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Premier healthcare alliance
Slowdown in hospital capital spending influenced by legislative and economic uncertainty, according to Premier healthcare alliance analysis
Spring 2012 Economic Outlook survey projects continued focus on HIT requirements; publication features insights from industry experts on reform, improving patient care while reducing costs
CHARLOTTE, N.C. (May 1, 2012) – Impending reimbursement reductions and uncertainty around the potential impact of health reform could be leading to more conservative hospital capital budget expenditures, according to a survey published in the Premier healthcare alliance's spring 2012 Economic Outlook.
Sixty-five percent of the 730 survey respondents indicated that capital budget expenditures for 2012 remained flat or increased as compared to 2011. This is down from 69 percent in fall 2011 and 72 percent a year ago.
Overall, 43 percent of respondents suggested an increase in capital spending, versus 40 percent in fall 2011 and 46 percent a year ago. Of them, 43 percent expect to make the largest capital investments over the next 12 months in healthcare information technology (HIT) and telecommunications, up from 35 percent last spring.
However, 35 percent of respondents suggested a decrease in capital expenditures, versus 31 percent in fall 2011 and 28 percent a year ago.
Future reimbursement cuts were cited by 76 percent of all respondents as one of the top three trends having the largest impact on their organizations over the next 12 months, with 53 percent citing HIT requirements. And 41 percent of C-suite respondents selected health legislation as the greatest or second-greatest driver of healthcare costs.
"The nation's current debt concerns and looming reductions in reimbursement have, for the most part, slowed hospital spending and increased demand for greater value," said Premier Chief Operating Officer Mike Alkire. "The one exception is HIT, where hospitals are placing a great deal of fiscal and operational focus."
Survey results also suggest:
- Physician employment has grown across the board, with 61 percent of respondents indicating that up to half of their practicing physicians were employed through hospital-owned practices, compared to 55 percent last fall.
- Half of respondents expect an increase in patient admissions this year as compared to 2011, with the other half anticipating admissions to remain flat or decrease. These results may signal a plateau in expected patient admissions, as 60 percent indicated growth in admissions last fall.
- However, 29 percent of non-acute care respondents expect patient admissions in that sector will increase by more than 5 percent. That is an 18 percent increase since last fall.
Spring 2012 Economic Outlook
The semiannual Economic Outlook helps Premier's 2,600-plus hospital and health system members better estimate supply cost inflation during their budget processes, projecting rates of inflation for the ensuing 12 months.
According to the spring 2012 edition, annual market inflation rates will increase on average between 2.2 percent and 5.6 percent across categories such as cardiovascular services, facilities, imaging and nursing. Premier's existing contracts, excluding foodservice and pharmacy, are expected to increase by about 0.82 percent on average in the next year. This is lower than overall market increases, which are predicted to average 3.2 percent during this time frame.
The spring 2012 Economic Outlook includes insights from the following healthcare leaders:
- Face time with Mark McClellan, M.D., Ph.D., director, Engelberg Center for Health Care Reform, Brookings Institution
- Payment reform, aligning incentives and driving change in the delivery system; Gail R. Wilensky, Ph.D., senior fellow, Project HOPE
- Doing more with less: Cutting costs while improving patient care; Sharon Begley, senior health and science correspondent, Reuters
- A national strategy for more affordable healthcare; Harold D. Miller, president and CEO, Network for Regional Healthcare Improvement; executive director, Center for Healthcare Quality and Payment Reform
- A conversation with Mark Zandi, chief economist, Moody's Analytics
The publication also features success stories regarding the following Premier members:
- Banner Health (Phoenix) is saving $1 million a year through more appropriate use of an abdominal adhesion barrier used in cesarean sections.
- East Alabama Medical Center (Opelika, Ala.) reduced costs by close to $100,000 by eliminating unnecessary inventory and optimizing par levels.
- McLeod Health (Florence, S.C.) is using roving nurses, who average 1,400 monthly visits, to help avoid an average of 75 unplanned ICU transfers per month for an annualized savings of $1.4 million.
- Presbyterian Healthcare Services (Albuquerque, N.M.) is saving $2 million a year through more appropriate use of an anti-coagulant for cardiac valve patients.
Continued Alkire, "Ultimately, hospitals know they can't just cut their way to the future. Instead, they need to make across-the-board improvements. Key to this is eliminating costs that aren't leading to better outcomes, which requires an enhanced focus on comparative effectiveness and resource utilization using meaningful data and more sophisticated analyses."
About the Economic Outlook
Premier's Economic Outlook highlights emerging economic and industry trends impacting Premier healthcare alliance members and the overall industry. The publication leverages subject matter expertise to build consensus from diverse points of view while highlighting best practices and strategies needed to drive performance improvement. Premier releases a new analysis every six months to ensure content and projections reflect changing market conditions. The focus of this edition of the Outlook is "bending the cost curve" in healthcare by optimizing resources and developing new measures of quality and effectiveness.
About the Premier healthcare alliance, Malcolm Baldrige National Quality Award recipient
Premier is a performance improvement alliance of more than 2,600 U.S. hospitals and 86,000-plus other sites using the power of collaboration and technology to lead the transformation to coordinated, high-quality, cost-effective care. Owned by hospitals, health systems and other providers, Premier operates a leading healthcare purchasing network with more than $4 billion in annual savings. Premier also maintains the nation's largest clinical, financial and outcomes database with information on 1 in 4 patient discharges. A world leader in delivering measurable improvements in care, Premier works with the Centers for Medicare & Medicaid Services. Headquartered in Charlotte, N.C., Premier also has an office in Washington. https://www.premierinc.com. Stay connected on Facebook, Twitter and YouTube.