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It's always good to understand the financial picture of the industry you work in. Today we discuss.


 Today. How's it. We're going to take a look at the financials. Look at projected financials. Look at. The economics of healthcare. My name is bill Russell. I'm a former CIO for a 16 hospital system and create, or this week health set of channels dedicated to keeping health it staff current and engaged.

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Thank you again for your generosity. All right today. I want to talk financials. , came across this Kaufman hall report. And it says some good things. I think it really depends on where you were at in the country and where you're at in the process of dealing with it. , but some health systems have moved quickly to address the financial challenges that they face. Some health systems have moved slowly to address the financial challenges that they face.

So some people are already through the, the brunt of the cost reductions and all that aspect of it. Some people are just now in the throws of it. , So, depending on where you're at, you will hear this differently. You'll hear this as you know, like yeah. We're, we're moving beyond that. Or you'll say that's not real. We're still in the middle of it.

But, , your situation does not necessarily indicate you're in. Situation today is not necessarily indicate, , where the economics are or where they're heading. So Kaufman hall report, as you know, they do. I think I covered this before they do a hospital flash report. This is the June report reports on may numbers. And they're showing that a couple of good things. Let me give you the key takeaways.

Which they have on one slide of your hospitals operating margins, moved back into positive territory in may. However operating margins continue to stand well below historical norms. Number two people are becoming more comfortable with in-patient care discharges emergency department visits and operating room minutes. All climbed, although very modestly on year-to-date basis.

Number three, there's a sizeable and growing gap between primary hospital revenue sources. Revenue from outpatient care is increasing at a much greater rate than revenue from inpatient care. Please hear that one revenue from outpatient care is increasing at a much greater rate than revenue from inpatient care.

All right. Number four, labor expenses are beginning to decline while labor costs remain significant expenses in may or well below comparable levels. From may of 2022. All right. So, , you know what, I'm going to leave it there. They have some national and regional data. Let me see if there's anything there's national data, regional data.

, west. West coast. You're still experiencing some downturn. Sorry about that. , Midwest upturn. South uptick. Mid Atlantic up tech and great Plains uptick. There you go. So sorry about that. And, , I don't know if there's any kinds of, , Kind of things from a bedside. This is it. They have it broken down by bed size as well as zero to 25.

25 to a hundred, a hundred to a 200, 200 to 300, 300 to 500, 500 plus beds. And if I look at this, the 500 plus beds have seen a significant uptick. So 300 to 400 Modest 200 to 300 bed. Significant from 100 to 200 bed. , up tech. Significant from a 26 to a hundred. And modest from zero to 25. That's so there that's the coffin hall report. This is worth taking a look at.

By the way it goes into a lot more detail as well. , we're taking a look at when it comes out. Generally somebody covers it. I forget where I got this. , medical economics, where I found it. And then there was a link to the hospital flash report. But if you can get to that site, And bookmark it worth taking a look at when it comes out, gives you an idea of what's going on with health systems. And what I use that for is it gives me idea if our health system is performing well or below the rest of the norms within our region, within our industry, so forth and so on.

I also came across this email hospital ology. I get a lot of these emails, but this one was interesting. By Blake Madden. And, , he has a whole bunch of metrics in here. So, let me give them to you. Husk hospital, our healthcare spending projections, healthcare spending as a percentage of GDP to hit 19.6%.

By 20 23, 19. 19.6%, 20% of all GDP. Is significant. If you're wondering where it's at, it's at roughly 18.3%. In 2022. , 65 plus population projected to hit 20% of the total us population by 2030. So 65, plus that age group. Projected to hit 20% of the total us population by 2031. So that's going to be an important population. This is why Medicare, Medicare advantage.

All those kinds of plans around that are so important. Per capita spending projected to increase from 12,894 in 2021 to 20,441. In 23. 2031 that's Haas healthcare spending per capita. Is slated to go up by $8,000. Wow. On a per capita spending. Let me read some of this on a per capita spending basis. Similar to overall growth projections.

National health spending per capita. As expected. To outstrip GDP per capita over the next decade. It would be interesting to look at this chart while also including protected wage growth. Over the next decade stated otherwise how much more will our healthcare costs continue to eat into wages and what percentage of salaries.

Wages and benefits healthcare spending, , comp co comprise at businesses. , let's see, what's the next one's fastest projected services, growth segment, home health.

And we're talking to a lot of health systems that are playing around with this, figuring it out there's hospital at home, there's home health. There's, , actually there's, there's a ton of different home options. There's some hospice there's a whole, whole new, , Concepts being birthed out there.

Around, how are we going to deliver care out of the home? And so that's the fastest growing services segment. Medicare spending projected to increase by 7.5% annually from 2021 to 2031 outstripping Medicaid. And private health insurance. So you got that. Medicare is going to outstrip Medicaid and private health insurance.

This does not bode well for health systems. And the reason it doesn't bode well for health systems is because a majority of the profit comes from private health insurance. , claims, , that is, we're getting better with Medicare, but generally that has been a, , A difficult place for health systems to make money. Medicare advantage has changed that a little bit.

But, , we we'll see what happens. I just want to throw out some numbers. I think it's important, even if you're in technology, even if you're a coder. To understand the financials in healthcare. If healthcare spending as a percentage of GDP continues to go up, it will be eight. Huge election year.

, issue that we talk about, , people are going to be talking about inflation anyway, they will talk about the cost of healthcare and how it is outstripping their wages, quite frankly. And it's hard to keep up. We will have stories of surprise bills and those kinds of things. So next year, this will all just come to a head as we have an election, as it usually does.

But it's important to understand. There will be pressure on us, in it as coders in whatever capacity you're in. To do more with less you're feeling it today. It will continue. It will continue because the revenue lines are shrinking generally. And the expense lines are growing. Whenever that happens to a business there there's a, there's a need to adjust either the business model needs to adjust.

The cost model needs to adjust. , or quite frankly, innovation needs to kick in. And I think you're going to see all three of those, quite frankly, as we progress. Into the coming year. So if you were in the throws of this right now, , you know, You have, , you have my greatest empathy for that situation. I've gone through that as a healthcare CIO, it's very difficult to do cost reductions. It's hard to find them, especially as your costs are going up. Your contract costs are going up.

The, , need to replace equipment. The need for new equipment is still as strong as it's ever been. So, , this is the second today's show this week that we've talked about. , costs, if you haven't listened to the one where I talked about David Monster's article. On cost reductions, and he is going to be publishing a three-part series on their blog about, , on.

On on creative ways to find, , cost reductions within healthcare, that is going to be a significant topic. It's a great article that previous episode in today, I think two days ago, we'll give you some thoughts and ideas of how to approach this, but again, it's hard, no matter how you slice it, it's a hard time to be a CIO and to address those things.

All right. That's all for today. If you know someone that might benefit from our channel, please. For them a note, let them know you're listening to this channel. You'd like to have conversations with them about the topics from time to time. That would be great. They can subscribe wherever they listen to podcasts. We want to thank our channel sponsors who are investing in our mission to develop the next generation of health leaders, short test and artist site. Check them out at this week. Health. Dot com slash today. Thanks for listening. That's all for now.

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