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Newsletter Article

Presidential Positions: Where the Candidates Stand on Health Care, Housing

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In seemingly every presidential election, we are told by pundits and politicos that this particular contest represents the starkest choice between two vastly opposed ideologies that we’ve seen in decades. The future, your kid’s future and your grandchildren’s future, depends on its outcome. Some may argue that such hyperbole is an understatement this year, and, whether that’s true or not, one thing is clear—this election gives voters the choice between the known and the unknown. If Secretary Hillary Clinton wins, the nation will likely stay on its current path—a pursuit of incremental change shaded by Democratic ideologies. If Donald Trump wins, no one is quite sure what will happen, although a look at his proposals and the GOP’s 2016 platform provides some insight. Health Care Clinton has made it clear she believes in upholding and improving the Affordable Care Act (ACA). Her website lists several other health care policies including: • Expanding Medicare by lowering eligibility age from 65 to 55 • Lower prescription drug costs by requiring drug companies to invest in research and development in order to receive taxpayer support • Incentivize states to expand Medicaid (no specifics given) • Allow families to buy insurance on the health exchanges regardless of immigration status • Identify ways to make providers eligible for telehealth reimbursement under Medicare • Expand federally qualified health centers and rural health clinics • Double funding for primary-care community health centers All this amounts to what would be a hefty expansion of the ACA and would…

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Healthcare Consumerism Study Shows Patients Need Financing Options

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Where patient satisfaction was once solely measured from a clinical standpoint, patients are increasingly judging and rating their satisfaction with healthcare organizations by the amount of repeat business and referrals they bring. Since 1992, ClearBalance has partnered with health systems to provide consumer-centric affordable care while improving net recovery of patient pay and overall financial performance. We recently conducted a study to measure awareness, loyalty and satisfaction with that program. The second annual Healthcare Consumerism Study was sent out in August, completed by nearly 2,700 patients. Of those survey respondents, healthcare cost was undeniably a concern: 79 percent stated that it was a factor when selecting a physician, and 81 percent stated the same when choosing a healthcare provider. Relative to their cost concerns, one out of every three consumers stated they would delay care if a loan program wasn’t made available to them. So, while cost is a factor for patients when selecting a specific physician or healthcare provider, the availability of a loan program is still critical in the decision-making process. One survey respondent said, “It’s helpful not to have to pay a large, unexpected medical bill all at once.” This seemed to be a common opinion amongst respondents, as an overwhelming 91 percent stated that healthcare was an expense that required financing of more than 12 months. Of those who use the ClearBalance program, more than half reported their annual insurance deductible to be $3,000 or less. Seventy-two percent of respondents depended on their employer-provided insurance to…

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Millennials Force Healthcare in Digital Direction

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Millennials raised in the digital age with the convenience of online services are driving healthcare providers to change how they engage with patients and improve the customer service aspect of care. While older generations value in-person communication and cultivating relationships with medical professionals, millennials desire a different approach. Accustomed to instant gratification, millennials don’t want to phone in for an appointment and then wait weeks to see a doctor. Nor do they like to be locked in to health plan network restrictions. They often will search online for healthcare information, even before seeing a doctor. A key finding in a global survey of over 3,000 people is that millennials tend to select doctors based on referrals from family and friends. But while older patients express dissatisfaction directly to doctors, millennials share unsatisfactory experiences with friends, often on a social network. The survey also revealed that this generation is likely to trust social feedback, handing providers another challenge. Not only do providers need an online presence, they must monitor and manage their social reputation. Millennials aren’t tied to the notion that they must have one specific doctor; they don’t develop personal relationships with them. For standard checkups and consultations, some don’t feel the need to see a doctor at all, opting instead to see a physician assistant or nurse practitioner. They don’t want to spend hours at a doctor’s office for minor medical complaints. Part of this is due to millennials being generally healthy; pressing health concerns typically are for accidents…

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The Hospital Accelerator Model

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Evolving reimbursement models, the Affordable Care Act and the activation of patients as consumers are among the major drivers of anticipated disruption to the provider landscape. This shifting financial, regulatory and patient preference has led to not only industry veterans attempting to recalibrate ways of doing business, but has also notably attracted outside entrepreneurs and capital vying to establish a presence in a massive industry ($1.5 trillion was spent on hospitals, physicians and clinics in 2013, according to the Kaiser Family Foundation) that historically has had large barriers to entry. StartUp Health reported  that capital flows for digital health increased from $1.2 billion in all of 2010 to $4.7 billion in the first three quarters of 2015. Despite all the above tailwinds, however, adoption of new business models has been relatively slow. A number of factors must be overcome, including: Cultural Differences: Many new entrants come from outside industries, such as technology. Current health care leaders may question new players’ understanding of the intricacies of health care, including fund flows, the level of control any one entity has over an entire episode of care, privacy, compliance, etc. New entrants, for their part, may view incumbents as slow adopters who have not faced the sort of innovation-driving market competition seen in other industries. Both viewpoints have merit. Financial Incentives: While the Centers for Medicare and Medicaid Services (CMS) is moving toward value-based reimbursement models such as shared savings or capitated payments, many (if not all) regions of the country are still…

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Agency Options for Hospital Finance Better than Ever

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Today is a good day to be an issuer in the bond market. With paltry returns available through government bonds and investment-grade paper, fixed income investors are reaching for yield and aggressively bidding for nearly all non-investment grade municipal bond credits, including hospitals. However, not all hospitals are a good fit for tax-exempt bonds. Restrictive covenants, transaction and borrower size, and cost of the issuance are a few factors that may make a public bond issue unfeasible. Fortunately, there is a low-rate, long-term, covenant-light solution. The U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration’s (FHA) Section (Sec.) 242 program and the U.S. Department of Agriculture’s (USDA) Community Facilities (CF) program both made significant capital contributions to hospitals during 2015. Further, each program made strides toward becoming more user friendly, specifically with HUD’s new loan documents and USDA’s emphasis on processes and uniformity. Until recently, the FHA Sec. 242 program used closing documents, covenant package and regulatory agreements that were created in 1973. This led to some of the terminology and legal concepts being outdated. The antiquated documents resulted in closing delays and additional costs, as a borrower and its lender counsel would have to negotiate changes to update and revise language. In 2016, HUD introduced a new set of documents that are expected to be finalized later this year. Although the documents do not introduce sweeping changes, much of the terminology and standard loan document provisions have been included. The changes should help alleviate the closing delays that…

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Planning for the Unknown: Triple Aim

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“In preparing for battle I have always found that plans are useless, but planning is indispensable.” This quote attributed to Dwight Eisenhower is good advice for strategizing in an environment where one knows that the conditions will change. Such is the case with the future of revenue for health care providers in America. U.S. health care is a $2.9 trillion complex and adaptive system of entities including insurance companies, hospitals, pharmaceutical companies, medical equipment manufacturers, technology companies and increasingly more stakeholders. Until recent years, the federal government had largely been a reactive participant since the advent of Medicare. For many Americans, the system has worked relatively well, with the average consumer enjoying access to quality care, state-of-the-art technology and a fair amount of options. However, the Medicare system has some glaring flaws that make it unsustainable as the population ages. The primary flaws include the unacceptably large percentage of the population without insurance and costs growing much faster than the rate of overall inflation, which led to the adoption of the Patient Protection and Affordable Care Act (ACA). While the ACA aimed to accomplish several things, perhaps the single biggest long-term change was the creation of the Center for Medicare and Medicaid Innovation (CMMI). CMMI is intended to drive changes through new payment models and performance metrics. Currently, CMMI is testing innovative payment and delivery system models that show important promise for maintaining or improving the quality of care in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP), while…

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Denials Management – Post ICD10

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A number of years ago, I wrote an article entitled “Denial Ain’t Just a River in Egypt”, and it was picked up by several State HFMA‘s and a national publisher. At the time it appeared to be spot on with advent of the HIPAA transaction file and a good attempt at standardization and how to start a Denial Program. As with every morphing technology, Denial management” became the catch-all phrase for any process that healthcare providers hoped could lead to cleaner claims, standardized denial codes, and fewer denials from third party payers. Then along came ICD10, the Y2K of coding. Well, to the payers surprise it was the Y2K of 2015 all over. The healthcare providers did the hard work of absorbing the extra cost of setting up their systems and processes, testing them, running in parallel and making sure the transition would be as smooth as possible. The sky did not fall thanks to the efforts of the healthcare provider. Today, still, denial management can be part of an entire electronic medical record/billing system, or it can be a “bolt-on” to an existing system, possibly a Web-based system that reviews claims and normalizes data, it can also be a manual, retroactive review of denied claims off an excel spreadsheet. It is most often paid for through the up-front purchase of software within the current system, from the billing software, or by contracting with a vendor for a bolt on product for a percentage of collections or fixed monthly fee….

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Long-Term Acute Care Hospitals: Can They Be Financed?

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Although long-term acute care hospitals (LTACHs) have been around for some time, they have historically been lost in the shuffle by financiers. While many may compare them to a traditional skilled nursing facility (SNF), there are several key differences which make it more difficult for LTACHs to obtain long-term financing. This begs the question; are there any consistent financing options for LTACHs similar to those in the skilled nursing sector? To determine the answer, we must first understand what LTACHs are and the factors which affect their financial health. LTACH Overview According to the American Hospital Association, LTACHs furnish extended medical and rehabilitative care to individuals with clinically complex problems that need hospital-level care for relatively extended periods of time.1 The major differentiation between LTACHs and SNFs is the type of care that is provided. LTACHs, much like a typical acute care hospital, provide care for more complex medical conditions than SNFs. In 2011, Medicare recognized LTACHs for the first time. In order for LTACHs to receive reimbursement, the inpatient length of stay must be greater than 25 days. The average length of stay for an LTACH is 30 days. Typical patients require prolonged ventilator use, ongoing dialysis, intensive respiratory care or multiple IV medications or transfusions, or complex wound care. Almost all LTACHs are licensed under the same criteria as an acute care hospital. There are some states in which an LTACH can be licensed as a “specialty hospital,” but Medicare will still certify the facility as an acute…

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Getting to the Essentials in Evaluating Value/Risk Contracts

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By Debra L. Ryan and Andrew S. Cohen Transition of the nation’s healthcare system toward a value-based business model requires healthcare providers to move toward value-based contracts and care delivery models. Twenty-two percent of hospital and health system leaders anticipate such contracts will constitute 50 percent or more of their payment arrangements within 24 months, up from 7 percent of those leaders six months ago, according to a recent Kaufman Hall survey. Under many value-based contracts, organizations accept greater financial risk by agreeing to deliver defined services to a specified population at a predetermined price and quality level. Organizations must develop a contracting and corresponding care delivery strategy that involves careful planning, skills development, and a phased approach. Thorough assessment of contracting options and specific contracts is essential. Identifying best-fit contracting options Evaluating risk- and value-based payment arrangements involves weighing organizational resources, capabilities, and goals against contract terms, including potential risks and rewards. Executives must be able to articulate the organization’s short- and longer-term goals, and its most appropriate role in the emerging population health management environment. Examples include an integrated delivery system suited to be a “population health manager” responsible for the full care continuum, a regional provider best positioned to maintain a clinically integrated delivery network of defined scope as a “population health comanager,” or a community hospital that will be part of a network managed by a population health manager or comanager. Healthcare leaders should assess the hospital’s or health system’s care delivery model and network, and…

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Salucro Leadership Series: The Consumer Experience | Kevin Kumler

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1. During your career you’ve represented healthcare providers and healthcare companies. How have you seen the patient experience evolve since you started? Considering there was no iPhone, mobile apps, or Facebook when I first started out, there have been fundamental shifts in the world as well as in the healthcare industry. In looking at the broader changes since then, technology has advanced at an unprecedented rate. It has helped us do things we’re already doing better and faster, and allowed us to do things we could never do before. It also allows us to solve patient problems that have been persistent pain points since I started in the industry in the ‘90s. These new experiences across all other consumer industries have conditioned patients to expect the same levels of choice, immediacy, and personalization when it comes to their care. While patients used to be a passive participants, they’ve since shifted to become more informed and empowered. In healthcare today, patients have started to play a more active role and they ‘get a vote’. 2. The shift from patient to consumer is a topic we are hearing a lot about in the healthcare industry. Many cite different reasons driving this change, including patients taking on more financial responsibility for their own treatment. Could technology and options like ZocDoc also be at the heart of this change? Patients have become accustomed to elements that have benefitted them in other markets: transparent and clear information, readily available alternatives, and low switching costs. These…

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