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Connection newsletter – latest quarterly financial report for hospitals, AzHHA files letter of support for key state agency and HHS’s latest rulemaking proposal

Read more about the latest quarterly financial report for hospitals, AzHHA files letter of support for key state agency and HHS’s latest rulemaking proposal.

AzHHA releases 2022 Q3 Quarterly Financial Analysis

Today AzHHA released its Quarterly Financial Analysis for the third quarter of 2022 which shows continued challenges for Arizona hospitals in the most recent quarter. Although AzHHA hospitals reported positive net operating margins in 2021, they fell to (4.6)% in Q1, (5.7)% in Q2, and (4.9)% in Q3. The negative net operating margins mirror what has been happening at the federal level in 2022. In 2022 Q3, hospitals reported some slowing of labor costs. In Q3, the cost of salaries and wages fell to a 4% increase over the same quarter a year earlier, compared to an 8% increase in both Q1 and Q2. Contractual labor expenses also declined from the prior quarter but were still up 88% from the prior year.

Looking ahead, 2023 may prove to be another challenging year, especially since the 4% statutory Medicare PAYGO sequester cuts are scheduled to go into effect in January unless Congress chooses to delay these cuts. On a national level, this would reduce Medicare payments by $38 billion in 2023.

Hospitals nationwide report ten consecutive months of negative operating margins

Earlier this week, KaufmanHall released its October report which shows data from more than 900 hospitals nationwide. October’s operating margins were (0.5)%, making it the tenth consecutive month of negative operating margins. Hospitals continue to face increasing costs, particularly with labor. Labor shortages in post-acute care settings (rehabilitation hospitals, long-term acute care hospitals, and nursing facilities) are also leading to longer hospital stays since as hospitals struggle to discharge patients to appropriate settings. Since most payments for general acute hospitals are case-based payments, hospitals typically do not receive additional revenue for longer stays but they still incur costs for additional days.    

Governor-Elect Hobbs Announces Chief of Staff and Transition Team

Governor-Elect Katie Hobbs has named her transition team as well as her first chief of staff. Her bipartisan transition team will be co-chaired by Michael Haener, a contract lobbyist and former Deputy Chief of Staff to Governor Janet Napolitano, and Monica Villalobos, the Executive Director of the Hispanic Chamber of Commerce. The full transition team list is available here. Governor-Elect Hobbs also announced that current Assistant Secretary of State Allie Bones will serve as Hobbs’ Chief of Staff. Bones is a social worker by background but is longtime public servant and advocate on issues related to ending homelessness, hunger, and domestic violence.  

AzHHA submits support for continuation of AHCCCS

Periodically, the Arizona Legislature reviews each agency’s performance via a special committee called the Committee of Reference (COR). The COR evaluates a report submitted by the Auditor General, which you can read here, and the COR then makes a recommendation to the full legislature about the continuation of the relevant agency. The Arizona Health Care Cost Containment System’s (AHCCCS) eight-year review is this year. This week, AzHHA submitted a letter of support for the continuation of AHCCCS, which you can read here. The COR will meet next week on Wednesday, December 7 to hear testimony from the Auditor General and AHCCCS Director Jami Snyder.

HHS proposes major changes to SUD record-sharing

The Department of Health and Human Services (HHS) this week released a notice of proposed rulemaking to improve the exchange of patient records used in the treatment of substance use disorder (SUD). The proposed rule implements section 3221 of the Coronavirus Aid, Relief, and Economic Security Act to ensure providers have more complete and timely information when treating patients with SUD, including updating patient consent requirements and aligning disclosure requirements with Health Insurance Portability and Accountability Act (HIPAA) regulations. AzHHA is among many organizations that have long advocated for closer alignment between the two sets of regulations to better facilitate care and advance the integration of behavioral and physical health treatment. HHS will accept comments for the next 60 days.

Federal resource for managing pediatric surge recently launched a website with pediatric surge resources. The site highlights resources identified or developed to help address the current response to the pediatric surge in viral respiratory illnesses impacting hospital capacity starting in the fall of 2022. Find clinical guidance and surveillance data along with general pediatric surge resources among the many page features.

In the spotlight: AzHHA Affiliated Partner Managed Care Advisory Group

AzHHA’s preferred vendor and affiliated partner, Managed Care Advisory Group (MCAG), provides class action settlement recovery services to member hospitals by consistently scanning relevant litigation and conducting the necessary background work to secure revenue that may have otherwise been overlooked. MCAG has already recovered more than $20 million for healthcare clients this year. Upcoming settlements include prescription drug class action and payor antitrust litigation for providers. To sign up, click here to visit MCAG’s website for AzHHA members.


December 13 – Introduction to POLST workshops

Join physician orders for life-sustaining treatment paradigm (POLST) for their one-hour virtual workshops equipping healthcare professionals with knowledge and resources to begin using POLST in Arizona. The objectives are to describe what POLST is at the state and national level, explain why POLST is important, define the population for POLST, when to begin the conversation and who completes POLST, describe the process for completing, reviewing and updating POLST, and learn the process of submitting healthcare planning documents to the Arizona Healthcare Directive Registry.

Register for these virtual workshops below:

Dec. 13, 2022, at 2 p.m.

Jan. 18, 2023, at 10 a.m.



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