Management Development
Program
Business of Healthcare at BMC
Session Objectives
▪
By understanding the business side of BMC, participants will be better able to:
– Connect their management roles to the overall business goals of BMC
– Explain how changes to the market and business environment affect BMC
– Improve our ability to respond to changes in the business environment.
– Increase employee engagement with the use of tools to better communicate
business operations to your teams
1
Session Outline
•
•
•
Introduction, Session Objectives and Outline
Hospital Facts and “Hot Topics”
o How does BMC make money?
o Patient and Revenue Cycles
Volume, Volume, Volume!
2
Hospital Facts and Hot Topics
3
Hospital Types
Hospitals are registered with the American Hospital Association as one
of the following types:
General Provide patient services, diagnostic and therapeutic, for a
variety of medical conditions. Boston Medical Center is a “General” Acute
Care Hospital.
Specialty Provide diagnostic and treatment services for patients who have
specified medical conditions, both surgical and nonsurgical
Rehabilitation and Chronic Diseases Provide diagnostic and treatment
services to disabled individuals requiring restorative and adjustive services
Psychiatric Provide diagnostic and therapeutic services for patients who
require psychiatric-related services
4
Hospital Types
Hospitals are organized as
Public hospitals
• In general, public hospitals provide substantial services to patients living in poverty.
• Federal hospitals serve specific purposes or communities
• Public hospitals are often funded in part by a city, county, tax district, or state.
Private, not-for-profit hospitals
• Are nongovernment entities organized for the sole purpose of providing health care.
Roughly 87 percent of nonfederal community hospitals are not-for-profit. In return for
providing charitable services, these hospitals receive numerous benefits, including
exemption from federal and state income taxes and exemption from property and
sales tax. Boston Medical Center is a private, not-for-profit hospital.
Private for profit hospitals
• The remaining nonfederal community hospitals are investor-owned, which means that
they have shareholders that may benefit from profits generated by the hospital. Forprofit hospitals do not share the charitable mission of not-for-profit hospitals (though
many do provide some charity services), and they must pay taxes.
5
Boston Medical Center
Hospital Facts Sheet
Staffed Beds:
Medicine/Surgery
Obstetrics/Gynecology
Intensive and Coronary Care
Neonatal Intensive Care
Nursery
Pediatric Intensive Care
Pediatrics
Rehabilitation*
Total
Average Length of Stay
Medical/Surgical
Newborn (Includes NICU)
Occupancy Rate (Staffed Beds)
FY12
306
47
58
21
34
6
30
9
511
4.73
4.73
70.6%
FY13
300
32
58
22
34
6
30
0
482
4.95
4.66
75.9%
FY14
300
32
58
22
34
6
30
0
482
Patient Activity:
Discharges
Outpatient Clinic
Outpatient Ancillary
Emergency Room
Ambulatory Surgery
Outpatient Observation
Total
Employees:
Hospital FTEs
FY12
26,132
656,940
243,528
129,714
28,382
8,126
1,092,822
FY13
26,035
681,177
189,745
129,783
27,840
7,792
1,062,372
FY14
26,119
720,132
206,297
128,839
29,406
7,928
1,118,721
4,506
4,573
4,767
5.29
4.60
79.2%
* Rehab unit closed 7/1/2012; FY12 reflects 9 months of operation
6
Hot Topics – Revenue
How does BMC make money?
7
Hospital Revenue Terminology
Typically, hospitals get their revenue in a variety of ways:
• By providing medical services
• For nonmedical services
• Through donations and grants from individuals, foundations,
or the government
• Through gains on investments
Hospitals group the way they make money into three different
categories:
• Operating Revenue: delivery of patient care
• Other Operating Revenue: nonpatient care activities
• Non-Operating Revenue: peripheral business activities
8
Hospital Revenue - Payers
• To understand how hospitals generate revenue for patient
services, it is important to understand the “payers” in the
healthcare industry.
• Public payers include federal and state governments—
which fund Medicare and Medicaid
• Private payers are insurance companies.
• Finally, there is the uninsured population, which includes
people who are expected to pay for their own health care,
unless they qualify for “charity/free care” as defined by
the hospitals internal policies.
9
Patient Demographics
Highlights:
• BMC’s payor mix is substantially different
from other hospitals
•
81% of BMC revenue comes from
governmental sources
•
Governmental rates of payments are
generally not negotiable
•
Any payments shortfalls are magnified by
BMC’s payor mix
10
Acute Hospital Financial Performance, by Hospital
System: FY11
Highlights:
• Partners and Care Group hospital systems make up 52% of the entire profit in the state.
• Mass General Hospital alone makes up 24% of the entire profit in the state.
• BMC had the largest loss for an individual hospital in the state.
• Steward Health Care System (10 hospitals) had the largest combined loss in the state.
11
Hot Topics – Patient and Revenue Cycles
Patient/Revenue Cycle
12
Revenue Cycle Overview
CLINICAL
DOCUMENTATION
CODING &
CHARGE
CAPTURE
HIM,
CODING
CLAIMS
EDITING
SUBMISSION
UTILIZATION
REVIEW /
CASE MGMT
FINANCIAL
COUNSELING
THIRD PARTY
COLLECTIONS
Patient
Care
COPAYMENT
COLLECTION
PAYMENT
POSTING
DENIALS /
AUDIT
MGMT
REGISTRATION
PREREGISTRATION
CONTRACT
MGMT
SCHEDULING
13
The Changing Economy
Revenue Related Challenges:
▪ Reduction/Lag in Governmental Dollars Owed to BMC
▪ Governor’s Budgetary Powers
▪ Future Years Not Yet Secured
▪ Reduced Demand for Healthcare, Fewer Elective Procedures
▪ Changes to insurance reimbursements: tiers and pay for performance
▪ Change from fee-for-service to payment for population management
14
Volume, Volume, Volume!
15
Types of Patient Volume
Category
Patients in Beds
Inpatients in Beds
Inpatient Discharge
Outpatients in Beds
Observation
Bedded Outpatient
Definition
Admission to a hospital bed for
inpatient care
Admission to a hospital bed for
observation, typically <24 hours, but
may stay longer
Admission to a hospital bed for
extended recovery after an outpatient
procedure (OR, Cath Lab, etc.)
Other Outpatient Services
Clinic Visit
Doctor's office visit - may also include
minor procedure
Emergency Room
Treated in the Emergency Department
and released to home
Surgical Day Care
Operating Room, Cardiac Cath, EP Lab,
Endoscopy or other significant
outpatient procedure.
Other Outpatient Services Radiology (MRI, CT, US, Xray, etc.),
Cardiology (EKG), PT/OT, Lab, etc.)
Outpatient Pharmacy
Outpatient Retail Pharmacy
Bedded outpatients: BMC typically receives payment for the procedure (SDC) but no added payment for the care on the
inpatient nursing unit.
16
Annual Inpatient Discharge Trend
FY08 - FY15 Annual Inpatient Discharge Trend
6.00%
4.9%
4.00%
2.8%
2.5%
% Growth / (Decline)
2.00%
0.1%
0.1%
0.00%
-0.4%
-2.00%
-4.00%
-4.3%
-6.00%
-8.00%
-10.00%
-9.9%
-12.00%
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Projected
FY15
Budget
Period
Fiscal Year
Discharges
FY08
29,357
FY09
30,179
FY10
30,215
FY11
28,917
FY12
26,060
FY14
FY15
FY13 Projected Budget
25,959
25,986
26,632
Highlights
 FY15 IP discharges are projected to grow 646 discharges (or 2.5%) to 26,632 from FY14 projection of 25,986
 FY14 IP discharges are projected to increase 0.1% from FY13 associated with strong inpatient Medicine discharge volumes
17
Boston Organization of Teaching Hospital Financial Officers
(BOTHFO): December 2014 Volume Report
BIDMC
BMC
BWH
Children's
DFCI
Lahey
MGH
St. E's
Tufts
Total
Total Excl. BMC
Discharges (3 Months)
FY15 YTD
FY14 YTD
Discharges Discharges % Change
9,669
8,442
14.5%
6,409
6,521
-1.7%
11,479
11,639
-1.4%
3,939
3,862
2.0%
245
305
-19.7%
5,285
5,206
1.5%
13,586
13,162
3.2%
3,221
3,270
-1.5%
4,375
4,533
-3.5%
58,208
56,940
2.2%
51,799
50,419
2.7%
Patient Days (3 Months)
FY15 YTD
FY14 YTD
Patient Days Patient Days % Change
51,341
45,111
13.8%
31,215
31,146
0.2%
65,453
65,539
-0.1%
27,609
26,683
3.5%
2,562
2,462
4.1%
26,106
25,256
3.4%
77,370
77,958
-0.8%
16,128
15,340
5.1%
23,670
23,698
-0.1%
321,454
313,193
2.6%
290,239
282,047
2.9%
Highlights
 As of December of FY15, BMC’s inpatient discharges were down 1.7% for the year while the average for other BOTHFO hospitals was up 2.7%.
18
Market Forces are Leading to Lower Inpatient Volumes
Stricter Requirements for Inpatient Admission
• Changing technology and requirements for inpatient admission resulting in more
observation and surgical day care patients
Care Management
 Medical home model leading to lower admission rates from Medicine and Family Medicine
 Reduced readmission rates due to penalties (Medicare, Medicaid)
 Efforts to limit Emergency Room usage
Competitors
 New emergency rooms and service guarantees from other Boston ER’s, along with efforts
to attract specific patient populations (Carney marketing to Vietnamese patients).
 Falling ER volume (walk-ins, ambulance and trauma) from BMC’s core market areas.
 Competitors consolidating referral networks and cutting out BMC
 For example: New Steward arrangement with Partners for trauma care
 Rate differentials make it difficult for BMC to grow its network
Financial Pressures on Patients
 The economic downturn, combined with increased prevalence of high-deductible health
plans, results in fewer elective procedures
19
The Right Care…no more, no less
Can only work if there is volume!
Patients can be divided into 4 groups based on the “front door” they use to arrive at BMC:
Emergency Walk-In & Other
Emergency Ambulance
10,000
9,600
9,380
9,600
9,223
9,200
9,200
8,993
8,800
8,800
8,341
8,400
8,400
7,888
8,000
7,977
7,972
7,600
Actual
8,034
Actual
8,000
7,383
7,600
Budget
7,200
7,090
7,200
6,996
6,800
6,800
2010
2011
2012
2013
2014
6,400
2010
Elective BMC/CHC
2012
2013
2014
5,800
9,600
5,400
9,200
5,000
8,800
8,000
2011
Elective Non-BMC/CHC
10,000
8,400
Budget
6,908
4,600
7,815
7,929
7,789
7,350
7,600
Budget
7,590
7,200
7,431
2011
2012
2013
4,200
3,940
3,800
3,709
3,279
3,400
3,539
2014
Actual
3,506
Budget
3,287
3,000
6,800
2010
Actual
2,600
2010
2011
2012
2013
2014
20
Emergency Admissions -- Volume vs Budget
January 2013 to December 2014
Emergency admissions in FY15 are down 5.6% from budget (221 discharges) and
4.3% from prior year. ED admissions account for 72% of the total inpatient variance
to budget.
Emergency Admits: FY15 Bud
FY15 Act
% Var
3,945 FY14 Act
3,724 FY15 Act
-5.6% % Growth
3,890
3,724
-4.3%
Inpatient Discharges
Emergency Admits
1,500
Actual
1,400
Budget
1,380
1,351
1,337
1,332
1,325
1,297
1,300
1,215
1,250
1,265
1,266
1,251
1,278
1,287
1,265
1,271
1,230
1,261
1,200
1,243
1,244
1,167
1,134
Dec-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
1,000
Jan-13
1,122
1,111
1,108
Nov-14
1,100
21
Monthly Walk-in Volume Trend
Walk-in volume has been decreasing since June 2014 (on average 511 visits per month
for the last 7 months).
Walk-in Volume by Month
9000
8000
7000
Volume
6000
5000
4000
3000
2000
1000
0
2013
2014
Jan
8087
7722
Feb
6387
6817
Mar
7757
7948
Apr
7671
7795
May
8450
7965
Jun
7951
7440
Jul
8275
7072
Aug
8056
7402
Sep
7757
7308
Oct
7868
7279
Nov
7041
6113
Dec
7392
6513
22
Questions?
23
Wrap-Up
24
Thank You!