tag:blogger.com,1999:blog-32053362.post950309229529665258..comments2024-03-26T00:25:34.026-04:00Comments on Not Running a Hospital: Where does that money go, anyway?Paul Levyhttp://www.blogger.com/profile/17065446378970179507noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-32053362.post-70246791697776979672007-11-15T07:32:00.000-05:002007-11-15T07:32:00.000-05:00Total margin would include gains from real estate ...Total margin would include gains from real estate transactions as well as imputed gains attributable to the market value of the investments in our endowment. Although you will sometimes see that total figure published in newspapers, we don't really pay much attention to these two additional items because they are not reflective of the underlying performance of our clinical and research operations. Also, real estate gains are nonrecurring, and investment gains can be reversed with a simple shift in the stock market. To answer your question, in a good year, these may add a point or two to the margin. I don't have the 2006 numbers with me right now, but I think that was the case in that year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-61443433134279920612007-11-15T06:32:00.000-05:002007-11-15T06:32:00.000-05:00Paul, Asking again about BIDMC's total margin--yo...Paul, Asking again about BIDMC's total margin--you've only posted the operating margin. I read that many hospitals are having to rely on non-operating income to shore up poor operating results, while other hospitals do well in both areas. wonder how the situation looks at BIDMC?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-10872547989194126332007-11-13T04:34:00.000-05:002007-11-13T04:34:00.000-05:00Hi Barry,On your first point, I don't see profits ...Hi Barry,<BR/><BR/>On your first point, I don't see profits piling up because things are in a constant state of repair and renewal (but, also, as I have noted elsewhere, there is no sign of slowing demand growth given the demographics of our region). That being said, a small number of hospitals in Boston have indeed seen very substantial growth in their endowments over the last 15 years -- a combination of very good financial results and philanthropy and investment returns. As far as I know, no one has ever questioned their tax exempt status, and there really is no reason to do so, in that they continue to carry out their public service missions. The larger endowment simply gives them a cushion against hard times, and all of its income goes to support their public purposes.<BR/><BR/>Yes, a larger financial base can permit buy outs of other hospitals -- again something we have seen in Massachusetts and may see over the coming years and months as another wave of consolidation looms. Thus far, in Massachusetts, there appears to be no limit imposed by regulators on expansion by even the dominant provider in the marketplace.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-89367633001420415852007-11-12T20:42:00.000-05:002007-11-12T20:42:00.000-05:00Paul – I wonder about a couple of things. First, ...Paul – I wonder about a couple of things. First, what happens when the local market doesn't need any more beds and your plant and equipment is up to date and fully competitive? Is it OK to just let the profits pile up for a while in a reserve fund or endowment? Also, if a hospital operates more efficiently than its competitors and its profit margins move, say, into the high single digits or even low double digits, is there a point at which your tax exemption might be challenged or questioned by legislators? With a large reserve, you would presumably be in a position to buy out an underperforming competitor and add value to the operation by running it better unless your market share is already pushing the upper end of the regulators' tolerable limit. Then again, if there is excess capacity in the market, it might be best if one or more hospitals downsized or closed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-56534435812407332562007-11-12T17:05:00.000-05:002007-11-12T17:05:00.000-05:00EB and Matt,Good questions. Will save them for an...EB and Matt,<BR/><BR/>Good questions. Will save them for another posting, ok?<BR/><BR/>And thanks, Dave.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-51676350534209440922007-11-12T14:20:00.000-05:002007-11-12T14:20:00.000-05:00Beyond Length of Stay and savings through quality ...Beyond Length of Stay and savings through quality improvement, how does your organization identify where there are opportunities to save money? Is analyzed on a service line level?Unknownhttps://www.blogger.com/profile/17179628000946910261noreply@blogger.comtag:blogger.com,1999:blog-32053362.post-87319601888025213942007-11-12T13:52:00.000-05:002007-11-12T13:52:00.000-05:00Great post, Paul, and excellent use of the visuals...Great post, Paul, and excellent use of the visuals. This is a very helpful presentation of how to assessment your financial performance relative to capital investment.<BR/><BR/>Do you perform similar analyses to evaluate how your are doing with respect to investment in program expansion (not just plant/property/equipment)? If appropriate to do so, perhaps you can have a future post on such a topic (i.e. investment in a new program/service).EBhttps://www.blogger.com/profile/10031048458428647087noreply@blogger.comtag:blogger.com,1999:blog-32053362.post-58134074743615220482007-11-12T12:54:00.000-05:002007-11-12T12:54:00.000-05:00What stuns me more than anything is that this orga...What stuns me more than anything is that this organization not only produces these results, it does so while never denying care to anyone - everyone gets the same care according to their needs, regardless of ability to pay. (Paul will correct me if I'm wrong, I'm sure.)<BR/><BR/>A long time ago an employer's VP of HR told me "Good people cost too much." At the time they were industry leaders; now they (and the company that bought them) are out of business. They, I'm sure, would say this couldn't be done.<BR/><BR/>I've never seen a better application of great management skills, including both building a wonderful empowered team and making it all work financially. It's proof positive that brilliantly successful management isn't limited to greed.<BR/><BR/>I am inspired.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-11845633285367607842007-11-12T07:40:00.000-05:002007-11-12T07:40:00.000-05:00Hi Peter,Our total budget for the last year was ab...Hi Peter,<BR/><BR/>Our total budget for the last year was about $1.1 billion, so the $40 margin million for that year was just under 4%. In Massachusetts, given the reimbursement rates for clinical care, that is good performance.<BR/><BR/>We have found that improvement of quality and safety programs, as outlined elsewhere on this blog, helps produce better financial results. For one thing, it helps reduce length of stay in the ICUs and elsewhere, freeing capacity for new patients. For another, you avoid unreimbursed extra costs that would otherwise result from higher rates of infection and the like.<BR/><BR/>So quality and safety improvements are not only good for health of patients, they are good for the financial health of the hospital.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-9339872651002277362007-11-12T05:48:00.000-05:002007-11-12T05:48:00.000-05:00Paul, Can you tell us your operating results as a...Paul, Can you tell us your operating results as a percent, and your total margin also? That would let us scale how BICMC is doing compared to other health systems. Thanks. PeterAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-88883215303810720582007-11-12T05:40:00.000-05:002007-11-12T05:40:00.000-05:00Thanks, Terry. Somehow I think it is more importa...Thanks, Terry. Somehow I think it is more important that you can rescue me! But, you are right, if the hospital does not run well financially, it becomes harder and harder for the providers to get what they need to do their job.<BR/><BR/>These places run on pretty narrow margins, maybe 3 or 4 percent. If you have a good year and can be above that, it never lasts and is inevitably followed by a lower one.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-80114961962412647282007-11-11T21:58:00.000-05:002007-11-11T21:58:00.000-05:00Whew, I don't know how you do it, but I'm glad you...Whew, I don't know how you do it, but I'm glad you do! I can resuscitate you from the jaws of death in the operating room, but when it comes to financial pie charts and analysis, I just get woozy!<BR/><BR/>It's good for me to hear about a hospital's health from the CEO's perspective, something that I've never really been privy to and have even less understanding of. Thank you for sharing not only the information, but your concern for fiscal health.<BR/><BR/>The CEO truly is responsible for the vision of the hospital.Terry at Counting Sheephttps://www.blogger.com/profile/16060732608278736543noreply@blogger.comtag:blogger.com,1999:blog-32053362.post-76672025904509717042007-11-11T15:56:00.001-05:002007-11-11T15:56:00.001-05:00... anyway, thanks for the congratulations. Stay t...... anyway, thanks for the congratulations. Stay tuned for the actual number.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-40773065531096033802007-11-11T15:55:00.000-05:002007-11-11T15:55:00.000-05:00I don't know about preemptive, Elliott, in that I ...I don't know about preemptive, Elliott, in that I wrote about the most successful year in our history, in terms of 2007 financial results, in an email to 6000+ employees and about 800 MDs faculty members back in early September. When you write to that many people, word gets pretty broadly spread! So that story has been circulating around town for two months before this posting and actually prompted several folks, inside and outside, to ask what we do with the operating margin we achieve.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-32053362.post-38438852124589071582007-11-11T14:31:00.000-05:002007-11-11T14:31:00.000-05:00Little preemptive spin to your wonderful 2007 resu...Little preemptive spin to your wonderful 2007 results? Congratulations on an amazingly profitable year.Elliotthttps://www.blogger.com/profile/08947512500100910895noreply@blogger.com