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Challenges, opportunities in reimbursement change


This Becker’s Hospital Review piece looks at how shifting reimbursement regimes are both a problem and opportunity.

Becker’s reported that Barry Arbuckle, president and CEO of Fountain Valley, Calif.-based MemorialCare Health System, said:

“We need to get people to the right venue of care.”

Becker’s said he outlined “MemorialCare’s push to ambulatory, community-based centers. Often, patients of independent physician groups typically wouldn’t seek care from a hospital outpatient department; rather, they’d go to a community-based ambulatory center. As hospitals and health systems acquire these physician groups, the hospital outpatient department becomes a cash cow for hospitals where both Medicare and commercial payer rates are higher than they would be in an ambulatory setting.”

“Gregg Beeg, CFO of Oaklawn Hospital in Marshall, Mich., said reimbursement change can be especially problematic for smaller hospitals such as his, a 77-bed independent hospital, as they navigate the shift from inpatient to outpatient. ‘Insurance companies continue to want to ratchet that reimbursement down,’ he said.

“What’s more, Mr. Beeg’s hospital faces the economic uncertainty tied to the rocky state of Michigan’s finances and how employee retention poses a burden to hospitals.”

“The market pressures to open and operate in facilities outside the four walls of a traditional hospital are also affecting Toledo, Ohio-based ProMedica. Randy Oostra, president and CEO of ProMedica, said the health system is strategizing how to rationalize inpatient consolidation and moving to outpatient over a period of time.”

He told Becker’s: “The idea down the road is how do you begin to think about rationalizing, consolidating [or] maybe not doing everything at every location.” ProMedica is opening six urgent care centers, largely in response to other healthcare organizations in the market doing the same thing. “We didn’t want to just give that away,” Mr. Oostra said.

Promedica tries to take antitrust case to the Supremes

Other expanding hospital chains will be watching  the Ohio/Michigan system ProMedica’s appeal to the U.S. Supreme Court to try to keep a hospital it acquired several years ago. A lower court had ruled that the purchase broke antitrust laws.


The Supreme Court filing follows an April ruling in which a federal appeals court  sided with the Federal Trade Commission’s order to  ProMedica to divest itself of St. Luke’s Hospital in Maumee, Ohio. The judges said the purchase, in reducing competition, would  unfairly raises prices for patients and insurers. Kaiser Health news reported  that  ProMedica  lawyers have argued that the appeals court was flawed in assuming that ”greater market share would lead to price increases. They also have said that selling the community hospital would lead to the hospital’s demise.”
Cambridge Management Group has reported on another important hospital antitrust case, in which a federal appeals court is considering Idaho-based St. Luke’s Health System’s  acquisition of a physician group.


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