EHR incentive payments boost for-profit hospitals' revenue

Meaningful Use incentive payments helped to lift for-profit hospitals' earnings in an otherwise "tepid" year, according to global rating agency Fitch.

In its recent quarterly review, although patient utilization and pricing trends for for-profit hospitals were mixed in 2011, the incentive payments boosted the hospitals' earnings--before interest, taxes, depreciation and amortization--by $396 million. Cash from operations increased $440 million.

Fitch noted that the incentive payment numbers were "modest" in 2011, and expects larger payments in 2012 and 2013 as the program progresses.

"Lower cash interest expenses, electronic health record incentive payments, and sustained profitability will be tailwinds to cash generation during [2012]," the agency predicted.

The report may be more sobering than at first blush if hospitals now are relying on, or hoping that, the payments will boost their earnings. A recent report from KMPG indicates that hospitals doubt their ability to meet Meaningful Use. What's more, the American Hospital Association notes in its comments to the Centers for Medicare & Medicaid Services on the proposed rule implementing Stage 2 that the vast majority of hospitals--more than 80 percent--haven't even met the requirements for Stage 1 of Meaningful Use.

To learn more:
- read the Fitch announcement
- check out the KPMG report (.pdf)
- here's the AHA comment letter to CMS (.pdf)