Dilemma of declining revenues and patient care

Health providers want to provide quality care and improve patient satisfaction. Really, they do. It’s just that pesky problem of declining reimbursements getting in the way of meeting those two key business objectives.

This dilemma comes to you courtesy of a survey conducted by IVANS, Inc., the company that helps providers process health transactions. IVANS found that about 50 percent of providers derive over 50 percent of their income from Medicare. As Medicare continues to be fiscally challenged, providers’ fiscal pain from this payer will increase.

IVANS predicts that, "as the baby boomer generation retires and the demand for medical services increases, the operational and administrative challenges of servicing this larger population of patients is expected to worsen this divide."

IVANS’s provider poll found that they believe electronic health records (EHRs) would have a positive impact on these challenges. Two-thirds of providers have plans to or have already implemented EHRs.

There’s a financial obstacle here, though — 85 percent of providers said a "lack of budget" was the largest barrier to adopting IT.

IVANS conducted this survey in June and July, 2008.

Jane’s Hot Points: If you marry these survey findings with the statistics I talked about yesterday in Health Populi’s coverage of Pricewaterhouse Cooper’s Behind the Numbers’s forecast of health care cost inflation, the inextricable linkage between Medicare’s and providers’ fiscal health is crystal clear. As Medicare health fares, so fares providers’.

While the vast majority of ‘everybody’ believes that the adoption of the EHR would ultimately help better manage patient care and satisfaction, the fact remains that a large financial barrier continues to prevent many providers from getting on with EHR implementation. If Congress won’t take on comprehensive Medicare reform, their very short-term health policy objective must be to reduce that fiscal barrier to help providers adopt the IT they need to improve patient care.

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3 replies »

  1. Adopting more health IT isn’t the only solution. And if not done carefully, investing in some IT may only increase the cost of health care.
    A solution for hospitals who cannot afford IT investment; look to data from existing technologies to improve their bottom line. Many small hospitals especially, do not use the information they currently have to its fullest extent.
    Hospitals should perform a comprehensive analysis of available data (a combination of financial, quality and satisfaction) to identify their largest opportunities for improvement. Then drilling down to the patient level can unearth big opportunities such as optimization of Medicare’s “transfer DRGs.” Spending millions on a new EMR has many benefits, but spending a few thousand for a consultant to perform a comprehensive analysis can yield millions to a hospital’s bottom line much faster.

  2. Where is the evidence of declining revenues? There is plenty of evidence that fee schedules, particularly for primary care, have flatlined. But any survey of physician incomes will show that income is still climbing.
    There are several reasons for this, which can continue even as Medicare takes over a larger role for most practices.
    1) Increase in volume of services delivered per physician. I don’t think any of us believe that quality will increase if volume keeps going up, but the case of Japan shows that it is still quite possible.
    2) Change of services delivered to favor the more highly reimbursed procedures. This is the most overlooked phenomenon in any analysis that draws a straight line from flat or declining fees to flat or declining incomes. Every year, new billable procedures emerge and these tend to be more lucrative than the old ones they replace. Since they are new, they don’t show up in trend analyses of changes in fee rates and it can look like everything is going down, when in fact that is not the case.
    One sign of the strength of the physician lobby and the influence of physicians on the current debate is that we take for granted that “revenues are declining” when in fact our problem is the very opposite: they are high and increasingly high.
    As I mentioned at the top, I give a partial exemption to primary care here, and am referring primarily to specialist care and facilities.

  3. EHR implementation can represent a significant financial burden to health systems… or it can be an investment that yields a measurable positive ROI. The challenge to health systems will be to implement EHR in a manner that improves system efficiency and productivity, rather than just “layering on” additional work for providers at the point of care.
    Essential elements to achievement of a positive return on this important technology investment include:
    – Optimization of clinical processes to improve efficiency of providers at the point of care
    – Incorporation of real time information for clinical decision making to improve quality of care and reduce waste
    – Incorporation of evidence-based care processes and physician order sets to improve consistency of care, and reduce hospital acquired conditions and length of stay
    – Improving access to information and improving coordination of care among participating physicians and clinicians.
    When implemented as an element of a comprehensive redesign in the way that care is provided, a positive return on the investment in clinical management technology can be achieved.

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