Fiscal Pressure and Hospital Financial Position
July 29, 2011
Laura A. Dummit & Kathryn Linehan
Hospital services account for the largest share of personal health care spending in the United States and are also the largest spending category for the Medicare program. As such, hospital services have been the object of the Medicare program’s efforts to control costs since the implementation of prospective payment systems, beginning with inpatient services in 1983. Most recently, the Patient Protection and Affordable Care Act of 2010 reduced Medicare’s annual payment updates by an estimate of the productivity improvements achieved across all industries. This Forum session explored hospitals’ strategies to maintain or improve their financial position and manage their costs and the effect of Medicare payment policies on those strategies. It presented findings from MedPAC about how hospitals under financial pressure keep their costs down. The session also explored the effect that factors such as competition, patient mix, corporate structure, provider integration, and ancillary services have on a hospital’s ability to control costs and increase revenue.
Mark Miller, PhD
Medicare Payment Advisory Commission (MedPAC)
Amy Freeman, MS
President and Chief Executive Officer
Providence Hospital (Washington, DC)
Michael M. Allen
Chief Financial Officer/Treasurer
Winona Health (Winona, Minnesota)
Medicare Payment Advisory Commission (MedPAC), Report to the Congress: Medicare Payment Policy, chapter 3, "Hospital Inpatient and Outpatient Services"