Maryland's Global Budget Revenue Program: Impact on Neonatal Intensive Care Unit Admissions and Infant Mortality.

BACKGROUND: In 2014, Maryland implemented the Global Budget Revenue (GBR) program to reduce unnecessary hospital utilization and contain spending. Little is known about its impact on pediatric health outcomes and high-cost services that are primarily financed by payers other than Medicare. OBJECTIVE: The aim was to examine the impact of the GBR program on neonatal intensive care unit (NICU) admission and infant mortality. RESEARCH DESIGN: We conducted a difference-in-differences analysis comparing changes of NICU admissions and infant mortality in Maryland with changes in 20 comparison states (including DC), before and after implementation of the GBR program. Effects were estimated for all infants and for risk groups defined by birthweight and gestation. SUBJECTS: A total of 11,965,997 newborns in Maryland and the comparison states was identified using US birth certificate data from 2011 to 2017. MEASURES: NICU admissions, the infant mortality rate, and the neonatal mortality rate. RESULTS: The GBR program was associated with a 1.26 percentage points (-16.8%, P=0.03) decline in NICU admissions over three full years of implementation. Reductions were driven by fewer admissions among moderately low to normal birthweight (1500-3999 g) and moderately preterm to term (32-41 wk) infants. The effects for very-low birthweight and very preterm infants were small and not statistically precise. There was no significant change in infant or neonatal mortality rates. CONCLUSIONS: Maryland's hospitals reacted to the GBR program by reducing NICU services for infants that did not have clear observed clinical need. Our results suggest that GBR constrained high-cost services, without adversely affecting infant mortality.

Community Benefit Spending Among North Carolina's Tax-Exempt Hospitals After Performing Community Health Needs Assessments.

CONTEXT: As of March 23, 2012, the Internal Revenue Service (IRS) requires tax-exempt hospitals to conduct Community Health Needs Assessment (CHNA) every 3 years to incentivize hospitals to provide programs responsive to the health needs of their communities. OBJECTIVE: To examine the distribution and variation in community benefit spending among North Carolina's tax-exempt hospitals 2 years after completing their first IRS-mandated CHNA. DESIGN: Cross-sectional study using secondary analysis of published community benefit reports. Community benefit was categorized on the basis of North Carolina Hospital Association's community benefit reporting guidelines. Multiple regression analysis using generalized linear model was used to examine the variation in community benefit spending among study hospitals considering differences in hospital-level and community characteristics. SETTING: Fifty-three private, nonprofit hospitals across North Carolina. MAIN OUTCOME MEASURE: Dollar expenditures as a percentage of operating expenses of the 2 categories of community benefit spending: patient care financial assistance and community health programs. RESULTS: Study hospitals' aggregate community benefit spending was $2.6 billion, 85% of which was in the form of patient care financial assistance, with only 0.7% of total spending allocated to community-building activities such as affordable housing, economic development, and environmental improvements. On average, the study hospitals' community benefit spending was equivalent to 14.6% of operating expenses. Hospitals with 300 or more beds provided significantly higher investments in community health programs as a percentage of their operating expenses than hospitals with 101 to 299 beds (P = .03) or hospitals with 100 or fewer beds (P = .04). Access to care was not associated with patient care financial assistance (P = .81) or community health programs expenditures (P = .94). CONCLUSIONS: The study hospitals direct most of their community benefit expenditures to patient care financial assistance (individual welfare) rather than population health improvement initiatives, with virtually no investments in community-building activities that address socioeconomic determinants of health.

State Laws and Nonprofit Hospital Community Benefit Spending.

OBJECTIVE: To determine the association of state laws on nonprofit hospital community benefit spending. DESIGN: We used multivariate models to estimate the association between different types of state-level community benefit laws and nonprofit hospital community benefit spending from tax filings. SETTING: All 50 US states. PARTICIPANTS: A total of 2421 nonprofit short-term acute care hospital organizations that filled an internal revenue service Form 990 and Schedule H for calendar during years 2009-2015. RESULTS: Between 2009 and 2015, short-term acute care hospitals spent an average of $46 billion per year in total, or $20 million per hospital on community benefit activities. Exposure to a state-level community benefit law of any type was associated with an $8.42 (95% confidence interval: 1.20-15.64) per $1000 of total operating expense greater community benefit spending. Spending amounts and patterns varied on the basis of the type of community benefit law and hospital urbanicity. CONCLUSIONS: State laws are associated with nonprofit hospital community benefit spending. Policy makers can use community benefit laws to increase nonprofit hospital engagement with public health.

Accounting Basics Part 4: Net Present Value.

MaKing and justitying capital expenditures can be a difficult part of a supervi- sory or managerial position. Understanding more advanced accounting tools for justifying these expenditures, like Internal Rate of Return (IRR) and Net Present Value (NPV), can improve the chances of receiving necessary funding. NPV avoids the weaknesses of the IRR method by allowing decision makers to specify when cash flows will occur instead of assuming that net cash flows will be equal each year ofa project. Taking the time to learn basic account- ing definitions and tools can improve your ability to manage and provide greater opportunities to help patients, staff, and the community.

Accounting Basics Part 3: Time Value and Internal Rate of Return.

Understanding the principles behind the time value of money can help individuals succeed in both business and personal long-term planning. The Internal Rate of Return (IRR) method provides a straightforward way to analyze long-term financial decisions. The result, the project's IRR, is a simple percentage that is easy to explain and compare with the results from other projects. When considering multiple investments, it is relatively simple to rank them by their IRRs, make minor adjustments to the list for qualitative issues, and invest down the list until the funds for the year have been spent.

MRI Upgrade: A Case Study in Germany.

The purpose of this work was a cost analysis for the acquisition of two new MRI devices in a university hospital. The costs of a classical exchange (new purchase) were compared to those of a system upgrade. Taking the local circumstances into account, up to $121,000 could be saved with. the system upgrade for one MRI system compared to a classic exchange. Upgrades of the 1.5 and 3 Tesla systems were performed within 15 working days without any problems or restrictions. The number of examinations per day could be increased from 13.4 to 16.2 using the 1.5T system and from 14.1 to 15.9 using the 3T. The upgrade possibility of an old MRI device represents an economically attractive approach, which allows access to the latest state-of-the-art MRI technology while respecting the limited economic resources of the department.

Time-Driven Activity-Based Costing in Emergency Medicine.

Value in emergency medicine is determined by both patient-important outcomes and the costs associated with achieving them. However, measuring true costs is challenging. Without an understanding of costs, emergency department (ED) leaders will be unable to determine which interventions might improve value for their patients. Although ongoing research may determine which outcomes are meaningful, an accurate costing system is also needed. This article reviews current costing mechanisms in the ED and their pitfalls. It then describes how time-driven activity-based costing may be superior to these current costing systems. Time-driven activity-based costing, in addition to being a more accurate costing system, can be used for process improvements in the ED.

[Trends in Health Financing: The Move from Passive to Strategic Purchasing in Middle- and Low-Income Countries].

Strategic purchasing is not new, rather it first started in Western Europe in the 1960s, as an approach to improving health system responsiveness, as well as for them more effective matching of supply and demand. In the 1960s some Western European facilities were affected by empty beds, others by overcrowding. Doctors were not showing up for work, due to the establishment of dual practice. There were consumer queues, and complaints that providers were inhumane. There was a shift purchasers in High Income Countries like Organization and Economic Cooperation for Development (OECD) countries, from paying for inputs to outputs and now outcomes. These challenges are yet to be overcome by non-OECD countries. In this article, we discuss the shift towards strategic purchasing in Middle Income Countries (MICs) and Lower Middle Income Countries (MLICs). There are successful models in both categories of emerging markets. The article begins with an overview of health funding, then focuses on the allocation of funds and strategic purchasing.

Accounting Basics Part 1: Application in Healthcare.

Accounting terminology and methods are essential parts of management and can be used to improve the efficacy of communication with other managers and executives. While learning these terms and methods can seem daunting, the rewards are well worth the effort. Accounting terminology can seem almost as complex as medical terminology: revenues, expenses, iRR, net pres- ent value, and profit. However, manag- ers and supervisors don't need to understand all of those terms, just those most commonly used. Once those basics have been mastered, they will provide sufficient background to understand the many forms, information requests, and questions accounting and finance lead- ers will provide and request. Imaging supervisors and directors can use these terms and methods to success- fully communicate with management about resources needed and their impact on the community and the bottom line of the organization. The reward for the time spent is well worth the effort.

Pricing commodity outpatient procedures assessing the impact.

Hospitals should carefully consider all relevant factors before choosing to lower prices and payments for certain outpatient commodity services in an effort to remain competitive in their market. Key steps to take in the evaluation process include: Determining current profitability. Assessing profitability by payer class. Understanding overall cost positions. Assessing the relative payment terms of current commercial contracts. Determining the net revenue effect of proposed changes.

The impact of global budgeting on treatment intensity and outcomes.

This paper investigates the effects of global budgets on the amount of resources devoted to cardio-cerebrovascular disease patients by hospitals of different ownership types and these patients' outcomes. Theoretical models predict that hospitals have financial incentives to increase the quantity of treatments applied to patients. This is especially true for for-profit hospitals. If that's the case, it is important to examine whether the increase in treatment quantity is translated into better treatment outcomes. Our analyses take advantage of the National Health Insurance of Taiwan's implementation of global budgets for hospitals in 2002. Our data come from the National Health Insurance's claim records, covering the universe of hospitalized patients suffering acute myocardial infarction, ischemic heart disease, hemorrhagic stroke, and ischemic stroke. Regression analyses are carried out separately for government, private not-for-profit and for-profit hospitals. We find that for-profit hospitals and private not-for-profit hospitals did increase their treatment intensity for cardio-cerebrovascular disease patients after the 2002 implementation of global budgets. However, this was not accompanied by an improvement in these patients' mortality rates. This reveals a waste of medical resources and implies that aggregate expenditure caps should be supplemented by other designs to prevent resources misallocation.

Does a global budget superimposed on fee-for-service payments mitigate hospitals' medical claims in Taiwan?

Taiwan's global budgeting for hospital health care, in comparison to other countries, assigns a regional budget cap for hospitals' medical benefits claimed on the basis of fee-for-service (FFS) payments. This study uses a stays-hospitals-years database comprising acute myocardial infarction inpatients to examine whether the reimbursement policy mitigates the medical benefits claimed to a third-payer party during 2000-2008. The estimated results of a nested random-effects model showed that hospitals attempted to increase their medical benefit claims under the influence of initial implementation of global budgeting. The magnitudes of hospitals' responses to global budgeting were significantly attributed to hospital ownership, accreditation status, and market competitiveness of a region. The results imply that the regional budget cap superimposed on FFS payments provides only blunt incentive to the hospitals to cooperate to contain medical resource utilization, unless a monitoring mechanism attached with the payment system.

How Cleveland Clinic used TDABC to improve value.

Cleveland Clinic partnered with Harvard Business School to conduct a pilot project to explore the differences between time-driven activity-based costing (TDABC) and relative value unit costing. The goal was to determine whether TDABC could improve the accuracy of cost information and identify value-improvement opportunities for two types of heart-value procedures. Using TDABC, leaders gained a detailed look into process steps that could be consolidated, reduced, or performed with a lower cost mix of personnel.

Making process improvement 'stick'.

To sustain gains from a process improvement initiative, healthcare organizations should: Explain to staff why a process improvement initiative is needed. Encourage leaders within the organization to champion the process improvement, and tie their evaluations to its outcomes. Ensure that both leaders and employees have the skills to help sustain the sought-after process improvements.

Total cost of ownership: the role of clinical engineering.

Hospitals often incur substantial hidden costs associated with service agreements that they enter into with original equipment manufacturers at the time of equipment purchase. Hospitals should perform an analysis of the total cost of ownership (TCO) of their organizations' medical equipment to identify opportunities for performance improvement and savings. The findings of the TCO analysis can point to areas where clinical engineering service management can be improved through investments in technology, training, and teamwork.

Sustainable risk management for an evolving healthcare arena.

A sustainable risk management approach includes the use of extensive scenario analyses to mitigate the risk of reduced revenues from changes in payment and volume. A successful risk management program helps organizations prioritize strategies for risks that are likely to have the biggest impact on their business. Continually strengthening controls and mitigating risks through a risk management program can help to build an effective security and compliance program.

The effect of activity-based financing on hospital length of stay for elderly patients suffering from heart diseases in Norway.

BACKGROUND: Whether activity-based financing of hospitals creates incentives to treat more patients and to reduce the length of each hospital stay is an empirical question that needs investigation. This paper examines how the level of the activity-based component in the financing system of Norwegian hospitals influences the average length of hospital stays for elderly patients suffering from ischemic heart diseases. During the study period, the activity-based component changed several times due to political decisions at the national level. METHODS: The repeated cross-section data were extracted from the Norwegian Patient Register in the period from 2000 to 2007, and included patients with angina pectoris, congestive heart failure, and myocardial infarction. Data were analysed with a log-linear regression model at the individual level. RESULTS: The results show a significant, negative association between the level of activity-based financing and length of hospital stays for elderly patients who were suffering from ischemic heart diseases. The effect is small, but an increase of 10 percentage points in the activity-based component reduced the average length of each hospital stay by 1.28%. CONCLUSIONS: In a combined financing system such as the one prevailing in Norway, hospitals appear to respond to economic incentives, but the effect of their responses on inpatient cost is relatively meagre. Our results indicate that hospitals still need to discuss guidelines for reducing hospitalisation costs and for increasing hospital activity in terms of number of patients and efficiency.

Accreditation of hospitals in Lebanon: is it a worthy investment?

OBJECTIVE: This study explores the views of Lebanese hospitals on the worthiness of accreditation vis-à-vis its associated expenses in addition to examining the type and source of financial investments incurred during the accreditation process. DESIGN: Observational cross-sectional design. PARTICIPANTS: All private short-stay hospitals registered with the Syndicate of Private Hospitals in Lebanon (110 hospitals). MAIN OUTCOME MEASURE: Hospital's views on the worthiness of accreditation in lieu of its associated expenses. Other measures explored included areas of expenditure increase and sources of expenses coverage for accreditation. RESULTS: Three-fifths of responding hospitals (63% response rate) considered accreditation as a worthy investment. Favorable views on accreditation were mostly related to its effect on enhanced quality and safety culture. Unfavorable views regarding the worthiness of accreditation investment were justified by absence of link with enhanced tariffs from payers (25.7%). All hospitals incurred increased expenses due to accreditation. Areas of highest increase included training of staff (95.7%), consultants' costs (80.0%) and infrastructure maintenance (77.1%). Most of the hospitals covered expenses through internal absorption (52%) or bank loans (45.7%). CONCLUSIONS: The financial burden of accreditation on hospitals has to be factored in the decision of its adoption at a national level, especially in developing countries.

Six sigma for revenue retrieval.

Deficiencies in revenue retrieval due to failures in obtaining charges have contributed to a negative bottom line for numerous hospitals. Improving documentation practices through a Six Sigma process improvement initiative can minimize opportunities for errors through reviews and instill structure for compliance and consistency. Commitment to the Six Sigma principles with continuous monitoring of outcomes and constant communication of results to departments, management, and payers is a strong approach to reducing the financial impact of denials on an organization's revenues and expenses. Using Six Sigma tools can help improve the organization's financial performance not only for today, but also for health care's uncertain future.