Category: Hospitals

Healthcare Workforce Healthy, Hospitals Lagging

We’ve been observing an interesting trend for a few months: healthcare employment is growing apace, but hospital employment is lagging. The latest Bureau of Labor Statistics monthly report confirms the trend. At Forbes, Dan Diamond has a chart and an explanation:

What’s the culprit behind hospitals’ incredible slowth? There are a few factors — for one, the hospital industry is relatively large (hospitals employ four times the number of workers as home health agencies) and mature, which acts as a constraint on its growth.

But more importantly, the jobs trend line reflects the pressures on hospitals generally and inpatient care specifically:

Is Consumer-Driven Health Care Hurting Hospitals? (And Should We Care?)

Dobson DaVanzo, a leading consulting firm, has produced a report for the Federation of American Hospitals, the trade association for for-profit hospitals. The report notes that the rate of change of health spending has slowed down. Indeed, the report concludes that spending is set to shrink this year by over one percent. This introduces a “paradox”:

However, paradoxically, consumers perceive that their health care spending is increasing more than usual. This perception is largely a result of spending on their health care increasing faster than personal income combined with a continuing redesign of their health insurance benefits, which shifts more of the cost burden onto consumers:

  • Almost 60% of Americans think that health care costs have been growing faster than usual in recent years, and more than 70% of consumers attribute responsibility for their perceived high and rising costs to health insurance companies.
  • Total premiums have increased substantially over the past decade, from 14.9% to 21.6% of median household income between 2003 and 2012.
  • Employee contributions to premiums and out-of-pocket spending have risen 23% faster than employee costs since 2009 (32% in cumulative growth vs. 26%) (See Exhibit 2).


Non-Hospital Healthcare Jobs Are Growing Fast

Jobs in health care, especially in outpatient settings, continue to rally. Of 217,000 nonfarm civilian jobs filled in May, 34,000 were in health care. This was twice the average monthly gain over the previous twelve months.

As previously observed, most of these jobs are in ambulatory settings. Two thirds of the gains (23,000) were in physicians’ offices, outpatient-care centers, and home-health care. Hospitals only added 7,000 jobs from April.

Table 1 shows the seasonally adjusted changes over the last twelve months. It continues to become apparent that the sector is undergoing a transformation: Care is being increasingly delivered outside hospitals. Although hospitals still account for one third of employment in health services, job growth there is anemic. Although outpatient-care centers employ only 715,000 workers, they continue to add jobs rapidly.

Hopefully, this indicates a shift to more productive ways of delivering care. However, the perverse incentives in ObamaCare (which cut hospital payments bluntly) caution against optimism.


Health Care Workforce Continues to Shift Out of Hospitals

Although the Bureau of Labor Statistics latest employment report shows that health care continues to add jobs at about the same rate as the rest of the economy, the shift of jobs to out of hospitals continues.

From March to April, hospitals barely added two thousand new workers. Physicians’ offices, on the other hand, added six thousand, while providers other than hospitals added jobs at a faster rate than hospitals. This is a trend that has persisted for months.

Hopefully, it portends a change in practice to lower cost settings. Nevertheless, hospitals are still adding workers. The hospital lobby often complains that reduced government reimbursement is causing cutbacks. The data do not confirm this.

Further, the unemployment rate in the education and health services sectors is just 3.7 percent (only government workers, with an unemployment rate of 2.7 percent, are doing better). Were the hospitals to actually reduce their workforce somewhat, we could plausibly anticipate that many of those workers would quickly be picked up by physicians’ offices and other health-services providers.


Hospital Price Transparency: More Toothless Regulation

The Administration continues to promulgate ineffective regulations that are supposed to help patients understand how much money they owe their hospital. Here is this month’s proposed rule updating the hospital Inpatient Provider Payment Services (IPPS) schedule for 2015:

Hospitals are responsible for establishing their charges and are in the best position to determine the exact manner and method by which to make those charges available to the public. Therefore, we are providing hospitals with the flexibility to determine how they make a list of their standard charges public. Our guidelines…are that hospitals either make public a list of their standard charges (whether that be the charge master itself or in another form of their choice), or their policies for allowing the public to view a list of those charges in response to an inquiry.

It is hard to imagine how this is going induce hospitals to present good-faith charges to patients, whether they are insured or not. A better solution would rely on common law, not federal regulation.

Can Safety Net Hospitals Survive?

The Need:

health-care-costsHealth-care providers faced between $74.9 billion to $84.9 billion in care costs for the uninsured and people who struggled to pay their medical bills, according to new estimates published in the journal Health Affairs. Using the lower of the two estimates, Urban Institute researchers calculated that hospitals provided $44.6 billion of the uncompensated care, publicly supported community providers delivered $19.8 billion, and office-based physicians provided about $10.8 billion.

Dwindling resources:

Some of the most notable cuts outlined in in the [Affordable Care Act] are to what’s known as Disproportionate Share Hospital payments under the Medicare and Medicaid programs. These safety-net hospitals are expecting to see a total $22.1 billion cut to Medicare DSH payments between the 2014 and 2019 fiscal years, and the ACA originally called for $17.1 billion in cuts to the Medicaid DSH program through 2020.

Jason Millman.

ObamaCare Will More than Double Profit Margins for Hospitals’ Emergency Departments

Think ObamaCare is all bad news for hospitals? Not according to a new study:

Physician and Nurse Pushing GurneyWe estimated that hospital revenue from ED care exceeded costs for that care by $6.1 billion in 2009, representing a profit margin of 7.8 percent (net revenue expressed as a percentage of total revenue). However, this is primarily because hospitals make enough profit on the privately insured ($17 billion) to cover underpayment from all other payer groups, such as Medicare, Medicaid, and unreimbursed care. Assuming current payer reimbursement rates, ACA reforms could result in an additional 4.4-percentage-point increase in profit margins for hospital-based EDs compared to what could be the case without the reforms.

(Michael Wilson & David Cutler, Health Affairs)

Why Do Hospitals Host Charity Galas? (Hint: Not To Raise Money)

Tickets started at $500. Food and beverages totaling $258 were budgeted for each person. A lucky reveler went home with a $125,000 Lexus Luxury Hybrid Sedan, donated for the occasion. It was the November 8, 2011, nonprofit Cedars-Sinai Medical Center’s annual Board of Governors Gala at the Beverly Hilton Hotel.

Of the hospital’s $2.8 billion total revenue that year, the lavish party netted the hospital $780,000 — barely a quarter of the C.E.O.’s salary.

Most galas, says [Charles Rehberg, a former hospital C.F.O], “are part of a carefully crafted strategy to promote their ‘charitable’ image in the community and engage the community leaders in their market. Look at the board of the foundation. It is generally the community business leaders, politicians and thought leaders in the community. It is very difficult to serve on such a board and also criticize the hospital for their high costs, charitable conduct, etc. By engaging these leaders in their ‘mission,’ they buy their support.

Rita Healey, 100Reporters. HT: Ron Shinkman, FierceHealthFinance.

Hospital Safety Matters

Patients who are hospitalized for pneumonia at a low-scoring facility were 67 percent more likely to die within 30 days of admission than pneumonia patients at a top-scoring hospital, according to the Consumer Reports analysis. Of 1,000 surgical patients who develop a serious surgical complication in a top-rated hospital, 87 or fewer die, compared to more than 132 in a low-rated one — a 52 percent higher fatality risk. (Reuters)

Hint: Don’t get care at Bolivar Medical Center in Cleveland, Mississippi.

High-Priced Hospitals are Not Necessarily Better Hospitals

foto-hospitalThe study found that high-price hospitals averaged 474 staffed beds — more than double the average number of beds in the low-price hospitals — and had market shares about three times as large as those of low-price hospitals. The high-price hospitals were almost three times as likely to be teaching hospitals, were much more likely to offer specialized facilities and services, and received significantly higher revenues from sources other than patient care. In national rankings of hospitals’ reputations, high-price hospitals scored higher, but clinical outcomes measures were mixed. High-price hospitals performed better on one measure of mortality (for patients with heart failure), but performed worse than the low-price hospitals on measures of excess readmissions and on patient-safety indicators, including postsurgical deaths and complications.