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1)According to the Town Hall held for employees of Children’s Hospital Colorado in early October of this year, the breakdown of revenue for 2024 is 47% Medicaid, 45.5% Managed Care and Commercial, 5% Tricare, and 2.5% Other.1 While there was no mention of the percent of bad debt, a loss of $300 million is expected from providing care for Medicaid patients.1 I mentioned in an earlier discussion that CHCO proudly does not limit the number of Medicaid patients the organization will provide care for.1 The trade-off of this is the large revenue loss that must be supplemented through other means. For 2024, those supplementations are present in the form of an improved payor mix over previous years (increased Managed Care and Commercial and decreased Medicaid) along with a renegotiation of commercial payor contracts which had last occurred just before the pandemic and was showing promising results of agreement to increased rates, a 2% increased rate for Medicaid, and an overall increase in patient volume.1
Unfortunately, the Town Hall did not provide a breakdown of the expenses such as salary and hourly percentages. However, it was noted that of the 7.5% increase to the $2 billion organizational budget from the previous year, 4% is attributed to an increase in salaries and employee compensation.1 The remaining 3.5% stems from the above mentioned increase in volume.1 By extending open hours to accommodate more patients, there is an expected increase in workforce expenses both from covering the larger timeframe and the increased workload and each of these is cited in the Town Hall.1 The only reduction in expenses was a $50 million savings due to a decrease in the number of contract employees (travelers).1 I suspect that the organization overall is less concerned about this increased budget at the moment because they mentioned that we have been under the preferred 4-6% operational budget they typically aim for, and instead it was mentioned that they are looking at increasing programs, facilities or services that could be affordable to implement at this time.1
Healthcare costs are driven by a multitude of factors. Geographic location and the ability to access the level of care needed can be a significant factor.2 Costs associated with traveling to facilities and needing time off to receive that care impact decision-making, and choosing to seek care at facilities that are unable to provide the specialized care needed may result in increased length-of-stay, readmission and complications that drive costs up.2 As noted above, geographic location can also impact payor mix and the subsequent costs that payors agree to, as the $300 million loss from caring for Medicaid patients is somewhat offset by increasing costs to Managed Care and Commercial payors.1,2 Additionally, a study investigating the discrepancy between healthcare spending in the United States and other countries identified increased prices for providers, services, pharmaceuticals, and care, as well as administrative costs as significant factors in the cost of healthcare.3 (Your Thoughts)
2)Note: I do not work at a hospital. I tried to contact a colleague when the post was assigned, but they did not reply yet. Most of the data I will reference is national data.
Sources of Revenue
What is the breakdown (in percent) of revenue at your place of employment? – national data
Federal Payors:
Medicare: 21%1
Medicaid: 18%1
Private Insurance: 29%1
Self-Pay: 11%1
Third-Party Payers: 13%1
What is the percent of bad debt?
I had difficulty finding this information nation-wide, but I did find that up to 41% of adults in the US have some form of medical debt with 6% of adults owing over $1,000.2
What other sources of revenue does your facility have to supplement the decline of these revenues?
Common alternative revenue sources utilized by hospitals are paid parking garages, gift shops, cafeterias, grants, donations, and investment income.3
Expense Reduction
What percent of your organizations budget is salary and what percent is non-salary?
Nationally, about 60% of hospital expenses are related to salary.4 This is driven higher by the increased utilization of contract workers.4
What ways has your organization reduced expenses?
Standardization of hospital contracts and strategic outsourcing of services.5
Foodservice, clinical engineering, environmental services
Prioritizing patient flow through hospital to decrease wait times and increase operational efficiency.5
Focus on training and development of staff to aid retention and quality services.5
Hospital Costs
What factors drive healthcare costs?
Underpayment by medicaid and medicare for essential services provided by hospitals.4
Hospital administration costs related to insurance claims, facility improvement, and implementation of new technologies.4
Drug expenses driven by pharmaceutical companies.4
Supply costs such as critical equipment purchases and stock of necessary items.4
Labor costs related to employee retention efforts and incentives to work in smaller markets.4
( Your Thoughts)
please follow up questions for both the answers (Please)
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