Executives planning a merger of the two largest health systems in the Dakotas say it could mean expanded medical services. Fargo-based MeritCare and Sioux Falls, SD-based Sanford Health hope to compete the merger by the end of the year. The combined network would serve about 2 million people in North Dakota, South Dakota, Minnesota, Nebraska, and Iowa.
The fight over healthcare increasingly seems like a contest about what scares Americans more, the government or insurance companies, according to this article from the Wall Street Journal. Republicans are conjuring nightmares of government bureaucrats blocking patients from life-saving treatment, while Democrats paint pictures of heartless insurance executives dropping or denying coverage.
A proposal to tax generous health plans is being given serious consideration by members of the Senate Finance Committee. Besides potentially generating tens of billions of dollars, proponents argue the move could slow the steep rise in health spending. They say generous insurance plans can encourage people to spend more freely on medical care. But the proposal being weighed by the Senate Finance Committee would tax health plans that cost much less, setting the bar perhaps as low as $25,000 a year for a family plan.
As the U.S. continued to shed jobs in July, the number of healthcare jobs kept growing. Over the past year, as the total number of nonfarm payroll jobs fell from 137.2 million to 131.4 million, the number of healthcare jobs rose from 13.3 million to 13.6 million. The sector has grown across the board, with job growth in doctors' offices, hospitals and home-health services.
Healthcare legislation being debated in Congress won't solve the problem of the lack of qualified medical professionals in Southern Maryland, but it "tips the hat" to the issue, House Majority Leader Steny H. Hoyer (D-MD) told doctors and other medical professionals during a discussion at Calvert Medical Center. The bill would provide funding for a pilot programs that would reimburse doctors based on outcomes instead of procedures. Scott Intner, director of business development at Calvert Memorial, said that doctors in Maryland's Calvert County receive up to 50% less in reimbursement funding than those in metropolitan areas and other states.
Health insurance companies are concerned that healthcare reform could damage their business, but the mere talk of healthcare reform is also negatively affecting health insurers.
In light of potential healthcare reform proposals, Fitch Ratings recently revised the Rating Outlook of six health insurers from Stable to Negative while maintaining six other insurers as Negative.
Fitch Ratings said the Negative Outlook "reflects the strong potential for healthcare reform and its possible adverse implications on each company's financial strength and creditworthiness. Though no bill has been finalized yet, and multiple policy schemes are possible, most of the alternatives being debated could weaken health insurers' financial profiles in Fitch's view. The Negative Outlook also reflects the high levels of uncertainty that currently exist with respect to the ability of individual insurers to adapt to a likely changing competitive and pricing environment resulting from reform."
The six health insurer groups who dropped from Stable to Negative are:
Aetna, Inc.
Blue Cross Blue Shield of Florida
Blue Cross Blue Shield of Idaho Health Service, Inc.
Cigna Corporation
Coventry Health Care, Inc.
Health Care Service Corporation
The six insurers who remained at Negative are:
Health Insurance Plan of Greater New York
Health Net, Inc.
Healthmarkets, Inc.
Humana, Inc.
UnitedHealth Group, Inc.
WellPoint Inc.
Fitch plans to address the ratings again after a healthcare reform package is finalized.
"Depending on the specifics of any final legislation, the net impact of healthcare reform could vary widely, falling anywhere from neutral to severely unfavorable for the ratings," wrote Fitch.
The "most detrimental scenario" for health insurers would be a public plan option, especially one that mirrors Medicare reimbursement rates. This would lead to "severely" hurting the "outlook for health insurers' profit margins. Depending on the ultimate structure, the public plan could also lead to substantial enrollment loss for private insurers," wrote Fitch.
Two other potential healthcare reform trouble spots for private insurers are adverse selection and health insurance price restrictions.
"A combination of any or all of these developments could incrementally weaken the sector's earnings and cash flow generation capabilities," wrote Fitch.
Joseph Paduda, principal at Health Strategy Associates, LLC, says Fitch's analysis makes sense if a public plan option forces providers to accept Medicare or similar rates, but he doesn't think that is going to happen. "There is zero chance of any reform measure passing that includes a public plan reimbursing at Medicare," he says.
Paduda also questions Fitch's suggestion that there are risks associated with potential adverse selection and insurance price-fixing. He adds there is no chance of the government mandating premium levels and adverse selection could actually help private insurers, who may want to drop sick members into a public plan "if the legislation isn't carefully written."
Paduda acknowledges that the health insurance industry is at risk, but also thinks there are opportunities for private insurers. Smart health insurers will see health reform as a chance to gain millions of new members and slash administration expenses by eliminating underwriting, refining marketing, and investing in population health, he says.
"I'd note that Fitch now has all plans in 'negative' status; I believe that is misguided, as there are clearly several that are better positioned to take advantage of reform if that happens," says Paduda.
The Joint Commission recently announced a new type of follow-up survey, "Medicare Condition-Level Deficiency Follow-Up Survey," which will go into effect in 2010. This is intended when surveyors assess a facility with one or more condition-level deficiencies out of compliance.
These condition-level deficiencies refer specifically to the Centers for Medicare and Medicaid Services' Conditions of Participation (CoP). This new accreditation decision is based in part on The Joint Commission's application for hospital deeming authority through CMS.
"I'm sure this is the result of continuing dialog between The Joint Commission and CMS regarding the Joint Commission's pending deeming application decision," says Joe Cappiello, chairman of Cappiello & Associates, Elmhurst, IL. "What CMS probably said was, 'If you have a condition out, it has to be fixed right away, and you'll have to go back in there and validate that it was fixed.'"
What wasn't addressed in this initial announcement—likely forthcoming before year's end— is what scenarios will cause this type of follow up.
Something The Joint Commission has not yet specified which the field is curious about, says Cappiello, is the time frame. Historically, CMS requires correction and verification by on-site follow-up within 90 days.
"I would imagine that CMS will require The Joint Commission to follow that timeline," says Cappiello.
Another question from the field: multiple follow-up surveys. For example, you've exceeded your bandwidth, you have gone to conditional accreditation, and you have a CoP out. This means you'll get a follow-up Conditional survey by The Joint Commission following your acceptable submission of ESC, and you'll have a follow up by The Joint Commission based on the CoPs.
"We don't know if those two are combined," says Cappiello. "Would they do them at the same time? Come back and take a look at direct impact standards and CoPs in the same visit? But what if the timelines are not compatible? I would hope that if the timelines match, The Joint Commission would combine the two into a single visit."
If, however, the timelines turn out to be incompatible, this could result in two visits—both of which the hospital pays for.
This may also have an effect on the size of the team sent for the follow-up survey. A follow-up survey is frequently one surveyor, one day. If there are a number of standards out, and a number of CoPs, this may result in a larger review team.
"I would think that The Joint Commission would review the timeline and the size/composition of the survey team on an individual basis," says Cappiello.
The nation's hospitals' payrolls grew by 4,200 new jobs in July and the healthcare sector continues to be one of the few job growth areas in the sluggish economy in 2009, Bureau of Labor Statistics preliminary data released today show.
While the preliminary July figures show a slight pick up over the 3,700 hospital jobs created in June, the payroll growth is well off the pace set in recent years, when the hospital sector added 12,800 jobs in July 2008, and 8,100 jobs in July 2007, BLS data show.
Overall, the healthcare sector—from physicians' offices, to residential mental health homes, to blood and organ banks—reported 19,600 payroll additions in July, and 149,800 new jobs in the first seven months of 2009, according to BLS' preliminary data. In the first seven months of 2008, the healthcare sector grew 217,100 new jobs, and averaged about 31,000 new jobs per month.
Nearly half of job growth in the healthcare sector continues to be in the ambulatory healthcare services, which reported 9,600 new jobs in July and 96,300 new jobs in the first seven of 2009, BLS preliminary data show.
In the first seven months of 2009, the nation's hospitals reported 22,600 payroll additions, preliminary data show, compared with 80,200 payroll additions in the first seven months of 2008, and 58,500 additions for the same period in 2007. BLS reports that there were more than 4.7 million hospital payroll jobs at the end of July 2009.
If hospital payroll increases continue at this pace, fewer than 39,000 new jobs will be created in 2009, as compared with 137,100 new hospital jobs in 2008; 105,700 new jobs in 2007; and 81,400 new jobs in 2006, BLS data show.
Even with the sluggish payroll additions, the healthcare sector is still outperforming the overall economy. BLS preliminary data show that nonfarm payroll employment fell by 247,000 in July as the nation's unemployment rate remained unchanged at 9.4%. Since the start of the recession in December 2007, payroll employment has fallen by 6.7 million.
The figures released today are preliminary and subject to change. In May, for example, preliminary BLS preliminary data showed only 300 new hospital jobs nationwide. As more data arrived, however, BLS revised its figures and now reports that 2,400 new hospital payroll additions were created in May.
Seasonally adjusted data, which are used in this story, allow for better month-to-month comparisons that better reflect changes in economy, rather than seasonal employment patterns. Payroll growth also reflects the number of new jobs, not the number of new employees, because one person can have more than one job.
Stone Medical Clinic had much to be proud of—a long history of excellent patient care, well trained physicians, and a growing roster of new patients. What the clinic lacked, however, was profitability comparable to similar-sized practices. While patient volume continued to grow, cash flow faltered as claims payments were slow and as fees under managed care contracts were not keeping pace with costs.
The clinic had recently implemented a real-time, all-payer, Web-based interface to its various payers. As a result, the day-to-day office flow had improved significantly with online verification of coverage and collection of copayments at the time of patient check in. Claims and payments were being reconciled online, resulting in a significant savings in time.
Given concerns related to overall practice financial performance, the clinic's office manager began to analyze claims status and claims history online. It was the first time in the practice's history that all claims from all payers could be viewed in a comprehensive manner.
Getting at the causes
Armed with this new informatics resource, the practice manager began to get at the root causes of lackluster financial performance. For example, she was able to pinpoint excessive claims rejections and the causes for bottlenecks in claims payment with various payers. Conference calls with these payers, during which everyone viewed a common database, resulted in quick resolution for unusually high claims delays and rejections.
At the same time, the practice manager was able to identify the top payers for the practice, providing the information she needed to negotiate more favorable managed care contracts. By demonstrating that the Stone Clinic was a major source of business for certain leading payers, more favorable terms were easy to reconcile.
Using graphic interfaces, the practice manager was also able to create a comprehensive financial report for the physicians, detailing each doctor's claims history with various payers. This information was invaluable in projecting cash flow, setting staffing levels, tweaking treatment plans, and providing a more strategic approach for the growing practice.
While the Stone Clinic is a fictitious practice, its experience is increasingly common. With the advent of all-payer, Web-based portals, physician practices are not only enhancing the efficiency of daily operations, they are also enhancing the strategic management of their practices. Web portals and payer claims processing databases make it is possible for physician practices not only to track every claim each step of the way, but also to access strategic information.
Disparate pieces need a central repository
Just as healthcare providers depend on their ability to review many disparate pieces of patient information to develop an accurate diagnosis and treatment plan, the same is true for the business aspects of managing a healthcare practice. On any given day, a healthcare practice processes hundreds of bits of information related to the business side of the practice, from verifying coverage to collecting copayments. When this information is concentrated in a database format, a whole new world of analytical possibilities is created.
Examples of these new capabilities, illustrated by the Stone Clinic, include:
Rejected claims analysis: The practice can view rejected claims over time and by health plan, making any needed adjustments to improve performance.
Status by plan: Physicians and other healthcare providers can determine the relative importance of each payer to the practice, which is important information for practice management and contract negotiations.
Transparency and partnership: With providers and payers working from a common claims database that each can review in real-time, transparency, and partnership opportunities are increased.
Cash flow: Access to cumulative claims information enables providers to better understand cash flow and plan accordingly.
Illustration: Using graphics software, practices can track, trend and illustrate their claims experience over time. Full color charts are often the most effective means of identifying trends and communicating with physicians and staff.
Treatment plans: Not only can a practice view current claims status, it can also anticipate payments in the future for patients requiring multiple visits. Treatment plans can be adjusted based on projected future adjudication experience.
Analysis opportunities: With a centralized database, the possibilities for analysis are expansive. Practice managers can interrogate the payer claims information database over time, including legacy systems, to track and trend by payer, physician, and diagnosis. The astute practice manager uses this information to enhance patient quality as well as ROI for doctors.
Healthcare providers are increasing their reliance on automated solutions and seamless connections to payers to assure smooth flows of patients each day. These practices also need the ability to track and trend financial claims data so they can do a better job with daily management and strategic planning.
The latest information technology tools from transaction integrators are opening up new ways to use financial information strategically. Data mining, dashboard reporting, and customized analytics make detailed, historical information readily available and in meaningful formats. The result is more successful practices that are better able to provide quality patient care in the rapidly changing healthcare environment.
Barry Byrd is president of Secure EDI, a healthcare information technology firm. He may be reached at bbyrd@secureedi.com.
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I was always taught "green" principles growing up, although you would never confuse my family with the stereotypical group of hippies that one usually imagines when the issue of environmentalism comes up. Not by a long shot. It was all about being grateful for what you've been given and not wasting it, and saving money.
Now, "green" is the new cool. It's trendy to shop with reusable grocery bags—my family does it—partly for the 6 cents a bag credit we get at the grocery store. It's trendy to recycle—we do that too. Nashville makes it easy with a curbside recycling program. But in my family, being "green" was less about conserving the environment and more about saving money—the other kind of green.
My dad was born in the Great Depression and his parents, along with just about everyone else at the time, saved and reused everything they could. They were middle class, but being middle class back then meant a roof over your head, food on the table, and perhaps an old car. One of the first things I ever remember him saying to me when I was a child was "use what you have before opening another one," in regard to bath soap, shampoo, leftovers—you name it. It's a lesson that's stuck—to the point that my wife makes fun of me for squeezing leftover ketchup packets into the big bottle. Rightly so, probably. But that waste not, want not ethos was something that was instilled into me from an early age and it's probably not going anywhere.
Similarly, many of the appeals you hear nowadays to "go green" come from people who mail you stuff. Banks, investment firms, and bill collectors encourage you to "go green," by agreeing to accept correspondence in electronic format instead of paper. I have no problem with that, but let's be frank: in these cases, "going green" has more to do with saving those companies money on printing and postage than any desire to save the earth. The environmental message is just a beneficial side-effect and a marketing tool.
It took leadership to install that conservation mindset into me, the same way it takes leadership to implement efficiency policies in your hospital, where "going green" should be a corporate directive. Frugal times call for frugal measures, whether that means replacing that aging boiler, turning off lights where they're not being used, or installing wind turbines or solar panels on your expansive roof. It could also mean setting thermostats slightly higher, using water-conserving plumbing fixtures or making use of available natural light to decrease the need for artificial lighting. They all save money.
To me, it's doesn't have to be about some high-minded desire to save the earth. It's simply about efficiency, and the environmental benefits are a bonus. After all, money saved on electricity, paper and other supplies means more for that shrinking bottom line.
Maybe efficiency isn't as sexy as saving the earth, but as you look down the barrel of declining reimbursements and greater scrutiny on patient outcomes and satisfaction, "going green" means cash, and that kind of beauty never goes out of style.
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