Sunday, January 20, 2008

The more things change, the more they stay the same


With the economy nearing recession it is a safe bet all the talk about healthcare reform and national health insurance will slow down. People want jobs and economic security. That debate is beginning to overshadow everything. Politicians are like a 3 year old child's short attention span and they focus on the flavor of the day. Until someone comes up with that private government combo plan for reform, its dead in the water. Look for incremental change that tinkers around the edges but fails to address underlying systemic issue. If real change is going to come it will have to come from employers large and small. As the old saying goes....Money talks and ........, well you know the rest.

Hospital margins

We all know that hospital margins for the most part have been showing signs of improvement the last couple of years. With the growth in spending in Medicare and Medicaid, and CMS realizing its out of control faster than they even thought, reductions are in the works. That will pace more pressure on margins. Also, hospitals have done very well thank you very much, in the past few years with their investment strategies which has supported margin growth. With the current state of the financial markets, some will take a financial bath. Look for losses especially with the stand-alones going forward. Higher interest rates for bond issues as well because of the sub-prime market meltdown, lower margins etc. As layoffs become more prevalent in the general job market more uninsured will be seeking care further increasing bad debt and adding to margin compression. Oh wait, my bad, bad debt is really community benefit as they like to say.

Mergers and Acquisitions

One would predict that merger activity will increase this year and for the foreseeable future with the economy the way it is becoming. The Justice Department will be looking very closely at these transactions. I have yet to see one where healthcare costs were reduced, duplicate services eliminated and big time leverage was gained for increased reimbursement from payers. Doesn't mean that it doesn't happen, I just haven't seen it.

Error rates

Nearly 100,000 people die every year from preventable medical errors. That's like crashing a fully loaded 747-400 every 1.5 days. Now we all know its unacceptable so why do we continue to allow that that in healthcare? Some payers and the government are going to stop paying for never events. A good start in the right direction. The jury is still out on whether or not P4P programs work. Mess with the medical communities money and you will see how fast the error rate and deaths associated with it goes down. Cynical yes, but true never-the-less.

Have a good week everyone and thanks for reading. Have some news or ideas just send them to All will be treated confidently and anonymity assured.

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