Community hospitals push ahead with IT, despite tight budgets

By Mike Miliard
11:09 AM

A new survey from Anthelio finds that a majority of community hospitals report having low operating margins due to rising healthcare costs and lower Medicare/Medicaid reimbursement. Nonetheless, most hospitals surveyed are still working to put in place an array of health IT.

The report finds community hospitals targeting several priorities as they work to put in place technology solutions to improve operations, and improve patient satisfaction and performance:

  • EMR implementation. Sixty-nine percent of community hospitals have acquired and started their EMR implementations, with 39 percent spending more than $8 million on their EMR implementations.
  • ICD-10 conversion. Although 95 percent of community hospitals have begun the switch from ICD-9/HIPAA 4010 to ICD-10/HIPAA 5010, only 24 percent are currently undergoing remediation.
  • Health information exchanges. Responding community hospitals expressed a strong interest in participating in HIEs, with 43 percent saying that they are participating in an HIE, plus another 28 percent saying they are not participating, but would like to – 29 percent reported not being interested in HIE participation.

Community hospitals account for the largest sector of the U.S. healthcare system, with 73 percent of the total registered hospitals in the U.S. having 300 beds or less.

The Anthelio survey provided insights into the financial health of community hospitals across the country and how this impacts their ability to implement new quality and performance enhancement initiatives. It found facilities struggling in several areas:

  • Operating margins. Forty-nine percent of those surveyed reported having operating margins below 2 percent with 38 percent under 1 percent, and 22 percent reporting negative operating margins. Only 23 percent of those surveyed reported operating margins over 4 percent.
  • Rising healthcare costs. Thirty-three percent of community hospitals surveyed reported that operating costs have increased by more than 5 percent during the past three years, and 60 percent report that operating costs have increased more than 3 percent during the past three years.
  • Lower Medicare/Medicaid reimbursement. Fourteen percent of community hospitals surveyed reported Medicare/Medicaid reimbursement reductions of over $10 million; 33 percent reported reductions of over $5 million; 67 percent reported reductions under $5 million; and 50 percent reported reductions of under $3 million.

  • Days cash on hand. Twenty-three percent have less than 60 days cash on hand and 12 percent have less than 30 days cash on hand, although 67 percent have over 80 days cash on hand.

“The results of this survey indicate that community hospitals today face unprecedented operational and financial challenges that are exacerbated by rising costs and lower reimbursement rates,” said Rick Kneipper, chief strategy and innovation officer of Anthelio. “These challenges threaten to negatively impact patient care and satisfaction, and stifle the innovation we need to make better use of technology and re-engineered business processes to streamline operations, improve top-line and bottom-line so that community hospitals can refocus their resources on maximizing patient care.”