Becker's Hospital Review

Finance, Revenue Cycle & ICD-10 51 This is not to say there weren't issues along the way. In February, in the middle of negotiations, Trinity Health President and CEO Joseph Swedish announced he was resigning to become CEO of one of the largest health insurers in the country, WellPoint. "That was a bump, a little bit of clear air turbulence," Mr. Carter says of Mr. Swedish leaving. But they knew it wouldn't derail the big picture. Register Now! Becker's Hospital Review 5th Annual Meeting Mr. Carter says system executives have already identified $300 million in annual savings, after three years, and the new entity is in a better position to deliver coordinated and integrated care associated with healthcare reform. Although mega-mergers like CHE Trinity Health are often scrutinized for potentially higher charges and larger negotiating clout with payers, Mr. Carter says this deal was strictly about meeting the requirements of a changing healthcare environment and sustaining the ministry. "We're moving toward population health and value-based care and reimbursement," Mr. Carter says. "This isn't about jacking up prices — this is about leveraging our infrastructure to make population health management work." n Lowe's, Wal-Mart Strike Deal With 4 Hospitals for Hip, Knee Replacements By Molly Gamble W al-Mart and Lowe's have formed a deal with four hospitals to provide hip and knee replacements for no out-of-pocket costs to the companies' 1.4 million insured employees and dependents. The following hospitals are participating in the program: • Virginia Mason Medical Center in Seattle • Johns Hopkins Bayview Medical Center in Baltimore • Kaiser Permanente Orange County Irvine (Calif.) Medical Center • Mercy Hospital in Springfield, Mo. Mooresville, N.C.-based Lowe's, the second-largest home improvement retailer worldwide, Bentonville, Ark.-based Wal-Mart and other large employers are part of the Pacific Business Group on Health Negotiating Alliance. The hip and knee replacement program is part of the PGBH's newly created Employers Center of Excellence Network. Employees will receive consultations and care covered at 100 percent without deductible or coinsurance, plus travel, lodging and living expenses for the patient and a caregiver. The program is voluntary, and employees or their covered dependents can still choose to receive care from local providers and incur routine costs. A Wal-Mart official said each hospital has a proven record of practicing evidence-based medicine with higher-than-average patient outcomes for hip and knee replacements, according to a news release. Wal-Mart and Lowe's have similar arrangements with Cleveland Clinic for fixed-price cardiac procedures. n Co-Chaired by Chuck Lauer and Scott Becker 100+ sessions and 190+ speakers May 15-17, 2014 Swissôtel • Chicago, Illinois For more information visit, http://www.beckershospitalreview.com/2013conference/ S&P: Financial Profiles of Lower-Rated, Small Hospitals Will Weaken By Bob Herman S mall nonprofit hospitals are already feeling the pressure of compressed revenue and heightened competition, and the finances of those hospitals with lower credit ratings are likely to record poorer financial performance over the next two years, according to a report from Standard & Poor's Ratings Services. S&P analyzed 80 small nonprofit hospitals within its portfolio. S&P defined a "small hospital" as one with annual net patient revenue of $125 million or less. Revenue was the only criterion. Analysts found small hospitals experienced more negative credit rating activity than larger standalone hospitals. S&P downgraded 9 percent, or eight, of its small hospitals, compared with 6 percent of all S&P's rated standalone hospitals. None of the hospitals had a credit rating higher than the "A" category. The median operating margin increased for most small hospitals between 2011 and 2012. An "A"-rated hospital posted a median operating margin of 4 percent, up from 2.8 percent, while "BBB"-rated hospitals had operating margins between 3 percent and 4.2 percent. Even with reimbursement cuts to Medicare and other payers, net patient revenue still increased for three out of four small hospitals in 2012. However, S&P issued a gloomy outlook because most of the hospitals in this group are located in rural communities and have lower ratings than larger hospitals and health systems. Additionally, small hospitals are likely to see weakened financial profiles if they have to make large capital investments in facility or electronic health record systems, and if they have difficulty in recruiting physicians. "We believe the impact of healthcare reform is magnified on smaller hospitals compared with their larger peers. Due to their narrower revenue bases, small hospitals have limited options to cope with these pressures," according to S&P's report. "Although these hospitals have focused on appropriate growth strategies and cost-containment efforts, in our view, their smaller service-area economies can only support a certain level of growth, and opportunities to cut costs are increasingly harder to find." n

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