"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.

Wednesday, April 27, 2011

Total Patient Revenue

Beginning this fiscal year (2011), WMHS is no longer paid on a volume-based model (charge per case).  We are now paid under a total patient revenue model.  WMHS is one of 10 Maryland hospitals in what you may call a 3-year demonstration project.  Under TPR, our annual amount of total revenue is fixed for all services, care, treatment and procedures provided in the hospital.  Our focus is now the appropriateness of the admission rather than the number of admissions.  We must also focus on the setting where the care or service is delivered.  TPR focuses on wellness and the cost effectiveness of the care delivered; it is preparing us for health care reform on a national level.  Introducing this change throughout WMHS has had its challenges, but it is so rewarding to see the leadership of the organization embrace this change.  Knowing that we have an opportunity to make a difference in lives of those we serve, gives one a great feeling and reminds us why we chose this field.


  1. Hi Mr. Ronan,
    If the 10 hospitals receiving TPR payments are provided a fixed revenue 'budget', how does this work when a hospital has multiple payers. For example, if a hospitals TPR revenue is $100 M, does Medicare pay $40 M, Medicaid $15 M, Private Insurers $45 M, or something to that effect? Is it allocated based on the population's payer profile? If so, have the private insurance companies been willing participants?
    Thanks for your insights

  2. Being in a rate regulated state, adjustments to our $300M in revenue are done so in rates by the Health Services Cost Review Commission.

  3. Thanks for the speedy reply. Just so I am clear, the HSCRC determines what percentage each payer must contribute to the hospital's $300M revenue? Has there been any pushback from different payers who disagree with their 'allocation' of the annual budget?
    Also, do you partner with tertiary providers in order to mitigate the financial risk of high acuity care under capitation?

  4. In Maryland, all payers (Medicare, Medicaid, private insurers, and self-pay individuals) pay the same rate, which is determined by the HSCRC. A payer’s “share” of our total revenue is based on the use of hospital services by its enrollees. We have not partnered with tertiary care providers on the more complex cases.