Health Care More Upbeat Than Other Sectors
January 14, 2010
Friday, December 25, 2009
Health care a little more upbeat than other sectors
Denver Business Journal - by Bob Mook
Health care providers in Colorado managed to survive 2009 without delaying big projects or making substantial staff cuts.
“Most of what we’re hearing now is that business is pretty much what it was a year ago and it’s not as bad as expected,” said Dr. William Jessee, president and CEO of the Medical Group Management Association (MGMA), a Greenwood Village trade organization that represents physicians’ practices nationwide. “We’re beginning to hear anecdotes from members who say things are picking up.”
However, the positive prognosis for health care may change in 2010 if the economy continues to deteriorate or if Congress cuts reimbursements on Medicare and other government-run health plans. And many medical providers worry about how national health care reform efforts might affect their practices.
Still, Todd Conklin, CFO and senior vice president for Exempla Healthcare, described 2009 as “a solid financial year.”
He said for the Denver-area hospital system, the number of patients staying in hospitals while receiving treatment (or “inpatient volume”) increased by 4 percent, while the number of patients receiving treatment at hospitals that didn’t require an overnight visit (or “outpatient volume”) rose by 9 percent. He added that the H1N1 virus was responsible for a spike in activity at Exempla’s hospitals at year-end.
Tom Nash, vice president of financial policy for the Colorado Hospital Association (CHA), said the number of patients visiting Colorado hospitals remained relatively flat from 2008. Nash said surgeries statewide were up 2 percent from the previous year — good news for hospitals.
Jessee said necessity drove much of the traffic to medical providers.
“People didn’t stop getting sick,” he said, noting that in 2009, hospitals continued to have “reasonably strong demand” and primary care practices didn’t experience significant drops from 2008.
Gary Campbell, president and CEO of Centura Health, reported that his hospital system’s revenue increased 6 percent from 2008 — despite a growing level of charity care the hospitals provide.
He said Centura employees have been “tightening their belts” by taking a close look at contracts and overhead, and adjusting salaries of new employees to reflect what’s going on in the market.
“We haven’t had mass layoffs, but we’re always looking for new efficiencies,” Campbell said.
For example, he said Centura saved millions by outsourcing some services, such as housekeeping and dietary services, to contractors.
Nash said if hospitals withstood the recession’s effects in 2009, it’s in large part because hospital cash reserves were in good shape and their investment portfolios rebounded — even when the overall economy didn’t.
Not all the numbers about hospital finances in 2009 were positive, however.
Nash noted that “uncompensated care” (the shortfall from Medicaid and Medicare reimbursements, bad debt and charity care) rose 15 percent from the previous year, according to a CHA survey that measured hospital activity in Colorado from September 2008 to August 2009.
“That’s definitely not an encouraging trend,” Nash said, noting that he’s heard pessimistic rumblings from the health care sector about the year ahead. “The impact from the downturn is somewhat delayed in health care, and we haven’t seen the worst of it yet.”
In particular, Nash said he’s troubled by the growing caseload from the Medicaid program, which has grown 45 percent since 2007.
Medicaid pays hospitals at a much lower rate than private insurance, and the difference is passed back to private insurers and their customers in the form of higher premiums.
Nash also worries that the number of uninsured patients will grow as unemployed people start losing coverage from COBRA, a federally sponsored program that allows workers who are between jobs to continue getting health care coverage provided by their former employer.
And though Colorado hospitals expect to gain $80 million from a new provider fee designed to generate matching federal dollars, proposed cuts in Medicare reimbursements (designed to rein in runaway costs in the federal program and encourage hospitals to operate more efficiently) quickly could override whatever new funds the fee delivers, Nash added.
“It’s very possible that 2010 may be a worse year,” he said.
Like the medical providers whose checks they write, insurers in Colorado also experienced a relatively “flat” 2009.
Tom Gosselin, director of small underwriting for Anthem Blue Cross and Blue Shield of Colorado, said most employers opted to renew their health insurance policies — despite ever-increasing costs.
However, Gosselin said there’s a trend for large employers to opt for “slightly leaner” benefits.
Meanwhile, employers from the small -group market struggled to find ways to keep their policies, but most managed to do it — albeit, with leaner products. Gosselin said Anthem had good retention of small-group clients, despite the implementation of House Bill 1355, which barred insurers from giving premium discounts for groups with good health.
But Gosselin isn’t optimistic about what health care reform measures being advanced in Washington mean for the insurance industry nationwide and in Colorado.
The congressional proposals also expand the private sector’s role in providing health care.
Both the House and Senate bills require most Americans to have health insurance and require many employers to provide coverage to workers. Insurers won’t be able to deny coverage to individuals due to pre-existing conditions or place limits on the dollar value of coverage.
“Whatever gets passed will involve lots of red tape and a bigger administrative burden,” Gosselin said.
Sally Kweskin, a spokeswoman for Anthem, said the congressional reform plans contain new taxes and fees on insurers that are “not likely to lower premiums in any meaningful way.”
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