Can We Fix the Healthcare Payment Mess? New Report Shares Strategies that Encourage Efficiency, Quality, and Consumer Involvement.

CHICAGO -- Today's healthcare payment system has produced a perplexing array of cross subsidies, hidden taxes and conflicting incentives, making it costly to administer and difficult to understand. And it has created such an intricate maze of conflicting incentives and priorities that any proposed solution damages at least one of the system's stakeholders -- government, payers, providers, business, and consumers.

To move healthcare toward a more effective payment system, the Healthcare Financial Management Association (HFMA) and GE Healthcare Financial Services have released Healthcare Payment: Goals, Trends, and Strategies, the first installment of the Financing the Future III series. Based on the experience and analysis of national thought leaders, the report advocates a payment system that rewards efficiency, quality and consumer involvement, but emphasizes such a system will require compromise and collaboration among all the stakeholders.

"The magnitude of these payment challenges and the consequences of failing to resolve them require stakeholders to give up adversarial relationships and competing agendas and work together to develop rational customer-focused payment strategies," says Richard L. Clarke, DHA, FHFMA, President and CEO of HFMA.

This first installment takes a deeper look at payment system goals and gaps; today's payment trends, including consumer-direct healthcare and pay for performance; and strategies for addressing the current situation.

Randy Fuller, Manager of Market Intelligence for GE Healthcare Financial Services, highlights the importance of enhanced quality to payment system improvement. "Quality is a huge issue. To the extent providers could become more efficient and raise the overall quality equation, they could go a long way to making payers and consumers more content with the healthcare dollars they are spending," Fuller says.

Key points emerging from the study include:

* While consumers will gain increasing influence over how healthcare dollars are spent, the impact of those decisions will vary widely by service type. For example, inpatient revenue may not change dramatically, because those services are less discretionary. On the other hand, competition between physicians and hospitals for outpatient services is likely to intensify, exacerbated by a waning market for expensive outpatient procedures.

* The momentum toward pay for performance is strong, with Medicare and other payers becoming a more active force to encourage quality and efficiency. However, much work remains to agree on what outcomes should be measured and how to measure them. The industry and its information systems must mature in their ability to collect, analyze, and apply outcomes data to a payment formula.

The study also recommends best practices for organizations striving to meet the challenges posed by the evolution of healthcare financing mechanisms. According to the report, financial executives should work closely with:

* Financial, clinical, and operations leaders need to collaborate to measure and enhance quality and patient satisfaction, alter strategic plans to focus on operational and clinical excellence.

* Provider organizations need to be able to gather and communicate pricing information in a manner that will be meaningful for patients.

* Providers and payers need to collaborate to simplify charge systems, enhance transparency in contracting, and promote timely exchange of eligibility and benefits information.

They also should focus on training and staffing practices to support a new breed of patient financial services professionals with the skills to respond to patient demands for pricing information and financial counseling.

To read the complete study, please visit www.financingthefuture.org.

About Financing the Future III

Since 2003, HFMA's Financing the Future project has given healthcare providers the information they need to help their organizations have the resources necessary to provide safe, high-quality care for their communities. The project began with a series of reports highlighting strategies hospitals and other healthcare providers could use to improve access to capital.

With Financing the Future III, HFMA, in partnership with GE Healthcare Financial Services, sets out on perhaps its most ambitious effort to date: helping providers navigate key industry trends that affect hospitals' capital position and ability to fund important future initiatives. For each trend, a report will identify the current state and implications for the future.

For more information about Financing the Future III and to access the complete archive of project reports, visit www.financingthefuture.org

About the Healthcare Financial Management Association (HFMA)

HFMA is the nation's leading membership organization for more than 34,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, managed care organizations, ambulatory and long-term care facilities, physician practices, accounting and consulting firms, and insurance companies. Members' positions include chief executive officer, chief financial officer, controller, patient accounts manager, accountant, and consultant. HFMA offers educational and professional development opportunities; information on key issues affecting healthcare financial managers; resources, such as technical data, checklists, and research reports; and networking opportunities--all of which provide our members with the practical tools and ideas they need to ensure career and organizational successes. For more information, visit HFMA's web site at www.hfma.org

About GE Healthcare Financial Services

GE Healthcare Financial Services is the premier provider of capital, financial solutions, and related services for the global healthcare market. With $16 billion in assets, GE Healthcare Financial Services offers a full range of financing capabilities from equipment leasing and real estate financing to working capital lending, vendor programs, and acquisition financing. With a dedicated focus and a deep knowledge of the healthcare industry, GE Healthcare Financial Services collaborates with customers to create tailored financial solutions that help them improve their productivity and profitability. For more information, visit www.gehealthcarefinance.com.