Financial Trends in Health Care

Piggy BankThe Winds of Change are blowing strongly across all sectors of our nation’s health care delivery system. Altru Health System, along with other systems in our region, is experiencing monumental change. The financial component of heath care is constantly evolving. Because of this, budgeting and long range financial planning can be challenging.

Nationwide, there are documented reductions in demand for health care services. We have heard anecdotal evidence that all providers in our region are experiencing this, causing them to reassess operations. Like Altru, these providers need an operating surplus to generate capital to fund projects and acquire new technology.

Inpatients Now Outpatients
In 2013, Altru Health System has continued to grow in terms of the total number of patients served; however, certain segments of the organization have seen shifts in the method of delivery. These charts show the change in utilization of inpatient beds and rooms in the hospital. Nearly 20 percent of patients in hospital beds at any given time are now considered “outpatient.”

Third party payers, the largest being Medicare, have attempted to classify more patients into “observation” status. This reclassification results in the patient being paid under Medicare’s Part B designation because it’s then considered an “outpatient” stay, even though the patient was in a hospital bed for care and recovery, most often staying overnight or possibly longer. Because of the status change, hospitals, including Altru Health System, receive lower payments even though patients receive the same level of care (or need the same level of resources) as if they were an inpatient. Often too, the patient has increased out-of-pocket responsibility.

2013 First Half Review
Altru Health System’s financial performance through the first six months is running slightly positive. Both revenue and expenses are running below plan.

The shift in how patient care is delivered is reflected in Altru’s capital purchases. So far in 2013, $18.1 million has been spent on capital upgrades, including converting patient rooms from semi-private to private, finishing the new space in East Grand Forks, “spiffing” inpatient rooms, and finishing preparations at Altru Specialty Center in south Grand Forks for full occupancy. Capital spending has also focused on office and equipment needs for our new physicians.

Clinic visits are up fairly strong at 5.6 percent, reflective of the 11 new physicians thus far in 2013. An additional 15 physicians are scheduled to start during the second half of the year, thanks to recent recruitment success. Thirteen physicians have signed agreements to practice at Altru in the coming years. However, by the end of 2013, ten physicians will depart the health system. The faces of health care are constantly changing, literally.

Long range financial planning is underway to accommodate a workable plan that will facilitate the organization’s strategic initiatives. As the Affordable Care Act becomes more fully implemented on a national level, our projections are that payments to providers will be gradually constrained. We’re looking for ways to maximize our available resources. We remain committed to providing high quality services, while maintaining a solid financial position.

With questions, please contact me directly at dthompson[at]altru[dot]org, or comment here.

Thompson, DwightAs Chief Financial Officer of Altru Health System, Dwight Thompson leads strategic financial planning, revenue cycle, accounting and finance, budget/reimbursement, coding compliance, doctor compensation, patient financial services and treasury and compliance. He is an active volunteer with the YMCA, Alerus Commission, City Growth Fund, Economic Development Corporation and Sanford Health Plan. Dwight and his wife, Ruth, enjoy spending time with their two grandchildren, RJ and Gwen.

One thought on “Financial Trends in Health Care

  1. Dwight, This was a very good article with lots
    of good patient information in it!

    I think it would be a great statement “stuffer” for our patients to read.
    The more information we can give the patient as to why things are
    changing the better it is for all of us.

    Thanks for your time,
    Dale

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