Let’s face facts. Hospitals need to make money, or at least be financially successful, in order to provide safe and effective patient care. This hinges on making sure medical facilities are properly managed, and that those receiving treatment are paying for the services they receive through insurance or government programs. Society needs successful, healthy hospitals.

Unfortunately, some hospitals fail to meet their financial goals, and as a result, declare bankruptcy or decide to close the doors before the economic hole gets deeper. Whether it’s weekly or monthly, management and finance problems cause some facilities to crumble. And only those that embrace change survive.

The overriding principles of the Affordable Care Act (ACA) will remain constant with the heavy hand of the Centers for Medicare & Medicaid Services (CMS) pushing facilities to change and improve. The patients who could not receive coverage prior to the ACA will be protected through a re-engineered system. Hospitals will be expected to operate more as businesses with a heavy emphasis on quality and patient satisfaction.

Prior to Section 3008 of the ACA that established the Hospital-Acquired Condition (HAC) Reduction Program, which provides an incentive for hospitals to reduce HACs, earlier non-payment penalties had little to no improvement effect. Nationally, HACs declined by 21 percent between 2010 and 2015, according to the federal Agency for Healthcare Research and Quality (AHRQ). Still, hospital harm remains a threat.

According to a Harvard study published in the New England Journal of Medicine, which reviewed statistics where hospitals were not reimbursed for many infections, the total the ACA was developed, one of the biggest questions was, “how do we improve quality and really get hospital teams focused?” The result was a progressive penalty that forced more attention by reimbursement withholding and saved the government a significant amount of money. If a facility is penalized due to patients frequently suffering from potentially avoidable complications, such as infections, and after one year it still does not improve, the penalty grows significantly.

Accordingly, each year CMS reviews the performance of hospitals based on three HACs: Central-Line Associated Bloodstream Infections (CLABSIs), Catheter-Associated Urinary Tract Infections (CAUTIs) as well as serious complications encompassing eight types of injuries. Facilities ranking in the bottom 25 percent receive a 1 percent reduction in CMS payments due to low scores. Combined with the progressive scale of penalties, including readmission and satisfaction score penalties, CMS has put an interrogation lamp on administrations with poor scores.

CMS publishes the annual list of 769 hospitals in the lower HAC score quartile that experience a 1 percent cut in payment. Of that total, 241 hospitals have been on the list three consecutive years due to low scores.

Drilling down on the numbers and focusing on the type of facilities on the CMS list indicate that some of the hospitals are most likely research-based or teaching hospitals. These hospitals, which tend to be located in urban areas, may be unfairly counted for two reasons. They have very specialized cases and they treat cases that other hospitals send them. In addition to serving a more complicated patient base, research and teaching hospitals have more robust surveillance systems to identify infections that might be missed by other types of hospitals. The reductions not only apply to patient stays, but also reduce the amount of money hospitals receive to teach medical residents and provide care for low-income people. This translates to a higher penalty for hospitals that treat mostly uninsured and low-income patients.

Specialized hospitals, such as those that treat psychiatric patients, veterans and children, are exempted from the penalties, as are hospitals with the “critical access” designation for being the only provider in an area. Of the remaining hospitals, the ACA requires CMS to penalize the bottom-performing 25 percent, even if they have reduced infection rates from previous years.

In order to provide the highest quality care possible to patients, a hospital can improve its financial standing by incorporating a more robust infection prevention and control program into project management plans. This is a particularly important step when hospitals are undergoing construction and renovation projects to minimize the risk and prevent Healthcare-Associated Infections. The risk of HACs increases significantly during construction-related activities due to the potential of contaminated dust particles being widely dispersed and posing a health risk for patients. Exposure to these infection-laden organisms can be life-threatening or fatal for patients who are severely immunosuppressed. However, not all hospitals are operating to the best of their ability and require changes that include everyone from the EVS technician to the surgeon. Administrators must communicate the message and drive quality change at every level, not just at those identified by CMS.

“This first appeared in the January/February 2017 issue of Healthcare Business News”