Despite a veto threat from President Bush, Democratic leaders in Congress have announced they will formally send a bill expanding a popular children's healthcare program to the White House.
With an expansion of CoverTN, housands more working, uninsured Tennesseans will qualify for government health coverage as of Jan. 1. Under the expansion, people earning $43,000 or less whose employers don't offer insurance will qualify, as will some businesses that employ 50 or fewer people and meet other guidelines.
As the credit crunch facing much of the economy refuses to fade, and in fact grows stronger, one sector seems somewhat immune. You guessed it: healthcare. While consumers and even banks seem to need a fresh infusion of capital that isn't coming, hospitals and healthcare companies are finding the spigot is still open--if a little more pricey.
While the price of money may have risen, at least hospitals can get it. Homeowners and many corporations that need debt are going wanting. But as our politicians and celebrities remind us ad nauseam through their actions, just because you can do something doesn't necessarily mean you should. As grandma and nationally syndicated personal money manager Dave Ramsey says, the borrower is slave to the lender. In the world of nonprofit finance, the borrower is also slave to the rating agencies. And the rating agencies--perhaps stung by their role in inflating the creditworthiness of esoteric collateralized debt obligations--are watching hospitals' balance sheets more closely than ever.
I listened to a conference call a couple of weeks back hosted by the healthcare analysts at Standard & Poor's. Turns out the ratio of credit quality downgrades to upgrades has risen dramatically for hospitals in the last quarter, by a count of 2-1. Why? Hospitals continue to take on additional debt.
Of the 11 hospital or system downgrades in the last quarter at S&P, seven were driven by additional debt or large capital plans on top of existing debt. Most of these organizations were rated highly to begin with, and in most of these cases, these organizations are expected to do well operationally going forward. But at some debt amount, the burden is too heavy to maintain a given rating. Still, hospitals seem to be getting their hands on that debt while the getting is still (relatively) good.
Analysts at S&P say that as a result of the continued borrowing, the hospital building boom may go on for the next couple of years as hospitals add fat for an expected long winter once government-led healthcare "reform" finally happens. Reform means a lot of things to a lot of people, but when you hear pundits and credit analysts talk about it, they're talking largely about reimbursement cuts. No one expects that before the next election, and predictions for cost cutting in healthcare are notoriously unreliable. But hospitals are voting with their borrowed dollars that now is a good time to start building the war chest in the form of updated bricks and mortar that will carry them through the next decade.
Rates for debt are still reasonable, and operationally, hospitals are doing much better, the analysts agreed. But operational improvements--at least as far as they translate to the bottom line--have essentially peaked.
The key takeaway from all of this? The rating agencies, rightly, wrongly, or late, are keeping a close eye on healthcare because of their mistakes in other sectors, and if you don't complete your anticipated borrowing soon, you're all going to have to pay a higher price.
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.
To ease the potential for surgical error, the University of Washington Medical Center is participating in a checklist pilot program that will ultimately improve patients' safety during surgery. +
Sure, your organization offers sophisticated, compassionate care. But the patients of tomorrow will want much more than that. Here's how some hospitals are creating facilities for a new vision of healthcare. +
As much as $90 million was paid to fraudulent billers who used dead doctors' ID numbers between 2000 and 2007, adding to the nearly $400 billion CMS pays to hospitals, doctors, and other healthcare providers each year. +
One key component of physician satisfaction is how responsive hospital administrators are to physicians' ideas and needs. Rural hospitals tend to excel in this aspect of physician relations. +
In an effort to combat bullying among hospital employees, The Joint Commission has called for health systems to develop codes of conduct by January 1, 2009. +
Kaveh Safavi, MD, JD, chief medical officer at Thomson Reuters' Center for Healthcare Improvement, discusses how technology might impact global healthcare and the looming physician shortage. +
To ease the potential for surgical error, the University of Washington Medical Center is participating in a checklist pilot program that will ultimately improve patients' safety during surgery. +
The Medical Tourism Association is now offering an accreditation program to medical tourism organizations as a way to emphasize the legitimacy of their services. +
Both parties' presidential hopefuls have offered plenty of sweeping proposals for fixing the nation's healthcare ills. But will either candidate be able to follow through? +
Sure, your organization offers sophisticated, compassionate care. But the patients of tomorrow will want much more than that. Here's how some hospitals are creating facilities for a new vision of healthcare. +
Bob Allen, vice president for public relations and government affairs at Crouse Hospital in Syracuse, NY, shares how his hospital's Expect the Best campaign helped the hospital grow its OB market share by 15%. +
Kirsten Engel, MD, talks about why patients often misunderstand discharge instructions and what clinicians can do to make sure that patients take proper care of themselves after their hospital stay. +
Bob Allen, vice president for public relations and government affairs at Crouse Hospital in Syracuse, NY, shares how his hospital's Expect the Best campaign helped the hospital grow its OB market share by 15%. +
Earlier this year Palomar Pomerado Health gained national attention when it created a virtual version of its planned $773 million "hospital of the future." +
One key component of physician satisfaction is how responsive hospital administrators are to physicians' ideas and needs. Rural hospitals tend to excel in this aspect of physician relations. +
HCPro recently published a book titled Top Managed Care Contracting Clauses, which was edited by Robin Fisk, an attorney with 19 years of experience in the healthcare field. In the book, she shows providers how to maximize reimbursements through managed care contracts, and provides strategies and tools for organizations facing the prospect of negotiating a new managed care contract. She was interviewed by Les Masterson, managing editor for HCPro.
William Jessee, MD, president of the Medical Group Management Association, discusses the critical issues that today's medical groups face and how they are dealing with a troubling financial landscape.
