"We were looking for a strong partner, but we were also looking for a good fit," says West Georgia Health's CEO. "Culturally, I believe this is a very good marriage."
LaGrange, GA-based West Georgia Health has signed a letter of intent to join Marietta, GA-based WellStar Health System, the largest not-for-profit community health system in Georgia.
"We were looking for a strong partner, but we were also looking for a good fit—the right fit. WellStar is that fit," Jerry Fulks, president and CEO of West Georgia Health, said in a media release. "They've amassed the size and financial muscle you need to succeed in today's healthcare world, and they've done that while keeping a sharp focus on patient care and employee satisfaction—and the relationship between those two. Culturally, I believe this is a very good marriage."
Jerry Fulks
West Georgia Health includes flagship West Georgia Medical Center, two skilled nursing facilities, a cancer clinic, heart clinic, women's center, occupational health clinic, outpatient lab and rehabilitation services, a wound care clinic, home care services, and 21 primary care and specialty practices operating in two counties.
WellStar serves more than 1.4 million residents in five counties. The system includes WellStar Kennestone Regional Medical Center, and WellStar Cobb, Douglas, Paulding and Windy Hill hospitals; WellStar Medical Group; urgent care centers and various outpatient clinics and services.
"As not-for-profits, WellStar and West Georgia Health have similar missions and commitments to our communities," WellStar CEO Reynold Jennings said in prepared remarks. "WellStar was formed 20 years ago when five hospitals came together to create a new health system. By bringing West Georgia Health into the regional system, we are continuing our commitment to deliver world-class healthcare to the communities we serve."
LifePoint will own 80% of the joint venture with Wisconsin's Watertown Regional Medical Center, which will retain a 20% ownership stake in the hospital if the deal is approved by regulators.
Wisconsin's Watertown Regional Medical Center,has signed a definitive agreement to partner with Brentwood, TN-based LifePoint Health.
Subject to regulatory approval, LifePoint will own 80% of the joint venture, while WRMC will retain a 20% ownership stake in the hospital, which will transition to for-profit tax status.
Governance will be shared equally through a board with equal representation from WRMC and LifePoint.
Financial terms of the deal were not disclosed, but the joint venture will invest $100 million in WRMC over the next 10 years for projects that include a wellness initiative and various capital improvements.
Proceeds from the joint venture transaction will be used to pay off WRMC's existing financial obligations, and the remaining assets will be used to create a substantial charitable foundation focused on community health.
John Kosanovich, president and CEO of WRMC, says the deal caps months of negotiations.
"The board determined that finding a partner was the move that made the most sense going into the future, given all the change that was happening in the healthcare environment, just the whole notion that the stand alone community hospital wasn't the best model for sustainability and viability in the future," Kosanovich says.
"Through that process we selected LifePoint. It was their track record of successfully managing and growing community hospitals and their proposal that included a joint venture structure that allowed for continued community involvement, including a 50−50 board and governance structure. The board really felt it was important that the community continue to be involved and not only contribute to, but benefit from the success of WRMC."
Kosanovich says the hospital's changing tax status "really doesn't matter anymore. Whether you are nonprofit or for profit you are making a profit to stay in business. The one difference we see, obviously, is payment of taxes and the city and the school board are pretty positive to see some more dollars added to the tax rolls."
UW Health was one of seven suitors in the deal before LifePoint was selected. Kosanovich says the relationship will likely change now that WRMC is with LifePoint, but that the hospital will retain some clinical affiliations with UW Health.
"We've worked with UW for a number of years in a clinical affiliation to enhance services that were available here, and look to continue to work with them in the provision of specialty services where it makes sense for both organizations," he says.
LifePoint Health, which this monthchanged its name from LifePoint Hospitals, owns and operates more than 60 community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 20 states.
WRMC will update its brand and logo on July 1.
Allan Baumgarten is a veteran hospital and health system analyst who tracks hospital mergers and acquisitions throughout the Midwest. He notes that LifePoint gained a toehold in the Upper Peninsula of Michigan two years ago when it acquired Marquette General Health System.
"I assume that if they are entering Wisconsin with one acquisition [or] joint venture that others will follow," Baumgarten says.
Under the joint venture finalized this week, WMC has taken 60% ownership of the system and controls day-to-day operations. Marriottsville, MD-based corporate parent Bon Secours Health System has retained 40% interest. The Sisters of Charity of St. Elizabeth, which has co-sponsored Bon Secours Charity Health System since 2000, will remain canonical cosponsors of the system, but will not retain a financial stake.
The three hospitals in Bon Secours Charity Health System: Good Samaritan Hospital in Suffern, St. Anthony Community Hospital in Warwick, and Bon Secours Community Hospital in Port Jervis, will keep their names and remain Catholic providers.
Michael D. Israel, president and CEO of Westchester Medical Center, declined to attach a dollar figure to the value of the deal when he spokes with HealthLeaders Media.
Michael D. Israel
"It's a very complicated deal. It is not a straight purchase," Israel says. "The only thing I can tell you is that Bon Secours Charity Health System issued the other day $122 million in bonds. If for some reason that entity cannot pay the debt service, we have guaranteed the yearly debt service, so the $122 million was issued by Bon Secours Charity using our credit rating."
WMC has three hospitals on its main campus: a 415-bed adult hospital, a 136-bed children's hospital, and a 101-bed behavioral health center. Israel says the joint venture allows WMC to "better fulfill our mission, which is to keep this campus an advanced care campus and continue to work with community hospitals, these ones we happen to have an ownership interest in."
"Our traditional model here has been working with community hospitals in the region. We don't do primary and secondary care here. We only do tertiary and quaternary care," he says. "We have, if not the highest, one of the highest case mix indexes in the U.S. given that we don't do primary and secondary. We are to a large extent a receiving hospital. We do 24,000 to 25,000 admissions a year and we have more than 7,000 transfers. That's about 20 a day… Bottom line is we are the tertiary referral center in the Hudson Valley."
"It also allows us to better develop tertiary services that are closer to where people live," he says. "We believe the relationship we have, both the ownership and the management of the Bon Secours Charity Health, will allow us to expand our reach and to work with them to expand services and improve service delivery to the communities they serve. We are just reacting to the changes in the healthcare system the way everybody else is."
With the majority stake, Israel says WMC's service area now includes about three million people living in eight counties in the Hudson Valley.
Last year, WMC purchased the financially struggling St. Francis Hospital in Poughkeepsie and placed it under WMC license as a second campus 53 miles to the north.
"Three years ago, every community hospital in the region was independent," Israel says. "Within the next three years there will be no independent community hospitals in the region. They will be either owned or affiliated by larger systems. What is happening nationally is happening in New York in a very compacted period of time. So, we obviously have to change with the changing times."
Israel says WMC's three Valhalla hospitals are operating at near capacity, so gaining more regional referrals is not a primary driver in the joint venture.
"We're really not focused on the traditional development of branches to refer patients in here," he says. "One of the purposes of the relationship with Bon Secours is the development of more and better services in Rockland and Orange Counties. Of course, the high-end tertiary and quaternary cases that they can't do there, we obviously would like to see those cases come here. But the goal of this is not strictly 'let's go out and control some community hospitals so we can shift the high-end business here.' That is not what we are about."
In a recent HealthLeaders Media Intelligence Report, healthcare leaders indicate that 64% of capital budget investment will go to ambulatory or outpatient care expansion, with just 36% dedicated to inpatient acute care expansion. HealthLeaders Media Council members discuss the outlook at their organizations.
This article first appeared in the June 2015 issue of HealthLeaders magazine.
Christian Pass
Interim CFO
John Muir Health
Walnut Creek, CA
We continue to build out our ambulatory strategy. We recently opened an outpatient care center with integrated physicians/specialists, other educational facilities, and ancillary services in the building. We're looking to expand outpatient care facilities in the Bay Area. Most of our new building capital investment is looking at the ambulatory strategy and then continuing to keep the inpatient facilities up to date with the latest equipment.
Healthcare is changing, with a significant shift toward the outpatient arena and trying to do things outside the hospital that we didn't do previously. Still, we will need that emergency uptime 24-hour care in the event of disasters. We have to be mindful of the capital and make sure we are planning appropriately, including, obviously, the pressures on payments and the movement to exchanges and things like that. It's a careful little chess game we are playing right now.
Another thing facing California in 2030 is the seismic regulations, so we are keeping that on the horizon as well. As we are looking at our capital outlook, even now into 2022 or longer, we need to start planning for either new construction or retro-fitting. Right now it's not directing a lot of funding. We have to be mindful of it in the future.
Ninfa Saunders
President and CEO
Navicent Health
Macon, GA
There is no question that ambulatory and outpatient care expansion is going to be where the preponderance of money will go. It's going into the world of retail, with some traditional outpatient, but tweaked to be more in the public space. The new retail product in the market space should be packaged in such a fashion that it is consumer-facing. The inpatient acute care expansion is not going to be bricks-and-mortar. It will go into the program as an inpatient product.
More important, the development in all areas—whether it is ambulatory or inpatient, the development of a comprehensive network or providers, whether we own them or not, it could be by partnership or some other arrangement—is designed so that the whole care continuum is populated to cover retail, hospital-based programs, and postacute. The only thing missing here is the postacute, unless you're looking at postacute as an inpatient expansion.
If we are serious about population health management, we have to start going from the mind-set of “build it and they will come” to going to the patients who might be using the care. Because, by the time they come to us, they're so very sick, and we're providing acute delivery as opposed to managing health. The management of illness through transactional care to the management of health is where the investment is going to go.
Jack Kolosky
Executive Vice President and COO
Moffitt Cancer Center
Tampa, FL
About 70% of our spending—and a growing rate—are outpatient revenues at Moffitt, which is consistent with what cancer care is becoming. The largest single capital investment that we have is a 206,000-square-foot outpatient building that we're building about 1 mile from the main campus to accommodate the sprawling activity.
Most of that is what I will call pure outpatient, with not a lot of crossover with inpatient. There is the breast program, the cutaneous skin cancer program, ambulatory surgery, and some chemotherapies. It will be those programs that will go over there initially. That is the majority of what our big investments are.
The only caution I'd have is that at some point we will need to address the inpatient hospital, which is coming up on 29 years old.
Capital investment at a cancer center is somewhat different from an acute care hospital in the sense that we don't have an emergency department or services such as obstetrics. But I would say we are not immune from the general trends in healthcare—that is, lesser inpatient, quicker stays, more use of ambulatory, and particularly in cancer there is consideration of oral chemotherapies, which the patient can take at home as opposed to coming in for IV therapy. That might be the single most important trend that could affect us down the road.
Bill Leaver
CEO
UnityPoint Health
West Des Moines, IA
On the shift toward ambulatory care: Our capital spend, which is in the neighborhood of $250 million a year, historically has been 55% facility, 20% ambulatory, and 25% technology/HIT. We have swapped out all of our IT platforms, inpatient, ambulatory, and are doing our enterprise resource-planning platform, as well. We have invested heavily in technology. Thinking about the next three to five years, I see that shifting to probably 50% ambulatory, 20% technology, 30% inpatient facility and technology. When I say inpatient facility I also mean replacing an MRI at a hospital, those types of things.
On the trends at hospitals: On the inpatient side, our board has had very good discussions. Some of our 17 hospitals needed some significant investments in terms of infrastructure, a new emergency department or critical care units and so forth. We have made those investments. Senior staff, the operators of these hospitals, sit in on these board meetings, so they are hearing our board members say we need to be looking at accelerating that shift to ambulatory.
On reexamining inpatient investments: A good example may be that some of our hospitals still have semiprivate rooms. It may be that three years ago the desire was to create all private rooms. Maybe that is something we don't
necessarily need to do, or won't be able to afford to do. It's not an unlimited capital budget. The ambulatory presence is a bigger priority.
"The financial health insecurity that comes from being underinsured is substantial and puts people's health and well-being at risk," says The Commonwealth Fund President David Blumenthal, MD.
High-deductible health insurance plans have been touted as a means to expand coverage to millions of people who otherwise could not afford it.
New reports out this month suggest that high-deductible non-group plans are not a silver bullet, however, and that while the premiums may be affordable, the costs of accessing care remains prohibitively high.
A survey released this week by The Commonwealth Fund found that 31 million adults ages 19–64 with health coverage were "underinsured" in 2014, and that oftentimes these underinsured people skimped on care because it was too expensive.
"The financial health insecurity that comes from being underinsured is substantial and puts people's health and well-being at risk," The Commonwealth Fund President David Blumenthal, MD, said at a news conference Tuesday. "If health insurance costs continue to be shifted to consumers this insecurity will deepen."
Sara Collins, the lead author of study, and vice president, Health Care Coverage and Access at The Commonwealth Fund, says "underinsured" status considers an insured adult's out-of-pocket costs during a year of coverage and the plan deductible. Premiums are not factored.
David Blumenthal, MD
"Someone is underinsured if their out-of-pocket costs excluding premiums over the 12 prior months are equal to 10% or more of household income," Collins says, "or if their out-of-pocket costs excluding premiums are equal to 5% or more of household income if their income is under 200% of the federal poverty level, which is about $23,000 for an individual and $47,000 for a family of four, of if their deductible is 5% or more of household income."
Collins says that after nearly doubling between 2003 and 2010 the number of underinsured adults held constant between 2012 and 2014.
"However, growth and the proliferation and size of deductibles threatens to increase underinsurance in the years ahead," she says. "Underinsured adults tend to skimp on needed healthcare and many are accumulating medical debt that is damaging their credit ratings and depleting their savings."
The effects of group coverage under the Patient Protection and Affordable Care Act were not factored into The Commonwealth Fund's report because people insured for a full year in the survey had coverage that began before the PPACA's major coverage expansion going into effect.
"The Affordable Care Act improves the quality of insurance coverage for people who lack job-based health benefits, but many marketplace plans and individual marketplace policies come with high deductibles," Collins says.
"The law has only limited ability to improve the cost protections of large employer plans. New approaches to benefit design are needed to better protect consumers from healthcare costs and encourage the use of timely care. System-wide efforts to lower the underlying rate of medical cost growth with those savings shared with consumers will be critical."
The Commonwealth Fund report's findings are in line with a Families USA report this month which also found that that one-in-four people who bought non-group health insurance in 2014 went without needed care because they couldn't afford it. That report blamed deductibles of $1,500 or more as the leading cause for the skipped care.
"It is critically important that consumers be able to afford all of these types of care," the report says. "Not getting follow up care to treat an illness or not taking needed medications can result in people facing avoidable, more serious health problems and more expensive healthcare costs down the road."
'Blunt Instrument' Wendell Potter is a former health insurance executive who has become an ardent critic of the health insurance industry. He says high-deductible plans are a windfall for commercial insurance providers. "To them right now this is an ideal scenario," Potter says. "They are collecting premiums, which continue to go up every year, but every year they are shifting more of the costs to the consumers."
Wendell Potter
"As you look at trend lines, you'll see the deductibles keep going up every year too but median household income is not keeping pace with these increases," he says. "The insurance industry is really doing quite well because they are taking in money in premiums, but they aren't paying nearly as much out in payments to medical providers that they were in the past because people have to pay so much out of their own pockets before their coverage kicks in."
Blumenthal rejects suggestions that high-deductible plans are simply a windfall for insurance companies.
"That doesn't mean [the underinsured] aren't getting any benefits. It means they are still not adequately protected against the cost of illness," he says. "I don't think it is fair to conclude that their insurance isn't worth anything. Their condition would potentially even worse, they might be paying 20%, 30%, 40% of their income or more than their income on an annual basis if they had no insurance at all."
"One of the clear questions that arises is are people who were previously uninsured better off with insurance, even though they are underinsured? That's likely to vary from individual to individual, but on balance I think the answer is yes." Potter says high-deductible plans have been used as a "blunt instrument" that doesn't factor an individual's income along with deductibles.
"It can be refined to take into consideration that people who are of modest means are going to have to go without care if they are in a plan with a high deductible," he says. "It's something that policy makers and employers and payers are going to have to look at because people are going without the care they need. In the long run, that is going to be a problem for payers and for society."
"Keep in mind that this strategy was promoted by people who can easily afford to put 'skin in the game,'" Potter says. "I can remember several years ago when that was a term that was used by CEOs of big insurance companies. They can easily meet a deductible. They had not walked many days in the shoes of people who are of modest means and don't know what it is like to make a choice between going to the doctor or putting food on the table, or picking up a prescription or make the car payment. They just don't have a clue what it is like to be an average American."
Collins says prohibitively high front-end costs are not the best way to achieve better health outcomes at a lower cost.
"People who are underinsured or who have deductibles that are high relative to their income are skimping on healthcare they need; not filling prescriptions, not getting preventive care tests, not going to the doctor when they were sick," she says.
"It suggests that high front-end out-of-pocket costs do deter people's use of healthcare services that they need. This points to the need for innovation in benefit design that encourages people to get the healthcare they need rather than delay that care."
If the bill adversely affects the RAC revenue stream, then lawmakers who are reluctant to raise taxes and committed to pay-as-you-go funding would have to find a way to offset the revenue loss to avoid deficit spending.
Legislation before Congress would rein in what many providers view as costly, overly burdensome, and outright abusive practices by Recovery Audit Contractors.
The Medicare Audit Improvement Act of 2015 has generated bipartisan support in the U.S. House, with 14 Republicans and nine Democrats signing on as co-sponsors, since the bill was introduced last month.
A key component of the bill eliminates contingency fees that pay RACs between 9% and 12.5% of every claim they deny. Providers have long complained that these contingency fees incentivize RACs to deny claims because they have no financial reward if they determine that any particular claim was appropriate. Nor are RACs penalized when appeals of their claims denials are successfully overturned, which the American Hospital Association says happens 72% of the time.
Instead, the bill calls for RACs to be paid a flat fee, similar to those paid to all other Medicare contractors.
"They have created a business that incentivizes with contingency fees these businesses to get into the game and report negative findings," says Gretchen Case, director of compliance and revenue integrity at Cedars-Sinai Medical Center in Los Angeles.
"If they took that away and paid the auditors without any kind of bias coming into these things that is the first step in making it a level playing field."
The bill has yet to be scored by the Congressional Budget Office, however.
RACs returned about $3.75 billion in allegedly faulty Medicare claims to the federal government in 2013. If the bill adversely affects that revenue stream, then lawmakers who are reluctant to raise taxes and committed to pay-as-you-go funding would have to find a way to offset the revenue loss to avoid deficit spending.
AHA Executive Vice President Rick Pollack said the bill "makes long-overdue repairs to the broken RAC program."
"Physicians do what is best for their patients and make medical decisions based on the care needs of their patients. But recovery audit contractors second guess medical decisions and divert resources from patient care," Pollack said in prepared remarks.
The bill would also:
Reduce payments to RACs that are inaccurate in their audit findings and have a high number of appeals overturned.
Amend rules to allow hospitals to rebill claims when appropriate.
Require RACs to make inpatient claims decisions using the same information the physician had when treating the patient, not information that becomes available after patient discharge.
Case says the RAC program has created an extreme financial burden on hospitals.
"We've had to put in place an infrastructure to reply to RACs in a timely manner, because we have no recourse if we pass up our limitation of days to respond, unlike RACs who can continue to go on and on and on to the point where they have to do a settlement to resolve accounts," Case says.
Case says Cedars-Sinai has had to create an entire department just to deal with the demands of RACs. "We've had to develop a focus team around case management, definitely with nursing experience, physician leadership, etc., which we had to do almost overnight," she says. "A lot of hospitals couldn't do that right away. They didn't have the means to do it. Those of us that could did."
"We've had to buy databases to monitor and track this because of the sheer volume. We needed to know where it was in the audit process, what was at risk, what were we saving, what was the rate of return, and the legal fees," she says. "Everyone was very worried about entering this appeal process without legal counsel."
Hospitals report an average of $1.4 million per hospital in claims under appeal; some larger hospitals have $20 million tied up in the appeals process.
On average, hospitals hire or reassign 2.2 full-time-equivalent employees to handle the operational aspects of RAC audit requests and the appeals process.
Hospitals report that they dedicate an average of 2,868 staff hours a year to the appeals process. Nearly 75% of hospitals report that they reassigned staff to fulfill RAC-related duties.
Hospitals spend on average $117,000 annually to hire external services to assist in RAC audit management.
Fifty-five percent of hospitals report that RAC audits and delays in the appeals process have created significant issues with the availability of capital resources.
Hospitals report delaying other priorities such as hiring personnel, updating equipment, implementing health information technology and updating buildings.
Case says hospitals "are not above being audited," but that the incentives around RACs make it untenable for many providers.
"We do audits with our [Medicare Administrative Contractors] all the time. We have a very collaborative relationship," she says. "If have an issue, we do corrective action. We know they are going to monitor it. We make resolutions and corrections. And then we go off audit."
"With the RACs, if you demonstrate a level of effectiveness and compliance, you never go off of it on a particular issue. They just keep coming because they have no reason not to. There is no penalty for them financially and there is no reason for them as a business model not to continue to appeal. And they bank on the fact that some hospitals will not be able to," Case says.
"These hospitals can't defend themselves and so they accept those findings, but I would love to know the percentage of RAC findings that were due to hospitals that just were not able to respond."
In a nutshell, the hearing provided rural healthcare providers with a soapbox to spell out the unique challenges facing those who deliver healthcare to the 51 million generally older, sicker, and less affluent Americans who live in about 80% of the nation's land mass.
On the government side, Sean Cavanaugh, deputy administrator at the Centers for Medicare & Medicaid Services, assured the subcommittee that "CMS recognizes the challenges faced by beneficiaries and providers in rural areas." Cavanaugh served up a laundry list of programs that CMS has undertaken to help rural providers with population health management.
The subcommittee also heard similar assurances from the Federal Office of Rural Health Policy at the Health Resources and Services Administration.
On the provider side, Julie Petersen, CEO of PMH Medical Center, a critical access hospital in Prosser, WA, told the subcommitteeabout the success of rural health despite the challenges.
"PMH is typical of the healthcare organizations that serve rural areas," Petersen said. "These organizations represent, in many cases, the entire healthcare delivery system—providing access to a broad spectrum of healthcare services from primary care to hospice, home health, and emergency ambulance services. Their continued viability is critical to the health, welfare, and economic viability of these communities."
These are familiar reassurances and laments about rural healthcare.
Tim Wolters, a reimbursement officer at Citizens Memorial Hospital in Bolivar, MO, and Lake Regional Health System in Osage Beach, MO, could have been speaking for any of the thousands of small hospitals across the nation when he provided a pithy account of the rural healthcare landscape.
Wolters said the four biggest challenges facing rural hospitals are: fixed costs and staffing issues around fluctuating patient volumes, higher levels of Medicare utilization, the cumulative effect of Medicare cuts under the Patient Protection and Affordable Care Act and sequestration, and an increasingly complex regulatory environment.
The American Hospital Association also submitted to the subcommittee a concise statement detailing the issues facing rural hospitals. In addition to "remote geographic location, small size, limited workforce, physician shortages, and often constrained financial resources," a big problem is "burdensome, duplicative, and often outdated federal regulations and policies present consistent strain on the ability for rural hospitals to keep their doors open and provide needed health care services," the statement said.
Again, none of this is news. These challenges are well known to those who care about rural health. But the story of rural health cannot be told too often because a lot of good people still don't get it. If that's the case in your area, then it's the fault of leaders because you haven't explained it to them.
Print out Petersen's or Wolters' testimony and post it in your break room at your hospital or other provider site. Talk to staff about these challenges when you see them on the floor or in the cafeteria. Make sure they understand the issues and then encourage them to speak with their friends and family to get the word out. People who work in healthcare carry a certain gravitas and well-earned respect in the communities they serve. When they talk, people listen.
Don't forget about local media. If you don't already, you should have someone at your local newspaper or radio or TV station on speed dial. Direct them to the hyperlink to the hearing. It will give them a concise, easily digestible understanding of the landscape of rural health.
They can be excused if they don't understand the finer points of the 96-hour rule. It's up to rural health advocates to provide the information local media needs to inform its readers and listeners.
That's the beauty of a compelling story. It may not be breaking news, but it's important and timely, and people will want to listen.
As it struggles with price transparency and works to improve quality of care, the Ohio Hospital Association anticipates growing demands for population health data from its members, says the organization's president.
The Ohio Hospital Association—the nation's oldest—celebrates its 100th anniversary this year. OHA President Mike Abrams spoke with HealthLeaders Media about the evolving role of hospital associations. The following has been edited for clarity and brevity.
HLM: You've talked about the need for hospital associations to evolve. What do you mean?
Mike Abrams
Abrams: We need to evolve because our membership is evolving. In the 1980s there were over 100 Blue Cross companies. Today there are fewer than 40. There is a lot of consolidation industrywide and that includes hospitals and health systems across the country. Not only do we have hospitals joining large systems, the large systems in our state are beginning to collaborate with other large systems.
One of the things I say to our staff is that right now we have 219 members in our state. What is going to happen in a few years and we have, say, five sets of members and what are the implications for the hospital association if that is our new truth? We are doing a lot of soul searching. We are looking at three strategic initiatives. One is advocacy, the other is patient safety and healthcare quality, and the third is economic sustainability.
There are some things reserved for proprietary collaborations, but there will be other things that lend themselves to industrywide service, such as a very aggressive advocacy program. From a patient safety and healthcare quality standpoint, it is data.
Are there data services that even large systems collaborating with other systems cannot accomplish for themselves that require a more statewide, industrywide approach? Those are the things where we think we will find that we will provide the best value for our members.
HLM: Will OHA merge with other hospital associations in Ohio?
Abrams: We have more hospital associations in Ohio than any other state: seven. The formula at that level really is very different from venue to venue. As a statewide association we work well with all of them, but we work differently with all of them.
I don't anticipate mergers like what we saw inIllinois unless the locality were to come to us. It has to be locally driven. It can't be the state association saying 'we are going to take you over.' But if the locality says, 'There are economies of scale we could gain if we joined with you,' we would be open to that. It's not anything we are necessarily seeking.
HLM: What are your thoughts on the FTC's heightened scrutiny of the hospital sector?
Abrams: Since time immemorial a criticism of our industry has been 'you are too disjointed and uncoordinated. You need to collaborate better so we can get better results and value and better patient safety.' That has been true and hospitals are beginning to collaborate. It is showing real results on patient safety, quality, value and efficiency.
Then, the long arm of the government comes down and says 'Not so fast!' Nobody wants to be anticompetitive, but we want to collaborate to the extent that the law will allow. There are also examples in the healthcare economy now where physicians and hospitals have done what they view as an honorable project that gets skewered by regulators.
Every time a court or regulators accuse a player on the field of being anticompetitive it is going to have a chilling effect on some of the collaboration that most commonsense people would view as proper.
There is value in competition. Our economy requires it at some level. So, I don't think the FTC is poorly motivated. But they do have an unrealistic expectation. Zealous enforcement of that body of law I don't think is helping the economy in any way. It has been frustrating to a lot of our members who are trying to do the right thing.
HLM: How do you see technology changing the healthcare landscape?
Abrams: We are a nearly $3 trillion segment of the U.S. economy and the really brilliant people from Silicon Valley are excited about opportunities to make our segment of the economy better. The game changers they are hurling at us are going to be shock and awe, starting now and indefinitely.
HLM: Some people in healthcare complain that 'techies' don't understand how a doctor's office, or a hospital ward function in real life.
Abrams: I say this at some risk, but the people with expertise in how a doctor's office works are not necessarily the people to go to to reinvent how a doctor's office should work. People from the outside who ask 'why do you do it like that?' may have better ideas. They can change the system deftly. We are going to see more of that because there is a ton of money in this segment of the economy. They look at this and say 'that is insane! Why do doctors and hospitals do it that way? They ought to do it this way.'
HLM: There is a growing consensus that healthcare providers need to overhaul their billing practices, especially with respect to transparency and simplicity. What efforts are Ohio hospitals making in this area?
Abrams: We are really struggling with transparency in Ohio and how to recommend something that is doable and that would matter. The public is frustrated that we can't tell them how much a service is going to cost. We are frustrated because we don't know how much that service is going to cost. We have proprietary contracts with payers that preclude us from giving out the payers' information.
So, if I call one hospital and ask 'how much are you going to charge me for a hernia?' They are going to say 'it depends.' What I am really asking is 'what is my out-of-pocket?' They have no idea unless they know who my insurer is. It's so much more complicated than just saying 'it's $8,000.'
HLM: Is there concern that if the healthcare sector does not simplify the process, then government will?
Abrams: Some states offer an exhaustive database on the website of what an organization's charges are. There is not a less-meaningful number than what a hospital charges for something because nobody pays what we charge. The chargemaster rate is a ghost.
I come from the position that bad data is far worse than no data. We are struggling with what is a credible number that insurance companies will not quash us from giving out. Publishing comparative data on a website is a tricky. We need to jump on it. The pressure is from the public and the legislative bodies that represent them and honestly they are not wrong. We are frustrated too.
The issue is how do we solve it in a way that will matter for patients and not put in place a program where we pat ourselves on the back and in three years we're no farther along on transparency?
HLM: How do you stay above the competitive fray of your members?
Abrams: The work that I do transcends competition. I am not looking to gain market share or teach anybody how to gain market share. I have the luxury of ignoring the very real competitive forces at play. I read about them as a curious bystander, but it is not central to the portfolio of products and services I offer Ohio hospitals. I don't see that changing.
But what I do see changing, potentially, is their demands of me. I can imagine one day that some of the members will say 'we no longer require this kind of data from you. What we are interested in is what you can do for our tribe from a population health data perspective.'
Right now we have a lot of members with a traditional business model that has been provide a service and earn a biscuit. I can imagine one day their business model is they are held accountable for the health of a population, be that a community or a set of employees. Hospitals will require me to provide different data from what they currently require. We are getting ahead of the curve because we see that coming.
HLM: Where do you get your data?
Abrams: We get great data from our members, but it is all proprietary. We take everybody's data and aggregate it and we are able to create reports based on their needs. It's very sophisticated and they are using it to do some of the things we are most proud of; driving down hospital-acquired incidents of harm. We have driven that down by 55% in the state of Ohio. We now have hospitals in our state that have gone years with no ventilator-associated pneumonias. We are driving down the incidences of central line infection rates and catheter-associated urinary tract infection. We are starting to take on sepsis.
Our data is being used for spectacular results that are not only resulting in lives being saved, but it is definitely driving down the costs because all of those complications have costs associated with them.
Dissatisfied with outdated payment systems, consumers are beginning to circumvent the claims-based healthcare payment system, especially when seeking primary care and chronic disease management, research finds.
Growing numbers of consumers, paying more for their care in high-deductible health plans, are peeved at providers who still use billing and payment systems from the era of Marcus Welby, MD.
An industry survey and report from PwC's Health Research Institute suggests that providers who don't make their billing and payment systems more consumer-friendly and transparent will lose patients to providers who do.
"The very definition of your customer in healthcare is changing right before our eyes," says Ceci Connolly, managing director at PwC HRI. "Healthcare used to be a wholesale industry where it was the business of a provider billing another business entity, an insurer. Now, suddenly much is going directly to the individual patient for services. You need to think about communicating in a very different way that is less about codes and bulk discounts."
The HRI report shows that the tensions over cost between providers and patients is a byproduct of the move toward high-deductible plans. Patients, paying most if not all of the bill, tend to be more price-conscious and astute consumers of healthcare services.
Ceci Connolly
"We used to think that everything in healthcare cost $10," Connolly says. "Back in the old days of very comprehensive first-dollar coverage for so many of us, it was a simple $10 copay no matter who you went to see or for what. We as consumers didn't think too much about what a price was or who was paying what amount or how it was processed."
Updating Billing Practices 'Costly, But Necessary'
"Now that we are on the hook for so much more of it, especially up front with high-deductible health plans, consumers are paying careful attention now and observing what an antiquated system this is," Connolly says. "At the same time the healthcare industry, which is having to perform much more efficiently, wants and needs to collect every single dollar it's owed."
The HRI report surveyed 1,000 adults and analyzed commercial claims from 34 million people. It found that:
Patients and wealthy consumers are most dissatisfied with the healthcare billing and payment system. One in two Americans in poor or fair health—the greatest users of the system—rated hospitals poorly on price transparency and affordability.
Millennials are more likely to judge healthcare organizations based on their billing practices. They also are more likely to challenge medical bills, search for better deals and make value-based decisions.
Consumers and new entrants are beginning to circumvent the claims-based healthcare payment system, especially when seeking primary care and chronic disease management.
Four in five adults with commercial insurance paid less than $1,000 in out-of-pocket expenses in a year. As deductibles rise, more patients will find paying their share of their medical bills difficult, and medical bills continue to be a major cause of consumer bankruptcy.
Nikki Parham, a principal at PwC HRI, says modernizing healthcare billing processes is a fairly straight-forward idea that in practice becomes highly complicated and costly, but necessary.
Shifting Consumer Expectations
"We are seeing a huge shift in consumer expectations, more than ever, which are really driving the need for providers to determine their strategies and technologies around how to respond," Parham says. "Different groups of people, like millennials who have higher expectations, are putting pressure on the healthcare industry to be more like other industries with a point-and-click environment, and to be much more transparent, customer friendly, easy, and convenient, which is something the industry has not been traditionally."
Parham says most providers want to make the transition, but are stymied by the complexity.
"These integrated healthcare systems are dealing with many disparate systems and interfaces and pieces of technology that don't all communicate and tie together in a way that makes it easy to be transparent, to identify what is your cost, and the total price for receiving a segment of care," she says.
"It is not gross charges that you need to quote. It's 'what is the amount that I as a consumer will have to pay which is different from the amount you will have to pay, which is different from the amount that my mom has to pay.' It's an overly complicated process," Parham says.
"There are tools and technologies that are starting to at least supplement these processes but they are expensive and it requires some level of integration to tie these pieces together."
Nikki Parham
HRI says consumers expect six things from their healthcare bill: Convenience; transparency; affordability; reliability; seamlessness; and quality. To get there, HRI recommends that providers:
Accelerate the move to digital.Commercial health insurers conduct just 15% of payments and 27% of remittance advice electronically. The average for payment is 43% among other business sectors.
Partner with a "sidestepper."Providers and insurers should partner with nontraditional companies offering services that sidestep high-deductible claims.
Embrace simplicity.Many consumers do not understand their insurance benefits and are confused by their medical bills. Online payment sites, mobile apps and aggregated billing can simplify the process.
Multiply payment options.Offering choices for payment, making payment easy and helping consumers plan for costs can reduce bad debt and days in accountable.
Connolly likens the upheaval now rattling the healthcare sector to that of the financial sector when it underwent its own fundamental transition toward consumer services.
"We believe that has to happen in healthcare as well," she says. "We try to lay out some short-term improvements, but the healthcare industry is ripe for an entire overhaul when it comes to billing and payment."
185 counties in the Lone Star State with a combined population of more than 3.1 million people, equal to or greater than 21 states, have no psychiatrist.
158 Texas counties with a combined population of 1.9 million, equal to or greater than 14 states, have no general surgeon.
147Texas counties with a combined population of more than 1.8 million people have no obstetrician/gynecologist.
80 counties have five or fewer physicians.
35 counties have no physician.
Even if you don't live in Texas, these numbers should scare anyone who cares about rural healthcare, because this crisis is not unique to Texas, which ranks 41st among 50 states in physicians per 100,000 residents.
"We're saying that more than 3 million people in the state of Texas don't have a psychiatrist. That is like saying Kansas doesn't have a psychiatrist. That is like saying the state of Nebraska or Montana doesn't have an OB. It's incredible," says Travis Singleton, senior vice president of Merritt Hawkins, who compiled the survey for NTREC.
"Sometime you have to put it that way to make people understand what we face."
Caveats apply
Loving County, TX, population 95, has no physicians. Neither does King County, population 283.
However, Live Oak County has no physicians for its 11,867 residents. Jackson County, population 14,591, has two physicians. The bottom line is that there are few and often no physicians across wide stretches of this stretched-wide state. Singleton says Texas would need to add more than 12,800 physicians to put it in the national average of physicians per 100,000 population.
As a result of the shortage, many residents of rural Texas are forced to travel to the next county or further to access healthcare.
"Some say you are manipulating data. Some of those counties don't have that many people and don't justify having an OB anyway. Yes, you do have a couple with 95 or 100 people. You will also have counties with 77,000 people in them without access," Singleton says.
"It also shows you how the problem is compounded by maldistribution. The vast majority of practitioners are in Dallas, Houston, San Antonio and Austin and this shows you what a strain that puts on the rest of the state. If you are an OB and you have your choice to go anywhere in the state, why would you go to a rural county with no support?"
Singleton makes a living tracking physician shortages across the nation for Merritt Hawkins, and he says that, while the survey is unique to Texas, the findings are not.
"To a lesser or grander scale you are going to see this everywhere," he says. "In fact, Texas has done better than most at attracting advanced practice nurses and physicians to meet population demands through tort reform or state-funded loan forgiveness and other programs."
Richard Howe, executive director of NTREC, says he hopes these stark numbers will open some eyes among Texas urbanites.
"There were some surprises. Those of us in urban areas think there are plenty of physicians and we have a high number of physicians per capita in urban areas," Howe says. "But you don't have to get far out of Dallas and it jumps rural pretty quick. We didn't realize how void some of these medical specialties would be throughout the state of Texas."
The lack of access to psychiatrists is particularly insidious because of the linkage between mental and physical health.
"That population with obesity, diabetes, (chronic obstructive pulmonary disease), and congestive heart failure is the same population, way above the averages, for individuals with needs for mental health services," Howe says. "If you don't have mental health capacity in the state, that is going to have a big impact on healthcare in general and will increase our incidences of these chronic diseases.
Urban Shortages Too
The physician shortage isn't just in rural Texas. Urban Texas is feeling the provider pinch within primary care. There are 375 federally designated Health Care Professional Shortage Areas in Texas with a dearth of primary care physicians and many of them are in the state's most populous counties, including Dallas, Harris, and Bexar.
Texas ranks second in the nation in the percentage of physicians who remain in independent private practice, although more physicians in the state are turning to hospital employment, part-time practice, and concierge medicine that reduce hours and accessibility.They also are less likely to accept Medicaid and Medicare payments than physicians in other states.
"It's not just the rural isolated counties where it is the issue," Singleton says. "You could be in downtown Dallas, depending on what kind of patient you are and what kind of provider you need, and you could have an issue. Five or 10 years ago you could look at a provider map and say are they employed or independent? Now you need to know practice patterns, who they are affiliated with, what resources do they have, are they urgent care, concierge? You just can't say they are family practitioners anymore."
Actionable Data
Armed with the new survey data, Howe says the 88 hospitals that formed NTREC will go to the Capitol in Austin to push for remedies. "There is a shortage of physicians in Texas," he says. "When we did this study we kind of felt there was a shortage, but we didn't know it was to this extent. One of the areas we can lobby for is better education and more money for medical education."
Howe says the information could bolster efforts to expand Medicaid in Texas.
"The state of Texas is turning down millions of Medicaid dollars every year and people say we don't want to be tied to the rules of Medicaid. Well, we are already," he says. "Those people come into the emergency department and they're accessing areas where our healthcare expenditures are very high instead of having more Medicaid dollars to treat them in a community setting."
Singleton believes that the survey will provide a wake-up call for Texas' politicians and policy makers.
"It is one thing to know you are in the middle of a drought, but quite another to walk down to the lake and see it almost bone dry," he says. "It really puts a different perspective on it. A study like this can show you that."