By Joy Hampton
The Norman Transcript
NORMAN — Hospital outpatient visits at Norman Regional Health System facilities in August increased 7.4 percent over July, and year-to-date hospital outpatient visits have increased 2.1 percent compared to the same 2-month period last year. Outpatient surgeries increased even more.
Outpatient surgical cases in August increased 65 cases or 11.2 percent from July. Year-to-date outpatient surgical cases have increased 5 percent compared to the same 2-month period last year.
“If you look at the HealthPlex architecture, it’s more designed to accommodate outpatients than you will find in a hospital that was designed in the ‘70’s or the ‘80s,” said Greg Terrell, Senior VP and Chief Operating Officer of Norman Regional Health System. “Of all the surgical procedures that are done here, two-thirds are outpatient and only one third are inpatient.”
It’s a growing trend seen across the nation.
In August, the Boston Business Journal reported that, “Massachusetts hospitals increasingly are growing revenue in their smaller-margin outpatient business to make up for downward pressure on inpatient hospital stays from private and public health care payers.”
Growth in outpatient services — especially outpatient surgeries — tracks back to the 1980’s and could result from a number of factors ranging from Medicare reimbursement, to doctor-owned clinics competing with hospitals, to patient preference for outpatient, single-day care.
“Payers such as Medicare and insurance companies have had a big influence on reducing one-day stays and converting them to outpatient,” Terrell said. “That’s a cost-cutting move for them.”
According to the Centers for Disease Control and Prevention’s National Center for Health Statistics, outpatient surgery visits in the United States increased from 20.8 million in 1996 to 34.7 million in 2006.
“Procedures that 10 or 15 years ago were considered very high risk, like a cardiac catherization most of those diagnostic procedures are now done outpatient,” Terrell said. “It still amazes me, you can put a wire into a heart and send them home that afternoon.”
That means hospital accommodations must change. Modern facilities have comfortable waiting areas and other amenities to deal with the outpatient trend.
Currently, the surgical waiting area at Norman Regional Hospital is being remodeled to better accommodate families during outpatient surgeries.
Nationally, outpatient surgery visits accounted for nearly half of all surgery visits in 1996 but almost two thirds of all surgery visits in 2006, according to the National Center for Health Statistics.
Members of the leadership team at the Norman Regional Health System are aware that this trend continues upward.
In fact, while the increases in outpatient visits and surgical cases were up during August, both areas ran below the numbers predicted for this year’s health system budget.
Hospitals continue to struggle to balance the emergeing trends in healthcare with increasingly limited reimbursement from third party payers such as insurance and Medicare.
The Norman Health System’s August net revenue of $26.8 million was $2.3 million, 7.9 percent below budget predictions, according to Chief Financial Officer Ken Hopkins.
“For the month of August, operating performance declined due primarily to a significant increase in average length of stay,” Hopkins said. “This increased average length of stay resulted in net revenue being $2.3 million below budget. Total expenses were also below budget, but not enough to offset the variance in net revenue.”
Length of stay is one of the critical factors hospitals try to manage.
“Medicare pays us a flat fee, regardless of how long a patient stays,” Terrell said. “That’s why length of stay is so important.”
Quality of care has to dictate over quantity, and that can mean financial losses for hospitals when patients stay longer than the standard flat rate allows.
While cases are managed to get patients out in an appropriate length of time, some patients require longer care.
In addition, there are penalties if a person must be readmitted within 30 days.
“Re-admission’s is a big issue right now,” Terrell said.
Hopkins reported that net operating income for August showed a loss of $1 million. Non-operating income was positive at $1.2 million, so combined Excess revenue over expenses was $200,000 for the month, $1 million behind August budget.
For the year-to-date period encompassing July-August, Net Operating Income showed a loss of $1.1 million and was $2.3 million below budget. Non-Operating Income was positive at $1.3 million and was $562 thousand above budget.
This upward trend in non-operating income was a welcom change over previous unrealized losses. Most of non-operating income results from investments.
Combined, operating and non-operating income show excess revenue over expenses for the YTD period of $223,000 which is $1.7 million below budget predictions, according to Hopkins’ monthly report to the hospital authority board.
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