known option that may require investigation and research on the part of the borrower and the local bank, which will have to consider the implications of posting collateral for the letter of credit.
When tax-exempt bonds are designated bank-qualified, banks can deduct 80 percent of their cost of buying and carrying them. Banks pass along the savings to borrowers by way of a reduced interest rate. Normally, only $10 million can be designated bank-qualified by any bond issuer in one year, meaning if a municipality had commitments for the full amount of this limit, the hospital would be shut out of funding from that source that year. While ARRA increased this limit to $30 million and applied the limit to the borrower, the limits reverted to normal levels after December 31.
Borrowers can get creative, though, by looking for bond issuers other than the hospital's traditional municipal source. If hospitals can find more than one issuer with bank-qualified capacity, they may be able to combine those sources to overcome the $10 million limit. Hospitals should keep in mind that the more funding sources involved, the more legwork and project management required.
Alternatively, hospitals can consider phasing their projects over multiple calendar years to stay within the $10 million limit. The risk in this scenario is, as always, market movement and changes in interest rates.
Numerous other options are still available in 2011for both municipal and nonprofit hospitals, and they can be used on their own or combined to create an affordable, tailored debt structure.
Federal financing remains a viable option through both the Federal Housing Administration (FHA) and the U.S. Department of Agriculture. The FHA's mortgage insurance program is available for both new construction and, as of 2010, for simple refinances. And in 2011, the USDA offers both its Business and Industry Program and its Community Facilities Program for hospitals in communities of less than 50,000 people for the former and 20,000 people for the latter. These structures provide credit-enhanced debt with amortizations of up to 25 years for FHA and 40 years for USDA. Underwriting standards for these programs necessitate the utilization of a lender familiar with the programs' requirements and limitations who can compile a credit package that accurately describes the hospital's strengths and goals.
Private placement of bonds has been a successful structure for several hospitals despite the markets. This path requires a lender with a firm grasp on local, regional, national and international banks' appetite for purchasing certain types of debt. Lastly, off-balance sheet financing and Real Estate Investment Trusts are also potential 2011 financing alternatives.
The coming year brings numerous challenges. Access to capital will be competitive, particularly given the unusually high number of letters of credit expiring in 2011 and 2012, bringing borrowers to market to seek either extensions or revised debt structures.
Some borrowers are in the position of needing to finance in 2011, but they may not be able to access the ideal debt structure at an affordable cost of capital. For these borrowers who must proceed with financing at less-than optimal terms, special consideration should be paid to incorporating flexibility into debt covenants, prepayment penalties and other terms. The borrower may find that paying a higher interest rate is worth the benefit of future flexibility to refinance early. Borrowers may also be able to negotiate smaller periodic enhancement fees, rather than annual fees, to smooth cash flows.
While the loss of the ARRA provisions narrows the financial options available to hospitals seeking funding for capital projects in 2011, there are still ways to get projects done. A good knowledge of all other possibilities will be critical in obtaining required financing at reasonable terms.
Tanya K. Hahn is a senior vice president, Lancaster Pollard (email@example.com).
This article is reprinted with permission from The Capital Issue at www.lancasterpollard.com.
Publication Date: Monday, April 11, 2011
TriMedx helps health systems control costs and uncover savings opportunities by optimizing the clinical engineering function.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
Emad Rizk, MD, president and CEO of Accretive Health, discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
Jim Bohnsack, vice president, solution & corporate development for Conifer Health Solutions, explains how the company helps healthcare providers leverage data to deliver better outcomes while optimizing reimbursement for all payment arrangements.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Steve Scibetta, senior director of channel sales for Ontario Systems' healthcare product line, shares insights into effectively managing receivables.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Elena White, vice president of risk, quality, and network solutions for Optum, discusses how healthcare providers can leverage data and technology as they enable risk in their organization.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
Somnia President and CEO Marc Koch, MD, MBA, explains how hospitals can drive transformative change in the perioperative experience for outstanding clinical and financial outcomes.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
PMMC President Roger L. Shaul discusses the effects of healthcare reform on revenue cycle management and how PMMC's products help clients adapt to a changing financial environment.
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Greg Burgess, Founder and Chief Product Officer at Burgess Group shares insights and opportunities for payment integrity in the rapidly changing healthcare IT landscape.
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
HFMA's print, email, online, and mobile opportunities provide you maximum reach and impact. We will work with you to build a plan that meets your needs. Contact a sales rep.
HFMA offers online, email, and print opportunities to help you recruit the most talented healthcare finance professionals. Place your classified ads today.
Drive down costs while improving quality in a reform environment.
Stay informed about new directions in healthcare finance. Share tools and strategies for improving performance. Be an active participant in your profession. Together, we’ll reshape the business and practice of healthcare. Join us.
Copyright 2016, Healthcare Financial Management Association.
Join HFMA today and enjoy: