Hospitals Move To Cash Investments As Short Term Pressures Mount

Under pressure from the troubled economy, hospitals are turning to their investment cash flow as a source of capital, according to a recent article in Healthcare Finance News.



Despite reimbursement delays and decreased revenue, hospitals and healthcare systems must still support costly healthcare information technology, facility upgrades and maintenance. As a result, they have focused on rebalancing their investment portfolios.



However, Sun Capital HealthCare (SCH) offers a debt-free funding program for hospitals and healthcare providers that serves as an excellent source of working capital in order to meet their financial demands.



SCH's Medical Accounts Receivable (MAR) funding program can be used as a strategic funding tool in order to:

• Accelerate cash flow by turning receivables into working capital
  
• Alleviate fiscal stress with an immediate infusion of cash


• Realize cost savings from vendor discounts and other operational improvements


• Protect credit ratings by making the balance sheet healthier


• Improve ROI's of capital programs by financing deferred projects at today's costs and seeing the benefits sooner


• Generate new revenue streams by quickly responding to market opportunities without lengthy credit applications

BASEBALL and HEALTHCARE

The Oct. 24th issue of the New York Times has an interesting article "How to Take American Health Care From Worst to First." In it the authors, Billy Beane, Newt Gingrich and John Kerry, note how the big payroll baseball teams are not in the World Series while the team with the second lowest payroll is. They attribute this to the fact that Tampa Bay uses a data-driven approach to decisions rather than the traditional approach that was based on a manager's experience and a few statistics.

The authors cite several examples that support their argument that "a health care system that is driven by robust comparative clinical evidence will save lives and money." Many other observers are also pushing an analagous approach to healthcare by emphasizing that quality of outcomes can be greatly enhanced with the use of technology, not just in new diagnostic and drug discoveries, but in communications and measurement of results to reduce human error and analyze what treatments do and do not work. Of course, a major issue in moving towards this type of approach to medicine is how will the technology be paid for, especially by the smaller hospitals and speciality services. One solution to this financial conundrum, especially with today's liquidity crunch, is through a medical accounts receivable funding program from Sun Capital HealthCare. Sun's program transforms a provider's medical receivables from a non performing asset into a cash flow solution to reimbursement delays that is not subject to the wild swings of today's credit markets.

Healthcare is like baseball in other ways as well. While the researchers and device makers often seem to be trying to hit a home run [so their stockholders can earn a return], in many ways 'small ball' can yield a better result. Reducing obesity, getting more exercise, good eating habits and focusing on prevention is a lot less costly in the long run and a lot healthier, both for the patient as well as the healthcare system.

Technology in Medicine - Emerging Trends

One of the paradoxes of increasingly powerful computer-based technologies is the declining cost and a hold out in hopes of reducing healthcare costs in future. An example of a up and coming developing new technology is the Smart Intensive Care Unit .

In an Intensive Care Unit (ICU) , heart rate, blood pressure, blood flow and other measurements are carried out routinely. The analysis of these parameters is quite time consuming for the puposes of analysis and continuing therapy. In an ICU setting, there could be wide variations of the patient's vital signs and it is critical for the nurse or doctor to be alerted quickly for deterioration of the patient's condition.

The relatively new introduction is the " Smart ICU" which contains a neural network operating on " fuzzy logic" - in simple terms this is a method to represent mathematically vague and imprecise human measures such as " almost", " very" and " quite far away" which cannot traditionally be designed in digital systems, which operate on "on-off" conditions.

It will be a major challenge for healthcare providers to keep abreast of these emerging new technologies and methods, training in their use, and budgeting for their acquisition.

HEALTH CARE REFORM

"Growing Health-reform Challenge For Next President" is the title of an article on yahoonews.

The author, Kevin Freking, discusses primarily the challenges of cost and coverage reform rather than the credit crunch in the financial markets. He aptly notes that there is a long history of failed health reforms and that the job has only gotten tougher with the financial meltdown.

Financial services companies, such as Sun Capital HealthCare, which provides debt-free funding resources to healthcare providers and suppliers, can only do so much for the industry. While cash-flow problems stemming from reimbursement delays from third party payors and the government can be mitigated by Sun's "cash flow solution to working capital needs, the underlying problems of the industry remain: a poor allocation of healthcare resources, a lack of emphasis on prevention, an aging and more obese population which will lead to greater need for healthcare resources, growing malpractice insurance premiums driving doctors away from practice, etc.

If we believe that a healthy populace is a desired goal of this country, both from the point of view of consumers of the goods and services that this nation produces and as users of healthcare services, then the whole delivery system of healthcare needs to be re-engineered, including pharmaceutical discovery and manufacturers, medical device development, and providing of medical treatment. A holistic approach needs to be incorporated, using modern management techniques, so that the national investment in healthcare is productive.

Without Reform, a Health Care Bailout May Be Needed

At this year's 23rd Cerner Health Conference, Neal Patterson, CEO of Cerner Corp., pounded home the message that a health care bailout may soon become a reality.

According to Patterson, with costs escalating, the health care industry could very well be headed for a crash that could mirror - or dwarf - the $700 billion Wall Street bailout.

"The Wall Street bailout is a one-time number," Patterson said. "To bail out health care, it is not a one-time fix. When the bailout comes...it's going to be a very gloomy day."

He predicts that some hospitals and health organizations eventually may quit honoring government reimbursement programs - he used Medicare as an example - because the programs do not cover the costs of providing the service.

Sun Capital HealthCare, Inc. to Exhibit at Medtrade Fall 2008

Sun Capital HealthCare, Inc. (SCH) will exhibit at Medtrade Fall 08 from October 28 - 30, 2008 in Atlanta, GA.

Medtrade Fall is the largest international tradeshow dedicated to the home medical equipment (HME) and durable medical equipment (DME) industry. Thousands of professionals in the industry gather together in search of products, technologies, and services that will increase their operational efficiencies and their bottom line.

SCH will have financial professionals on hand at Booth 2163 to share with HME/DME providers how SCH's Medical Accounts Receivable (MAR) funding program can accelerate cash flow and make their balance sheet healthier whether in growth mode or fiscal stress.

Sun Capital Group Exhibits At the Turnaround Management Association's Annual Convention

Sun Capital Group, Inc. (SCG) will offer an alternative funding solution at the Turnaround Management Association's (TMA) annual convention on October 27-29, 2008.

TMA is the premier professional community dedicated to corporate renewal, turnaround management, restructuring and distressed investing industry.

SCG financial professionals will be on hand at Booth 221 to share with TMA professionals how SCG can be a strategic funding source when they are in both preventative and reactive client counseling modes.

SCG's accounts receivable funding program provides an alternative funding solution that accelerates cash flow and makes a company's balance sheet healthier.

How Do These Economic Conditions Affect My Medical Business?

What are the boundaries of our recent economic catastrophe? Unfortunately, the answer tells us the boundaries are endless and there is no immunity to this financial holocaust.

Medical providers have seen (or very shortly will see) payment intervals begin to extend from all carriers. Starting with government payors, we see California and Illinois not paying for services or equipment already rendered. Other states will undoubtedly follow in the same pattern. State revenues are coming to a screeching halt with decreased tax collections, no ability to borrow in the short term and increased demand for municipal and governmental services. The federal government just committed to a $700 billion bail out of our financial institutions. One must immediately assume that, as in the past, federal reimbursements will decrease in dollars paid, and become significantly protracted.

Commercial carriers have significant exposure to the current financial woes through their investments in mortgage backed securities and derivative instruments. Logic tells us that delayed payments provide "float income" which can offset, although minimally, some of their losses. Not a pretty picture for the medical community. Solutions are few, as conventional lenders are not in that business as of now!

Medical Accounts Receivable (MAR) funding is truly the only solution. The modest discount paid for this service is worth the expense. MAR funding provides a predictable steady cash flow and up-front capital to fund infrastructure additions designed to generate additional income through additional services or products. It is the only game in town...and....coincidentally the best solution for the medical community.

Margins Squeezed? Here's Where to Find Operational Efficiencies

The current economic downturn has caught many businesses in an unanticipated margin squeeze. Healthcare organizations are no exception, with the impact being felt from the declining value of investment portfolios, reduced access to capital, increasing supply costs, and a rising proportion of uninsured patients.

Per an article in HealthLeaders Media, there is something organizations can do to ensure they are generating the margin necessary to fund future operations and investments. A margin improvement audit.

When determining a margin requirement, your target margin should be an operating margin that is sufficient to meet your board's financial performance expectations and fund future capital requirements.

In addition to operating margin, operating cash flow and existing debt service along with other sources and uses of cash should be considered. Medical Accounts Receivable (MAR) Funding is a financing tool that can generate opportunities to reduce operating expenses, increase cash flow, and boost revenue.

With MAR Funding, cash flow can be accelerated by turning receivables into working capital. Operational improvements can be attained by realizing cost savings from vendor discounts with the immediate cash generated through MAR Funding. Also, new revenue streams can be created by having the up-front debt-free cash needed to quickly respond to market opportunities as they arise.

State Medicaid Programs for Long Term Care

State Medicaid programs will spend $1.6 trillion on long-term care in the next twenty years.

Medicaid spending for long-term care will grow at a faster rate than overall health care spending, faster than Medicare, and faster than the national Gross Domestic Product.

"This report shines a spotlight on the need to better prepare for long-term care expenses and to explore ways to provide consumers with greater access to home and community based care options," said Karen Ignagni, President and CEO of AHIP. "Many Americans underestimate their risk of needing long-term care, underestimate the cost of care, and many erroneously believe they have long-term care coverage."

States with the highest projected expenditures over the next twenty years includes New York ($271 billion), California ($230 billion), and Pennsylvania ($104 billion). States with the fastest growing Medicaid long-term care expenses are Alaska (7 percent), California (6.4 percent), and Arizona (5.9 percent).