Healthcare Finance Policy Update

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August 5, 2009

Although healthcare reform has dominated the headlines, other important changes to healthcare finance policy are moving forward in Washington.

Through its Healthcare Financial Practices department, HFMA monitors policy and legislative actions in Washington and coordinates HFMA testimony and comments to Congress and federal agencies. This issue of HFMA Wants You to Know provides an update on HFMA's recent activities in Washington, as well as information on the state of the healthcare finance industry as discussed at this year's ANI: The Healthcare Finance Conference.

Section 242 Financing for Hospitals
The Department of Housing and Urban Development (HUD) has made it easier for not-for-profit hospitals to finance their debt through the Federal Housing Administration's Section 242 Mortgage Insurance Program for Hospitals. Congressional testimony presented by HFMA helped pave the way for the change.

In May, HFMA presented testimony to the U.S. House of Representatives' Financial Services Committee. In that testimony, HFMA recommended eliminating the requirement that 20 percent of the FHA-insured loan be used for new construction. HUD used HFMA's testimony as one of the documents sent to the Office of Management and Budget to help implement this requested change.

A recent HFMA article on Section 242 financing by Lancaster Pollard's Alan Spidel and Matthew Lindsay notes that, with Section 242's 20 percent construction requirement lifted, hospitals nationwide will have new opportunities "to refinance out of strict debt covenants, remove riskier hospitals from a system's balance sheet, or reduce their interest rate by leveraging the lower risk associated with HUD mortgage insurance." HFMA was pleased to have the opportunity to help its members gain better access to capital.

Community Benefit and Tax-Exempt Status
An important healthcare reform side debate has been the tax-exempt status of not-for-profit hospitals. In a comment letter to Sen. Max Baucus (D.-Mont.), Chairman of the Senate Finance Committee, HFMA President & CEO Richard L. Clarke urges a broadening of the tax-exempt status discussion.

Too often, discussions of tax-exempt status focus narrowly on the provision of charity care, Clarke states in his letter. These discussions should also include consideration of the organizational attributes of not-for-profit hospitals, the full range of societal benefits they provide, and the impact that revocation of tax-exempt status would have on communities served by not-for-profit hospitals.

Charity care is, of course, an important part of a not-for-profit hospital's mission to provide compassionate, high-quality, and affordable healthcare services. HFMA's Principles & Practices Board has recently released a sample charity care policy to assist hospitals in fulfilling that mission. The policy is intended as a sample, not a standard, and may be adapted according to community needs, state or local laws and regulations, and the individual mission of your organization.

As healthcare organizations face growing numbers of unemployed and uninsured patients in their communities, some are using new outpatient care management programs to assist the uninsured, especially those with chronic conditions. "Solving Your Hospital's Multi-Million Dollar Uncompensated Care Problem," a September 23 HFMA audio webcast, offers a look at how hospitals have successfully implemented these programs.

Submit Your ANI 2010 RFP Now!
The RFP process for HFMA's 2010 ANI: The Healthcare Finance Conference is officially open to those who want to share their expertise, increase visibility in the industry and enhance professional growth as a presenter at ANI 2010! Submitted topics should be timely, focused on healthcare financial management needs and relate to the delivery systems and to financial management/legal/legislative issues within these delivery systems, from either a payer, a purchaser and/or a provider perspective. Submit an RFP now!

The State of the Industry at ANI
HFMA is also closely monitoring the healthcare reform debate, which will affect an industry still struggling against the adverse effects of the economic downturn.

At this year's ANI: The Healthcare Finance Conference, HFMA President & CEO Richard Clarke presented "Leading Through Turmoil: The Role of Finance," which highlights the challenges that reform may pose and steps healthcare organizations can take today to prepare themselves for the future. The presentation, available as both a video and slide presentation on HFMA's web site, draws in part from HFMA's white paper, Healthcare Payment Reform: A Call to Action, which was also released at ANI.

Also available is a video of HFMA National Chair Catherine A. Jacobson's ANI presentation, "Making It Count." In her speech, Jacobson describes the challenges her own organization has faced over the past year and the opportunities all healthcare finance professionals have to make it count in difficult times. And be sure to check out the video of ANI conference highlights.

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