EHR incentive payments improve bottom line of for-profit hospitals
Meaningful use incentive payments made in 2011 helped boost the bottom line for several for-profit hospital companies by almost $400 million, according to Fitch Ratings.
Fitchs report, For Profit Hospitals Quarterly Diagnosis, published in April, found that meaningful use incentive checks added a cumulative $396 million in earnings before interest, taxes, debt and amortization.
All six massive for-profit hospital companies examined by Fitch had received an incentive payment ranging from $11 million, which went to Universal Health Services, to $306 million, which went to HCA.
According to the most recent report from the Centers for Medicare & Medicaid Services issued in April, 2,667 Medicare and Medicaid incentive payments had been made to both eligible hospitals and critical access hospitals through March. There were 566 hospitals that received money from both Medicare and Medicaid.
Incentive payments to hospitals are based on a complicated formula, with qualifying hospitals earning a base of $2 million. The report noted that the 2011 incentive payments, which Fitch considered modest, are expected to be bigger in 2012 and 2013.
No known report has noted the net gains for doctor practices qualifying for incentives. Since January 2011, 29,931 eligible health care professionals received $628 million in Medicare incentives through March 2012, according to the CMS report. Since May 2011, 44,014 eligible professionals, which include physicians, dentists, nurse practitioners and chiropractors, collected $792 million in incentives. The Medicaid program granted eligible professionals to purchase a system with their first incentive payment, and the Medicare program required eligible professionals to have a system in place to qualify.
Practices could earn up to $44,000 per doctor over five years from Medicare or almost $64,000 over six years from Medicaid if they show meaningful use of EHRs. Unlike hospitals, they can’t participate in both programs,
In a March 26 blog post, National Coordinator for Health Information Technology Farzad Mostashari, MD, stated the Office of the National Coordinator has set a goal of having at least 100,000 eligible professionals paid incentives by either the Medicare or Medicaid meaningful use incentive program by the end of 2012.
Fitch stated the hospital companies examined in the report are not expected to use their positive cash flow to reduce debt. They are anticipating acquisitions of other hospitals to remain a top priority. Fitch could not provide specifics on expected acquisition activity, but did state that Community and HCA had the most acquisition activity in 2011.
A Feb. 28 report released by Irving Levin Associates stated 86 hospital merger or acquisition deals took place in 2011, the highest number in the past decade. Moodys Investors Service issued a report in March predicting those trends will continue.
Copyright 2012 American Medical Association. All rights reserved.
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Submited at Thursday, May 17th, 2012 at 6:00 am on Uncategorized by sofia
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