Revenue Cycle Strategist

Revenue

Cycle

Strategist

www.hfma.org/rcs

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July-August 2010

Revenue cycle staff can do only so much to reduce medical necessity denials. Many of the decisions that lead to these denials—for example, scheduling an inpatient CT scan when an outpatient scan would be more appropriate—are made by physicians days or weeks before patient financial services gets involved.

To prevent these denials, CHRISTUS St. John Hospital in Nassau Bay, Texas, is taking a number of steps to create a more collegial partnership between clinical department/unit leaders and finance. For one, finance is providing regular training to clinical leaders on managed care and other payment issues. In addi-tion, job roles and social norms are

being redefined to help ensure more dialogue and interaction.

One result: Clinical leaders are proac-tively reining in unnecessary orders and ensuring that care is provided in the most appropriate setting. “Clinical directors are redirecting physicians when appropriate,” says CFO David Witt. “Telling a physician that it’s inappropri-ate to order an inpatient CT is much bet-ter coming from a clinical director than the CFO.”

Training in Managed Care

A few years ago, the finance and man-aged care departments at 178-bed St. John began providing clinical directors

CHRISTUS St. John has decreased denials, in part, by nurturing

a collaborative relationship between revenue cycle and clinical

leaders.

INSIDE THIS ISSUE

Coding Q&A: New Codes for FY11 4

Signature Guidelines: Revisions to Enforcement for Medical Review

Purposes 5

Privacy and Security Become Financial Concern Under

HITECH Act 6

Charity Care and Bad Debt Deductions and

Expenses, 2006-09 8

WEB EXTRA!

See CHRISTUS St. John managed care contract matrix and a job description for an ancillary informations system coordinator at www.hfma.org/rcs

NEW HFMA RESOURCE Special Report:

Strategies for the Next Era in Health Care www.hfma.org/pulse

CHRISTUS St. John Reduces

with regular training about how managed care contracts affect the hospital revenue stream.

Training forums.The quarterly managed care educational meetings are more like open forums than lectures, says Witt. “We put all the clinical directors in one room so they can interact with each other, learn from each other’s questions, and discuss how patients flow through the hospital,” he says. The finance lead-ers also learn about the clinical side of the house as they listen to clinicians describe various patient cases.

“We have developed a matrix that sum-marizes our major managed care con-tracts in terms of how payments are calculated for certain clinical business lines,” says Anita Fluharty, regional managed care manager for CHRISTUS Health system. “We walk through this matrix with the clinical directors, using patient examples they give us. We explain

how a patient’s insurance benefit plan can affect authorization requirements. We also show how our reimbursement changes based on whether a managed care plan offers a per diem rate versus a diagnosis-related groups rate or has a particular carve-out for a procedure.” (See the matrix at www.hfma.org/rcs.)

“A lot of this is trying to understand the different languages everybody uses,” says Witt. “When we talk ‘carve outs,’ that does not translate down to the OR direc-tor who is putting in a $20,000 hip implant. To them an implant is an implant, and to us it’s a carve out,” he says.

Other key lessons: The hospital is trying to get the most out of its managed care contracts, and the clinical directors must help manage costs.

St. John also holds similar—but sepa-rate—training sessions for clinical lead-ers on Medicare and Medicaid payment structures.

Ensuring the appropriate setting.Learning about managed care contracts has not changed Kelli Holt’s priorities as a clini-cian. “First and foremost, you have to make sure that your patients are getting the care they really need,” says Holt, director of diagnostic imaging and

Robert Fromberg Carole Bolster

Editor-in-Chief Senior Editor

Amy D. Larsen

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Revenue Cycle Strategist is published 10 times a year by

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Presorted nonprofit postage paid in Chicago, IL 60607. ©2010 Healthcare Financial Management Association. Volume 7, Number 7

Subscriptions are $110 for HFMA members and $165 for other individuals and organizations. Subscribe online at www.hfma.org/rcs or call 1-800-252-HFMA, ext 2. To order reprints, call 1-800-252-HFMA, ext. 387. To submit an article, contact Carole Bolster at cbolster@hfma.org.

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Health Administration Index and the HealthSTAR database. Material published in Revenue Cycle Strategist is provided solely for the information and education of its readers. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions in

Revenue Cycle Strategist articles and columns are those

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ISSN 1549-0858

Finance Training for Clinical Leaders: Lessons Learned

Schedule training sessions at lunchtime.“You will get greater attendance by clinical directors this way,” says David Witt, CFO, CHRISTUS St. John. “For me, 8 a.m. is a better time, but that’s the time clinical directors are busy managing their units.

Provide food during training meetings.Every hospital has a kitchen so the food is not that big of an expense, says Witt.

Create an environment where there are no stupid questions.“You have to encourage an atmosphere of free collaboration,” says Witt. One tactic: Ask questions of clinicians and admit it when you don’t understand something in the clinical arena. “Finance has to convey an open-minded attitude and be willing to learn,” says Witt.

Avoid lectures; encourage team learning.“We’re trying to get clinical leaders outside their comfort zone,” says Witt. “You can’t do that by lecturing. You do it by gathering a group of people and say-ing, ‘We’re all in this together.’”

Schedule regular training meetings.It takes time to create a true collaborative relationship. That’s why St. John holds quarterly educational meetings with clinical leaders, as well as continuous one-on-one exchanges. To further emphasize the importance of collaboration, leaders should make attendance at training meetings nonnegotiable, says Witt.

Bring up the same points over and over.“We’ve made the mistake of assuming the clinical directors understood what we taught only to learn that they didn’t,” says Witt. “So we’ve learned that we can never say, ‘We’re done with this issue.’ We have to bring up these issues with the directors over and over.”

Have separate meetings for leaders and front-line staff.“We have learned that we sometimes need to have separate meetings for directors, managers, and staff,” says Witt. “The managers or front-line staff may be more likely to discuss issues they wouldn’t feel comfortable bringing up if the director was in the room.”

cardiology services at St. John. “And you cannot make those decisions based on what the payment is going to be.”

However, the training has caused Holt and other clinical directors to become more assertive about questioning tests and procedures that are not medically necessary.

Holt has taught radiology staff to ask some additional questions before pro-ceeding with tests and procedures. “Clinicians are taught to make sure they have the right patient before conducting a test by checking the patient’s name, date of birth, and other patient identi-fiers,” says Holt. “We built on that and trained staff to also check the patient’s admitting diagnosis against the diagno-sis for doing the procedure. When there’s not a valid correlation, the radi-ology technologist needs to clarify whether the test is absolutely necessary.”

She gives the example of a patient who is admitted to the hospital for hyperten-sion, and is brought down to radiology for a foot X-ray. “That should prompt some questioning,” says Holt. “The facil-ity should call the case manager and question the physician’s order.”

There may be a valid medical reason for the X-ray, she says. But the physician might have ordered the inpatient test at the patient’s request or out of conven-ience—in which case, the hospital would not likely be reimbursed under a managed care plan. These contracts typically cover only inpatient services related to the admitting diagnosis—or services deemed medically necessary. Some services may be more appropriately provided in an out-patient rather than an inout-patient setting; other services may not be needed at all.

Pointing out denial issues.As clinical directors have become more managed

care savvy, they have also helped identify medical denial issues that we are able to take back to the payers for resolution, says Fluharty. For example, one health plan was denying the use of Doppler fetal monitors, but the rationale seemed con-tradictory. The clinical director brought this contradictory rationale to Fluharty’s attention, and the plan provided addi-tional information on their raaddi-tionale on the appropriate billing for this service.

“In the past, clinical directors were not always directly involved with denials,” says Fluharty. “But now they are more likely to pick up the phone and ask me questions. They are looking at plan policies and questioning the impact of their department practices on reimbursement.”

More Face Time

Reconciling revenue cycle issues across department silos cannot be done by e-mail, says Witt. “An e-mail is easy to shoot off, but oftentimes your point doesn’t get across and questions can’t be asked. You’ve got to get people to go face to face.”

At St. John, encouraging this type of interaction has involved creating a new position, rewriting job roles, and leading by example.

A clinical-finance liaison.A few years ago, St. John converted to a new health infor-mation system. The confusion that erupted led to the creation of a new posi-tion: ancillary information systems coor-dinator. (See a job description for the position at www.hfma.org/rcs.)

“I’m a liaison between clinical depart-ments and patient financial services,” says Christine Longmore, who holds the position. “We realized that there were all these different languages being spoken— medical records, billing, managed care—

and nobody could understand what the other department was asking.”

Let’s say radiology performs a procedure, the charges go across to the billing side, and the coders code it. But then patient financial services sends the claim back to radiology saying, “It is missing device code XXX.” This is when Longmore would step in to resolve the problem—saving clinical directors hours of detective work. “When finance asks a question, they are asking it in their terminology, which is not the terminology that the clinical department uses,” says Longmore.

However, it’s not just a translation issue. The two sides of the house see different information on their computer screens when they pull up a patient’s account. “All clinicians see on their computer is a short form. They don’t see all the detailed information that coders and the billing office see.”

Holt is grateful for the help Longmore provides clinical directors like herself. “With her help, I can focus more on the daily running of my department.”

Face-to-face training.Fluharty works for the CHRISTUS Health system, oversee-ing the managed care function for two of the system’s regions. But she spends much of her time in face-to-face inter-actions with hospital leaders and staff. This face time—which is encouraged by the system senior director of managed care—allows Fluharty to provide individ-uals with customized instruction about managed care contracts on an as-needed basis.

“My role is integrated into the day-to-day operations,” says Fluharty. “One day-to-day, I’ll sit down with someone in the busi-ness office who pays a claim, and then I’ll move on to a clinical director’s meeting

where I’ll go over some of the managed care contracts with the directors.”

Stand-up meetings.Seeing the hospital CFO make time for face time is a power-ful example. Witt makes a point to deal with problems rapidly and in person. “Oftentimes, you have to go to admitting or radiology to resolve issues,” says Witt. “We have a lot of stand-up meetings. We stand in the hallway or an office and get the issue addressed.”

A recent example: “I got a call from a patient who was frustrated that she could not schedule an ultrasound, and I didn’t understand why either. So I got the ultra-sound technologist, the admitting sched-uler, and myself in the same room to figure this out.”

It turned out to be a misunderstanding. Certain days/times had been mistakenly blocked off on the schedule, making it impossible to schedule any ultrasounds

during those times. The quick, face-to-face meeting resolved the situation. “I cannot tell you how many procedures we might have ended up losing because someone thought we could not book them,” says Witt.

Bill Hold Drop

As a result of finance-clinical collabora-tion, St. John has seen a decrease in the number of procedures performed out-side the scope of admitting diagnoses. This has helped the organization reduce denials to 0.51 percent of net patient revenue.

The teamwork has also contributed to a significant bill hold drop. “We are get-ting bills out the door much faster,” says Witt. “Clinical directors are now more aware of the overall billing process, and they no longer think, for example, that admitting authorizations have nothing to do with clinical care.”

Q: On Oct. 1, Medicare is eliminating sev-eral ICD-9-CM codes we use regularly, including “disorders of iron metabolism” (275.0) and “body mass index 40 and over, adult” (V85.4). Why is this being done and what codes should be reported in their place?

A: Each year, the Centers for Medicare & Medicaid Services’ (CMS) ICD-9-CM Coordination and Maintenance Committee, in conjunction with specialists in the field, reviews and revises both diagnosis and procedure codes to keep them current with advances in medicine and emerging technologies. New, deleted, and

revised codes take effect at the beginning of the new fiscal year on Oct. 1 and are published in June in the Federal Register and on the CMS website.

Often, codes are revised to make them more specific. In the case of “disorders of iron metabo-lism,” the broad category code is being replaced with “hereditary hemochromatosis” (275.01), “hemochromatosis due to repeated red blood cell transfusions” (275.02), “other hemochro-matosis” (275.03), and “other disorders of iron metabolism” (275.09). Similarly, the single V code for body mass index over 40 is being replaced with five codes, V85.41 to V85.45,

denoting ascending degrees of obesity from BMI 40-45 up to BMI 70+. These more specific codes should be reported in place of the earlier codes.

Other new diagnosis codes include H1N1 and avian flu virus codes and jaw pain. Among the new procedure codes are several specific sinus carotid stimulation implants replacing the previ-ous blanket code, and revisions of spinal fusion procedures. Summaries of all changes can be found at www.cms.gov/ICD9ProviderDiagnostic Codes/07_summarytables.asp#TopOfPage.

Jennifer Swindle, RHIT, CCS-P, CPC, CPMA, is director, coding and compliance, Pivot Health LLC, Nashville, Tenn. (jennifer.swindle@pivothealth.com). Coding Q&A

Send your coding questions to Carole Bolster at cbolster@hfma.org.

By Jennifer Swindle, RHIT, CCS-P

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Opening your e-mails and reading newsletters is just not as much fun as it used to be. A few years ago, the onslaught of new information and tech-nology was exciting. Receiving information gave healthcare providers regular “finds” that enabled improved processes to be put into place or opportunities to increase revenues.

These days, it seems our in-boxes are continually filled with information about new rules, revisions to existing rules, or just plain bad news. How we long for the good old days when information flowed just a bit slower!

Enforcement of the Guidelines

The Centers for Medicare & Medicaid Services’s (CMS) revision to the enforcement of the signa-ture guidelines for Medicare fee-for-service (FFS) claims is just one of those issues that will create additional responsibilities for healthcare providers. Signature guidelines have been an integral part of the documentation and reimbursement process for a long time; however, enforcement of these rules has not been as diligent or coordinated.

A November 2009 CMS Comprehensive Error Rate Testing (CERT) Program report indicates that the error rate for improper Medicare FFS pay-ments increased significantly in 2009 (7.8 per-cent), up from 3.6 percent in 2008. This increase was due to a number of factors that were cited in the CERT report, one of which was a strict adherence to the signature legibility requirements.

The result of this development is a rededication to the appropriate enforcement of these guide-lines by review contractors, beginning with Transmittal 327 (R327PI), dated March 26, 2010, with an effective date of March 1, 2010, and an implementation date of April 16, 2010.

The revised guidelines provide reviewers with a clear decision tree indicating if the signature requirements have been met or if the provider needs to be contacted for additional information. This process will be followed only if all other requirements regarding the claim are met, leav-ing just the signature issue as the reason for denial. The guidelines explain the new enforce-ment policies (www.cms.gov/transmittals/ downloads/R327PI.pdf).

Financial Impact

The significance of these changes flows straight to the bottom line. Total overpayments identified for inpatients during this CERT review were $6 billion. In the past, signature requirements were not strictly adhered to and did not necessar-ily result in a take-back. However, going forward (for all but Recovery Audit Contractor reviews, which were specifically excluded from the list of CMS audit programs—for now), the payment will be lost if the signature is not included, is not legible, or is not properly documented.

Although the process of obtaining and submitting legible and complete signatures is not a new process and is assumed to be part of standard operating procedure, protecting revenues and ensuring that your facility is appropriately reim-bursed should keep this issue on the top of your radar screen.

What You Can Do

Here are some suggested action steps: >Review your current process.First and

foremost, get a feel for how well (or poorly) your facility is adhering to the guidelines.

>Re-educate.If you do not fare well in step one, the next logical and less invasive step is a staff re-education program.

>Re-evaluate.If education alone is not going to help your organization comply with the guidelines, determine whether your process needs to be adjusted to achieve success (review signature logs and/or attestation processes).

Compared with some of the current daunting issues that may result in decreased revenues, the signature guidelines are relatively mild. Additionally, the issue is tangible and can be directly addressed with proper procedures and education.

So call a friend and have him or her e-mail you a good, clean joke—for old times’ sake.

George L. Kelley is COO, CBIZ KA Consulting Services, LLC, East Windsor, N.J., and a member of HFMA’s New Jersey Chapter (gkelley@cbiz.com).

Revenue Assurance By George L. Kelley

Signature Guidelines: Revisions to Enforcement for

Medical Review Purposes

CMS is renewing efforts by its contractors to enforce compliance

with signature guidelines.

The revised guidelines

provide reviewers with a

clear decision tree indicating

if the signature requirements

have been met or if the

provider needs to be contacted

for additional information.

Estimating Patient

Responsibility

Register now to attend Transparency in Health Care: Patient Responsibility Estimation Best Practices, an HFMA webinar to be held July 29 from 2:00 p.m. to 3:30 p.m. CT.

Ensuring transparency in the price of health care can have a positive impact for providers by accelerating revenue collection and reducing the risk of bad debt. In this webinar, Moses Taylor Health Care System will share best practices and recommendations for using patient responsibility estimation to shape internal policies and processes to maximize results.

This webinar is free to HFMA members. For more information, visit www.hfma.org/ Education-and-Events and scroll down to Upcoming Webinars.

Recent studies report that healthcare providers are not adequately prepared to comply with the new Health Insurance Portability and Accountability Act (HIPAA) Health Information Technology for Economic and Clinical Health (HITECH) Act privacy and security rules, which largely became effective in February 2010. While privacy officers have been scrambling for months to ensure compliance and mitigate risk, financial leaders have been left largely uninvolved—until now.

Noncompliance with the new rules can deteriorate the reputations and balance sheets of unprepared hospitals. Fines of up to $1.5 million per year can be imposed, and large breaches of protected health information (PHI) have become a matter of public record. The Department of Health and Human Services (HHS) Office for Civil Rights now posts a list of providers with breaches affecting 500 or more individuals. The list is on its web-site, easily accessible to all, and includes some of our nation’s largest and most reputable providers (www.hhs.gov/ocr/ privacy/hipaa/administrative/breachno-tificationrule/postedbreaches.html).

Understanding the Cash Impact

A single breach of PHI through “willful neglect” could cost $25,000 per incident (if organizations move to fix the security weakness) or $50,000 per incident (if they don’t). The maximum fine is $1.5 million per year.

Beyond the negative impact to an organi-zation’s balance sheet, large-scale breaches can demand weeks of executive time and potentially hundreds of thou-sands of dollars in attorneys’ fees. Breaches can quickly become a public relations nightmare and affect an orga-nization’s competitive position at the local, regional, and even national level.

The new message for healthcare providers is clear. The days of relaxed privacy provisions under HIPAA have come to a close.

Understanding the New HIPAA Rules Similar to the previous HIPAA rules, the updates include many provisions that are intended to safeguard patient privacy and data security. However, providers should review them carefully and engage legal counsel when necessary, as they are often written in overzealous language and may appear more onerous than intended. In addition, HHS has issued guidance docu-ments, and has more scheduled to be issued, on how to interpret the rules.

The following six areas include some important differences that healthcare financial leaders should know.

Accounting of disclosures (AOD).Under the American Recovery and Reinvestment

Act of 2009 (ARRA), covered entities using or maintaining an electronic health record (EHR) must document dis-closures, by logging them, for treatment, payment, and authorization. For exam-ple, providers may need to log each time a patient’s information is disclosed to a nurse or other healthcare worker during a visit or postencounter for continuing care. This proposed requirement clearly would place a significant burden on providers, and there is much controversy around this change. This is one area that the government plans to clarify in upcoming guidance.

Tip: EHRs must include the ability to log

each instance when a clinician or staff member views the patient chart, plus the new requirement for logging all treat-ment, paytreat-ment, and operations uses.

Direct liability for business associates.

Effective Feb. 17, 2010, business associ-ates (BAs) to covered entities are subject to the same risk for litigation and penal-ties as the covered entity. For example, while providing technical support for any type of electronic system or information, a vendor is now equally liable as the cov-ered entity for any breach.

Tip: Providers should review BA

agree-ments and ensure that vendors are ready to comply.

Data encryption rules.As a security measure required for interoperability, encryption is defined simply as an electronic means of making PHI inaccessible or unread-able. PHI should be accessed only with a password or with encryption software. If unauthorized individuals try to access the data, the system should display a stream of ones and zeros, rendering the data unreadable.

Healthcare Reform By Jan P. McDavid

Privacy and Security Become Financial Concern Under HITECH Act

Revenue cycle leaders should be sure to understand their risks

under the new privacy and security rules.

Key Areas of Financial Risk

> $25,000-$50,000 per incident > Maximum fine of $1.5 million per year > Executive time

> Legal fees

> Public relations impact > Employee terminations > Cost of imprisonment

The HITECH guidance on this subject contains an exhaustive list of acceptable encryption methods. Redaction alone is not acceptable.

Tip: All IT applications, including EHRs,

should provide encryption.

Security breach notification.The covered entity must notify the affected individual within 60 days after discovery and, if a breach affects 500 or more individuals, providers must provide a notice in promi-nent media outlets in the immediate area, as well as notify the HHS Secretary.

Informing patients of a breach applies in specific situations, but there are exceptions.

Tip: Providers should create a breach

notification plan and explore exceptions with their designated legal counsel, risk manager, or compliance officer.

Sale of PHI.The sale of PHI without writ-ten authorization is a new issue under ARRA . Providers must avoid a sale of PHI for pharmaceutical and medical device marketing without a written patient authorization. Exceptions include public health activities, research, treatment, and sale or merger of a medical group.

Tip: Providers must avoid the sale of PHI

without written patient authorization.

State attorney general involvement.State attorneys general can now bring lawsuits against providers on behalf of patients and receive costs and fees. This change makes mitigation of damages a top prior-ity upon notification of a breach.

Tip: State attorneys general can bring

lawsuits against providers.

Finally, along with increased penalties for wrongful disclosure of PHI, there is a

new category called “willful neglect,” defined as willfully disregarding knowl-edge of a violation. Providers should simply be aware of this new provision and educate staff accordingly.

Top-of-Mind Takeaways for Providers Healthcare financial leaders don’t need to know every nuance of the new HIPAA rules. Much of the heavy lifting should be shouldered by privacy, security, and compliance officers. However, executives should be aware of the risks involved with breach of patient privacy because, in the end, they will be held responsible for their organization and their employees’ actions. They should also understand the practical steps necessary to protect themselves—and their patients.

Here are three important points to remember:

> The auditors are coming. Previously a complaint-driven process, now the government can proactively audit a provider, rather than only react to complaints.

> HHS and the Office for Civil Rights are especially concerned about mass breaches (those affecting 500 or more patients). They will focus especially on unencrypted data from devices such as mobile devices, laptops, and flash drives.

> New HIPAA regulations go beyond IT and legal processes. The HITECH changes and the drive toward automa-tion and interoperability require a change in the way medicine is practiced and information is shared.

Jan P. McDavid is general counsel and compliance officer, HealthPort, Alpharetta, Ga. (jan.mcdavid@ healthport.com).

HIPAA Then and Now: A Provider Comparison Chart

Business Associates

Lawsuits

Reporting

Disclosures

Then

HIPAA applied only to the use and communication of PHI by covered entities.

Patients could file a complaint with the government, but not a lawsuit, and could not receive money as a result of the complaint.

Reporting was limited only to the site where the breach occurred.

Patients generally allowed their insurers to obtain disclosure of “any and all records.”

Covered entities were required to provide patients with a list of all disclosures, not including those for treatment, payment, or operations.

Now

HIPAA also applies directly to business associates, who may also be liable for a breach.

Patients can now sue through a state’s attorney general under HIPAA and be financially compensated as a result.

In addition to business associates reporting to the site, covered entities must now report to the patient in certain circumstances.

Patients can prevent insurers from receiving records when paying out of pocket for medical services.

Patients may now obtain a list of all disclosures, including those for treatment, payment, and operations.

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Figures at a Glance

Charity Care and Bad Debt Deductions and

Expenses, 2006-09

Not-for-profit and public hospitals follow differing accounting standards. For exam-ple, the treatment of bad debt is an expense for not-for-profit hospitals but a deduction from revenues for public hospitals.

Differences in patient mix between not-for-profit and public hospitals are reflected in charity care and bad debt deductions and expenses. Charity care consumes slightly more revenue in public than in not-for-profit hospitals, but overall accounts for a small percentage of total revenue. By contrast, bad debt equals about 10 percent of net patient revenues in public hospitals, but only about 6 percent in not-for-profit hospitals. Expanded Medicaid eligibility and increased

access to private insurance following the healthcare reform legislation may reduce these percentages in future years.

The exhibit selects key financial indicators for nonfederal general acute care hospi-tals that contributed data from 2006 through 2009. Hospital responses were weighted to make the sample comparable to the national distribution of all hospitals based on hospital class, location, owner-ship, and profitability.

Data for this analysis were developed by Thomson Reuters. For more information, e-mail David Koepke, Ph.D., at healthcare. articles@thomsonreuters.com.

Bad Debt % of Net Patient Revenue

0 4 8 12

2006 2007 2008 2009

Charity Care Deductions % of Gross Patient Revenue

0 1 2 3 2006 2007 2008 2009 Not-for-profit Public