Becker's Hospital Review

28 Financial Management hospitals can't provide a price for a procedure that applies to a broad audience, since the cost may vary widely depending on the patient's health plan and other factors. "The insurers have all the relevant data to determine member liability," he says. "They have the provider fee schedule, eligibility, plan and claim data to be able calculate a more precise cost per procedure given a location, facility type, and the provider performing the service." Still, both Ms. Caballero and Mr. Hinde say hospi- tals and other providers can bolster transparency efforts and can help health insurers in developing tools that offer cost estimates. Hospitals can ad- vocate for and support the creation of statewide, all-payer claims databases, Ms. Caballero says. She also says that providers should no longer insist or require payers sign contracts with gag clauses, which prohibit payers from using price and qual- ity information to build transparency tools. Mr. Hinde says hospitals can also help by making sure their charges and line items are clean, consistent and easily understood. Mr. Gundling of HFMA — which also believes health insurers are the best source for cost esti- mates — says hospitals and other providers can aid patients in finding available transparency tools. Additionally, the hospital can step up when the patient doesn't have a health plan to turn to. What the provider needs to do provide that price estimate is when the patient's uninsured or out of network. "That's where the provider should be able to offer an estimated price for a standard procedure without complications, and what com- plications would mean," he says. Mr. Brennan of Geisinger says his system under- stands that "in some cases, the insurer might be a better source for certain information." However, he also says he thinks physicians, hospitals and other providers play a key role in transparency efforts. "I believe the HFMA report correctly identifies that both insurers and providers have responsibilities in that regard and can contribute to meaningful price transparency information," he says. Overall, Mr. Brennan urges other hospitals and health systems not to brush off the push for trans- parency and to examine their capabilities to de- termine what it would take to provide actionable financial information to consumers. "We have more people seeking price information and mak- ing decisions about where to seek care," he says. "The number one thing is, don't ignore this." n Moody's: Hospitals That Invest in IT, Outpatient Will Win By Bob Herman A May report from Moody's Investors Service said hospitals that put their investment dollars in two primary areas — IT and outpa- tient services — are most likely to survive the challenging operat- ing conditions. Continual declines in inpatient volumes, risk-based payer models and height- ened competition from "nontraditional participants" like Wal-Mart and CVS are forcing hospitals to make tough choices, Moody's analysts said. The agency views investments in IT and outpatient strategies as a "long-term credit posi- tive," but they often negatively impact financial statements in the short term. Moody's said there are three main considerations for hospitals as they de- velop these new investment strategies. 1. Health IT is necessary, but costly. New IT systems undoubtedly are huge capital investments for hospitals and health systems, with elec- tronic health record systems serving as the poster child for multimillion- dollar installs. However, hospitals that want a shot at long-term success must stomach the high costs. "A well-functioning IT system that integrates [EHR] management, clinical oversight, billing, revenue management and customer interfacing may well be a minimum requirement for organizational success, especially among larger systems," Moody's said in the report. 2. Outpatient is the new inpatient. Inpatient utilization is decreasing for several reasons. Most notably, HHS and CMS have been cracking down on short inpatient stays, which has led to more observation stays, and more services are now available on an outpatient basis. Outpatient services are an essential part of any hospital's strategy, but they also pay less than inpatient services. To offset the revenue losses, many hospital systems are investing more in newer outpatient venues, like ambulatory surgery centers, urgent care centers and standalone emergency departments. 3. Price sensitivity is creating new competitors. High-deductible health plans, insurance shopping through the exchanges and price transpar- ency are spurring patients to look for more low-cost alternatives than their local hospitals. Consequently, "drugstores and unaffiliated outpatient cen- ters are diverting volumes and revenues from traditional hospital providers," Moody's analysts said. To compete, hospitals may have to consider making additional investments or forming partnerships with these providers. n 3 Key Findings on the Newly Insured By Helen Adamopoulos I n early May, HHS announced more than 8 million people had signed up for health plans through the Patient Protection and Affordable Care Act exchanges, surpassing the Congressional Budget Office's ini- tial projection of 7 million for the first year. The characteristics of the newly insured population can be used to assess how well the PPACA is working at expanding health insurance coverage, according to The Urban Institute. In a study funded by the Robert Wood Johnson Foundation, Urban Institute researchers analyzed data collected through their March 2014 Health Reform Monitoring Survey to examine the demographic characteristics and health status of the newly insured un- der the PPACA. Here are three of their key findings. 1. Most of the newly insured are in the income brackets targeted by the health insurance exchanges and Medicaid expansion. Nearly half of the newly insured adults have annual incomes at or below 138 percent of the federal poverty level, and 40.1 percent have incomes between 139 percent and 399 percent of the poverty level. 2. The newly insured are more likely to report fair or poor health (17.4 percent) than adults who had coverage for the full year at the time of the monitoring survey (11.8 percent). 3. The newly insured population doesn't have a strong connection to the healthcare system, with 35.7 percent reporting they didn't have a usual source of care. Additionally, 47.9 percent said it had been a year or more since their last routine checkup. By contrast, 18.9 percent of full-year insured adults at the time of the survey were without a usual source of care, and 30.8 percent hadn't undergone a routine checkup in the previous year. n SUBSCRIBE TODAY! Becker's Hospital Review CEO Report E-Weekly To subscribe to the FREE E-Weekly, visit www.BeckersHospitalReview.com and click on the "E-Weekly" tab or call (800) 417-2035

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