- Hospital-at-home programs increasingly are becoming “table stakes” for health systems, according to a discussion at HFMA’s 2022 Annual Conference.
- Finance leaders are going back to the basics to address costs amid persistently high inflation.
- Questions surround the new regulations on surprise billing.
- The challenging market environment makes thoughtful investment strategies even more important.
DENVER — Educational content at HFMA’s 2022 Annual Conference featured timely insights on the most pressing financial and operational issues facing healthcare organizations. Here’s a small sampling of highlights from among dozens of breakout sessions at the June 26-29 event.
The challenges and opportunities of hospital-at-home
Bringing acute care into patients’ homes is a rare chance to achieve organic growth in today’s healthcare environment, according to a panel of health system leaders in the session “Key Strategies for an Effective Hospital-at-Home Program.”
“When you look at growth for sectors within the entire continuum of care, with the exception of home services, your traditional sites of care over the next five to 10 years are flat at best,” said Kevin Splaine, vice president for payer strategy with Medically Home. “Whereas the prediction is that services will continue to grow at double-digit rates in the home sector.”
Hospital-at-home programs provide savings of up to 35% when considering 30-day total cost of care, Splaine said, and quality and safety metrics are comparable to those in inpatient settings. Net promoter scores are in the upper 90s and staff satisfaction rates are similarly high.
In truth, hospital-at-home programs are becoming “table stakes” for health systems, said Michael Allen, CFO of Peoria, Illinois-based OSF HealthCare.
“If you think we’re going to survive just in bricks and mortar going forward, it’s probably not wise to think that way,” Allen said.
Hospital-at-home programs also can be cogs in value-based payment strategies, said Deremius Williams, vice president for payer strategy and innovation with Yale New Haven Health, which just launched its program in early June.
In that context, Allen and Williams said they hope their health plan partners eventually take a more holistic view of payment for hospital-at-home services.
“On a case-by-case basis, it doesn't cost less," Williams said. "I think there's a rationale to pay a little bit more because from a total-cost perspective, the expectation is that you're going to reduce readmissions and other things that add to the cost.”
Among the questions that require the attention of finance leaders is how a hospital-at-home program affects capital planning.
“At our Florida campus, we are building a new hospital building scaled on a foundation of 120 to 150 hospital-at-home patients in the future,” said Dennis Dahlen, CFO of Mayo Clinic and HFMA’s 2022-23 Chair-Elect. “If that doesn’t work, we just built it too small. So, this is a foundational input to our capital planning.”
Rising costs test CFOs
With inflation posing an increasingly significant concern for hospitals and health systems, finance leaders are responding by emphasizing fundamentals.
“We’re doing a lot of the basic blocking-and-tackling things that kind of fell by the wayside during the [COVID-19] crisis,” Janie Wade, CFO for Enterprise Operations with Intermountain Healthcare, said during the “CFO Perspectives and Industry Trends” panel discussion.
Those efforts include “really trying to manage productivity, try to manage length of stay, and grow. We all know you can’t just cut your way out of the problem — you’ve got to grow.”
Areas of innovation that could spawn financial opportunities include robotic process automation — “where you’re not eliminating jobs, [it’s that] you can’t fill those jobs.”
Boone Memorial Hospital, a critical access hospital in West Virginia, is considering steps such as joining a group purchasing organization to lower supply costs, said CFO Chad Hovis. The organization also struck a deal with a tertiary hospital that agreed to provide care for Boone Memorial’s employees at a discounted rate.
While such issues are short-term priorities, CFOs also are considering how they can improve the cost effectiveness of health for their patient populations.
Such strategies presently may be more of a focus at organizations such as Intermountain Healthcare, which operates a health plan and spans markets that range from mostly fee-for-service to mostly capitated.
Wade said the variety of markets offers an opportunity to "really understand and learn from each other about what works, what doesn't work and [for] the parts of the organization that are not as far along the value curve, how do we move them faster? If you go too fast and you don't have the contracts aligned well or you don't have your analytics set up well, you can really lose your shirt.”
Boone Memorial, a stand-alone hospital, sees a revenue opportunity in moving away from “the culture of, ‘I’m sick, I’m just going to the emergency room,’” Hovis said. “We have hired someone who is following up on those inpatient visits [and is] not attached to a provider in our community. Looking at the ER visits, if [patients] don’t have a provider, we’re trying to attach them to one of our providers. We’re trying to get them into the wellness visits and the quality measures.”
No Surprises Act arbitration guidelines still need to be clarified
Uncertainty lingers around a key aspect of the new regulations on surprise billing, according to perspectives offered in the session “Understanding Dispute Resolution and the No Surprises Act.”
Litigation has led HHS to retract regulations on the arbitration process for settling disputes over out-of-network payment. In choosing between offers submitted by the provider and the insurer, arbitrators initially were instructed to select the offer closest to the qualifying payment amount (QPA) unless presented with a compelling reason to deviate from that benchmark. The QPA is defined as the median in-network payment rate for a given service in a given market.
Fearing such guidance would give a significant edge to insurers in arbitration, providers have filed at least six lawsuits to get the regulations changed. In the first suit to be decided, in February, a Texas federal judge ruled for providers. HHS subsequently drafted new regulations that are being reviewed by the Office of Management and Budget and are expected to be released in August or September.
As a result, “Right now, we don’t have any rules,” said Kenneth White, national managed care practice leader with WTW (formerly known as Willis Towers Watson). “We’re not exactly sure what the arbitrator is supposed to decide on.”
The arbitration process is designed to settle payment disputes between insurers and providers in situations where balance billing is prohibited under the No Surprises Act, which took effect this year. The hope is that the sides will resolve most disputes during a mandatory 30-day negotiating period that precedes arbitration.
“We anticipate that in most cases, resolutions will, in fact, be handled that way,” White said. “It’s what everybody’s used to.”
“You’re going to know what each side’s best offer is going to be,” said Michelle Skipper, vice president and national healthcare lead with the American Arbitration Association. “So, you’re going to know what the other side’s going to be submitting to an arbitrator. I think the intent is that you will settle it and it won’t have to go to an arbitrator to pick one or the other.”
Balanced investment strategies have never been more vital
The COVID-19 pandemic has put “intense pressure on margins at hospitals and systems across the size and credit spectrums,” said Craig Standen, senior healthcare investment consultant at Vanguard, in the session “Transitioning from the Pandemic: Financial, Operational and Investment Success.”
While margins are getting squeezed, balance sheets “have never been stronger” in terms of liquidity, Standen said. Metrics such as unrestricted reserves and days cash on hand have risen significantly during the pandemic, according to 2021 Moody’s data.
But that cushion is likely to be adversely affected by recent trends, including those seen in the stock and bond markets. For example, balanced portfolios were down by about 11.5% for 2022 as of late June.
“It’s a real tough market environment,” Standen said. “There’s no way to sugarcoat it. The sustainability of the recovery and the growth that we’re in right now is quite frankly in doubt.
“We’re looking for ways to optimize and position the portfolio. The thing that we’re not trying to do is run headlong into making significant changes without being really thoughtful about: Is this the best way we can position the portfolio that’s going to set [you] up for success going forward?”
Dealing with rate resets on fixed income has been painful for organizations, Standen acknowledged, but such setbacks also bring opportunities.
“As we look at account structure, there are more opportunities to actually earn yield on the shorter end of the curve, have a balanced portfolio and then develop longer-term strategies,” he said.
Thus, organizations should “focus on operations, and don’t make reactive moves on the investment portfolio. Just be very thoughtful.”