Issue link: https://beckershealthcare.uberflip.com/i/1507870
12 CFO / FINANCE 'Dark clouds' may derail hospital financial recovery By Laura Dyrda N onprofit hospitals have been hit hard over the last 18 months with rising costs, workforce shortages, inflation and more leading to tighter margins and tough decisions. Financial performance is expected to improve through the first half of next year, according to an Aug. 9 Moody's Investor Service report, but "significant challenges could still derail recovery." Nonprofit hospitals and health systems overall rely less on expensive contracted labor than they did during the pandemic and many have launched large-scale efforts to reduce labor costs in the last year, with some success. Nonprofit hospitals in general have reported "modest improvement" with commercial payer reimbursement, according to Moody's, and recent one-time Federal Emergency Management Agency grants are helping hospitals across the U.S. But financial recovery isn't a sure thing. Moody's highlighted five "dark clouds" that may still hinder hospital finances: 1. Permanently higher labor costs. 2. Increasing aging population who rely on Medicare. 3. More uninsured people amid Medicaid eligibility redetermination. 4. Shiing care to the outpatient setting, as inpatient care leads to higher revenue and margins. 5. Elevated expenses for IT services, cybersecurity, pharmaceuticals and supplies. CMS won't be much help, either. e agency is planning a 3 percent rate increase for 2024, which is below cost increases from previous years, as expenses climb. Moody's said hospitals with nimble management teams that can cut costs, sell non-core assets, reduce length of stay and add capacity for high-margin inpatient care will do better in the coming year. But even with these efforts, not all hospitals will succeed. "Hospitals in rural areas or lacking a sufficient network to transition patients to outpatient care will likely continue to lag peers. A prolonged failure to restore operating performance to pre-pandemic levels and rebuild liquidity will exacerbate credit stress, particularly when covenant violations are a risk. Exposure to certain bank agreements and concentrated counterparty risk that tighten available credit will also pose a significant risk at least into next year," according to the report. n Hawaii hospital fires 3 top managers in leadership restructure By Kelly Gooch T he Hawaii State Hospital, a publicly funded, state psychiatric hospital in Kaneohe, is firing three top- level managers as part of a leadership restructure amid patient overcrowding and workforce shortages, local media outlets reported over the weekend. On Aug. 17, Associate Administrator Bimmie Strausser, MD, Director of Nursing Lani Tsuneishi, MSN, and Operations Administrator Anthony Fraiola were fired and escorted off the property, staff at the facility said, according to Honolulu Civil Beat. Kenneth Luke, the hospital's acting administrator, on the same day announced to staff that the three senior managers were no longer with the hospital and that the hospital is restructuring its senior leadership team. "Other leaders will be asked to take on new roles to help our organization to move forward," Mr. Luke said, according to the Honolulu Star-Advertiser and Honolulu Civil Beat. According to both publications, Mr. Luke's announcement to staff did not provide a reason for the move. However, the Honolulu Star-Advertiser reported that he did note the hospital "is being challenged with maintaining quality care in a safe and therapeutic environment, while having to manage an ever-increasing demand for our services." Mr. Luke added, "I am confident that, by functioning as one team, we can meet this challenge." Shawn Hamamoto, spokesperson for the Hawaii State Department of Health, told Becker's, "We are unable to comment as this is a personnel matter." Ms. Tsuneishi, who has worked at the Hawaii State Hospital for more than three decades, told Honolulu Civil Beat she is shocked by her termination and that she has never had job performance issues. The hospital has long struggled to recruit and retain enough workers, and she suspects the firings are related to issues such as overtime costs and staffing, Ms. Tsuneishi said, according to the publication. Dr. Strausser and Mr. Fraiola did not respond to Honolulu Civil Beat's requests for comment.n