Ratings of dialysis centers are based on population health statistics that are often beyond the facilities' control and don't reflect quality measures important to patients, says an executive at the National Kidney Foundation.
The Centers for Medicare and Medicaid Services' new five-star rating system for kidney dialysis centers is getting one-star reviews from patient advocacy groups.
"Star ratings are simple to understand and are an excellent resource for patients, their families, and caregivers to use when talking to doctors about healthcare choices," outgoing CMS Administrator Marilyn Tavenner said in prepared remarks. "CMS has taken another step in its continuous commitment to improve quality measures and transparency."
The rankings are akin to CMS's Nursing Home Compare and Physician Compare websites, although the methodologies are dissimilar. DFC ranks centers on a bell curve based upon nine quality measures that include mortality, hospitalization, and transfusion ratios.
Those measures are creating frictions with advocates for kidney patients, who say CMS ignored their suggestions for creating a more accurate rating of the quality of care delivered by dialysis centers. Instead, the advocates say the DFC ratings from CMS will become a confusing and inaccurate resource for dialysis patients.
"It's great that CMS specifically is looking to make quality a little bit easier for patients to understand, but the way the program is laid out has oversimplified the situation," says Tonya Saffer, senior federal health policy director, government relations, at the National Kidney Foundation.
"This is going to be misleading to patients who are looking for a quick way to see how their facility is doing or how the facility they're considering going to might be doing. There is a lot of misleading information in these rankings."
Population Health Benchmarks
For starters, Saffer says, the dialysis centers are judged on population health statistics that are often beyond their control, such as population mortality and hospitalization rates.
"A lot of these star ratings can reflect things such as population health, and that is a big concern of ours," she says. "It is not necessarily that the dialysis facility itself is doing a poor job, but that there aren't enough community healthcare resources, or general population health in those areas is likely poor."
Saffer also says the CMS ranks don't reflect quality measures that are important to dialysis patients, such as the cleanliness or physical condition of the facility, the attentiveness of the staff, and overall patient satisfaction.
And kidney patient advocates are concerned that the ratings rely on a bell curve, which they believe will unfairly penalize some dialysis centers and unfairly reward others.
"You have a set number of facilities and there is no set standard of care that they are being measured against," Saffer says.
The DFC star rating for more than 5,500 centers break down like this:
1-star — 545
2-star — 1,105
3-star — 3,399
4-star — 1,126
5-star — 565
"We know that by looking at the country, population health in different areas of the country is lower or higher. So, I don't think these rating provide a snapshot that can provide patients with an ability to make a decision off of a star rating. My fear is they will look at these and they will make decision."
The National Kidney Foundation's concerns were echoed by other kidney health advocacy groups, including Kidney Care Partners, and Dialysis Patient Citizens. Both groups complained after the DFC rollout last week, criticizing CMS for ignoring issued they'd raised about the ranking methodologies.
"We wanted the system to be reliable and meaningful to patients and to reflect the quality of care being delivered," KCP Board Chairman Edward M. Jones, MD, a nephrologist, said in prepared remarks. "The program as developed and now launched by CMS simply does not accomplish that goal."
Scores Favor Healthy States
DPC noted on its website that "a nationwide competition among all facilities that gives considerable weight to health outcomes (such as hospitalizations and mortality) [and] disfavors facilities in places where, in general, patients are less healthy. Dialysis Facility Compare star ratings are most favorable to clinics in healthy states, such as Hawaii and Colorado, but unfavorable to clinics in places like West Virginia. This discourages investment in clinics in places that need them the most."
Not everyone dislikes the rankings.
DiVita Kidney Care, the national for-profit chain of dialysis centers, issued a press release bragging about its high scores from CMS. "For 15 years clinical quality has always been the first order of business at DaVita," DaVita HealthCare Partners Co-Chairman/CEO Kent Thiry said. "It's gratifying to see those efforts positively reflected in the two government reports showing our national leadership in dialysis patient outcomes."
Community Health Systems, Inc. has announced that it will purchase 80% equity in Metro Health. In Colorado, Humana and Boulder Community Health have announced the launch of an accountable care arrangement and population health partnership.
Community Health Systems, Inc. will enter the Michigan market with its announced purchase of 80% equity in Metro Health, a not-for-profit community hospital in the Grand Rapids suburb of Wyoming, MI.
Financial terms were not disclosed.
"Metro Health provides an opportunity for our company to expand into Michigan and add the state's fastest growing market to our organization," Wayne T. Smith, CEO and President of Franklin, TN-based CHS said in prepared remarks. "This health system has served Western Michigan for many years, and we look forward to supporting Metro Health's medical staff and employees in their ongoing work to provide quality care."
The acquisition, announced Friday includes the 208-bed Metro Health Hospital, outpatient centers, and other assets and businesses. For-profit CHS also agreed to invest between $100 million and $125 million in capital over the next five years for facilities, services, medical technology, and physician recruitment.
Metro Health posted a net loss of $3.4 million in 2013, according to its Medicare cost report. The health system had posted a net gain of $7.2 million in 2012.
The deal is subject to regulatory approval by the Michigan Office of the Attorney General and certificate of need review by the Michigan Department of Community Health, a process that is expected to take several months.
If the sale is approved, Metro Health will change its tax status to for-profit as it girds to compete against Spectrum Health, the 11-hospital not-for-profit system and a dominant player in the Grand Rapids and western Michigan market.
"We had the luxury of time to work together with CHS to achieve the best long-term strategic outcome," Mike Faas, president/CEO of Metro Health, said in prepared remarks. "We could be patient looking to the future, not in a panic mode for a short-term solution."
Along with the access to capital, CHS has agreed to retain the Metro Health workforce, including more than 500 physicians on the medical staff, adopt the not-for-profit system's charity care policies, continue residency and fellowship programs, retain the local board of directors, and maintain relationships with the University of Michigan, Orthopaedic Associates of Michigan, Pennant Health, and other affiliations.
CHS owns, leases or operates 206 hospitals in 29 states with an aggregate of approximately 31,100 licensed beds. The deal marks CHS's entry into Michigan, and also the first affiliation in West Michigan of a community hospital with an investor-owned, national health system.
Josh Fangmeier, a senior health policy analyst at the University of Michigan Center for Healthcare Research & Transformation, says the same forces that are pushing hospital consolidation elsewhere in the nation are at play in Michigan.
"We are seeing increasingly fewer and fewer independent hospitals. There is a lot of pressure to join larger systems for a variety of reasons," Fangmeier says. "Just in the southeast Michigan area recently we have seen Crittenton Hospital in Detroit acquired by Ascension Health, a not-for-profit chain. Also Garden City Hospital just outside of Detroit was acquired by an out of state for profit chain. We're also seeing Duke-LifePoint making a presence in the Upper Peninsula and now we are starting to see acquisitions in western Michigan in the Grand Rapids area with more out-of-state, for-profit activity."
Fangmeier says Michigan is getting a lot of attention from out-of-state for-profit chains ever since Nashville-based Vanguard Health Systems, Inc. acquired Detroit Medical Center in 2011.
"A few years ago the state was almost entirely not-for-profit-based hospital systems. Many of these systems faced significant financial challenges, particularly those that are independent, relatively small and without a lot of negotiating power," Fangmeier says.
"We are going to continue to watch not only these remaining independent hospitals, of which there are almost none in the Detroit Metro area. There are a few remaining in the state, but what are the next steps for them? Are they going to be able to continue the status quo?"
"There is a lot of financial pressure not only from Medicare reimbursement reductions under the Affordable Care Act, but also from private insurers to slow cost growth. So, for a lot of these systems that don't have a lot of bargaining power there is going to be more pressure on them to join other systems, whether those are other existing chains already here in MI or out of state partners."
Stony Brook U. Hospital, Southampton Hospital Deal Advances
Stony Brook University Hospital and Southampton Hospital are moving toward an affiliation following the unanimous approval this month by the State University of New York Board of Trustees.
"There is still work to be done, but this is an extraordinarily important first step as we look at the future of Stony Brook University Hospital and our ability to compete in a crowded marketplace, but one in which we are excelling," Samuel L. Stanley Jr., MD, president of Stony Brook University, said in prepared remarks.
"For both Southampton Hospital and for Stony Brook University Hospital, this is a win-win in every sense of the word. We are taking two very strong institutions and strengthening both of them through this action."
Stony Brook University Hospital, a tertiary academic medical center and Southampton Hospital, a 125-bed community hospital, have been formally affiliated since 2008 and provide healthcare services to the South Fork of Long Island. In August 2012, leadership from both hospitals signed a non-binding letter of intent in which Southampton Hospital would join the Stony Brook Medicine healthcare system.
Humana, Boulder Community Health Launch ACO
Humana Inc. and Boulder Community Health have announced the launch of an accountable care arrangement and population-health partnership through Connect for Health Colorado and Humana's commercial HMOs for employers.
Humana members will have in-network access to the inpatient, outpatient, and emergency care services at Foothills Hospital and Boulder Community Hospital as well as the urgent care center, physician offices and special medical services at Mapleton Center and at Community Medical Center. More than 128 primary care physicians and specialists affiliated with Boulder Community Health, an integrated health system, are also now in-network to Humana members.
The value-based arrangement uses measures defined by the National Committee for Quality Assurance Healthcare Effectiveness Data and Information Set for diabetes care and treatment, breast cancer screenings, colorectal cancer screenings and high-risk medication.
"These types of partnerships are a critical step for Humana in Colorado as we look to create a system that works in a more coordinated way," Jeremy Gaskill, Regional Vice President, of Market Development for Humana's West Central Region, said in prepared remarks.
"With a tremendous scope of services and highly integrated model, Boulder Community Health is an ideal partner as we continue developing improved quality care and health care experiences for our members
CT's Johnson Memorial Medical Center Sold to Saint Francis Care
The board of directors at financially strappedJohnson Memorial Medical Center has approved the sale of the health system to Saint Francis Care.
The agreement came after discussions among JMMC's board of directors, lenders, governmental agencies and consultants. Under the arrangement, JMMC will enter a voluntary reorganization under a Chapter 11 bankruptcy filing, which hospital leaders said was the most expedient way to proceed with the deal under the terms negotiated, which includes a debt restructuring."
"This will clear the path for JMMC's continued financial strength and stability," the health system said in a media release. "The terms of the transaction will allow JMMC to emerge from this process with less debt and the deepened relationship with Saint Francis Care will help to achieve the goal of becoming a stronger, more financially sound hospital, well-positioned for the future."
JMMC and Saint Francis Care signed an affiliation agreement in July 2012.
"Our current affiliation agreement provides the framework necessary to ensure the continued delivery of quality care to the local community and sustain a major economic resource for the region," Christopher Dadlez, president and CEO of Saint Francis Care, said in prepared remarks. "Recently we have watched JMMC stabilize and strengthen its operations. Both parties are enthusiastic about the next steps ahead."
Under the deal, which requires regulatory approval, JMMC would become a wholly owned subsidiary of Saint Francis Care as part of a clinically integrated healthcare delivery system.
Saint Francis Care is an integrated healthcare system anchored by Saint Francis Hospital and Medical Center, which is licensed for 617 beds and 65 bassinets.
In our July Intelligence Report, healthcare leaders identified "all-cause hospitalwide readmissions" as the outcome-of-care measure that presents the biggest challenge. HealthLeaders Media Council members discuss how they are addressing this critical metric.
This article first appeared in the January/February 2015 issue of HealthLeaders magazine.
Michael Murphy, MD
Chief Medical Officer
Sharp Grossmont Hospital
La Mesa, California
We concentrate on congestive heart failure, heart attacks, and strokes, and what we have found and what the literature supports is that among the biggest issues are medication management and knowledge of medications. We have dedicated nurses who contact the patients and go to their homes and make sure their medications are correct, that they're taking them and they understand what they're doing.
We also deal with a lot of social factors. One is a lack of food. We connect with the food bank and social support systems.
The skilled nursing facility project is kind of the same thing. If we can go out to these SNFs and teach them when it's appropriate to have heart failure patients return to the hospital, then we can improve the care and decrease the costs for the whole system. Because when we teach them with our patients, it is going to work for other patients, too.
Our readmissions have been decreasing over three or four years, and we see a bit of a percentage decrease each year. We are putting more resources into this effort than we lose from the readmission from Medicare reductions. For readmissions, we lose $150,000, but we are putting far more dollars into it to save $150,000. If you talk to our CFO, there is no ROI and it is the right thing to do.
Stephen Moore, MD
Senior Vice President and Chief Medical Officer
Catholic Health Initiatives
Englewood, Colorado
The majority of the patients who come back to the hospitals within 30 days for all-cause readmissions are a key subset of folks with multiple comorbid diseases. They have issues with access to physicians' offices, follow-up, transportation issues, and a number of things, and this can be predicted.
At CHI we use the LACE tool—Length of stay, Acuity of admission, Comorbid conditions, and the number of ER visits in the last six months. Any patients admitted who trigger a score with this tool are focused on in a different way than we would with a low-risk patient population. We ensure that care management, pharmacy, and the physician team caring for the patients are aware of their high risk for readmissions. We also ensure a more rigorous medication reconciliation process with the patient wherever they may go afterward, whether it is a nursing home, home, long-term acute care facility, or other postdischarge disposition area.
Of all patients, those who trigger LACE are between 10% and 12% of our patient population. These are the folks who are responsible for about 60%–70% of the readmissions. We've seen our readmission rates for all-cause over the past three years drop by about 15%–20%. We expect we will see this drop even more as we get the tool fully implemented over the organization.
Jeffrey DiLisi, MD, MBA
Senior Vice President and Chief Medical Officer
Virginia Hospital Center
Arlington, Virginia
In the latest data dump from Hospital Compare, we are going to be listed as better-than-expected for all-cause hospitalwide readmissions. I attribute that to two things: rounding and case management.
We have care coordination rounds on all of our units. Every morning at about 9 a.m. on each of our nursing units there is a meeting involving physicians, nurses taking care of the patients, and case managers where we talk about every patient on every unit. One of the questions we ask is "What day will the patient go home?"
It's important because if we know that someone is going to go home the next day and we predict that correctly over half the time, then we are able to properly get all of the right things set up for the patient for that transition of care: to make sure that the transportation is set up, get the discharge instructions together, make sure the family is aware.
The second big element is we have a fantastic case management department. This comes down to making sure you have the right director of case management who hires the right case managers. Our case managers do utilization review, and they really understand the patients they are taking care of. We have great relationships with the free clinics, the subacute nursing facilities, the nursing homes in our area.
William Cors, MD
Vice President and Chief Medical Officer
Pocono Medical Center
East Stroudsburg, Pennsylvania
On getting your feet wet. We became involved in a CMS demonstration project for bundled payments. We wanted to get our feet wet to see what is actually involved in the total financial picture of taking care of an episode of care for three days prior to admission and 90 days postadmission. As a result we realized we needed a mechanism to identify high-risk chronic disease patients. We formed what we call a community care network.
On developing a community care network. We hired an internal medicine physician with a specialty in geriatrics and a nurse who assists in running a course at East Stroudsburg University, where we take premed, pre–physician assistant, and pharmacy students and we teach them to be health coaches who go into the homes of patients we have identified as high-risk.
We are running that almost as outpatient care management. As time goes on, we are probably going to have to add a social worker to the network. But we're finding that so far, at least with the COPD patients, we probably are now slightly lowering readmissions, maybe in the 5%–10% range.
On patient-centered medical homes. We're also investing in establishing patient-centered medical homes at key strategic areas of the county. Coincident with that is the establishment and expansion of a primary care health network. Without a primary care network supporting the home, you basically have a house of cards. I would love to tell you we get reimbursed for this. We don't.
Health improvements in sparsely populated Franklin county are no fluke. Forty years of data illustrates that population health works, and that just about everybody can do it with resources they already have.
All the talk around population health makes it sounds like a new concept even though it's been around for nearly half a century.
One pioneer movement for population health in the United States began in Franklin County Maine, a sparsely populated, rural, inland expanse north of Portland. Many of the county's 30,000 residents are older, sicker, and poorer than the overall population of the state.
Franklin County, ME
Yet, when it comes to certain conditions, particularly cardiovascular health, the residents of Franklin County enjoy the same or better health status than their fellow Mainers in counties with younger, wealthier populations.
This is no fluke. Rather, it is the payoff from decades of community health outreach. In the late 1960s, physicians in the county seat of Farmington joined with the hospital and community leaders to improve and coordinate care for the county's poor.
"It started by recognizing that there weren't very many physicians in the county, that they were all getting older and that there were virtually no specialists," says Roderick E. Prior, MD, a semi-retired primary care physician who has spent the last 38 years working with the county's population health effort.
"This was all before my time," Prior told me. "This was the time of the Great Society in the 1960s. The Office of Economic Opportunity had been started and they were looking at healthcare. They encouraged those folks to think bigger."
Initially, the federal government provided funding to create comprehensive health and dental care for 3,000 people in the county. "That was 15% of the population of the county," Prior says.
"All of a sudden our uninsured rates went down. Access to care became much more available. The other thing that happened was some real interest in outreach. Organizations started some rural health clinics which eventually became federal qualified health centers. We started using mid-level nurses. We were one of the first training grounds for the physician assistant profession."
Prior says the pioneering physicians in Franklin County understood that they were not practicing medicine in a vacuum, and that they needed to work with government, schools, and other community organizations to coordinate care. They worked with the University of Maine at Farmington to create a training program for community outreach workers.
"They were thinking about things like transportation—[whether] people could travel to get their healthcare," Prior says. "Traditionally, if the patient doesn't show up the doctor says, 'I can't treat you if I you don't come in,' without recognizing that most people can't come for whatever reason; the car is broken down or they don't have gas or the employer says they have to work, or if the kids are sick."
"But it was an organized community-based effort that started looking at where the problems were and went beyond just providing a doctor and medicine to reaching out, finding people who had health problems, and then getting involved with them, monitoring them," Prior says.
"When I use the word 'community,' I mean that people need to identify their community, which means the people for whom you and your colleagues are willing to take responsibility for their health."
40 Years of Results
Over the decades, the funding has ebbed and flowed, but the program has endured and transcended generations of patients and providers.
To get an idea of the effect of the care coordination, Prior and his colleagues examined the data around 40 years of work to improve cardiovascular health in Franklin County. The results were published this month in theJournal of the American Medical Association.
Before the population health efforts began, Franklin County had higher death rates for heart attack and stroke than the statewide average. Once the population health efforts began, however, Franklin County was the only county in the state with consistently lower-than-expected mortality rates for heart disease and stroke.
The county has also seen a steady uptick in smoking cessation and cholesterol control. Researchers estimate that the improved health of the population has saved about $70 million through reduced hospitalizations from 1994 to 2006.
A Large Caveat
That bit of good news comes with a large caveat that explains why population health has yet to catch on in a fee-for-service world.
"There is nobody in Franklin County who is clearly make money from doing this," Prior says. "The savings are going to the insurers. It's Medicaid and Medicare. And, if you look at the way private insurance companies price their products, they don't look at the mortality and hospitalization rates of Franklin County and give all the employers a cost break."
That is a topic for another day.
For now, the lesson from Franklin County is that population health works, and that just about everybody can do it with resources they already have.
Prior says "it's easy" to identify the health risks in any community down to the county level by using publicly available data found on the Centers for Disease Control and Prevention website. At the risk of oversimplifying, identify the healthcare needs of the people you serve, and then find a way to deliver the care once that need is identified. If you can demonstrate the need, the community support will follow.
Looking back on his own nearly 40 years of public service, Prior says he's proud to have played a role in the work of Franklin County's pioneering physicians.
"I wanted to practice medicine and make a difference. I think we have proven to ourselves that we've made a difference," he says. "We wanted to tell our story because we think it's not a bad model for people to think about [as they think about] what they might do… in their own communities."
More than half of healthcare executives surveyed believe they'll see a return on investment for healthcare information technology and data/analytic tools in four years or less.
More than half of healthcare executives believe they will recoup their investment in population health management programs within three to four years, an online survey from KPMG LLP shows.
"It can be realistic within three or four years, but let's not sugarcoat it. It takes a lot of time, effort, commitment, and understanding to make that happen," says Joe Kuehn, a partner with KPMG's Healthcare Advisory Practice.
"It needs a commitment to change how you're rendering care and getting funded from that care, moving away from fee-for-service base to quality and outcomes and some form of value-based payment. But there is still enough fat in the system and low-hanging fruit where those quick wins can be used to fund and reduce the costs and ultimately deliver that ROI."
The upbeat forecast from nearly 300 healthcare executives came even though 24% of them described their own population health management capabilities as "mature." Nearly 40% described their population health capabilities as "nonexistent," and 38% describe their capabilities as in the "elementary stages."
"Trying to determine what the ROI is up front is sometimes more art than science, but looking at technology and population health management in a vacuum isn't what we are looking at," Kuehn says.
"It's looking at the future of healthcare delivery and the design of new target operating models, meaning redesigning the care delivery systems and business models to practice differently and also to practice in a way where we can accommodate new forms of payment and funding for the care we are rendering."
The survey found that 20% of executives believe they'll see an ROI for healthcare information technology and data/analytic tools within two years, and 36% said they expected an ROI within three or four years. Another 29% see the ROI in five years or longer, and 14% say they'll never recover the investment.
Levi Scheppers
'The Right Thing to Do'
Levi Scheppers, chief administrative officer atNebraska Medicine, says the Omaha-based health system projected the ROI for the cost of the IT infrastructure and the new personnel needed for population health. The tricky part was trying to determine the cost of utilization of the "kept market share" and the risk of not doing anything.
"You think you are going to keep utilization, but on the flip side your competitors are thinking the same thing," he says. "Ultimately, we got comfort in doing it because it is the right thing to do at the macro level. It is the new cost of doing business in healthcare. You need to know how to produce value more consistently as opposed to just increasing prices and hoping volumes follow."
While there are uncertainties around any financial model for population health ROI, Scheppers says, "you have to do the financials to even have the conversation."
"You don't always have to make the decisions off of the financials, but you need to know it. It is still a valid lens. You need to know what you anticipate recouping," he says. "The approach we took was 'if we are going to do it we need to make sure we understand the financial risks so we are making the right decisions as we are implementing these strategies.'"
"Just make sure you know the risks you are taking and the assumptions you have made in order to recoup any semblance of the investment, but it's not a go/no go based on purely the financials."
Retail Disruptors
Forecasting ROI becomes even more complicated when the dynamism of the budding retail market for population health is factored into the equation.
"We've had Walmart trying to enter the market from a primary care base. You have CVS and Walgreens executing on their care delivery strategies. You have DiVitamaking their acquisitions of risk-taking providers and trying to deploy that nationally. All of those providers are disruptors and it's tough to incorporate all of those risks into our traditional models from an ROI perspective. So, we are monitoring the risks as we make our decisions, and that is more critical than purely trying to break even within two to four years."
Even with the daunting challenges in a new and fluid market for population health, Kuehn says providers are better served by joining the fray now, rather than letting others do the heavy lifting.
"It takes folks who can see over the wall and understand where they need to be going," he says. "Those that are more proactive are going to be the winners because they have the time to make some mistakes that aren't financially devastating."
"Those who are sitting on the sidelines watching the game, by the time they get in it they are going to be under duress and pressure to make it happen, and that makes it that much more difficult."
Tavenner steps down at the end of February, citing no future plans. She cites success in Healthcare.gov enrollment and improved quality of care.
Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner will step down from her job at the end of February, Health and Human Services Secretary Sylvia M. Burwell announced Friday.
Principal Deputy Administrator Andy Slavitt will become the Acting Administrator when Tavenner leaves, Burwell said in an email to HHS staff.
Tavenner came to CMS in 2010, a few weeks after President Obama signed the Patient Protection and Affordable Care Act. Her nomination as CMS administrator was confirmed by the Senate in May 2013. Burwell on Friday noted that Tavenner was "the first Administrator to be confirmed by the Senate in six and half years—and she was confirmed with overwhelming, bipartisan support."
Burwell praised Tavenner for delivering "historic results at the helm of CMS."
"Under her watch, the solvency of the Medicare Trust Funds was extended to 2030," Burwell said. "In addition, her work on healthcare quality helped our nation achieve a 17% reduction in hospital acquired conditions—saving an estimated 50,000 lives and $12 billion in healthcare costs."
In a farewell email to CMS colleagues, Tavenner did not say what prompted her decision to leave CMS or what she would do after she leaves.
"I feel fortunate to leave here with a great sense of accomplishment, a wealth of knowledge, many new friends, and the comfort of knowing that the citizens of this country and I are in great hands with all of you and your incredible drive and commitment to continue transforming our healthcare system," she said.
Unfairly or not, Tavenner will be best remembered as leading CMS during the botched rollout of the federal health insurance marketplace in October 2013. That failure ultimately led to the resignation of HHS Secretary Kathleen Sebelius in April, 2014. Tavenner's email to CMS staff did not mention HealthCare.gov, but instead focused instead on enrollment successes, improved quality of care, a crackdown against Medicare fraud, and progress in controlling healthcare costs.
Slavitt, who has served at Tavenner's top assistance since he joined CMS last summer, has extensive experience in the commercial health insurance sector, where he worked for UnitedHealth subsidiary Optum.
"Andy joined HHS with over 20 years of private sector experience," Burwell said. "As Principal Deputy Administrator, he oversees HealthCare.gov and the Department's work to upgrade the consumer experience. In addition, Andy is responsible for cross-cutting policy and operational coordination for the agency's Medicare, Medicaid, CHIP, and Marketplace initiatives; combatting health care fraud; reforming healthcare delivery; and improving health outcomes."
Hospital administrators, unable to close a budget deficit, have unveiled a cost-cutting plan that eliminates 3.2% of the jobs at Houston's safety net health system.
News this week that Houston-based Harris Health System would shed 262 jobs to help cover nearly $72 million in red ink provides a stark example of the financial challenges confronting Texas's safety net hospitals, observers say.
"The state's decision to not accept Medicaid expansion or find a Texas alternative is a contributing factor to our projected budget shortfall," Harris Health spokesman Bryan McLeod says.
"So, too, is the federal government's decision to decrease the dollars available to health systems through the Disproportionate Share and Uncompensated Care programs, since Medicaid Expansion, if adopted, would be the offset for those programs."
In December, Harris Health CEO George V. Masi told staff he anticipated a "reduction in force" of about 125 jobs to cover the shortfall. That estimate more than doubled this month when hospital administrators unveiled a cost-cutting plan that eliminates 262 jobs, including 112 currently staffed positions.
"The RIF, coupled with other cost-cutting measures, is necessary as we work to close a substantial projected budget deficit for the coming fiscal year," Masi said in a notice to employees.
"We are this community's safety net health system," Masi said. "Nobody provides healthcare to those most in need better than Harris Health. We will continue to deliver high quality health services as efficiently as possible with the resources we have available."
The job cuts account for 3.2% of Harris Health's 8,237 employee positions. The reductions in workforce are not expected to affect patient care and will be finalized this week, McLeod says.
Texas is one of several Red States that has adamantly rejected Medicaid expansion money, which some studies have estimated would have brought Texas nearly $6 billion in federal matching money every year, including $782 million to $935 million in Harris County, where Houston is located.
Newly elected Texas Gov. Greg Abbott told The Wall Street Journal this week that he opposes expanding Medicaid as it exists, "but like anyone with an inquiring mind, we'll look at any idea anyone has" on how to effectively deliver healthcare.
A Bellwether?
As it stands, there does not appear to be any plan in the works to propose an alternative.
Maureen Milligan, president/CEO of Teaching Hospitals of Texas, says there is concern that Harris Health is a bellwether for Texas's six safety net hospital districts, all of which operate under similar funding schemes and which face many of the same financial challenges.
"The Texas hospital financing structure is very unstable," Milligan says. "Medicaid expansion would put a lot more money in the system. Right now you have local hospital districts paying 40% of disproportionate share and uncompensated care costs. Some of those funds would be reduced when people actually have access to healthcare under an expansion. So yes, it would definitely take the pressure on some of the financing issues."
Milligan says the political climate in Texas towards Medicaid expansion remains hostile, and that advocates should "build the business argument along with the health argument."
"You don't want to paint yourself as 'pro Obamacare.' The conversations that have to happen have to happen quietly so nobody gets a target put on their back," she says. "The goal would be to open up the conversation with business leaders in local communities saying 'This is killing us. This is a lot of money and it's good for Texas.'"
Little Relief
The not-for-profit hospital sector already faces strong headwinds, even in states that have expanded Medicaid. Standard & Poor's Rating Services this week reported that operating pressures on the sector likely would continue through 2015 and result in more ratings downgrades than upgrades for the third straight year.
"Operating margins were pressured by top-line revenue constraints, soft demand, a movement toward value- and risk-based payment structures, the impact of reform readiness activities, and the high cost of electronic medical record implementation and maintenance," S&P credit analyst Cynthia Keller said this week.
"While we have seen some relief stemming from the expansion of health insurance coverage under the Affordable Care Act which improved revenue streams at many hospitals, merger-and-acquisition activity, and strong investment markets in 2014, these forces have not been sufficient to reverse the generally negative trends driven by revenue and cost pressures."
Although the federal program that provides healthcare for millions of poor people faces some legal hurdles, governors in some states that have refused Medicaid expansion are starting to reconsider.
On the national scene and in the media, Medicaid often takes a back seat to Medicare.
That's understandable. Medicaid is a smaller program; the poor people it serves don't have the political clout of Medicare recipients; and Medicaid is much harder to track on a national level because each state administers its own program.
The day-to-day operations of Green Mountain Care in Vermont, for example, may not much affect what happens to Missouri's MO HealthNet. It's hard to build a national consensus or a political movement around so many fiefdoms.
Nonetheless, Medicaid is a vitally important and expensive program that affects the lives of millions of poor and vulnerable people who would otherwise go without health insurance coverage.
The program will be in the news this year on several fronts, so I've rounded up a sampling of some of the issues that likely will be taken up in 2015.
Medicaid Parity Funding Expires
The New Year started off on a dour note for Medicaid with the expiration on Dec. 31 of Section 1202 of the Patient Protection and Affordable Care Act. The Medicaid-Medicare Parity provision had earmarked $12 billion in 2013 and 2014 to raise to Medicare levels the Medicaid fee-for-service payments for primary care physicians. Without action from Congress, however, the provision expired at the end of the year.
The American Academy of Family Physicians and other provider associations want the Republican-controlled Congress to reinstate the money this year, but that is laughably unlikely because the Republican-controlled Congress hates anything to do with Obamacare and has spent much of its time trying to eviscerate it.
SCOTUS Hears Idaho Medicaid Suit
The U.S. Supreme Court next Tuesday will hear oral arguments in Armstrong vs. Exceptional Child Care Center, Inc. I wrote about this case back in October. In a nutshell, providers in Idaho complain that the state's Medicaid reimbursements are insufficient to cover costs, and are thus a violation of Medicaid's equal-access mandate because they create a barrier to care access for the state's poor.
The chief question before the court is whether or not the Supremacy Clause in the U.S. Constitution grants providers the "private right" to sue the state to increase its Medicaid reimbursement rates.
The American Medical Association is one of a number of parties with vested interests that have filed a friend-of-the-court brief. AMA President Robert M. Wah, MD, said in prepared remarks this week that "the sad fact is that Medicaid's guarantee of equal access has become an illusion in many states that have cut Medicaid funding and driven physicians and other health professionals from the program."
The AMA cited a report by the Government Accountability Office which showed that 38 states were unable to attract enough physicians and dentists to serve new Medicaid patients and that low Medicaid payment rates were a leading cause.
Matt Salo, executive director of the National Association of State Medicaid Directors, says allowing private parties to sue Medicaid for perceived inadequate rates would create chaos.
"There is a process to determine what constitutes appropriate rates and how to define access. Medicaid is administered by the states and overseen by the federal government. Health and Human Services has very effective guidelines and processes for determining these issues," Salo wrote in an email exchange.
"We think it is unnecessary and counterproductive to open up that process to other parties who feel aggrieved by the results. Private right of action on this issue (can you name a provider or group of providers who think they're paid too much?) would unnecessarily clog up the courts and prohibit the effective and efficient operation of the Medicaid program."
Medicaid Expansion in Red States
Throughout this year we can expect to read about Red State governors reconsidering their ill-advised and politically motivated decisions to reject billions of federal dollars in the form of Medicaid expansion money.
The Obama administration earlier this month pledged to work with the states that were considering non-traditional alternatives to expanding Medicaid and governors are grasping that olive branch, perhaps to use it as a fig leaf.
Tennessee last month was the latest state to bow to reality when Gov. Bill Haslam (R) pitched a plan that would allow Medicaid-eligible adults to use the expansion money to buy private coverage. The proposal will be debated by a special session of the Republican-controlled Tennessee General Assembly next month. The Centers for Medicare & Medicaid Services also would have to approve the deal.
Political leaders in Kansas, North Carolina, Utah, Colorado, Wyoming, Montana and other non-expansion states have also expressed an interest in creating their own version of Medicaid expansion. There were even reports that Texas' new Gov. Greg Abbott (R) during a closed-door staff meeting last month expressed some interest in expanding Medicaid. That idea was buggy whipped when it became public, however, forcing the governor's spokesperson to claim that Abbott's remarks had been "misinterpreted."
At the point where it becomes politically expedient, Texas will adopt Medicaid expansion. I cannot imagine that Texas's healthcare sector, which includes huge and wealthy for-profit and not-for-profit health systems, is not aggressively pushing for some form of expansion. They understand that the state is missing out on billions of dollars of federal subsidies, even as hospitals are required to provide care for people who can't otherwise pay.
In 2015, the question for Texas—and all non-expansion states—will be not "if" but "when."
Data showing that 2014 had the best job growth since 2008 suggests that hospital leadership is becoming more comfortable with the Patient Protection and Affordable Care Act, says a managing director at PwC Health Research Institute.
The 311,000 new jobs created by the healthcare industry in 2014 represent the largest year of job growth in the sector in the past seven years, and it may suggest that providers are more comfortable with the Patient Protection and Affordable Care Act while acknowledging the challenges of care access for an aging demographic.
Healthcare created 10% of the 2.95 million new jobs in the overall economy in 2014. The 311,000 new jobs in healthcare last year represent 2% of the 14.9 million people employed in the sector at the end of 2014. That includes 6.8 million people in ambulatory care, 4.8 million in hospitals, and 3.3 million in nursing and residential care.
Ceci Connolly,
Managing Director
PwC's Health Research Institute
"With healthcare representing about 17% of the U.S. economy, it is not surprising that one-in-10 new jobs would be in healthcare, even if the growth in overall health care spending has slowed," says John Ayanian, director of the University of Michigan Institute for Healthcare Policy and Innovation.
Ceci Connolly, Managing Director at PwC Health Research Institute, says she's not surprised either because "healthcare is typically a growth industry and there are a couple of reasons why that's even more the case right now."
"One is in part the Affordable Care Act," she says. "There are many more covered individuals. They are paying customers and so that's required more temporary and fulltime positions to get them signed up and answering their questions and getting them their care."
"The other factor that comes through loud and clear is the aging of the population. Demographics are showing we are living longer and we need and are using more healthcare services and products," Connolly says.
"That is a lot of the big growth in home health and personal care aides, physical and occupational therapy—a number of those areas where we are seeing big growth and we expect that that is going to continue."
Less Anxiety About Reform
A further breakdown of BLS data for 2014 shows that there were 230,300 new jobs in ambulatory services, 47,300 jobs in hospitals, and 33,400 jobs in nursing and residential care. The healthcare sector saw job growth of 65% in 2014 compared with the 203,000 jobs the sector created in 2013, which saw hospitals shed 500 jobs that year.
Healthcare job growth in 2014 was the best since 2008, when the sector created 317,400 jobs, BLS data shows.
Connolly says the job growth in 2014 when compared with 2013 suggests that hospital leadership is becoming more comfortable with the Affordable Care Act.
"We did see a certain amount of anxiety as the ACA was being implemented," she says. "I think hospital executives in particular were exceedingly cautious about the law and now there is a little more of a comfort level or an understanding. They've gotten it a little more under their belts. We are also seeing more covered laws with the Medicaid expansion and exchange customers so that is helping them soften the blow of some of the reduced reimbursement rates."
'Reasons for Some Growth'
Mary Ellen McCartney, Chief Learning Officer at La Crosse, WI-based Gundersen Health System, says she was somewhat surprised to see hiring increasing because labor is a huge cost driver at a time when providers are squeezed to reduce costs.
"There are reasons for some growth," McCartney says. "The population is aging and they are including long-term care here, and more people seeking care as the population ages. There is also growth in ambulatory services, the largest growth area, and that makes a lot of sense because we are trying very much to steer our care to the most cost-effective places for patients."
McCartney says she anticipates a demand for technology workers in healthcare with "the advent of technology, [in] particular electronic medical records and more intense technology requires jobs that weren't in healthcare."
"Hospitals are like a little city," she says. "We have a wide variety of services that we need to have on staff in the hospital that we didn't have to have in the past. I believe that the economy is shifting to more knowledge workers in healthcare and there is growth in those areas."
The demand for physicians, especially primary care physicians, is expected to remain strong this year and well into the future. Because the demand outstrips the supply, Connolly says "physician extenders" such as nurse practitioners and physicians assistants will continue to be in high demand.
"One of our Top 10 Trends in 2015 is the growth in the use of non-physician care givers. They are lower cost but they can still do a phenomenal amount on a care team," she says. "Those are going to continue to be big growth areas, especially when you see more accountable care organizations and bundled payment arrangements. You are going to see the approach of integrated clinical care teams and much of the hiring will be just below the physician level."
What About Cost Control?
As to whether or not a new era of healthcare hiring is a good thing in the context of controlling costs, Connolly says, "that depends upon your perspective."
"For a long period of time this sector was flat or weak coming out of the recession. This growth is probably healthy," she says. "On the other hand, I am sensitive to concerns about spending growth in healthcare. When you are looking at growth in some of the extender categories such as physician assistants, nurse practitioners, and personal care aides, that is a good thing because they are responding in a cost-effective manner to the needs of an aging population. I am happy to see that as opposed to the very high-end specialists, which we know is where there is generally over-utilization of services and waste."
More than 6 in 10 physicians say they've received 50 or more job offers during their residency, and more than 4 in 10 received more than 100 job offers, according to data from a physician recruiting firm.
Physicians completing their final year of residency say they're entering the job market with scores of job offers and most anticipate earning $176,000 or more in their first year of practice.
More than 60% of the 1,208 new doctors responding to an email survey from physician recruiters Merritt Hawkins say they've received 50 or more job offers during their residency, and 46% received more than 100 job offers.
"There is no such thing as an unemployed doctor," says Kurt Mosley, vice president of strategic alliances at Irving, TX-based Merritt Hawkins. "The good news is all of them need a job. The bad news is they only come out one time a year."
Along with the strong job prospects, however, half of the residents say they owe $150,000 or more in students loans, and 25% of new physicians say they'd pick another profession if they had a do-over.
Ronald A. Paulus, MD, president/CEO of Asheville, NC-based Mission Health, says he's surprised the number of malcontents-in-residence is so low.
"Medical students measure extraordinarily high on compassion and empathy and by the time they're done with their residency it is very low," Paulus says. "The training process has been around since the early 1900s with only moderate changes. It is an extraordinarily grueling time."
"We need to look internally and ask what is it about this process that creates the change, because that is not what we want. We don't want to stamp out compassion and empathy. We want to boost it. We don't want people regretting their career choice. We want them embracing it."
Hospital Employment Alluring
Mosley says new physicians are entering a healthcare landscape that has changed dramatically since the day they entered medical school.
"In the past three years medicine has changed the most since 1965 and the arrival of Medicare and Medicaid. Many of the doctors who I talk to say 'Obamacare is not what I signed up for,'" Mosley says. "There are a lot of unknowns and people do not like unknowns. Some of it is trepidation, and some of it is what they are hearing from other physicians."
As for work settings, more than one-third (36%) of new physicians say they're "most open" to employment by a hospital. Mosley says that's understandable.
"That's where they were trained. There is strength and security in numbers, more depth and breadth," he says.
"When we're advising our clients about recruiting, we are saying in a lot of cases that hospitals have a better offer. It's not necessarily the geography as it is the primacy of the workshop. You've got to have a not just a reasonable schedule but a set schedule, 8–5 or 9–6, call coverage, hospitalists. Hospitals have all that and they know new docs want to be in that environment."
Rural Prospects
For those same reasons only 7% of new physicians expressed an interest in practicing in an area with a population of 50,000 or fewer. Only 2% said they'd practice in a town with 25,000 or fewer. Nearly half (47%) say they want to practice in an area with 500,000 or more people.
"This does not bode well," Mosley says.
"Most of the residencies are in the big cities, and they get a taste of it. They don't have any exposure to rural areas. We are telling our rural clients: If you don't have the complete primacy of the workshop, set schedule, hospitalist, call coverage, time off, locum tenens for solo practices, it's tough."
"Communities will have to grow their own," Mosley says. "Rotary, Chamber of Commerce, whomever: They'll have to help prepay medical school tuition in exchange for returning to practice for a few years."
The survey found that 78% of the physicians anticipated earning $176,000 of more in their first year. Mosley says new physicians are savvy about their earning potential. "They can go to our website and pull up a specialty and know what doctors make all over America," he says.
Even so, 22% of physicians expect to earn $175,000 or less in their first year.
"The average family practitioner makes $200,000 plus no matter where they are, so this indicates that some of these residents coming out are going to practice part time," Mosley says. "A lot of our clients want full-time doctors only, but in a lot of cases it could be good to have a husband and wife part time."
Paulus says his interactions with new physicians suggests that they are more mission-driven.
"It's not that they don't want to earn, but they are less fixated on maximizing income and having this life/work balance and making a difference," he says. "They also don't want to deal with many of the hassles that would traditionally be in place; starting a practice, worrying about billing and those things. It would be overgeneralizing to say that they want to come in, do their thing, and go home in a shift-like model, but that is the trend."
"Geographic location" was listed as the "most important" consideration (69%) for the new physicians, followed by lifestyle (61%), adequate call coverage/personal time (60%) and "good financial package" (60%).
Changing Expectations
Paulus says it's time to acknowledge and adapt to the profoundly changing expectations of the younger physician workforce.
"I have seen estimates that it takes 1.6 new graduates to replace one retiring," he says. "There are multiple reasons why and the biggest ones are lifestyle reasons. On average, new grads are more interested in a work/life balance than older graduates were."
"There is different speculation as to why that is the case. I am not trying to stereotype, but one thought is that over half of U.S. Medical students are female. That is a different dynamic than existed back whenever I was in medical school, and even before that. But, both males and females want to have more time with their families, more free time. So the choices that they are going to make are going to be driven by what can provide that kind of balance."
"I think most all of these things are very good," Paulus says. "The desire for a better life balance is a good thing and maybe we were the ones who were screwed up."