The Department of Justice has raised no objections to a proposal by Savannah, GA-based Memorial Health Inc. and St. Joseph's/Candler Health System to form a money-saving joint purchasing agreement for surgical and medical supplies.
Memorial and St. Joseph's/Candler each own acute tertiary care hospitals that serve Southeast Georgia and the low-country area of South Carolina. Memorial owns and operates the Memorial Health University Medical Center. St. Joseph's/Candler owns and operates St. Joseph's Hospital and Candler Hospital. The JPA negotiations began two years ago, and the two health systems requested the DOJ antitrust review.
Executives at the rival nonprofit healthcare systems say this collaborative effort furthers their charitable mission to provide quality and cost efficient healthcare to the community, especially in light of declining governmental reimbursement.
"This shows an unprecedented level of cooperation between St. Joseph's/Candler and Memorial that will benefit patients in our region," says Paul P. Hinchey, president/CEO of St. Josephs'/Candler. "It will allow us to maintain community outreach programs threatened by Medicaid and Medicare cuts that are extremely important to many disenfranchised groups now trying to seek healthcare."
DOJ determined that the proposal meets the so-called "safety zone" provisions in the Antitrust Enforcement Policy in Health Care, which require that the cost of all products purchased through the JPA account for less than 20% of the total revenue of all products and services sold by each participant. It also requires that products purchased through the JPA from a given supplier account for less than 35% of that suppliers' sale of those products in the market.
Healthcare reform has elbowed out a lot of other major healthcare industry news of late, and that's understandable. The next few weeks in Washington could determine—or not—how healthcare is delivered in this nation for decades to come. Trillions of dollars and the welfare of hundreds of millions of people are at stake.
In case you missed it, however, healthcare news was made outside of the Beltway recently with the auspicious announcement that three of the nation's largest nurses unions—California Nurses Association/National Nurses organizing Committee, United American Nurses, and Massachusetts Nurses Association—would merge and form the nation's largest registered nurses union.
The newly named National Nurses United will have 150,000 members and a national organization, after each union holds a separate ratifying convention, and then a founding convention in Scottsdale, AZ, on Dec. 7-8.
The merger had long been in the works, but that did nothing to quell the bald-faced glee of labor advocates salivating over the organizing potential for the new, well-funded, well-organized union. "As staff nurses, our time has finally come," Sandra Falwell, RN, with the District of Columbia Nurses Association, and a UAN director, said when the merger was announced. "Just think about all the management heads that turned grey when they heard what we are doing."
James G. Trivisonno, president of Detroit-based IRI Consultants, says the merger means the unions will end years of acrimonious and self-defeating infighting. "It's a big deal because these organizations were literally stealing members from one another, and now they are working together. Clearly there is plenty to split up. There are millions of organizable workers in healthcare," he says.
Most healthcare systems and hospitals already have enough on their plate structuring employee compensation packages that compete with those of nearby rivals. Trivisonno says a large, well-organized union with a national reach could change that dynamic.
"If they get a favorable contract in one part of the country, staffing ratios or favorable benefits or pay practices, they can hold that up as a model contract," Trivisonno says. And unions are very, very good at recruiting. Trivisonno says the new, larger union will parachute in experienced, smart, professional "nurse flight teams" during local organizing drives to make "nurse-to-nurse connections" with potential new members. They will know the issues at a particular hospital, they will listen to the employees' concerns, and they will explain how a union can resolve those concerns.
"To have someone come in from another part of the country to say how great it is, that is hard to dispel and it allows them to bring in experienced folks that have dealt with whatever they are dealing with in that particular organizing drive," Trivisonno says.
So, what can you do?
Trivisonno says hospitals must understand the concerns of their staffs with respect to patient care, staffing, compensation, and other critical areas that unions are sure to exploit in an organizing campaign. If hospital leaders don't listen to their staff, be assured that union leaders will. "Unions are excellent listeners and they can make promises that they don't have to deliver," he says.
In addition to understanding the concerns of staff, Trivisonno says hospitals must also clearly state why they oppose unionization, and how they believe it would negatively impact hospital operations. Hospitals must ensure that they have open lines of communication for staff, so they feel like their concerns are being heard and addressed. Again, if you don't do it, unions will.
Hospital leaders should also review union literature to find out what promises they're making. "They are a competitor for the hearts and minds of your employees, so look at what they are offering and make sure you are touting the things that your organization is already doing to meet those needs," he says.
Also, be prepared. Trivisonno recommends that hospitals create a readiness manual for organized labor and put it in a three-ring binder next to the manuals for disaster preparedness and Joint Commission surprise visits. "Labor unions will have their positions well thought out. You can't wait for the 6 o'clock news to respond anymore. You might have 20 minutes to control the message before it is all over the place," he says. "Look at your vulnerabilities, where you may be attacked, and have some kind of reasonable explanation for why you are in that position. Have a statement that's been fully vetted for the issues that have been raised."
A disclaimer: Regardless of how you feel about unions—and if you're management you probably don't like them—they can provide frustrated staff with the voice not just to get a more favorable contract, but to improve patient care and hospital operations. Would a union be needed if you were already addressing those legitimate concerns?
Bottom line: I've said it before, and you need to hear it again: If your staff votes to organize, don't blame the unions. Blame yourself. Hospital leaders get the unions they deserve.
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The Joint Commission has announced a new policy for accredited hospitals seeking deemed status. This new policy will align awarding of Joint Commission accreditation with Centers for Medicare & Medicaid Services (CMS) Certification Numbers (CCN). Approximately 300 hospitals will be directly affected by this change.
CCNs, formerly known as "Medicare Provider Numbers," are provided by CMS to hospitals or groups of facilities based on specific factors or characteristics. This number has, in the past, had no effect on whether or not the hospital can be accredited by The Joint Commission. Typically, the CCN does not have an effect on Joint Commission accreditation status. Hospitals covered under the Department of Veteran Affairs are not affected as well.
What does this mean? Hospitals that are part of a system affected by this new policy will now have two survey options:
Individual hospitals in the system will have a survey of shared functions between facilities, and then individual hospital surveys will follow concurrently
Or
Each hospital in the system will have completely independent surveys
Typically, CCNs are shared throughout a hospital system, but in some cases individual hospitals within a system may receive their own CCNs.
The Joint Commission will contact each affected hospital individually on this matter.
Staffing effectiveness update
In other Joint Commission news, a second field review will take place for the revised staffing effectiveness requirements, according to an official statement by The Joint Commission. These requirements, applicable to both hospitals and long-term care facilities, have been refined following feedback during the first field review period.
Just a few short years ago alternative investments such as hedge funds weren't the dirty words they are today. They "were rock stars" between 2004 and 2007, says Ivy Bibler, senior vice president and senior healthcare advisor at Bank of America in Orlando, FL.
But those rock stars turned into county-fair performers in 2008, helping trigger some of the most significant hospital investment losses ever. "Those asset classes have been the most volatile and down the most," says Bibler. Risk took on a whole new meaning in 2008. Hospital investment losses soared as high as 35% over the previous year. Alternative investments were just part of the problem. Over the past several years, as hospitals experienced strong operating margins, they began taking on increasing amounts of investment risk, which also included a higher percentage of equities.
"Over the last five years you have been seeing hospitals get more into equity investments, both international and domestic, and alternative types of investments like private equity funds or hedge funds," says Catherine Jacobson, CPA, senior vice president, CFO, and treasurer at Rush University Medical Center in Chicago. This type of investment strategy did not exist a decade ago, except at a handful of hospitals, she adds.
New day, new strategy
Rush University Medical Center shares a similar story with most hospitals. Its investment portfolio has experienced heavy losses in the past year. Year-to-date through March 31, 2009, investment losses totaled $107.9 million. As of July 2009, the academic medical center experienced 7% in investment income losses year over year.
"Regardless if you had a fixed income, domestic equity, or an international portfolio . . . you were going to get hit no matter what. There was no place to hide," says Jacobson, who is also the national chair for the Healthcare Financial Management Association.
As investment losses have mounted and cash availability decreased, hospitals face significant changes to their operations and investment portfolios. "The first reaction, and we did it here as well, is hospitals went to their capital budgets and started to scale back. They went into cash preservation mode," says Jacobson. At the same time, CFOs, driven both internally and by the board, are taking a hard look at investments to make sure they "absolutely understand the risk and return dynamics of their investment portfolio," says Jacobson, noting that some of the "less sophisticated hospitals" that dipped their toes into equities and alternative investments without performing a risk analysis on the front end, have pulled out of these riskier investments.
Larger systems, however, are mostly staying the course, says Jacobson. "I have heard very few people say they will significantly change their asset allocation because they simply have stepped back, looked at it, assessed their risk, and said, 'Maybe we need some minor tweaking, but we think we are pretty OK,'" says Jacobson.
Market volatility has caused Jacobson and her team to make some changes even though she says the organization has been somewhat conservative in its investments all along. While Rush University Medical Center's fixed income portfolio had intermediate bonds and fixed income, Jacobson says there was still some exposure to international equities and global bonds that were moving around more than the academic medical center could tolerate and were thus liquidated. "We also had some inflation-protected assets that were moving around a little bit. I think long term those investments would have been perfectly fine, but we reached a point that we couldn't tolerate the losses and the volatility anymore and moved them into straight money market funds."
Rush University Medical Center's investment portfolio as of June 2009 was roughly 27% cash, 41% fixed income, 19% domestic equities, 3% international equities, 2% hedge funds and 6% private equities. This excludes its off-balance-sheet pension trust. In September 2008, the medical center had half as much allocated to cash at 13% and close to 24% more in fixed income at nearly 54% allocation. Jacobson says investments have yielded a 3.5% return through May.
Bibler, for her part, says investment strategies are changing. For example, she says, the top 10% of nonprofit hospital performers between 2002 and 2007 had as much as 30% of their portfolios in alternative investments, 50% in equities, and 20% in fixed income. Today, she says, the top 10% percent of performers have reduced their equities by about 10% and increased fixed income investments, but are still maintaining pretty heavy investments in alternative assets. While alternatives tend to be riskier, Bibler notes that they can also include hedge funds made up entirely of fixed income. "So it is a switch from your further-out-there types of investments to more fixed income typically."
As well, says Bibler, hospitals are structuring investments that can convert more quickly into cash. "One of the lessons we have learned over the past 12 months is that cash, readily available cash, is very important and some strategies, particularly your alternative strategies, tied up money for too long. So you are seeing a larger cash component particularly in the smaller hospitals."
Rating agencies zero in
Rating agencies also factor more heavily into investment portfolio strategy today. "There are more questions than ever on our investment portfolio and risk concentration," says Patricia O'Neil, associate vice president of treasury and pension at Rush University Medical Center. "After the Madoff headlines, we had a fair amount of questions relating to the number of investment firms that manage our funds," she adds.
"We are doing an enhanced analysis of liquidity and diving deeper into investment allocations more so than we have in the past," says Lisa Goldstein, senior vice president, team leader, at Moody's Investors Service in New York City. "We want to know that they have done an analysis of what their potential calls are on their liquidity and what their sources of liquidity may be. Then we would look to see if they have done an analysis as to what is their liquidity versus what is their wealth."
New standards for risk
Because investments fell so dramatically in the past year, hospitals are returning to a deeper understanding of the relationship between risk and return. "Who would ever think that you would have had to analyze risk at the third standard deviation of performance level, because that is what we have been through," says Jacobson.
Today, it is important to understand your risk tolerance at that level, and it is important to do an asset liability analysis and review debt structure and investments together. "You can't look at your investments in isolation," Jacobson says. "You have to look at them in the broad context of your entire organization."
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Frank D. Sottile, MD, chief medical officer at 290-bed Crittenton Hospital Medical Center in Rochester, MI, spoke with me recently about Crittenton's journey to an electronic medical record system and the impact of the HITECH Act on the hospital's IT strategy. Crittenton is a standalone community hospital that serves a population of 700,000 people in a highly competitive market
It's one of three remaining independent community hospitals in Southeast Michigan. It began implementing an EMR system in 2001 and went live with the CPOE component in August 2007. Currently, 47% of all of its orders—about 60,000 orders a month—are entered directly by providers, which include physicians, nurse practitioners, and residents, says Sottile, adding that 50% of physicians are using the CPOE system. Here are highlights from our conversation.
HealthLeaders Media: Describe the state of the hospital when you began your journey to an EMR system? Sottile: The hospital brought in a new administration team in late 2000. I joined in March 2001. At that time, the hospital had a small IT department and a legacy system that had been built in-house. We decided that we needed to move to a clinical EMR and refurbish the IT infrastructure of institution. We looked for an enterprise-wide EMR, selected the Cerner Millennium package, and chose to remote host the clinical database in Kansas City, MO.
We struggled for nearly two years with the implementation. Realizing that our small team was not going to get the job done, we made the decision to outsource IT services. In 2003, we chose CareTech Solutions to help us. It was a major shift for us because we went to a totally outsourced IT department including the CIO. CareTech hired all of our employees so we continued to work with people we knew and trusted. After that, we moved swiftly launching one Cerner application after another—laboratory, radiology, ER systems, pharmaceutical systems, nursing documentation.
Today, almost of all of Cerner's applications are implemented and operational in the institution. During the same time, we completely refurbished the IT infrastructure going wireless throughout the institution and deploying 1,200 PCs and developed a PACS system. It took us from an HIMSS level 1 to a HIMSS level 5 on the EMR Adoption Scale.
HLM: How many people were on your IT staff when you outsourced to CareTech? Sottile: We had 13 to14 IT employees when CareTech took over. Now we have 16 to17, but we have gone from 20 applications to 65 to 70 applications. We didn't really add any FTEs until the past couple of years. What CareTech did for me was rotate FTEs in and out for specific expertise. I was overstaffed with mainframe programmers and it provided people who could project manage, so I could leverage those 13 to14 employees very effectively.
HLM: What was your strategy to get physicians on board with CPOE? Sottile: Part of the strategy was to get them used to interfacing daily with systems. We went live with radiology and lab in 2005, so that was a win because it makes finding data much easier for physicians. They had a full two years getting used to the platform. When CPOE went live, we mandated it for use in our ED with a group of doctors that were young and energetic. It was like a proof of concept—if they can do order entry at that pace, anyone can do it.
We then allowed physicians to do use CPOE on a voluntary basis. We had early adopters who couldn’t wait to use it, doctors who used it at other hospitals who were self starters and easy motivators, and a group that was willing to adopt/slow adopters. Our strategy is continual education and making it a little more laborious without the system. We just had medical executive committee endorse the position that by January 2010 each physician has to do at least 60% order entry as a goal. We are driving it from the physician leadership and hope to refrain from mandating it here.
HLM: Recommended "meaningful use" guidelines for EMR systems call for 10% of all orders to be entered electronically by 2011. You had two years to get physicians warmed up to the idea; can other hospitals achieve that more quickly? Sottile: If they haven't started yet, it is a big hill to climb. But, like at Crittenton, their competing hospitals are helping to move the medical staff forward and physicians coming out of school are more prepared, so the whole physician culture is much more ready to accept this now than they were in 2005. But it's still a big hill to climb in two years.
HLM: Have you changed your strategy to meet meaningful use requirements under the HITECH Act? Sottile: We don't think so. We are well ahead of this curve. We set our strategies to support the overall business strategy of the organization. Having said that, we are in the process of reviewing each individual objective and making sure that in my IT strategic plan I have the capabilities built in. We'll do a gap analysis—if our current strategic plan doesn't have it, then we'll figure out how to do it. My position to my partners and board members is we'll achieve 100% of meaningful use and we won't leave anything on the table.
HLM: Do you have concerns about the proposed requirements for 2013 or 2015? Sottile: We are on target, but we have to purchase a few additional applications. The maintenance of the problems list is going to be an operational and cultural issue. That will take a little clinical work with physicians—getting agreement to the maintenance of that list. As you come into healthcare today, it is a complex environment and you are seen by multiple physicians. So who has the right to add or delete problems? That is the issue we need to work through. Can a dietician define you as obese or nutritionally malnourished or does it require a doctor?
HLM: Are you concerned about the certification of your system--whether you have the right version of software? Sottile: I'm more worried about the reporting requirements and how do we document and report that we have achieved meaningful use. Some of the systems are not designed for reporting. You have to extract it out.
HL: Key lessons you've learned along the way? Sottile: It is all more complex and time consuming and costly than you anticipate. It is important to get the board of trustees on board and understanding the road you are going to travel, understanding the measurement of ROI may not always be there, and keeping the medical staff informed and involved to the extent you can. We've had a monthly open meeting for the medical staff for the past five of years. That has served us well. There may not be a lot of physicians coming every month, but they know that there is an open forum for them if they want their voices heard.
The Centers for Medicaid and Medicaid Services has sent a letter to all state Medicaid directors to provide initial guidance on upcoming Medicaid EHR incentive payments. Under the American Recovery and Reinvestment Act, hospitals and physicians that treat a qualifying number of Medicaid patients can apply for incentive payments based on their meaningful use of electronic health records.
The Kansas Health Policy Authority has received a $40.3 million federal grant to buy a new computer system. The funding comes through the Health Resources Services Administration. The computer system will improve management of the state's Medicaid and State Children's Health Insurance programs.
Apple iPhone owners wondering if there is a case of swine flu nearby can now find out instantly with a new program that tracks outbreaks of infectious diseases. "Outbreaks Near Me" is an application for the popular smartphone developed by researchers at Children's Hospital Boston in collaboration with the Media Lab of the Massachusetts Institute of Technology. The application, which was developed with support from Google.org, enables users to track and report outbreaks of infectious diseases such as swine flu in real time.
Three regional health information exchanges have started exchanging real-time data on real patients among themselves. According to the participating organizations, this is the nation's first live, multi-region clinical information exchange. The participants include the Indiana Health Information Exchange in Indianapolis, HealthLINC in Bloomington, IN, and HealthBridge in Cincinnati.
Sen. Edward Kennedy (D-MA), who died last month, was nicknamed the "lion of the Senate" for the way he presided in his position—fighting for many issues, including healthcare and universal healthcare coverage during his 47 years in office.
Will anyone be able to fill his position as he did—working both sides of the aisle to find agreements and hammer out healthcare legislation? It will be a tough assignment. So who is likely to take on the lead position as the advocate for healthcare issues in the Senate?
Here are seven potential candidates:
Sen. Christopher Dodd (D-CT), who took over for Kenneday earlier this year to temporarily head up the Health, Education, Labor and Pensions (HELP) Committee to push the healthcare reform bill through, has expressed interest in moving permanently into the position—giving up his position as chair of the Banking Committee.
Sen. Jay Rockefeller (D-WV), has served many years as chair of the Health Subcommittee of the Senate Finance Committee. While excluded from the group of six that has been developing the healthcare reform proposal, Rockefeller has been instrumental in introducing numerous healthcare proposals during the reform debate, including turning the Medicare Payment Advisory Commission into an executive branch agency.
Sen. Sherrod Brown (D-OH), in his first term in the Senate, has served on the HELP Committee and has been a strong proponent in recent months of the public insurance option in the healthcare reform legislation.
Sen. Sheldon Whitehouse (D-RI), made healthcare reform the subject of the first three pieces of legislation he introduced when he took office in 2007. Prior to his election, he was involved with health-related issues, including helping to found the Rhode Island Quality Institute, a collaborative effort between healthcare providers, insurers, and government.
Sen. Ron Wyden (D-OR), has been involved in healthcare for decades—since he was a director of the Oregon Gray Panthers. He has had an ongoing interest in healthcare reform legislation: In 2006, he proposed the first major bipartisan healthcare reform legislation in more than a decade to provide portable healthcare coverage.
Sen. Charles Schumer (D-NY) has become one of the more visible faces of pushing for healthcare reform this year—including looking at alternatives to getting bipartisan support such as reconciliation.
Sen. Max Baucus (D-MT), as head of the Senate Finance Committee, has been seeking support bipartisan support for healthcare reform legislation with his panel that includes GOP members.
