NURSE-FAMILY PARTNERSHIP: A SOCIAL PROGRAM THAT WORKS

I came across an article in the New York Times about the Nurse-Family Partnership and thought it might be interesting for those of you who may have missed it—and those who perhaps are unaware that Rhode Island is one of 42 states that has instituted this remarkably successful program. I found it particularly notable, perhaps, because I’m married to a pediatrician. The article, titled “For Mothers at Risk, Someone to Lean On,” profiles the social program in New York City.

The Nurse-Family Partnership, started in the 1970s, has been adopted in 42 states and has been found to be a social program that works—saving states money and giving tangible benefits to the women and children involved. Rhode Island adopted this program in 2005 after a push by several organizations, including Rhode Island KIDS COUNT, the leading children’s policy and advocacy organization in the state.

The Times story is about a nurse for the New York City Department of Health and Mental Hygiene who is involved in that city’s Nurse-Family Partnership. The program matches specially trained nurses to low-income, first-time mothers. The nurses start meeting with the mothers during pregnancy and continue their visits until the child’s second birthday. Read the NY Times article.

THE ELECTRONIC HEALTH RECORD: SAVIOR OR DESTROYER?

Courtesy www.health.advancestuff.com

The electronic health record (EHR), a digital replacement for patient information that has been stored on paper since the Greeks, has been touted as the technologic advance that will greatly enhance the quality and efficiency of care. But others believe this technology being imposed on doctors will destroy the doctor-patient relationship, increase costs through billing creep, and slow down the busy physician. Is it the answer to many of our problems or the ruination of our healthcare system? We all know the EHR is neither the savior of the system nor its ruination. It’s a new tool, a disruptive technology that, in the short run is a strong dissatisfier for many providers.

Our system has implemented a fairly robust EHR on the inpatient side, and we are in the process of implementing an EHR for the physician practices that are part of the system. The physicians all understand that recording, storing, and retrieving patient health information electronically is here to stay, but, to put it bluntly, most of them hate it. It has changed the fundamental way they work and most would say that they are working harder and really don’t see much benefit to the patient or to them.  Doctors also resent the added cost to their practice of installing and maintaining this technology—as much as $20,000 per doctor per year. So why are we putting millions of dollars into this technology?

First of all, there is clearly a generational divide when it comes to the EHR. Most recently-trained physicians are accustomed to using a computer to record their findings and have learned to relate to the patient at the same time. Those who trained before the advent of this technology are just staying at work longer to enter their notes into the computer. As this new generation of doctors becomes the majority, the noise will subside.

It is clearly too early to evaluate the value of the EHR to patient outcomes. However, we do know that, if implemented correctly, it does facilitate the tracking of progress for groups of patients and the ability to track physician compliance with standards of care, such as routine screenings, for different categories of patients. Prior to the advent of EHRs, we had to rely on claims data for some of this information and it was notoriously inaccurate.  The timely availability of accurate information on the status of the patients served by primary or specialty providers is critical to advance the concept of population health. In addition, as we move away from what many have come to see as the perverse incentives of fee-for -service reimbursement to various forms of global payment, the ability to measure outcomes becomes even more critical to guard against the perception of “cutting corners” to reduce overall medical expense.

EHRs, as we know them today, must undergo extensive development to gain broader acceptance. However, we have crossed the digital divide and can’t turn back. It’s now up to the new crop of providers, who understand the underlying technology, to help evolve the EHR into an effective tool for advancing patient care, much as surgeons have learned to use robots and other technology in the operating room.

I look forward to your comments. --Lou Giancola

HEALTHCARE REFORM ON THE GROUND

One of the most rewarding aspects of being a healthcare administrator is having the opportunity to watch committed doctors and other providers interact around improving the care of patients. Over the years, this has usually been in the context of discussing the care being provided to individual patients during of rounds in the Intensive Care Unit or discussion of patients in the Cancer Tumor Board. In this context, the only focus is the patient, and the different disciplines bring their perspective on how an individual patient should be treated. I feel particular pride on these occasions because I experience the knowledge and dedication of wonderful healthcare providers being brought to bear on determining the best care for an individual patient. During those moments, all the administrative and process issues that occupy much of my time seem to vanish. It’s all about the patient.

Recently I’ve had the opportunity to observe a similarly dedicated group of health professionals, mostly primary care physicians and healthcare policy makers, grappling with the issue of how you improve care and affordability on a macro basis—for the population of a state. The Executive Committee of the Chronic Care Sustainability Initiative (CSI), which is actually the Patient Centered Medical Home project in Rhode Island, is reviewing the available evidence to determine how patient centered medical home (PCMH) practices in other states have affected measureable health outcomes and the cost of care.

We are fortunate to have a group of incredibly smart and dedicated providers and policy makers in our state leading the transformation of primary care.

As with traditional research studies to determine the efficacy of treatment interventions, such as new drugs, there are many variables to deal with in assessing the effectiveness of PCMH practices, and the pilot projects are different in each state. Although almost all the pilot projects require that practices be recognized as Patient Centered Medical Homes by the National Committee on Quality Assurance, we know there is still wide variability in how they function. In addition, it is difficult to control for the differences in patient populations and the relation of the practice to other resources in the community, such as hospitals. Some practices are part of an integrated system with hospitals and other community health providers, while others are stand-alone practices whose patients use various hospitals.

Despite the difficulty in controlling for all these variables, there is mounting evidence that Patient Centered Medical Home practices improve outcomes for patients, particularly those with chronic conditions; these practices reduce costs by reducing expensive emergency visits and hospitalization; and the patient and provider’s experience of care is enhanced. A recent study entitled “Impact of Medical Homes on Quality, Healthcare Utilization, and Costs,” in The American Journal of Managed Care, compared a large cohort of insured patients in PCMH practices and non-PCMH practices and found significant differences in all three categories. Other insurers have reported similar findings and many are investing in pilot programs around the country.

As a friend whose opinion I greatly respect pointed out, the PCMH movement is not the sole answer to obtaining greater value for our healthcare dollar, but I believe it is a very important component. We are fortunate to have a group of incredibly smart and dedicated providers and policy makers in our state leading the transformation of primary care. Their efforts may ultimately transform the entire healthcare system in our state.  In my forty-five years in healthcare, I don’t think I’ve seen the same focus and energy to find solutions, which energizes me to want to be a part of that change.

BALANCING ACT: JOBS VERSUS HEALTHCARE PLANNING

There is a growing body of evidence that the demand for inpatient acute care beds will decline over the next ten years, despite the aging of the population. This, on top of data suggesting that current inpatient bed capacity is underutilized, has led many policy experts to believe that RI has too many hospitals. Overlooked in this conclusion is that hospitals are much more than inpatient beds. They serve as a nexus for healthcare delivery in a community and increasingly are responsible for recruiting and managing traditional physician practices and other outpatient services. There is also the issue of the distribution of hospital beds and what constitutes reasonable access, particularly in an emergency. That said, there is a strong argument to be made for fewer beds and morphing some hospitals into strong ambulatory care delivery systems that are focused on population health management.

Some people, myself included, felt that we had an opportunity to pursue a rational plan for healthcare delivery and population management in Woonsocket and Westerly, as the hospitals in both communities found it impossible to sustain their current profile of services. In both instances, the communities and the staff fought to preserve a full-service hospital. Although there was concern about access to services by the communities, maintenance of employment was the primary goal of hospital staff and the communities. In both instances, the staff were willing to make concessions related to working conditions to preserve the hospital and their jobs. In the case of Landmark Hospital in Woonsocket, the staff are apparently faced with an unknown out-of-state bidder as the only remaining option after Steward Healthcare System withdrew after three years of negotiations.

"Although there was concern about access to services by the communities, maintenance of employment was the primary goal of hospital staff and the communities."

There is clearly a dilemma here as health planning goals appear to conflict with disruption to people’s employment and their lives. One wonders if there isn’t a way to pursue a more balanced approach. The first step in such an approach is to better understand the health needs of a community and, in conjunction with residents of the area served by a hospital, determine what services are necessary to meet those needs. It’s impossible to do this in a crisis, but in the case of Woonsocket we had four years to think this through. The second step is to consider what kind of healthcare roles will be necessary in the new system and where the jobs will exist. Finally, retraining may be necessary to prepare workers for the new roles.

These situations raise the question of whether we will ever be able to plan the healthcare delivery system of the future or whether we will stumble from one crisis to the next? Maybe my approach is oversimplified, but there has to be a better way to approach these situations, particularly if demand for hospital beds is going decline and we’re going to face more situations like Westerly and Woonsocket in the future.

I look forward to your comments. --Lou Giancola

IS THIS PROGRESS?

The Health Insurance Commissioner in Rhode Island has long advocated for increased emphasis and investment in primary care to improve outcomes and decrease costs. I must admit to being a skeptic as to whether investment in primary care was the most efficient way to achieve improved outcomes. I also wasn’t sure how you could shift dollars away from hospitals and specialists. Although the evidence that these investments will turn the tide on outcomes and quality is still mixed, I’ve become a strong believer, a convert if you will, that Christopher F. Koller was right. It makes sense that if primary care is the foundation of the system, and we strengthen the foundation, the whole system will be stronger. The Chronic Care Sustainability Initiative (CSI), which is really the Patient Centered Medical Home (PCMH) Project in RI, has now shown that patient outcomes improve and utilization can be reduced for patients receiving their care from PCMH practices.

It makes sense that if primary care is the foundation of the system, and we strengthen the foundation, the whole system will be stronger.

The Health Insurance Commissioner has, with the cooperation of the insurers, mandated that the insurers increase their spending on primary care by 1% per year from 2010 to 2014. He has further required that this increased spending on primary care not be included in rate increase requests. His Office has reported that the plans have met the spending target through 2011 and in their projected spending for 2012. This is a credit to the Health Insurance Commissioner, the insurers, and the primary care physicians who have embraced the concept. It also shows that change in the healthcare system is possible if you develop a specific intervention with clear targets and create a mechanism for tracking progress. This should give us hope that larger change in the system is possible.

On another note, I want to recommend that you read the statements of the Presidential candidates on healthcare reform published in the June issue of the New England Journal of Medicine and “The Conservative Case for Obamacare” in the Sunday Review Section of the New York Times.

Is Transparency In Healthcare Costs Possible?

One of Webster’s definitions of transparency is “characterized by visibility of information especially concerning business practices.” Therefore, transparency means that the business practices are easily discernible to the public. I have long felt that the business practices of the healthcare industry are lacking in transparency, which means it’s difficult to act as an intelligent consumer of healthcare. As consumers, we’re a lot like car buyers before it was possible to go on-line and get complete information on every make and model of car with every possible accessory. Although more information is now available on-line for consumers to learn about the charges and approximate out-of-pocket costs for selected healthcare procedures, such as hip and knee replacements, the actual cost of care is still nearly impossible to find.

Part of the reason for the difficulty in determining the cost of medical care is that consumers generally associate charges with cost. If you buy a bunch of bananas, you know you’re going to pay $1.10 a pound. That is both the charge and the cost to the shopper. When it comes to healthcare, the charges almost always have no relation to the cost to the patient. Even if the patient has insurance with a high deductible, the cost to that person will be whatever the hospital or doctor has negotiated as the price the insurer will pay the provider for that service, regardless of the charges. For example, the charges associated with a hip replacement may be $30,000, but the insurance company may pay only $15,000. If you have insurance with a $5,000 deductible, you will pay $5,000 and your insurer will pay $10,000. Although the payment, $15,000, is 50% of charges, there is no true relationship. The hospital, in this instance, negotiated a rate of $15,000 with a particular insurer. By the way, the hospital may only receive $14,000 from other insurers and even less from Medicare.  Another reason why it’s difficult for the consumer to get information about the cost of a service is that the provider is almost always prohibited from disclosing what an insurer pays it for a given service.

"The public deserves greater transparency in our healthcare system."

At this point you should be asking yourself two questions. The first is why are the charges so high in relation to the actual cost or payment received? The second is why are providers prohibited from disclosing what they are paid? You may even have a third question, which is what is the hospital’s actual cost to replace that hip? The answer to the first question is that historically some insurers paid hospitals on the basis of charges. As more insurers moved away from paying charges, the hospitals increased the charges to get more dollars from the few who paid charges. The answer to the second question is that insurers were afraid that if every hospital was aware of what every other hospital was paid, it would lead to everyone holding out for what the highest paid hospital was receiving for that procedure. I have long felt that this explanation was a cop out on the part of insurers and regulators. The insurers should have been able to justify any difference in payment and the regulators should have insisted on an explanation, given that insurance costs have been out of control. Many insurers and politicians decried the fact that consumers never consider the cost in making decisions about their care, but they wouldn’t arm them with the information necessary to make intelligent decisions. This underlying lack of transparency persists to the detriment of the consumer and the premium-paying public.

Now for the third question, what does it actually cost the hospital for a patient undergoing a hip replacement? The answer, of course, varies from one patient to another and from one doctor to another. Some patients will require more days in the hospital or more testing than others, so the costs will vary. Different doctors take different amounts of time to perform the procedure and may use different implants, also resulting in variation in cost. However, hospitals have become more sophisticated in using cost accounting techniques to determine their costs for a given procedure and can even break it out by physician. Some components of cost associated with overhead, such as human resources, do require allocation methodologies. Hospitals are required to submit extensive cost information to Medicare, which is available to the public but difficult to interpret.

With the federal government now responsible for more than 50% of healthcare costs, with the increases in health benefits a drag on our economy and with per capita healthcare costs twice the rate of some other European countries, the public deserves greater transparency in our healthcare system. I would start by systematically providing information to the public on what each payer pays each hospital for the top 20 diagnoses and procedures. That should lead to some very interesting questions about variation in payment and to the cost structures that underlie those payments. It should also lead to insurers and hospitals having to explain those differences.

I look forward to your opinions and comments. --Lou Giancola

Rhode Island or Vermont -- Who has the Right Answer for Healthcare Reform?

I had the opportunity to interact with two individuals who have significant roles in leading healthcare reform in Rhode Island (RI) and Vermont (VT)—Christine (Christie) Ferguson and Anya Rader Wallack.

Christie Ferguson

Christie Ferguson has been appointed Director of the RI Health Benefits Exchange. She’s been on the job for five weeks and is struggling with the balance of just getting the Exchange functioning and addressing the larger issues of improving outcomes and controlling costs. She clearly understands that insurance coverage is important, but not sufficient. Improving the effectiveness and efficiency of the system had to be accomplished through the aggregated purchasing power of the Exchange. The purchasing power amassed through the small employer groups and the non-group individuals mandate —those likely to obtain coverage through the Exchange—will not be sufficient to drive the necessary changes. She faces the challenge of somehow marshalling the purchasing power of state employees (19,000) and Medicaid (224,000) to implement payment reform and other tactics designed to improve quality and bend the cost curve.  Other populations that might be coordinated are municipal employees. Coverage is currently purchased for these employees through several buying cooperatives. The question is whether the regulatory and political climate will make it possible to have all of these entities establish similar standards for their plans related to the role of primary care, participation in the provider network, generic drug use and quality. This is a tall order, but Ms. Ferguson has experience in state government and may be able to pull it off.

Anya Rader Wallack

Anya Rader Wallack hasn’t been around healthcare as long as Christie Ferguson, but she finds herself heading up a very ambitious effort in VT to change the state’s healthcare system. Until her recent appointment as Chairwoman of the Green Mountain Care Board, Ms. Rader Wallack served as the Deputy Chief of Staff to Governor Shumlin for Healthcare Reform. The Green Mountain Health Board was created by the VT Legislature in 2011 to:

·         improve the health of Vermonters;

·         oversee a new health system designed to improve quality while reducing the rate of growth in costs;

·         regulate hospital budgets and major capital expenditures as well as health insurance rates;

·         approve plans for health insurance benefits in Vermont’s new “exchange” program as well as plan to recruit and retain health professions; and

·         build and maintain electronic health information systems.

Wow! That’s an impressive set of goals and a tremendous concentration of power in the hands of a five-person board consisting of two doctors, a business owner and the VT Secretary of Human Services, in addition to Radar Wallack. VT has a population of 619,000, one major teaching hospital (Fletcher Allen in Burlington) and 13 community hospitals. Many Vermonters are served by the Dartmouth-Hitchcock Medical Center, another major teaching hospital located just over the border in Hanover, New Hampshire. Radar Wallack says that, although a Healthcare Exchange will be implemented, it will not be the centerpiece of reform in VT. She and her staff are spending more time reviewing hospital budgets and launching projects to test new payment methodologies.

Keep in mind that neither state has the ability to directly affect changes in the Medicare program (18% or 111,420 in VT and 17% or 176,375 in RI) or employer self insured programs, which are regulated under federal laws.

Which state do you think has the greatest chance of successfully extending coverage, improving quality and bending the cost curve?

I look forward to your comments and opinions. —Lou Giancola

BETTER HEALTHCARE, DECREASED COSTS: A MODEL WE CAN REPLICATE

A New  York Times editorial on September 3, cites the work of Bellin Health, a relatively small healthcare system in Green Bay, Wis., in managing healthcare costs. I was impressed by this piece for several reasons and wanted to bring it to your attention.

First, it is interesting that a relatively small hospital (178 beds) has managed to build a system of care capable of controlling costs and achieving extraordinary quality results. We usually hear about Geisinger and Kaiser Health Systems as achieving these results.  Yet here is a small provider marshalling the resources and the know-how to make a difference. It should inspire the rest of us to explore new ways of delivering care.

Second, it is interesting to see the tactics employed by Bellin to achieve those results. Bellin has employed a large number of primary care physicians and nurse practitioners to ensure that patients can be seen promptly. Their experience seems to confirm that a strong primary care base, combined with convenient and timely access, not only improves outcomes but reduces overall costs. This is not surprising as countries with higher ratio of primary care providers to population tend to have better health outcomes and lower costs.

"A strong primary care base, combined with convenient and timely access, not only improves outcomes but reduces overall costs."

Third, it seems that Bellin has been successful in working effectively with employers to lower their healthcare costs. The editorial notes that a number of companies have contracted with Bellin to provide on-site care to their employees. This encourages employees to seek care early and avoid expensive care in emergency departments. This information, I hope, will encourage more companies to partner with local healthcare systems to find innovative ways to reduce their healthcare expenses. In my experience companies are usually reluctant to make upfront investments even though they are crazed about their increased cost of health insurance.

As the CEO of a small healthcare system, I am sometimes overwhelmed by the challenge of converting from a traditional hospital-based system where volume is king to a system based on improving the health of the population while helping to control the costs of healthcare. Managing the transition from hospital buildings and state-of-the-art technology as capital to primary care physicians and nurse practitioners as capital, is incredibly challenging. In the midst of this transition, it is encouraging to hear about a system that seems to have made great strides in that evolution.

I look forward to your comments. —Lou Giancola

THE POLITICS OF MEDICARE: DISTORTION AND FLIP-FLOPPING

Courtesy Scholastic.com

I thought this election was supposed to be about the economy and jobs, but lately the headlines have mostly been about Medicare. And, surprise, the candidates and their surrogates are playing fast and loose with the facts and neither is talking about the real issues or solutions. Cynics that we’ve all become, you are probably saying, what did you expect? I guess I didn’t expect the level of distortion and flip-flopping that seems to be going on in this campaign.

Gov. Mitt Romney and his running mate, Paul Ryan, both of whom are purportedly budget hawks, are going around criticizing the $716 billion savings from Medicare built into the Affordable Care Act (ACA). They have implied to their audiences that this will affect the benefits seniors currently receive. In fact, virtually all of the proposed savings come from reductions in payments to providers, mostly hospital providers. The hospital lobby agreed to these reductions as a tradeoff for reduction of the number of uninsured resulting from other provisions of the ACA. The NY Times is reporting that if the reductions were removed, seniors would have increased out of pocket expense (estimated at $342 per year on average over the next decade) because their co-insurance is tied to the amount that Medicare pays. Of course, in typical campaign style, none of this is explained to audiences and few will read the coverage in the Times. Although vice presidential candidate Ryan had previously embraced the $716 billion in savings in his deficit reduction plan, he and Gov. Romney are referring to President Obama as having “robbed” the money from Medicare. It appears that, if elected, the Romney Administration will restore the $716 billion in reimbursements to hospitals and worry about the deficit later.

Mr. Ryan’s long-term solution to Medicare Program costs is what he calls a “Premium Support System,” which Mr. Romney has embraced. Under his original proposal, the Ryan Plan would contribute a fixed amount, adjusted for age and health status to each Medicare beneficiary, to purchase private health insurance. This system would not apply to people who are currently 55 or older. You have to ask why, if it’s such a good deal for seniors, it would not begin sooner?

President Obama’s campaign is attacking the Romney camp for destroying Medicare as we know it. Clearly, if the Premium Support Program goes through, that is a fair characterization.

Is it possible that the amount of premium support would not be sufficient to purchase the benefits now available under the current Medicare program?  According to Congressional Budget Office estimates, the Ryan Plan would spend $2,300 per year less on each new Medicare enrollee in 2030 and $8,000 less in 2050, both expressed in today’s dollars. Presumably, seniors will still need a lot of the care they now receive, so they will have to pay for it themselves out of what are likely to be decreasing retirement accounts, given all the changes being made in pension plans for those under 55.

President Obama’s campaign is attacking the Romney camp for destroying Medicare as we know it. Clearly, if the Premium Support Program goes through, that is a fair characterization. The beauty of Medicare is that everyone, regardless of income, is entitled to the same set of benefits. The cost of administering the program is relatively low and the benefits are portable if seniors relocate, unlike private coverage. On the other hand, the President has not been entirely honest with the public about the long-term sustainability of Medicare, given the need to eventually address the federal deficit. The President and his advisors are well aware of the need for fundamental changes in the system of reimbursement and delivery of healthcare to bend the cost curve. This will require some fundamental changes in the Medicare Program, probably a combination of increasing the age of eligibility going forward, but more importantly, forcing changes in the delivery system. The Obama Administration has supported measures, such as the piloting of Accountable Care Organizations, which are designed to incentivize providers to give more efficient care by sharing in the savings relative to the baseline fee-for-service costs. However, these are pilots that last for three years and no one knows what happens when the pilot ends. The ACA calls for the establishment of a panel to evaluate the effectiveness of new therapies, but its findings are not binding because of the “death panel” scare raised by critics.

Obviously, neither party has a clear, well thought-out plan to reform Medicare and the underlying healthcare delivery system.

Medicare is a very successful program and an example of government’s ability to address the needs of a population segment in a thorough and relatively cost-effective manner. In some ways, it is the victim of its own success. Not only has it provided insurance coverage to seniors, but it has financed a significant portion of the medical education system in this country. However, the structure of the program has led to significant excesses. We need political leaders who champion continued access to care, but propose comprehensive solutions to the spiraling cost issue, not just rhetoric.

I welcome your comments. —Lou Giancola

WHO WILL FIX THE HEALTHCARE SYSTEM?



Who is responsible for healthcare reform? Providers?
Insurance companies? Politicians? Federal agencies?
Illustration courtesy of Hospital Marketing Journal



Everyone agrees that the healthcare system is broken. Whether you consider the number of uninsured in our country, the fact that health insurance premiums have risen much more than general inflation, or that, despite our country having the highest per capita expenditures, we have poorer overall health than other industrialized countries, the system is failing us.  Some blame the system’s failings on the fee-for-service reimbursement system, which rewards volume rather than value. Others blame lack of planning, resulting in a system that responds not to need but to highly-reimbursed services. As a result, we have imaging centers on every corner. Still others blame the lack of any personal responsibility on the part of users for the ills of the system. The theory is that as long as insurance pays, the individual doesn’t care what it costs. No doubt all of these have contributed to the current condition of our healthcare system. The question now is who is responsible for fixing the system?

     This question arose in the midst of a meeting of HealthRight, a coalition of providers, labor, and small business that is dedicated to achieving universal coverage for residents of Rhode Island and controlling costs. The group believes that this can be achieved by centralizing the purchasing of all healthcare through the Healthcare Exchange being implemented in our state. We all know that achieving these goals through the Exchange is a long shot. In the meantime, there are others, such as the largest insurer in Rhode Island, Blue Cross, feeling immense pressure from employers to reduce costs. Blue Cross, along with other insurers doing business here in RI, has been helped by guidelines issued by the Health Insurance Commissioner that limit the annual reimbursement increase Blue Cross can give hospital providers without seeking an exception. In a recent dispute with a hospital provider, Blue Cross cited these guidelines as a rationale for not granting the desired increase. The hospital mounted an aggressive and expensive public relations campaign.  One member of the HealthRight group accused Blue Cross of “playing God” because the provider claimed that failure to achieve the requested increase would result in the hospital’s demise. There has been considerable debate within the state about how many hospital beds are required and there is probably some truth to whether this particular provider can survive, with or without the requested increase.

     In my mind, this dispute just gives rise to the larger issue of who is responsible for fixing the system. In this case, the insurer is simply trying to control increases in hospital costs, but insurers will be seeking bigger changes in the system, including global reimbursement (aka, capitation).  Do the insurers have the right or the responsibility to drive the change? If not, who should? Will the providers reform the system on their own? (Unlikely!) Will the Legislature and Executive Branch mandate change through the establishment and implementation of clear policies, as seems to be happening in Vermont? (Most people are skeptical about the likelihood of all parties reaching a consensus!) Will the Exchange become strong enough to drive the change? (It’s too early to tell.) Will the newly established Comprehensive Health Planning Advisory Council take control and drive the change?

     Some institution or body needs to take control if we are going to have a system that improves overall population health and makes healthcare affordable for all our citizens.

     Who do you think should take the lead in fixing our broken healthcare system?  As always, I welcome your comments. —Lou Giancola

HOSPITAL REIMBURSEMENT—THROUGH THE LOOKING GLASS



Deciphering hospitals bills can drive
people a bit bananas--even those who
understand how the healthcare
system works.



When we orient new hospital board members, all of whom are bright, capable individuals, often with lots of business experience, they are usually amazed at the complexity of hospital reimbursement or payment systems. They are accustomed to the way the majority of businesses operate:  goods or services are provided; a bill is generated reflecting certain fixed prices; the customer then pays as invoiced. That’s what most of us experience on a daily basis. I go to the grocery store to buy bananas, the checkout clerk weighs them and translates the price per pound into a price for the bunch, and I pay that amount. I should also mention that if I have forgotten my wallet, I can’t take home the bananas. The store has no obligation to meet my need for bananas, and even though I go to the same local grocery store all the time, they haven’t chosen to extend me credit.

Contrast the transaction that takes places for my purchase of bananas to what happens during a visit to the Emergency Department at South County Hospital or virtually any hospital in the country. The patient arrives and receives a medical assessment before there is any discussion of the ability to pay for services. Our obligation, consistent with our mission, is to address the patient’s chief complaint and ask questions about how he or she will pay for the service later. At some point during the stay there is a conversation about whether the patient has insurance. If so, we immediately extend “credit” even though we aren’t sure the insurer is obligated to pay and, in many cases, we don’t even know how much the hospital will be paid for the service. If we know the patient’s insurance requires a co-pay (a fixed amount the patient is obligated to pay for a given service), we attempt to collect it at the end of the visit. If the person has forgotten to bring cash, checkbook, or credit card, we agree to send a bill. (We hope they agree to pay us.)

At this point the process gets kind of complicated. The patient’s visit can involve a myriad of services in addition to the doctor’s assessment and treatment plan. Depending on the complexity of the presenting problem, a dozen laboratory tests, one or two imaging exams (X-ray, CT, MRI), and the administration of intravenous drugs. The charges (prices) for all those services is entered into the hospital’s billing system. The charges, however, have little or no bearing on what the hospital will eventually be paid for the emergency visit. In most cases, they don’t even relate to how much the service cost us to deliver. Nonetheless, the hospital is required to assign a unique code or identifier to each service, used by most insurers—the federal government for Medicare and the state government for Medicaid. (One of the challenges is meeting the specific requirements of each insurer or government payer. Sometimes it feels like they’ve made it complicated so they can find an excuse to delay payment…)

Once all the charges are assembled, the hospital submits a claim to the insurer or government payer. For people without insurance, a traditional bill is sent with each of the itemized charges, similar to your grocery receipt but usually more difficult to understand. The commercial insurers, assuming the claim is properly completed and the patient’s coverage is verified, then pays the “allowable amount” less whatever the patient is obligated to pay. The allowable amount can be anywhere from 10 to 70 percent of the charge and is based on what each hospital negotiates with each insurer. It is not unusual to have very different payment rates for the same service from different insurers. Also, rates of payment vary significantly from one hospital to another for the same service. A few years ago, the Boston Globe published a series of articles that showed some hospitals receiving 100 percent more than others from an insurance company for the exact same procedure or diagnostic imaging exam. Most insurers prohibit hospitals from disclosing what they are paid for a given service. The insurers have defended the lack of transparency whenever hospitals have protested; they do not want to be pressured to reimburse all hospitals at the highest rate for any given service. The government payers start with the same basic rate for all services, but adjust their payment to each hospital based on whether the hospital is involved in graduate medical education and the relative wages in a given geographic area. These adjustments have been under perpetual study ever since Medicare’s inception in 1965.

Does all of this sound confusing? It should. Hospitals employ reimbursement specialists to negotiate better rates and to maximize payment from insurers and government agencies. Insurers employ adjusters to find problems with claims, which often delays payment. The government employs contractors who audit hospital payments and are paid a percentage of the amount they are able to take back from hospitals because they didn’t comply with the ever-changing rules. The whole process is expensive and clearly does not add value to patient care. I often marvel that I can go anywhere in the world and pay for something with my American Express card, but a medical insurance card doesn’t even have a magnetic strip to provide our hospital system with demographic information. I’m hoping this system of payment for healthcare can be simplified during my lifetime.

I look forward to your comments. --Lou Giancola

THE CRITICAL ROLE OF “CULTURE” IN QUALITY AND PATIENT SAFETY

Dr. Lucien Leape and his colleagues, in the July issue of Academic Medicine, decry the slow pace of improvements in patient safety in our healthcare system. After considering the various causes, they conclude “that the fundamental cause of our slow progress is not lack of know-how or resources but a dysfunctional culture that resists change.” The authors delve into the different forms of disrespect that negatively affect the culture of healthcare organizations, resulting in conditions that threaten patient safety. Although the article draws many of its examples from academic institutions, I believe the underlying theme of the importance of culture on patient safety and quality is relevant to all provider organizations, large or small, academic or community-based. I have spent more than 40 years in healthcare, mostly in leadership positions. I know how my own behavior has contributed to a positive environment that promotes teamwork and motivates individuals to focus on patient safety and how, more times than I care to admit, it has had the opposite effect.

.

Aretha Franklin singing her iconic hit,

"Respect," -- a sentiment that fosters a

culture of patient safety and quality care.

As I reflect on my experience, I know that many people in healthcare are suspicious of leadership and tend to think of us as primarily focused on financial outcomes. They think that we have a different value system. They see themselves as genuinely caring about the patients and perceive that leadership is focused on productivity and the bottom line. That disconnect can lead to a sense that people’s contributions to the care of patients are not respected or valued. This feeling can be exacerbated when those departments that make greater contributions to the financial well-being of the organization, often for historical reimbursement reasons, are held up as paradigms for everyone else and are perceived to have more influence with leadership. I call it the “you give them everything” syndrome. The point is that leadership has a big impact on culture and historically we have not provided the right emphasis. This point was driven home in a meeting with our hospital medicine group where one of the members complained that all they hear from me is how expensive their department is, not what they contribute to our 98 to 100 percent scores on best practice for heart attacks, congestive heart failure and stroke. Unfortunately, he was right.

My experiences have led me to take a different approach to my communication with hospital staff and physicians. Now when I present updates on how we are doing, I talk about quality and patient safety first, the patient experience second, and the finances last. I emphasize that we’re here for the patients, not to make money. The financial performance is the enabler for the first two. Obviously, I haven’t stopped being concerned about the dollars, but I recognize that most people in our organization relate first to quality and the patient experience. They want to know that leadership really is concerned about the care being provided. They also want to know that we listen when concerns are raised about impediments to providing the level of care and service patients deserve. When we’re genuinely aligned, it’s easier to have dialog around some of the other challenges faced by the organization.

Many factors go into in creating an organizational culture that focuses on patient safety and quality, but leadership can make a big difference by recognizing and communicating its importance.

I look forward to your comments. —Lou Giancola

THE GREAT STATE OF TEXAS

Texas Gov. Rick Perry on the campaign trail. Photo
courtesy PRWatch.com

Did any of you see the coverage of Governor Rick Perry of the great state of Texas announcing that Texas would not create a Healthcare Exchange and wouldn’t participate in the Medicaid Expansion Initiative created under the Affordable Care Act? I don’t have the exact quote, but I think he said that Texas wasn’t going to be forced by the federal government to spend money on the poor. I guess I’m not surprised by anything coming out of Texas. That’s the state that seems to encourage people to carry concealed weapons and leads the nation in administering the death penalty. The Governor’s statement prompted me to look at some statistics on the uninsured in Texas. I went to the Texas Medical Association, not exactly a left wing organization, to get some data about the uninsured in Texas. Surprise, Texas is number one in the nation in the percentage of the population that is uninsured, a whopping 25 percent. By the way, that’s about 6.2 million people without health insurance out of almost 50 million, or 16 percent of the U.S. population. Seventeen percent of children and 33 percent of adults ages 19-64 are uninsured in Texas. Texas leads the nation in the percent of children without health insurance. You’d think that at least the people of Texas would want to give children a chance at living a healthy life.

The Texas Medical Association says “The uninsured are up to four times less likely to have a regular source of health care and are more likely to die from health related problems.” In addition, we all know that someone is paying for the episodic care the uninsured do receive, often provided in emergency rooms. That someone are those of us who have insurance. The uninsured generally avoid seeking care until the problems are serious. As a result, we end up spending more for their care. Most importantly, the lack of insurance is a source of anxiety and suffering for millions of people.

I think that reducing the number of uninsured

would result in savings of at least the 10 percent

of costs the states are required to pick up.

If we could reduce suffering and probably save money by extending coverage to the 50 million uninsured, why is there such resistance? Let’s put aside the issue of presidential politics, which may play a role. There is the issue of states’ rights. Texas and Florida don’t want the federal government telling them how to solve their problems. I’m not into the states’ rights thing, but I can appreciate the sentiment. If that is the issue, what does Governor Perry want to do in Texas to address the problem? Governor Perry wants Medicaid to be a block grant to states. I get that. Healthcare is local. So what is the Governor’s plan? It doesn’t appear that he has one. Vermont also wants to shape its own destiny by creating a single payer system. The federal government can be flexible: witness Massachusetts. Another argument is that states cannot bear the additional 5 to 10 percent of the cost of the Medicaid expansion once the federal government’s commitment to 100 percent of the cost of the Medicaid expansion expires. This is also a credible argument. Having watched the RI Legislature struggle with balancing a budget for the last 12 years, the state share of Medicaid is usually the biggest issue. I think that reducing the number of uninsured would result in savings of at least the 10 percent of costs the states are required to pick up. However, if  being responsible for 10 percent of the cost is the issue, why don’t the states ask Congress to pick up 100 percent of the costs? The final argument against expansion of Medicaid is that it reinforces a fee-for-service system that rewards volume rather than outcomes. As far as I can tell, this is a red herring. The states have the right to change the reimbursement system to reward providers for better outcomes and reduced overall medical costs. The Right Care Program in RI seems to illustrate the ability of the states to experiment with different incentives.

So why am I fixated on Texas? After all, RI is committed to the Healthcare Exchange and the Medicaid Expansion Program. The answer is that the Affordable Care Act is under attack and could easily be undermined by the upcoming election. I would like those people who are on the fence to understand what’s at risk. I’d like them to think through the issues and decide what kind of society they want. Do we want a society in which a substantial number of children, due to no fault of their own, cannot access appropriate care? Do we want a society in which many adults put off routine preventive care and, because they become sick and disabled, become dependent on the state? I might be missing something, but it doesn’t make sense from a humane or economic perspective to delay extending coverage to all Americans.

I look forward to your comments. --Lou Giancola

THE CONTROVERSY OVER THE AFFORDABLE CARE ACT CONTINUES

Health Care Reform will give everyone
access to healthcare.
Photo courtesy Parent Guide News

For those of us responsible for stewarding resources to ensure high quality care for people with serious illness and to maintain the health of the population, the controversy over the Affordable Care Act is a huge distraction and an environment of uncertainty for management. The New York Times on Sunday (July 8, 2012)  ran a story about whether the Act authorizes subsidies to individuals who purchase services through the federal exchange in states that do not establish their own exchange. This is just one more example of using people’s access to healthcare as a political football. As most of you know, the Act provides support to states to establish “Health Insurance Exchanges.” Modeled after the system in Massachusetts, the Exchanges are designed to pool the purchasing power of individuals and small employers to make available affordable insurance. The Exchanges will also determine eligibility for subsidized premiums for individuals who are not eligible for Medicaid. In addition to making health insurance affordable, the Exchange is supposed to make selecting a plan more understandable for the average consumer, no small task in itself. Rhode Island is pretty far along in establishing an Exchange and recently hired a health policy expert, Christie Ferguson, to head it up. Sitting on one of the advisory committees for the RI Exchange, I can say there are some very smart people trying their best to implement it. I can also say that it is complicated stuff. The core of the Act is an effort to extend insurance coverage to the 40 million uninsured by expanding Medicaid and by using the Exchanges to create competition for the purchasers of insurance.

Can’t we just get on with it already? I guess not. People on the right have criticized the Act as big government interference in the private marketplace and a drain on the federal budget. I heard a spokesperson for Mr. Romney criticize the Act because it doesn’t give the states the freedom to experiment with different options to meet the needs of the uninsured. I assume she believes the Massachusetts’ program that Mr. Romney supported reflects the creativity of that state’s leaders. The left has always been suspicious of the Act’s reliance on private insurers, who they feel have bloated administrative costs (compared to Medicare) and have failed to get costs under control. The left, and some people on the right, also criticize the Act as not promoting necessary changes in the delivery system (the way care is actually provided) and not promoting a movement away from the fee-for-service payment system. The latter two changes are considered essential if we are going to bend the healthcare cost curve.

As the CEO of the local health system, people frequently ask me what I think of the Affordable Care Act. I always say the same thing—it’s a step in the right direction. If nothing else, it has focused our attention on a system that doesn’t work. We spend too much and don’t get the same results as most western countries that have universal coverage. The Act is flawed and will need changing, but it is a beginning. It gives states a fair amount of freedom to experiment through the Exchanges, including using their purchasing power to alter the reimbursement system and the way care is delivered. I say let’s get on with tackling the problem and stop using healthcare as a political football.

Thanks for visiting. —Lou Giancola

The Times They Are A-Changin'




Health Care Reform supporters and protesters gather
outside the U.S. Supreme Court. 
Courtesy of the Christian Science Monitor

 

I decided to start this blog on healthcare to share the perspective of a small community hospital’s Chief Executive Officer. This seems especially relevant now because of the unprecedented rate of change in healthcare. Each day brings a new revelation. The Affordable Care Act is dead one day and alive the next; virtually every hospital in our small state has either joined a larger hospital system or is considering it; two out of eleven hospitals in Rhode Island are in receivership and others teeter on the edge; and doctors are being hired by hospitals in ever larger numbers. Here, in the smallest state, six hospitals and system CEOs have turned over in the last four years; one only lasted six months in his position. In our state, we also have a new CEO of the dominant commercial health insurer (Blue Cross) and he is aggressively trying to alter the relationship with providers in ways that encourage less utilization of hospital services. It isn’t so much the direction of change that is staggering, but the pace of change. In fact, I embrace the direction of change because I believe it will result in a healthier population and reduce healthcare costs, making it more affordable for individuals and businesses. Along with others watching these changes, I’m hopeful they will improve the business climate in RI and free up dollars that could be better spent on early childhood education and the underlying causes of poverty.

There are already some signs of positive change. For one, more than 40 percent of RI’s primary care practices are now designated as Patient Centered Medical Homes (PCMH) by the National Committee on Quality Assurance.  PCMH-designated practices must demonstrate that they have organized their resources around trying to achieve the best health outcomes for their patients. You might ask, isn’t that the goal of all primary care doctors? It is, but they haven’t necessarily organized their practice around that goal. PCMH practices take a team approach to care, meaning everyone, from receptionists to doctors, knows the patients and is expected to contribute to improving their health. For example, PCMH practices track the results attained by their patients with chronic diseases such as diabetes. They review these results with the team and try to figure out what they can do to help patients who aren’t controlling their blood sugar or blood pressure. These practices share results with colleagues from other PCMH practices to learn which techniques have been successful in improving outcomes.

The jury is still out on whether the PCMH movement has reduced the utilization of expensive services such as emergency room visits and avoidable hospitalizations, but the preliminary evidence is promising. In other countries, there is a well-documented direct correlation between the number of primary care physicians per capita and the overall cost of care, as well as healthier populations and better quality of life.  Let’s hope we see the same results here, and more young doctors choose primary care over historically better paying specialties. This is healthcare reform at the local level where it counts the most.

Each week I’ll try to focus on a different aspect of change in the healthcare delivery and financing system. In the meantime, I’d appreciate your feedback. --Lou Giancola

Welcome!