A Massachusetts-based skilled-nursing facility sets a high bar for quality, invests in staffing and HIT, and has created operational efficiencies based on the proximity of its facilities.
Research published this month indicates post-acute-care at skilled nursing facilities could be a significant source of wasteful healthcare spending.
The lead author of the peer-reviewed study, Massachusetts Institute of Technology Professor Joseph J. Doyle Jr., says a big next steps is to examine best practices at good SNFs.
By at least three measures, Winchester, MA-based Salter Healthcare is a good SNF organization:
High Medicare Ratings: All three Salter Healthcare SNFs (Aberjona, Winchester Rehabilitation and Nursing Center and Woburn Rehabilitation and Nursing Center Are the other two) have 5-Star Medicare ratings on Nursing Home Compare.
Sustainable Finances: "We are able to have a margin that allows us to invest in IT, to invest in training, and to invest in rehabilitating the facilities, rather than just trying to hang on for another year," says co-owner Richard Salter.
Low Staff Turnover: In a sector with high rates of nursing turnover, Salter says his organization is noteworthy for staff retention. "We keep people for five to 10 years. They get the proper training; they have the proper skill sets; and they are working with other employees who also have proper training and skills."
Salter identifies five essential elements to his organization's success:
1. Invest in Staffing
Salter says his organization invests significant time and money in clinical-care staff, and quality is engrained in the organization's culture.
"When every other SNF looks at our cost of nursing, they say, "'You are spending too much money. How can you be in the 99th percentile in spending per patient on all of your clinical costs?'"
But if those costs were to be reduced, "you are not going to have high-quality care, and you are not going to have your contracts, and you are not going to be as good."
2. Value Human Resources
Morale is key to retention , says Salter.
"It's not just about how many staff you have, although that is important. It's about how long they have been there, how good they are, and how they show up for work in the morning."
"On the high-tech, high-touch spectrum, the people in healthcare are high-touch people. They want to feel good about the care they are giving their patients; they want to feel proud of their professionalism and their licensing because they chose this career and they chose this path; and they want to work with people who feel the same way."
Mediocrity is not tolerated. "The biggest mistake we make in management is when don't terminate someone who is doing a mediocre job.
"The employees are good," says Salter, "and they want other good employees working next to them."
3. Stay Small
The Salter Healthcare strategy is based on what it is not doing, he explains. "We are not doubling in size. We are not thinking about where we can buy more facilities and ramp up to become bigger."
The organization operates three facilities in the same geographic market, making it "efficient at filling the backroom stuff."
"Our goal is low cost and high quality. That is what everybody says, but it is easy to say and hard to do. The way we stay low-cost is to not over grow, and to not redirect resources to the next new project. We do what we do well, and we just keep doing it."
4. Manage Your Payer Mix
To continue to serve all comers—including frail geriatric patients—without going bust financially, Salter Healthcare benefits from a diverse payer mix.
"Sometimes, they are tough cases and there is great insurance. Sometimes, there is full Medicare reimbursement. Sometimes, you have a Medicaid patient, and you don't get paid much at all," Salter says.
"You have to have the proper mix of Medicare patients, private-insurance patients, and Medicare and Medicaid dual-eligible patients, so you have collectively enough revenue to cover the high expenses of the good care."
5. Invest in Technology
Over the past five years, Salter Healthcare has invested heavily in IT capabilities. "At our three facilities, we spend about a million dollars a year on IT—on software, and hardware, and people in that department. It's a huge number for an operation our size," Salter says.
"All the filing cabinets are gone. The nursing aides are working in kiosks documenting their bathing and weighing—it's like a giant McDonald's keyboard station with icons and pictures, so they don't have to be programmers. The nurses have access to the patient database."
Its investment in IT has boosted Salter Healthcare's care-coordination capabilities with hospitals and physicians, he says.
"We can interact with the hospital systems; and the doctors, when they come into our facilities, they can pop information into our system and the hospital system simultaneously."
The organization is "trying to make sure there is continuity between us and the hospitals, and, eventually, to home care. That's what we have to do to stay in this game."
The primary elements of UnityPoint Health Meriter Hospital's bundled-payment model are care navigators, relationships with cost-effective skilled nursing facilities, and a robust home-health capability.
This story was originally published in September, 2015.
Over the past five years, federal officials have targeted hospital readmission rates, including payment penalties for conditions such as heart failure and pneumonia in the Hospital Readmissions Reduction Program (HRRP).
The HRRP penalties have spurred change, says Jeffrey Brenner, MD, executive director of the Camden Coalition of Healthcare Providers, a nonprofit organization working to improve population health and promote value-based care in one of New Jersey's most disadvantaged communities.
"This is the most exciting moment of my career. Partly because of readmissions penalties, people are having discussions they have never had before," he says.
From 2007 to 2011, the all-cause 30-day hospital readmission rate for Medicare fee-for-service beneficiaries held steady at about 19% to 19.5%, according to the Centers for Medicare & Medicaid Services.
The Medicare FFS beneficiaries readmissions rate fell to 18.5% in 2012 and 17.5% in 2013.
"When everything is said and done, the whole health system is going to look different," Brenner says of initiatives such as HRRP that are accelerating efforts among healthcare providers to build more seamless care continuums, improve care coordination, establish community partnerships, and engage patients to set and achieve their health goals.
For hospitals and physician practices, the key to readmissions-reduction success is working with community partners to effectively serve high-risk populations such as elderly patients with multiple chronic conditions, he says.
"You have to reach out to the community to have an impact."
Bundled Payments Drive Change at Community Hospital
In Madison, WI, UnityPoint Health Meriter Hospital has used bundled payments for hip and knee procedures as a springboard to quicken the organization's adoption of value-based care and to establish better relationships community partners.
Meriter, a member of Iowa-based UnityPoint Health that features a 448-bed community hospital, started performing knee replacement procedures under bundled payments in 2012 and contracted with CMS to performed hip procedures through the agency’s Bundled Payments for Care Improvements program in 2014.
For the fiscal year ending December 2014, UnityPoint Health posted net revenues at $557 million. Meriter was UnityPoint Health’s strongest subsidiary in 2014, posting net revenue at $405 million.
Readmissions reduction is one of the primary goals in Meriter's approach to bundled payments, says Philip Swain, PT, MBA, former director of orthopedics and rehabilitation at the hospital and currently director of orthopedics at UW Health in Madison, WI.
For lower-joint surgeries, readmission rates fell 68% after Meriter started bundle-payment contracting, he says. "It had a halo effect over all of our joint-replacement patients."
The primary elements of Meriter's bundled-payment model include deploying care navigators, building and maintaining relationships with cost-effective skilled nursing facilities (SNFs), and establishing a robust home-health capability.
Key Coordination Role: Care Navigators
To staff effective bundled-payment programs, care navigators are critically important, Swain says.
"They hold the hand of the patient all the way through the care continuum. They look proactively at risk factors. They start mitigating those risks before the patient even goes into surgery."
The care navigators are part of the patient discharge process and stay in touch with patients through phone calls after they leave the hospital. "They make sure the patient's medication is working. They eliminate as many pitfalls as possible."
Care navigators serve as an essential point of contact for patients before, during and 90 days after a hip or knee replacement procedure, says Pamela Dahlke, Meriter's director of care coordination. "We follow those patients through a more extended period of time."
Care navigators play a pivotal role in the post-acute care setting, she says. "High success comes with connecting patients with providers who they can get to."
Establishing SNF Partnerships
When care navigators began reaching out to community partners, Dahlke says local SNFs were "skeptical at first," chafing in particular over the drive in bundled-payment contracting to shorten length of stay at hospitals and post-acute-care facilities.
"In this journey, we are all in it together; but when you talk about length of stay, it's a difficult conversation to have."
Before participating in bundled-payment contracting, Meriter did not have strong relationships with SNFs and the hospital made establishing partnerships with cost-effective facilities a top strategic priority, Swain says. "It took a while to break in."
He says the relationship-building process featured three steps:
Outreach to SNFs that was designed to share Meriter's approach to bundled-payment contracting and to identify facilities with partnership potential
Crafting informal partnerships with cost-effective SNFs that were willing to align with core bundled-payment principles such as limiting length of stay
Establishing formal SNF partnerships that include contractual agreements such as care-coordination commitments
Robust Home-Health Capability
Home-health nurses are the frontline staff members for the hospital’s care transition program, which features home visits and an average of five check-in phone calls in the 30 days following hospital discharge.
"We can help get patients out of the hospital and prevent readmissions. Keeping the care at home—safely—will drastically reduce cost of care to the system," says Mandy McGowan, director at Meriter-UnityPoint Health Home Care.
Home-health nurses have been integrated into Meriter's electronic medical record system, which boosts care coordination and eases the hospital discharge transition, she says.
"The discharge goes much smoother. We have what we need. We work with discharge planners in the hospital. They speak with us several times per day."
The communication between hospital staff and home-health nurses is fundamental to post-acute-care success when treating high-risk patients, she says.
"We have built up the comfort level of discharge planners so they can talk with patients about post-acute care options. All discharge planners spend at least one day training with home health."
Meriter's care transitions program involves an intense level of patient engagement, McGowan says.
The home-health staff calls patients in their hospital rooms the day before discharge to outline the discharge process. Depending on the risk level for complications, home-health nurses visit or call patients at home on the day of discharge to review care plans, check medications, urge follow-up visits with the orthopedic surgery team, and make sure patients are prepared to recover at home.
"We talk with them about their diagnosis and what happened during their acute episode. We ask them what they were feeling the day when they needed to go to the hospital, so they don't panic if that takes place again. They have a plan in place."
After the day of discharge, patients in the care transitions program receive a phone call three days later, then weekly for 30 days.
Meriter's care transitions program is having a neutral financial impact on the organization, but the effort is clearly helping to avoid unnecessary medical spending, McGowan says.
"We can avoid observation readmissions to the hospital. There are things we can do in the home like draw labs that avoid a trip back to the hospital… We can help keep patients at home rather than in a skilled nursing facility, which is a tremendous financial benefit to patients."
The National Quality Forum sends risk-adjustment model designers back to the drawing board after their largely unsuccessful attempts to link social risk factors such as ethnicity with medical-treatment outcomes.
A two-year trial designed to examine the impact of risk-adjusting medical-treatment performance measures for social risk factors has raised far more questions than it has answered.
On July 18, the National Quality Forum (NQF) released a report on the trial, which began in April 2015. The trial is most noteworthy for what it did not prove and more research is necessary, the report says.
"One of the most striking findings of the trial was that measures with a conceptual basis for adjustment generally did not demonstrate an empirical relationship of the social risk factors to the outcome measured," authors of the report wrote.
The impact of social risk factors such as income and education level on medical-treatment outcomes at hospitals and other care settings has been debated hotly for several years.
Supporters of risk-adjusting medical-service payments for social factors contend that patients with social risks are more challenging to treat, placing an unrecognized financial burden on safety-net hospitals and other caregivers in disadvantaged communities
Opponents of risk-adjustment for social factors argue that setting the bar low for medical services in disadvantaged communities could institutionalize healthcare disparities across the country.
"The frequent use of NQF-endorsed measures for payment purposes underscores the importance of ensuring accurate comparisons of providers so that rewards or penalties are fairly assessed and based on true differences in performance," Shantanu Agrawal, MD, president and CEO of NQF, says in a prepared statement accompanying the release of last week's report, "Evaluation of the NQF Trial Period for Risk Adjustment for Social Risk Factors."
On Monday, the NQF Board of Directors released a statement announcing a new three-year study that will be designed to draw deeper conclusions about risk-adjusting performance models for social risk factors.
"We support the launch of a new, three-year initiative to build on NQF's leadership in this area and the significant knowledge gained through its recently completed trial. NQF will work with its stakeholders to secure the necessary financial support for this critical initiative," wrote Board Chairman Bruce Siegel, MD, MPH, and Board Vice Chairman Jim Chase, MHA.
"The new initiative will focus on unanswered questions about social risk adjustment of measures, including determining what data are needed and how to access them. NQF will continue to consider adjustment for social risk factors as part of its measure endorsement criteria. This vital work reflects NQF's commitment to effectively deploying measurement to decrease health disparities."
During the two-year trial, 303 performance measures were submitted to NQF for review, with about one-third of the measures categorized as "outcome or intermediate outcome" metrics. Out of those outcome measures, 93 utilized risk adjustment in some manner.
Risk-adjustment models during the trial featured more than a dozen social risk factors, including race, distance from clinics, marital status, language, and country of origin. "Race, ethnicity, and payer (including Medicaid status) were the most commonly examined variables," the report's authors wrote.
In addition to not finding expected correlations between risk-adjusting for social factors and healthcare-provider performance, last week's report says the two-year trial encountered several roadblocks:
Paucity of data: Researchers encountered challenges finding comparable data sets of social risk factors at the individual level, and they struggled to include community-based data into risk-adjustment models. "NQF recognizes the current limitations of data availability but encourages developers to continue efforts to explore alternative data sources," the report's authors wrote.
Conceptual basis of research: The approach to identifying potentially impactful social risk factors during the trial lacked consistency, with 65 risk-adjustment models picking social factors for inclusion based on literature reviews that were largely speculative on the impact of social risk factors, and 19 models selecting social risk factors for inclusion based on data from prior research. "The conceptual model has been identified as a potential area for greater specificity," they wrote.
Risk-model remodeling: Accounting for social risk in medical-treatment performance measures remains an imprecise science and risk-adjustment for social factors must be optimized before conclusions are drawn on their impact.
Richard Humphrey will leave Texas Health Resources to take the chief financial officer role at Parkland Health in Dallas.
Parkland Health & Hospital System has named Richard Humphrey, CPA, MBA, as the large Dallas-based safety net hospital's executive vice president and CFO.
Humphrey currently serves as senior vice president of Arlington-based Texas Health Resources.
"Uncertainty is a given in the complex and evolving healthcare industry today," Fred Cerise, MD, MPH, Parkland's president and CEO, said Monday in a prepared statement. "Richard's extensive experience in healthcare finance will be invaluable as we navigate the challenges facing Parkland in the months and years ahead and strive to use resources effectively and efficiently to deliver care."
Humphrey is set to begin working at Parkland on Aug. 21.
In comments to HealthLeaders, Humphrey identified reasons why Parkland is a good fit for his career:
"The organization has a compelling mission and vision as well as a new world-class facility, but they also have a defined strategy for the future."
"As a member of Parkland’s senior executive team I will be able to collaborate with leaders and staff as we execute and refine the strategic plan."
"Although Parkland has a new facility, the operating margin is thin. I will be able to use my experience to take the lead in looking for ways to close the financial gap as we move from pay for volume to a triple aim of quality, patient experience, and cost efficiencies. In a prior setting, I was brought in to close a financial gap, and I can bring that experience to Parkland."
"I felt a strong connection with Parkland's leaders, and I look forward to working collaboratively with everyone in the system."
Parkland Memorial Hospital is an 870-bed facility linked with 12 community health centers. For the fiscal year ending September 2015, the organization posted total operating revenue at $977 million, with a $500 million operating loss.
The hospital has posted operating losses for several years and efforts to stabilize the organization's finances include a federally supervised corrective action plan adopted in 2012.
Hospitals based in Texas, which has not expanded Medicaid under Obamacare, face daunting financial challenges, Humphrey says.
"All organizations are facing declining reimbursements that are not keeping pace with inflation. There is continual pressure on operating margins especially for public safety-net hospitals such as Parkland. Medicaid and Medicare payments are shrinking as are various supplemental government payments, and the burden often falls on the local taxpayer. It is difficult to manage high volumes of low-income and uninsured patients at the same time there is uncertainty in government reimbursement."
In addition to his new role at Parkland and current role at THR, Humphrey has held two other top healthcare-finance posts:
Vice president of finance and CFO: THR Harris Methodist Hospitals, Fort Worth, TX, which features four hospitals
Vice president of finance and CFO: Kershaw Health System, Camden, SC, a public safety-net integrated health system featuring a regional medical center
The CPA is a decorated Air Force veteran, attaining the rank of captain. He served as a nuclear-armed B-52 navigator, earning the National Defense Service, Air Force Commendation and Combat Readiness medals.
Humphrey earned an MBA from Golden Gate University in San Francisco and a bachelor of science degree from Carson Newman University in Jefferson City, TN.
In addition to his CPA, he is a certified internal auditor (CIA), certified healthcare financial professional (CHFP), certified treasury professional (CTP), and a fellow of the Healthcare Financial Management Association (FHFMA). He served in the Air Force as an officer and B-52 navigator.
Research using claims data from Medicare raises questions about the relative cost-effectiveness of inpatient care and post-acute-care in a skilled nursing facility.
New research on the cost-effectiveness of inpatient care at hospitals compared to skilled nursing facility (SNF) care is based on a technique used to compare hospital performance, the study's lead author says.
"When you compare hospitals, the big concern is [that] they treat different patients, which makes it very difficult to compare outcomes or how hospitals treat people. But now, we have a new way of comparing very similar patients who go to different hospitals," Joseph J. Doyle, Jr.
Doyle is a professor of applied economics at the Massachusetts Institute of Technology. He and colleagues at MIT and Vanderbilt University are using Medicare ambulance-service claims data to compare spending and other performance measures at hospitals.
The study Doyle published this month in the Journal of Health Economics, "Uncovering Waste in U.S. Healthcare: Evidence from Ambulance Referral Patterns," examined average 90-day spending on more than 1.5 million Medicare patients.
The research shows that hospitals that spend intensively on inpatient care and send patients home rather than to a SNF generate lower one-year mortality rates than hospitals that spend more intensively on post-acute-care at SNFs.
"We characterized the types of hospitals that get better outcomes. [They] tend to be more intense on the inpatient side. It doesn't necessarily have to be length of stay. Hospitals with better outcomes could be doing more inpatient procedures, for example," Doyle says.
"These hospitals treat patients more intensively during their inpatient stay, then they send people home instead of sending them to SNFs."
More Research Needed
While this finding is provocative, more research is required to draw conclusions on the relative cost-effectiveness of inpatient care vs. SNF care, he says. "We are able to characterize the hospitals that get good outcomes, but it's a leap to say we should all mimic the type of care that is given in those hospitals."
"Maybe the hospitals that spend more intensively on inpatient care and send patients home have better doctors and better nurses; it's possible that there are many characteristics of hospitals that result in that type of treatment profile."
In addition to further research to determine whether other hospitals can replicate the mortality outcomes of hospitals with an inpatient-care-intense treatment profile, more research is necessary to examine the cost-effectiveness of SNF care, Doyle says. "This spotlight is suggesting that we should take a close look at post-acute-care."
Comparing the treatment outcomes of patients who are sent home rather than to a SNF after inpatient care is prime area for future research.
"For patients where it is not obvious whether they should go home or go to a SNF, we should have studies that either historically or, even better, prospectively, randomize those patients to either go with home-health care or go to a SNF… If we send more people home, do we achieve better outcomes or not?"
In addition to the tantalizing findings about inpatient care and SNF care, Doyle's latest research casts doubt about earlier comparative research conducted on hospital performance.
"There is a large literature that suggests it really does not matter what hospital a patient goes to for care, in terms such as survival rates from a heart attack. We are concerned that earlier hospital comparisons did not take into account that the patients were different. We say it does matter where you go," Doyle says.
"If it doesn't matter where you go, then people could say high-intensity hospitals are wasteful."
With Republican efforts to repeal and replace Obamacare in disarray, several healthcare-provider organizations are calling on Congress to set aside party rancor and cut a bipartisan deal on healthcare reforms.
"The best approach would be for Congress members to reach across the aisle and address some of the specific problem areas of the Affordable Care Act," Elizabeth "Betsy" Ryan, JD, president and CEO of the New Jersey Hospital Association, told HealthLeaders today.
"To me, letting Obamacare fail would be a dereliction of government’s responsibility to the people. This is not just a political fight to be won—these are real people, real families, whose healthcare is at stake."
Partisan congressional approaches to repealing, replacing, or repairing the PPACA are likely destined for the scrapheap, Nicholas Schilligo, MS, vice president of public policy at the Chicago-based American Osteopathic Association (AOA), told HealthLeaders today. "Any meaningful solution is going to require bipartisan discussion, including hearings that thoroughly examine and vet a lot of the issues that are going to be put forward."
This past weekend's collapse of the Senate's Obamacare repeal-and-replace bill, the Better Care and Reconciliation Act (BCRA), prompted Majority Leader Mitch McConnell to call on his Senate colleagues to pass repeal-only legislation. The Kentucky Republican's repeal-only plan includes a two-year grace period to give Congress time to craft a replacement for the Patient Protection and Affordable Care Act (PPACA).
McConnell's repeal-only proposal would land a crushing financial blow on healthcare providers, Ryan says.
"A repeal of the ACA without an adequate replacement would be devastating. Hospitals and other healthcare providers conceded billions of dollars in federal funding under the ACA, because they knew those reductions would be balanced by more insured patients. If we lose both—federal funding and healthcare coverage—it would be unsustainable for our healthcare system, and that would impact all of us."
Allowing the Obamacare insurance exchanges to collapse would also have a negative impact on healthcare providers and patients, Schilligo says. "It would be devastating to patients, hospital systems, and physicians. It would be a huge step backward from where we were and where we have gone. De-stabilizing the insurance market would compromise patients' access to care that they need to resolve their comprehensive and complex healthcare needs."
Congress should take action as quickly as possible to stabilize the PPACA exchanges, Herb Kuhn, president and CEO, of the Missouri Hospital Association, told HealthLeaders today.
"Although the ACA's marketplace is fragile—Missouri was one of a handful of states that could have had 'bare' counties in 2018—it is functioning. Most other aspects of the law are working; although there are holes, including 19 states that have opted out of Medicaid expansion. Nonetheless, failure could occur—by not addressing the marketplace subsides, not enforcing the individual mandate, or indifference to other aspects of the law."
Following the collapse of Republican-senator support BCRA, President Donald Trump's renewed calls to take no action on the Obamacare exchanges and allow the individual insurance market to implode are misguided, Kuhn says.
"What's certain is that, absent repeal, the ACA's demise is unlikely to occur overnight. If the ACA is destined to collapse, it could be a long and excruciating end with millions of Americans sharing the pain."
A key element of Indiana University Health's self-distribution model is to combine manufacturer-contracting gains with efficiency gains realized at a new IU Health Integrated Service Center.
Indiana University Health is banking on efficiency and financial gains from the organization's new supply-chain strategy, which is centered on a high-tech warehouse under construction and set to be fully operational in the fall.
Starting with the Indianapolis-based health system's 15 hospitals, IU Health is establishing a robotically enhanced self-distribution model, Dennis Mullins, senior vice president of supply chain, told HealthLeaders last week.
"What we are attempting to do is to truly integrate and standardize our logistical footprint as an organization… Our current model is to use a third-party distributor as the intermediary with the manufacturer of goods."
By negotiating contracts for goods directly with manufacturers, IU Health expects to cut sweeter contract deals, he says. "Distributors make money on both ends. They charge a fee to the manufacturer to manage their goods, and they charge us a distribution or handling fee to get the goods to us."
In IU Health's self-distribution model, the potential financial gain from goods contracting alone is significant, Mullins says. "There is anywhere from a 2% to a 5% opportunity."
A key element of the health system's self-distribution model is to combine manufacturer-contracting gains with efficiency gains realized at the new IU Health Integrated Service Center (ISC) warehouse in Plainfield, IN. The 300,000-square-foot facility will be equipped with a high-velocity robotic goods-picking system that is expected to double goods-picking speed.
"The pick process will start with the robots, then goods will move on a conveyor-belt system at a high velocity," he says.
The robotic picking system is designed to boost efficiency in several ways, including reductions in the number of workers required to operate the warehouse's distribution floor.
"As the bins move on the conveyors, there is a spot where we weigh the bins. We know the weights of the goods, so we know what the bin should weigh. If the weight is off, the bin will off-shoot and we will check for quality assurance. We will open the bin and find out why the weight is not enough or too much. There are a lot of efficiencies to be gained."
The bulk of the health system's $9.2 million investment in the high-tech warehouse will be in the robotic picking module that IU Health has purchased from a third party, a data-driven warehouse management system, and equipment, Mullins says. IU Health has a 12-year lease on the facility structure. "We will pay back on this $9 million to $10 million investment in 2.4 years."
IU Health ISC by the numbers
Initial annual supply-chain expense savings estimated at $3 million
300,000 square feet of total facility space
35,000 square feet of office space
About 120,000 square feet for internal supply-chain distribution growth beyond the health system's hospitals such as pharmacy, information technology, clinical engineering, and print shop
Approximately 110 IU Health supply chain staff will work at the ISC. About 40 workers will run the facility, with the remaining staff working in the new facility's office space.
IU Health is planning to roll out the health system's self-distribution model in two main phases:
Phase I is slated for completion in the fall, when the ISC is expected to be fully operational and servicing the supply-chain needs of the health system's hospitals.
Phase II is a longer-term initiative aimed at meeting the supply-chain needs of as many as 400 other IU Health locations.
"The ultimate goal is for the new facility to meet all of IU Health's supply-chain needs throughout the organization," Mullins says.
Reaching that goal requires planning far beyond getting the IU Health ISC fully operational, he says. "I am thinking down the road about who we are going to be as an organization and who we are going to service—not on Day 1, but two or three years from now."
Cutting hundreds of billions of dollars from Medicaid, as the GOP's Better Care Reconciliation Act proposes, makes no sense to some healthcare leaders.
In the healthcare industry, the chorus of alarm over congressional proposals to slash Medicaid is thunderous.
In a joint letter to Senate leaders released Friday, the presidents and CEOs of America's Health Care Plans (AHIP) and the BlueCross BlueShield Association called the latest amendment to the GOP bill "unworkable," and said it "would harm consumers who are most in need of coverage."
Ignoring these voices bears the risk of shuttering hundreds of rural hospitals, shredding the financial fabric of thousands of communities, and signing death certificates for people who could live longer lives.
Specifically, here's what some healthcare industry executives have told HealthLeaders Media recently:
Otis Brawley, MD
Chief Medical Officer
American Cancer Society
Atlanta, GA
ACS researchers have already published declines in health disparities in the diagnosis and treatment of several cancers in states that expanded Medicaid, with no change in states that have not expanded.
We see more breast, colon, and cervical cancer screening. There are signals of more accurate diagnostics and improved quality of treatment. We have also seen differences in smoking cessation, with more efforts and more success in states where Medicaid was expanded.
As a health-outcomes epidemiologist, I see provision of adequate care to include preventive services, such as smoking cessation, appropriate screening, diagnostics, and treatment as a human right. The declines in Medicaid are most concerning in that they will decrease preventive measures and early treatment.
Stuart Hill, MBA
Vice President and Treasurer
Unity Health
Searcy, AR
The Arkansas Hospital Association has estimated that one-third of those who obtained coverage will lose it. That will obviously increase our deductions and bad debts, and hinder the future delivery of healthcare services, particularly for the rural safety-net hospitals. [About a quarter-million Arkansas residents gained health coverage through Medicaid expansion.]
Herb Kuhn
President and CEO
Missouri Hospital Association
Jefferson City, MO
States like Missouri will be in a significant bind. Costs to care for the most expensive categories of Medicaid enrollees continue to rise, and the state is unlikely to have—or to generate—the revenue to absorb cuts to the federal share of the Medicaid partnership.
This is especially true in states like Missouri that rely on provider taxes to support their programs.
There is significant inequity built into the Senate's Better Care Reconciliation Act. The 19 states that did not expand Medicaid under the Affordable Care Act will forego $737 billion in net federal Medicaid outlays throughout a decade, compared to states that have opted to expand the program.
These states, including Missouri, have already fallen behind. Federal cuts will only exacerbate the inequity, creating have and have-not states.
Medicaid's largest enrollment category is children. It's most expensive category is the aged, blind, and disabled. The low-cost, high-value of investment in children's health is indisputable. The necessity of caring for the impoverished elderly and the disabled is equally undeniable. The discussion meets at the intersection of value and values.
In Missouri, one of the most vocal advocates for Medicaid expansion was the Missouri Chamber of Commerce and Industry. They recognized that a system that doesn't address the cost of the uninsured is a system that passes along costs and delivers poorer results.
Peter Wright, FACHE
President and CEO
Valley Regional Healthcare,
Claremont, NH
Over the years, the Centers for Medicare & Medicaid Services and Congress have toyed with 1% and 2% cuts here and there on physician payments or hospital payments for Medicare and Medicaid. These guys are talking about taking nearly $800 billion just out of Medicaid.
If this were to go through the way it is today, you would see loads of hospitals across the country start to go out of business.
We are the third largest employer in the county. We employ about 350 people, and we don't just employ people. Our average wage is higher—we are employing the higher-wage people in our community.
We're already filling a hole in our budget. It was $5 million a few years ago, it was $4 million last year, and it will be $3 million this year. We're starting to dig out, but we are starting to dig out because of the ACA.
They are cutting payments to Medicare and Medicaid. That means the cuts are going to disproportionately affect people in poorer communities and in older communities. This is not going to hit Nashua, New Hampshire, which has a low percentage of Medicaid patients. This is going to hit Plymouth. This is going to hit the North Country. This is going to hit the places in the state where the need for care is the most.
The waiver is designed to temporarily stop the collapse of the Obamacare insurance exchange, says CMS Administrator Seema Verma.
Federal officials have granted Alaska's request for a waiver of the Patient Protection and Affordable Care Act (PPACA) to establish a state-administered reinsurance program in the individual-insurance market.
On Tuesday, the Centers for Medicare & Medicaid Services announced that the agency and the U.S. Treasury Department had finalized approval of Alaska's request for a State Innovation Waiver for Section 1332 of the PPACA. Alaska officials applied for the 1332 Waiver on Jan. 3.
According to a CMS Fact Sheet released Tuesday, Alaska's 1332 Waiver exempts the state from a key PPACA provision: "the requirement to consider all enrollees in a market to be part of a single risk pool, to the extent it would otherwise require excluding total expected State reinsurance payments."
In a statement Tuesday, CMS Administrator Seema Verma said the 1332 Waiver establishing the state-run Alaska Reinsurance Program (ARP) is designed to stop the collapse of the Obamacare insurance exchange in The Land of the Midnight Sun. "Approval will temporarily stabilize Alaska's individual-insurance market, which only has one carrier and has experienced a 203% increase in insurance premiums since the Affordable Care Act began."
Alaska's waiver request met four essential criteria for approval, the CMS Fact Sheet says:
ARP is expected to ensure that healthcare coverage matches or exceeds coverage requirements under the PPACA
ARP is expected to maintain or increase affordability of coverage obtained through the PPACA insurance exchange
ARP offers "coverage to at least a comparable number of Alaska residents"
ARP will not increase the federal deficit
State officials and the Alaska Comprehensive Health Insurance Association (ACHIA) will administer ARP. The heart of the program is the state assuming risk to help pay for treatment of 33 high-cost medical conditions. "The ARP is a state-operated reinsurance program which covers claims in the individual market for individuals with one or more of 33 identified high-cost conditions to help stabilize premiums," the CMS Fact Sheet says.
In a letter sent to the country's governors in March, Tom Price, MD, secretary of the Department of Health and Human Services, encouraged states to consider filing 1332 Waivers. "State Innovation Waivers that implement high-risk pool/state-operated reinsurance programs may be an opportunity for states to lower premiums for consumers, improve market stability, and increase consumer choice," Price wrote.
Although the expected annual budget and costs associated with ARP were not released Tuesday, CMS has committed federal "pass through funding" to help finance Alaska's reinsurance payments. ARP's deficit-neutral funding mechanism hinges on the program driving down HIX premiums, which in turn would drive down federal subsidies for health plans purchased on the exchange.
"As a result of the waiver approval, more consumers in Alaska may have coverage, consumers will see lower premiums, and the State will receive federal funds to cover a substantial portion of State costs for the ARP," the CMS Fact Sheet says.
ARP is expected to reduce HIX premiums 20% next year, according to the fact sheet. Last year, CMS reported that Alaska residents purchased about 23,000 health plans on the Obamacare exchange, which is administered on the CMS-maintained enrollment platform, HealthCare.gov.
Alaska's 1332 Waiver is effective from Jan. 1, 2018, to Dec. 31, 2022.
For emergency-service patients, Medicare data shows that spending on care in the hospital-inpatient setting is relatively more cost-effective than spending on care in skilled nursing facilities.
For elderly patients who experience emergency medical episodes, hospitals that spend more money on inpatient care relative to post-acute care have lower mortality rates, research published in the Journal of Health Economics shows.
The study, "Uncovering Waste in U.S. Healthcare: Evidence from Ambulance Referral Patterns," examined average 90-day spending on more than 1.5 million Medicare patients over age 65. The research features two key findings:
Average 90-day spending was nearly $27,500 per patient, with every increase in spending of $8,500 resulting in a 2% reduction in mortality risk for the year following an emergency medical episode.
Patients treated at hospitals with relatively high spending on post-acute care, particularly skilled nursing facilities (SNFs), had a 5% increase in mortality risk.
"Patients who go to hospitals that rely more on skilled nursing facilities after discharge, as opposed to getting them healthy enough to return home, are substantially less likely to survive over the following year," Joseph J. Doyle Jr., PhD, a professor at the Massachusetts Institute of Technology and corresponding author the study, told MIT News this week.
The research is one of the best attempts so far to pinpoint wasteful U.S. healthcare spending, Doyle and his coauthors wrote. "Patients assigned to hospitals with high levels of inpatient spending are more likely to survive to one year, while high levels of outpatient spending result in lower survival. In particular, we discovered that downstream spending at skilled nursing facilities is a strong predictor of mortality."
MIT Professor Jonathan Gruber, PhD, and Vanderbilt University Assistant Professor John Graves, PhD, coauthored the study.
The researchers conclude that SNF utilization following treatment at an acute-care hospital should be added to the quality measures that the Centers for Medicare & Medicaid Services (CMS) use to base medical-service reimbursement on the quality of care.
"Our results highlight SNF admissions as a quality measure to complement the commonly used measure of hospital readmissions and suggest that in the search for waste in the U.S. healthcare, post-acute SNF care is a prime candidate," Doyle and his coauthors wrote.
"In a similar spirit to widely used readmission measures, SNF admission is expensive and we find it is a strong predictor of mortality. This suggests that SNF admission, or some combination of SNF and hospital admission, creates a stronger quality measure."
The research also has an intertwined pair of implications for bundled-payment reimbursement contracts involving acute-care hospitals, the researchers wrote:
There is a weak correlation between overall 90-day spending and patient outcomes, which implies bundled-payment contracts have the potential to reduce healthcare spending relative to fee-for-service contracts.
However, Medicare claims data indicates that inpatient spending is cost-effective, so bundled-payment contracts should be crafted in ways that do not penalize high-performing hospitals.
Doyle and his colleagues are among the research pioneers using Medicare ambulance-service claims data to compare spending and other performance measures at hospitals. A study he coauthored in 2015 that used ambulance-service claims data to examine the intensity of emergency-care treatment also found high-cost hospitals generate better patient outcomes.
Linking ambulance-service claims data with Medicare inpatient and outpatient claims data creates a powerful statistical tool, Doyle and the coauthors of this month's Journal of Health Economics study wrote. "Each community provides its own experiment, with ambulance companies delivering patients to hospitals with different treatment patterns. This enables us to compare patients assigned to hospitals with different combinations of treatment intensities."
