A challenge

Healthcare Purchasing News, Feb, 2004 by Kristine S. Russell

As healthcare professionals charged with the formidable task of juggling budgets and providing quality care for our patients, we are constantly looking for sound and creative ways to be successful at both. Just because Medicare reimbursement gleaned a 10.6% increase doesn't alleviate the need for expense control, particularly in the area of supply chain management. HPN readers should not view this government decision as a pain reliever that will keep CEO/ CFO pressure off their backs. The record increase, about five times larger than those in recent years, resulted because of revisions to the reimbursement formula mandated by the new Medicare law. The law established a "complex new formula" that will increase the reimbursements to HMOs by an estimated $500 million this year and a total of $14 billion between 2004 and 2013. For all intents and purposes, that increase is likely already spent because it has to cover the enormous amount of red ink already on many hospital balance sheets. I would challenge HPN readers to use this 10.6% as a magic number to prove their mettle with their superiors. Make it a goal to reduce their supply chain management budget by 10.6% this year--not just by beating up suppliers or shifting responsibilities to GPOs but by carefully examining their own professional operations.

Federal officials and lawmakers hope that the new reimbursement levels will "reverse the exodus" of HMOs from Medicare. Many HMOs in recent years have withdrawn from Medicare because they said that, although their costs increased at about 10% per year, reimbursements only increased by about 2% per year. Who will be left to pay the bills?

With the number of uninsured Americans rising, some policy makers and health care experts are saying that the best way to give health coverage to more people is to give some people less. As healthcare providers, we see first hand the irony of this premise. Patients without proper insurance still get sick and will still be sent to our facilities for care. I n his State of the Union address, President Bush highlighted several longstanding administration objectives that until now have taken a backseat to such priorities as the tax cuts and Medicare drug benefit. The objectives included a plan for $89 billion in health care tax credits to help the nation's swelling ranks of uninsured, now more than 46 million people. Will these plans go far enough to ensure that the reimbursements needed to balance our budgets are there for the supplies, equipment and caregivers salaries? If not, how can we give patients less? Who chooses which patients get less care, poorer quality supplies, and what cost-savings policies may be adopted within our hospitals that may hurt the safety of the staff providing the care?

Faced with the inevitable, we can only go back to the creative solutions. Educate and arm ourselves with tools that use our current resources smarter and more efficiently. Cut the waste, eliminate the surplus, the unwanted and unused supplies. We can also choose to work with the multitude of departments within our hospitals and share information, ideas and reward efficiencies. Take that 10.6%, accept the challenge and make it work.