Bending the cost curve in healthcare requires not only developing new payment models but also using the same data-driven rigor that is applied to healthcare-provider finances to the clinical realm, Yale-New Haven Health cardiologist says.
Finance is the key to fixing what ails the healthcare industry.
"The status quo is increasingly untenable, and it is because of the finances," Harlan Krumholz, MD, director of the Yale-New Haven Hospital Center for Outcomes Research & Evaluation in Connecticut, said Monday at the HFMA-ANI conference in Orlando, FL.
"You can figure out how to make the numbers work," the cardiologist told an audience of well over 100 healthcare-finance executives.
"If the numbers don't work, nothing is going to happen. And with a sixth of the U.S. economy dependent on healthcare, how much perturbation do you think is possible without people getting in the street and saying, 'You are threatening my job. You are disrupting our local economies. You are putting our lives at risk.'"
Sound financial leadership in the healthcare industry is critically important for the national economy, he said. "The economy is intrinsically dependent on the success of the healthcare system. … There cannot be a rapid disruption in healthcare without ripple effects throughout the entire nation."
Ongoing increases in healthcare costs pose a clear and present danger to the national economy, the cardiologist and prolific healthcare researcher said. "The one fact that is undeniable is that the continuing rise in healthcare costs cannot be sustained over the long haul."
Adopting Financial Principles in Clinical Care
Fundamental principles of finance such as accountability and reliance on data for good decision-making must be applied in the clinical setting, Krumholz said.
"What is important is that the finance work does not get sequestered from the intrinsically important work in the healthcare system. For a long time in healthcare, only the finances were heavily quantified to determine whether an organization was making any money, so governing boards disproportionately worked on finances. In many places, finance became sequestered distant from the clinical enterprise. That is not going to work in the future."
As an example, the cardiologist cited research he had conducted on underutilization of beta blockers even after studies had shown the drugs to be very effective in the treatment of heart attacks.
"Every time cardiologists had given beta blockers late, they had missed an opportunity to reduce risk and to improve outcomes, and they were wasting money. … These were all good doctors who were trying to deliver the very best care, with no insight into how these opportunities were being missed. It would be like finance executives trying to do their job without spreadsheets."
To deliver valuable services to their patients, clinicians need to establish the same level of mastery over data and setting best practices as healthcare-provider finance teams have established, he said.
"Measuring performance and setting standards in clinical areas should not be that much harder than measuring performance and setting standards for finances at hospitals and health systems. … Imagine working without spreadsheets and somebody asks, 'How are you doing? How is the balance sheet?' And you say, 'I can't tell you, but we're working our *** off.'"
With more and more patients struggling financially to pay the high out-of-pocket costs associated with high-deductible health plans, clinicians need to consider the financial consequences of care decisions, Krumholz said.
Medicare's reimbursement system for physicians is emerging as a major driver of change in the healthcare industry.
The long journey to establish value-based healthcare business models has taken a giant leap forward this year.
The rollout of the Medicare Access and CHIP Reauthorization Act (MACRA), which is linking an ever-increasing share of physician payments for outpatient care to service-value rather than service-volume, is a game changer, according to the presenters of a workshop Sunday at the HFMA-ANI conference in Orlando, FL.
"The turning tide is largely driven by MACRA. It has changed healthcare significantly in terms of moving the mindset toward more value-based reimbursement," said Max Reiboldt, CPA, president and CEO of Coker Group, a healthcare consultancy based in Alpharetta, GA.
While there is considerable uncertainty over the ultimate fate of the Patient Protection and Affordable Care Act, MACRA is an example of how value-based healthcare appears destined to advance, he said.
"It has been a long, drawn-out process from March 2010, when President Obama signed the Affordable Care Act, to today. But regardless of what happens to the ACA or how the ACA changes, the concepts involved in shifting to value-based reimbursement are not going to change. MACRA illustrates the point. No one is talking about repealing MACRA."
Medicare's physician reimbursement model, which launched with performance reporting this year and is slated for full implementation in 2019, is making the shift from volume to value a real business condition in the healthcare industry, Reiboldt said.
"Everybody is now in a value-based reimbursement setting, and the reason for that is MACRA. We are all subject to MACRA."
MACRA Success Strategy: MIPS versus APMs
There are two physician-reimbursement tracks under MACRA:
In the near-term, most clinicians will be paid through the Merit-based Incentive Payment System (MIPS), which features data reporting in four performance categories that drive payment bonus and penalty mechanisms.
Clinicians participating in MACRA-approved alternative payment models (APMs) such as Medicare's Next Generation ACO can earn 5% payment bonuses.
For most healthcare organizations, MIPS is a more attractive option because it takes a blended approach to physician reimbursement based on both volume and value, said Justin Chamblee, CPA, senior vice president at Coker Group.
"It is still very much a volume-based reimbursement methodology, but it is volume-based with strings attached. It's not just how much you do, but also how well you do what you do."
From the perspective of physician financial success, the key to MIPS is a highly structured approach to balancing volume of services with quality of services, said workshop presenter William Strimel, DO, president of Mercy Physician Network, Mercy Health System in Philadelphia. MHS is an affiliate of Livonia, MI-based Trinity Health. "You need to have a robust system in place to manage quality."
Participating in an APM is potentially more lucrative for physicians. However, operating under APM contracts, which feature both significant upside and downside risk, poses more daunting challenges than MIPS, Chamblee said.
"Under an APM, Medicare is saying they will give physicians an annual 5% uptick in reimbursement for at least a few years. So, clearly there is an incentive to be in an APM, but an APM takes a lot more work. You have to be in the Medicare Shared Savings Program or some sort of innovation model to qualify for APM reimbursement."
Long-term strategy should be a prime consideration for healthcare organizations that are struggling with the decision to embrace MIPS or APMs, Strimel said. "Mercy is looking to get to full risk. So, if we are going to get to full risk, then we need to perform well in an APM. We need to build the infrastructure."
Do you lead a post-acute care facility? A $1,000 honorarium offer to help revolutionize the gathering and dissemination of your patients' medical information could come today.
Implementation of a federal law passed in 2014 to standardize patient-assessment data in post-acute care facilities has reached a key milestone, with national testing of the new data-collection methods set to begin in the fall.
The primary goals of the Improving Medicare Post Acute Care Transformation Act (IMPACT Act) of 2014 include enabling comparisons of quality across different post-acute care settings, boosting the exchange of information across post-acute care settings, and improving care coordination.
The Centers for Medicare & Medicaid Services is implementing the IMPACT Act, with the Rand Corporation serving as the initiative's primary contractor.
On June 20, CMS officials and Rand executives led a conference call update on the initiative for post-acute care providers, featuring information on the "Alpha 1" and "Alpha 2" early rounds of data-collection testing as well as plans to launch a national "Beta" testing effort in November.
The top objective of the IMPACT Act is to create a core set of standardized data at home health agencies, inpatient rehabilitation facilities, long-term care hospitals (LTCHs), and skilled nursing facilities, a Rand executive said during Tuesday's conference call.
Currently, these post-acute care providers each use their own patient-assessment methodology such as the LTCH Continuity Assessment Record and Evaluation (CARE) Data Set.
Based on an information-gathering effort Rand conducted in 2015 and 2016—including literature reviews, expert focus groups and consultations with CMS—Rand targeted five categories of patient-assessment data for standardization:
Function such as self-care ability and mobility levels
Cognitive function such as the presence of depression or dementia
Special services and treatments such as the need for a ventilator or dialysis
Medical conditions and co-morbidities such as diabetes and heart failure
Impairments such as incontinence or difficulty swallowing
The national testing set to start in November, which is designed to examine the reliability and validity of the data elements proposed for standardization, is slated to last six months. Fielding testing of patient assessments using the new standardized methodology will be conducted on computer tablets, with no requirement to enter the patient assessments in a post-acute care facility's electronic health record.
Participation in the national testing is voluntary.
CMS and Rand are seeking 210 organizations to participate in the national testing in 14 metropolitan areas:
Boston, MA
Harrisburg, PA
Philadelphia, PA
Fort Lauderdale, FL
Durham, NC
Chicago, IL
Nashville, TN
Kansas City, MO
St. Louis, MO
Dallas, TX
Houston, TX
Phoenix, AZ
Los Angeles, CA
San Diego, CA
Recruitment for national testing participants has begun through a phone-outreach campaign. This week's update conference call highlighted several incentives for post-acute care providers to participate in the testing:
Training and experience with the patient-assessment data collection methodology that could be mandated under the IMPACT Act
Opportunity to give "on-the-ground input" to CMS
Honorarium of $1,000
Internal and external publicity to show an organization's commitment to quality and innovation
Networking with peer organizations
Rand is expected to submit formal recommendations to CMS by the fall of 2018.
In proposed changes to Medicare's new value-based payment system for physicians, federal officials want to delay mandatory data reporting for another year and lower implementation burdens for small physician practices.
The 2018 proposed rule for Medicare's new payment system for physicians is consistent with the relatively flexible regulatory approach at the Centers for Medicare & Medicaid Services (CMS) under the Trump administration.
Next year's proposed changes to the Quality Payment Program (QPP), which were announced Tuesday afternoon, feature continuation of "pick your pace" for the new payment system's data reporting and expands exemption of physicians from mandatory participation.
The QPP was established under the Medicare Access and CHIP Reauthorization Act (MACRA), which gives physicians two service-reimbursement tracks: the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) such as Medicare accountable care organizations (ACOs).
"The most significant proposed changes for 2018 intend to ease the administrative burden for physicians, especially those who are in small practices and rural settings," Christopher Stanley, MD, MBA, director at Chicago-based healthcare consultancy Navigant, said this morning.
In the 1,052-page proposed rule, he says there are three prime examples of CMS regulatory flexibility, including a financial sweetening of MIPS for physicians in small practices who are struggling to adopt the new payment system:
More physicians will be exempt from MIPS as the threshold for inclusion is increased from 100 patients or $30,000 in Part B payments to 200 patients or $90,000 in payments.
Physicians will be able to participate in MIPS through Virtual Groups—working with other small practices to combine their administrative costs.
Physicians in small practices will receive extra "bonus" points within the Composite Performance Score for MIPS to recognize their value to communities where they practice.
The proposed rule eases reporting requirements significantly, but small and rural practices still face daunting QPP implementation challenges, Stanley says.
"Readiness will still require investment in technology such as healthcare IT, people such as care coordinators and data support, and process such as establishing a Virtual Group. The proposed rule does not give a pass to rural providers—it simply opens the door that they will still need to walk through."
In the proposed rule, there are several other examples of planned changes to QPP designed to give physicians more flexibility in operationalizing the new payment system:
Continuation of the "pick your pace" option for implementation of MIPS data reporting in 2018. There are four MIPS data-reporting categories: quality, improvement activities, advancing care information, and cost.
Continuing to allow the use of 2014-edition Certified Electronic Health Record Technology.
Adding the option for physicians to use facility-based scoring for facility-based clinicians such as hospitalists.
For physicians at small practices, adding a new hardship exemption for the advancing care information data-reporting category.
In a prepared statement Tuesday afternoon, CMS Administrator Seema Verma underscored her agency's commitment to regulatory flexibility during the QPP rollout.
"We've heard the concerns that too many quality programs, technology requirements, and measures get between the doctor and the patient. That's why we're taking a hard look at reducing burdens. By proposing this rule, we aim to improve Medicare by helping doctors and clinicians concentrate on caring for their patients rather than filling out paperwork."
Tom Nickels, executive vice president of the Chicago-based American Hospital Association (AHA) praised the proposed QPP changes in a prepared statement on Tuesday.
"[The] proposed rule continues the incremental, flexible implementation approach called for by hospitals, health systems and the more than 500,000 employed and contracted physicians with whom they partner to deliver care. We are encouraged by CMS's proposal for a facility-based clinician reporting option that may promote better alignment and collaboration on efforts to improve quality among hospitals and clinicians," Nickels said.
More details about the QPP proposed rule are available in a CMS Fact Sheet.
The deadline for submitting public comments on the proposed rule is Aug. 18. The QPP 2018 final rule is expected to be released in the fall.
Although nonprofit and for-profit hospitals are fundamentally similar, there are significant cultural and operational differences, such as strategic approaches to scale and operational discipline.
All hospitals serve patients, employ physicians and nurses, and operate in tightly regulated frameworks for clinical services. For-profit hospitals add a unique element to the mix: generating return for investors.
This additional ingredient gives the organizational culture at for-profits a subtly but significantly different flavor than the atmosphere at their nonprofit counterparts, says Yvette Doran, chief operating officer at Saint Thomas Medical Partners in Nashville, TN.
"When I think of the differences, culture is at the top of my list. The culture at for-profits is business-driven. The culture at nonprofits is service-driven," she says.
Doran says the differences between for-profits and nonprofits reflect cultural nuances rather than cultural divides. "Good hospitals need both. Without the business aspects on one hand, and the service aspects on the other, you can't function well."
There are five primary differences between for-profit and nonprofit hospitals.
1. Tax Status
The most obvious difference between nonprofit and for-profit hospitals is tax status, and it has a major impact financially on hospitals and the communities they serve.
Hospital payment of local and state taxes is a significant benefit for municipal and state governments, says Gary D. Willis, CPA, a former for-profit health system CFO who currently serves as CFO at Amedisys Inc., a home health, hospice, and personal care company in Baton Rouge, LA. The taxes that for-profit hospitals pay support "local schools, development of roads, recruitment of business and industry, and other needed services," he says.
The financial burden of paying taxes influences corporate culture—emphasizing cost consciousness and operational discipline, says Andrew Slusser, senior vice president at Brentwood, TN-based RCCH Healthcare Partners.
"For-profit hospitals generally have to be more cost-efficient because of the financial hurdles they have to clear: sales taxes, property taxes, all the taxes nonprofits don't have to worry about," he says.
"One of the initiatives we've had success with—in both new and existing hospitals—is to conduct an Operations Assessment Team survey. It's in essence a deep dive into all operational costs to see where efficiencies may have been missed before. We often discover we're able to eliminate duplicative costs, stop doing work that's no longer adding value, or in some cases actually do more with less," Slusser says.
2. Operational Discipline
With positive financial performance among the primary goals of shareholders and the top executive leadership, operational discipline is one of the distinguishing characteristics of for-profit hospitals, says Neville Zar, senior vice president of revenue operations at Boston-based Steward Health Care System, a for-profit that includes 3,500 physicians and 18 hospital campuses in four states.
"At Steward, we believe we've done a good job establishing operational discipline. It means accountability. It means predictability. It means responsibility. It's like hygiene. You wake up, brush your teeth, and this is part of what you do every day."
A revenue-cycle dashboard report is circulated at Steward every Monday morning at 7 a.m., including point-of-service cash collections, patient coverage eligibility for government programs such as Medicaid, and productivity metrics, he says. "There's predictability with that."
A high level of accountability fuels operational discipline at Steward and other for-profits, Zar says.
There is no ignoring the financial numbers at Steward, which installed wide-screen TVs in most business offices four years ago to post financial performance information in real-time. "There are updates every 15 minutes. You can't hide in your cube," he says. "There was a 15% to 20% improvement in efficiency after those TVs went up."
3. Financial Pressure
Accountability for financial performance flows from the top of for-profit health systems and hospitals, says Dick Escue, senior vice president and chief information officer at the Hawaii Medical Service Association in Honolulu.
Escue worked for many years at a rehabilitation services organization that for-profit Kindred Healthcare of Louisville, Kentucky, acquired in 2011. "We were a publicly traded company. At a high level, quarterly, our CEO and CFO were going to New York to report to analysts. You never want to go there and disappoint. … You're not going to keep your job as the CEO or CFO of a publicly traded company if you produce results that disappoint."
Finance team members at for-profits must be willing to push themselves to meet performance goals, Zar says.
"Steward is a very driven organization. It's not 9-to-5 hours. Everybody in healthcare works hard, but we work really hard. We're driven by each quarter, by each month. People will work the weekend at the end of the month or the end of the quarter to put in the extra hours to make sure we meet our targets. There's a lot of focus on the financial results, from the senior executives to the worker bees. We're not ashamed of it."
"Cash blitzes" are one method Steward's revenue cycle team uses to boost revenue when financial performance slips, he says. Based on information gathered during team meetings at the hospital level, the revenue cycle staff focuses a cash blitz on efforts that have a high likelihood of generating cash collections, including tackling high-balance accounts and addressing payment delays linked to claims processing such as clinical documentation queries from payers.
For-profit hospitals routinely utilize monetary incentives in the compensation packages of the C-Suite leadership, says Brian B. Sanderson, managing principal of healthcare services at Oak Brook, IL–based Crowe Horwath LLP.
"The compensation structures in the for-profits tend to be much more incentive-based than compensation at not-for-profits," he says. "Senior executive compensation is tied to similar elements as found in other for-profit environments, including stock price and margin on operations."
In contrast to offering generous incentives that reward robust financial performance, for-profits do not hesitate to cut costs in lean times, Escue says.
"The rigor around spending, whether it's capital spending, operating spending, or payroll, is more intense at for-profits. The things that got cut when I worked in the back office of a for-profit were overhead. There was constant pressure to reduce overhead," he says. "Contractors and consultants are let go, at least temporarily. Hiring is frozen, with budgeted openings going unfilled. Any other budgeted, but not committed, spending is frozen."
4. Scale
The for-profit hospital sector is highly concentrated.
There are 4,862 community hospitals in the country, according to the American Hospital Association. Nongovernmental not-for-profit hospitals account for the largest number of facilities at 2,845. There are 1,034 for-profit hospitals, and 983 state and local government hospitals.
In 2016, the country's for-profit hospital trade association, the Washington, DC–based Federation of American Hospitals, represented a dozen health systems that owned about 635 hospitals. Four of the FAH health systems accounted for about 520 hospitals: Franklin, TN-based Community Hospital Systems (CHS); Nashville-based Hospital Corporation of America; Brentwood, TN–based LifePoint Health; and Dallas-based Tenet Healthcare Corporation.
Scale generates several operational benefits at for-profit hospitals.
"Scale is critically important," says Julie Soekoro, CFO at Grandview Medical Center, a CHS-owned, 372-bed hospital in Birmingham, Alabama. "What we benefit from at Grandview is access to resources and expertise. I really don't use consultants at Grandview because we have corporate expertise for challenges like ICD-10 coding. That is a tremendous benefit."
Grandview also benefits from the best practices that have been shared and standardized across the 146 CHS hospitals. "Best practices can have a direct impact on value," Soekoro says. "The infrastructure is there. For-profits are well-positioned for the consolidated healthcare market of the future… You can add a lot of individual hospitals without having to add expertise at the corporate office."
The High Reliability and Safety program at CHS is an example of how standardizing best practices across the health system's hospitals has generated significant performance gains, she says.
"A few years ago, CHS embarked on a journey to institute a culture of high reliability at the hospitals. The hospitals and affiliated organizations have worked to establish safety as a 'core value.' At Grandview, we have hard-wired a number of initiatives, including daily safety huddles and multiple evidence-based, best-practice error prevention methods."
Scale also plays a crucial role in one of the most significant advantages of for-profit hospitals relative to their nonprofit counterparts: access to capital.
Ready access to capital gives for-profits the ability to move faster than their nonprofit counterparts, Sanderson says. "They're finding that their access to capital is a linchpin for them. … When a for-profit has better access to capital, it can make decisions rapidly and make investments rapidly. Many not-for-profits don't have that luxury."
5. Competitive Edge
There are valuable lessons for nonprofits to draw from the for-profit business model as the healthcare industry shifts from volume to value.
When healthcare providers negotiate managed care contracts, for-profits have a bargaining advantage over nonprofits, Doran says. "In managed care contracts, for profits look for leverage and nonprofits look for partnership opportunities. The appetite for aggressive negotiations is much more palatable among for-profits."
A former president of the National Association of Insurance Commissioners, who is also a former member of Congress, describes the potential fate of the bill intended to repeal Obamacare.
In Congress, sometimes a crushing legislative defeat is the clearest path to political victory.
The American Health Care Act, the Republican Party's best hope to repeal Obamacare this year, has 50/50 odds of passage in Congress and GOP lawmakers could soon be hoping their big bet goes bust, says Earl Pomeroy.
From 1993 to 2011, Pomeroy, a Democrat, represented his state in the US House of Representatives and served on the Ways and Means committee. Now, he is working in Washington as senior counsel at Atlanta-based law firm Alston & Bird LLP.
Pomeroy served as state insurance commissioner in North Dakota from 1985 to 1992. And from 1990 to 1991, he was president of the National Association of Insurance Commissioners.
In the first half of his interview with HealthLeaders, Pomeroy gave his views on the fate of the Patient Protection and Affordable Care Act. In this installment, he talks about the AHCA's prospects for passage. The transcript below has been lightly edited.
HLM: What is your prediction on passage of the AHCA?
Pomeroy: I expect the Senate will barely pass a bill, then present it to the House on a take-it-or-leave-it basis, which they will take. I give equal odds to the notion that the Senate will come up just short and can't get the votes for the AHCA, then they leave healthcare and go on to other issues.
HLM: What happens if the AHCA fails to gain passage?
Pomeroy: Failure to pass the AHCA will allow Republicans to use the Affordable Care Act for the same kind of politics they have used over the past four election cycles.
They will say, "The law is a mess, and we need more Republicans so we can get it repealed. We almost got it repealed and now we need more Republicans to get it repealed."
Voters would not be looking at the prospect of millions of people losing coverage, which is what would happen if the AHCA passed according to the CBO.
So, this is a rare case where the majority party may fair better if it fails to pass major legislation and takes the issue into the next election, than if they actually pass a bill and the consequences start to hit home.
HLM: What are the key developments to watch as the Senate tackles the AHCA?
Pomeroy: The first factor to look at is whether Senate Majority Leader Mitch McConnell is intent on passing a bill. He is intent on passing a bill—and doing it in June.
He is a very powerful leader, and he is making a sincere effort to repeal the ACA and advance the AHCA. What the majority leader sets out to do has to be taken extremely seriously.
The second question is that there are people on the far right side of the Republican caucus who don't like the bill and there are some moderates who have problems with it, so how does McConnell get to 50 votes, with Vice President Pence providing the 51st vote?
The closer the bill comes to enactment, the easier it is to settle important differences. In the end, senators are looking at whether they want a bill or don't want a bill. When you have a path to enactment right before you, it gets easier to cut the final deal.
Thirdly, can McConnell pass a bill with opposition from the right? It appears the only intransigent senator on the right is Rand Paul (R-TN).
Finally, there are the moderates. In the House, we saw the moderate Republican members folded in the end, and allowed the bill to move. It remains to be seen whether the Senate will go the same way.
In the days ahead, listen very closely to the voices in the moderate side of the caucus and the extreme right, and see whether they are saying, "My way or no way!"
At the moment, it seems most senators are satisfied to engage in bargaining to get to "yes" on the bill.
HLM: Assuming McConnell finds 50 votes for the AHCA, can the House and Senate agree on the same version of the bill?
Pomeroy: When I was a House member, the Senate always had leverage over the House in these major bills. It is entirely possible the Senate will cobble together a deal that will get just enough votes to pass. They will submit that deal to the House on a take-it-or-leave-it basis.
McConnell will tell Speaker Ryan, "This is the best that I can do, if you reject it, you are not going to get another proposal." Under those circumstances, the House usually goes along.
At Bellin Health, offering employees vaccinations, preventive-medicine screenings, and free services for some health conditions has made a significant reduction in the number of claims.
Bellin Health Systems has transformed an internal workforce challenge into a thriving direct-to-employer service business model.
"We think more health systems should get in this business," says Randy Van Straten, vice president of business health at the Green Bay, WI-based health system, which features an acute-care hospital, a critical access hospital and more than two dozen primary care clinics.
In the early 2000s, a harsh reality turned into a dream opportunity for Bellin, Van Straten says. The health system was facing a 30% increase in the premium cost for employee health insurance coverage. "What we found out was that we really didn’t know our employees," he says.
Bellin examined the health of its workforce and launched an aggressive effort to improve the medical status of its employees.
The health system, which employs 3,600 people, saved about $23 million in employee-healthcare costs through 2015, he says. The number of employees at risk for one or more serious medical conditions dropped from 14.2% to 6.6%. From 2014 to 2015, Bellin was able to decrease its per-employee healthcare costs 1%.
Bellin now provides a range of on-site services to more than 100 companies. In addition to building on the experience of boosting healthcare services for its employees, there are several essential ingredients in Bellin's recipe for direct-to-employer services success:
On-site clinics at large-employer facilities such as the home of the National Football League's Green Bay Packers, Lambeau Field. The Packers, who offer access to their clinic for all of the team's workers, have a seat on Bellin's board.
In addition to on-site health clinics, Bellin offers employers a range of on-site occupational health services such as vaccinations, a turn-key corporate health and wellness program, and fitness centers.
At-risk strategic partnerships feature health clinics based on pay-for-performance and shared savings models. Bellin has about two dozen strategic partners and annual revenue growth from strategic partnerships is exceeding the health system’s 10% goal, posting gains from 12% to 18% in recent years.
Bellin's strategy for offering on-site health services is grounded on generating results for employers and using that track record to attract new clients, Van Straten says. "You don’t want to grow your business on the backs of employers."
An effective cost-containment strategy for Bellin's workforce has been offering free services such as preventive care for a half-dozen conditions, including diabetes, tobacco addiction, and cardiovascular disease. Offering free services for these conditions has made significant reductions in the number of claims for care more than $50,000.
Bellin is devoting marketing resources to the service line. Last year, five account executives and three sales executives helped generate and maintain large-employer clients for on-site health services. Account executives were deployed based on business-mix segments of the local market, and sales executives were deployed based on regions and types of on-site services.
Primary care growth is a key metric to gauge the financial performance of direct-to-employer health services. In recent years, Bellin has boosted its primary care patient population at annual rates of more than 10%.
Joanne M. Conroy, MD, currently CEO of Lahey Hospital and Medical Center in Massachusetts, has been selected to lead the New Hampshire health system.
One of the most prestigious academic medical centers and health systems in the country has a new leader.
Joanne M. Conroy, MD, has been picked as the second CEO and president of Dartmouth-Hitchcock and Dartmouth-Hitchcock Health, the organization's Board of Trustees announced today. Conroy, who earned a chemistry bachelor's degree from Dartmouth College in 1977, received a unanimous vote of the board on June 14.
Dartmouth-Hitchcock features Dartmouth-Hitchcock Medical Center, a 396-bed facility located in Lebanon, NH. The health system also has a cancer center, children's hospital, and four affiliated acute-care hospitals. For the fiscal year ending June 2016, Dartmouth-Hitchcock posted total operating revenue at $1.8 billion.
Conroy, 61, is stepping down as CEO of Lahey Hospital and Medical Center in Burlington, MA. The 343-bed hospital is the flagship facility for Lahey Health System.
"Coming back to New Hampshire is like a homecoming for me," Conroy said in a prepared statement that Dartmouth-Hitchcock released today. "It will be wonderful to be back in a place I love, but more wonderful still to have the privilege of serving an organization I've long admired as a leader in patient-centered care and the evolution of care delivery."
Conroy is succeeding James Weinstein, DO. Under his leadership, Dartmouth-Hitchcock has played an active role in value-based healthcare initiatives, including participation in Medicare accountable care organization models such as Pioneer ACO. The health system's medical-education partner, Dartmouth College, features not only a premier medical school but also The Dartmouth Institute for Health Policy and Clinical Practice, which developed the Dartmouth Atlas.
Weinstein is stepping down as Dartmouth-Hitchcock CEO and president on June 30. Conroy's selection as CEO and president is the second major C-Suite move at Dartmouth-Hitchcock in less than a year. In July 2016, Daniel Jantzen was shifted to CFO from the role of executive vice president of operations and chief operating officer.
In addition to her Dartmouth College chemistry degree, Conroy earned her medical degree from the Medical University of South Carolina (MUSC) in Charleston, SC. She has multiple certifications and has served in several professional roles:
Board certified with the American Board of Anesthesiologists
Certificate of added qualifications in pain management
Diplomate in the American Academy of Pain Management
Worked more than five years as chief health care officer for the Association of American Medical Colleges in Washington, D.C.
Served in multiple senior executive roles at Florham Park, NJ-based Atlantic Health System, including chief medical officer
Held several academic and executive positions at MUSC, including president of the medical staff and executive medical director
Conroy is set to start her new job at Dartmouth-Hitchcock on Aug. 7. From July 1 to Aug. 6, Chief Clinical Officer Edward Merrens, MD, and Chief Administrative Officer Stephen LeBlanc will serve in co-interim CEO and president roles.
In the employer-sponsored insurance market, swings between single-digit and double-digit growth in the annual cost to treat patients appear to be over, a new 2018 medical cost trend report says.
Single-digit growth is the "new normal" for healthcare cost in the employer-sponsored insurance (ESI) market, according to a PricewaterhouseCoopers report published today.
For 2018, PwC projects the total annual cost growth to treat patients in the ESI market at 6.5%. When accounting for the impact of expected benefit-design changes next year such as higher co-pays, net annual cost growth is forecast at 5.5%.
"The era of volatile swings and double-digit growth in employer medical costs appears to be ending. With medical cost trend hovering in the single digits for several years, the industry has been waiting for the inflection point when spending will take off. But that spike appears unlikely to happen," says the report, "Medical Cost Trend: Behind the Numbers 2018."
Despite the healthcare industry's apparent achievement of establishing a single-digit cost trend over the long-term, more cost reduction is economically essential for the country, the report warns.
"Even with medical cost trend between 6% and 7%, health spending continues to outpace the economy. From 2011 to 2016, the average health premium for family coverage purchased through an employer rose 20%. In the same period, wages increased just 11%. This gap erodes consumers' ability to pay for other goods and services. … Nationally, as medical costs are projected to continue to grow faster than gross domestic product (GDP), healthcare will continue to take up a greater share of the economy."
With consumerism and other factors limiting healthcare-service utilization, one of the PwC report's primary prescriptions for large employers to contain healthcare costs is to press providers on service pricing.
"For medical cost trend to sink lower than its 'new normal,' health organizations and businesses will have to consider tackling the price of services as well as the rate of utilization. Heading into 2018, employers should look to new contract arrangements with providers to tackle healthcare prices without shifting more costs to employees."
2018 Medical Cost Trend Drivers
In 2018, PwC expects three factors to put upward pressure on healthcare spending:
Economy-wide inflation: The ongoing recovery from The Great Recession will likely boost general inflation rates, which would drive up prices of medical wages and services
High-deductible health plan ceiling: Growth of high-deductible coverage is slowing in the ESI market, weakening a well-used tool to contain service utilization
Generic drugs: Relatively few branded drugs are losing patent protection in 2018, which will limit opportunities for healthcare providers to contain costs through purchasing generic drugs
After a rollercoaster ride over the past 30 years, the rate of healthcare spending appears to be entering a period of relative stability, the PwC report says.
"Cost trend has risen and fallen in cycles, peaking after several years of double-digit increases, falling for several years, hitting a trough and then rebounding back to double digits. These cycles have tended to span about 10 years. … The latest downward trend to single-digit annual growth began even before the lower economic growth surrounding the 2009 recession and subsequent recovery. With medical cost growth hanging in the single digits for over a decade now, many employers have been expecting an inflection point when costs will once again grow at double digits. However, that spike doesn't appear to be coming."
Single-digit annual cost growth in healthcare is being maintained despite significant inflationary pressure from the broader economy, the report says. "Even as the economy now picks up steam, growth in cost trend has remained at historic lows."
In 2018, the report says hospital expenditures will account for the largest share of medical costs in the ESI market:
A former US representative and ex-president of the National Association of Insurance Commissioners expects financial turmoil in the healthcare industry as Obamacare repeal-and-replace legislation lurches through Congress.
The intersection of healthcare finance and politics features an assortment of twists and turns. Earl Pomeroy knows the terrain as well as the back of his hand.
Pomeroy served as state insurance commissioner in North Dakota from 1985 to 1992. From 1990 to 1991, he was president of the National Association of Insurance Commissioners.
From 1993 to 2011, the Democrat represented his state in the US House of Representatives and served on the Ways and Means committee. Now, he is working in Washington as senior counsel at Atlanta-based law firm Alston & Bird LLP.
Last week, HealthLeaders quizzed Pomeroy on efforts in Washington to repeal and replace the Patient Protection and Affordable Care Act, including his forecast for the financial impacts on healthcare providers and payers.
The transcript below has been lightly edited.
HLM:Before the ACA, there was no functioning individual insurance market. The individual market created through the ACA-spawned exchanges is losing carriers and teetering perilously. Gauge the fate of the individual market.
Pomeroy: The individual insurance market has long been troubled. [When] I was North Dakota insurance commissioner, we had nothing but trouble in that area.
One company, Blue Cross Blue Shield, essentially made the individual market available. So, pre-ACA, there were an awful lot of jurisdictions that did not have competitive markets.
The exchanges have had a variety of problems, and there were missteps by the Obama administration in the implementation of the Affordable Care Act that compounded some of the difficulties for insurers trying to operate on the exchanges.
However, the Trump administration has not taken the steps to signal to insurers whether the administration is committed to maintaining viable exchanges until they get a new law in place.
There is a very uncertain outlook for insurance exchanges because insurance companies don't know what the rules are going to be or what the reimbursements are likely to be. So, they are very reluctant to participate.
HLM:If there is a HIX meltdown before ACA replacement legislation is in place, what would be the primary financial impact on healthcare providers?
Pomeroy: For the healthcare delivery system—ranging from the hospitals to the doctors to the ambulance drivers—there is a substantial financial consequence for those providing healthcare when patients move from having insurance to not having insurance.
As the number of uninsured balloons, operating margins slide into the negative.
HLM: Medicaid Expansion under the ACA is under assault on several fronts, including President Trump's proposed budget, the House version of the American Health Care Act, and regulatory shifting at the Centers for Medicare & Medicaid Services. How would a Medicaid rollback financially impact healthcare providers?
Pomeroy: Hospitals have told me it's the nightmare scenario. They lose the newly covered lives, and they don't gain back some of the cuts they took in the ACA anticipating they were not going to have to deal with a large uninsured population.
The deal with the ACA was that some of your inflation adjustments going forward would be reduced, but you would have many more insured patients and your number of uninsured patients would drop significantly.
Now, they want to take the coverage away and leave the cuts in place. This would force the closure of at least hundreds of very low-margin nonprofit providers.
I used to represent North Dakota in Congress, and I know this will fall particularly hard on rural providers. It will drive a lot of rural hospitals out of business.
HLM:How would a Medicaid rollback affect commercial payers? For example, Arkansas Blue Cross Blue Shield could lose a quarter million beneficiaries who gained relatively generous Medicaid coverage through Arkansas' private-option expansion of the program.
Pomeroy: It would hurt two ways.
First, you lose some of the margin. In running an insurance company, some of the margin comes from the administrative functions they perform. They pay claims and make some margin for the administrative work that they do.
Losing lives means they are losing business.
Secondly, because the bad debt in hospitals would go up from treating uninsured patients, part of that cost would be shifted to patients who are insured.
So, suddenly health insurers are going to be paying higher medical bills. When insurance companies have to pay more, they have to get rate increases, so this would not be an isolated problem for those losing coverage.
This would be a problem for those with coverage, even at their place of employment, because the rates would go up.
