2014 MEGA Conference The Medicare Cost Report: A Tool for Decision Making and Strategic Development January 30, 2014 10:30 a.m. 12:00 p.m. Date or subtitle Kathy LaBrake, CPA, Partner Holly Pokrandt, CPA, Partner Wipfli Health Care Practice Wipfli LLP Wipfli LLP 0
If you had to make a decision and your Medicare cost report was your only tool, how would you begin to... a. Analyze your cost b. Compare a contract c. Calculate contribution margins d. Determine unit cost Wipfli LLP 1
Agenda Cost Report Mechanics Routine Cost Analysis Ancillary Cost Analysis Contracting Contribution Margin Outsourcing Services Benchmarking Wipfli LLP 2
Cost Report Mechanics How are reimbursable costs determined? Wipfli LLP 3
Cost Report Flow Worksheet S Worksheet A Worksheet B Worksheet C Worksheet D Worksheet E S-3 A, A-6, A-8, A-8-1, A-8-2, A-8-3 B Part I, B-1 C D Part V, D-3, D-1 Parts I, II, III E Part B, E-1, E-2 E-3 Part V Statistics Costs adjusted: Added and subtracted Allocated to revenueproducing departments Dept. revenue = Cost-tocharge ratios X Dept. Medicare charges = Medicare cost Compared to Medicare Payments = Settlement Wipfli LLP 4
Routine Cost Analysis Wipfli LLP 5
Routine Cost Analysis 2013 Adults & Peds Direct cost per day $ 535 Total cost per day $ 1,164 Gross charge per day $ 1,134 Observations: Direct cost is 46% of total cost Overhead cost is $629 per day or 54% of total cost Costs exceed gross charges by $30 per day Cost-to-charge ratio is 1.03 Wipfli LLP 6
Routine Cost Analysis Calculation for ratios: Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Overhead Percent Sample HOSPITAL Adults & Peds $ 3,167,300 $ 6,890,400 $ 6,712,900 5,920 $ 535 $ 1,164 $ 1,134 54% Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Overhead Percent Your Hospital Adults & Peds Wipfli LLP 7
Routine Cost Analysis 2013 Adults & Peds Direct cost per day $ 535 Total cost per day $ 1,164 Gross charge per day $ 1,134 Overhead percent 54% Your Hospital Thoughts: Is it reasonable that more than 50% of the total cost is overhead? Are these results comparable to or as expected when compared to prior years? Wipfli LLP 8
Routine Cost Analysis Adults & Peds Observations: 2011 2012 2013 Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 From 2011 to 2013, direct cost per day increased $113 or 27% From 2011 to 2013, total cost per day increased $283 or 32% From 2011 to 2013, gross charge per day increased $229 or 25% From 2011 to 2013, days decreased 1,220 or 17% Wipfli LLP 9
Routine Cost Analysis Direct cost per day - Adults & Peds 7,500 Adults & Peds days $600 $500 $400 $300 $200 $100 Direct cost per day D a y s 7,000 6,500 6,000 5,500 Adults & Peds days $0 2011 2012 2013 5,000 2011 2012 2013 Thoughts: If your days decrease and your direct cost remains the same or increases, direct cost per day will increase. If days decreased, why didn t direct cost decrease in some proportion... what could be causing this? Wipfli LLP 10
Routine Cost Analysis Adults & Peds Observation: 2011 2012 2013 Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 Overhead cost per day $ 459 $ 581 $ 629 From 2011 to 2013, overhead cost per day increased $170 or 37% Wipfli LLP 11
Routine Cost Analysis Adults & Peds 2011 2012 2013 Direct costs $ 3,011,800 $ 3,124,400 $ 3,167,300 Indirect costs: Capital - Building 425,100 777,800 789,600 Capital - MME 140,300 130,500 124,700 Employee benefits 409,600 401,400 449,000 Communications - 45,600 45,100 Data processing - 41,400 39,400 Purchasing - 3,200 2,900 Admitting - 40,400 37,100 Cashiering - 47,600 52,400 Other admin 411,000 256,600 244,100 Operation of plant 411,500 419,900 432,500 Laundry 68,800 77,100 73,600 Housekeeping 135,900 152,400 147,700 Dietary 355,100 185,700 195,900 Cafeteria 133,700 156,400 138,000 Nursing administration 614,200 628,400 586,900 Medical records 153,300 166,500 152,900 Social service 190,100 196,700 211,300 Total indirect costs 3,448,600 3,727,600 3,723,100 Total costs $ 6,460,400 $ 6,852,000 $ 6,890,400 Thoughts: Was there a capital project completed in 2012? A & G department was fragmented in 2012 What could happen in your dietary to reduce the costs by half? Source: Direct Costs: Medicare cost report Wkst. B, Part I, Col 0, Line 30 Source: Indirect costs: Medicare cost report Wkst. B, Part I, Overhead Columns, Line 30 Wipfli LLP 12
Routine Cost Analysis Adults & Peds 2011 2012 2013 Direct cost per day $ 422 $ 488 $ 535 Total cost per day $ 881 $ 1,070 $ 1,164 Gross charge per day $ 905 $ 1,049 $ 1,134 Days 7,140 6,400 5,920 Overhead cost per day $ 459 $ 581 $ 629 Gross charge greater (less) than cost $ 24 $ (21) $ (30) Cost-to-charge ratio 97% 102% 103% Observation: Charge exceeded cost in 2011, but cost exceeded charge in 2012 and 2013 Thoughts: If my total charge per day is less than my total cost per day... Do I have a pricing issue? Wipfli LLP 13
Routine Cost Analysis Consider calculating your other routine departments Department Worksheet B Part I Column 0 Direct Cost Worksheet B Part I Column 26 Total Cost Worksheet C Part I Column 8 Charges Worksheet S-3 Part I Column 8 Days Direct Cost/Day Total Cost/Day Total Charge/Day Sample HOSPITAL Adults & Peds $ 3,167,300 $ 6,890,400 $ 6,712,900 5,920 $ 535 $ 1,164 $ 1,134 Nursery $ 202,400 $ 380,300 $ 511,300 670 $ 302 $ 568 $ 763 SNF $ 3,248,900 $ 5,630,100 $ 6,994,700 30,200 $ 108 $ 186 $ 232 Wipfli LLP 14
Routine Cost Analysis Summary: Do your costs exceed charges? Does overhead look reasonable? Is the percent of direct costs to total costs consistent between the years? What s happening to the direct costs as your days change? Is there something you need to investigate? Wipfli LLP 15
Ancillary Cost Analysis Wipfli LLP 16
Ancillary Cost Analysis Sample HOSPITAL - Current Year Department Cost-to- Charge Ratio Operating room 0.361166 Radiology - Diagnostic 0.236128 Laboratory 0.315394 Respiratory therapy 0.877002 Physical therapy 0.357025 Medical supplies charged to patients 0.398714 Observations: Cost-to-charge ratio over 1.0 means costs exceed charges. Cost-to-charge ratio near zero means charges greatly exceed cost. Drugs charged to patients 0.402092 Emergency 1.101237 Observation beds (nondistinct part) 1.597864 Wipfli LLP 17
Ancillary Cost Analysis Calculation of Cost-to-Charge Ratios Sample HOSPITAL - Current Year Department Worksheet C Part I Column 5 Total Cost Worksheet C Part I Column 8 Total Charges Worksheet C Part I Column 9 Total Cost-to- Charge Ratio Operating room $ 3,530,400 $ 9,775,000 0.361166 Radiology - Diagnostic $ 5,866,700 $ 24,845,400 0.236128 Laboratory $ 3,866,700 $ 12,259,900 0.315394 Respiratory therapy $ 859,900 $ 980,500 0.877002 Physical therapy $ 2,351,900 $ 6,587,500 0.357025 Medical supplies charged to patients $ 1,686,600 $ 4,230,100 0.398714 Drugs charged to patients $ 5,070,500 $ 12,610,300 0.402092 Emergency $ 4,228,200 $ 3,839,500 1.101237 Observation beds (nondistinct part) $ 508,600 $ 318,300 1.597864 Wipfli LLP 18
Ancillary Cost Analysis Typical Departments With Cost-to-Charge Ratio Over 1.0: 1. Low volume departments such as labor and delivery or speech therapy 2. High cost departments such as emergency room, clinic, and observation 3. Cost report preparation errors such as: Anesthesia Calculation of professional component costs Medical supplies Expense reported in medical supply department while charges reported in department utilizing the supply Laboratory Lab gross-up not completed 4. Start-up departments such as operating room with a new surgeon Wipfli LLP 19
Ancillary Cost Analysis Sample HOSPITAL - Current Year Department Cost-to- Charge Ratio Operating room 0.361166 Radiology - Diagnostic 0.236128 Laboratory 0.315394 Respiratory therapy 0.877002 Physical therapy 0.357025 Medical supplies charged to patients 0.398714 Drugs charged to patients 0.402092 Emergency 1.101237 Observation beds (nondistinct part) 1.597864 Your Hospital Thoughts: For a cost-to-charge ratio of 1.0 or greater, can costs be reduced to improve margin (look at cost allocation)? For a cost-to-charge ratio significantly less than 1.0, have prices been increased to a level that the hospital is no longer competitive for the service provided? Wipfli LLP 20
Ancillary Cost Analysis Cost-to-Charge Ratios Department 2011 2012 2013 Operating room 0.44296 0.46800 0.36117 Radiology - Diagnostic 0.23734 0.25357 0.23613 Laboratory 0.22501 0.23675 0.31539 Respiratory therapy 0.92695 0.87222 0.87700 Physical therapy 0.55951 0.40697 0.35702 Medical supplies charged to patients 0.34353 0.37231 0.39871 Drugs charged to patients 0.39790 0.42999 0.40209 Emergency 1.01594 1.05276 1.10124 Observation beds (nondistinct part) 1.53467 1.87324 1.59786 Questions to Consider: Are the results of the historical comparison as expected? Are the results supported by operational activity? What is the percent change in each of the years presented? Wipfli LLP 21
Ancillary Cost Analysis Cost-to-Charge Ratios Percent Change Department 2011-2012 2012-2013 Operating room 5.7% -22.8% Radiology - Diagnostic 6.8% -6.9% Laboratory 5.2% 33.2% Respiratory therapy -5.9% 0.5% Physical therapy -27.3% -12.3% Medical supplies charged to patients 8.4% 7.1% Drugs charged to patients 8.1% -6.5% Emergency 3.6% 4.6% Observation beds (nondistinct part) 22.1% -14.7% Thought: What reasons could be causing the change in the above highlighted departments? Wipfli LLP 22
Ancillary Cost Analysis Cost-to-Charge Ratios Department 2011 2012 2013 Operating room 0.44296 0.46800 0.36117 Percent change 5.7% -22.8% Wipfli LLP 23
Ancillary Cost Analysis 2011 2012 2013 Direct costs $ 2,479,200 $ 2,763,800 $ 1,688,300 Indirect costs: Capital - Building 139,300 254,900 258,800 Capital - Movable equipment 200,700 218,300 238,300 Employee benefits 103,100 131,200 160,900 Communications - 35,100 34,800 Data processing - 56,800 63,600 Purchasing - 69,400 98,500 Admitting - 55,400 60,000 Cashiering - 65,300 84,700 Other admin 461,500 203,100 139,400 Operation of plant 134,900 137,600 141,800 Laundry 24,000 28,700 34,900 Housekeeping 45,500 51,100 47,300 Cafeteria 30,200 46,300 44,200 Nursing administration 138,700 141,900 187,900 Medical records 210,100 228,400 247,000 Total indirect costs 1,488,000 1,723,500 1,842,100 Total costs $ 3,967,200 $ 4,487,300 $ 3,530,400 Percent change 13.1% -21.3% Charges $ 8,956,200 $ 9,590,100 $ 9,775,000 Operating Room Observations: Direct costs increased 11% from 2011 to 2012 but decreased 39% from 2012 to 2013 Indirect costs increased 16% from 2011 to 2012 and 7% from 2012 to 2013 At the same time, charges increased 7% from 2011 to 2012 and 2% from 2012 to 2013 Percent change 7.1% 1.9% Source: Direct: Wkst. B, Part I, Col 0, Line 50 Source: Indirect: Wkst. B, Part I, Overhead Columns, Line 50 Wipfli LLP 24
Ancillary Cost Analysis 2011 2012 2013 Salary expense $ 642,200 $ 843,700 $ 944,800 Other expense 1,837,000 1,920,100 743,500 Total direct cost $ 2,479,200 $ 2,763,800 $ 1,688,300 Charges $ 8,956,200 $ 9,590,100 $ 9,775,000 Salary expense / Charge 7.2% 8.8% 9.7% Other expense / Charge 20.5% 20.0% 7.6% Operating Room Observations: By drilling down further, we can see that the change has occurred in other expenses. This will require further analysis to understand why. Source: Salaries: Wkst. A, Col 1, Line 50 Source: Total direct cost: Wkst. B, Part I, Col 0, Line 50 Source: Other expense: Difference between total direct cost and salaries Wipfli LLP 25
Using the Cost Report at a High Level to Evaluate Contracts Wipfli LLP 26
Contracting Total Medicare inpatient cost per day: Total Medicare inpatient charge per day: Wkst. D-1, Line 49 (Routine & Ancillary) $ 8,471,900 Wkst. D-3, Col 2, Lines 30 + 200 $ 15,848,400 Days: Wkst. S-3, Col 6, Line 1 + Applicable Lines 8-12 3,500 Days: Wkst. S-3, Col 6, Line 1 + Applicable Lines 8-12 3,500 Total Medicare inpatient cost per day $ 2,420 Total Medicare inpatient charge per day $ 4,530 Assume Medicare reimburses the Hospital $ 2,445 Wipfli LLP 27
Contracting Total Medicare inpatient cost per day $ 2,420 Total Medicare inpatient charge per day $ 4,530 Assume Medicare reimburses the Hospital $ 2,445 Percent of charge 54% XYZ Contract per day $ 3,000 Percent of Medicare reimbursement 123% Thoughts: How do your current contracts compare? What can you negotiate? Percent of Medicare charge 66% Wipfli LLP 28
Contracting Outpatient Medicare costs (Wkst. D, Part V, Col 6, Line 200) $ 4,839,700 Outpatient Medicare charges (Wkst. D, Part V, Col 3, Line 200) $ 15,369,700 Percent 31% Assume Medicare reimburses the Hospital 35% XYZ Contract 50% Thoughts: How do your current contracts compare? What can you negotiate? Wipfli LLP 29
Contribution Margin Wipfli LLP 30
Contribution Margin Contribution margin represents: The amount remaining after revenue less allowances and discounts less direct expenses The amount remaining, or contribution margin, is the amount available to cover fixed and overhead expenses and profit Wipfli LLP 31
Contribution Margin Calculating Contribution Margin for Hospital Departments #1 Challenge How do you determine contractual adjustments by department? While it is not perfect... One option is to use an average contractual adjustment percent from Medicare cost report Worksheet G-3 Wipfli LLP 32
Contribution Margin Average Contractual Adjustment % 2011 2012 2013 Total gross patient service revenue (Wkst G-3, Line 1) $ 119,149,800 $ 126,727,900 $ 144,677,900 Total contractual adjustments (Wkst G-3, Line 2) $ 58,169,500 $ 61,925,800 $ 75,053,800 C/A % 48.8% 48.9% 51.9% Wipfli LLP 33
Contribution Margin Medicare Cost Report Reference Revenue: Radiology Department Considerations: Contractual adjustment % 2011 2012 2013 Wkst. C, Part I, Col 8, Line 54 Radiology revenue $ 16,693,100 $ 17,915,200 $ 19,845,400 From Internal Records * Less - C/A & discounts 8,149,700 8,754,300 10,295,100 Subtotals Net Radiology revenue 8,543,400 9,160,900 9,550,300 Expenses: Wkst. A, Col 1, Line 54 Direct salary expense 1,261,700 1,294,500 1,397,400 Wkst. A, Col 2, Line 54 Direct other expense 1,094,600 1,153,900 1,091,400 Wkst. B, Part I, Col 4, Line 54 Employee benefits 202,600 202,500 238,000 Subtotals Total direct expenses 2,558,900 2,650,900 2,726,800 * Or calculated average Contribution margin $ 5,984,500 70.0% $ 6,510,000 71.1% $ 6,823,500 71.4% Cost report excludes professional revenue and expense Other information to consider: FTEs and volume statistics Wipfli LLP 34
Contribution Margin Physical Therapy Department 2011 2012 2013 Medicare Cost Report Reference Revenue: Wkst. C, Part I, Col 8, Line 66 PT revenue $ 3,261,400 $ 3,184,400 $ 3,952,500 From Internal Records * Less - C/A & discounts 1,591,600 1,557,200 2,051,300 Subtotals Net PT revenue 1,669,800 1,627,200 1,901,200 Expenses: Wkst. A, Col 1, Line 66 Direct salary expense 545,800 549,100 636,900 Wkst. A, Col 2, Line 66 Direct other expense 156,100 202,400 181,700 Wkst. B, Part I, Col 4, Line 66 Employee benefits 87,600 85,900 108,500 Subtotals Total direct expenses 789,500 837,400 927,100 * Or calculated average Contribution margin $ 880,300 52.7% $ 789,800 48.5% $ 974,100 51.2% Question: If the hospital would contract PT services to a nursing home, how could this analysis be used to assist with structuring a rate? Wipfli LLP 35
Contribution Margin There s not a magic contribution margin: Contribution margin depends on your operations and charge structure. Within a hospital, we would expect the contribution margin to stay relatively similar to prior periods or understand why any changes have occurred. Wipfli LLP 36
Outsourcing Services Wipfli LLP 37
Outsourcing Services Sample Hospital Your Hospital Cost Center Description Unit Cost Multiplier Statistic Unit Cost Multiplier Statistic From Wkst B-1, Line 203 Cap Rel Costs - Bldg & Fixt $ 21.99 Square feet Operation of plant $ 35.17 Square feet Housekeeping $ 40.25 Hours Dietary $ 10.99 Meals Represents: Cost Per Unit (Unit Cost Multiplier) = Fully Allocated Cost Total Statistical Unit (i.e. square feet) Wipfli LLP 38
Outsourcing Services A local clinic comes to the hospital wanting to rent space. How can you use the cost report to estimate what you should charge? Building cost per square foot per the Medicare cost report, assuming no utilities or maintenance: Cap Rel Costs - Bldg & Fixt $ 21.99 Wkst. B-1, Col 1, Line 203 Wipfli LLP 39
Outsourcing Services A local clinic comes to the hospital wanting to rent space including utilities. How can you use the cost report to estimate what you should charge? Wipfli LLP 40
Outsourcing Services Cost Center Description From Wkst B-1, Line 203 Unit Cost Multiplier Statistic Cap Rel Costs - Bldg & Fixt $ 21.99 Square feet Operation of plant $ 35.17 Square feet Housekeeping $ 40.25 Hours Dietary $ 10.99 Meals Wipfli LLP 41
Outsourcing Services Cap Rel Costs - Bldg & Fixt $ 21.99 Operation of plant 35.17 Amount per square foot $ 57.16 Thoughts: If we add the building depreciation and the operation of plant unit cost multipliers together amount looks high Why would this be occurring because the operation of plant department may include more than the utility cost Wipfli LLP 42
Outsourcing Services Calculation for Utilities Cap Rel Costs - Bldg & Fixt $ 21.99 Wkst. B-1, Col 1, Line 203 Total square feet 33,000 Wkst. B-1, Col 1, Line 1 Total costs for utilities $ 300,000 Wkst. A, Col 2, Line 7, or internal records Amount per square foot $ 9.09 ($300,000 / 33,000 square feet) Wipfli LLP 43
Outsourcing Services Cap Rel Costs - Bldg & Fixt $ 21.99 Utilities per square foot 9.09 Estimated cost per square foot $ 31.08 Thought: Is $31.08 a reasonable estimate of the costs for rent and related utilities (example 1,500 square feet would approximate $47,000 a year or $3,900 per month)? Wipfli LLP 44
Outsourcing Services The hospital is approached to provide housekeeping services for a clinic what should the hospital consider charging? Cost Center Description From Wkst B-1, Line 203 Unit Cost Multiplier Statistic Cap Rel Costs - Bldg & Fixt $ 21.99 Square feet Operation of plant $ 35.17 Square feet Housekeeping $ 40.25 Hours Dietary $ 10.99 Meals Wipfli LLP 45
Outsourcing Services Calculation of the Cost of Providing Housekeeping Services Housekeeping cost per hour $ 40.25 From Wkst. B-1, Col 9, Line 203 Total square feet 33,000 Wkst. B-1, Col 1, Line 1 Total costs for housekeeping $ 692,000 Wkst. B, Part I, Col 9, Line 9 Estimated cost per square foot $ 20.97 ($692,000 / 33,000 square feet) Thought: If housekeeping services are provided for 1,500 square feet, the annual estimated cost is approximately $31,500, or $2,600 per month.this represents about 3 hours a day is this a reasonable starting point? Wipfli LLP 46
Outsourcing Services The Hospital currently provides an outside meal program What is the direct cost of the program compared to the revenue received? What is the total cost of the program compared to the revenue received? Wipfli LLP 47
Outsourcing Services Direct Cost Analysis Example Outside Meals Outside Meals Revenue (10,000 x $5.00) $ 50,000 Revenue (10,000 x $5.00) $ 50,000 Number of meals 10,000 Number of meals 10,000 Direct cost per meal (A) 6.44 Total cost per meal (B) 10.99 Total direct cost 64,400 Total direct cost 109,900 Loss, excluding overhead $ (14,400) Loss, including overhead $ (59,900) (A) Direct costs per Wkst. B, Part I Total Cost Analysis Example (B)Total costs per Wkst. B, Part I Column 0, Line 10 $ 451,000 Column 10, Line 10 $ 769,000 Total meals per B-1 70,000 Total meals per B-1 70,000 Direct cost per meal (A) $ 6.44 Total cost per meal (B) $ 10.99 Meals on Wheels Program Assumption: Contract rate $5.00 per meal Observation: The Meals on Wheels program loses money based on direct costs and loses more when including overhead costs. Thought: Is there a better way to provide this service? Wipfli LLP 48
Benchmarking Your Hospital and Your Competition Wipfli LLP 49
Benchmarking After spending time analyzing and dissecting your cost report data, consider developing a summary of benchmarks comparing to your historical data and to your hospital s competitors. Medicare cost reports can be requested through the Freedom of Information Act from the Centers for Medicare & Medicaid Services or your fiscal intermediary. Wipfli LLP 50
Benchmarking Benchmark Hospital Benchmark 2011 2012 2013 Adults & Peds occupancy percentage 19.7% 18.2% 21.6% ALOS - Adults & Peds 2.8 2.8 2.9 Hospital Medicare Utilization: Routine - Total 49.0% 47.2% 38.5% Ancillary - Total 23.5% 23.2% 26.8% Operating room 44.8% 30.0% 38.5% Emergency room 30.0% 25.9% 33.7% Overhead expenses as a percentage of total expenses 48.7% 49.8% 50.5% Outpatient charges as a percentage of total charges 69.5% 72.0% 71.6% Cost per diem for hospital routine $ 1,092.45 $ 1,213.79 $ 1,058.68 Cost per diem for SNF $ 173.82 $ 178.81 $ 188.15 Medicare cost per diem for total inpatient services $ 1,529.06 $ 1,704.78 $ 1,746.74 Medicare outpatient cost-to-charge ratio 43.5% 41.7% 44.6% Net income from service to patients $ 401,200 $ (277,100) $ 491,957 Contractual adjustment and discounts % 38.3% 41.0% 36.5% Wipfli LLP 51
Benchmarking Benchmark Competition (Sample: 12 competitors) Lowest Median Highest Benchmark Hospital Performer Performer Performer Adults & Peds occupancy percentage 21.6% 19.8% 31.5% 41.9% ALOS - Adults & Peds 2.9 2.2 3.4 2.8 Hospital Medicare Utilization: Routine - Total 38.5% 36.7% 38.1% 24.4% Ancillary - Total 26.8% 19.7% 24.0% 30.0% Operating room 38.5% 44.4% 30.8% 20.5% Emergency room 33.7% 24.1% 24.8% 31.5% Overhead expenses as a percentage of total expenses 50.5% 41.0% 44.9% 46.7% Outpatient charges as a percentage of total charges 71.6% 59.1% 56.0% 79.8% Cost per diem for hospital routine $ 1,058.68 $ 1,690.14 $ 1,080.52 $ 1,584.75 Cost per diem for SNF $ 188.15 $ - $ 213.99 $ - Medicare cost per diem for inpatient services $ 1,746.74 $ 2,452.26 $ 1,732.84 $ 2,420.68 Medicare outpatient cost-to-charge ratio 44.6% 48.5% 40.8% 65.0% Net income from service to patients $ 491,957 $ (1,604,803) $ (57,899) $ 2,660,396 Contractual adjustment & discounts % 36.5% 36.4% 39.2% 34.4% Wipfli LLP 52
Benchmarking Benchmark Formula - Cost Report 2552-10 Adults & Peds occupancy percentage (and others) Worksheet S-3, Part I, Column 8, Line 1 / Column 2, Line 1 (Beds) * 365 ALOS - Adults & Peds Worksheet S-3, Part I, Column 8, Line 1 / Column 15, Line 1 Hospital Medicare Utilization: Routine Worksheet S-3, Part I, Column 6, Line 1 / Column 8, Line 1 Ancillary Worksheet D, Part V, Column 2-4 plus D-3 (Hospial and Swing Bed), Column 2 for Department Line or Total Line / Worksheet C, Part I, Column 8 for Department Line or Total Line less Lines 30-46 Overhead expenses as a percentage of total expenses Worksheet B, Part I, Column 0, Lines1-29 / Column 0, Line 202 Outpatient charges as a percentage of total charges Worksheet C, Part 1, Column 7, Line 202 / Column 8, Line 202 Cost per diem for hospital routine Worksheet D-1, Part II (Hospital), Line 38 Cost per diem for SNF Worksheet D-1, Part III, (SNF), Line 71 Worksheet D-1, Part II (Hospital), Line 49 / Worksheet S-3, Part I, Column 6, Medicare cost per diem for inpatient services Line 1 + Applicable Lines 8-12 Medicare outpatient cost-to-charge ratio Worksheet D, Part V, Column 6, Line 202 / Column 3, Line 202 Net income from service to patients Worksheet G-3, Line 5 Contractual adjustment & discounts % Worksheet G-3, Line 2 / Line 1 Wipfli LLP 53
Questions Wipfli LLP 54
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Speaker Information Kathy LaBrake, CPA Partner, Health Care Practice Wipfli LLP 11 Scott St., PO Box 8010 Wausau, WI 54402-8010 715.843.8351 klabrake@wipfli.com Holly Pokrandt, CPA Partner, Health Care Practice Wipfli LLP 3703 Oakwood Hills Pkwy., PO Box 690 Eau Claire, WI 54702-0690 715.858.6627 hpokrandt@wipfli.com Wipfli LLP 56
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