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Revenue Cycle Trends To Watch This Year

Posted on July 13, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Revenue cycle management is something of a moving target. Every time you think you’ve got your processes and workflow in line, something changes and you have to tweak them again. No better example of that was the proposed changes to E/M that came out yesterday. While we wait for that to play out, here’s one look at the trends influencing RCM strategies this year, according to Healthcare IT leaders revenue cycle lead Larry Todd, CPA.

Mergers

As healthcare organizations merge, many legacy systems begin to sunset. That drives them to roll out new systems that can support organizational growth. Health leaders need to figure out how to retire old systems and embrace new ones during a revenue cycle implementation. “Without proper integrations, many organizations will be challenged to manage their reimbursement processes,” Todd says.

Claims denial challenges

Providers are having a hard time addressing claims denials and documentation to support appeals. RCM leaders need to find ways to tighten up these processes and reduce denial rates. They can do so either by adopting third-party systems or working within their own infrastructure, he notes.

CFO engagement

Any technology implementation will have an impact on revenue, so CFOs should stay engaged in the rollout process, he says. “These are highly technical projects, so there’s a tendency to hand over the reins to IT or the software vendor,” notes Todd, a former CFO. “But financial executives need to stay engaged throughout the project, including weekly implementation status updates.”

Providers should form a revenue cycle action team which includes all the stakeholders to the table, including the CFO and clinicians, he says. If the CFO is involved in this process, he or she can offer critical executive oversight of decisions made that impact A/R and cash.

User training and adoption

During the transition from a legacy system to a new platform, healthcare leaders need to make sure their staff are trained to use it. If they aren’t comfortable with the new system, it can mean trouble. Bear in mind that some employees may have used the legacy system for many years and need support as they make the transition. Otherwise, they may balk and productivity could fall.

Outside expertise

Given the complexity of rolling out new systems, it can help to hire experts who understand the technical and operational aspects of the software, along with organizational processes involved in the transition. “It’s very valuable to work with a consulting firm that employs real consultants – people who have worked in operations for years,” Todd concludes.

3 Key Steps to Driving your Revenue Strategy

Posted on July 9, 2018 I Written By

The following is a guest blog post by Brad Josephson is the Director of Marketing and Communications at PMMC.

For healthcare providers struggling to accurately collect reimbursement, developing a revenue strategy based off a foundation of accuracy is the most efficient way to ensure revenue integrity throughout the revenue cycle.

Currently, many hospitals operate under multiple systems running for their different departments within the organization. This type of internal structure can threaten the accuracy of the analytics because data is forced to come into multiple systems, increasing the chances that the data will be misrepresented.

By maintaining revenue integrity, not only does it give hospitals assurance that the data they’ve collected is current and accurate, but it also provides invaluable leverage with the payer when it comes time to (re)negotiating payer contracts.

Let’s begin by starting from the ground up…

Here are the 3 steps needed for maintaining revenue integrity:

  • Creating a foundation backed by accurate analytics
  • Breaking down the departmental siloes
  • Preparing ahead of time for consumerism and price transparency

Accuracy Drives Meaningful Analytics

The first step toward maintaining revenue integrity is to assess whether your data is accurate. We know that accurate data drives meaningful analytics, essentially functioning as the engine of the revenue cycle.

And what happens when you stop taking care of the engine regularly and it no longer works properly? It not only costs you a lot of money to repair the engine, but you may also have to pay for other parts of the car that were damaged by the engine failure.

What if, however, you were able to visualize pie charts and bar graphs on your car’s dashboard that showed the current health of the engine to inform you when it requires a maintenance check?

You would be better informed about the current state of your engine and have a greater urgency to get the car repaired.

This same principle applies to healthcare organizations looking to increase the accuracy of their data to drive meaningful analytics. While some organizations struggle to draw valuable insight from pieces of raw data, data visualization tools are more efficient because it allows the user to see a complete dashboard with a drill-down capability to gain a deeper and clearer understanding of the implications of their data analytics.

Data visualization allows healthcare providers to quickly identify meaningful trends. Here are the 4 key benefits of implementing data visualization:

  • Easily grasp more information
  • Discover relationships and patterns
  • Identify emerging trends faster
  • Directly interact with data

Figure 1: Payer Dashboard

Removing Departmental Siloes  

While data visualization does generate helpful insight into current and future trends, it begins with storing the data in one integrated system so that different departments can easily communicate regarding the data.

System integration is crucial to maintaining revenue integrity because it dramatically lowers the likelihood of data errors, missed reimbursement, and isolated decisions that don’t look at the full revenue picture. Here is a list of other issues associated with organizations running revenue siloes:

  • No consistent accuracy metrics driving performance and revenue.
  • Different data sources and systems drive independent and isolated decisions without known impact on the rest of the revenue cycle.
  • Departments cannot leverage analytics and insight into contract and payer performance.

In the spirit of the recent international World Cup games, think of revenue siloes like playing for a professional soccer team.

Similar to the structure of a hospital’s revenue team, soccer teams are large organizations that need to be able to clearly communicate with each other quickly in order to make calls on-the-spot. These quick decisions can be the difference in turning the ball over to the other team or scoring a goal in the final minutes so it’s crucial that everyone knows their role on the team.

If other players don’t understand the plays that are being called, however, then mistakes will be made that could cost them the game. Each player on the team needs to study the same playbook so they stay on the same page and decrease the chances that a costly mistake will be made.

A hospital’s Managed Care department works in a similar way. If Managed Care is preparing to renegotiate payer contracts, they need to fully understand and have insight into underpayment and denial trends across multiple payers.

Preparing Now for Consumerism and Price Transparency

Now that we know the reimbursement rate is accurate, how do we communicate an accurate price to patients in order to encourage upfront payment?

Studies have shown that by increasing accuracy in pricing estimates, it increases the likelihood that patients pay upfront, which can help your organization lower bad debt.

In an effort to migrate to a more patient-centric approach, these accurate online estimates also enable hospitals to address the patient’s fear of the unknown with healthcare of ‘how much is this procedure going to cost?’ By giving the patient more control over their financial responsibility, hospitals can become a leader in pricing transparency for their entire community while expanding on their market share.

At the end of the day, what this all comes down to is maintaining accuracy to help drive your revenue strategy. By integrating all data into a single system, the hospital is positioned to identify trends more quickly while increasing the accuracy of their patient estimates, ultimately driving your revenue strategy to new heights.

With many healthcare organizations still making the transition away from the traditional fee-for-service model, now is the time to prepare for consumerism and value-based care. Take some time to evaluate where your organization currently stands in the local market as well as any pricing adjustments that need to be made.

About Brad Josephson
Brad Josephson is the Director of Marketing and Communications at PMMC, a provider of revenue cycle software and contact management services for healthcare providers. Brad received a Bachelor of Arts, Public Relations and Marketing Degree from Drake University. He has worked at PMMC for over three years and has a deep knowledge of hospital revenue cycle management tools which improves the financial performance of healthcare organizations.

Hospitals Puts Off Patient Billing For Several Months During EMR Rollout

Posted on January 6, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Here’s something you don’t see every day. A New Hampshire hospital apparently delayed mailing out roughly 10,000 patient bills going back as far as 11 months ago while it rolled out its new EMR.

According to a report in the Foster’s Daily Democrat,  members of Frisbie Memorial Hospital’s medical staff recently went public with concerns about the hospital’s financial state. Then a flood of delayed patient bills followed, some requesting thousands of dollars, the paper reported.

Hospital officials, for their part, said the delay was planned. Hospital president John Marzinzik said Frisbie needed time to implement its new Meditech EMR and didn’t want to send out incorrect bills during the rollout.

In fact, Marzinzik told Foster’s, under the previous system, records generated during doctor visits weren’t compatible with forms for hospital billing.

Rather than relying further on this patchwork of incompatible systems, Marzinzik and his staff decided to wait until the process was “absolutely clean” for patients. The hospital decided to have a staff member validate every balance shown on a statement before sending them out, he says.

Previously, in December of last year, anonymous Frisbie medical staff members sent Foster’s a letter to share concerns about the hospital and its administrators. The criticisms included skepticism about the over-budget implementation of the $13.5 million Meditech system, which they named as one of the reasons they lack confidence in the hospital administration. The staff members said that this cost overrun, as well as other problems, have undermined the hospital’s financial position.

As is always the case in such situations, hospital leaders took the stage to deny these allegations. Frisbie Senior VP Joe Shields told the paper that the hospital is in sound financial condition, and also said that the only reason why the Meditech project went over budget by $1.5 million was that the administrators delayed the implementation by seven weeks to give the staff holiday time off.

Hmmm. I don’t know about you, but to me, some parts of this story look a little bit bogus. For example:

* I appreciate accurate hospital bills as much as anybody, but the staff was going to check them manually anyway, why did it take 10 or 11 months for them to do so?

* The holidays take place at the same time every year.  Did administrators actually forget they were coming to an event that necessitated an almost 10% cost overrun?

Of course, only a small number of people know the answers to these questions, and I’m certainly not one of them. But the whole picture is a little bit odd.

A Snapshot: Is Free Care in Minnesota What It Appears?

Posted on January 16, 2012 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

With any luck, we’ve finally left the worst of the financial crash behind, and with it the financial challenge posed by large numbers of medically indigent patients.  A recent report from Minnesota’s hospital trade group underscores how bad things were for patients. It also suggests that the hospitals may not quite be as charitable as they claim.

According to the report, the level of free or discounted care provided by the state’s hospitals shot up 27 percent in 2010, driven largely by falling state coverage and rising unemployment.  The Minnesota Hospital Association said that state hospitals provided $226 million in charity care last year, along with $498.5 million expenses generated by Medicaid patients receiving discounted care that wasn’t reimbursed.

OK, let’s break this down. We’ve got, very broadly, $750 million in direct charity care expenses among 135 hospitals.  While I don’t know exactly what they grossed in 2010, we can be pretty sure it exceeds that figure by at least three or four orders of magnitude.

Sure, several million in charity care per hospital is enough to erode the slim margin most hospitals cope with year to year.  On the other hand, we know it’s not a simple matter of money in, expenses paid for charity care.  The accounting gets more complicated than seven-way chess, and let’s admit it, some of the numbers are a bit dicey at best.

Now, I’m not suggesting any individual hospital is gaming the system worse than others. But I am suggesting that if this is the best they can come up with, they’d better get cracking. Neither the IRS or Congress has much patience for charity care numbers that don’t add up, and municipalities (at least in Illinois) are getting into the “yank the tax exemption” act too.

Bottom line, you better keep your nose clean and those charity care numbers better be above board. If you’re not already, it’s time to avoid accounting tricks and play it straight.

Small-Hospital Mergers A Signal That Crisis Is Upon Us

Posted on December 19, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

If you’re wondering how healthy an industry is, look at how many smaller players are selling out. And if the smaller players are bailing like rats from the proverbial ship, consider that industry to be in crisis. That’s my theory, anyway. Read on and see if you agree.

You know, when I watched Community Health Systems and HCA and Tenet doing their little dances on the catwalk a few years ago, tendering offers and buying up sinking ships, I thought hey, that’s what big chains do. Didn’t register much.

One year ago, when I watched VC firm Cerberus Capital Management pick up Boston’s Caritas Christi chain, I saw signs of hospital desperation. After all, VC firms don’t sink their money into companies that offer a small, predictable return;  in this case, they acquired financially distressed properties with a very substantial upside.

So, what of this year?  Merger mania continues $7.3 billion of total healthcare-related M&A this year. (For more background, check out this hospital M&A list from business information provider Hoover’s. It’s been a wild year, and next year is likely to keep up the pace.

I’m not really surprised by the merger mess, and I doubt you are either. After all, hospitals have been running at minimal or even negative margins for many years, and now that health reform is breathing down everyone’s necks the pressure is climbing. The question is what this means for the industry.

Consider that one John Reiboldt of investment bank Coker Capital Advisers called the single stand-alone hospital a “concept of the past” at this year’s HIMSS event. Even if he’s wrong — or ahead of himself — the folks in his industry  are clearly poised to strike. And they’ll be making offers beleaguered single- and small-chain hospitals can’t refuse, capice?

Why Not Sell Those Medical Office Buildings?

Posted on December 5, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Back when the U.S. financial crisis was at its height, hospitals were searching desperately for assets which could keep them above water. And there was one type of asset which largely held its ground.  Though most other investments tanked, medical office buildings were a lone bright spot.

In 2008 and 2009, hospitals began unloading their MOBs, selling them to investors and leasing them back in an effort to keep the ground under their doctors’ feet. Commercial real estate players — notably real estate investment trusts — were only too happy to participate in these deals, as MOB properties had a rep for being nearly recession-proof.

By mid-2010 or so, MOB fever calmed down. But now, with the hospital industry’s health improving, it may be heating up again. If your hospital owns Class A medical office space occupied by affiliated doctors, you’re likely to get courted by real estate investors in the next few quarters.  (That’s my prediction, not some real estate exec’s, but the signs are there and MOB buyout momentum is growing again.

After all, consider the trends. Demand for medical office space is growing, boosted by rents hovering at about 5 percent below pre-recession levels, according to commercial real estate research firm CoStar Realty Information. Also, hospitals continue to need more space to house the practices they acquire, which will absorb any left-over vacancies and raise the value of the properties investors already own.

Not only that, there are long-term forces which are likely to keep demand high for MOBs. Commercial RE investors expect the coming growth in demand for outpatient services — which should hit 22 percent by 2019, according to McKinsey Global — to generate strong returns for medical property owners.

So, what does this mean for you?  Well, if you didn’t sell your MOBs a few years ago, you may have another chance. Bear in mind that investors are more interested in signing MOB deals with big chains like Tenet or HCA, as aggregating properties makes more sense than negotiating one deal at a time. But you’ve still got a special asset there.

Bottom line, if you have new (or newly-upgraded) medical office properties on your campus, consider whether they’d be more valuable as a lease-based tax deduction.  My guess is that you’ll be able to redeploy the cash more effectively in other areas of your operations — such as, say, building up your EMR.  And hey, you’re not really in the real estate business anyway, are you?

Hospital Strategic Partnerships Avoid Mergers, But Create Other Pain Points

Posted on November 21, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

This is one of those periods in health biz history when M&A looks especially attractive.  What CEO wouldn’t give a second thought to getting acquired and picking up a bundle of cash when they’re struggling to survive?

In fact, one attorney with a national health care law firm argues that that as many as 50 to 60 percent of doctors and hospitals are looking for partnership opportunities of late, in part because health reform encourages consolidation.

The question is whether the institutions can put aside their differences long enough to talk business — particularly if they have dueling missions (such as religious charity vs. profit). Not only that, it’s not clear whether partnerships will meet their needs for long, as we’ll discuss below.

Given their druthers, many institutions would prefer to stick it out on their own and do things their own way. And despite the urge to merge, many hospitals are keeping their independence through strategic partnerships, notes Becker’s Hospital Review.

It’s hard to argue that partnerships can have their advantages, as the Becker’s piece notes. Hospitals can cut overhead costs by sharing services and staffing, while expanding on their local reach and adding services they might lack.

Partners can also come together to shore up specific service lines without having to invest heavily on their own. That was the purpose of a recent agreement between Saint Vincent Health Center in Erie, PA and the Cleveland Clinic, which are teaming to further boost the reputation of their already high-profile organizations in cardiac and neurological services, according to the Becker’s piece.

And hospital partners can save big bucks by rolling out the all-but-mandatory EMR system together, too.  Not only do the hospitals save bucks on staffing and technical expenses, they also end up sharing clinical data by default. Ideally, they’ll provide higher-quality care and save money by avoiding duplicate services.

Hospital partnerships may make it easier to build an effective Accountable Care Organization, too. After all, it’s easier to share data and coordinate treatment if you already have a trusting relationship in place, particularly if you’re already integrated clinically.

That being said, partnership building comes with its own set of frustrations. Take last year’s relationship struck by Reston, WA-based Providence Health & Services and Seattle-based Swedish Health Services.

To get along, the two parties had to set up a complicated structure letting Providence’s 27 hospitals keep their Catholic mission, while the five Swedish hospitals stayed non-religious. The two will work together using the Epic EMR to work together on shared best practices and population health.

And that’s far from their biggest headache. Ultimately, hospitals won’t save the kind of money they’d like to save, nor build new business the way they’d hope to, without completing a real merger. At that point, things can get expensive and even more complicated, as individual IDNs or facilities fight to keep key partners of their strategy in place.

Meanwhile, the hospitals in question may find that merging doesn’t meet regulatory approval. Hey, look at what happened when ProMedica Health System of Toledo and nearby St. Luke’s Hospital decided to get hitched. The $1.7B ProMedica chain, has 11 hospitals in Ohio and Michigan, came riding to the financially-ailing St. Luke’s rescue with a $35 million investment in August 2010.

Since then, though, the FTC has cracked down hard on ProMedica, arguing that the deal unfairly monopolizes the Toledo market,  in particularly by raising its share of the inpatient obstetrical services market to 80 percent. (Hey, ask your friendly editor and I have to admit that the FTC’s argument has some merit.)

So, where can hospitals turn if they want to thread their way through the current hospital business climate?

Well, at least one model — promoted by organizations like Paradigm Physician Partners and the LHP Hospital Group — have rolled out a model in which, as privately held companies, they form joint ventures with and sink capital into non-profit hospitals and health systems. LHP, which holds joint interest in some or all of the hospital’s operations through an LLC,  recently closed a deal with Pocatello, ID-based Portneuf Medical Center.

I predict that hospitals will find new ways to take in investment without giving up equity or their non-profit status. If new models pop up on my viewscreen I’ll let you know — I think this’ll be a hot new transaction strategy.

 

Hospitals play unfair games with Medicare observation status

Posted on November 14, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Most hospital visitors don’t care a whole lot whether they’re classed as inpatients or outpatients  — unless it affects the size of their bill. But lately, many patients are getting hit with unexpected fees after spending days in a hospital, thanks to tricks hospitals are playing in an effort to lower their readmission rate numbers, a newly-filed lawsuit contends.

These days, hospitals are under intense pressure to lower readmission rates, as such rates figure into their ratings on various types of quality scales.  In some cases, of course, they have no direct control of this number, as readmissions often have far more to do with the care they receive from community physicians and their willingness to comply with discharge instructions.

But ever-resourceful administrators have found a loophole that allows them to rejigger the admissions numbers. Under Medicare rules, they’re allowed to keep patients on “observation status,” deliver care and let patients go without ever classing them as inpatients. All of which might be well and good, except that if patients are in a hospital for days, they rack up a big bill — one they’re expected to pay far more of if the visit is billed as outpatient care under Medicare Part B.

Even more delightful for these patients, the fact that they haven’t logged three or more “real” inpatient days means that Medicare won’t pay for follow-up in a skilled nursing facility after discharge. So seniors either do without, or end up having the state pay through Medicaid.

Nice way to look out for patients, guys. Being old and sick and scared isn’t bad enough; now seniors have to wonder if their hospital costs are paid for even with Medicare coverage in place.

With this kind of mumblety-peg becoming fairly common, a consumer group called Center for Medicare Advocacy has filed a lawsuit to call a halt to the fun. The group is asking CMS to simply end observation status as a billable category.

While I sympathize with hospitals to some degree, who are also hoping to dodge scrutiny from the RECs by avoiding inpatient claim reviews, setting up seniors for high costs by playing unfair games is bad for you, the industry and the patient. Cut it out.

$1M+ pay for non-profit CEOs still an embarassment

Posted on September 19, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

When a not for-profit hospital recruits a CEO, they certainly need to bear in mind the salaries their candidate might be offered by a for-profit rivals, as well as their not for-profit competitors. However, does that justify a million or more dollars a year in compensation, even when the not for-profit is losing money or laying off staff?

This question has been embarrassing U.S. non-profits for quite some time, but of course, there’s no simple answer. The non-profits continue to argue that they can’t attract the talent they need without handing out top-dollar comp packages. Critics, meanwhile, say there’s no excuse for paying Joe CEO millions if the hospital is supposed to be dedicated to the less-fortunate.

To date, non-profits have been winning the battle, as megabucks salaries are still on the table in most markets. (Apparently, the critics haven’t had the juice to force industry change on the non-profit giants.) Still, regional controversies over public and non-profit hosp ital CEO pay flare up from time to time.

In Atlanta, for example, the Atlanta Journal-Constitution recently shined a light on the hefty compensation packages awarded to CEOs of several non-profit facilities.

As the paper notes, twelve of the 15 acute care hospital systems in metro Atlanta are exempt from paying any taxes on more than $2.6 billion worth of property and equipment. Unlike their for-profit brethren, the non-profit systems are spared millions in sales taxes and income taxes.

According to the AJC, at least five CEOs of non-profit hospitals or health systems made more than $1 million in the fiscal year ending in 2009.  Take Edward Bonn of Southern Regional Health System, which operates Southern Regional Medical Center and two affiliated facilities. Not only did Bonn make $2,610,175 in 2009, he got $421,822 plus $2.2 million from a retirement plan when he left the plan that year.

When CEOs have salaries rivaling corporate executives, they certainly don’t come across as being charitable, says a former state Department of community Health commissioner.  Says Russ Toal, now a professor of public health at Georgia Southern University: “I think, it makes a statement about what their priorities are.”

The problem isn’t limited to Georgia, of course. In Texas, for example, state Sen. Rodney Ellis is pushing for tougher enforcement of the state charity care requirements for not-for-profits hospitals. “If you get a tax exemption, you ought to be able to justify why,” Ellis told the AJC.

But big cities with large underserved populations (and financially shaky public institutions like Atlanta’s Grady Memorial, the nation’s 5th largest public hospital) will continue to get the most press. When a struggling metro can hardly care for the poorest and sickest patients, those big, bad salaries look even worse.

Let’s face it, though:  while non-profit CEOs’ fat paychecks will continue to get slammed for the foreseeable future, nobody’s ready to slap strict limits on those paychecks. So if you’re bothered by reading about non-profit hospital CEOs taking home $1 million plus a year, you’d probably better turn to the sports pages.

FTC: This Merger Looks So Good, It Has To Be Illegal

Posted on August 29, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

If you’re as cynical as I am, it’s not hard to take a certain amusement in the goings-on in Toledo over the merger between an aggressive for-profit hospital chain and a suburban not-for-profit.

Over the past few months, the Federal Trade Commission seems to have developed a passionate interest in the merger between a formerly Lutheran-owned non-profit, St. Luke’s Hospital of Maumee, OH and ProMedica Health System of Toledo. ProMedica, which owns 11 hospitals in Ohio and Michigan — including four in the Toledo metro — is a swaggering giant with $1.7 billion in annual revenue.

What a sweet deal it was for ProMedica. According to Moody’s, the facility had very little debt ($8.3 million) and 412 percent cash-to-debt coverage as of November 30, 2009 (recently enough to matter).

Sure, as of early 2010 St. Luke’s had an operating cash flow deficiency of -2.0 percent and -9.8 percent operating margin, and at least according to Moody’s, had cut some cut-rate contracts with payors accounting for 22 percent of its operating revenues.

On the other hand, its miserably weak competitive market position which, as Moody’s noted in its downgrade report, included clashes with ProMedica, went away with the stroke of a pen when the two consummated their agreement. ProMedica sweeps in with its Aa3-rated borrowing capacity, invests a relatively slim $35 million and picks up the 10 percent market share SLH held at the time. I don’t know what 10 percent of the market is worth, but that has to be a fire sale.

Dig this if you can, cats and kittens:  According to the FTC,  the deal increases ProMedica’s market share in Toledo to 58 percent of inpatient services and (get this) 80 percent of high-margin inpatient OB services. Wow… Small wonder the FTC smells a rat.

Of course, in the sort of excess of confidence you always see in these deals, ProMedica’s executives are pretending the deal was good for the public and stuff.  I don’t know about you, but I find the following comment (made by ProMedica CEO Randy Oostra to the New York Times) to be preposterous:

“We could coordinate care,” Mr. Oostra said. “We could improve quality at St. Luke’s by adopting electronic health records and using clinical protocols to standardize the delivery of care. But the F.T.C. has stopped us in our tracks.” 

OK, let me get this straight, Mr. Oostra. You could only connect with St. Luke’s by buying it and forcing your EHR down its throat (after all, we know you’re not going to put St. Luke’s on Cerner if you use Epic)? You’re buying a hospital with tremendous upside largely because you think you can standardize care — because that will, of course, increase effectiveness and lower prices?  Oh, and as far as sharing data and coordinating care: have you ever heard of a health information network? Or an Accountable Care Organization?

Really, sir, if you want to impress the FTC with the public benefits of your transaction, you’re going to have to try a little harder. If you’re already phoning it in, to the Times no less, you’re not just arrogant, you’re stupid.