A device category economic model of electrosurgery technologies across procedure types: a U.S. hospital budget impact analysis.

AIMS: The electrosurgical technology category is used widely, with a diverse spectrum of devices designed for different surgical needs. Historically, hospitals are supplied with electrosurgical devices from several manufacturers, and those devices are often evaluated separately; it may be more efficient to evaluate the category holistically. This study assessed the health economic impact of adopting an electrosurgical device-category from a single manufacturer. METHODS: A budget impact model was developed from a U.S. hospital perspective. The uptake of electrosurgical devices from EES (Ethicon Electrosurgery), including ultrasonic, advanced bipolar, smoke evacuators, and reusable dispersive electrodes were compared with similar MED (Medical Energy Devices) from multiple manufacturers. It was assumed that an average hospital performed 10,000 annual procedures 80% of which involved electrosurgery. Current utilization assumed 100% MED use, including advanced energy, conventional smoke mitigation options (e.g. ventilation, masks), and single-use disposable dispersive electrode devices. Future utilization assumed 100% EES use, including advanced energy devices, smoke evacuators (i.e. 80% uptake), and reusable dispersive electrodes. Surgical specialties included colorectal, bariatric, gynecology, thoracic and general surgery. Systematic reviews, network meta-analyses, and meta-regressions informed operating room (OR) time, hospital stay, and transfusion model inputs. Costs were assigned to model parameters, and price parity was assumed for advanced energy devices. The costs of disposables for dispersive electrodes and smoke-evacuators were included. RESULTS: The base-case analysis, which assessed the adoption of EES instead of MED for an average U.S. hospital predicted an annual savings of $824,760 ($101 per procedure). Savings were attributable to associated reductions with EES in OR time, days of hospital stay, and volume of disposable electrodes. Sensitivity analyses were consistent with these base-case findings. CONCLUSIONS: Category-wide adoption of electrosurgical devices from a single manufacturer demonstrated economic advantages compared with disaggregated product uptake. Future research should focus on informing comparisons of innovative electrosurgical devices.

Efficiency and profitability in US not-for-profit hospitals.

This article examines the relationship between hospital profitability and efficiency. A cross-section of 1317 U.S. metropolitan, acute care, not-for-profit hospitals for the year 2015 was employed. We use a frontier method, stochastic frontier analysis, to estimate hospital efficiency. Total margin and operating margin were used as profit variables in OLS regressions that were corrected for heteroskedacity. In addition to estimated efficiency, control variables for internal and external correlates of profitability were included in the regression models. We found that more efficient hospitals were also more profitable. The results show a positive relationship between profitability and size, concentration of output, occupancy rate and membership in a multi-hospital system. An inverse relationship was found between profits and academic medical centers, average length of stay, location in a Medicaid expansion state, Medicaid and Medicare share of admissions, and unemployment rate. The results of a Hausman test indicates that efficiency is exogenous in the profit equations. The findings suggest that not-for-profit hospitals will be responsive to incentives for increasing efficiency and use market power to increase surplus to pursue their objectives.

Predictive Hiring to Maintain Excellence in Patient Care.

OBJECTIVE: The purpose of this research study was to design and pilot a predictive hiring model to improve the hospital's operational vacancy rate and reduce premium pay expenses. BACKGROUND: According to Purcell, the average nursing turnover rate is at 18.2%, and the new-graduate nurse turnover rate is higher at 35%. With turnover rates high for nurses, the importance of recruiting, hiring, and training the new nurse needs to be completed as soon as possible. Often, a nurse manager cannot interview and hire into a position until it is vacated. Premium pay including overtime is typically used to cover the time from the position being vacated until the next nurse is trained. METHODS: This was a pretest/posttest design with a predictive hiring model intervention. The intervention was a 3-pronged approach that consisted of a strategy for recruiting graduate nurses, hiring to operation vacancy rates, and utilizing a predictive hiring method. Operational vacancy is a calculation to determine if a department has the right amount of hired labor available to work scheduled shifts without having to routinely rely on agency nurses and/or premium pay. These are people ready to work. RESULTS: The hospital significantly decreased premium pay and eliminated the use of agency nurses by implementing a predictive hiring model tailored to the department's operational vacancy. CONCLUSIONS: A predictive model is a useful vehicle in assisting nurse managers to plan and replace positions more quickly. The model needs continued testing to support application beyond the testing site.

The Privatization of Public Hospitals: Its Impact on Financial Performance.

This study examined the effects of public hospitals' privatization on financial performance. We used a sample of nonfederal acute care public hospitals from 1997 to 2013, averaging 434 hospitals per year. Privatization was defined as conversion from public status to either private not-for-profit (NFP) or private for-profit (FP) status. Financial performance was measured by operating margin (OM) and total margin (TM). We used hospital level and year fixed effects linear panel regressions with nonlagged independent and control variables (Model 1), lagged by 1 year (Model 2), and lagged by 2 years (Model 3). Privatization to FP was associated with 17% higher OM (Model 2) and 9% higher OM (Model 3), compared with 3%, 4%, and 6% higher OM for privatization to NFP for all three Models, respectively. Privatization to FP was associated with 7% higher TM (Model 2) and privatization to NFP was associated with 2% higher TM (Model 3).

Fenestrated endovascular aneurysm repair is financially viable at a high-volume medical center with positive hospital contribution margins and physician payment.

OBJECTIVE: To examine hospital finances and physician payment associated with fenestrated endovascular aneurysm repair (FEVAR) for complex aortic disease at a high-volume center and to compare the costs and reimbursements for FEVAR with open repair, and their trends over time. METHODS: Clinical and financial data were collected retrospectively from electronic medical and administrative records. Data for each patient included inpatient and outpatient encounters 3 months before and 12 months after the primary aneurysm operation. RESULTS: Between 2007 and 2017, 157 and 71 patients were treated with physician-modified endograft (PMEG) and Cook Zenith Fenestrated (ZFEN) repair, respectively. Twenty-one patients who were evaluated for FEVAR underwent open repair instead. The 228 FEVAR patients provided a total positive contribution margin (reimbursements minus direct costs) of $2.65 million. The index encounter (the primary aneurysm operation and hospitalization) accounted for the majority (90.6%) of the total contribution margin. The largest component (50.3%) of direct cost for FEVAR from the index encounter was implant/graft expenses. The average direct costs for FEVAR and for open repair from the index encounter were $34,688 and $35,020, respectively. The average contribution margins for FEVAR and for open repair were approximately $10,548 and $21,349, respectively, attributable to differences in reimbursement. The average direct cost for FEVAR trended down over time as cumulative experience increased. Average reimbursement for FEVAR increased after Centers for Medicare and Medicaid Services approved payments with the Investigational Device Exemption (IDE) trial for PMEG in 2011, and a new technology add-on payment for ZFEN in 2012. These factors transitioned the average contribution margin from negative to positive in 2012. The average physician payments for PMEG increased from $128 to $5848 after the start of the IDE trial. The average physician payments for ZFEN and for open repair between 2011 and 2017 were $7597 and $7781, respectively. CONCLUSIONS: FEVAR can be performed at a high-volume medical center with positive contribution margins and with comparable physician payments to open repair. At this institution, hospital reimbursement and physician payments improved for PMEG with participation in an IDE trial, while hospital direct costs decreased for both PMEG and ZFEN with accumulated experience.

Do hospitals respond to decreasing prices by supplying more services?

Regulated prices are common in markets for medical care. We estimate the effect of changes in regulated reimbursement prices on volume of hospital care based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement-with increasing prices for some hospitals and decreasing prices for others-without directly affecting the relative prices for different groups of patients or types of treatment. Based on administrative data, we find that hospitals react to increasing prices by decreasing the service supply and to decreasing prices by increasing the service supply. Moreover, we find some evidence that volume changes for hospitals with different price changes are nonlinear. We interpret our findings as evidence for a negative income effect of prices on volume of care.

Collaboration, Not Calculation: A Qualitative Study of How Hospital Executives Value Hospital Medicine Groups.

BACKGROUND: Hospital medicine groups (HMGs) typically receive financial support from hospitals. Determining a fair amount of financial support requires negotiation between HMG and hospital leaders. As the hospital medicine care model evolves, hospital leaders may regularly challenge HMGs to demonstrate the financial value of activities that do not directly generate revenue. OBJECTIVE: To describe current attitudes and beliefs of hospital executives regarding the value of contributions made by HMGs. DESIGN: Thematic content analysis of key informant interviews. PARTICIPANTS: Twenty-four healthcare institutional leaders, including hospital presidents, chief medical officers, chief executive officers, and chief financial officers. Participants comprised a diverse sample from all regions in the United States, including rural, suburban, and urban locations, and academic and nonacademic institutions. RESULTS: Executives highly valued hospitalist groups that demonstrate alignment with hospital priorities, and often used this concept to summarize the HMG's success across several value domains. Most executives evaluated only a few key HMG metrics, but almost no executives reported calculating the HMG return on investment by summing pertinent quantitative contributions. Respondents described an evolving concept of hospitalist value and believed that HMGs generate substantial value that is difficult to measure financially. CONCLUSIONS: Hospital executives appear to make financial support decisions based on a small number of basic financial or care quality metrics combined with a subjective assessment of the HMG's broader alignment with hospital priorities. HMG leaders should focus on building relationships that facilitate dialog about alignment with hospital needs.

Conditional Financing of Drugs in the Netherlands: Past, Present, and Future-Results From Stakeholder Interviews.

BACKGROUND: Conditional financing (CF) of hospital drugs was implemented in the Netherlands as a form of managed entry agreements between 2006 and 2012. CF was a 4-year process comprising 3 stages: initial health technology assessment of the drug (T = 0), conduct of outcomes research studies, and reassessment of the drug (T = 4). OBJECTIVES: To analyze stakeholder experiences in implementing CF in practice. METHODS: Public and private stakeholders were approached for participation in stakeholder interviews through standardized email invitations. An interview guide was developed to guide discussions that covered the following topics: perceived aims of CF, functioning of CF, impact of CF, and conclusions and future perspectives. Extensive summaries were generated for each interview and subsequently used for directed content analysis. RESULTS: Thirty stakeholders were interviewed. Differences emerged among the stakeholders on the perceived aims of CF. Conversely, there was some agreement among stakeholders on the shortcomings in the functioning of CF, the positive impact of CF on the Dutch healthcare setting, and improvement points for CF. CONCLUSIONS: Despite stakeholders' belief that CF either did not meet its aims or only partially did so, there was agreement on the need for new policy to address the same aims of CF in the future. Nevertheless, stakeholders diverged on whether CF should be improved on the basis of learnings identified and reintroduced into practice or replaced with new policy schemes.

Hospitals' use of hospitalists: Implications for financial performance.

BACKGROUND: Hospitalists, or physicians specializing in hospital-based practice, have grown significantly since they were first introduced in the United States in the mid-1990s. Prior studies on the impact of hospitalists have focused on costs and length of stay. However, there is dearth of research exploring the relationship between hospitals' use of hospitalists and organizational performance. PURPOSE: Using a national longitudinal sample of acute care hospitals operating in the United States between 2007 and 2014, this study explores the impact of hospitalists staffing intensity on hospitals' financial performance. METHODOLOGY: Data sources for this study included the American Hospital Association Annual Survey, the Area Health Resources File, and the Centers for Medicare & Medicaid Services' costs reports and Case Mix Index files. Data were analyzed using a panel design with facility and year fixed effects regression. RESULTS: Results showed that hospitals that switched from not using hospitalists to using a high hospitalist staffing intensity had both increased patient revenues and higher operating costs per adjusted patient day. However, the higher operating costs from high hospitalist staffing intensity were offset by increased patient revenues, resulting in a marginally significant increase in operating profitability (p < .1). PRACTICE IMPLICATIONS: These findings suggest that the rise in the use of hospitalists may be fueled by financial incentives such as increased revenues and profitability in addition to other drivers of adoption.

Doing well by doing good: Evaluating the influence of patient safety performance on hospital financial outcomes.

BACKGROUND: As financial pressures on hospitals increase because of changing reimbursement structures and heightened focus on quality and value, the association between patient safety performance and financial outcomes remains unclear. PURPOSE: The purpose of this study is to investigate if hospitals with higher patient safety performance are associated with higher levels of profitability than those with lower safety performance. METHODOLOGY/APPROACH: Using multinomial logistic regression, we analyzed data from the spring 2014 Leapfrog Hospital Safety Score and the 2014 American Hospital Association to determine the association between Leapfrog Hospital Safety Score performance and three dimensions of organizational profitability: operating margin, net patient revenue, and operating income. RESULTS: Our findings suggest that improved hospital safety scores are associated with a relative risk of being in the top versus bottom quartile of financial performance: 5.41 times greater (p < .001) for operating margin, 10.98 times greater (p < .001) for net patient revenue, and 4.03 times greater (p < .001) for operating income. PRACTICE IMPLICATIONS: Our findings suggest that improved patient safety performance, as evaluated within the Leapfrog Hospital Safety Score, is associated with improved financial performance at the hospital level. Targeted focus on patient safety may allow hospitals to improve financial performance, maximize scarce resources, and generate additional capital to continue to positively evolve care.

Taxes, bankruptcy costs, and capital structure in for-profit and not-for-profit hospitals.

About 60% of the US hospitals are not-for-profit and it is not clear how traditional theories of capital structure should be adapted to understand the borrowing behavior of not-for-profit hospitals. This paper identifies important determinants of capital structure taken from theories describing for-profit firms as well as prior literature on not-for-profit hospitals. We examine the differential effects these factors have on the capital structure of for-profit and not-for-profit hospitals. Specifically, we use a difference-in-differences regression framework to study how differences in leverage between for-profit and not-for-profit hospitals change in response to key explanatory variables (i.e. tax rates and bankruptcy costs). The sample in this study includes most US short-term general acute hospitals from 2000 to 2012. We find that personal and corporate income taxes and bankruptcy costs have significant and distinct effects on the capital structure of for-profit and not-for-profit hospitals. Specifically, relative to not-for-profit hospitals: (1) higher corporate income tax encourages for-profit hospitals to increase their debt usage; (2) higher personal income tax discourages for-profit hospitals to use debt; and (3) higher expected bankruptcy costs lead for-profit hospitals to use less debt. Over the past decade, the capital structure of for-profit hospitals has been more flexible as compared to that of not-for-profit hospitals. This may suggest that not-for-profit hospitals are more constrained by external financing resources. Particularly, our analysis suggests that not-for-profit hospitals operating in states with high corporate taxes but low personal income taxes may face particular challenges of borrowing funds relative to their for-profit competitors.

Processo de auditoria e faturamento de contas em hospital geral privado: um estudo de caso / Audit and account billing process in a private general hospital: a case study

Mapear, descrever e validar o processo de auditoria e faturamento de contas e recursos de glosas em um hospital geral, de grande porte, privado, foi o objetivo deste estudo. Pesquisa exploratória, descritiva, do tipo estudo de caso. Foram realizados momentos de observação não participante nos Setores de Auditoria Interna e de Recurso de Glosas do hospital visando o mapeamento dos processos objeto de estudo. Os dados obtidos foram validados por especialistas da área de auditoria de contas hospitalares, internos e externos ao hospital. Os processos, descritos e ilustrados na forma de três Fluxogramas, favorecem aos profissionais racionalizar as atividades e o tempo despendido no faturamento hospitalar evitando/minimizando a ocorrência de falhas e gerando resultados financeiros mais eficazes. O mapeamento, a descrição e a validação dos processos de auditoria e faturamento e recurso de glosas propiciaram maior visibilidade e legitimidade às ações desenvolvidas pelos enfermeiros auditores.

Our study aimed to map, describe and, validate the audit, account billing and billing reports processes in a large, private general hospital. An exploratory, descriptive, case report study. We conducted non-participatory observation moments in Internal Audit Sectors and Billing Reports from the hospital, aiming to map the processes which were the study objects. The data obtained was validated by internal and external audit specialists in hospital bills. The described and illustrated processes in three flow-charts favor professionals to rationalize their activities and the time spent in hospital billing, avoiding or minimizing the occurrence of flaws and, generating more effective financial results. The mapping, the description and the audit validation process and billing and, the billing reports propitiated more visibility and legitimacy to actions developed by auditor nurses.

Point-of-Care Ultrasound Work Flow Innovation: Impact on Documentation and Billing.

OBJECTIVES: To evaluate the impact that an innovative automated ultrasound (US) work flow, which allows for bedside performance of examination documentation and order placement, has on point-of-care US billing compared to ordering US examinations through an electronic medical record. METHODS: We conducted a retrospective review of point-of-care US billing data (March 2014-February 2016) for adult and pediatric emergency departments with an emergency medicine residency and a US fellowship. An innovative work flow with the ability to automate US billing and selectively transfer the images and reports for patient care examinations to an electronic medical record and picture archiving and communication system using the QPath US work flow solution (Telexy Healthcare, Maple Ridge, British Columbia, Canada) was implemented. The total number of examinations billed and percent increase in technical and professional revenue, excluding examinations performed by US fellows, before and after implementation of the automated work flow innovation were determined. RESULTS: After implementation of our automated US work flow process, the number of patient care US examinations billed increased significantly due to completing documentation and immediate billing determination at the bedside. The increase in percent billing relative to total examinations was noted in both technical (32% to 61%; P < .0001) and professional (37% to 65%; P < .0001) billing components. In addition, there was a net increase in technical and professional fee revenue to 96% and 78%, respectively. CONCLUSIONS: The implementation of an innovative automated work flow to include bedside point-of-care US documentation, order placement, and the automated transfer of images and reports led to a significant increase in US billing revenue, documentation, and compliance.

US Hospitals Are Still Using Chargemaster Markups To Maximize Revenues.

Many hospital executives and economists have suggested that since Medicare adopted a hospital prospective payment system in 1985, prices on the hospital chargemaster (an exhaustive list of the prices for all hospital procedures and supplies) have become irrelevant. However, using 2013 nationally representative hospital data from Medicare, we found that a one-unit increase in the charge-to-cost ratio (chargemaster price divided by Medicare-allowable cost) was associated with $64 higher patient care revenue per adjusted discharge. Furthermore, hospitals appeared to systematically adjust their charge-to-cost ratios: The average ratio ranged between 1.8 and 28.5 across patient care departments, and for-profit hospitals were associated with a 2.30 and a 2.07 higher charge-to-cost ratio than government and nonprofit hospitals, respectively. We also found correlation between the proportion of uninsured patients, a hospital's system affiliation, and its regional power with the charge-to-cost ratio. These findings suggest that hospitals still consider the chargemaster price to be an important way to enhance revenue. Policy makers might consider developing additional policy tools that improve markup transparency to protect patients from unexpectedly high charges for specific services.

A More Detailed Understanding Of Factors Associated With Hospital Profitability.

To identify the characteristics of the most profitable US hospitals, we examined the profitability of acute care hospitals in fiscal year 2013, measured as net income from patient care services per adjusted discharge. Based on Medicare Cost Reports and Final Rule Data, the median hospital lost $82 for each such discharge. Forty-five percent of hospitals were profitable, with 2.5 percent earning more than $2,475 per adjusted discharge. The ten most profitable hospitals, seven of which were nonprofit, each earned more than $163 million in total profits from patient care services. Hospitals with for-profit status, higher markups, system affiliation, or regional power, as well as those located in states with price regulation, tended to be more profitable than other hospitals. Hospitals that treated a higher proportion of Medicare patients, had higher expenditures per adjusted discharge, were located in counties with a high proportion of uninsured patients, or were located in states with a dominant insurer or greater health maintenance organization (HMO) penetration had lower profitability than hospitals that did not have these characteristics. These findings can inform policy reforms, while providing a baseline against which to measure the impact of any subsequent reforms.

A Performance Analysis of Long-term Acute-Care Hospitals Owned by Large, Multistate Investor-Owned Companies.

This study provides a descriptive assessment of the operating performance of for-profit long-term acute-care hospitals owned by multistate, investor-owned companies (large FP LTCHs) compared with FP LTCHs owned by smaller FP companies (small FP LTCHs) and nonprofit LTCHs (NP LTCHs). The study used the Centers for Medicare & Medicaid Services cost report data for 290 LTCHs from 2010 through 2012 to compare the financial performance of large and small FP LTCHs and NP LTCHs. The study found that the median operating profit margin for large FP LTCHs was 8.06%, which was twice as high as that of the small FP LTCHs and NP LTCHs (4.78% and 2.80%, respectively). Larger size, serving a greater proportion of private pay and more complex patients and incurring lower operating expenses, including salary expenses, may account for the higher operating margin of the large FP LTCHs.

Relationship between hospital financial performance and publicly reported outcomes.

BACKGROUND: Hospitals that have robust financial performance may have improved publicly reported outcomes. OBJECTIVES: To assess the relationship between hospital financial performance and publicly reported outcomes of care, and to assess whether improved outcome metrics affect subsequent hospital financial performance. DESIGN: Observational cohort study. SETTING AND PATIENTS: Hospital financial data from the Office of Statewide Health Planning and Development in California in 2008 and 2012 were linked to data from the Centers for Medicare and Medicaid Services Hospital Compare website. MEASUREMENTS: Hospital financial performance was measured by net revenue by operations, operating margin, and total margin. Outcomes were 30-day risk-standardized mortality and readmission rates for acute myocardial infarction (AMI), congestive heart failure (CHF), and pneumonia (PNA). RESULTS: Among 279 hospitals, there was no consistent relationship between measures of financial performance in 2008 and publicly reported outcomes from 2008 to 2011 for AMI and PNA. However, improved hospital financial performance (by any of the 3 measures) was associated with a modest increase in CHF mortality rates (ie, 0.26% increase in CHF mortality rate for every 10% increase in operating margin [95% confidence interval: 0.07%-0.45%]). Conversely, there were no significant associations between outcomes from 2008 to 2011 and subsequent financial performance in 2012 (P > 0.05 for all). CONCLUSIONS: Robust financial performance is not associated with improved publicly reported outcomes for AMI, CHF, and PNA. Financial incentives in addition to public reporting, such as readmissions penalties, may help motivate hospitals with robust financial performance to further improve publicly reported outcomes. Reassuringly, improved mortality and readmission rates do not necessarily lead to loss of revenue. Journal of Hospital Medicine 2016;11:481-488. © 2016 Society of Hospital Medicine.