State report underscores critical work ahead for hospitals
You don't have to work in the health care industry to know that working in a hospital is not easy today. The massive changes wrought by health care reform, fed in part by the steady and steep rise in insurance premiums over the last two decades, have forced health care providers to take a long, hard look at the services they deliver.
In some cases, those hard looks have led to hard decisions, such as restructuring and layoffs. For instance, UMass Memorial Health Care, the largest provider in Central Massachusetts, has recently eliminated or announced it will cut about 400 positions throughout the region. It has also cut back some services. These moves came on the heels of what UMass Memorial's CEO, Eric Dickson, called the “worst financial year” in the system's history, when it reported a $55-million operating loss.
A recent report by the Massachusetts Center for Health Information Analysis (CHIA), which oversees the state's health care cost-containment efforts mandated by law in 2012, paints a harsh financial picture for the state's 64 hospitals. Highlights from the report include the following:
• Three of Central Massachusetts' 11 hospitals turned in operating losses for the 2013 fiscal year, which ended last September. Along with UMass Memorial Medical Center in Worcester (2.3 percent loss), the others were Clinton Hospital (3 percent) and MetroWest Medical Center (0.7 percent);
• Operating margins for community hospitals statewide were down about 2 percent. The best performance among the nine community hospitals in the region came from Milford Regional Medical Center, which posted a 4-percent margin;
• Most hospitals in the commonwealth are finding it takes longer to collect payments from patients and insurers. While the statewide median for average number of days in accounts receivable is 41, up from 38 in the 2012 fiscal year, the averages for seven of this region's hospitals are above the median;
• It's also taking longer for many hospitals to pay their bills. The statewide “average payment period” is 59 days, up from 57 days a year earlier. But again, the averages for seven of this region's hospitals exceed the median.
• St. Vincent Hospital in Worcester, which is run by Tenet Healthcare (as is MetroWest Medical Center) had the best operating margin in the state, at 14 percent, and holds one of the best overall financial positions among the state's hospitals.
The CHIA report is long on information and short on analysis. But the numbers, especially the operating margins, lead to one critical conclusion for the state's hospitals: All of them need to take a strategic look at what they offer and what they need to do to bring their houses into order and improve future sustainability. We're sure they're busy at that task already. In some cases, that may mean abandoning services in which some can't compete and ceding them to providers that do a better job at it. In other cases, it may mean working collaboratively with one another. As Dickson noted in a recent address to his leadership team, (the video of which was posted on his blog) — UMass Memorial needs to work with organizations “we once called our competition” — St. Vincent and Reliant Medical Group – and ask: “How do we partner with them to provide the highest-quality, lowest-cost care possible in Central Massachusetts?”
The answer to this and other similar questions is of utmost importance not just to an industry that's critical to this region's employment base, but also to the thousands who depend on them for high-quality care.
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