Hospitals Flashcards
4 types of hospitals?
most common?
Non-profit (most common): ~60%, same over time
For-profit: increased over time
Public: city/state level operated, serving low-income/uninsured individuals (decreased over time
Non-community: federal, psych, long-term care
Hospital Trends
% of total spending: Hospital medical care has been _ over time
Beds: Rural vs Urban
Hospital size: Rural vs Urban
outpatient surgeries have been _ over time
number of beds per capita has been _ over time
the number of hospital admissions per capita has either _ or held steady
Hospital Trends
% of total spending: Hospital medical care has been decreasing over time
Beds: Rural < Urban
Hospital size: Rural < Urban
outpatient surgeries have been increasing over time
the number of beds per capita has been decreasing over time
the number of hospital admissions per capita has either decreased or held steady
2000s had an increase (and subsequent moratorium) in physician-owned specialty hospitals
Concerns?
2000s had an increase (and subsequent moratorium) in physician-owned specialty hospitals
Concerns?
- they are profiting off of the Medicare DRG payment system because some DRGs were more profitable than others
- The potential for a physician to direct the more profitable patients to their own physician-owned specialty hospitals
- direct the less profitable patients away to a community hospital
There has been a _ in the proportion of hospitals that are public hospitals over time, while there has been an _ in the proportion of hospitals that are for-profit, investor-owned hospitals
why?
There has been a decrease in the proportion of hospitals that are public hospitals over time, while there has been an increase in the proportion of hospitals that are for-profit, investor-owned hospitals
why?
Closures vs openings
- more closures than openings
Conversions
- public hospitals being converted to either nonprofit or for-profit hospitals
- nonprofit hospitals being converted to for-profit hospitals
Hospital length of stay has _.
WHY?
- Hospital length of stay has decreased
- WHY?
-
Technology: less-invasive/ new procedures
- shift some surgeries to outpatient
-
Medicare switch to DRG/IPPS
- switch from cost-based retrospective payments
- Private insurers’ use of capitation or managed care
-
Technology: less-invasive/ new procedures
US # of beds and cost compared to other countries
US # of beds and cost compared to other countries
- We have less beds, but spend more
- means we spend more per admission
Describe a Non-Profit hospital
Cost vs Revenue
Direct benefit of being non-profit (3 tax exemptions)
Indirect benefits (2)
the underlying goal of designating hospitals
Describe a Non-Profit hospital
- Non-profits are exempt from paying most taxes
Cost vs Revenue
- If revenue > cost, money is invested back into hospital
Direct benefit of being non-profit (3 tax exemptions)
- Exempt from paying _ taxes
- income taxes
- property taxes
- local sales tax
Indirect benefits (2)
- Can receive
- charitable donation
- lower-interest loans
The underlying goal of designating hospitals
- hospital’s forgone taxes are exceeded by its community benefit
Describe 3 types of community benefits for non-profits
Describe 3 types of community benefits for non-profits
- Charity care to uninsured
- unreimbursed costs for means-tested gov programs (difference from Medicaid/care and cost incurred)
- Subsidized health services
unreimbursed costs for means-tested government programs CONTROVERSY
Direct and indirect solution
unreimbursed costs for means-tested government programs CONTROVERSY
- Medicaid payments are slightly higher than Medicare payments now
- No unreimbursed cost for Medicaid
Direct solution
- alter Medicaid rates
indirectly
- making up for cost with non-profit tax emeption
Controversy about community benefit amount and forgone taxes
Controversy about community benefit amount and forgone taxes
- For-profit hospitals also provide these community benefits (though not as much as nonprofits)
- CBNP – CBFP > foregone taxes?
Possible solutions to community benefit controversy (3)
possible solutions
- require increases in nonprofit community benefits
- limit the number of non-profits by having the IRS grant fewer
- use the increased tax revenues to directly fund those benefits
Publics perspective on non profits
adv vs dis adv of community benefits
Advanatge:
- Community benefits achieved
disadvantage
- the level of community benefits aren’t actually high enough
knock on non-profit hospitals
community benefit
admins
size and stature?
- Level of community benefit similar to for-profit hospitals
- less accountability of administrators (no investors focusing on rate of return)
- Focused on size and stature of hospital and not on value (high tech services)
Why are there so many non-profits? (2)
Why are there so many non-profits? (2)
- 1900s reliance on charitable donations to serve the poor/dying
- a charitable mission was ingrained in most hospitals
-
1946 Hill-Burton Act: requirement to access construction and modernization funds
- had to have a charitable mission
Advantages of market competition (many small hospitals) (3)
Advantages of market competition (many small hospitals) (3)
- Lower prices less bargaining power (for private insurers)
-
Compete on quality of care rather than price
- fixed administered prices i.e DRGs
- Increased access to care – minimize travel time to a hospital
Advantages of market concentration (few large hospitals) (3)
-
Economies of scale (lower costs)
- hospitals becoming more efficient as they get larger
- Hospitals have “centers of excellence”
- experts concentrated in one location
- Reduction in the “medical arms race”
- duplication of capital-intensive services
- led to the passage of certificate of need laws
M&A Horizontal
M&A Vertical
What 2 periods saw a rise in M&A?
M&A Horizontal
- Hospitals coming together
M&A Vertical
- hospital buying a physicians office
What 2 periods saw a rise in M&A?
- 1990s in response to managed care (bargaining power)
- 2010s w/ ACA ACO Provision (easier to operate as an ACO w/ bigger)
Medicare payments to hospitals
negative margins?
Federal Medicare payments vs state Medicaid payments
Yield negative margins, Why?
- Prices below the costs incurred
Medicare (DRGs)/Medicaid (either DRGs, per diem, or FFS)
- federal Medicare program uses the Prospective Payment System DRGs
- State Medicaid programs have discretion in determining their payment rate/ model
Private insurance payments to hospitals?
Issue of price transparency for consumers?
Private insurance payments to hospitals?
- negotiated prices with a discount off of the “ charge master ” list
Issue of price transparency for consumers?
- HDHP/HSAs- Patients using their own money to purchase health care will become more cost-conscious
- there is too much info for them to be able to shop like informed consumers
Variation in Hospital Payments across the Three Main Payers
three main takeaways
- price comparison
- public vs total cost
- cost shifting
Variation in Hospital Payments across the Three Main Payers
three main takeaways
- at any point in time, private payers on ave. pay 30-40% more than Medicare, Medicare > Medicaid payments
- comparisons of 100% cost line and public payments showing public payments not covering cost
- increases in public payment rates associated with decreases in private payment rates aka cost-shifting
Uninsured charity care
American Hospital Association (AHA)’s guidelines:
Uninsured charity care
American Hospital Association (AHA)’s guidelines:
Patients under 100% FPL
- free care
Patients between 100% and 200% FPL
- public or private insurer’s price
Patients above 200% FPL
- hospital’s discretion
Maryland’s All payer Hospital Rate Setting System
All payers (private and public) pay _ _ for _ services; rate set by _ _ _ _ Comission
Includes _ for uninsured charity care pool (discontinued in 2014)
HSCRC determines _ budget for each hospital and CMS _ test which focuses on _
Maryland’s All payer Hospital Rate Setting System
All payers (private and public) pay same rate for hospital services; rate set by Health Services Cost Review Commission
Includes surcharge for uninsured charity care (discontinued in 2014)
HSCR determines global budget for each hospital and CMS waiver test which focuses on growth in all payer all hospital costs per beneficiary
- deviating from Medicare’s IPPS/DRG payments
