A Nashville-based company that crunched numbers to rank hospital care by outcomes, process measures, and patient satisfaction data submitted to the federal government says that providers must get used to the idea of pay for performance, regardless of whether they like it or not.
"Not surprisingly, many in the hospital industry are reluctant to embrace the concept of value in healthcare, though several value-based concepts have already taken hold," according to the new report by Data Advantage.
"In conversations that we have had recently, several healthcare executives have bemoaned the use of Core Measures to determine reimbursement, while others have decried benchmarking," the Data Advantage authors wrote.
"We would suggest that philosophical issues with the concept of [value-based purchasing] VBP and the financial realities of what Congress has proposed are two different things. We enjoy the philosophical debate as much as anyone, but we recommend that philosophy not prevent people from accepting reality."
Data Advantage developed its own formula to rank hospitals across the country, dividing them into the 10 federal regions I through X, and compared their scores two one-year periods, the most recent of which ended in April 2009. The report is scheduled for release tomorrow.
What they found is that the hospitals that had the best average scores for the 2008 data collection—Maine, Vermont, New Hampshire, Rhode Island, Massachusetts, and Connecticut—had the worst average scores in 2009, a drop of 11.04%. Only 23.12% of these New England hospitals averaged in the top quartile.
The hospitals that averaged the best scores in 2009 were those in region VII, which includes Iowa, Minnesota, Nebraska, and Kansas, where 34.34% of hospitals were in the top quartile. The regions ranking second to ninth were III, V, VIII, IV, II, VI, X, and IX.
In fact, hospitals in all but one of 10 regions of the country had lower scores compared with last year, with an average decline of 5% for those hospitals scoring above the 75th percentile. Only Region VII did performed better, improving by 4.65%.
Hal Andrews, Data Advantage CEO, said there are three important reasons for the differences between year one and year two.
First, the company increased the number of hospitals in the study from 1,415 to 2,987. Many smaller hospitals were included for the first time in the second year.
Second, in the second year, patient satisfaction data that hospitals are now required to submit to the federal government was included in the equation.
"During the first year, the hospitals that were doing well on patient satisfaction when it was voluntary were likely to volunteer reporting of that information. The second year, those who didn't report until they had to were included as well."
And third, while in the first year the equation factored 45% quality, 45% affordability and efficiency, and 10% patient satisfaction, in the second year the formula changed, so that quality was given 65%, affordability and efficiency 25%, and patient satisfaction 10%.
Data Advantage developed an algorithm to create a scorecard of value-based purchasing that it defines as its trademark, Hospital Value Index.
The idea of calculating compliance with core measures will become increasingly important as health plans and government payers reward providers for meeting certain benchmarks, and processes of care that are believed to lead to higher quality and better outcomes for patients.
"To date, the only certainty in reform is reduced reimbursement for providers, particularly hospitals," according to the Data Advantage Report. It adds that savings will come from increased efficiencies. "One conclusion of this release of the Hospital Value Index benchmarks is that approximately 9.3% of all hospitals' costs could be eliminated if all U.S. hospitals achieved the HVI benchmarks."
The authors of the study acknowledged that many hospital executives and physicians are skeptical that meeting such requirements can equate with better care. But they added that even those skeptics should realize that the changes are coming.
"The decline is attributable to a series of industry initiatives ranging from increased compliance requirements, to the introduction of greater transparency, and on new measures that are being monitored that will support the implementation of value based purchasing," they wrote.
For example, nearly 3,000 hospitals must now comply with federal requirements for disclosing and actively reporting on sets of quality measures, a number of facilities that has doubled since the 2008 report.
Also the report includes enhanced 30-day mortality rate scores and the introduction of measures that rank hospitals for the number of re-admissions within 30 days.
The data used for scoring came from publicly available government agency-run sources. It included:
Patient safety scores as defined by the Agency for Healthcare Research and Quality, which includes information from approximately 12 million Medicare discharges.
Medicare Hospital Outpatient Prospective Payment System data, which includes 54 million hospital-based outpatient Medicare claims.
Hospital Consumer Assessment of Healthcare Providers and Systems patient experience reports.
Hospital 30-day readmission rates collected by the Centers for Medicare and Medicaid Services.
Post-discharge hospital mortality collected by the CMS Hospital Outcome of Care dataset.
Information based on patient perception provided by Ticker Division of the National Research Corporation.
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Is the recession responsible for the flat job growth in the hospital sector? Or, is something larger at play? Are we seeing a fundamental shift in the way healthcare is being delivered in this country? Is the idea of the single, monolithic brick-and-mortar hospital giving way to a more fluid construct where hospitals play a less-centralized role?
Consider Bureau of Labor Statistic preliminary data for August, which showed that the overall healthcare sector reported 27,900 payroll additions in August, and 180,400 new jobs in the first eight months of 2009. Nearly two-thirds of job growth in the healthcare sector is in ambulatory healthcare services, which reported 18,300 new jobs in August and 119,600 new jobs in the first eight months of 2009.
Hospitals, however, lost 700 jobs in August, and 200 jobs in June. In the first eight months of 2009, the nation's hospitals reported 17,100 payroll additions, compared with 94,100 payroll additions in the first eight months of 2008, and 66,800 additions for the same period in 2007.
David Bachman, a senior healthcare analyst with Longbow Research, says the recession is accelerating a long-term trend away from the hospitals and toward the outpatient setting. "There is some evidence that the tough economic times might be accelerating the shift that we have been seeing over the past several years," he says. "We've been picking up some anecdotal comments in the surveys we've been doing about patients choosing the outpatient setting, where their out-of-pocket costs are lower."
"As the data comes in on the effectiveness of the outpatient or freestanding setting, insurance companies are steering more volume that way, and part of the way they do that is by cost-sharing with patients. It makes sense to move to the lowest cost, most convenient setting that can provide the same quality of care."
Kurt Mosley, vice president of business development for Merritt Hawkins & Associates, the Dallas-based physician recruiters, blames hospitals' slow job growth and other woes on the economy.
"It did go away for a little bit but it will go back to the hospitals," he says.
He believes the Obama administration and healthcare reform will serve hospitals well. For starters, he says, the White House is trying to shutter physician-owned hospitals, which would put hospitals in a strong position to recoup business that had been siphoned off by ambulatory imaging centers and other lucrative specialty service lines.
In addition, most of the $20 billion the federal government is prepared to spend on electronic medical records will be funneled through hospitals. "Hospitals are going to be the center for this whole electronic medical records movement," Mosley says.
"Doctors now are asking hospitals to employ them, and not own them like they did in the 1990s, but help them run their practices. That is where the hospitals are stepping up. They are pulling the doctors back into the fold and they are going to get the money for EMR and things will start to refocus on the hospitals."
Bachman concedes that healthcare reform is the "wildcard" in any debate. While the expansion of health insurance could mean more short-term business for hospital emergency departments, Bachman says most of the new demand will be for primary care services, most of which is more effectively provided outside the hospital.
"There are something like 500 million primary care visits in the U.S. annually. And you can assume that the vast majority of those are coming from the insured population, who can schedule a primary care visit instead of going to the ER," Bachman says. "If we expand coverage for primary care across all the population you could see another 85 million primary care visits. By definition, those are outpatient visits. The sorts of services that come along with that like follow-on or diagnostic or imaging work happen in the outpatient setting. I really think that healthcare reform, first and foremost, accelerates the trend to outpatient setting."
In my opinion, hospitals will remain a central part of healthcare delivery in this country, but not in the way that they have been. Hospitals are already expanding their primary care, walk-in clinics, and urgent care and specialty ambulatory services, either through affiliations or direct ownership.
Hospitals will have to accelerate the move toward retail-friendly care delivery. We no longer live in the 1950s. Most of the United States is on a 24/7 clock, and right now the only place providing that level of access is the emergency department. If you can access a pharmacy at 2 a.m., you should be able to access a physician outside of an ED. Healthcare delivery has to adapt to the demands of the population, even if that means working late and on weekends, as millions of Americans already do.
The healthcare sector will continue to grow jobs as the population grows, and grows older and sicker. One constant will be the need for hospital staff, although their duties, work hours, and even their location within the hospital setting will be subject to constant change as hospitals adapt to the nation's healthcare needs.
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Tim C. Lessing has been appointed CFO at St. Tammany Parish Hospital. Previously, he was the CFO at Community Health System Dukes Memorial Hospital in Peru, IN. He was also the CFO at the Columbus Community Hospital in Columbus, WI, and worked in various finance and accounting positions for the Parkview Health System in Indiana. Lessing also served in the US Air Force-Air National Guard as a medical executive officer where he assisted in the post-Hurricane Katrina rebuilding of a New Orleans clinic.
Kenneth Glass, a psychologist and native Philadelphian with more than 15 years of clinical and administrative experience in community mental health in Philadelphia, New York City, and Boston has been appointed CEO of Friends Hospital, the 200-year-old psychiatric hospital in Northeast Philadelphia. Before joining Friends, Glass was senior vice president of behavioral medicine for North Philadelphia Health System. Before that, Glass was CEO of WES Corp.
Amedisys, Inc., a home health and hospice nursing company, has announced that two executives are leaving the company to pursue other interests. Amedisys has accepted the resignation of Larry R. Graham, as president/COO. Graham's duties will be temporarily assumed by William F. Borne, Amedisys' chairman/CEO. Amedisys also announced the departure of CIO Alice Ann Schwartz, effective Sept. 3.
Miami Children's Hospital has named Yolanda D. Douthard as the hospital's new Director of Pharmaceutical Services. Most recently, Douthard was director of pharmacy at Aventura Hospital and Medical Center in Aventura, FL.
John Howard, MD, has been named the new director of the U.S. Centers for Disease Control and Prevention's National Institute for Occupational Safety and Health, effective immediately. Howard will assume a dual role. In addition to being the director of NIOSH, he will also serve as the World Trade Center Programs coordinator for HHS. Howard, who is currently a consultant at the CDC, served as NIOSH director from 2002 through 2008. He also served as coordinator of HHS' World Trade Center Health Programs from 2006 to 2008.
Peggy A. Sebastian, a nurse with more than 29 years of experience in healthcare administration, has been named president/CEO of St. Joseph's Hospital. She begins on Oct. 5. Sebastian succeeds Dennis Hutchison, who has served as interim administrator of St. Joseph's since December. Sebastian joins St. Joseph's after leading her own healthcare consulting firm. Between 2006 and 2008, Sebastian served as chief patient care officer for Rogers Behavioral Health System, which provides patient care at four locations in Wisconsin. Before that, she served as vice president and the executive in charge of operations at the 275-bed Mercy Hospital in Janesville, WI, from 1999 and 2006.
Roberta Luskin-Hawk, MD, has been named CEO of Saint Joseph Hospital- Resurrection Health Care. She is one of only four female doctors to serve as a hospital CEO in Illinois. She is an expert on the topics of H1N1, AIDS/HIV, and infectious disease.
Why should you go fully electronic when it comes to credentialing? For one, you could see as much as a 50% reduction in costs, says Matthew Haddad, president and CEO of Merversant. [Sponsored by Emdeon]
