Wall St. vs. Main St. - Healthcare Financing

An article by Matthew Weinstock in the June 20th issue of H&HN online makes some interesting observations about the intersection of Wall St. with Main St. in setting the future direction for healthcare. Wall St. is looking for returns on the bonds they've bought while Main St. [the public] is looking for increased access to quality healthcare.

A common thread tying the two objectives together is investing in information technology. As has been discussed here before, IT investments, whether it's electronic medical records, remote links to specialists, improved operating systems and controls, etc. are seen as providing the tools needed to develop metrics and other measurement approaches for evaluating the quality of healthcare delivered by providers.

However, there is a growing gap between the elite not-for-profit health care systems with their smaller and/or rural counterparts. What worries Beth Ward, CFO for the Moses Cone Health Systems in N.C. "is an ever-widening gap with hospitals that have trouble surviving market downturns. She noted that some hospitals in North Carolina with lower credit ratings have put much of their capital plans on hold." The natural consequence of doing this will only make it harder for these hospitals to compete in the future as their ability to adapt to new market conditions, generate new revenue streams and/or develop and implement a new business model for how they operate in their market.

What the elite hospital systems rely on to support their growth and expansion is "... strong balance sheets to fund expensive information technology projects with the hope of improving patient safety and quality of care". One way for the not so succesful hospitals to improve their balance sheets is to add a MAR [medical accounts receivable] funding program from Sun Capital HealthCare Inc. to their financial toolbox.