Dive Brief:
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MD Anderson Cancer Center CFO and EVP of Administration Dan Fontaine this week stated the organization may have to reduce expenses further if revenues don't rebound, Becker's Hospital CFO reported.
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After losing $110 million from September through November last year, the organization sustained an additional $58 million loss in December, according to the Houston Chronicle.
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MD Anderson announced last month that it would reduce its workforce by 5% -- or about 1,000 positions -- in an effort to bring its operating deficit under control, but no further workforce reductions are in the works for now at least, according to Fontaine.
Dive Insight:
After suffering a $266 million loss in fiscal year 2016, MD Anderson is not faring much better through the first four months of fiscal year 2017. Losses are approaching $170 million over this period, well above the $21.4 million shortfall MD Anderson officials had predicted back in August, according to the Houston Chronicle.
MD Anderson officials attributed losses to a costly EHR implementation, a rise in coverage denials after treatment has been delivered, and high out-of-pocket costs for patients that lead to bad debt.
It had appeared the organization was moving in the right direction when operating losses fell to $9 million in November from $41.5 million in September and $60.9 million in October. Fontaine indicated losses in December could be an outlier following its performance in November. However, while December is typically a slow month in healthcare, gross patient revenues actually increased from November, according to the Houston Chronicle.
Over the year, MD Anderson has pointed to its new EHR systems as the primary cause behind its financial woes. A 76.9% drop in adjusted income from September 2015 to June 2016 was “primarily attributable to an increase in expenses combined with a decrease in patient revenues” stemming from EHR implementation, according to an agenda book released by the University of Texas Board of Regents.
Although MD Anderson has been playing the EHR blame game, its troubles likely run deeper than that, Vivian Ho, an economist at Rice University, told the Houston Chronicle. "It's the introduction of electronic medical records; it's insurance providers pushing them out of networks because their prices are so high; it's the movement toward higher deductibles and out-of-pocket costs causing patients to go elsewhere,” Ho said.
MD Anderson officials seem to recognize now that financial problems run beyond. In addition to cost-cutting measures announced last month, the cancer system will take steps in the near future to reduce costs. These include potential changes to personnel policies, scheduling, and administrative systems, according to the Houston Chronicle. While MD Anderson CFO and executive VP Dan Fontaine predicted the cancer system will be back in the black by the third quarter of this year, only time will tell.