Apr 4, 2018 | Laboratory Hiring & Human Resources, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Management & Operations
Clinical laboratories may want to offset plunging patient lab specimens by increasing outreach business
Hospital admissions are in decline across the country and the trend is being blamed in part on the rising use of high-deductible health plans (HDHP). The implications for hospital-based clinical laboratories is that lower in-patient totals reduce the flow of patient lab specimens as well. This situation may encourage some hospital and health-system labs to increase their lab outreach business as a way to offset declining inpatient lab test volumes and help keep down overall average test costs.
Healthcare Dive, which named “changing patient admissions” its “Disruptor of the Year,” used data from America’s Health Insurance Plans (AHIP) annual surveys to show the admission rate trend that is causing hospital operators and health systems to rethink how they do business going forward.
“We are really talking about how providers are not taking in as much revenue as they are spending,” Healthcare Dive noted. “Hospitals are largely fixed cost businesses, and rising expenses have been outpacing admissions growth.”
Experts Claim the ‘Hand Writing Is on the Wall’
According to Healthcare Dive’s analysis of US hospital admissions, which used data from the American Hospital Association’s Annual Survey, hospital admissions peaked at 35.4 million in 2013, coinciding with the roll out of the Affordable Care Act. The total fell to 34.9 million in 2014, before rebounding slightly to 35.1 million in 2015. The 2016 survey, published in 2018, showed hospital admissions remaining relatively flat at approximately 35.2 million.
Paul Hughes-Cromwick (above), Co-Director, Sustainable Health Spending Strategies, Altarum in Ann Arbor, Mich., expects hospitals to be challenged by flat admission rates going forward. “Times are still pretty good, but the writing is on the wall for hospital operators,” he told Modern Healthcare. This will impact clinical laboratories owned by hospitals and health systems as well. Photo copyright: Long Beach Business Journal.)
Most experts place the blame for slumping patient admissions on HDHPs. Such plans, which are paired with a tax-advantaged health savings account, have enabled employers to shift initial medical costs to workers in exchange for lower monthly health insurance premiums. Nearly 20.2 million Americans were enrolled in HDHPs in 2016, up from 15.4 million in 2013 and far above the roughly one million plans in existence in 2005, the AHIP surveys revealed. HDHPs were first authorized by Congress in 2003.
Consumers Delaying or Opting Out of Healthcare
Faced with higher out-of-pocket medical costs, consumers are opting to postpone or forgo elective surgeries and procedures, which in turn is placing pressure on healthcare systems’ operating revenues.
According to Healthcare Dive, Community Health Systems experienced a 12% drop in operating revenue in the first nine months of fiscal year 2017, while HCA Healthcare and Tenet Healthcare dropped 6.7% and 3.8%, respectively.
J. Eric Evans, President of Hospital Operations, Tenet Healthcare (NYSE:THC), a 77-hospital chain, told Modern Healthcare, today’s consumers are spending their healthcare dollars differently.
“The more elective procedures, things like orthopedics, we see the softness,” Evans told Modern Healthcare. “So, we think that does play into the story of deductibles rising and changing behaviors.”
The challenges for not-for-profit hospital systems are no different. Modern Healthcare noted that the 14-hospital Indiana University Health system reported a 46% drop in operating income in the third quarter of FY 2017 on a year-over-year admission decline of 2%.
Healthcare Systems Rethinking Their Business Strategies
“Health systems en masse are reacting to shifting dynamics in healthcare utilization by throwing money and resources to lower cost settings, such as urgent care centers and freestanding emergency departments,” Healthcare Dive noted. Dark Daily has reported on this trend. (See, “From Micro-hospitals to Mobile ERs: New Models of Healthcare Create Challenges and Opportunities for Pathologists and Medical Laboratories,” May 26, 2017.) Health systems also are selling unprofitable hospitals and laying off or eliminating positions to cut costs. Tenet Healthcare, for example, is laying off 2,000 workers while selling eight of its US hospitals and all of its nine United Kingdom facilities, Modern Healthcare reported in January.
“We are seeing and are working with health systems to take out pretty significant amounts of cost out of their operations, both clinical and nonclinical, and setting targets like 15-20%, which is a transformative change,” Igor Belokrinitsky, Vice President and Partner at Strategy&, PricewaterhouseCoopers’ strategy consulting group, told Healthcare Dive in a 2017 interview.
Lower hospital in-patient volume means less clinical laboratory test orders. This, in turn, will result in increases in the average cost per inpatient test. Anatomic pathology groups and medical laboratory leaders who work in or service hospitals may wish to take proactive steps to boost test referrals from outpatient and outreach settings as a way to help keep down the lab’s average cost per test.
—Andrea Downing Peck
Related Information:
Disrupter of the Year: Softening Patient Admissions
Hospital Volumes Laid Low by High-Deductible Health Plans
How Hospitals Feel about AHCA’s Death, Future with ACA
2016 Survey of Health Savings Account-High Deductible Health Plans
Fast Facts on U.S. Hospitals, 2018
5 Things to Know about Tenet Healthcare’s Restructuring
From Micro-hospitals to Mobile ERs: New Models of Healthcare Create Challenges and Opportunities for Pathologists and Medical Laboratories
Sep 28, 2015 | Coding, Billing, and Collections, Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory Pathology, Laboratory Testing
As national health insurers push more risk to hospital systems and medical groups, many hospital administrators become more interested in establishing their own health insurance companies
New modes of provider reimbursement—such as bundled payments and budgeted payments—are motivating hospitals and health systems to reconsider their existing relationships with health insurers. Hospital administrators want to control the dollars they save by improving patient care, instead of allowing insurance companies to capture that money.
To accomplish these goals, more and more hospitals and health systems across the country are making one of three moves:
• Funding their own health plans;
• Partnering with health insurance companies; or,
• Buying health insurance companies.
As this trend gathers momentum, it will put the medical laboratories of hospitals in a much better position to regain access to patients. It can be expected that hospital administrators will include their own clinical laboratories and anatomic pathology providers in their own health insurance provider networks. (more…)
Jul 8, 2011 | Laboratory News, Laboratory Pathology
Meanwhile, financial pressures mean smaller budgets for hospital laboratories
When it comes to multi-hospital health systems, the biggest are getting bigger. But many health systems are not covering their costs. These were the findings from a recent annual survey of health systems by Modern Healthcare magazine. It confirms what pathologists and clinical laboratory directors see in many regional markets.
As we wrote in Dark Daily on June 29, three factors are driving this growth trend: federal healthcare reform, mandated spending on health information technology (HIT), and the economic contraction from 2007 to 2009 that pushed smaller hospitals to merge with larger health systems. This is the analysis reported by Modern Healthcare. (See Dark Daily, Modern Healthcare’sTop 10 Largest Health System Rankings also Reveal Nation’s Largest Hospital-Based Laboratories, June 29, 2011.)
(more…)
Aug 14, 2009 | Laboratory News, Laboratory Pathology
Clinical laboratories can play a role in two of these ten cost-cutting opportunities
Everyone in healthcare expects significant across-the-board cuts to reimbursement as healthcare reform moves forward. High profile targets for cost-cutting are imaging technologies and physician preference items (PPIs), which include expensive supplies and implant products, including stents, wires, pacemakers, and knee/hip replacement prosthetics.
Hospitals and health systems, in recognition of this major shift in national health policy, are scrambling to stay ahead of these economic and regulatory pressures. It is causing them to closely scrutinize operational costs and implement cost-cutting measures.
(more…)
Sep 29, 2008 | Laboratory News, Laboratory Pathology
As many as one-third of the nation’s uninsured qualify for public health programs and the answer to getting them insured may be as simple as educating these individuals about which health insurance programs are available to them! That should be big news for hospitals, health systems, and clinical laboratories that spend millions of dollars annually on uncompensated care for uninsured individuals each year.
About 34% of uninsured individuals qualify for public health programs but are not aware they are eligible, according to commentary from Phil Lebherz, Founder and Executive Director of the Foundation for Health Coverage Education in Modern Healthcare. These people are mostly the working poor, the elderly, and single parents of young children. But that’s not all! Another 32% of uninsured individuals-because they make enough money-could afford to purchase their own health coverage, but they are not informed enough to know the importance of health insurance. 14% of uninsured individuals are between jobs and may not know about the availability of COBRA or other programs.
Recognizing this opportunity to help uninsured obtain health coverage, some forward-thinking hospitals have teamed with non-profit organizations to utilize the Internet to explain viable options for health care to such individuals. The Foundation for Health Coverage Education was one of the first to reach out to hospitals to get them to help promote health insurance education online. Their site, coverageforall.org, gives consumers the opportunity to answer a 5-question quiz to figure out which health insurance options are available to them based on their state of residency. The data from the quiz can be re-used to start the enrollment process should the individual completing it want to enroll in a health insurance program.
For every 1% increase in the unemployment rate, another 1.1 million individuals become uninsured. The work of the Foundation for Health Coverage Education demonstrates that simple programs to educate uninsured patients have the potential to generate major benefits, and reduce the number of Americans who lack health insurance.
Finally, 34% (approximately 15 million) of the nation’s 45 million uninsured individuals qualify for the federal Medicaid program. Why are state and federal efforts to educate and enroll such people in these social safety net health programs failing to reach so many individuals? Could it be that, because of budget squeezes and spending fears, that our elected officials and program bureaucrats have huge financial and political disincentives to be more successful at identifying the insured and bringing them into such health programs as Medicaid? That certainly is a dimension to solving the nation’s uninsured problem that gets little attention by the intellectual class and the national media.
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Educating the uninsured
