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The WAMI Rural Hospital Project. Part 4: Improving the financial health of rural hospitals.

Sound financial management has been identified as a critical component of effective hospital administration. Inadequate financial practices are a leading factor in the failure of hospitals. As part of the Rural Hospital Project (RHP), which operated in six rural Northwest communities from 1985 to 1988, detailed and extensive analyses of financial practices were conducted to identify strengths and weaknesses of the hospitals' financial management. In addition, 15 hours of formal education covering a variety of financial topics were presented to project participants. Results of the evaluation demonstrated that the greatest degree of change occurred in the financial management leadership capacity of the hospitals. All five hospitals, which either had no chief financial officer initially or subsequently experienced a turnover in the position, recruited individuals with strong qualifications. Vacancies in the administrator position in three of the four hospitals were filled by individuals with stronger financial management qualifications than their predecessors. Hospital board finance committees were formed in three of the four communities which previously did not have them. The biggest changes in financial practices occurred in the budgeting processes, which by 1989 better reflected the goals and strategies of the hospital's strategic plans. The financial performance of the six hospitals varied considerably over the study period. As a group, the RHP hospitals continued to require substantial nonoperating subsidies to remain solvent, despite improved financial practices. Despite the methodological limitations of this evaluation, we conclude that the intervention improved the capacity of the hospital administrations' financial leadership, as well as that of the governing boards, and led to substantial improvement in selected financial practices at all sites. Rural hospitals continue to operate in a hostile and precarious financial environment that limits their ability to sustain themselves on the basis of operating revenue alone.

Alaska↗

Rebuilding of the Lebanese health care system: health sector reforms.

The civil war in Lebanon from 1975 to 1992 had a significant negative impact on the public health care system. This paper describes the health care system in Lebanon and its financing as of 2001. The efforts that have been made and are being made to rehabilitate and reform this sector since the end of the war are outlined.

Accreditation↗

Cost-financed mental health facility. I. Clinical care pattern in a labor union program.

Cost-financed mental health facilities create opportunities for new patterns of mental health service analogous to community mental health centers in some ways and to HMOs in others. This paper describes the first facility based on such financing. The concept of cost-financed mental health practice is introduced and defined as including a multidisciplinary team serving a defined population of enrollees through prepaid or prebudgeted financing. The financing may be capitation based or generated through an agreed-upon budget for predefined services. Ordinary fee-for-service insurance creates purchasing power but not care system. Cost financing can create service mechanisms. The paper describes the clinical system made possible through such financing. The direct patient service systems for the United Auto Workers at the Johns Hopkins Hospital funded through cost financing included an early case-finding program, intake and evaluations specially designed for blue-collar workers, a full range of continuous treatment modalities, and programs in chronic care and rehabilitation. Programs in prevention, consultation, and education were also included. Conern is described. The authors conclude that this clinical form has the potential to offer both the advantages of the community mental health center and of the private practice system.

Attitude to Health↗

Rural rescue--a vision in time.

Remaining a stand-alone hospital in a small, rural community puts a lot of pressure on both the board and management to be visionary leaders. Gibson Area Hospital and Health Services in Illinois has thrived under its risk-taking CEO and board.

Capital Financing↗

Medicaid cutbacks and block grants: crisis or opportunity for community mental health?

The fourfold growth in the mental health service system since 1955 has been largely financed by federal monies and by federal and state funding through Medicaid. This growth represents expansion of both institutional and outpatient settings, even though there has been a total reversal of the proportion of inpatient to outpatient care over the last 22 years. Current proposals to cap Medicaid costs and to issue block grants challenge the delivery system to attempt alternatives, such as financing similar to what is done in a health maintenance organization (HMO). The author describes a model of a "mental health HMO" that would be appropriate from professional consumer, and economic perspectives.

Capitation Fee↗

Under the gun.

This year Congress will consider proposals to significantly restrict the access of not-for-profit healthcare organizations to affordable capital and other federal benefits of their tax-exempt status. The federal benefits of tax-exempt status are (1) exemption from federal tax on net income, (2) eligibility for tax-deductible charitable contributions, and (3) access to tax-exempt financing. Of these, the last is probably most important because hospitals' capital needs are substantial and almost always met through the issuance of tax-exempt bonds. In recent years, budget pressures have prompted many state and local governments to challenge the tax-exempt status of not-for-profit organizations. At the federal level, tax-exempt bonds have been under sustained attack for the past 10 years, and tax-exempt organizations have been under scrutiny for the past 4 years. In 1989 several bills were introduced in Congress that would limit some of the benefits of tax exemption. This year the signs are particularly ominous: Budget pressures are severe, no one seems willing to call for "new taxes," and tax-exempt organizations are considered fair game. To preserve their tax-exempt status, not-for-profits must act now to convince congressional decision makers that they deserve their tax exemptions and need them to continue to provide community service.

Capital Financing↗

Hospital financing by self administrated institutions. Proposals for a new form of organization and financing of hospital care in West-Germany.

Acta Hospitalia publishes this summary as an illustration of the difficult process most Western countries experience in reorienting their hospital financing systems. The case of West-Germany is of particular interest. It is the leading economic power in the European Economic Community and its sickness funds (the Krankenkassen) play a very important role in hospital financing. The article reports on the conclusions of a five year study by the R. Bosch Stiftung. We draw attention to the following: The article illustrates that each hospital financing system implies a particul balance of power between the hospitals, on the one hand, and the sickness funds on the other hand, under the auspices of the government. The final balance of power is not so much determined by the general principles but by the detailed operational procedures on which the financing system will eventually be based. This may explain why the conclusions of the Commission are rather vague. The option of the price as the main control instrument immediately demands some 'state committee' to lay down the guidelines for the provision of hospital care including the regional conditions and minimum service quantity and quality standards.

Financial Management↗