To date, there hasn't been sufficient dialog regarding provider contracts, according to officials at Tufts Health Plan. Quality initiatives have always existed in provider contracts, but they don't always fit neatly into a single template. It's crucial for healthcare organizations to look at more ways to align and achieve higher quality, and establish common goals toward this end.
Even in the throes of a deep recession that is prompting large-scale wage and benefits freezes and mass layoffs, a new survey by the National Business Group on Health shows that many large companies aren't giving up on wellness and health management programs for their employees. In fact, more than half the companies surveyed are providing financial incentives to promote the programs.
The January survey of 489 large businesses, the 14th annual survey conducted for NBGH by Watson Wyatt consultants, found that 58% of the companies offer lifestyle improvement programs, up from 43% in 2007, while 56% offer health coaches compared with 44% in 2007. The number of weight management programs is also on the rise, offered by 52% of companies, up from 42% in 2007. Health risk appraisals are offered by 80% of companies, up from 72% in 2007.
"I'm not surprised. This is consistent with the trends we've been seeing over the last couple of years as we do this survey," says Scott Keyes, senior group and healthcare consultant for Watson Wyatt. "The cost of healthcare continues to become so high. People are looking at long-term solutions. We realize that one long-term solution is to keep our population healthier. You are not seeing people pull away from that."
Keyes says there's a reason why a growing number of employers are offering financial incentives for wellness programs: They work. The survey found that even moderate incentives can help engage employees in healthy behaviors. Financial incentives between $51 and $100 can boost participation in smoking cessation and weight management programs and encourage workers to get biometric screenings. Higher participation in health risk appraisals is associated with incentives greater than $100. However, financial incentives have limited impact on participation in disease management programs.
Although 80% of companies offered health risk appraisals, Keyes says participation varied greatly because only 61% of employers offered financial incentives. "Financial incentives really increase the participation from single digits to up to 50% to 80%," he says.
Health-risk appraisals can be done online, where questions are asked about health habits, diet and exercise, and most importantly, biometric information like blood pressure, blood sugar, and cholesterol. "The biometric information is very important to the point where some employers are saying if you don't provide the biometrics we won't provide the financial incentives," Keyes says.
He says the financial incentives are most commonly reimbursed through gift cards and reduced health insurance premiums.
Companies that offer financial incentives report significantly higher participation in lifestyle management and wellness programs, according to the survey. However, employee participation in some wellness programs remains low. Despite the obesity epidemic, 40% of companies report that less than 5% of their workers participate in weight management programs.
Other programs that frequently offer incentives to encourage use include those for smoking cessation (offered by 40% of employers in both 2008 and 2009), weight management (offered by 34% of employers, up from 31% in 2008) and full coverage of preventive services (offered by 73%, up from 53% last year). Keyes says a growing number of companies are expanding their free or reduced-cost screenings to include pap smears, mammograms, and colonoscopies.
Keyes says there's conflicting data that can't clearly demonstrate the cost effectiveness of wellness programs. Nor is there anything to definitively demonstrate that they positively impact employee recruiting and retention. "It's still a new area. It could be a few years until we have some good longitudinal studies," he says. "But the employees like that these are available, so it certainly won't hurt."
To view the 14th annual NBGH/Watson Wyatt report, visit www.watsonwyatt.com.
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Over the last two years, a number of nonprofit hospitals have filed for bankruptcy protection. In some instances, those hospitals were able to reorganize successfully and in others, the hospital closed or its assets were sold to a proprietary hospital company or another nonprofit. In many instances, the nonprofit hospital could have been saved if hospital and physician incentives could have been aligned.
A whole hospital joint venture with physicians is perhaps the most powerful way to align incentives. In such a venture, the physician owners are incentivized not only to send patients to the hospital, but also to manage length of stay, pressure payers to provide attractive reimbursement, manage quality of care, and complete medical records in a timely manner. As a side note, at the present time, it is lawful for physicians to own an interest in a whole hospital. Legislation has, however, been introduced on a number of occasions to make it unlawful for a physician to own an interest in a hospital to which patients are refered. That legislation typically bans physician ownership of an interest in any hospital, not just a specialty hospital. All legislation that has been introduced includes some form of grandfathering provision. Many of these, however, restrict the hospital's ability to increase the number of physician owners and/or increase the services offered by the hospital.
Physicians as investors will supply capital to the enterprise. The nonprofit hospital can preserve all of the fundamental aspects of its mission. Numerous constituencies must be considered in the conversion of any nonprofit hospital, including the community, the physicians, hospital personnel, the board, and the hospital's creditors.
What to expect after you file for bankruptcy protection
Once a hospital files for bankruptcy protection, it will be subject to the jurisdiction of the bankruptcy court. Once a Chapter 11 bankruptcy case has been filed, the hospital will be subjected to heightened scrutiny from at least four constituencies, often with competing interests:
The board of directors
The United States Trustee's Office
The secured creditors of the hospital
A creditors' committee, appointed by the United States Trustee's Office for the benefit of unsecured creditors.
The Bankruptcy Code, as amended in 2005, also includes additional constituencies such as a patient ombudsman, and gives certain expanded rights to the community in which the hospital is located.
The principal objective of the creditor's committee is to obtain the largest possible recovery for the creditors. Typically, the bankruptcy trustee and the creditors' committees will consider either liquidating the assets for a cash purchase price and using the proceeds from that sale to discharge indebtedness or restructuring the existing debt and continuing operations of the hospital. The benefit of the liquidation approach is that the creditors receive a sum certain, even if that is only 10% of the debt. In the earlier stage of bankruptcy cases, the view is often that the recovery to creditors can be maximized by liquidating the assets prior to the expenses of the bankruptcy case that is eating into recovery. Liquidation gets another hard look late in cases where it appears to be the only viable option left after a reorganization has been thoroughly vetted and has failed.
Restructuring debt
Where the debt is restructured and the hospital reorganized, there is uncertainty as to the creditors' ultimate recovery. But typically there is a possibility of a greater recovery than what would be received upon a liquidation. A restructuring frequently returns 100% recovery to all constituents (although for unsecured and equity claimants, much of it may be taken in the form of equity or installment payments). The problem with restructuring the debt is that this does not address the fundamental underlying operational issues that contributed to the hospital's poor economic performance, and resulted in its inability to pay its debt. However, a conversion of the hospital to a physician-owned joint venture provides a framework in which a high return can be given to creditors and the fundamental operational problems can be addressed.
One hurdle in converting a nonprofit hospital to a physician-owned joint venture is that the tax-exempt debt of the hospital will become taxable upon the conversion. Since the holders of the bonds are typically the single largest secured creditor, and since the conversion of the hospital to a joint venture requires the approval of the secured creditors, the bondholders have to be convinced that their after-tax return—taking into account that the interest on the debt will now be taxable—will exceed the after-tax return they would receive from a liquidation or restructuring of the tax-exempt debt.
First steps in converting to a physician joint venture
Certainly the first step in determining the viability of a conversion to a physician joint venture is determining the level of physician interest and quantifying the impact that this might have on the economic performance of the hospital. There are a number of companies that can assist in making those determinations. If the initial analysis appears compelling, a new limited liability company will be formed to take over the operations of the hospital and units of ownership in the new limited liability company will be offered to physicians (and possibly unsecured creditors) through a private placement.
As part of the bankruptcy process, the nonprofit hospital will be able to discharge or reduce some portion of its indebtedness. The newly formed limited liability company will only become responsible for those obligations it agrees to assume. Additionally, since the newly formed limited liability company will become the employer of all of the hospital employees, there is an opportunity to revisit staffing and eliminate or revise union contracts. The same goes for vendor or supplier agreements. New vendors and suppliers can enter the process, while older ones could have their agreements rejected and may receive very little on their claims.
The offering of ownership interests to physicians must be structured to comply with federal and state laws governing securities offerings. Generally, an exemption from registering the securities should be available so long as units of ownership are not sold to more than 35 unaccredited investors in a single offering. Generally, an investor is accredited, either if he has a net worth of $1 million, excluding certain assets such as his home or automobile, or has annual income in the last two years of $200,000 or $300,000 jointly with a spouse, and expects that level of income to continue in the current year. Most physician specialists meet the accredited investor definition by virtue of their income level. The challenge is that primary care physicians, who are crucial to the success of the hospital, often are not accredited.
Care must be taken to ensure that the ownership mix, both in terms of ownership percentage and number of owners, is not unduly weighted toward specialists. In the event that more than 35 unaccredited investors wish to participate in an offering, a secondary offering can be conducted at any time after the first anniversary of the closing of the initial offering, and an additional 35 unaccredited investors can be sold interests in the secondary offering. The ownership interests sold in the secondary offering will have to be sold at the current fair market value, which may exceed the initial offering price. All offerings must be conducted pursuant to a private placement memorandum that provides investors with the information required under applicable securities laws and which includes all facts material to an investment. Typically, the private placement memorandum will include forecasts that provide examples of financial results. Because the financial results are so dependent on volumes, generally forecasts are prepared for several different volume levels.
Structuring a conversion
The nonprofit will generally retain complete discretion over whether to close the offering and proceed with the conversion of the hospital to a physician-owned joint venture. If the offering does not attract adequate capital or the right number and the right mix of physicians to make the project successful, the nonprofit would elect not to close the offering and would return any money raised from the investors.
There is no one right way to structure a nonprofit hospital conversion. All structures should, however, ensure:
Sufficient capital for the capital expenditure needs of the operating entity
Sufficient working capital to provide a long enough runway to turn around operations
Significant input in governance by the physicians
A tax-free stream of income to the nonprofit
A commitment to make operational changes, including expense reductions, necessary for the joint venture to be successful.
To the extent the hospital had issues with regulators, those issues should be addressed also by the new management of the organization. Sometimes penalties and setoffs under Medicare and Medicaid programs can be ameliorated by the new managers through early contact with and a cooperative working attitude toward the intermediaries.
Operational control and tax-exempt status
Early Internal Revenue Service rulings seemed to state that a nonprofit entity could only retain its exemption in a hospital joint venture if it had absolute control over the governance of the entity. Subsequent court cases and rulings make it apparent, however, that absolute control is not necessary. Rather, what is necessary is for the nonprofit entity to have control over those items that are the cornerstone to its tax-exemption. Key items over which the nonprofit must have absolute control include charity care policies and community outreach.
It is not necessary for the nonprofit to have complete control over operational decisions, such as operating budgets, capital expenditures, and incurrence of debt, to maintain its tax-exempt status. As a practical matter, it will be difficult to attract physician participation unless the physicians have a significant voice in the operation of the hospital. Physician participation will be driven as much by the physicians' desire to have greater control over the environment in which they practice as the potential for economic return. Consequently, a typical structure would be for the joint venture to be owned equally by physician investors and the nonprofit entity. The physicians and the nonprofit would each have the right to appoint 50% of the joint ventures' governing body. Although, the nonprofit entity would have reserve powers that give it unilateral control over charity care and community outreach. Even though the nonprofit should be able to maintain its federal tax-exemption, it may lose its state and local property tax-exemption.
Working out the details of capital
The physicians and the hospital will each contribute their pro rata share of the necessary capital to the joint venture. In general, the amount of capital required should equal the amount of capital, which along with anticipated working capital financings and other borrowings, will be sufficient to carry the institution to positive cash flow based on a conservative proforma plus a substantial reserve. Sources of capital include capital contributions from the physicians and the nonprofit hospital, working capital financings, equipment loans, and equipment leases. The hospital's capital contribution will typically be comprised of cash obtained from debtor-in-possession financing and/or a contribution of existing accounts receivables.
The plant, property, and equipment owned by the nonprofit will be leased to the joint venture pursuant to a long-term agreement, with rent payments structured to provide a sufficient return to the nonprofit's creditors and to ensure, based on the joint venture's pro forma and initial capital, that it has sufficient time to improve operational performance for any conversion. The nonprofit's indebtedness will be restructured so the required payments on its indebtedness match the required payments pursuant to the lease—this will be taxable.
Generally, the lease should provide for a stepped rent structure with nominal rent during the early years of the joint venture, increasing annually to match the anticipated improved performance by the hospital. The rental stream will be pledged to and provide a source of funds to pay the nonprofit's creditors.
Additionally, if the joint venture is successful, the nonprofit will also be entitled to 50% of the cash distributions. To the extent in excess of amounts payable to creditors, this will be held by the nonprofit in a foundation generally used to meet the community's healthcare needs. The amount that creditors participate in the cash flow distributions is a matter of negotiation. Typically, the greater the creditor's participation in cash distributions, the smaller the fixed rent obligation. However, the ability for the creditors to participate in the cash flow distributions creates significant flexibility for structuring and can give the creditors significant upside potential that the creditors do not have in most traditional nonprofit bankruptcy restructurings.
In the event the joint venture is unsuccessful, the nonprofit still owns the underlying assets that can be sold to discharge its debts. Regardless, the nonprofit might still consider selling the real property to a REIT or other real estate investor to generate immediate cash to discharge indebtedness and fund the foundation.
The lease of the hospital to the joint venture will be a change of ownership for Medicare and state licensure purposes. As a result, there will be state and federal filings that must be completed prior to the effective date of the lease. In certificate of need states there will be, at minimum, a notice requirement. In many states, the change of ownership filing is ministerial and not subject to challenge. There are states, however, in which the change from the nonprofit to the joint venture will require approval of the state healthcare regulatory authority—this approval may be discretionary.
Finally, some states have enacted nonprofit conversion statutes that will require filings with the state attorney general in order to convert the nonprofit hospital into a joint venture. In some states, complying with the conversion statutes can be time consuming and costly. Since the joint venture will be a new provider of healthcare services, not only will it be required to obtain a new provider number, but it must also enter into new contracts with managed care payers. Often managed care payers have a vested interest in seeing failing hospitals survive because of their desire for in-market competition. Additionally, physician owners can be persuasive in encouraging the managed care payers to contract with the joint venture at attractive rates.
Struggling nonprofit hospitals can be saved by joint venturing with physicians in the community. By doing so, the hospital's mission can be preserved, key community healthcare services retained, and creditors will often enjoy a greater recovery than is typically the case when the organization is sold or its debt restructured.
Joseph A. Sowell III and John C. Tishler are partners with Waller Lansden Dortch & Davis in Nashville, TN. They may be reached at joe.sowell@wallerlaw.com and john.tishler@wallerlaw.com, respectively.
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Although the general principles of what goes into creating a culture of safety are the same at small and large hospitals, both types of facilities face different hurdles when addressing the topic.
"I think that there is not a substantive distinction," says Jennifer Lundblad, PhD, MBA, CEO of Stratis Health in Bloomington, MN, about the culture of safety in the two settings. "You can focus all you want on clinical change, but if you are not also simultaneously focusing on issues of the culture in a hospital, those changes are probably not sustainable, because culture drives so much of what occurs in terms of adverse events."
The Agency for Healthcare Research and Quality (AHRQ) recently published its annual Hospital Survey on Patient Safety Culture: 2009 Comparative Database Report. The report compiles data from hospitals utilizing its Hospital Survey on Patient Safety Culture, originally released in 2004. Stratis Health, a nonprofit organization that works with hospitals on national and local levels to improve quality, helped implement this survey tool in Minnesota's hospitals as that state's Medicare Quality Improvement Organization. Karla Weng, MPH, CPHQ, program manager at Stratis Health, says that generally, small rural hospital score higher on the AHRQ survey.
"In particular, the biggest gap was on handoffs and transitions, they were 22% higher than their urban counterparts," says Weng.
Communication and Openness
Handoffs, in particular, highlight one of the areas in which small and large facilities have unique sets of problems. Coordination and communication between different departments are often the lowest scored domains when measuring the culture of safety.
"I think those are especially problematic in large organizations, just because of the complexity in dealing with different departments," says Marilyn Szekendi, RN, PhD, Patient Safety Leader at Northwestern Memorial Hospital (NMH) in Chicago. Szekendi cites a greater number of departments and less familiarity among staff members as one of the barriers that her large urban facility faces on a daily basis.
"At some large hospitals, transferring someone from one unit to another can take going to another building." Not only do transitions occur less smoothly than they do in rural facilities, staff members at large urban hospitals are often more stressed as a result of having to connect with staff members with whom they are not familiar and worry about keeping patients safe, says Szekendi.
From a small rural hospitals' perspective, communication and coordination present a whole different set of challenges. The close, personal atmosphere that many small hospitals foster plays well for handoff communication.
"Where rural health can really be a leader is because [the setting] is close and personal, those handoffs and transitions are managed so much better in that smaller environment," says Lundblad. "I think that's some of the reason we see those generally higher scores when looking at an urban and rural comparison around safety culture." She gives the example of a part time nurse in the emergency room who may also work in the medical unit, "They transition to themselves in some cases. There's not that lost information about the patient, that missed opportunity about medication reconciliation."
It's this same closeness that can also inhibit open communication among hospital employees. "There's a particular unique rural challenge in communication because you know these people personally as well as professionally," says Lundblad.
The role of leadership
Leadership plays an important and vital role in effecting culture change in small and large hospitals. In both settings, any culture change initiatives must come from the top-down to be successful.
The difference may be that in large settings, hospital leaders are more in tune with what quality and patient safety issues exist. At NMH, many of their culture of safety initiatives have come from the leadership team, says Szekendi. In a rural setting, this might not be true, especially with boards of directors, says Lundblad. At the board or trustee level, in small communities these people are often local business leaders.
"I think they have fewer opportunities than their urban counterparts to be exposed to or have the kinds of orientation and training that is specific to quality and patient safety," says Lundblad."
Additionally, if rural hospital leaders embrace a culture of safety, the effects can be seen quickly. Because of the closer environment, one leader can have much more influence than one leader in a large hospital, simply because he or she has more visibility and more influence over the entire facility.
"If leadership at a small facility really gets it, and really embraces the culture of safety, they can make things happen so quickly with such amazing results because it has the ability to so quickly infuse itself across the whole facility," says Lundblad.
Hospital leaders at large urban facilities have to make more of an effort to connect with staff and show that they are supportive of culture change, says Szekendi. Having hospital leaders take part in patient safety Walkrounds, or showing a presence in patient care areas in some other way can help staff members at a large hospital understand that their leaders stand behind a culture of safety.
Heather Comak is a Managing Editor at HCPro, Inc., where she is the editor of the monthly publication Briefings on Patient Safety, as well as patient safety-related books and audio conferences. She is also is the Assistant Director of the Association for Healthcare Accreditation Professionals. Contact Heather by e-mailinghcomak@hcpro.com.
With angst wrapped around healthcare reform, Kevin Lavender, the head of Fifth Third Bank's national healthcare practice, discusses how lenders are paying closer attention to hospital management teams.
The mood was remarkably upbeat in the room considering it was a group of healthcare lenders and borrowers discussing current 2009 lending trends on tax day. But maybe it was the strawberry-swirled yogurt parfaits at each place setting.
Is capital really flowing again? It is, bankers assured the audience of local healthcare execs. The recent Nashville Health Care Council meeting included a panel of healthcare lenders with both local and national healthcare practices. It was rounded out with David Anderson, senior vice president of finance and treasurer of HCA, Inc. Anderson backed the group's sentiments in announcing that the mega-hospital company had closed that morning on a $1.5 billion high-yield bond issue, the largest deal of its kind in 2009.
While healthcare borrowers are logically skeptical about their ability to access capital, panelist Kirk Porter, senior vice president of healthcare strategies with Bank of America, cut to the meat as he eyed the audience, which included a cross section of Nashville's most influential leaders. "As I look through the room here, we have a little over a billion dollars of capital committed to companies just in this room," he said.
To sum up the hour-long meeting, banks are bullish on healthcare, deals are getting done, and healthcare is a true growth engine for banks.
Sensing there might be some skeptics in the room, Porter said regardless of what we may read, Bank of America has grown its national healthcare business 18% in the last year with a $7.5 billion year-over-year increase in commitments. "We clearly have a desire to lend and the plan this year is for more of that."
Kevin Lavender, the head of Fifth Third Bank's national healthcare practice, which he started only three years ago, brought some gravity back to the conversation, saying there may be money to lend but the terms aren't going to be all that favorable in the short-term.
"I bet everyone is concerned about approaching your bank today to ask for an extension and increase," Lavender said. Anyone resetting a bank agreement today is going to look at increased pricing and increased fees. And even more uncertainty lies ahead.
"A flood of refinancing will come up in the next three years and nobody quite knows where the capital will come from to support that," said Porter.
That uncertainty was on Anderson's mind as he closed HCA's bond deal. "People can say you are trading off some very low interest rate for an obviously higher interest rate, but that is not the issue," he said. "The issue is to manage the refinancing risk out in 2012 and 2013."
While the market may be unpredictable and the regulatory clampdown that many anticipate is still a question mark, bankers only want predictable when it comes to parking their money right now. There's less to give and they're returning to practices your grandparents would approve of.
"We have an internal saying that today's $35 million commitment was last year's $100 million commitment," said Lavender. "The winners will be those with strong balance sheets and predictable cash flows, but also those who have the wallet where they can share with the bank," he added. "We are looking for a certain return that we haven't expressed over the last three or four years because we spent so much money chasing so few deals."
Across the board, the group also reiterated what we already know: solid management teams and strong business plans are key to accessing capital.
In the meantime, as bankers' doors are cautiously squeaking open, the cost of running a healthcare business goes up. According to the HealthLeaders Media annual survey of CFOs, 163 finance leaders at healthcare organizations say government laws and mandates, labor costs, and clinical technology are the biggest drivers of healthcare costs. Porter, with Bank of America, said there are positives on the horizon. "While a lot of the stimulus package and regulatory changes in some areas are neutral to negative, I think there is a perception they may be actually neutral to positive to the industry as a whole," he said, pointing to funding that is going to SCHIP expansion, Medicaid, and IT.
On a much more tangible level, the stimulus bill includes a provision for nonprofit hospitals looking to do capital expansion projects this year and next. They can now receive up to $30 million in bank-qualified tax-exempt bonds, up from the current limit of $10 million per calendar year for a municipality.
When asked whether banking today is a "brave new world" or a return to sanity, Lavender said this: "We reached a 'brave new world' but have headed back to sanity in terms of pricing."
While we hear a lot of throwaway phrases like "it's time to get back to basics," and "tighten up business plans and management teams," I can't help but be comforted by them. They tell us "okay, the bubble is over" and now it's back to what we know was right all along.
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During the first quarter of fiscal 2009, more than half (54%) of the hospitals surveyed nationwide reported negative total margins. The greatest rate of hospitals reporting negative margins occurred among those with 500 or more beds (80%) and the lowest rate (36%) was reported among the smallest hospitals (those with less than 100 beds).
In addition, according to by the Healthcare Financial Management Association, nonoperating revenue declined 78% in all of the 263 hospitals participating in the survey, with 64% reporting a decrease of more than 20% in operating income. Again, the larger hospitals with more than 500 beds were most impacted with 79% saying they had decreases of more than 20%.
Also, patient revenue declined in 43% of those hospitals surveyed, with rural hospitals showing a greater impact (60% had a decline in patient revenue), compared with larger urban facilities (37%), according to the HFMA report released this month.
At the same time, 73% of those surveyed reported a decrease in days cash on hand: 96% of the hospitals with more than 500 beds indicated a decline, with 50% of those hospitals indicating that they had had a drop of 20% or more. The survey also showed that 43% of the responding hospitals had a decline in investment of 25% or more.
During the current economic recession, hospitals are "in a brand new territory where we aren't all sure how all the parts are fitting together at this point in time, said Randy Fuller, HFMA's Director of Thought Leadership. The recession has created many new questions that hospitals may have trouble answering right now.
"We have an engaged consumer that is bearing a big chunk of the burden for their own healthcare and see them delaying elective services. How much of that's really going to come back? What types of services are going to remain down the longest? What's the unemployment curve look like? When are the financial markets going to improve?" he said. "There are a lot of moving parts to this."
The survey found that 62% hospitals were responding to these economic conditions by putting budget contingency plans in place. These responses could be triggered by changes in: patient revenue or volume (typical triggers were declines of 5%, 10% or 20% in net patient revenue); operating margin targets (such as net operating income falling below 80% of budget); sustained declines (such as three consecutive months of undesirable performance); or failure to meet debt covenants (such as related to days cash on hand).
Other strategies are reducing capital spending, changing debt structure, reducing nonlabor costs, containing labor costs, enhancing productivity and efficiency, protecting cash flow, and increasing efforts to expand or protect volume.
"We've seen a big resistance on the part of CFOs to do just simple across the board freezes," Fuller said. "Most of the (chief financial officers) that I've talked to have been very thoughtful about making sure they are doing the right things and not ruining the culture of the organization--just really smart cost-cutting processes . . . rather than across-the-board budget freezes." Additional findings from the study can be viewed at www.hfma.org/pulse.
Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached atjsimmons@healthleadersmedia.com.
Few nursing homes are using electronic health records that allow them to share information with other healthcare providers—a standard known in the technology world as "interoperability." But more nursing homes could begin using more interoperable EHRs soon, thanks to incentives provided by the American Recovery and Reinvestment Act (ARRA) and a push to certify long-term care health IT products.
The Certification Commission for Healthcare Information Technology (CCHIT) announced last Thursday that it aims to begin certifying long-term care Health IT products by July 2010.
CCHIT has created a volunteer task force full of industry players representing skilled nursing facilities, assisted living, home care, and hospice services, according to the CCHIT. The task force will advise a CCHIT work group creating the Long Term Care Spectrum certification.
Although certification is voluntary, the marketplace is starting to request it, said John Morrissey, communications director for CCHIT.
A certification would ensure buyers that certified long-term care HIT products would work seamlessly with other certified HIT products, said Majd Alwan, PhD, director for the Center for Aging Services and Technologies (CAST).
The ARRA is putting a lot of emphasis on standards-based interoperable health IT to guarantee every American has a health record that is portable or can allow the exchange of information, Alwan said. The certification is an indication that the investment in this product is somewhat protected and the system will not become obsolete because it is not compliant with national standards for interoperability, he said.
Achieving interoperability in HIT products is especially important in long-term care because the sector serves seniors who often have multiple chronic conditions and multiple care providers, such as physicians and pharmacists, Alwan said.
The population also tends to move across the several care settings. For example, if a senior who falls suffers from a broken hip, he or she may move from a hospital to a skilled nursing facility for rehab before transitioning to an assisted living facility within in relatively short period of time, Alwan said.
Also, sharing electronic records may be useful because seniors in long-term care facilities may have a primary care physicians or geriatricians who work outside of their facilities.
"The benefits of interoperable HIT across settings would be maximized in this segment," Alwan said.
The long-term care industry has adopted electronic records at a rate that is comparable, if not higher, than acute care and private physician practices, he said. However, many nursing homes are not using fully integrated or interoperable electronic records, he said.
"This implies the long-term care sector is not only ready for this, but stands in a position where it could leap-frog other sectors" in adopting electronic records, Alwan said.
Hospitals in Dallas will not accept organ donations from people who aren't friends or relatives. They fear under-the-table payments—it is a federal offense to buy or sell organs in the United States—and the growth of an Internet-induced organ exchange industry preying on the sick and poor.
Services such as credit scoring help nonprofit hospitals identify patients who qualify for charity or free care, those eligible for discounts and those who should pay the whole bill. "It's a sign of the times in healthcare," said Kevin Bloye, a Georgia Hospital Association vice president. "Hospitals can use this as a tool to determine who can pay and who can't." But the use of credit scores in analyzing patients' finances has triggered criticism for nonprofit hospitals. Many are trying to tamp down a reputation as aggressive bill collectors while their tax-exempt status gets heightened scrutiny from lawmakers and regulators.
