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Does HCA Follow Best Practices?

 |  By kminich-pourshadi@healthleadersmedia.com  
   September 10, 2012

Should financial practices of HCA be vilified or lauded? That's a question I found myself asking while reading the recent New York Times series analyzing how the for-profit healthcare giant is somewhat craftily succeeding at making margin in healthcare.

HCA has carved a path to profit in healthcare—which is not easy—in its growth into a healthcare behemoth. And while some criticize its tactics (and the government investigates them), other healthcare organizations, both not-for-profit and for-profit, are modifying their practices to try to get similar results.

Profit, though a taboo word in the NFP world, is nevertheless essential to the survival of any healthcare organization. For-profits like HCA have private equity investors who demand returns, and that comes from growth and tight cost control. HCA owns 163 hospitals from New Hampshire to California, a sizable footprint to which many NFP hospitals and health systems aspire.

The healthcare industry consolidation is booming, driven by the need for hospitals to find financial strength by expanding market share and reducing costs. Still, too much organizational growth brings challenges. HCA is the second-largest healthcare organization in the U.S., second only to the U.S. Department of Veterans' Affairs, which has struggled with its own quality issues over the years.

HCA says more than 80% of its hospitals rank in the top 10% for federal quality measures, versus 13% in 2006. That means about 130 of their 163 hospitals are doing quite well, but the other 33 can easily besmirch that record through less-than-stellar practices. The New York Times reports that HCA owned eight of the 15 worst hospitals for bedsores among the 545 profit-making hospitals.

Bedsore statistics can reflect a nursing staff shortage, which is a dangerous problem. HCA uses a flexible nurse staffing system that fluctuates with patient volume, a practice that is not uncommon. In fact, I've even written about it as a cost-cutting mechanism, and more than a few hospitals nationwide use flexible staffing practices.

Some HCA nurses report that important areas are inadequately staffed. That could very well be true, but is that a consequence solely of flexible staffing, or could the nationwide nursing shortage also be a factor? I will venture to say that HCA isn't the only hospital, regardless of tax status, that has been or will be accused of insufficient nursing staff.

I don't wish to belittle these incidents, or how painful and severe bed sores are to patients, only to make the point that their occurrence may not be solely attributable to HCA's profit motive—rather, they may also be a reflection of some of healthcare's larger woes.

But HCA's practices over the years haven't been beyond reproach, and in fact HCA is in hot water again with the Justice Department, which recently launched a review of cardiac businesses at 10 HCA hospitals. The investigation is intended to discern if some HCA hospitals conducted unnecessary procedures and therefore resulted in unjustified reimbursement from Medicare and other insurers.

Though only 10 hospitals are under review, ultimately the Justice Department has another 153 hospitals to choose from and hundreds of thousands of employees with the potential to complain of HCA practices.

Though folks may have chided HCA for its aggressive billing tactics, much of what the organization does has also been modified and imitated by other healthcare providers. HCA managed to garner more revenue from private insurance companies and Medicare by aggressive billing practices. They worked the coding system to their advantage (note that HCA was never formally charged with up-coding).

By way of explanation at the time, HCA said the change in coding practices better reflected the services provided. Partly as a result, its earnings increased $100 million in the first quarter. That's a profit to be proud of, unless the government rules otherwise.

Some people also take umbrage with HCA emergency room triage tactics, which are designed to discourage non-urgent care patients from using the ED for care. Patients are assessed by caregivers and then non-urgent patients are discouraged from staying (though physicians can override the system to treat a patient as necessary).

Some HCA doctors don't care for the screening practice, which encourages non-urgent patients to go to free clinics or to pay copayments or fees before services can be rendered.

HCA's approach parallels a goal of healthcare reform, to keep people out of the ED to help reduce healthcare costs. The government is doing this by encouraging patients to get preventive care and to see primary care physicians. HCA took more of a sledgehammer approach.

Although HCA's approach is distasteful to some, it has not been found to be a violation of the Emergency Medical Treatment and Labor Act. Keep in mind that patients at primary care offices are asked to pay co-pays upfront, and essentially non-urgent care is like primary care.

Moreover, many hospitals are now analyzing patients' high-deductible health plans to determine the patient's upfront payment before care. So was HCA out of step, or did it just take the step too early? Similar ED triaging strategies are now proving to be ED time- and money-savers, as several hospitals are demonstrating.

The New York Times article says that HCA doctors and nurses felt strained over "whether the chain's pursuit of profit may have, at times, come at the expense of patient care." I'm certain their sentiments are true, but are there any healthcare CFOs that haven't heard similar comments from clinicians? The fact is, the clinical and financial sides of healthcare often butt heads—yet one cannot succeed without the other.

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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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