The Caretech
Budgetwire Blog |
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Caretech Group's Budgetwire Blog addresses the complex budgetary issues facility executives face. We're interested in hearing your personal experiences and challenges each month.
Steve Katz, Vice President of Business Development at Caretech Group and Lecturer on Health Services Administration at City University of New York's Lehman College hosts Caretech's Budgetwire Blog. Mr Katz has over 25 years industry experience and 12 years experience lecturing future industry leaders. |
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Dear Contact Custom Text 1,
This month's featured article, "Plummeting Tax Revenues Target Medicaid Reimbursement" provides crucial information to assist your facility in preparing for the unprecedented budgetary challenges our industry will face in the near future. First and Second Quarter Tax Revenues herald a 20% drop in revenue for New York State, with direct repurcussions anticipated for Long Term Care. Caretech Group welcomes Liora Stein, our Business & Product Development Strategist as a contributing author to The Budgetwire October 2009 Issue. |
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Plummeting Tax Revenues Target Medicaid Reimbursement
by Steve Katz & Liora Stein
As reported on the Caretech Group Budgetwire Blog, tax revenue for the first quarter of 2009 compared to the same period of 2008 is down significantly for the state and for the nation as a whole. Second quarter tax revenue dropped at a greater rate than the first quarter based upon an analysis conducted by the Rockefeller Institute. Even though the recession may indeed be coming to a close, tax revenues will not recover in NY in the near future.
The Governor put the public on notice in the spring that the 2009-2010 Budget will have a short fall. The proposed Medicaid cuts or approximately $500 Million is an early warning for next year's budget. The projected three year shortfall of $50 Billion makes Medicaid an obvious target and nursing homes may indeed be the bullseye. When we consider the potential impact that Universal Health Care will have upon our industry, the looming challenges are daunting.
As the universal coverage debate rages, federal cuts to Medicare ($1.05 Billion plus other cuts to help finance universal coverage) and Medicaid for nursing homes will be our reality. Although nursing homes struggle with inadequate Medicaid reimbursement cuts to Medicaid reimbursement for nursing homes has been protected to some extent because it has increased even in years where tax revenues have not.
For many NY nursing homes, Medicaid is the source of most of their revenues. What happens to Medicaid will have a major impact on an industry that is already showing significant financial strain. There are many studies and reports that document the precarious nature of the nursing home industry in New York. A thorough presentation was included in the final report of the Berger Commission, updated annually by trade associations like NYSAHSA. Clearly the industry is on the precipice.
Revenue for the Medicaid program comes from taxes collected. The recent State Revenue Report, July 2009 No.76, published by the Rockefeller Institute of Government (www.rockinst.org) reviews tax collections for the States and reports them for the first quarter of 2009. The following table summarizes tax revenue collection information contained in the report for New York State:
Analysis of First Qtr 2009 Tax Revenue (in millions):
Source Personal Corporate Sales Other Total
2008 $11,709 $1698 $2747 $2103 $18,257
2009 $ 9,273 $1292 $2590 $2005 $15,160
Variance $(2436) $(406) $(157) $(98) $(3097)
% Change NY -17%
% Change US -12%
Source: State Revenue Report July 2009, No. 76, The Rockefeller Institute, by Boyd and Dadayan
According to the report, the decline in tax revenue from one year to the next is the worst on record. As previously mentioned, the Rockefeller Institute examination of tax revenue shows that the second quarter was worse than the first quarter, for the US as a whole and for New York State. The negative impact on New York is greater than the average for the rest of the country, reflecting the impact that the decline in the Financial/Banking sector has had on the State.
Review of the tax revenue and Medicaid spending tends shows that until now, increases in nursing home spending have not been aligned with tax revenues. The following graphs summarize recent trends in both tax revenue and NYS funds allocated to nursing home reimbursement:
Source: Rockefeller Institute
According to latest analysis from the Rockefeller Institute, the Second Quarter Decline in Tax Revenue is poor as well. Nationally the decline in tax revenue was 16%; in New York it was 22%. While the impact of recession may have been mitigated for nursing homes in the past, it is likely that the industry may not be as fortunate in the next year.
Source: Health Care Expenditures of Provider Medicaid Summary Tables 1980-2004 Final, 02/09 Testimony by Richard F. Daines, MD, Commisioner NYS Department of Health Joint Leg Budget Hearing 2009-2010 State Budget, Addendum, 2/2/2009, NYS Division of Budget, Enacted Budget Financial Plan 4/28/2009.
The graphs suggest that NYS nursing homes have been protected from the true impact of the vagaries of tax collection. Such protection may not be possible given the state of the NY economy and the national health care agenda, which is not focused on long term care and nursing homes. The recession has had a significant impact on one of the major sources of tax revenue in New York; the financial and banking sector. The reduction in this sector of the State's economy will have an ongoing impact on tax revenues. It is unlikely that Medicaid spending will continue to grow or be unaligned with tax revenues. Nursing homes should expect rates to either remain at current levels or be reduced.
It is hard to imagine that our industry has been protected; yet when one compares tax revenue and Medicaid reimbursement this conclusion is obvious. The next fiscal year will see reimbursement cuts that we have never had to cope with. Such times require aggressive and creative solutions. |
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What Makes Caretech Different? |
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Many healthcare facilities are members of General Purchase Organizations (aka GPOs or Independent Distribution Networks), benefitting from negotiated discounts on behalf of members. Caretech extends this role by providing tools or a combination of tools and personnel that simplify the procurement process.
By adding controls and acquired intelligence, Caretech effectively co-manages current resources and vendor relationships. Establishing how resources are best utilized, and renegotiating pricing in alignment with Caretech's available discounts benefits our customers.
While the financial benefits can be accounted for in real savings for less expensive materials, understanding how the choice of supplies and methodologies affect the efficiency and profitability of the entire facility is a "value add" that no GPO can bring to the table. Caretech is not only ensuring that products are ordered, but that the items will be fulfilled 100%, on time, and that the facility administration stays abreast of budgetary status all the while.
Why Use Caretech NOW?
Within a volatile economic environment which has both profound and intense repercussions to the operating environments of the facilities it services, Caretech is uniquely positioned. Intellectual capital, delivered in real time, is a primary goal of the organization. Arming executive management with the Business Intelligence (BI) they need through traditional and innovative reporting methods, empowers management to identify problems as they arise. Providing Clinical Intelligence (CI) to administrators and caretakers alike, directly and positively impacts the quality of patient care in real time. These tools also protect finely tuned budgets. Proactive and strategic planning in response to an economic crisis is the net result of our innovative technological tools.
Caretech is preparing our clients to plan for dramatic cuts in Medicare & Medicaid through education, business intelligence delivery and inventive solutions for procurement, supply recommendations, the analysis of food services, labor,insurance, technological tools and pharmaceutical management.
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In conclusion, Caretech brings you both the aggressive and creative solutions in response to todays economic climate.
Caretech offers three levels of service to help you better manage supplies and reduce these expenses. The attention that Caretech provides assures that your facility is spending its limited resources judiciously. The information that Caretech can provide will empower you and your management team to be proactive. If you need to reduce expenses, Caretech will work collaboratively with you to lower per patient per day expenses with different option to address the realities of reduced reimbursement. Caretech is well positioned to help your organization deal with the new Medical reimbursement methodology, particularly with the Regional Pricing component to the rate calculation.
As you begin to enter the planning season for the 2010 Budget consider Caretech. Our services will help you weather the approaching reimbursement tsunami. The Caretech Vision Statement is timelier than ever: Caretech will assure that its customers manage supply expenses efficiently and effective using Key Performance Indicators to focus their efforts on the delivery of fiscally sound quality care that meets regulatory and consumer requirements.
Please call me directly to discuss the ways in which Caretech can assist you at 914-400-7124.
Sincerely,
Steve Katz
Vice President
Business Development
Caretech Group |
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