Posts Tagged ‘Non-profit hospitals’

Non-Profit Hospital Fundraising Soars in 2011

Monday, October 29th, 2012

According to a report from the Association for Healthcare Philanthropy (AHP), that is an 8.2 percent increase over the previous year.  The recent numbers continue a trend that started in 2010 when non-profit hospitals saw an eight percent rise in donations compared with 2009 to more than $8 billion.  Individual donations totaled nearly 60 percent of that amount, according to the AHP.  That was a significant increase over 2009, when donations fell 11 percent or $944 million.

During 2011, the cost of fundraising rose to 31 cents per dollar collected, a two percent rise over the previous year.  Healthcare systems raised $3.24 for every dollar they spent.  University-connected hospitals were the most prolific, with $7.58 raised for each dollar spent.   Approximately 19 percent of donated funds supported community benefits and charity care; an additional 8.6 percent funded training and research.

Annual giving was the primary fundraising source, followed by capital campaigns and special events.  Approximately 70 percent of money raised was in the form of cash contributions, while the remainder was pledges primarily in the form of bequests and planned gifts.

Susan J. Doliner, chair of the AHP board of directors, notes that “It’s interesting to see that the funds raised continue to be predominantly in support of construction and renovations, equipment and program operations.  Stay tuned, as this finding shines a light on the future gap in resources healthcare organizations will face as we begin the implementation of new healthcare financing models.”  The uptick in donations is good news for hospitals and healthcare systems working to accommodate millions of new patients when the Patient Protection and Affordable Care Act (ACA) becomes fully effective in 2014.  At present, healthcare systems are relying on capital campaigns to finance new construction rather than bank loans or other debt.   Only 17 percent are using debt, a decline from the 20 percent reported in 2010.  Another 42 percent are financing new facilities with cash reserves.  The use of tax-free bonds is at its lowest level in six years, comprising just 21 percent of new construction financing.

Non-Profit Hospitals Will Take Financial Hit If the Individual Mandate is Struck Down

Monday, May 14th, 2012

If the Supreme Court overturns the individual mandate that requires Americans to buy healthcare insurance that is contained in the Patient Protection and Affordable Care Act (ACA), non-profit hospitals will struggle with higher costs, according to Moody’s Investors Service.  The individual mandate has become the focus for legal attacks on the healthcare law.  It “would result in a significant reduction in uncompensated care delivered by hospitals” and reduce “utilization of expensive emergency room services,” the rating agency said.

“If the Supreme Court overturns the individual mandate, the private health insurance market would likely weaken under the unbalanced weight of strict provisions to cover all those who seek insurance without the counterbalancing benefit of a new, largely healthy, population segment that would be provided under the mandate,” Moody’s said.  “This scenario could become untenable for many insurers and hospitals, as costs would rise but revenues would not.”

There are additional challenges to non-profit hospitals in the ACA, specifically cuts in reimbursement rates for Medicare and reduction of funds paid to hospitals that serve a disproportionate share of Medicaid recipients, Moody’s said.  “Removing the mandate would make the negative features of reform loom much larger.”  Moody’s said the federal government could turn to a voucher system in which individuals would receive public help for them to buy health insurance, but the results for non-profits hospitals “would be more complex and hard to foresee.”

This is bad news because by a nearly five-to-one margin, hospitals expect the ACA to shrink their revenues. The result suggests that hospital executives are having second thoughts about the deal they made with the Obama administration in exchange for supporting the healthcare overhaul will help them weather the law’s financial repercussions.

According to a recent poll, 55 percent of hospitals and health systems anticipate falling revenues as a result of the law, while 12 percent expect an increase.  Twenty-eight percent were unsure of the law’s effect on revenue, indicating continued concern in the industry over the changes wrought by healthcare reform.  Hospital executives agreed to give up $155 billion in government payments over 10 years in a deal to cap costs borne by the industry as a result of the ACA.  The agreement followed a similar agreement with pharmaceutical companies and enabled the reform.  Two crucial hospital groups — the American Hospital Association and the Federation of American Hospitals — backed the law.  “Hospitals have acknowledged that significant healthcare savings can be achieved by improving efficiencies, realigning incentives to emphasize quality care instead of quantity of procedures,” Vice President Joe Biden said at the time.  “Today’s announcement, I believe, represents the essential role hospitals play in making reform a reality.”

“Hospital and health systems’ financial health has a direct impact on the benefits offered to their employees,” said Maureen Cotter, a senior principal at HighRoads, which took the poll.   “Even though 70 percent of those surveyed stated that they are committed to providing coverage in the long term, and no organizations have plans to discontinue coverage now or in the future, the coverage provided may take a new shape,” Cotter said.

There’s even more bad news in the fact that Howard Dean, a physician who formerly was chairman of the Democratic National Committee, a 2004 presidential candidate and governor of Vermont thinks that the high court will declare the mandate unconstitutional.  Dean believes that Justice Anthony Kennedy’s swing vote will side with the conservative justices when it comes to the individual mandate.  “I do believe that it’s likely the individual mandate will be declared unconstitutional.  Kennedy will probably side with the four right-wing justices. The question is going to be, is this individual mandate question, can that be considered separately from the rest of the bill?  And I think it will be.”

Dean also said the ACA can remain in place without the mandate.  “It’s definitely not necessary for the bill to succeed,” Dean said.  “It was mainly put in by academics who built the program for Governor Romney in Massachusetts, they had did it there, and for insurance companies who will benefit from extra customers.”

According to Dean, “The number of so-called free riders — people who will refuse to get insurance until they get sick — is going to be very, very small.”  Dean noted that the actual benefit of the individual mandate is “relatively small.  Everyone is a libertarian in America, whether Democratic, Republican or independent.  They don’t like to be told what to do by government.”

Large Arizona Healthcare System Taking a Close Look at New Reimbursement Models

Wednesday, January 26th, 2011

Arizona’s second largest healthcare system – Banner Health, which employs 28,000 – is struggling to save jobs in the face of up to $100 million in 2011 cuts to reimbursement from the Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid program.

This is the opinion of Peter S. Fine, FACHE, President and CEO of Banner Health in a recent op-ed piece in the Arizona Republic. According to Fine, “Arizona’s elected officials continue to struggle with a massive state budget deficit that is primarily made up of healthcare, education and corrections.  I do not envy their job as there are no pain-free options.  Our objective will be to stay ahead of further possible cuts to AHCCCS by the state Legislature and subsequent reductions in reimbursements from AHCCCS to deal with these cuts.”

Fine notes that non-profit hospitals must act when reimbursements are cut or threatened – whether the reductions come from government or private payers.  “In challenging economic times, healthcare organizations that place themselves into a weakened position as a result of inaction, tepid actions or even actions that come too late to make a difference, are organizations in which job security is at great risk,” Fine wrote.

Banner Health is in discussions with private insurers to create new care and reimbursement models.  Typically, these are collaborative efforts where reimbursement is shared by hospitals, doctors and other providers.  The goal is to cut costs by reducing hospital admissions through prevention or cutting hospital re-admissions by better patient management.  “This model is called an Accountable Care Organization (ACO), and it incentivizes insurers, hospitals, physicians and other healthcare providers to work more collaboratively to ensure a higher quality of care at a reduced cost.  Doubtless, there will be those who will decry ACOs as a by-product of healthcare reform and therefore unworthy of consideration.  However, ACOs and similar collaborative models are moving forward whether healthcare reform is implemented or not.”