The healthcare sector saw job growth of 65% in 2014 compared with the 203,000 jobs the sector created in 2013, federal data shows.
Healthcare accounted for 311,000 or more thanone in 10 new jobs created in 2014, which was the best year for job growth in the overall economy since 1999, Bureau of Labor Statistics data released Friday show.
The nation saw 2.95 million new jobs created in 2014. In the healthcare sector, 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.
December's job figures are considered preliminary by BLS and subject to revision.
Minnesota's highest court has ruled that hospital "medical staff" meet the statutory criteria to sue and be sued at hospitals where physicians have privileges and that medical staff bylaws are an enforceable contract between the medical staff and the hospital.
The New Year got off to a good start for physicians with the Minnesota Supreme Court ruling that strengthens the autonomy of hospital medical staffs.
In a 5-2 opinion issued on Dec. 31, the Gopher State's highest court overturned a state appeals court and said that hospital medical staffs "composed of two or more physicians who associate and act together for the purpose of ensuring proper patient care at the hospital under the common name 'Medical Staff'" meet the statutory criteria to sue and be sued at hospitals where physicians have privileges.
Along with that, the high court ruled that medical staff bylaws are an enforceable contract between the medical staff and the hospital.
The ruling marks the latest turn in a three-year running battle between Avera Marshall Medical Center, in Marshall, MN, and its medical staff, which saw its bylaws unilaterally amended by the board of directors after Avera acquired the hospital in 2009.
Writing in dissent, Justice G. Barry Anderson said that "at its heart, this case is about who has ultimate control of Avera Marshall Regional Medical Center—Avera Marshall's Medical Staff or Avera Marshall's board of directors. As a matter of contract law, and under the terms of Avera Marshall's corporate bylaws and the medical staff bylaws, the answer to that question is Avera Marshall's board of directors."
Anderson went on to express concerns that the majority's opinion "will encourage conflict between medical staffs and a hospital's board of directors. Ultimately, in my view, a hospital's board of directors must be allowed to amend medical staff bylaws when it has expressly reserved ultimate authority over the medical staff and determines that doing so is in the best interest of the hospital and patient care."
The case was remanded back to a state district court.
A call to Avera Marshall Medical Center was not immediately returned.
The Minnesota Medical Association, which filed an amicus brief on behalf of the Avera Marshall medical staff, had argued that the medical staff bylaws were "a binding contract that protects the medical staff's role in facilitating the quality of patient care which, traditionally, has been a key function of a hospital medical staff."
MMA President Donald Jacobs, MD, said the ruling marks a huge victory for physician autonomy and patient safety.
"An independent, autonomous medical staff serves a critical role in facilitating and maintaining quality patient care in a hospital setting and should have a strong, collaborative voice in the decision-making process regarding that care," Jacobs said in prepared remarks.
Those remarks were echoed by American Medical Association Robert M. Wah, MD, who called the ruling "an important court victory in support of medical staff autonomy and the enforceability of medical staff bylaws. The court ruling reaffirms that medical staff bylaws are a binding contract that help protect the rights, duties and responsibilities of the medical staff to uphold the quality of patient care."
Little Effect on Daily Operations
There is debate on whether or not this ruling will have any effect beyond Minnesota. The MMA said the ruling "has broad implications that may be felt across the nation. The decision reaffirms medical staff autonomy and the enforceability of medical staff bylaws. Decisions in similar cases in other states have been mixed. But this strong ruling for Minnesota physicians may be used to persuade courts in future cases."
However, Minnesota Hospital Association General Counsel Ben Peltier says the ruling won't have much effect on day-to-day operations of medical staffs "for the vast majority of hospitals in Minnesota" and elsewhere.
"There are some potential concerns related to liability that comes with the fact that a medical staff is an unincorporated association and thus has the capacity to sue and be sued under Minnesota law," Peltier told me. "That has some long-term potential impact on risk and liability for all healthcare providers that practice in a hospital."
The Minnesota Supreme Court ruling cites Minnesota state law, which defines the terms of unincorporated associations. In order for the ruling to affect other states, Peltier says, "they would have to have a statute that was similar and potentially a supreme court that came to the same conclusion about a similar statute. I don't know if that portion of it is going to be nationally significant."
"There are some states that have already identified the medical staff bylaws as a binding contract. I have not seen others that have identified the medical staff as a separate legal entity or an unincorporated association that may sue or be sued as subject to law suits. That is something that hospitals around the country may take note of and need to potentially address."
Peltier says that the celebratory comments of the AMA and the MMA fail to note that the ruling affirms the right of medical staffs to sue – and be sued.
"The outcome of this case gave them a little more than they might have bargained for with respect to liability," he says. "In theory, a plaintiff's attorney could file suit against an entire medical staff for the negligence of a single member of that medical staff and individual members of the medical staff could potentially be liable for the damages awarded against another member of the medical staff."
Culture Clash
"Practically speaking, will a court allow a plaintiff's attorney to bring a claim against multiple members of a medical staff when only one was involved? Will a court enforce a judgment against an entire medical staff if it finds that one individual on the medical staff is unable to fulfill a damage award that has been levied against them?"
Although both sides in the suit repeatedly cite "patient safety" as their primary concern, the origins of the case are pedestrian. This is a turf war between established physicians at a hospital and the new owners, as Justice Anderson noted, a classic clash of cultures.
We see a lot of this with all of the mergers, acquisitions and other affiliations ongoing in healthcare. In fact, with so many egos at play it's nearly unavoidable and maybe even healthy for the overall process if some sort of clear parameters are set for physician autonomy. Clear lines of responsibility bring accountability, and that will improve patient safety.
As the Minnesota Supreme Court made clear, however, with autonomy comes liability.
Nonprofit hospitals have the right—indeed the obligation—to pursue outstanding debts. But aggressive debt collection tactics can rightly spark public backlash.
The U.S. Treasury Department this holiday week quietly released its final regulations governing patient protections from overly aggressive debt collections tactics by "tax-exempt" hospitals.
These new regulations shouldn't surprise anyone. The feds have been talking about them for years now as a component of the Patient Protection and Affordable Care Act. A cursory review shows there is nothing in the new guidelines that wasn't anticipated. For expediency's sake, read the details here.
The release of the new regs comes just days after Pro Publica published a series of devastating reports detailing the aggressive and possibly illegal debt collection practices at several nonprofit hospitals, specifically in Missouri and Alabama. The Pro Publica stories were widely read after they were picked up by mainstream media, including NPR.
Unfortunately, the actions of a few nonprofit hospitals tarnish the entire sector. In the media, you are guilty until proven innocent, and even then suspicions linger. Frankly, it would not be unfair to suggest that these aggressive practices are limited only to the hospitals identified by Pro Publica.
Are these aggressive debt collection tactics a symptom of a larger challenge facing many nonprofit hospitals? I believe so, and I am not alone.
Jill Horwitz, a professor at the UCLA School of Law, and a public health policy expert, says these new guidelines, along with ongoing Congressional investigations into care provided by nonprofit hospitals, and the redesign of the federal 990 returns "all point in the direction of requiring hospitals to provide free care for indigent patients in exchange for their tax exemption."
"I worry about that focus because non-profit hospitals do a lot of things to improve the health of everybody, not just indigent patients," Horwitz says. "There have to be trade-offs. If you require hospitals to spend more money providing free care, they are going to have to make cuts elsewhere or find ways to increase revenues. Neither of those responses are really desirable."
"Making cuts elsewhere means providing less-profitable services that a lot of people, especially poor people need and making money requires focusing on profitable services and cross-subsidizing to meet the free care provision requirement. That means doing more diagnostic imaging, more invasive cardiac treatments, and more orthopedics, which are already areas that the federal government worries that we provide too many services."
Horwitz's big picture arguments are valid and nuanced, and I hope to speak with her again in the coming year to expand on her observations.
For our immediate purposes, however, rest assured that cross-subsidizing is not what local media is going to focus on if you've got a bill collector demanding credit card swipes from bleeding patients in the emergency department.
The issue of debt collection and bill padding—particularly at nonprofit hospitals—pops up every so often. Back in 2010 nonprofits were rapped for their failure to inform patients about their eligibility for charity care. In 2013, public outrage followed a report detailing the strong-armed tactics Accretive Health Inc., a debt collection agency in Chicago whose work on behalf of its hospital clients brought down the wrath of the Minnesota Attorney General.
Clearly, healthcare billing and debt collection are issues that resonate strongly with the American public. They tap into our anxieties about our abilities to pay for healthcare, even if we are insured. This anxiety is well-founded.
AKaiser Family Foundation study published early this year found that one in three Americans has difficulty paying for medical debts. KFF data further shows that 70% of people with medical debt are insured, and that people with employer-sponsored coverage represent 54% of medical debt cases. These are the people who are playing by the rules and they're still in financial straits!
Healthcare is expensive and complex. Health insurance benefits copays and networks can be undecipherable for people not schooled in cryptology. Those entering the healthcare labyrinth are usually sick, or in pain, or tending to a loved one, and stressed out. It's almost impossible to get an estimate for what you'll eventually pay, and healthcare is still years behind retail when it comes to pricing transparency.
If you're in senior leadership, you should be able to answer these questions: What is your hospital's debt collection strategy? Are you telling your patients about their charity care options? Do you know how far your hospital will go to collect a debt? Are you demanding payment in full or threatening to dun wages, or are you attempting to work with your former patients to find a less-draconian repayment scheme?
If you contract with a debt collection service, do you know how they're attempting to collect your debts? Have you specifically told your debt collectors how far they can go in your name to pursue repayment? Have you spoken with former patients who've been through your debt collection process? Is your strategy to plead ignorance if any unsavory debt collection tactics, either in-house or through a collection service, are made public?
Always keep in mind the potential for public backlash when your nonprofit hospital fashions a debt collection strategy. Nonprofit hospitals have the right—indeed the obligation—to pursue outstanding debts. When you're fashioning those guidelines, however, don't just consider what the Internal Revenue Service might think. Envision how your debt collection practices would look if they were reported on the Five O'clock News.
As provider affiliations have become more nuanced than simple bricks-and-mortar acquisitions they are thus harder to track, quantify, and predict.
Consolidation in the hospital sector is a trend that most observers believe will continue as providers adapt to value-based care, population health and capitated payments.
What's not so clear is what form this consolidation will take and how fast the hospital sector will move in that direction in the coming year.
Brett Hickman, a partner and healthcare deals leader with PwC, notes that mergers and acquisition volume for U.S. hospitals declined by 58% in the first three quarters of 2014, when compared with the same period in 2013.
However, Hickman says, that decline comes with caveats because provider affiliations have become more nuanced than simple bricks-and-mortar acquisitions and are thus harder to track and quantify.
"What is happening now is a lot of what I call convergence deals, things that may not show up on publicly reported data, and what I will call private industry deals, a lot of stuff in the physician space," Hickman says.
These affiliations are being led largely by management service organization models, clinical integrations, and joint ventures.
"We are seeing a lot of deals by payers getting into not pure acquisitions, but MSO [management services organization] models, affiliations like clinically integrated networks, things that qualify under the regulations for them to be able to negotiate together and partner and get their clinical activities integrated, but not have to do a full merger. The deal is still a deal or a transaction, but not an M&A. We can't keep up with that."
These looser affiliations have key advantages over traditional acquisitions, in that they are not subject to the same regulatory scrutiny, they allow the smaller partner to keep a measure of autonomy, and the deals are more easily unwound if they don't work.
Hickman says one trend below the radar has "healthcare systems buying up mom-and-pop [skilled nursing facilities] and trying to get control of their post-acute costs. [There is] lots of activity in the SNF space now, none of which is going to hit in anything publicly reported."
Adam Powell, a healthcare economist with Payer + Provider Syndicate, a Boston-based consulting firm, says there is more interest in creating narrow network products for oncology, cardiology, and other lucrative subspecialties that include hospitals from multiple health systems.
"An insurer can build a narrow network that is a collaboration of several hospitals without actually merging them," Powell says. "It's easier to unwind something if you don't go in whole hog. In the event that it doesn't work out, it leaves the organization with more dynamism to react to changing market conditions."
"That being said, going in whole hog does allow for tighter integration. It's more feasible for merged hospitals to share a common infrastructure to reduce costs."
2014 a 'Surprising Year'
Powell called 2014 "a surprising year."
"At the beginning of the year people were speculating that there would be a lot of M&A activity in the hospital sector, but that hasn't panned out," he says. "There may have been a lot of the low-hanging fruit deals that happened earlier. The ACA was passed in 2010 and there was a spike in M&A's in 2011 and 2012 and 2013. In 2014 there was a bit of a decline and a lot of the deals that needed to happen may have happened already."
In Boston, for example, Powell says the trend now is not necessarily finding more hospitals to acquire, but to integrate and coordinate care among the hospitals that have already consolidated.
"Whether it is getting together on the same EMR, or synchronizing disparate care processes, there are a lot of internal resources locally that have been devoted to getting acquired hospitals all in sync and acting as a system," Powell says.
"So there may be a tension between 'how much do we expand?' versus 'how much do we assimilate?' Given all of these recent expansions some of these systems might be in an assimilation phase right now."
Breaking Market Boundaries
Allan Baumgarten, a healthcare sector analyst based in Minnesota, says we can expect to see more mergers and acquisitions that transcend geographic boundaries and business models.
"We are seeing more examples of mergers that go outside of traditional market boundaries and mergers that blur traditional distinctions between investor-owned hospital systems and community owned nonprofit systems," he says.
A prime example, Baumgarten says, is the Duke-LifePoint joint venture. A Tennessee-based for-profit hospital chain and a North Carolina-based academic medical center have teamed up to operate hospitals in four states, including the Upper Peninsula of Michigan.
"Those are examples of crossing traditional geographic boundaries and some are examples of blurring the lines between for-profit and not-for-profit," Baumgarten says.
Strategic alliances are also becoming more popular as health systems look for clinical expertise and expanded referral regions.
"The Cleveland Clinic has one venture with Community Health Systems, and then a broader venture with suburban community hospitals in places like Chicago where they are basically selling their cardiology expertise," Baumgarten says.
"Mayo is expanding its Mayo Clinic Care Network and they are up to about 25 hospitals now, mostly in mid-sized markets like Lansing, MI, and Grand Forks, ND, where they are sharing a broader range of specialty expertise and more generalized expertise," he says.
"If you are a hospital that is getting dinged by Medicare for too many readmissions, Mayo Clinic is happy to consult with you on strategies for reducing readmissions."
In return, Mayo enlarges its referral base.
"So, at a certain point the hospital in Grand Forks is going to say, 'This patient requires very specialized care so we are going to refer him to Rochester,' or the hospital in Lansing is going to refer them to Rochester," Baumgarten says.
"A secondary goal of the Mayo strategy is to block out local competitors, either who might want to take those same referrals of high-end cases, or who might want to make acquisitions of those hospitals in order to cement their referral base and broaden their geographic reach."
"So Mayo Clinic, without spending much of its own capital, is blocking out local competitors and generating additional referrals to come to Rochester."
In the coming years, Baumgarten says he expects to see continued consolidation in the healthcare sector, with many sorts of nuanced variations.
"I see traditional M&A continuing. I see these variations on traditional M&A's going beyond traditional boundaries, the blending of for-profit and nonprofit, and I see a lot of strategic affiliation activity going on. People are looking for ways that they can stay on their own."
Powell agrees, but says he's not sure if the move towards consolidations hasn't slowed of late.
"The outlook for 2015 is cloudy," Powell says. "In 2014 there was a forecast of a lot of M&A activity associated with the ACA. Those factors persist, but there wasn't that most M&A activities. There were other partnerships that are not M&As. In 2015 many of the factors that drove M&A's in 2013 still exist. In light of what happened in 2014 my forecast for 2015 is uncertain."
The neutral effect of Medicaid expansion comes even though some not-for-hospitals are seeing payer mix changes that are "really extraordinary," a Standard & Poor's Ratings Services senior executive says.
Medicaid expansion has played no role in rating the credit worthiness of acute care not-for-profit hospitals, a sector that continues to confront a negative credit outlook, Standard & Poor's Ratings Services analysts say.
"Is there any correlation to upgrades and downgrades based on if you're in a Medicaid expansion state? The answer really is no," S&P Senior Director J. Kevin Holloran said at a Thursday afternoon webinar hosted by the ratings service.
"We've had 256 ratings in expansion states and 211 ratings in non-expansion states, so a very equal number, and there really is no correlation to upgrade. Basically it is an even split. Just over 50% of upgrades occurred in non-expansion states and 55% of downgrades occurred in expansion states."
Holloran says analysts have been watching the expansion closely to see if there would be a "natural lift up in those states that did expand and right now, today, we aren't seeing it."
"We hear that it is still improvements on the margins, so to speak. 'I am getting zero cents on the dollar from self-pay and now I am getting 20 or 30 cents on the dollar from Medicaid. If it went up two or three percentage points, that is all good news and we are appreciative of it as an organization, but it isn't curing all that ails me. While I am grateful that it is there, it is something that I am going to watch over time to see what happens with the rest of my payer mix.'"
A Cleaner Picture
"So, it's another change to the payer mix, is what we are seeing from a lot of organizations," Holloran says. "It is certainly initially a little helpful. Once we get a track record and see what levels out, by leveling out the entire payer mix, after the impact of the exchanges as well, we will have a better and cleaner picture of what the organization's payer mix looks like on a longer go-forward basis."
S&P Managing Director Martin Arrick, who co-hosted the webinar, says the neutral effect of Medicaid expansion comes even though some not-for-hospitals are seeing payer mix changes that are "really extraordinary."
"I'm seeing cases where Medicaid percentage is up 2%, 3%, and in some cases even 4% and that's being matched by drops in uninsured percentages of comparable amounts," Arrick says. "That seems like a pretty huge positive in some cases."
"But the other thing is depending upon where you are and what your pre-reform payer mix was, there are a lot of cases where it's not making any change at all. We aren't seeing the needle move."
A Financial Chasm
While the not-for-profit sector appears to be little affected by Medicaid expansion, reports from other analysts have shown that the expansion has been a windfall for the for-profit hospital sector.
In September, PwC Health Research Institute found that Medicaid expansion—in place for less than one year—is creating a financial chasm between hospitals in states that accepted the expansion money and those that have rejected it.
Arrick says there are several factors in play.
"The for-profit sector is very top-line oriented. The for-profit sector reports every quarter and there are about one dozen companies, so you get a view of the entire sector every quarter. They are public companies and they have an interest in managing all of their metrics and their equity metrics, etc. They get their story out there every quarter," he says. "The not-for profit world tends to report on an annual basis. We are not even a year in and we don't have all of the reporting. It is still anecdotal."
Medicaid expansion and the health insurance exchanges have also provided more coverage options for healthcare consumers, who can now shop for care at for-profit hospitals.
"If you are one of those folks who now has an insurance card for the first time, you can shop around," Arrick says. "Perhaps you used to go to the safety net hospital because that is where you felt at home."
Holloran says not-for-profit hospitals also tend to be more conservative with their finances, with a mission-oriented, long-term outlook.
"For the not-for-profit sector it is very common for us to meet with individuals who are part of organizations that have been around for 100+ years, and they are building and trying to sustain their organization for the next 100 years. They don't operate on a quarter-by-quarter nature," he says.
Whatever the reason, Arrick says that both the for-profit and not-for-profit hospital sectors face a negative credit outlook for many of the same reasons.
"They're not changing the bottom line, so to speak," he says.
Sam Foote, MD, found himself at the center of a national scandal in 2014 after he blew the whistle on scheduling delays and other irregularities at the Phoenix VA Health Care System, where he'd worked for more than 20 years. The internist's tip sparked months of investigations, which he says, uncovered a pattern of "cheating [at VA facilities] all over the country."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. They are making a difference in healthcare. This is the story of Sam Foote, MD.
This profile was published in the December, 2014 issue of HealthLeaders magazine.
"I was just trying to get some issues fixed. Then it went viral. I just did not realize the extent of the cheating all over the country."
It would be an understatement to say that 2014 was an interesting year for Sam Foote, MD.
The unassuming 61-year-old internist and career physician with the Department of Veterans Affairs found himself at the center of a Category 5 national scandal this spring after he blew the whistle on scheduling delays and other irregularities at the Phoenix VA Health Care System, where he'd worked for more than 20 years.
"I was shocked," Foote recalls. "I was just trying to get some issues fixed. Then it went viral. I just did not realize the extent of the cheating all over the country."
Foote's tip proved to be the tip of the iceberg. Months of investigations and congressional hearings determined the irregularities in Phoenix were part of a systemic pattern at VA facilities across the country: Administrators, motivated by bonuses for meeting two-week waiting time targets, sought to paper over the actual delays experienced by veterans seeking medical care.
"I knew them saying they had the wait times down to two weeks was impossible from the experience I was seeing with the patients," Foote says. "It wasn't medically possible. We didn't have enough providers to get the numbers they were advertising."
In fact, Congressional investigators suggested that scores of veterans may have died while waiting for access to VA care.
"People were coming in saying 'I've been waiting 6, 9, 12, 14, 16 months for care,' " Foote says. "I had a heart patient waiting 14 months for an appointment who went to the ER with chest pains and had an EKG that said he'd had a prior heart attack. He was supposed to be given an appointment in three days. This was in January of 2013. His appointment was October of 2013."
For several weeks last spring the story dominated an insatiable news media. Ultimately, the revelations that began with Foote's whistleblowing forced VA Secretary Eric Shinseki to resign. President Obama and new VA Secretary Robert A. McDonald, the former CEO at Procter & Gamble, have vowed to fix the troubled system, but Foote says that won't be easy.
"In the short run they have no other choice but to go to the private sector, which is very expensive," he says. "There is a fundamental mismatch in the U.S. right now between primary care providers available for baby boomers. The VA has to compete with the private sector for a scarce resource, which is why I am not sure it is necessarily solvable."
Foote says the problems at the VA weren't created overnight but were the result of inaccurate demand projections over the decades. While those projections correctly anticipated the declining numbers of World War II veterans, they could not account for the War on Terror, the Great Recession, the open enrollment of the late 1900s and early 2000s,or the effects of the Affordable Care Act and the individual insurance mandate, all of which created thousands of new patients for the VA.
"Everything combined to put a huge demand on the VA, which was not in a place to handle it," Foote says.
For clinicians at the Phoenix VA, the cracks started showing at the bedside level about four years ago when their caseloads increased dramatically to meet unrealistic waiting time goals. As the caseloads grew, so did the exodus of clinicians, knowing their skills were in high demand elsewhere. The problem was thereby exacerbated for those who remained.
"In February 2011 we were seven providers down and 7,000 patients uncovered, and they didn't do anything about it," Foote says. "By December 2012 we were about 13,000 patients with over a one-year backlog in the computer, and some more that they never put in. Rather than try to address the issues, they tried to hide everything."
Foote's complaints went unheeded by his immediate supervisors, some of whom he alleges were involved in the cover-up. Foote filed a complaint with the VA Inspector General in April 2013, and he says the retaliation from supervisors at the hospital began that summer.
"There is a huge culture of secrecy," Foote says. "It's like a fraternity or a secret order. You don't criticize it outside, and if you do you will be severely punished."
He expounds, "They were harassing me on leave issues along with everybody else. They were ramping our panel sizes up when people were pretty much working as hard as they could. For full-time primary care, the average caseload is 1,200 patients. They were jacking it up to 1,380. Nurse practitioners were supposed to be at 900, and they moved it to 990 and then 1,045. One of my nurse practitioners who collapsed under the strain mentally was pushed up to 1,300. They were working longer, and the VA wouldn't pay overtime or comp time. People were pushed to the max, and it drove away an incredible number of good providers."
Foote says he tries to stay clear of the inevitable partisan finger-pointing over the scandal. In his view, there is plenty of blame to go around.
"It's not a Democrat or a Republican issue. It's a national issue. The VA management is the problem," he says. "If you want to blame Bush for the war in Iraq, you can blame the Republicans. You can blame Obama for Obamacare. But these are not things that in and of themselves caused the problems. The main problem was they downsized. They got rid of facilities and people, and then they ended up with twice as many people as they were projecting to have when they downsized with a war on and the economy tanked. It was horrible planning on the VA's part, but they didn't know that at the time."
Retired now, Foote says he spends his free time trying to help veterans gain access to the healthcare they were promised by their country when they put on their uniforms. Even with all the personal upheaval and stress the scandal has caused him, Foote says he has no regrets about blowing the whistle.
"At the end of the day, I have to sleep at night," he says. "And if I'd let it go, I wasn't going to sleep."
This well-reasoned manifesto makes the case for an end to unfair billing practices, no more ICD-10 delays, and better access to healthcare for all.
In the spirit of the holidays, here is my wish list for the coming year.
For physicians:
Find a Permanent Fix to the Sustainable Growth Rate
A permanent fix to the SGR debacle should be at the top of the wish list for anyone who cares about healthcare access. How can we expect physicians to do business with the dangling threat of calamitous double-digit cuts in Medicare reimbursements? This is bad policy—if we can even call this "policy"—and it's grossly unfair to physicians.
The "doc fix" has become an embarrassing annual sideshow at the Capitol, but the only solution so far is a new Band-Aid. The American Medical Association and other physicians' associations try each year make a permanent fix their top legislative priority.
Every year they're promised action by Congress, bills are filed, lawmakers pontificate, and promise, and every year those hopes flame out. Congress has had 17 opportunities to permanently fix the SGR and 17 times they've failed to do their job. Find the funding and fix this! For good!
[In the interests of full disclosure, Congress must fix the SGR because I am sick of writing about it.]
For the Poor:
Expand Medicaid in Every State
Political leaders in the states that did not expand their Medicaid programs must put aside their mean-spirited partisanship and make Medicaid expansion work. Feel free to reject Obamacare, but you owe it to the poor and most vulnerable people of your state to come up with an alternative. Beyond that, it's just plain mule dumb!
States that reject Medicaid expansion are losing billions of dollars in federal subsidies. That's money that will pay for medical services, and provider salaries, and in many cases will keep the doors open at cash-strapped hospitals.
And that is money that will circulate in local economies. Let's be clear. Rejecting Medicaid expansion was never about policy or state budgets. It was always about politics. Giving ground on the Patient Protection and Affordable Care Act would be perceived as surrender by hard-right extremists who have resisted the reforms at great expense.
No one has demonstrated that rejecting Medicaid expansion would put a state on a more-solid financial footing. Do the right thing Gov. Scrooge! Expand Medicaid!
For Hospitals and Public Health Policy:
Implement ICD-10 with No More Delays
The argument against ICD-10 implementation is simply untenable, which is why those who oppose the upgrade to the diagnostic coding set had to resort to trickery to get it delayed until Oct. 1, 2015. Enough already!
The United States spends more money on healthcare than any other country in the industrialized world. Coincidentally the United States is also the only country in the industrialized world that still uses ICD-9, a coding set devised in the 1970s.
Yes, doctors have quite a bit on their plates already with fundamental shifts to value-based care, quality metrics, the annual SGR threat (see above) and meaningful use of electronic medical records. The thought of adding another complex mandate that is linked directly to reimbursements is unnerving.
However, this was not a surprise. We've known about ICD-10 since 2009 and there have already been two years of delays. The fact is, our profligate healthcare system needs the granular data that ICD-10 provides to help identify best practices, and track treatment regimes, procedures, outcomes, quality, cost, redundancy, and fraud.
These delays are unfair to the people, hospitals, and other institutions who assumed the implementation dates would be met and who acted appropriately and prepared. Hospitals are spending billions to operate dual systems because of the delay.
And it should be noted that there are thousands of ordinary people who took the time to become certified for ICD-10 in the hopes of improving their lives. They played by the rules, paid their tuition, took the certification courses, but many saw their job prospects evaporate for at least another year with the latest delay.
It's time to move diagnostic coding into the 21st century!
For Consumers:
Eliminate Drive-by Doctoring, Balance Billing
Imagine this scenario: You are seriously injured or become ill, are rushed to the ED and admitted into the hospital for a day or two. Fortunately, you're a responsible citizen who took the time to buy health insurance and your hospital is in the network.
Weeks later, however, you learn that a certain ED doc, hospitalist or other physician contracted to work in your network hospital is not, in fact, in your network. That knowledge comes to you in the form of a thick envelope containing an eye-popping bill detailing potentially tens of thousands of dollars in out-of-network fees that you were not told about beforehand, most likely because you likely were unconscious.
When people in healthcare complain that their industry is over-regulated, ask them how their industry can defend practices such as drive-by doctoring and balanced billing. It's just plain sleazy and if you allow this to happen in your hospital to your patients—people who are in pain, afraid, essentially defenseless and trusting—then shame on you!
People in leadership positions within healthcare need to understand that this issue is on the radar of attorneys general and state and federal lawmakers across the nation. If the healthcare sector doesn't take care of this problem on its own, the government will.
For Veterans:
Eliminate or Greatly Reduce Care Wait Times at the VA
We've heard the horror stories about scandalously long wait times at Veterans Administration hospitals and how administrators at some hospitals cooked the books and gamed the system to collect bonuses for improving care access.
Fortunately, the public outcry has made this an issue that the Obama Administration, Congress, and the VA cannot ignore. Steps must be taken to improve access to care for veterans, many of whom also suffer disproportionately from behavioral health issues related to their service.
If this country can afford to wage war, then it should be able to provide care for the people who answered the call. As a side note, whatever success the VA achieves in improving access to care could almost certainly have civilian applications in a nation that is struggling with a dearth of primary care physicians.
For Insurers:
Reject the Latest Challenge to the PPACA
This latest challenge to reach the U.S. Supreme Court regarding the PPACA may very well be the silliest and least tenable. Essentially the not-just-no-but-Hell-no opponents of Obamacare pored through the massive healthcare reform bill and found what amounts to a typographical error regarding subsidies for consumers using state-sponsored health insurance exchanges.
They took this typo and ran with it, all the way to the U.S. Supreme Court, which is expected to hear the case sometime early next year.
Whether or not you support Obamacare, this case is pure pettifoggery. The fact that four of the most-conservative members of the highest court in the land have determined that this is worthy of review unfortunately speaks volumes about the state of our politics. God help us every one!
Roxana Reyna, RN, has learned that sometimes the best way to treat a serious injury is to improvise. Reyna's creative skills as a skin and wound care specialist earned her an invitation to a White House event honoring healthcare professionals who look beyond textbooks and develop their own solutions.
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. They are making a difference in healthcare. This is the story of Roxana Reyna, RN.
This profile was published in the December, 2014 issue of HealthLeaders magazine.
"We can't wait for a company to come up with something that will help our patients heal faster, so I have to think of it and create it there on the spot at the bedside with what I have."
Neonatal medicine has vastly improved the chances of survival for infants. But when dealing with wounds, burns, and other skin issues, nurses can face challenges because medical supply companies often don't make standardized dressings and bandages that are small enough to fit infant bodies. This was a common vexation for Roxana Reyna, RN, a skin and wound care specialist at Driscoll Children's Hospital in Corpus Christi, Texas. So, she learned to improvise.
"I got interested in wound care and I noticed that there weren't any dressings or bandages made for kids that provide the same pathway to healing," she says. "I had to take the dressings and design them, cut them up, and make them so I could get the full effect of the wound healing that I needed for the babies and the kids."
In one burst of creativity, Reyna's proudest moment came when she devised a dressing for babies born with omphalocele, a birth defect that leaves intestines protruding from the body and covered only by a thin layer of tissue. Surgery repairs the defect, but in the interim, the infant is at risk of infection. Pressed to improvise, Reyna fashioned a Hydrofiber dressing made from antimicrobial materials.
"I am there to get those kids to heal using the materials on hand," she says. "We can't wait for a company to come up with something that will help our patients heal faster, so I have to think of it and create it there on the spot at the bedside with what I have."
Reyna's skill at improvising has not gone unnoticed. "I became a resource for the entire hospital. I was being called upon where the wounds were worst," she says. And in June, Reyna was invited to the White House to take part in an event honoring the MakerNurse program and its innovative clinicians who use their brains, pragmatism, and creative energy to solve problems that aren't in the playbook.
"Sometimes we are standing there with our hands crossed because we have nothing available. When we make these things, we provide something even better than the standard of care," she says. "We are helping kids survive who had never survived before, who would have a higher risk of infection or mortality. We are helping kids get home quicker and helping them stay out of the hospital."
Reyna's eclectic career path before nursing shaped her confidence to create solutions. "I have a background as a cosmetologist and also as a florist, so I have a creative side in me. I can see things in the way they need to be shaped. It is not difficult for me. It is fun," she says.
Equally important, she says, is working with other clinicians, managers, and administrators who respect, understand, and support colleagues who have the courage to create solutions. "They are very supportive at Driscoll. We collaborate," she says. "We are encouraged to be innovative when we need to be. If the standard that has been carried on for years is not helping kids and we see that there can be something better to help them, then we are going to take a leap forward in doing things that are going to be safe and cost-effective and following those steps where we are still helping the patients reach better outcomes."
As the healthcare industry moves toward best practices and standardized care, Reyna says it's important that hospitals and health systems continue to spark the creative energies of bedside care providers.
"That is what the nursing profession is: being able to assess a situation and maybe create something, evaluate it, and revamp it if you need to," she says. "It is an ongoing process. Some things will work. They are going to become standardized.
"We are always having to customize things for the patients because their needs are all different," Reyna concludes. "In the works now is building a community of nurses who bring forward their ideas so we can collaborate. They can feel supported and empowered to do these kinds of things. That is my focus: building a wound care team; having people empowered to be the resource on their units and floors. We will come together to share ideas."
Researchers find that physicians whose residencies were in higher-spending regions spent 29% more on average than their peers who had trained in lower-spending areas of the country.
A study this month in the Journal of the American Medical Association found that physicians from residency programs with higher healthcare spending brought more-costly habits with them when they began their practices.
Fitzhugh Mullan, MD
The study by researchers at the Milken Institute SPH at George Washington University found that physicians whose residencies were in higher-spending regions spent 29% more on average than their peers who had trained in lower-spending areas of the country.
When adjusted for patient demographics, regional cost of living, and other factors, the study showed that mean spending for physicians trained in higher-cost residency programs averaged $522 more per Medicare patient each year.
Those cost traits persisted even if the new physicians went to another region of the country with lower healthcare spending. Those higher-cost practice traits appeared to level off at mid-career as the research found no significant variance related to training location 16 to 19 years after residency.
Fitzhugh Mullan, MD, the Murdock Head Professor of Medicine and Health Policy at Milken Institute SPH and senior author of the paper, discussed his team's findings in an interview last week. The following is an edited transcript.
HLM: Why do training costs vary so greatly among teaching hospitals?
Mullan: I don't know the answer precisely. All teaching hospitals aren't the same. There are some that are well more expensive than others, and there is high variability, even within the more expensive hospitals. It ranges from simple calls about office visits to complicated decisions about expensive surgeries. It would seem in some communities there is a propensity to do more interventions and in others to practice more frugally. It's a complicated set of factors that we call the culture of practice.
HLM: Did the higher cost hospitals produce better results?
Mullan: We did not look at outcomes, but others have. The general findings are that there is not a correlation between the costs of medical practice in a higher-spending hospital referral region than in a lower spending one. These costs adjust on race, age. You adjust those communities so you are looking at the same age cohort and you find there is not an association with outcomes based on costs.
HLM: What are the lower-cost teaching hospitals doing differently?
Mullan: Many of them are in less-urban areas. The urban areas tend to be more expensive, and even when you adjust for cost of living they remain very expensive. There are many reasons why that might be.
When you get into rural areas, hospitals tends to be smaller and tend to have more limited training programs largely in primary care, perhaps general surgery and OB/GYN. They are not into neurosurgery, plastic surgery, advanced nanotechnology, etc. They are training more of the basic physicians and probably as such their use of technology and the frequency of the use is less.
One might say we need the expensive teaching hospitals in the cities. That proposition needs to be challenged, because our national problem isn't an access of technology, it is an absence of coverage in some areas and it is an absence of prudent coverage in many areas. Those are major issues that tax payers in all locations should be concerned with.
Yes, it is good to have burn units in certain areas, but people burning to death is way less of a national problem than having people not get services and die prematurely from things that could have been prevented with good primary care. We are not focused on producing those doctors with the same vigor that we tend to be for producing the more specialized and rarified physicians.
HLM: Why do physician costs fall in line with community averages as their practice matures?
Mullan: It was a surprise finding for us. We found what we call "imprinting." The nature of the practice in the area where the person trains imprints on them a standard and intensity of practice that they carry into their practices. In the first seven years that is very powerful, with a 29% difference for those trained in low-expense areas versus high-expense areas.
That effect diminishes in the 8−15 year period and we see no difference in the 16−19 year period. That suggests that whatever the imprinting they carried with them out of residency diminishes over time as they become more a part of the culture of the community in which they are practicing.
That means that their decisions on diagnostic activities and therapeutic activities become more in common with the practice standards of that community. Although it works in reverse, too.
HLM: How can high-cost teaching hospitals act on your findings?
Mullan: First of all, it's knowing the hospital referral region. Some leaders of teaching hospitals may know what their attributable area is. Others may not. What role do they play?
They second thing, and I expect many would be defensive, is to ask 'if we are more expensive, is it because we are practicing good medicine?' As the costs of medicine in general and the variability of cost become better known and the nation becomes more aware of what a huge chunk of our national treasure is becoming invested in healthcare these topics won't be as easily avoided.
This is a preamble period where we are gathering data and perspective for what could be a fairly major change in our notions of training prudent physicians. We are way out of line with the rest of the world in terms of our expenditures without the presumed benefits. Our outcomes are less good than many countries in the world that spend a good deal less.
HLM: What sort of challenges do teaching hospitals face with these self-assessments?
Mullan: The question of a CEO or CMO looking at their culture is what I would like to see happen. It's a little trickier when you consider that you have in place 50 or 100 or 1,000 academic physicians, many of them experts in their field, and many physicians in the community probably trained at that hospital, practicing in similar fashions.
The nature of the decisions being made about clinical interventions is diffuse. It's not like you get the chief of surgery to say to his faculty and residents 'be more frugal.' It's a question of looking at a given service or diagnoses and analyzing the approach and costs at the institution versus others versus standards of practice.
HLM: What role do you see for value-based payments in this transformation?
Mullan: For an institution to take on a serious intervention to be more cost conscious is a challenge. It's also a challenge because right now, by and large, they get rewarded for volume. It is going to be hard acting on this teaching hospital by teaching hospital.
As the system sends more signals back to large institutions that we are going to manage more care in the community—or if it's an ACO where there is a bundled payment or any kind of organization that is paying—there will be pressure to be more prudent providers.
My guess is [that] over time that will be more effective; the invisible hand as opposed to a principled and intellection approach of trying to look more like national standards.
HLM: Given their training, specialty, and research mission, should not we expect that care in teaching hospitals would be more expensive?
Mullan: The perception is right. What is the norm? Residency is a wonderful part of a physician's life, in which you move from training wheels to no training wheels. It is a revered and ancient way of learning things in the midst of our modern techno-medical center.
But you do what you see as you rotate from service to service to within a specialty. There is more cost consciousness and efforts are underway in institutions to embrace value thinking, but it is still predominantly [based on] what you see your elders doing, whether that elder is a chief resident or a world-renown specialist.
That is why there is imprinting. We think there is documented variability in hospital costs, presumably because of decisions around therapeutic and diagnostic services. You get the clinical leaders doing it X way. As a learner you see it X way, you adopt it X way in your practice. The opportunity and narrative for imprinting is very clear.
HLM: Do you want a more rigorous role for value as a metric when dispersing GME funding?
Mullan: The short answer is yes, but I should amplify that. We have many parts of the country that are way under-doctored and other areas that are generously doctored. We have specialties that are clearly undersupplied, such as primary care, and others that are arguable oversupplied.
The federal government, despite billions of dollars awarded to these institutions, has no ability to discuss, let alone effect changes with that money. That is the basic problem with Medicare funding.
The answer is yes, there should be a way that not just government, but public policy around the training of doctors can be gently redirected based on the huge investment that the taxpayers of America make in graduate medical education.
Right now that doesn't exist. Teaching hospitals by and large like the system as it is now. They don't want the topic discussed because they feel they won't be able to defend and maintain it in a way they like.
The playing field is tilted toward larger more research intensive institutions and that is just fine with them. Those people are the most vocal in defending it, largely in the Northeastern part of the country. That is the standoff we have right now.
Can we discuss a better use, modernizing and bringing into the 21st century a generous reward system for hospitals from the 20th century when our concerns about costs and quality were not what they are today?
Medicaid parity's days appear numbered, but debate continues about whether the provision of the healthcare reform law worked as designed and the extent to which its demise will affect healthcare delivery.
An air of resignation hangs among people paying attention to one provision—Section 1202—of the Patient Protection and Affordable Care Act, that the lame duck Congress will very likely allow to expire.
Better known as Medicaid-Medicare parity, the provision 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 will expire at the end of the month and the 113th Congress has not shown it will act before it also expires at the end of the month.
Though Medicaid parity's days appear numbered, debate continues about whether the provision worked as designed, how much money it distributed during the PPACA's rocky, uneven rollout, and the extent to which its demise will affect care delivery.
American Academy of Family Physicians President Robert Wergin, MD, believes losing the parity money will mean that fewer primary care physicians will see Medicaid patients.
"As a small business, the question becomes can you afford to see some or any of the Medicaid population," Wergin says.
Big Drop in FFS Payments Ahead
"I will personalize it. I am president of the AAFP, but my day job is a rural practice in southeast Nebraska, a town of about 2,000. This makes you look long and hard at your practice. In a rural setting you have to see those patients anyway. They are your neighbors and you just take the hit and it erodes your infrastructure and you have to find your efficiencies. In urban situations. the decision might mean you become a boutique practice."
Nationally, Medicaid reimbursements for primary care average about 59% of what Medicare pays. The amount varies greatly with each state Medicaid program. North Dakota and Alaska Medicaid payments are higher. Reimbursements in most states are not. For example, if parity expires, on Jan. 1, 2015 California primary care physicians will see a drop of 57% in fee-for-service Medicaid payments.
"It pushes physicians into making hard decisions," Wergin says. "Physicians created the infrastructure to try to provide access and now it's a non-sustainable business model. Maybe they will have to draw back and not see that population. Those patients then would—which is what happened in the past—get their primary care and acute care in the emergency room at a much higher cost. Probably, that is what will happen."
Parity Law Won't be Missed
On the other hand, says Matt Salo, executive director of the National Association of State Medicaid Directors, "there are a whole lot of caveats to indicate that this is not going to be a disaster."
Salo says many states believe the Medicaid parity law was poorly designed, had little effect on care delivery while it was operating, and won't be missed after it's gone. Because of that, he says, there is little interest in renewing Medicaid parity funding.
"It's not really on our top triage list of things we are pushing for," Salo says. "If you asked a lot of our members 'do you want some free money to increase payment to providers' a lot of them would say 'yes.' But almost every one of our members would have also said, 'yes, but there is a better way to design this.'"
Salo says most of the state Medicaid officials he's spoken with believe that losing the parity money "is not that much of a problem because the vast majority of the primary care that is delivered in many state is done so through managed care and not in a fee-for-service environment. In reality, most folks are in managed care where the docs are getting paid a lot better."
In addition, Salo says, states found it "much more difficult to figure out how in a managed care environment you actually increase doctors' fee-for-service payments." States also weren't happy that Medicaid parity came without incentives for doctors to improve their practice.
"The way it is designed, everybody gets paid more, but states said they would like to pay people more if they met certain criteria," Salo says. "If you're a physician who is improving quality, or improving access, yes, let's pay you more. But if you're just in the bottom quintile of physicians why should you get paid the same as the top? Let's use this as an incentive to drive some much needed payment reforms."
Effect on PCPs Questioned
Salo also questions the degree to which the end of Medicaid parity will disrupt primary care delivery.
"It's a great sound bite for when you want to get paid more," he says. "Has this increased access or has this just paid people who were doing the right thing a little bit more for continuing to do the right thing?"
"I would guess that it is much more of the latter, that it hasn't actually increased access because of a variety of reasons, including the fact that people knew this was just going to be for two years. You don't change your business model based on the assumption that Congress is going to 'do the right thing' and extend something they didn't have the money or the political will to extend in the first place."
Even with those caveats and concerns, Salo says, "some states have decided that they know that Congress isn't going to extend it and they are going to try to find the money to keep it alive in whole or in part, at least for another year or so, and maybe on an ongoing basis."
"Is it really going to affect every primary care doctor? The answer is, 'that's not exactly true.'"