"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Thursday, August 18, 2011

Red Alert for Hospitals

No matter what side you take in the current political debate regarding the Federal debt issue, the bottom line is that there isn't enough funding to support the expansion of our population as the baby boomers age and the cost of providing health care increases.  As an industry, we need to brace ourselves for significant payment reductions from Medicare and Medicaid, but also from commercial and private insurers.  In addition, we need to change how we deliver care. 

WMHS is coming off of one our best financial year's ever;  however, we are stepping up our plans for driving cost out of the system through ongoing process improvement.  Chris Van Gorder, CEO of Scripps Health in San Diego, put it succinctly, "the debt ceiling challenge for our country has created a new and unexpected challenge for us."  Under this challenge, hospitals could close or eliminate services and physicians could stop seeing Medicare patients beyond those who have stopped already.  If the super committee of 12 can't come up with a plan, then Medicare will be cut by $50 billion in payments to hospitals and $11 billion to physicians beginning in 2013.  We have to improve processes and eliminate process variation in the delivery of care ASAP.

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