Becker's Hospital Review

10 CFO / FINANCE Hospitals are in a world of denial By Molly Gamble H ospital and insurer contract negotiations are oen framed as an industry gauntlet, a defined period of time with an objective outcome where big talk does not translate to money. But reimbursement rates secured in new contracts are only one piece of hospitals' payer-induced headaches. Traditionally, a health system and commercial insurer would occasionally run into a wall in the contract negotiation process. is could play out into a dispute palpable enough to consumers that it warranted headlines. ese impasses generally lasted a matter of weeks with no significant disruptions before outside pressure drove the parties to compromise. Over the past five years or so, the nature of provider-payer conflicts intensified and may be on the cusp of unprecedented severity given health systems' financial pressures. At the same time, agreed-upon reimbursement rates are only the tip of the iceberg when it comes to payment health systems can expect from commercial insurers, who have many more defensive plays in their playbook. ey boil down to a classic line from a 1968 movie: deny, deny, deny. Russ Johnson is CEO of LMH Health, a 102-year-old, independent, nonprofit health system based in Lawrence, Kan. e $350 million organization is anchored by a 174-bed hospital. As he puts it: "We're not tiny, but we're not very big." Mr. Johnson has spent 37 years working in healthcare, holding senior leadership positions in hospitals and health systems in rural communities and large cities. It's difficult to identify many things going well when it comes to provider-payer relationships, but Mr. Johnson told Becker's that it's the payer movements beneath the reimbursement rates that are worsening and causing greater pain today. "e part that's getting worse is the practices behind and underneath the contracts — the sophistication and implementation of pay practices, information systems, artificial intelligence and computer algorithms that are just denying claims by the thousands every month," he said. e reimbursement rates secured in contracts are what you can see above water. Beneath, health insurers are moving faster and kicking harder. roughout the first three months of 2023, about one-third of inpatient and outpatient claims submitted by providers to commercial payers went unpaid for more than 90 days, according to an analysis from Crowe. "So many more claims are now surfacing with some kind of a fallout on a denial, a downcoding or a pre-authorization — you know, the proverbial dotting the i's and crossing the t's, sometimes. But what is abundantly clear is it is not fundamentally about a clinical difference," Mr. Johnson said. Denials were once reserved for a sliver of expensive treatments and have now become common occurrence for mundane, ordinary medical care and treatments such as inhalers or familiar medications for chronic conditions a patient has managed for years. e Only 8% of CFOs still anticipate a recession By Alexis Kayser I n January, 98 percent of U.S. CEOs agreed there would be a "short and shallow" recession. Now, that anticipation is waning in the C-suite, Fortune reported Aug. 22. The publication analyzed a new survey of 600 U.S. C-suite leaders from PwC. Seventeen percent of executives strongly agreed that there is still a recession to come in the next six months — and their role appears to influence their perspective. Just 8 percent of CFOs expect a recession, compared with 27 percent of chief operating officers. They're looking at the situation through different lenses, Wes Bricker, U.S. vice chair and trust solutions co-leader at PwC, told Fortune. "CFOs have spent, I would say, the better part of the COVID crisis and beyond really anchoring scenario planning, shoring up their balance sheet writing, and their cost structure. I think that gives them optimism across multiple scenarios that they'll help guide the company to financial success," Mr. Bricker said. "I think what we see in the data is that COOs are looking at multiple scenarios around the transformation work with a bit more caution than the chief financial officers who feel ready to allocate capital to invest in the future." Healthcare is considered a "recession-proof" industry by some, Becker's Noah Schwartz wrote in July. He asked hospital CFOs if they were concerned about a recession. "Obviously, people's healthcare needs don't cease to exist just because the economy is in distress," Terry Collins, CFO of Rifle, Colo.-based Grand River Health Hospital, told Becker's. "In fact, you could argue that healthcare needs might even increase during a recession because of the additional stress people feel during difficult economic times." But hospital CFOs shouldn't expect complete insulation from a slumping economy, either, some said. "Initially, hospitals may be recession-proof after the defining two quarters of decline in GDP. However, as the recession goes on, more jobs are lost and insurance coverage is lost with those jobs," said Gene Finley, CFO of Camden, Ala.-based J Paul Jones Hospital. "Hospitals should see a rise in self-pay patients, and with that, a rise in bad debt." n

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