Colin McCulloch, an Associate in the Health Care and Life Sciences practice, in the Washington, DC, office, was quoted in an article titled “7 Strategies to Help Hospitals Break Even on Medicare,” written by Bob Herman.
Following is an excerpt:
For hospitals, Medicare’s impact is colossal, to say the least. Roughly four out of 10 hospital stays are financed by Medicare, and Medicare constitutes anywhere between 35 and 55 percent of the average hospital’s revenue. McCulloch adds that Medicare usually pays 70 to 80 cents on the dollar compared with commercial payors, leaving hospitals scrambling to break even.
McCulloch says hospitals tend to be capital-intensive and, as such, are really slow at eliminating costs. Cutting off Medicare patients altogether is not a wise choice by hospitals, he says, because although that may eliminate 10 to 20 percent of the cost of treating the patient in the short term, that is a 100 percent loss of revenue. “That’s going straight to the bottom line,” he adds.