Catholic hospitals, like most religious healthcare institutions, follow a set of medical ethics based in religion. It's probably unnoticeable for a patient with a broken leg, but for others, the difference is clear. There's a gap between what the Catholic church deems acceptable and what the law allows in reproductive services. That gap includes abortion, stem cell research, vasectomies, treatments for infertility, emergency contraception for rape victims and birth control counseling. It's a gap that many are concerned will be created when University of Louisville Hospital merges with Jewish Hospital and St. Mary's Healthcare and a division of Catholic Health Initiatives. "It's scary just in general not having health insurance, and to think that I would have to rely on a hospital that's under some religious directive, to do that, I'd probably go somewhere else if I could," says Angela Wallace. But U of L says Wallace and others have nothing to worry about. Even though they share faculty, the School of Medicine isn't part of the hospital, and Dean Edward Halperin says everything that's done today will be done after the merger, but not necessarily in the hospital.
Although 2011 may go down in the history books as the year of the accountable care organization, there's also been a tremendous amount of payment innovation on a different level—aligning incentives and optimizing the delivery of "episodes of care." Bundled (sometimes referred to as episode-based) payment structures are a means to that end.
A bundled payment can be thought of as a budget. For a given episode of care, a group of "at-risk" providers agrees to work together to ensure that care is coordinated and that the total cost of an episode is within the budget.
Under this model, the costs of any unplanned readmissions or complications are the responsibility of the providers, creating an economic incentive to prevent those costly events. To ensure that these financial incentives don't adversely affect other aspects of quality, it is also critical to measure and monitor patient experience and outcomes.
CaroMont Health, a community hospital in Gastonia, NC, and SSM DePaul Health Center in Bridgeton, MO, made headlines earlier this year when it signed agreements with payers in which the hospital and affiliated physicians agreed to take on clinical and financial responsibility for the episode of care surrounding a total knee replacement. And in California, under the direction of the Integrated Healthcare Association in Oakland, a regional approach to episodes of care is underway involving multiple hospitals, physician groups and payers.
Although the approaches to bundling vary, a common theme is that the at-risk providers (ie, hospital and physicians) are responsible for the quality and cost of services that they do not directly provide: services such as outpatient drugs, physical therapy and other post-acute services.
These arrangements are an exercise in taking on risk. Why do it?
In the short-run, it offers the potential to increase market share, particularly when paired with benefit plan changes that provide incentives ("steerage") for patients to choose participating facilities. More importantly, however, these arrangements create a laboratory to experiment with risk in a relatively controlled environment and an opportunity to align incentives to improve the quality of care, reduce cost and improve patient experience. This is achieved through the collaboration that aligned incentives can foster among hospitals and physicians.
While it's important to carefully design the financial elements of these arrangements, the financials are only half of the equation. To be successful, organizations need to simultaneously embark on a process to redesign and optimize care—engaging all providers who touch a patient across an episode of care.
For an elective procedure such as a total knee replacement, this might include better patient preparation for surgery and more tightly managed post-acute care. In preparation for these types of models, some organizations are exploring the concept of prehabilitation—programs that both mentally and physically prepare patients for their procedure.
The short-term play may be to increase or lock-in market share—but the alignment of incentives in bundled payment also provides an opportunity to encourage and reward providers for working collaboratively to put the patient first and deliver the highest-quality, most cost-effective care.
Express Scripts and Medco Health Solutions, the largest U.S. pharmacy benefits management companies, said Thursday they will combine in a deal worth $29.1 billion in cash and stock. The companies manage prescription drug benefits and look for ways to cut costs for health plan sponsors and members. Combined, they handled more than 1.7 billion prescriptions in 2010 and reported almost $110 billion in revenue. Express Scripts of St. Louis, Mo., will buy its rival for $71.36 per share. Medco's shareholders will get $28.80 per share in cash and 0.81 shares of Express Scripts for each share they own. That's a premium of 27.9 percent based on Medco's closing price of $55.78 Wednesday.
From gearing up for the healthcare overhaul to dealing with rising numbers of uninsured patients, John Haupert will confront an array of hurdles as Grady Health System's new CEO. While they are substantial, the challenges facing Grady aren't new territory for Haupert, who currently serves as executive vice president/COO of Parkland Health & Hospital System in Dallas. A team of Grady corporate board members spent months sifting through hundreds of applications following the resignation of former CEO Michael Young earlier this year. "Grady is not just an occupation," said board chairman Pete Correll. "It is a mission, a calling." Under a three-year contract, Haupert's base salary will total $615,000 with a maximum 30% yearly bonus based on performance, Correll said. He will take over in early October if his appointment is approved by the full board, which will vote Aug. 8. The Arkansas native is currently overseeing the construction of a $1.3 billion, 862-bed replacement hospital in Dallas.
The Colorado Health Foundation has no guarantee that medical giant HCA will keep open all of its hospitals after the foundation's $1.45 billion sale of its share of their joint venture, and the board is still bargaining for assurances that HCA will continue Medicaid care in the state's largest hospital system, documents show. Papers obtained by The Denver Post in an open-records request also show the foundation board questioned whether HCA managers would have new profit incentives and cost pressures after the Nashville, TN-based hospital chain became publicly held again in March. Critics of the sale have said the nonprofit foundation's 50% control of the Denver hospital group keeps HCA profit motives in check at Swedish, Rose, Presbyterian/St. Luke's, Sky Ridge and other facilities, and that the foundation should not sell under current terms. "The community deserves more assurances," said Dick Anderson, a former chair of the joint-venture board.
The FBI is moving against what authorities describe as a long-running insurance fraud in which a downstate lawyer and a handful of health professionals exaggerated injuries suffered by traffic accident victims in order to bilk insurance carriers out of big settlements. Authorities say the principals in the Fairfield County ring found victims from relatively minor car accidents and took elaborate steps to inflate the apparent severity of their injuries. They created false medical records, prescribed powerful and unnecessary pain medication, required extended and unneeded chiropractic treatment and recommended exotic diagnostics, such as $2,000 "nerve conduction velocity testing." In cases where the accident victims were low-income recipients of public assistance, participants in the scheme also are accused of circumventing state law that requires that the state receive half of any insurance settlement.