The introduction of Medicare' prospective payment system in 1983 prompted some deep strategic thinking by hospital executives about future revenue and how to best preserve margins. The thinking went something like this: "If Medicare is giving the hospital a flat fee to cover its costs based on an expected length of stay, then if the patient stays in the hospital for less than the expected length of stay, the hospital will make a profit."
It sounds reasonable based on the reimbursement methodology, but it was flawed logic simply because it was assumed that if the patient stayed in the hospital fewer days than expected, then fewer resources would be consumed. With fewer resources consumed, the difference between Medicare's DRG reimbursement and the hospital's actual cost would result in an attractive margin that every hospital needs to financially thrive. The reality turned out to be quite different. Resource consumption did not decline and physicians continued to practice exactly the way they did pre-DRG—but they did it in fewer days. It is this legacy assumption that still pervades much of the thinking about hospital costs, margins, and length of stay, and hospitals are still feeling the pinch.
A recipe for bankruptcy?
Since 1983, approximately 2,500 hospitals have gone bankrupt, closed, or have been acquired. Though decreasing margins continue to grab headlines in healthcare magazines, hospital executives remain slavishly devoted to the LOS measure. It appears on their desk every morning, every month, and every year according to patient units, physicians, service lines, and any other drill-down meant to communicate the LOS impact. And when the hospital's LOS is higher than that of the state, regional, or national indicators—or if it's not in line with budgeted expectations-the occupants of executive suites across the country issue directives to beef up the hospital's control and command tactics to 'get the patients out quicker.'
That's not to say that LOS is not a valuable metric. Indeed, it is important to gauge hospital efficiency, to maximize the volume of patients in profitable service lines, to attract managed care contracts, to maintain competitive edge and to stay aligned with regional and national benchmarks. It is also a very easy metric to obtain. Though hospitals are replete with data, it is often difficult to access information that would prove helpful to hospital leaders in their quest to improve efficiency, reduce costs, and decrease length of stay.
There are many internal operational situations that every utilization review coordinator or, more recently, case managers routinely encounter in their efforts to advance a patient's treatment plan and effect a timely transition to a lower level of care or discharge. Singularly or in combination, these situations add up to a complexity of variables that needlessly prolong LOS. Situations ranging from inaccurate registration information to delays in delivery of care, consulting specialist responsiveness, ancillary services availability, timely diagnostic testing and reporting, scheduling limitations, and communication mishaps are among the numerous controllable situations that are often cited as cause for excessive length of stay.
Since 1983, length of stay has been the organizational mantra, and since 1983 doctors have been begged, harassed, coaxed, and sweet-talked into discharging their patients as soon as they no longer require an acute level of care. As part of this effort, physicians are asked to consider some other acceptable alternative that can be provided to the patient at a lower level of care. In addition, utilization review coordinators or case managers have pleaded, encouraged, and negotiated with department heads to schedule the diagnostics the doctors have ordered and expedite the results so the patient can be discharged promptly. These ‘discussions' have been going on since 1983 and nothing has changed. Physician practice decisions and delivery of care processes still drive the patient's navigation through the hospital system with the end result of a length of stay that keeps the chief financial officer awake every night. This scenario is a classic example of that overused example about doing the same thing over and over and expecting different results.
Physician practice behaviors
In the past, and according to Medicare's Conditions of Participation, it was left to the hospital's utilization review committee to monitor individual cases with excessive LOS. That directive, while still on the books, is beyond the reality of most hospitals and is rarely practiced. Instead, hospitals generally use LOS trends to identify physicians whose practice decisions routinely put patients over the accepted LOS threshold or whose use of resources far exceed those used by their peers caring for similar patients. But even with objective outlier evidence, offending physicians face little or no consequences. Hospital boards of directors and executive leadership are either unaware of the problem or incapable of implementing solutions. Research from Dartmouth University and the RAND Corporation have consistently confirmed that physicians aren't prescribing more resources because their patients are sicker, but rather because of practice patterns, resource availability, and a perverse reimbursement system that pays physicians for doing more-not doing better.
Back in the 1980s, hospital information systems and technical support staff were ill-prepared for the kind of monitoring it takes to examine physician practices beyond length of stay. Today however, every practice decision made by the physician—how many tests are ordered, how many consultants are brought in, how many days the patient remains warehoused before elective surgery is done—are known. The data exist at the hospital, state, and federal level, and are often used by a variety of public and proprietary oversight agencies and insurance companies to compare a physician's practice against those of his peers caring for similar patients. While the use of the claims data is an inexact science and subject to the vagaries of hospital-specific financial policies, they can be used as a consistent measure of resource consumption. Even if the data are unreliable—and often they are, given the inconsistencies in the hospital's CDM or revenue codes—they will be consistently unreliable. Statistical consistency rather than reliability makes the process a suitable technique to objectively confirm physician practices. This data provides practice information about medical interventions that are not related to the patient's reason for admission; wasteful discretionary treatments; disregard of evidence-based medical protocols; excessive LOS; and compliance with quality measures. Armed with this information, especially when presented in a comparative format, physicians tend to self-modify practice patterns to stay under the bell curve and avoid scrutiny as long as patient quality is never compromised.
Delivery-of-care processes
Hospitals are complex organizations and suffer from the silo-centric nature of their structure. Administrators are put to the test daily to improve delivery-of-care processes to meet staggering demands and overcome the challenge of communication between multiple caregivers. Tracking the timeliness of scheduling a treatment or service, providing that treatment or service, and reporting the results of that treatment or service are tests of patience. The number of steps in every delivery-of-care process, the sheer number of people who have a hand in the care process, and the process variables that have to be considered are overwhelming, especially in large academic medical centers. Hospitals have tried. From Deming to Six Sigma, administrators have introduced methodologies to help hospital departments streamline processes to make them more patient-centric. But the structural and operational complexities of the hospital defy every effort, and obstacles continue to emanate from every service delivery department. Just think of the number of people and tasks involved in a simple order for a blood test. The complexity and cost of delivering a treatment or service create barriers.
Over the past few years, however, as hospital case management programs have matured, one of the features of most programs involves capturing, quantifying, and reporting potentially avoidable days. Using a preprinted list of every possible system-, patient-, community-, nurse-, or physician-related reason why a patient's navigation through the episode of care has been delayed, hospital case managers are providing objective information to the C-suite on hospital efficiency. Like physician profiles, potentially avoidable day (PAD) reports are not an exact science, but as hospitals strive to streamline processes and evaluate the business case for providing 24/7 delivery-of-care, the reports take on new value. In the absence of anything better, PAD reports paint a vivid map of barriers and obstacles that impede or delay a patient's progress through an episode of acute care and subsequent return to the community. Knowing that every day in the hospital increases the patient's risk of a medical miss-adventure, case managers are the eyes and ears of the executive team to target opportunities for performance improvement. Whenever possible, the case manager will advocate on the patient's behalf to expedite the prescribed service or treatment. At some point, however, the department heads of those departments must be held accountable or hospitals will continue to see patients suffer and margins decline.
One against the other
The combination of physician practice decisions and delivery of care processes add costs to every patient admission, extend LOS beyond the geometric mean, and eat away at potential margins. Hospitals are overrun with data relating to both of these major variables, and only recently are hospital executives able to turn that data into practical information. Today, using severity-adjusted comparative data, hospital execs know the source of their financial hemorrhaging; they know which physicians are consuming resources beyond the mean for a similar group of patients; they know the physicians who are making questionable referrals to specialist consultants; they know what system or community obstacles obstruct the patients' safe and swift navigation through the acute level of care; and they know which physician or service line produces the needed margins to stay economically healthy. Armed with this information, it's time to shift the center of attention from length of stay to delivery-of-care processes and resource management using physician specific margins, costs per case, and data demonstrating system inefficiencies.
Slavish focus on length of stay is an out-of-date tactic. If cost per case is less than the DRG reimbursement, the hospital achieves a margin no matter what the LOS might be. The literature is replete with studies showing that a decrease in LOS, occurring as it does at the end of the patient's stay when less intensive resources are consumed, does not equate to a concomitant decrease in total resource utilization and cost per case. If quality patient care and financial viability is the hospital's goal, then it's time to switch strategies.
Shifting focus to physician-specific practice patterns and consistent monitoring of delays and obstacles caused by organizational and community barriers is of even greater significance in hospitals with per diem, fee-for-service, or discounted-fee-for-service commercial contracts. Under these reimbursement methodologies, every acute care day and every medically prescribed intervention will be scrutinized by the payer. Positive reimbursement determination will be made once the payer is satisfied that the service, treatment, or care could only be provided at the acute level of care and are appropriate to the patient's severity of illness and prognosis. Denial information is essential to identify the source of revenue hemorrhaging. However, hospital finance departments have little if any information on their denial situation. They have denial management committees–an oxymoron if I ever heard one–but can rarely tell committee members the specific source of the denial by payer, reason, or attributable source. They have write-off lists galore, but buried in those lists of contractually dictated revenue shortfalls are the actual denial dollars that had to be written off, as well. It is the rare hospital that I have encountered that can point to specific payers denying specific services for specific populations.
Physicians who practice the same way today they did 10 years ago will generate more denials than those who are in synch with the exigencies of today's financial environment. Hospital executives must commit to using severity-adjusted physician resource utilization practice profiles to help physicians target practice areas that extend beyond the bell curve, and they must hold department heads accountable for efficient service provision with consequences to both within a given time frame. Unless the medical staff sees a genuine improvement in hospital efficiencies they will not be motivated to make a change in their practice.
Stop the insanity
Length of stay is an easily obtained proxy measure of both physician practice decisions and the inefficiencies of hospital delivery-of-care processes. While there are many other variables that contribute to LOS, these two factors comprise the major stumbling blocks and constitute the ones that can be modified with renewed vigor in the administrative suite and supported by the board.
The hospital environment has changed dramatically, and access to inpatient care has become even more complex with the shortages in nursing staff, available acute care beds, medical specialists, and access to primary care. These variables are often used as ancillary arguments supporting the continued use of LOS as the key metric for financial health. However, after 25 years since PPS was introduced, it's time to shift priorities. Influence the physician's use of the pen and remove, or at least minimize, system, process and community barriers, and LOS will fall like a row of dominos. Unfortunately, many hospital administrators have been reluctant to tackle the former and have not been very successful in improving the latter.
But there is a light at the end of the tunnel in the form of the hospital's case management program. Hospital case management and the PPS share the same birthday. The former was initially developed to cope with the latter. In the 1990s, plummeting margins, the re-engineering craze, and the lack of understanding about what constitutes professional case management practice forced hospital executives to downsize and reduce expenses resulting in the deterioration of case management practice into discharge planning and utilization review programs. Recently, however, there has been a welcome resurgence of executive interest in authentic case management as a strategy to engage the medical staff to advance the treatment plan and invigorate the hospital's bottom line. Relieved of the burdensome tasks foisted upon them during the re-engineering craze of the 1990s, today's hospital case manager is a valuable asset and a consistent advocate for safe, swift, and cost-effective care.
But first, stop the badgering. Stop harassing the current staff of case managers, utilization reviewers, discharge planners, medical chiefs, and the CFO about length of stay. Then get your information systems up to snuff. Make sure you regularly update your CDM, review and update your utilization review plan, coordinate departmental rev codes, purchase access to severity adjusting software, and recruit decision support specialists who know how to turn data into business intelligence.
To monitor and ultimately efficiently overcome delivery-of-care obstacles, make sure your case management team has access to a method of capturing potentially avoidable delays or days (PAD) and that there is a mechanism to quantify the data based on a pre-determined financial metric such as average variable costs per patient day or average revenue per patient day. If it turns out it costs $300,000 to fix a $100,000 PAD problem, obviously it makes no business sense to do so. But let case managers and medical staff know that administration will revisit the issue at some future date. But if it costs $60,000 to fix a $150,000 problem, then something should be done, and that, too, should be broadcast to hospital associates.
Reorganizing and reorientating the hospital's case management program will also spell relief. In the vast majority of hospitals, case management programs are functional models; that is, the professionals on staff—case managers and social workers—typically perform the two major functions traditionally associated with length of stay: Utilization review and discharge planning.
Utilization review is a retrospective contractual obligation. In terms of Medicare and Medicaid patients, it is governed by the CoP and the language spelled out in the hospital's utilization review plan. In terms of commercial insurers, it is spelled out in the payer provider manual and the contract. Contract language can be changed, and if the hospital can provide objective evidence that the hospital's payer denial rate is so low that boilerplate utilization review language is no longer applicable, it should be changed. Likewise, since the language of the UR plan dictates the review activities for Medicare and Medicaid beneficiaries, that too can be modified. With efficiency improvement, the professional resources dedicated to the perfunctory activities of chart review and post-discharge arrangements can be delegated to non-professionals, leaving the professional staff to work alongside the physicians at the point of service to promote high-quality, cost-effective care and advocate for the patient.
The business case for case management
Like so much in healthcare, case management has evolved. Today's models focus on achieving outcomes and are structurally and operationally designed to generate clinical and financial bottom line results. Offering a case manager to serve as a navigator for targeted physicians and selected patient populations is a popular strategy to achieve those results. In addition, delegating burdensome clerical and record review activities to non-professional staff is a growing strategy to increase the case manager's visibility and availability to work in partnership with rounding physicians and clinical nurses. Starting with a robust and centralized gatekeeping system through transition to home or a lower level of care, the case manager serves as the chief experience officer: a single consistent, point-of-care resource to their customers to promote better quality care at lower costs. In an era of value-based purchasing, pay for performance and public reporting of safety, financial, and quality outcomes, patients and physicians benefit from having an advocate at their side. They warrant closer attention and greater support from the C-suite.
Stefani Daniels, MSNA, RN, ACM, CMAC, is president and managing partner of Phoenix Medical Management Inc., a hospital case management strategic planning advisory firm. She may be reached at daniels@phoenixmed.net.
Much of my recent reader mail has come from a column I wrote a few weeks ago on hospital pricing and how consumers will or won't make use of it. Looks like you all have some strong opinions out there. Many of you think any attempt to bring transparency or a retail flavor to healthcare is some kind of scam or conspiracy, but just as many seem determined to prove that while healthcare may be more complicated than many other businesses, it is just as bound by the laws of economics. We'll see as it plays out over the next few years.
But that's not the only column that prompted you to fire off an e-mail or two. Read to the bottom for a hospital CEO's struggle—albeit indirect—with gas prices, of all things. One reader, whose missive I didn't include, praised me for my "explain it like a 4-year-old writing style." I wasn't sure what to make of that comment, but I choose to take it as a compliment.
Thanks to everyone who took the time to write, and please keep the e-mails coming—I love hearing from you. I'm not able to run every response I get to my columns, but I do my best to run the most thoughtful ones that aren't laced with profanity. Just kidding—I only get a very small percentage of those.
Our prices are right
I enjoyed reading your article "The Price is Wrong". I just wanted to let you know that we have been providing this service to our patients for almost two years. We have a statewide 800 number that patients can call. We verify their benefits, calculate what the insurance allowable is, [and] contact their insurer to determine what the out-of-pocket expense is going to be. We currently process about 800 requests per month with a very high level of consumer acceptance.
Greg Meyers
System Vice President
Integris Health
Oklahoma City
More kudos:
I couldn't agree more with your article "The Price is Wrong."
I am the project leader for HFMA's Patient Friendly Billing project. In our 2006 consumerism report, we emphasized that participants in this phase of the Patient Friendly Billing project believe that price information provided to consumers must be meaningful to them. For that information to be meaningful, it must focus on the patient's financial obligations—what the patient is expected to pay—and not merely charges. It must be tailored to the patient's specific condition, treatment, and insurance coverage. Therefore, meaningful price transparency ideally involves a patient having the ability to get an estimate—prior to service—of the amount the patient will actually owe for the treatment, and that the estimate incorporates the patient's specific condition and insurance coverage.
Terry Allison Rappuhn
Rappuhn Consulting
Nashville
Not exactly my point, but thanks anyway…
Thank you so much for pointing out that retail pricing isn't going to help consumers shop for care. Even if the patient's service is applied to the deductible, it is the contract rate, not retail charges, that will apply. So comparing retail prices doesn't give people the answer they think it does. In addition, basic pricing is only part of the story. Doctor A may have cheaper office visits, but what about the lab tests, radiology, and other services? How about access to care, quality of care? What if the doctor is out of network? Just try finding out what the health plan considers "usual and customary." And absent a crystal ball, who knows what will be required at patient visit, or for ongoing care and treatment? We find so many people totally misunderstand the quotes they get.
Finally, the biggest fallacy is that healthcare consumers are rational. When a doctor tells you a biopsy is needed to determine if you have cancer, your first thought isn't to start shopping for biopsy prices. People who are ill are not like people shopping for refrigerators. And of course, you can get much better information about refrigerators than you can about healthcare providers.
Lisa Norris
ClaimCare
Torrance, CA
It's a load of something, that's for sure…
This so-called consumerism wave is a load of misdirection. First of all, the overly confusing way we physicians have to bill [that] everyone complains about as being too complicated. The reason it's complicated is there are too many codes, and the codes are not just so physicians can get paid—they're so the industry can have easy and precise information. Here is what I'm talking about: Every time you give a vaccine, you have to put the CPT code for the vaccine. Then you have to put the CPT code for giving the shot (immunization code). Then you have to give a visit code, and then you need to give an ICD-9 code to explain why you gave the vaccine. In this day and age, who the heck—except for the parents or an older child—needs an explanation why you give a vaccine? Look, I give one shot and I need at least four codes; big waste of time. Think about us doing a series of four shots and all the codes we need. What we have is a STUPID system that's inefficient with some of the worst outcomes in the industrialized world and is bloated financially so our brainless administration fools voters into believing that by showing retail prices all healthcare problems will be solved. Admit it, it's BS and nothing really changed.
Harvey Brownstein
Practice Administrator
Clarkstown Pediatrics
Nanuet, NY
Again, I don't have a quarrel with the goal, just the process…
Congratulations on pointing out a completely useless activity. Of course, in healthcare if you pointed out all of the useless activities you would have a compendium the size of Google's. A couple of brief points: First, you are using the hospital experience which, as you point out, is likely to never be a cash transaction. If hospitals were used correctly, for catastrophic care, then a person's "true insurance" would handle that and there would be no calculation.
For the rest of healthcare access, the system never gets fixed until the financial and the service transactions take place between the same two people.
Besides, the cost of production is not known in healthcare for a variety of reasons. Price is completely arbitrary and set by the government. So, who needs a calculator? Just ask CMS.
Robert Teague, MD
Austin, TX
But really, do the uninsured actually pay much of anything for care?
I would like to see an experiment where a hospital would charge (and collect) the same to every patient regardless of what, if any, insurance a patient had. Why should a patient with Blue Cross, UnitedHealthcare, Medicaid, or Medicare, pay only 20% of billed charges while an uninsured person is expected to pay 100% of billed charges? What other industry could survive under such a system? Health insurance is becoming so prohibitively expensive for employers that many employers are dropping health coverage for their employees. I am no fan of government run health systems like the VA but the current system is dangerous to our financial health. If hospitals expect private payers to make up for those that only pay for 80% of their costs, they will lose those private payers to competitors.
Lynn C. Griswold
Hospital Gothic
Howdy, Philip. I'm writing from home. I'm the CEO of Monroe County Hospital in Forsyth, GA. I just read your article in HealthLeaders, and thought about gas prices and how it affects us out here in the boonies.
Filling up the tank is a common denominator in our labor-intensive business of giving care to people. Everybody has to get to work in a hospital. It's not like an insurance or financial services business where folks can enjoy flex hours or work from home in their PJs. A nurse, tech, or janitor has to be in the building so that sick people can get taken care of.
Competition for employees between hospitals often focuses on price paid for the hourly worker. Used to be that nurses wouldn't think twice about driving 30 miles to go to work if they could get a buck more an hour. It's different now. Seeing the ticket spit out of the pump causes those nurses to start thinking differently.
Especially in our rural hospital markets, I think we need to grow workers more locally. It's even more important now to work closely with colleges and tech schools to train locals to work in their own hometown hospitals. That means CEOs need to reach out and develop friendly relationships with college and tech school presidents and convince high school superintendents to let line managers teach classes to students.
We have to do a better job at selling the healthcare career idea to young people. Kids that grow up in a small town often think the big city is their only option for life fulfillment. We have to get them exposed and educated about what working in a hospital is all about. I think you can tease excitement and desire out of the hearts of youngsters if they become familiar with what we do for a living.
I'm always thrilled to see a young person who grew up in town stay in town to take care of the Daddies and Mommas and Grandfolks they used to play with in their front yard. These folks make great nurses and technologists because they are heartfully invested in the main order of business we are in–friends and family who need loving care.
Oliver J. Booker
CEO
Monroe County Hospital
Forsyth, GA
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.
Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top quality issues facing healthcare leaders.
Dwayne Thomas, MD, chief executive officer of New Orleans-based Charity and University Hospitals, has been removed indefinitely from his position, according to Louisiana State University system officials. Thomas played a critical role in getting LSU Interim Hospital, formerly known as University Hospital, back on its feet after Hurricane Katrina. Officials declined to comment on the specifics surrounding Thomas' administrative leave, but said Thomas will retain his tenured faculty position at the LSU School of Medicine and continue to be paid in full.
The updates to the Pharmaceutical Research and Manufacturers of America's Code on Interactions with Healthcare Professionals contain some significant changes for the pharmaceutical industry, according to Linda Pissott Reig, a principal with Porzio, Bromberg, & Newman in New Jersey.
They also reflect a natural development of the sales model for pharmaceutical companies, according to Dan Kracov, a partner with Arnold & Porter in Washington, DC.
"This is a very positive development, but it will require a not insignificant effort for companies to make sure they adopt the changes in the Code and meet the recordkeeping requirements," Kracov says.
While state disclosure regulations and the pending Physician Payments Sunshine Act currently in Congress played a role in the new guidelines, Kracov and Reig says they weren't the only factors.
"The updates are a direct response to the criticism and skepticism from all sources," Reig says. "It's an effort to demonstrate the industry wants to be considered to be taking the high road and conducting itself appropriately."
Kracov considers the new guidelines as a general tightening up of the standards, but believes the public and lawmakers may remain critical of some of their interactions between pharmaceutical companies and physicians, including speaker programs. The Code requires companies to track how much money they pay each speaker and set an annual limit on how much they spend. However, the Code does not specify the amount of the dollar limit.
Revisions in a nutshell
The revised Code, which takes effect in January 2009:
Prohibits distribution of non-educational items, such as pens, mugs, and other "reminder" objects typically adorned with a company or product logo, to healthcare providers and their staff
Prohibits company sales representatives from providing restaurant meals to healthcare professionals, but allows them to provide occasional meals in healthcare professionals' offices in conjunction with informational presentations
Includes new provisions that require companies to ensure that their representatives are sufficiently trained about applicable laws, regulations and industry Codes of practice - including the Code - that govern interactions with healthcare professionals
Provides that each company will state its intentions to abide by the Code and that company CEOs and Compliance Officers will certify each year that they have processes in place to comply
Includes more detailed standards regarding the independence of continuing medical education (CME)
Provides additional guidance for speaking and consulting arrangements with healthcare professionals
One of the most significant changes requires Chief Operating Officers and Chief Compliance Officers (CCO) to certify annually that their company complies with the PhRMA Code and posting contact information for the CCO, Reig says. PhRMA will take on an increased prominence as a central place where employees, physicians, pharmacists, and the public can report suspicious conduct.
Companies are more likely to comply with the code if they have to certify their compliance and everyone can report suspected violations, Reig added. Companies will also have the opportunity to correct misconduct in the field.
The Code also now requires pharmaceutical companies to force physicians who serve as consultants and also as members of a formulary committee to disclose their work for the pharmaceutical company to the formulary committee. In the past, the physicians were responsible for making sure they disclosed the relationship.
Under the revised Code, sales representatives and their managers will only be allowed to bring food into a physician's office as part of an informational presentation. Sales representatives and managers will no longer be permitted to take physicians out to dinner. Reig considers this as a significant change and also as an area that may need to be further clarified.
"The Code is currently silent on how a rep who attends a scientific conference would be able to have an information presentation with a physician or whether that is not going to happen," Reig says. "I think that's going to have to be addressed as we go forward."
Complications for complaining with new Code
Companies will face two major challenges when trying to comply with the new regulations - training and tracking aggregate spend.
Some pharmaceutical employees have deeply ingrained habits, so companies will need to retrain them and track compliance with the new regulations, Kracov says.
"There's a lot of work to be done in terms of the development of policies and training and the responding to the particular questions that arise," Reig says.
Sales representatives and pharmaceutical employees are not the only ones who will need training, Reig says. Healthcare practitioners will also need to understand the new guidelines.
Accurately capturing the aggregate spending across the organization will be a difficult undertaking at least initially, Kracov says. Companies have different systems in place to track spending in various departments of the company and they need to find a way to consolidate the systems and get a real-time sense of how much money is going to individuals and institutions from these parts of the companies.
"Some companies do not have sufficient control over aggregate spend," Karcov says. "It will take a lot of effort and evolution."
Companies have been working on systems to track aggregate spending because of the various state disclosure laws, but met with varying levels of success.
Benefits of the new Code
Kracov believes the changes to the Code will benefit some companies by helping them save money on traditional marketing efforts.
Another benefit to the updates to the Code, Kracov says, is the chance for pharmaceutical companies to rebuild its public's image.
"It's critical that the whole debate over pharmaceuticals and the marketing of pharmaceuticals get on a more rational basis because the industry has been under attack for so long and has been such a moving target," Kracov says. "This should be used as a way to move towards more of an equilibrium and understanding what's appropriate and what's not in dealing with physicians."
The industry will change, not only as a result of the new guidelines, but as part of a broader evolution of the sales model, Kracov says. Those changes public policy, formularies, contracting, and more reliance on evidence-based medicine than in the past.
"The Code is part of an overall evolution in public policy and healthcare economics," Kracov says. "It's an important development. . It's not the beginning or end."
"I think this is a substantial development just like the 2002 Code was a significant development.," Reig says. "There's a substantial amount that is new here and I think that as a result it's going to change how business gets done in the industry, but hopefully will also have the expected change of responding to the criticism."
Michelle A. Leppert is an editor with ePharmaceuticals, a division of HCPro, Inc.
Plans are moving forward to replace the old Stanford (CA) Hospital with a new one on the leading edge of innovation. The new facility will be designed to set the standard for safety and being flexible enough to accommodate yet-to-be-imagined medical technology. The planned seven-story hospital, costing about $2 billion, is scheduled to open in 2015 and will have 1.1 million square feet and add 144 beds. The new hospital is part of a larger renewal project at Stanford Medical Center that will modernize and expand Lucile Packard Children's Hospital, replace laboratories in the School of Medicine, and renovate the Hoover Pavilion for community health providers' office space.
The University of California is preparing to open two new medical schools to help train more physicians for underserved rural and minority communities. While the schools won't be open for four or five years, they are intended to help fill a growing shortage of physicians in the state, officials say. In addition to planning the new schools, UC is working to add slots at its existing medical schools in San Francisco, Los Angeles, San Diego, Davis, and Irvine, which now enroll about 2,540 students.