Healthcare Financial Management: Journal of the Healthcare Financial Management Association

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The importance of capital planning is increasing as the healthcare industry moves toward value-based care. Replacing unwieldy and inflexible traditional capital planning processes with a rolling capital planning approach can result in: Greater standardization, facilitating better strategic planning across the whole system. Reduced labor intensity in the planning and budgeting process. Reduced costs through being able to plan better for replacement purchases and take advantage of group purchasing and bundling opportunities...

An electronic health record implementation brings risks of adverse revenue cycle activity. Hospitals and health systems can mitigate that risk by taking aproactive, three-phase approach: Identify potential issues prior to implementation. Create teams to oversee operations during implementation. Hold regular meetings after implementation to ensure the system is running smoothly.

A performance improvement project helped Bronx-Lebanon Hospital Center in New York, which serves a highly indigent population, to increase efficiencies and cost savings as it moved toward value-based health care. Specific initiatives included in-depth analyses of provider and employee productivity, performed by focus teams led by executive sponsors and the department directors or managers. Through two broad phases, focusing on nonlabor and labor areas, the organization was able to realize savings amounting to more than $20 million...

An increase in the number of patients visiting emergency departments (EDs) presents an opportunity for additional revenue if hospitals take four steps to optimize resources: Streamline the patient pathway and reduce the amount of time each patient occupies a bed in the ED. Schedule staff according to the busy and light times for patient arrivals. Perform registration and triage bedside, reducing initial wait times. Create an area for patients to wait for test results so beds can be freed up for new arrivals...

A healthcare organization's efforts to strategically transform its cost structure in preparation for value-based payment invariably must begin with a systemwide assessment of cost and quality. Such an assessment should focus on three categories of performance improvement activities: margin improvement, business restructuring, and clinical transformation. A work-team approach is recommended, where teams with multidisciplinary representation assume responsibility for assessing specific areas (e.g., acute care enterprise, physician enterprise, business restructuring)...

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Pharmaceutical inventory management as an ancillary concern presents a risk for hospitals and health systems. Healthcare leaders should look to prevent fraud as well as legal noncompliance. Leaders should consider not only how much inventory they need but also how to store it and who to assign to handling it.

Updates to the Medicare inpatient prospective payment system (IPPS) will change disproportionate share hospital (DSH) payments for coming fiscal years. In FY17, changes to the calculation of Factor 2 will lower the uncompensated care DSH available for allocation. In FY18, the Centers for Medicare & Medicaid Services (CMS) will begin using uncompensated care expenses to determine a hospital's share of payments from the uncompensated care DSH pool.

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Recently released lease accounting standards from the Financial Accounting Standards Board (FASB) present three significant challenges for healthcare organizations: All leases must be reported on a company's balance sheet, increasing liabilities on the balance sheets of healthcare organizations considerably. Contractual agreements not previously considered leases will now be treated as leases. Classification of some equipment leases could change.

Health systems and providers that search out more interoperable technology can help move the industry toward greater productivity using a multistep approach. Assemble a team of champions to address the interoperability issue. Describe the desired state of interoperability for the organization. Assess the current state of interoperability in the organization. Identify the gaps between the current state and the desired state. Develop a road map for addressing the gaps. Achieve an immediate win by selecting a quickly attainable goal...

Hospital executives seeking to instill rigor into their organization's capital review process should focus their attention on four areas: Establishing and ensuring compliance with clear internal policy and procedures governing the organization's capital equipment review and purchase process. Cultivating a collaborative culture, while eschewing an "us against them" mentality. Managing provider-vendor relationships. Having a clear definition of success for the capital review process that is championed by executive leadership...

Capital planning has become more centralized at many health systems. Managing the capital budget for IT continues to be a challenge. The arrival of value-based payment is influencing some organizations' strategic capital investments.

As health systems continue to embrace disruptive innovation, they are increasingly likely to consider making a move into venture capital. Working in venture capital can benefit a health system in several ways, including: Allowing it to operate outside of bureaucracy and align projects with its core values. Encouraging innovation within the organization. Enabling it to respond quickly to changes in the market.

When hospitals embark on bundled payment programs, they should take steps to ensure physicians are on board. Key steps include: Contacting physicians while in the planning stages so they can prepare to participate in the new model. Establishing resources and processes designed to make compliance easier. Educating physicians about the importance of coding and documentation.