HOSPITAL EXECUTIVES confronted many big issues in 2008, and most of those concerns will be equally as important to them in 2009.
The general decline of the U.S. economy has already hit healthcare – an industry perceived by some as “recession-proof” – and the worst may be yet to come. David Bachman, senior research analyst for healthcare facilities at Longbow Research, said hospitals could struggle well into 2010.
“Hospitals may be required to cut back on staffing, equipment, marketing and other areas next year, and they will be at a competitive disadvantage even when the economic climate changes for the better,” he said.
The credit crunch is affecting hospitals’ ability to raise funds to finance capital expenditures, especially for big-ticket items. Michael Matson, senior analyst in medical device equity research for Wachovia, says capital expenditures require long decision cycles that will disrupt hospital purchasing, as executives may decide to review previous capital decisions or may be limited because of financing constraints.
“One-off hospital projects are at risk of delay until they can be combined with other hospital construction projects in an effort to minimize redundant costs,” he said. “A purchase that has no tie to revenue or does not expand revenue (is) more susceptible to delay or deferral.”
Hospitals in 2008 also began to brace for stricter Medicare billing scrutiny. Approximately 81 percent of hospital information management directors are taking steps – like conducting internal audits – to improve Medicare claims accuracy in preparation for the Centers for Medicare and Medicaid Services’ Recovery Audit Contractor program.
“A lot of hospitals have been talking about doing these sorts of things for a long time,” said Sean Benson, co-founder of ProVation Medical, a division of Wolters Kluwer. “Now that CMS has gone through the RAC pilot, they appreciate (that) CMS is serious.”
In one of 2008’s more interesting developments, CMS approved the first new U.S. hospital accreditation organization in more than 30 years.
DNV Healthcare Inc., a Houston-based division of the Norwegian company Det Norske Veritas, joined the Joint Commission and the American Osteopathic Association as the only national hospital accreditor approved by CMS.
“Both The Joint Commission and DNV Healthcare will work with hospitals to reach their goal of quality improvement – they’ll just take different paths to get there,” said Nancy Foster, vice president for quality and patient safety for the American Hospital Association.