HFMA NEWS

Expense growth rate exceeded the revenue growth rate again in FY07 as it did in FY06 for its not-for-profit hospitals and health systems, according to a recently released report by Moody’s Investors Service, Not-for-Profit Hospital Medians for Fiscal Year 2007. According to the report, median operating performance and liquidity remain good relative to historical levels, but operations and the rate of liquidity growth are slowing. Slower revenue growth for hospitals is attributed to a continued shift in surgical volumes from inpatient to outpatient settings, increased charity care, and push-back from commercial insurers on higher rate increases. Moody’s says that due to a weak economy and government initiatives such as recovery audit contractor audits, hospitals will continue to see revenue growth restrained in FY08 and FY09.

The report notes a continued increase in capital spending in FY07, attributed to good cash flow generation in recent years, lower cost of capital, the need to remain competitive by renovating aging facilities, and increased IT needs to improve clinical quality and operational efficiency. The medians report is based on analysis of audited financial statements for 410 free-standing hospitals and single-state healthcare systems and 16 multistate healthcare systems, representing 94 percent of Moody’s publicly rated portfolio that is eligible to be included in the medians.

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The proportion of working-age Americans who have medical bill problems or who are paying off medical debt climbed from 34 percent to 41 percent between 2005 and 2007, bringing the total to 72 million, according to a new Commonwealth Fund report, Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families. In addition, 7 million adults age 65 and over also had problems paying medical bills, for a total of 79 million adults with medical bill problems or medical debt.

Those with medical bills and medical debt are increasingly facing serious financial problems and sometimes facing trade-offs among immediate life necessities. Thirty-nine percent of those with bill problems or debt say they have used up all of their savings to pay their healthcare bills; 29 percent are unable to pay for basic necessities like food, heat, or rent; and 30 percent took on credit card debt. Twenty-four percent of adults under age 65 with medical debt owe $4,000 or more and 12 percent owe $8,000 or more in unpaid medical expenses. Access the report.

If we are to unlock the potential of IT to help transform the U.S. health system, we need to expand beyond narrowly focused standard-setting, according to a new article published Aug. 19 on the Health Affairs web site.

Proponents of health IT need to resist “magical thinking,” such as the notion that technology on its own can transform our broken system without alignment of policy objectives and financial incentives at the same time. IT is critical to improving healthcare quality and cost-effectiveness, but a sole focus on technical standards overlooks the “serious structural barriers to the use of IT that have nothing to do with technology,” write researchers Carol Diamond, managing director of the Health Program at the Markle Foundation, and Clay Shirky, an adjunct professor at New York University.

The authors propose an alternative approach to using health IT to help transform the U.S. health system, one that “would mean working simultaneously on removing other obstacles while concentrating on those standards necessary for sharing the information, however formatted in the short term, to flow between willing and authorized participants. Finally, it would require clear policy statements that will guide the design of technology,” they write. Read the abstract.