Budget Cuts In The E.R. __TOP__
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Hospital job cuts across the nation have pushed out some health care professionals who had stuck with their jobs during the stress of the pandemic. And the cuts have meant some patients have needed to travel further for treatment.
Under hospital all-payer global budgets, however, hospitals are not paid on a fee-for-service basis. Instead, hospitals are paid a prospectively determined amount for all inpatient and outpatient services provided to a patient population in a given year. Global budgets counteract the volume-inducing characteristics of itemized payment systems by expanding the bundle of services. Other payment approaches bundle together services. For example, episode of care payments might cover all hospital care for joint replacement patients, for 30 days pre- and posthospitalization. However, as shown in Exhibit 1, hospital global budgets provide additional incentives and opportunities to manage volumes and costs. In this way, global budgets are meant to give hospitals clear incentives to manage their provision of care within a budget constraint, emphasizing the policy objective of cost containment.
While hospital global budgets are designed primarily to give hospitals clear incentives to manage the provision of services and improve operating efficiency, other features make them attractive from an overall policy perspective. In general, global budgets:
A similar system used in the public utility sector, marginal cost pricing, is a well-accepted payment methodology to discourage excess power production by eliminating variable revenue earned in excess of variable costs required to produce an incremental service.15 Likewise, the volume adjustment system for hospitals helps neutralize incentives to provide excess or unneeded services. In addition, these more flexible budget models accommodate patient flow from hospital to hospital, with revenue following the patients, consistent with market competition principles. The methodology also can allow hospitals to maintain their revenues at levels sufficient to cover fixed costs should volumes decline.
Overall, global budgets can create the conditions necessary to hold hospitals accountable for the cost of services they provide while requiring a minimum of regulatory complexity to implement and enforce. In addition, this payment approach can provide hospitals with a stable and predictable amount of annual revenue, facilitate more rational allocation of hospital resources, and provide hospitals with the financial flexibility necessary to meet the diverse and unique health needs of the communities they serve.
Technology has been essential to colleges' and universities' business continuity during the pandemic. Online services and virtual gatherings are enabling students to learn, faculty to teach and continue much of their research, staff to work, and prospective students to \"visit\" and apply to institutions safely from their homes. In many cases, institutions have had to make additional investments in technology to operate during the pandemic. Yet the pandemic and its widespread consequences have had a sizeable negative financial impact on higher education. What choices are institutions making about IT budgets when leaders need to reduce expenditures but somehow also maintain critical IT services
So far, most institution have been able to avoid the cuts that directly damage staff and or services. Most reductions have been focused on travel, professional development, compensation freezes (rather than reductions), delaying planned work, and renegotiating contracts and licensing. Budgets are increasing for a few services, specifically those needed to bolster academic technologies and support.
An institutional digital divide has opened and is growing. About one-quarter (26%) of respondents said their IT budget has remained roughly the same, and a lucky 11% reported IT budget increases. A number of institutions are investing in new technologies and digital transformation (44%), while others are cutting services and staff salaries and forgoing technology upgrades. Higher education will need strong leadership, both within the institution and within the higher education ecosystem at large, to help institutions whose technology budgets have diminished survive.
IT budgets are down this year. Almost two-thirds (63%) of the survey respondents reported overall IT budget decreases this academic year, and the median decrease is 10%. About one-quarter (26%) of respondents said their IT budget has remained roughly the same, and 11% reported IT budget increases. Taking all respondents into account, overall higher education IT budgets have decreased by 5% this year (see figure 1).
More belt-tightening lies ahead for many. More than half of respondents (53%) anticipate additional changes in the IT budget before the end of the current fiscal year, mostly decreases (43% expect IT budget decreases and 10% expect increases). Further decreases are more commonly anticipated by those who have already experienced decreases; similarly, those who have already experienced budget increases are more likely to anticipate further increases (see figure 2).
Most institutions general fund reserves have decreased. Three out of four respondents (73%) reported reductions in their institution's general fund reserves. IT budget decreases are most common among those institutions (see figure 3).
For most, institutional leadership is supportive of IT. We asked respondents to reflect on the role their institutional leaders have played as fiscal leaders (see figure 4). Most respondents have confidence in institutional leadership. We found some patterns in the data suggesting that confidence in institutional leadership is lower at institutions that have experienced IT budget decreases.3
Institutions are still investing in teaching and learning technologies. The areas most likely to see budget increases concern academic technologies and support, which have been essential to enabling institutions to remain open.
Technical debt leads to reduced IT quality. The other major long-term challenge of today's IT budget reductions is mounting technical debt and a general erosion of effective IT services:
Lead or despair Leadership plays a role. Most respondents reported having institutional leadership that supports and understands technology's role and funding needs. Although no silver bullets exist, good solid managers are able to make \"a lot of tough decisions,\" as one respondent recounted. Other IT leaders may, to their institutions' detriment, have given up and are simply \"going over budget and letting the chips fall where they may.\" Leading IT today is neither easy nor obvious, but every institution deserves the best of their IT leaders at this time.
Institutions are also using financial tactics to adapt. Some institutions that have received CARES Act monies are using them for pandemic-related IT costs. More often, respondents described tactics to develop more accurate budgets and to manage them more flexibly:
As one respondent put it, \"The cuts implemented are permanent at this time. Those require creative solutions for the pre-committed contracts/services in place.\" Fourteen percent of respondents reported using vendors to help negotiate a reduction of contracts; Gartner was the vendor mentioned the most often. Others are negotiating directly with their service or application vendors.
Don't forget to invest in your staff. Several respondents are restructuring their organizations and staffing. Central and departmental IT units are working more closely together, which in the long term will lead to what one respondent described as \"stronger relationships between central and de-central IT staff, as well as willingness to coordinate work and projects with common goals in mind.\" Only one respondent described nonfinancial investments in their IT staff: \"We are offering as highly flexible work environment and schedules as we can for IT staff to help offset the financial impact of pay/benefits cuts, and the stress of high workloads since March.\"
The Market Shift Adjustments (MSAs) mechanism is part of a much broader set of tools that links global budgets to populations and patients under the State's new All-Payer Model. The specific purpose of the MSA is to provide criteria for increasing or decreasing the approved regulated revenue of Maryland hospitals operating under GBR or TPR rate arrangements. Providing these criteria is important for ensuring that revenue is appropriately reallocated when shifts in patient volumes occur between hospitals as a result of efforts to achieve the Triple Aim of better care, better health, and lower costs. MSAs under GBR arrangements are fundamentally different from volume adjustments. Hospitals under a population-based payment system, such as GBR, have a fixed budget for providing services to the population in their service area. Therefore, it is imperative that MSAs reflect shifts in patient volume independent of general volume increases in the market.
Healthcare is continuously evolving, and that means there are new ideas and strategies about how to optimize hospital spending published every day. The key to making lasting cuts to hospital spending is remaining on top of emerging trends. Regularly make time to review what other hospitals are doing and assess whether or not these strategies could be beneficial to your own organization.
The Great Recession of 2008 drastically reduced education funding and forced school budget cuts throughout the country. Over 10 years later, many states are slowing adding back revenue, while others have kept their education budgets low. School districts in both groups feel the continued pressure to stretch every dollar, as even increases in funding may not be enough to cover rising costs over time. 1e1e36bf2d