Even though the economy has forced many hospitals and health systems to delay or cancel capital projects, there is still a bright spot on the horizon. Yes Virginia, there is a silver lining in healthcare construction. That bright spot is reduced costs. Commodities, materials, and land have all seen recent and fairly dramatic drop in prices.
2009 can be a year in which hospitals and health systems benefit from lower material costs and the availability of construction trade labor. If these entities can get the necessary funds to start projects, then they will be able to get them constructed with prices more favorable than in the past two years. Even projects currently under way may have a chance to realize great savings over earlier cost projections.
Construction costs have fallen since late 2008. According to a recent report in the San Francisco Business Times, the costs of concrete and steel have dropped by as much as 15% to 20% since late 2008. The price drop is a nice boost for hospitals and health systems that are about to begin construction on major projects and for those who may still be ordering their materials.
Price index shows declining costs
Some examples of falling prices can be seen on the U.S. Labor Department's February 2009 producer price index report :
The index for materials and components for construction moved down 0.7% in January 2009 after falling 1.2% in December.
Prices for paving mixtures and blocks declined 6.2% in January subsequent to an 8.3% drop a month earlier.
The index for structural, architectural, and pre-engineered metal products decreased 2.6% in the first month of 2009 compared with a 1.1% decline in December.
Make the economy work to your advantage
There is no better time to plan for healthcare developments than right now. But while you're in a "time-out" state, you should revisit what you had planned at the end of last year because you can probably re-price it or re-buy it better. What you don't want to do is do nothing for the next three months or six months until the market turns around and wish you had the drawings done so you could bid the project now.
On average it takes four months to get drawings completed, so hospitals and health systems shouldn't wait. Otherwise inflation could hit right when the drawings are done and you've missed the window. In order to take advantage of a commitment for the lower material prices for six months you need bona fide drawings in your hands. Then you can pull the trigger on your project when you are ready to go.
In central Kansas, the start of construction on the planned $10 million Hillsboro Community Hospital was delayed, at least in part, to take advantage of falling construction prices in both material and labor. The hospital's parent company, HMC/CAH Consolidated Inc., decided in late 2008 to delay the project until early 2009, from a previously planned construction start date of August 2008. As the economy started to worsen and prices began falling, the company decided to implement the delay.
"We will hopefully benefit from having lower costs across the spectrum, whether it is concrete or copper, architect fees, labor—whatever might be part of that new construction," says Mike Ryan, CEO of Hillsboro Community Hospital. "The economic downturn is not a good thing for anybody, but sometimes, with any kind of an unfortunate occurrence like this, there are some silver linings."
Project review the best investment for the future
Unfortunately, capital "frosts and freezes" are a reality for many hospitals today. However, these tough economic times represent a great opportunity for health systems to take advantage of this "pause period" and re-evaluate the projects in their queues.
While resources are down, needs remain and continue to grow. Inpatient medical office and other ancillary facilities continue to be essential investments. Hospitals can use this time to do a capital project review. This allows them to take a new, clean look at capital projects. As a result, when the market turns around and it is time to move forward, the project has been appropriately rethought, resized or rescaled in scope.
When a capital project review is performed, a team of experts takes a critical look at every aspect of the project. Reviews can be performed on projects at any phase of development, from the initial concept to those already under construction.
Questions like the following ones should be asked and answered:
Is this conceptual solution the best for these times?
Is the size and scope of the project appropriate?
Have all the possible alternatives been examined objectively?
How do we wind down or slow down a project already under way?
What is the priority level of the project compared to the others in the hospital's lineup?
Within 90 to 120 days, the team develops a report to help a hospital understand whether it should cancel a project, put it on hold, or consider whether it needs a whole new destiny.
Al Seeley is executive vice president of development at Lillibridge Healthcare Services, Inc. He may be reached at al.seeley@lillibridge.com.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.
As physicians strive every day to provide the best healthcare to their patients, they may be overlooking a strong ally in this process: the pharmacy benefit management (PBM) company that manages their patients' prescription drug benefit.
As a practicing physician, I know that busy doctors often see PBMs as one more layer in the bureaucracy of patient care. Yet if that's our perspective, we're overlooking a resource that can be a significant help to us in our common goal: getting the right medication to the right patient at the right time, and at an affordable price.
My own experience is unique in that I see both sides of the picture. I now work for a PBM, and I still practice medicine. In many ways, it's never been more challenging to be in private practice. We can all benefit from assistance that helps us deliver the best care we can.
For decades, we've relied on pharmaceutical companies and their representatives to be an important conduit for information on effective use of prescription drugs. PBMs are another major resource to practicing physicians, not only for information on prescription drugs, but on how our patients are taking them, on potential adverse drug interactions that can be avoided, and on how to obtain the most affordable medications. This latter point is especially important in today's economy, when we know that many patients are compromising their care by skimping on or not taking their prescription medications because they can't afford them.
With these common goals in mind, let's take a look at how your patients' PBMs can be a resource to you and your practice, for the benefit of your patients.
The Role of the PBM: Adversary or Ally?
Pharmacy benefit management companies exist to manage the pharmacy benefit program that is funded by plan sponsors. While their original value was primarily in purchasing drugs in bulk and in processing claims, the role of PBMs today encompasses numerous programs and initiatives to help patients use drugs safely, to stay compliant with their prescription drug regimen, and to obtain drugs conveniently and as affordably as possible.
A significant asset that PBMs bring to these initiatives is the knowledge within their claims data base. They see the overall picture of a patient's prescription drug use across multiple physicians, facilities, and geographic areas—knowledge that the individual physician does not have in today's medical world. This information provides practical value to physicians to help provide their patients with the best healthcare.
Still, in the day-to-day practice of medicine, it's easy to view the interactions with the PBM as another administrative chore and even as interference in the physician-patient relationship. Another perspective is to see beyond the interruption of routine and to recognize the value of the information that the PBM brings to the physician that is otherwise unavailable.
Getting Value from PBM Interactions Value from Basic PBM Practices
PBM “best practices” with which physicians are most familiar—such as prior authorization, step therapy, and programs that look at drug interactions and polypharmacy—are designed to work to the benefit of everyone: physician, patient, and plan sponsor. They are a checkpoint that brings together a wide range of information that the physician does not have available at the point of prescribing, to help make the best choice for a particular patient.
Here are some examples:
Prior authorization—the practice of requiring approval for a specific drug—is used to ensure that the right medication gets to the right patient for the right length of time. It is a good strategy to ensure that patients who need high-cost drugs receive them, while helping plan sponsors manage costs. Often, the physician is not familiar with the plan design and does not know all the drugs that may be covered in the formulary that may be options. Similarly, prior authorization is often required for new drugs on the market, to ensure that there is a full understanding of the drug's appropriate usage.
The goal of step therapy—prescribing the least expensive, equivalent drug first before proceeding to more costly medications—ensures that high-cost medications are the last, not the first, choice for treatment. It is a tried and true practice that works to ensure that patients are treated with the best medication at the best price for their disease or illness. If a generic drug is available and appropriate, it should almost always be the first-line therapy. If the outcome achieved is not as desired, then the next step would be to move up to another medication until the desired outcome is reached.
Avoiding drug-drug interactions and managing the dangers of polypharmacy is a critical health challenge as baby boomers age and chronic illness across all age groups increases. PBMs can help because they are in a position to identify at-risk patients, providing physicians with feedback on whether or not the patient is filling their medications and taking them correctly, and if there is the potential for a dangerous drug interaction, which can often happen when patients see multiple physicians. By contacting physicians and providing them with educational materials to use as a discussion point with their patients, a PBM's intervention can be very effective in preventing these interactions.
The communication in these touchpoints should always be two-way. Often the physician has important information on the patient's situation that impacts the decision. My PBM work includes many hours of such discussions each week, to reach the best choice for each patient.
Support with Medication Compliance
PBMs can also help patients to be more compliant with their medications, which is a huge challenge for physicians, as well. Some PBMs offer programs for physicians that identify patients who are not taking medications as prescribed and help them to directly reach out to those patients, thereby improving adherence and outcomes. Some PBMs also have clinical management expertise to improve medical outcomes. They offer disease therapy management programs, for example, to help manage the medication therapy component for patients with chronic illnesses. The goal of these programs is to improve patient compliance, which will improve outcomes over time.
Increase the Use of Generics
PBMs encourage the use of generics for two reasons: a generic drug is therapeutically equivalent to its branded counterpart, and the cost savings from using generics help everyone control their prescription drug costs. Among the efforts that some PBMs make to ensure physicians stay abreast of what is going on in the world of generics is direct contact to let them know about the availability of a new generic drug. Another method is direct mailings to physicians with information on generic drugs, along with identification of patients who are taking branded drugs for which generics are available. The mailing may be followed by contacting the doctor to suggest the generic alternative.
Information on a Broad Range of Drugs
It's estimated that the average physician is primarily familiar with the 100 or so medications prescribed most frequently. Yet there are hundreds of other potentially beneficial medications. For example, specialty pharmaceuticals represent promising, yet costly drug therapies. PBMs can offer doctors clinical insights and knowledge about the latest therapeutic advances to help them better sort through and identify the medication regimens so that their patients that can best benefit from new treatments, new pharmaceuticals, and new biologics.
PBMs offer a real value to physicians by helping them to help their patients. Most PBMs are not trying to limit medication utilization or limit the prescription choices of doctors. Instead they are promoting the appropriateness of prescription medications with a focus on the clinical efficacy and quality. Looked at from this perspective, it makes sense for physicians to use the information and services PBMs provide for the benefit of their practices and their patients.
Brian K. Solow, MD, FAAFP. is vice president and medical director for Clinical Services at Prescription Solutions, a UnitedHealth Group company and a PBM that manages the drug benefit of commercial, Medicare, and governmental health plans, as well as employers, union trusts, and third-party administrators. For information, visit www.rxsolutions.com.For information on how you can contribute to HealthLeaders Media online, please read ourEditorial Guidelines.
OIG Opinion 09-05, approving a hospital's proposal to compensate physicians for on-call services performed on behalf of the hospital's uninsured patients, may have broad implications for on-call coverage.
The 400-bed nonprofit general hospital is the sole provider of acute care inpatient hospital services in the county.
Under the proposed arrangement, the hospital would pay physicians on a per-encounter basis for the following services provided during on-call periods to indigent patients:
$100 flat fee for emergency consultations on an eligible patient presenting
$300 per admission for care of eligible patients admitted as inpatients from the ED
$350 flat fee for the primary surgeon of record for the surgical procedure or procedures performed on an eligible patient admitted from the ED
$150 flat fee for the physician performing the endoscopic procedure or procedures performed on an eligible patient admitted from the ED
The OIG noted that although there is "substantial risk that improperly structured payments for on-call coverage could be used to disguise unlawful remuneration" under the anti-kickback statute, the proposed arrangement had adequate safeguards.
Those safeguards can provide guidance to physicians, says Todd A. Rodriguez, partner and cochair of the Health Law Practice Group at Fox Rothschild, LLP, in Exton, PA. Among them:
The hospital certified that the payment amounts are within the range of fair market value for services rendered, without regard to referrals or other business generated between the parties
The hospital had a legitimate rationale for revising its on-call coverage policy—namely, that it did not have adequate call coverage
The proposed arrangement will be offered uniformly to all physicians and will impose tangible responsibilities on them
The proposed arrangement would appear to create an equitable mechanism for the hospital to compensate physicians who actually provide the care that the hospital is required to furnish
"While the advisory opinion does not contain any surprises, it provides a very useful analysis at a time when on-call compensation arrangements are proliferating. Physicians who have on-call compensation arrangements or who are considering entering into one are well-advised to review their arrangements in light of the OIG's analysis," Rodriguez writes in his Physician Law blog.
This article was adapted from one that originally appeared in the July 2009 issue of Physician Compensation & Recruitment, a HealthLeaders Media publication.
Most women surgeons would make the same career choice again if given the option even though it affected their personal lives, according to researchers at the University of California-Davis. Women were somewhat more likely than men to say they would choose the surgical profession again (82.5% versus 77.5%), the report found. But female surgeons were also five times more likely than men to forego having children and nearly twice as likely to have a first child later in life.
Bob Coli, MD, discusses the benefits of application service providers, a remote-hosting option for electronic health records that can save physicians thousands when implementing an EHR system. [Sponsored by Emdeon]
Key lawmakers moved to cut roughly $100 billion from the cost of healthcare reform proposals as they sought to break weeks of gridlock. House Democrats reached a deal with conservatives in their caucus that would reduce the overall cost of the package and ensure more funding for rural hospitals. Bipartisan negotiators on the Senate Finance Committee, meanwhile, announced that a draft of their reform package would come with a lower-than-expected price tag of less than $900 billion over 10 years.