Blue Cross Blue Shield companies posted an aggregate 40.9% year-over-year decline in income in 2008 because of realized losses, and declines in underwriting and investment income, a new analysis by the credit rating firm A.M. Best Co. shows.
Best's analysis of Blue Cross Blue Shield plans found:
A 6.6% increase in net premiums written (NPW) was reported. The 2008 NPW growth rate was slightly higher than that of 2007, 5.9%, but lower than 2006's 9.1% rise.
The healthcare expense ratio improved 20 basis points to 85.9%.
A 10.3% decline in capital and surplus—to $41.6 billion—was reported, bringing that key measure back down to a level not seen since 2005.
There was a 30 basis points decline in the sales, general and administrative expense ratio in 2008, after remaining flat in 2007.
Underwriting earnings declined for the third year in a row, although the 5.5% decrease in 2008 was much less than the 24.6% and 8.5% declines in 2007 and 2006, respectively.
Given the 2008 financial market turmoil combined with the low interest rate environment, investment income declined by 19%.
An unrealized loss of $3.1 billion was reported for 2008, compared with gains of $285.5 million in 2007 and $1.9 billion in 2006.
In an effort to make parents more aware of the medical errors their children are in danger of while in the hospital, The Joint Commission launched an education campaign as part of its existing Speak Up program last week.
The original Speak Up program encourages all patients to become involved in their care and make their voices heard to prevent potential medical errors. This new version, called "Speak Up to Prevent Errors in Your Child's Care," is aimed at parents and encourages them to ask the right questions to prevent a potential error from occurring while their child is at a healthcare facility.
"Through the Speak Up™ program, The Joint Commission is helping parents by giving them the tools they need to ask the right questions and take action before, during and after their child's care," said Marc Chassin, MD, MPP, MPH, president of The Joint Commission, in a press release.
According to a 2008 study from the National Initiative for Children's Health Care Quality, 1 in 15 children is harmed by a medical error. The Joint Commission is encouraging parents to take action before, during, and even after their child has been cared for to help reduce this number.
The new campaign gives parents some advice about what to watch out for during their children's next doctors' appointments or trips to the hospital. This includes:
Knowing their children's medical history, including vaccinations and any health problems
Being aware of any medications their child is taking
Making the doctor aware that they don't understand a specific treatment or care prescribed, if parents have questions
Reminding caregivers to wash their hands, and being vigilant about doing so
Further specific advice is given for situations in which a child might be undergoing an operation, having lab tests done, or visiting the hospital.
The Speak Up campaign was originally introduced in March 2002 as a joint initiative between The Joint Commission and The Centers for Medicare & Medicaid Services. The program was one of the first public campaigns to encourage patients to become actively involved in their care by "speaking up" when they thought something might not be right with their treatments. It also suggested patients become more educated about their conditions to prevent potential errors from occurring.
Healthcare is not known for being an environmentally friendly industry. It produces a lot of waste, from scalpels and infectious materials to outdated lab equipment and computers. But hospitals are beginning to challenge that perception. And the hospital of the future—whether it's built from the ground up or retrofitted—will be green. Not just because it's good for the environment (that's actually an added bonus), but because it saves money in the long term and makes the most design sense.
I'm not simply referring to using renewable flooring materials, buying food locally, or recycling old computers. That is part of it, but innovative organizations are also looking for ways to reduce IT's carbon footprint, and in the case of LaCrosse, WI-based Gundersen Lutheran Health System, be 100% energy independent. Gundersen plans to be totally powered by renewable energy by Jan. 1, 2014, says CEO Jeff Thompson, MD, referring to the whole system, which is comprised of 42 facilities in 19 counties in three states.
"Our energy spend is a little over $5 million and by spending a little more than $2 million, we will drop our energy spend by 20%," says Thompson, who is a "Design" panelist at the HealthLeaders 09: Hospital of the Future Now conference in October. "We'll get $1 million back, which is a two-year return on that investment."
Gundersen began its movement toward energy independence with a conservation program. The health system performed an energy audit and found immediate savings by refitting equipment, changing speeds of fans, and reevaluating the setup of pumps and air handlers. It is figuring out that for the past 10 years the exhaust fans have been running constantly, but if you turn a switch slightly to a variable speed it can save you $10,000 annually, explains Thompson.
Here's a quick glance at the mix of technology, Gundersen is using on its path towards energy independence.
Electrical power. Gundersen has partnered with City Brewery in LaCrosse to tap the methane created in the brewer's wastewater treatment process, clean the gas, and sell it to a local utility.
Solar power. The health system placed solar panels on its parking garages, which, Thompson does acknowledge, can have a long return on investment—especially in the Midwest versus sunny California.
Wind power. The health system has partnered with Organic Valley, a large consortium of organic farms located about 40 miles away, on a wind project. "Our technical college wants wind turbines to train their students on, so we are all putting in something on that," says Thompson.
Hydro power. "We have locks and dams up and down the [Mississippi] river, but they have an excess lock at each dam site that has never been used for anything," says Thompson. There is a technology that can be placed in the gate of that unused lock, which appears will yield the "best payback of all of the renewables in a rather short time," he says.
Now, Gundersen is being approached by landfill sites and a printing company for other "green" opportunities.
To learn more about Gundersen's energy independence initiatives, join us at the HealthLeaders 09: Hospital of the Future Now conference (Oct. 15-16, Palmer House, Chicago), which gathers a carefully selected faculty of 30 healthcare pioneers to share strategies for creating your next-generation hospital in five key leadership areas: Talent, Outcomes, Patient Experience, Design, and Culture.
Interactive format built for peer exchange.
Small group discussions
Pre- and post-event online idea exchange community.
Learning focus on action points to take back to your healthcare organization.
Note: You can sign up to receiveHealthLeaders Media IT, a free weekly e-newsletter that features news, commentary and trends about healthcare technology.
Come for the gorgeous beaches, sunshine, and nightlife—and stay for world class healthcare.
That could be the slogan as Miami tries to establish itself as an international destination for foreign patients. The city is attempting to do so via a collaborative effort that includes the work of the Greater Miami Convention and Visitors Bureau, The Greater Miami Chamber of Commerce, and six (to date) large healthcare providers serving the city.
The collaborative features a Web site called MiamiHealthCare.org that touts the city's "renowned medical services in a tropical, cosmopolitan paradise." The site features links to each of the participating providers' Web sites—which tout how they cater to international patients using attractions, such as concierge services—to help consumers find the best fit as well.
Its slogan is "Miami—A place of complete physical, mental, and social well-being." Participating providers include Baptist Health, Florida International University College of Medicine, Jackson Health, Mercy Hospital, Miami Children's Hospital, and the University of Miami Health System.
"We're going to be the world's number one international getaway for healthcare," Rolando D. Rodriguez of the Greater Miami Chamber of Commerce told the Miami Herald when announcing the initiative.
Although the initiative has several providers working to market the region's healthcare services, they will remain in fierce competition for patients. The effort is different from an effort in the 1990s called Salud Miami, which was designed to lure Latin American medical travelers. Under that program, eight hospitals contributed an annual fee and the program's directors worked to filter potential patients to the participating hospitals. However, the program failed because the hospitals struggled to share patients with nearby facilities that they competed with for business for so long.
Because of the way it is structured, proponents of MiamiHealthCare.org say it has the potential to improve quality of care for both domestic and international patients:
The hospitals involved remain in competition for patients, but the Web site and initiative is another way for them to market their facilities
Marketing in this fashion may force the facilities to improve care, and possibly even price competitively, to keep up with the other providers that have joined the effort.
Attracting medical tourists to the city has the potential to help other businesses as well. Southern Florida hotels have seen a huge dip in business due to the recession, and medical tourists could help this industry, as well as other businesses that draw customers from tourism.
And the MiamiHealthCare.org collaborative is only one way the city is expanding its marketing to potential international patients: Last month, the Bank of Bahamas announced a new Visa card that allows Bahamians discounts of between 30%-60% at seven South Florida hospitals.
Perhaps the unique collaboration between the Miami area providers can serve as an example that competitors can work together to increase business, but at the same time maintain their independence. During the recent economic downturn, there have been several instances of healthcare providers collaborating via joint ventures and business strategies to increase patient base and revenue. It's always beneficial, especially during the current economic climate, for providers to do whatever they can to increase its patient base.
With this project, Miami-area healthcare providers are doing so by putting their names alongside their competitors. It will be interesting to see if it will inspire the organizations to improve their quality and marketing efforts so they can stand out even more while competing for business.
Note: You can sign up to receiveHealthLeaders Media Global, a free weekly e-newsletter that provides strategic information on the business of healthcare management from around the globe.
Many hospitals haven't adopted computerized provider order entry systems and other technologies designed to prevent medication errors, due in part to their high costs. A recent survey suggests that only 17% of U.S. hospitals use CPOE, and other surveys have found even fewer hospitals use bar coding.
Digital games are one of the latest tools being used to improve health outcomes, according to Carleen Hawn, co-founder and editor of Healthspottr.com. Virtual realities, computer simulations, and online play are among the games gaining traction, Hawn says, adding that health-related digital games have an "immense" potential for growth in the digital game market. According to PriceWaterhouseCoopers, the worldwide market for game hardware and software generated $42 billion in revenues in 2007 and will grow to an estimated $68 billion by 2012. Currently, digital health games generate an estimated $6.6 billion.
During a webcast on health reform, David Blumenthal, national coordinator for health IT, said that health information technology can improve healthcare quality and lower costs by preventing adverse drug interactions and eliminating duplicative tests. HHS Secretary Kathleen Sebelius added that telemedicine services provide people in rural areas with remote access to physicians and medical experts.
Terry Wagner, chief information officer, and Mark Zeman, associate administrator of integrated materials & technical support at SUNY Upstate Medical University in Syracuse, NY, discuss how a wireless asset tracking system has improved on-time start rates and patient throughput in their operating rooms.
Uncle Sam is poised to spend $1.1 billion in stimulus funds to compare the effectiveness of 100 treatment categories in coming years, so providers, taxpayers, and insurance premium payers will stop wasting money on worthless care.
But many experts say there's already enough evidence to start changing clinical practice to cut waste, improve outcomes, and save as much as 30% of what is being spent today.
There are 12 possible ways that health reform could look to improve care while saving costs:
1. If health reform creates a public plan, the federal government will have to make decisions on whether to spend money on procedures like vertebralplasty. Researchers point out this is not to ration care, but to approve spending to target only that which has been shown to make people better, and live longer, more enjoyable lives.
Both groups of patients reported the same improvements in pain and disability, even six months later. An accompanying editorial carried a colorful chart of the country showing such wide variations in use of the procedure, 66 regions in the nation used the procedure 30% higher than the national average while 105 regions used it 25% less frequently.
As described in another New England Journal of Medicine article published Monday, Dan Callahan decried an April 29 Senate Finance Committee report that demands that those conducting comparative effectiveness research with that $1.1 billion "should be prohibited from issuing medical practice recommendations or from making reimbursement or coverage decisions or recommendations."
Callahan called it "the first shot across the bow of serious cost reform."
Research is essential to use science to inform the process through which patients and doctors make honest and realistic decisions based on the best interests of the patient. When that happens, there will be a lot of avoided costs, not to mention avoided risk, from unnecessary tests, procedures, and medications.
Researchers with the Dartmouth Atlas crunched Medicare utilization data throughout each region and county in the country and determined that up to 30% of Medicare dollars are wasted each year, in part because of wide variations in care practices.
Douglas Wood, MD, of the Mayo Clinic in Rochester, MN, and Joe Scherger, MD, chairman of the Right Care Initiative of the Rand Corp., and a clinician at Eisenhower Medical Center in Rancho Mirage, CA, helped prepare a list of procedures, drugs, and screenings that offer little or no benefit, yet are commonly used in healthcare, often at tremendous and unnecessary expense.
2. Coronary stents may be overused by 30%, and far too many bypass graft procedures are done on patients who could be better, more safely managed with medications. Since concern about stent thrombosis incidents that occurred after drug eluting stents were implanted, the number of stent placements has started dropping, which Wood says "is a pretty good clue we were overusing them."
At the Mayo clinic, Wood says, the same cardiologist does not do the exam, the angiogram, and the angioplasty. "Here there are at least two opinions before you get an angioplasty," he says.
3. Coronary calcification screening in asymptomatic people over age 70 may be a waste of money. "Most people of that age have coronary calcification, but it won't predict whether they are going to have a heart attack," Wood says. With these expensive tests comes an increased risk of cancer from radiation. A recent study found between 42 and 62 extra cases of cancer per 100,000 people would occur over the course of their lives if they underwent such tests every five years, after age 45 for men and 55 for women.
4. Ultrasounds in pregnant women at 20 weeks are not that useful. "It's just become an expectation of mothers who want to have a picture of their baby," Wood says.
5. Use of generics rather than brand name drugs and more intelligent use of channel blockers and ace inhibitors in patients with heart failure, heart disease, high blood pressure, and diabetes. Wood calls it a move toward "rational prescribing.
"I see a number of patients who are taking nine or 10 medications, where we could probably get by with six," Wood says. Use of generic diuretics for high blood pressure are effective, inexpensive, and underutilized in part because brand name drug advertising steers patients and physicians toward more expensive products that aren't always more effective.
6. Use of generic statins to control cholesterol instead of higher priced brands such as Lipitor. Wood says "the results are generally the same. Once in a while, I see a patient who does not respond to generic statins, but it's pretty rare."
7. Expensive chemotherapy drugs used too long after they have stopped working. "Unfortunately, we're not using any restraint in cancer therapy. And the number of patients with terminal, metastatic cancer who are given an opportunity to have hospice care is still way too low," Scherger says. "We subject them to incredibly expensive therapy with no hope. We need to show honesty, and restraint."
8. Use of unreasonably expensive medications for rheumatoid arthritis care before much less expensive therapies have been tried is a big area of potential cost-cutting, Scherger says. "Drugs like Enbrel and Humira will be used way more judiciously."
9. Use of older or no antibiotics instead of newer brand name products to treat common viral infections when there is no evidence of bacterial infection.
10. Inappropriate use of expensive asthma medications, such as inhalers. "The bigger issue is whether the patient has a long-term plan" and knows when to use a controller asthma medication versus a rescue asthma treatment.
11. Screening for prostate specific antigen in men over age 75 is not recommended, and in men younger than 75, there is no good data to suggest screening will save lives.
12. Hip and knee replacements are probably vastly overdone, Wood says.
"Decisions about what is covered today (with taxpayer dollars) is sometimes based on good evidence, and sometimes based on flimsy evidence depending on expert opinions and recommendations from local or state committees," Wood says. And throughout the country, even from one Medicare region to another, there is remarkable variation.
"What we need to do is make it clear to consumers and physicians alike to make sure that everything that is done, needs to be done. Both physicians and their patients should look at the same information and make a decision about that," he adds.
"If the patient opts to undergo a procedure based on shared decision-making, and there's reasonable evidence to say it should help, then it ought to be covered. But if there's little evidence, and the patient still wants it done, then the patient will have to pay more of that expense," he says.
Though the alliance may not be obvious, hospital leaders can turn to their facilities directors and engineers for advice on how to identify inefficiencies. That was the prime lesson attendees heard during a keynote last week at the American Society for Healthcare Engineering's (ASHE) annual conference in Anaheim, CA.
In some aspects, hospitals could learn from the operations of McDonald's Corporation, said Stephen Mayfield, DHA, MBA, MBB, senior vice president for quality and performance improvement for the American Hospital Association (AHA) and director of the AHA's Quality Center.
A consumer can go to any McDonald's across the country and know what to expect. However, hospitals don't use that business model, which leads to confusion for patients, Mayfield said.
"If we don't do anything about this … patients will eventually abandon hospitals [except in dire circumstances]," he said.
An example that he showed to ASHE attendees was a modern-looking, flat pill bottle, which because of its shape is easier to read a label from than more traditional circular pill bottles. The newer bottles also have color coding to indicate which medications a person should take on a particular day or at a certain time. Such simple changes can improve patient safety, Mayfield said.
Hospital engineers are familiar with this type of streamlining, he added. In the early 2000s, hospital facilities representatives worked with the Food and Drug Administration and medical gas vendors to review safety pin systems and labeling for medical gas line hook-ups, such that a nitrous oxide supply could not be inserted mistakenly into an oxygen connection. The changes occurred after at least 22 patients received the wrong medical gas and were injured or died.
Hospital facilities directors also understand the importance of the following tactics used to pinpoint deficiencies or areas of improvement:
Walking around the units to identify concerns (e.g., noticing a door that doesn't latch properly to a maternity unit)
Observing staff member behaviors and developing enhancements as necessary (e.g., monitoring worker actions during a fire drill)
Taking pictures to document conditions (e.g., photographing egress doors mistakenly marked as "no exit" and sending them to department managers)
Surgical recovery rooms are a prime area to look for excess efforts. Mayfield showed a quick video clip from a hospital that put all necessary supplies for patient care in the recovery room. Environmental services workers keep the supplies stocked so that nurses don't have to constantly leave the recovery room to get something.
"Whatever's outside that door—let's bring it in the room," Mayfield said. Rather than give individual nurses their own computer-on-wheels to track down at the start of each shift, the hospital parks a laptop permanently by each patient bed and lets nurses log onto whatever computer they need. Near the computers are lists of frequently called phone numbers, another convenient item to have close to bedside rather than out at the nurses' station.
"These are very simple tools that we can bring [to nurses]," Mayfield said.
