revenues

Study: Cardiology costs rising faster

Thu, 06 Dec 2007 06:59:57 -0500

New data from the Medical Group Management Association suggests that some key specialties--particularly cardiology--are continuing to face financial pressures.

One new study of cardiovascular/thoracic surgery and cardiology practices found that median total medical revenue flattened in cardiology practices dropped $8,216, a drop of just under 1 percent. This is a striking change from previous years, which averaged 4.7 percent annual increases. This came, in part, because operating costs have increased 3 percent, from $522,303 per FTE physicians in 2005 to $538,135 in 2006. Orthopedic practices, meanwhile, saw costs and revenues per FTE physician stay flat from previous years, with costs per FTE increasing at 2.4 percent during 2005 and 2006 and revenue climbing $1.12 million to $1.14 million.

Anesthesiology practices, meanwhile, actually did better in 2006 than previous years. Practices saw operating costs drop sharply, about 10 percent, while revenue climbed 5.1 percent from 2005 to 2006 after two years of decline.

To get more data from the study:
- read this MGMA press release

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FDA slams use of Avastin for breast cancer

Tue, 04 Dec 2007 06:59:57 -0500

While Avastin has won a large patient base for use in treating colon and lung cancer, it's looking like maker Genentech won't be able to extend that success to breast cancer. A new report from the FDA suggests that not only did Avastin fail to increase the lifespan of women with cancer, it also caused meaningful side effects.

The agency meets tomorrow discuss whether it should approve Avastin for treatment of breast cancer. Despite the negative comments, it hasn't yet said whether it will approve Avastin. Meanwhile, staff members did note that Avastin does seem to delay the period of time before cancer worsens. Now, an FDA advisory panel will debate whether that benefit outweighs the risks imposed by the drug.

Regardless, despite its extremely high price tag, Avastin seems to be here to stay for treating other cancers. It generated $1.7 billion in revenues for Genentech for the first nine months of this year alone.

To learn more about the debate:
- read this piece from The New York Times

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HCA income up, but bad debt still significant

Thu, 08 Nov 2007 06:59:57 -0500

HCA turned in a nice performance for the third quarter, posting its first quarterly growth in income since going private last year, but like its peers, it's still struggling with unpaid patient bills. The hospital chain just reported that net income grew 25 percent in the third quarter of this year, to $300 million. (This number was boosted by $316 million in income from its sale of two Swiss facilities.) Meanwhile, revenues climbed 5.7 percent, to $6.57 billion, a rise HCA attributed to getting better contracts in place with private and government health plans.

At the same time, however, it calculated that bad debt would eat 10.9 percent of this year's revenues--down from 11.8 percent for the previous quarter, but still significant. Analysts said that HCA faces higher numbers of medically-indigent patients than some competitors, given that 44 percent of its hospitals are in Florida and Texas, where there are more uninsured patients than elsewhere.

To learn more about HCA's financial position:
- read this piece in The Tennessean

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Should practices "get tough" with insurers?

Fri, 02 Nov 2007 07:59:59 -0400

This week, as part of my coverage of the Medical Group Management Association's annual meeting, I wrote about how hard it's getting to make a profit as a medical group. In an editorial, I noted that for many types of groups (including some lucrative specialties), expenses are rising faster than revenues, something which obviously can't go on forever.

In response, a practice manager from California wrote in with this take:

"I believe that doctors have to get tough with these heartless insurance companies. I read in Physician's Practice a while back that the pediatricians told the parents that the insurance companies were not reimbursing appropriately and that they were not going to dispense vaccines until the insurance companies coughed up the money. This is the kind of hardball that physicians need to play. If we pay $10 for a vaccine I expect that we will be reimbursed properly. If we are not, the parents are sent a bill. When they return for a visit and have not paid, then we tell them that they can (a) pay what they owe or (b) re-schedule for a time that they can pay. (Our office) is not a free clinic and I do not believe that physicians should be in the business of losing money. I will NOT stand for it."

With all due respect to my correspondent, my feeling is that while groups should hold the line with insurance companies, they're not going to get much more juice out of them at this point. On the other hand, they can certainly tighten up patient collection measures--after all, you have more leverage with patients, who at least stand there and look you in the face.

Readers, do you think that groups can regain their footing financially by drawing a line in the sand with insurance companies? (I'd love to hear stories of how you won the day in battles like the one outlined above.) And OK, maybe one group doesn't have sufficient clout on its own, but if most groups pushed harder, would it work? Or are we on the verge of some major shifts toward business activities that don't involve collecting from a health plan? - Anne

Senator may seek tougher charity rules for nonprofits

Fri, 02 Nov 2007 07:59:55 -0400

Fairly or not, Sen. Chuck Grassley (R-Iowa) seems to be exasperated with nonprofit hospitals--and that could mean trouble. Yesterday, during a roundtable discussion on nonprofits and charity care, Grassley said that he isn't satisfied with the extent to which nonprofits share information on the community benefits they provide. In fact, his staff has apparently already prepared draft proposals which would impose tougher charity demands--including a possible rule requiring that they dedicate 5 percent of annual patient operating expenses or revenues to charity care--but Grassley says he hasn't decided whether he'll go ahead and file legislation to this effect.

Grassley is piqued that some hospitals are opposing changes to the IRS Schedule H and Form 990 which would require nonprofits to provide more detail on their charity care activities and overall community benefit. Some nonprofits have challenged the IRS's plans, saying that the proposed changes would pose a heavy reporting burden and would impose too restrictive a definition of community service, limiting their ability to respond creatively to community needs.

To find out more about Grassley's plans:
- read this Contra Costa Times piece

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VA removes Avandia from its formulary

Thu, 18 Oct 2007 06:59:58 -0400

VA dealt a body blow to type 2 diabetes drug Avandia this week, deciding that while it would continue to make the drug available to existing users, officials would no longer allow it to be prescribed it to new patients. This decision is far more than a public relations problem, as the VA accounts for a whopping 8 percent of Avandia's sales. The VA issued more than 161,000 Avandia prescriptions between September 2006 and August 2007 alone.

The decision follows on a now-famous journal article published in May which suggested that using the drug could increase heart attack risks by more than 40 percent. The article triggered a dramatic drop in the use of Avandia, which at one point accounted for $2.2 billion a year in revenues for GlaxoSmithKline.

To find out more about the VA's decision:
- read this piece in The New York Times

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MDs, others face charges on Net pharmacy operation

Mon, 06 Aug 2007 06:59:56 -0400

A federal grand jury in San Diego has indicted 18 people on charges arising from a large-scale Internet pharmacy operation. The grand jury charged these individuals with racketeering, fraud and money laundering charges. It marks the first time racketeering charges have been filed in connection with an Internet pharmacy case.

According to the indictments, the pharmacy business, Affpower, sold about 700,000 prescriptions to customers using illegal prescriptions. The company generated $126 million in revenues during a two-year period ending in June 2006, according to a federal official involved with the case.

The indictment, which included 313 counts, included three doctors and two pharmacists from among the pool of defendants. The doctors' job was to give a quick look to online questionnaires filled out by Web site visitors, then approve and write prescriptions. The physicians got $3 for every form they reviewed.

To learn more about the charges:
- read this piece in the San Diego Union Tribune

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HCA profits fall, smacked down by debt payment

Fri, 03 Aug 2007 06:59:58 -0400

Hospital chain HCA's profits fell dramatically during the second full quarter since private investors acquired it. While the chain's revenues for the quarter were up 5.8 percent, to $6.7 billion, its net income fell 60.7 percent during the quarter to $116 million, down from $295 million during the same quarter the previous year.

HCA's income fell primarily due to paying down debt it took on when it went private. The company spent $361 million more this year than it did last year to pay off interest on the debt it took on in going private. That's just a drop in the bucket, meanwhile, compared with the $16 billion in new debt and $11.7 billion in existing debt it faces. At the same time, the amount of revenue it set aside to cover unpaid medical bills went up to 11.2 percent from 10.6 percent last year.

On the positive side, HCA was touting the 7.1 percent increase in average price charged to patients, more money from managed care companies and higher volumes of sicker, more profitable patients.

To learn more about HCA's situation:
- read this article in The Tennessean

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SPOTLIGHT: Hospitals can learn from smart retailers

Tue, 24 Apr 2007 20:01:32 -0400

Once again, Tony Chen of industry blog Hospital Impact has nailed an important concept--that hospitals can and should learn much from successful retailers. Chen describes how computer vendor Apple became the country's highest earning retailer, generating a staggering $4,000 per square foot in revenues, and teases out some key lessons hospitals can learn from its success. Blog

After big losses, Henry Ford prospers

Sun, 22 Apr 2007 20:01:34 -0400

It's a good time for the Henry Ford Health System, which is coming back strong after suffering major losses a few years ago. The nonprofit system has done well again this year, reporting a 2006 net income of $134.9 million on revenues of $3.25 billion. Revenues are up 6.6 percent from 2005, and net income a whopping 20 percent. Revenue sources included $1.5 billion from the system's Health Alliance Plan and $1 billion from its 920-bed Detroit hospital, physician practices and behavioral health program. These numbers are a huge turnaround for the Ford system, which had lost $87.7 million in 2001. Now it's on a winning streak; in fact, this is the fourth year in which the health system has improved earnings. Buoyed by its new success, the system is building a $310 million hospital and has acquired another health system. In addition, it plans to spend $1 billion on projects between 2006 and 2010. What's more, the system is hiring, having added 947 staffers last year alone. It also paid $22.4 million in bonuses last year, which ranged from $400 to $1,200 depending on employee status.

To find out more about the system's turnaround:
- read this Detroit Free Press piece

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