Healthcare
Cost Issues
We appreciate your interest in learning more about the rising
costs of healthcare. We feel we have an important message – while
health insurance premiums are going up, Upland Hills Health
is doing our part to keep costs in line.
It’s difficult to turn on the television or open a
newspaper today without finding more about the skyrocketing
healthcare costs. We would like to share
what we are doing and help clarify some of the complexities
relating to healthcare costs.
More information follows:
Frequently Asked Questions (FAQs) relating to patient financial
services
QUESTION: If my insurances do not change, why must
I show my insurance wallet card at each visit?
ANSWER: This is a requirement of most insurers and
other third-party payers (i.e. HMOs or claims administrators),
who request verification with the wallet card at each visit. In
fact, one insurer recently informed us, without a wallet
card presented, we should consider the patient a self-pay
patient (uninsured patient) until the card is provided.
QUESTION: If I do not have insurance, will you still
treat me?
ANSWER: YES. Upland Hills Health is committed
to serving patients whether or not they can pay for part
or all of the essential care they receive. We believe
in offering compassionate care from the bedside through the
billing office. At the same time, we do have a responsibility
to all patients and payers to attempt to obtain payment from
those able to pay. The financial viability of hospitals
is affected by their success in obtaining payment from those
responsible. Our “Community Care Application” is
available by calling or emailing (608) 930-7108 or UHH_Community_Relations@uplandhillshealth.org.
QUESTION: Do I make co-payments or coinsurance payments
at the time of my hospital visit?
ANSWER: Yes. If you are able to pay, we accept
cash, credit cards and personal checks. This procedure
helps reduce the costs of collecting these payments later.
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What is driving these increases?
The Wisconsin Hospital Association (WHA) monitors cost trends
and shares data with Upland Hills Health, routinely. In
a recent study, the WHA found the following key factors relating
to rising costs:
- Advances in patient care: New medical treatments
and technologies often mean higher survival rates and safer,
more convenient hospital services. These advances
are costly to fund.
- Input costs: Workforce shortages are driving up
healthcare worker salaries at rates much higher than inflation. In
Wisconsin, labor costs account for more than 50 percent
of hospital spending.
- Government underfunding: The Medicare and Medicaid
programs DRAMATICALLY underpay their fair share of hospital
expenses
- Employer sponsored health insurance: Hospitals
are finding without economic consequences (copayments,
deductibles, shared premiums) employers consume more health
resources.
- Less than optimum care: Some researchers have found
higher costs are due to poor quality cares. Upland
Hills Health is continually improving the quality of care
we provide.
The WHA also studied how healthcare dollars are spent and
found hospitals’ percent of healthcare dollars has decreased significantly
(17 percent from 1995 to 2001) but at the same time, prescription
drug dollars have increased dramatically (40
percent during the same timeframe.) It is interesting
to note this increase closely correlates to the increased
television ad expenses for prescription drugs we have viewed
in recent years.
The WHA study also looked at who is using healthcare resources. Those
who are healthy (80 percent of the population) are spending
just 18 percent of the healthcare resources for prevention
and wellness testing. At the same time, those with
catastrophic, episodic and chronic illness are utilizing
the majority of the resources. This means 20 percent
of the population is utilizing 82 percent of the healthcare
resources.
To read the Wisconsin Hospital Association’s full
report, click here:
http://www.wha.org/newsCenter/pdf/2003healthindustryanalysis.pdf
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Impact of government shortfalls on Upland Hills
Health:
The Medicare and Medicaid programs DRAMATICALLY underpay
their fair share of hospital expenses. This forces
hospitals to trim costs wherever possible, and to shift costs
to private sector payers (i.e. insurance companies, HMOs,
and self-pay patients). At Upland Hills Health in 2003,
we deducted nearly $9.7 million from our revenue for Medicare
and Medicaid.
The percentage of government shortfalls typically increases
each year. Efforts are under way to apply for a new
reimbursement status and improve Upland Hills Health’s
reimbursement. The Wisconsin Hospital Association’s
website, www.wha.org has
some detailed information about the impact of government
underpayments on state hospitals.
Guest Column: The Tax No One Talks About … For
Now
By Eric Borgerding, WHA Senior Vice President
Income, sales, property, estate, corporate, alternative
minimum, capital gains, gasoline …. taxes
we all know, in fact some of them (like Wisconsin’s
highest-in-the-nation gas tax) we know too well,
or get reacquainted with right around April 15 when
they come for a visit.
But let me take a moment to introduce the new tax
in town – Medicaid’s Hidden Tax on Health
Care. You may not know it as well as the others,
but let me assure you, it knows you (especially if
you are an employer or employee paying for health
insurance). Medicaid’s Hidden Tax has been
here awhile — came to Wisconsin in about 1997
and has been expanding ever since. If and when it
leaves is entirely up to Governor Doyle and the Legislature.
The Hidden Tax on Health Care is not from Washington
DC – it’s from right here in Packer Country.
It’s the direct result of years of the Legislature
and Governor failing to pay for existing state health
care programs – namely Medicaid (MA) – while
continuing to create new programs.
A quick look at the numbers tells the story. In
2003, hospitals were paid 59 percent of what it COSTS
to provide care to MA recipients – one of the
worst payment rates in the country. The result – in
2003 at least $349 million in unpaid MA hospital
costs were shifted onto the health insurance premiums
of businesses and families – a Hidden Tax on
Health Care.
To put this number in perspective, that’s
more than five times the state’s GPR share
of BadgerCare, almost 11 times the GPR share of SeniorCare,
and the equivalent of a $250 annual tax per insured
family in Wisconsin.
The Hidden Tax is starting to get around in the
halls of the Capitol – we think that’s
a good thing. In fact, WHA will soon be teaming up
with our allies (WMC) from the business community
in a public effort to make sure a lot more people
hear about The Hidden Tax – get to know it,
understand it, and then (hopefully) repeal this jobs
killer.
Bottom line: If lawmakers want to curb costs and
make health care more affordable, they must start
with their own programs first. They have to bite
the budget bullet, appropriate the funding necessary
to pay hospitals at least something approaching what
it costs to provide care, and quit shifting the cost
of government health care programs onto the backs
of employers, employees and their families. |
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Costs unique to healthcare:
- Medical equipment and technology are expensive. As
an example, Upland Hills Health recently purchased a new
CT scanner in our radiology department for approximately
$900,000. The older, leased unit was becoming worn
out. CT scans, today, are a necessity in order to
support an emergency department or surgery department,
as well as other units of the hospital.
- Shortages in the workforce drive up costs. Upland
Hills Health competes with local, state and national hospitals
and health systems to recruit and retain skilled professionals
in not only nursing, but also in radiology, pharmacy and
laboratory services. At Upland Hills Health, last
year we allocated $54.9 percent of all expenses to salaries
and benefits. Wages in clinical areas such as nursing,
pharmacy, radiology and laboratory are monitored and adjusted
when needed to remain competitive with local and Madison
hospitals.
- Prescription drugs are costly. Just as your
individual costs for drugs at home continue to increase,
our hospital pharmaceutical expenses also increase sharply. Because
our patients need certain medications, regardless of the
costs, we pay higher prices.
- We are open 24/7. Due to the unpredictable nature
of illness and injury, our doors are always open. We
are committed to maintaining safe staffing levels, despite
the number of patients here at a given time. Unlike
other industries, we are not able to reduce our hours of
operation to control costs.
- We do not do credit checks. We do not turn away
poor paying patients. We assess health needs, not
wallets, when patients present at our door. During
2003, we wrote off nearly $252,000 in charity care or other
uncollectible accounts for those with little or no health
insurance.
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Cost control efforts at Upland Hills Health:
We talk to patients every day who share their struggles
with the cost of healthcare. We understand the severity
of the issue, and would like to share with you what we are
doing to control costs. We are:
- Reducing supply costs by eliminating standard “patient
kits” and individualizing the room supplies given
to patients – as needed.
- Cross-training staff to work in different areas to reduce
the need to hire more workers or bring in agency staff.
- Developing our own “Staffing Resource Pool” pool
of local nurses and other professionals to call when patient
loads increase. Again, reducing our dependence on
agency staff.
- Following variable staffing by calling off staff
when there are fewer patients and calling in staff when
there are more patients or more seriously ill patients;
- Upgrading our computer systems to reduce paperwork and
eliminate duplicate efforts;
- Upgrading our nurse call monitoring system to improve
staff efficiencies;
- Upgrading our phone system to improve scheduling efficiencies;
- Revamping our pharmacy “formulary” or available
inventory to offer generic and select brand name drugs. This
helps us better monitor the escalating costs of medications.
- Joining purchasing groups with other hospitals to seek
more competitive bids on expensive medical equipment and
supplies.
- Outsourcing our pharmacy services for nursing and rehab
residents. This improved our purchasing power and
allowed for direct billing to insurance companies.
- Constructing more energy efficient and staff-efficient
facilities – and at the same time, making our surroundings
more patient friendly.
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Where do Upland Hills Health’s ‘profits’ go?
When Upland Hills Health’s revenue exceeds its expenses,
we use the difference to fund facility improvements and improve
our patient services. This is done in a variety of
ways -- identified during our strategic planning and budgeting
processes.
Typically, we make capital purchases for new equipment,
new technology, facilities upgrades and new construction. We
also use profits to expand existing services or reach out
to new communities. Some of our profits are saved in
local banks to lessen our risk and support cash flow in the
event of a financial setback. These reserves also accumulate
interest, which adds to our financial stability.
In 2003, Upland Hills Health’s ‘profit’ (or
margin, as is often described in the hospital industry) was
5.53 percent. This means for every dollar we received,
we reinvested nearly six pennies back into the organization
for future growth or stability.
Upland Hills Health is not owned by stockholders. As
a non-profit corporation, we are governed by a nine-member
board of directors, all volunteers. No profits are
returned to our Board members. We reinvest profits
to support our mission – to serve as the heart of quality
health in our communities.
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