Hospital and health system mergers and acquisitions have grown by 70% since 2010. That means "vigorous enforcement of the antitrust laws is more important than ever," says the chair of the Federal Trade Commission.
Federal Trade Commission Chairwoman Edith Ramirez has reaffirmed that regulators will continue to take a "very active" look at consolidations in the healthcare sector, including efforts to skirt antitrust laws through state interventions that she said still have the potential to limit competition and drive up costs for consumers.
In a recent speech before the American Health Lawyers Association, Ramirez left little doubt about where the FTC stands on hospital consolidation, noting that hospital and health system mergers and acquisitions across the nation have grown by 70% since 2010.
"In the midst of these ongoing changes, vigorous enforcement of the antitrust laws is more important than ever," she told the lawyers. "That is the key message I want to leave with you today."
"The latest empirical research continues to consistently show that provider competition results in the greatest price and quality benefits for consumers, justifying the FTC's continued vigilance in healthcare provider markets. And we have been very active," she said, noting that the commission is currently challenging at least three high-profile hospital mergers.
A Troubling Tactic
A particularly troubling trend, she said, involves the efforts of some healthcare systems to bypass federal antitrust review by obtaining state-issued Certificate of Public Advantage waivers. She specifically cited the Cabell Huntington Hospital's proposed acquisition of nearby St. Mary's Hospital in Huntington, WV, and the proposed Mountain States/Wellmont merger in Tennessee and Virginia.
"Proponents of these legislative measures claim that FTC enforcement efforts undermine the policy aims of the Affordable Care Act to improve the quality of healthcare and lower costs by encouraging more coordination between healthcare providers in local communities," Ramirez said.
"In my view, these legislative efforts to immunize combinations from the antitrust laws are misguided and risk harming consumers. We understand that coordination of care has the potential to further key goals of healthcare reform, including encouraging provider collaboration, avoiding duplicative testing, increasing preventive care, and encouraging greater patient follow-up. But procompetitive collaborations are already permissible under the antitrust laws."
As a result, Ramirez said the primary effect of COPA laws "may very well be to immunize mergers that will not generate substantial efficiencies and therefore would not pass muster under the antitrust laws, likely leading to increased healthcare costs and lower quality and decreased access to care."
Hospitals' Response
Reached this week, Wellmont and Mountain States issued a joint statement in response.
"The policy and laws of Tennessee and Virginia permit the very type of collaboration our systems have proposed. We are following the law and decades of precedent that have been set by the courts and other states, which support the legal foundation and rationale for proposed mergers like ours," the statement read.
"We respect the important work the FTC and our state attorneys general do, and we remain committed to cooperating with them. The enormous value of our proposed merger is evident through the support that has been expressed by the business community, which pays a large share of the costs of health care, and the leaders throughout the region, who see the evidence of the value created by our proposed merger for the people of our region. We sincerely appreciate the hard work the FTC does and we believe our proposed COPA addresses the very issues the chairwoman discussed."
"We agree some hospital mergers lead to higher costs without demonstrable benefit for their communities, and we believe the COPA we have proposed provides a clear alternative to those types of mergers. We have held more than 40 public meetings throughout the region, and the process for approval by the states has been more transparent than the types of mergers the chairwoman has referenced. In fact, the FTC has participated in those public meetings and has provided comments we believe have been important in the process."
Ramirez said most merging hospitals have "largely failed to present us with even a close case on efficiencies, often providing little substance to back-up their claims. In particular, parties have failed to make their case when trying to demonstrate that a merger is necessary to achieve the claimed efficiencies."
"Parties often claim that their merger will provide the necessary patient volume to allow them to engage in risk-based contracting and population health management," she said. "We recognize that healthcare is increasingly moving in this direction, and we continue to assess, on a case-by-case basis, whether a merger that enables parties to engage in these and other activities could benefit consumers. Yet there is strong evidence that scale, at least over a certain threshold, is not necessary to engage in those practices. Greater scale can also be achieved through another combination that is not a merger with a close rival."
Telemedicine has grown tremendously in the past five years in some rural areas. Yet barriers remain, and only a fraction of the population has access.
"Soccer is America's sport of the future," so that old joke goes, "and it always will be."
I am reminded that of that chestnut every four years as I follow the World Cup misfortunes of the U.S. men's team, and whenever the subject turns to telemedicine.
For so many years we've been talking about the potential of telemedicine, how it can improve population health and access and contain costs, particularly in rural America. Still, we've yet to achieve the sort of widespread utilization and population health benefits that many advocates have envisioned.
For example, a new study in JAMA examined claims data and found that telemedicine visits among Medicare beneficiaries increased by 28% each year from 2004 to 2013, and that 107,000 telemedicine visits were provided in 2013.
More than 40,000 rural Medicare beneficiaries received one telemedicine visit that year, with a mean of 2.6 visits each. That's pretty impressive growth.
Still, 107,000 telemedicine visits represent a fraction of 1% of the nation's 55 million or so Medicare beneficiaries.
There is a human face behind each of those 107,000 visits in 2013. The study found that the most likely users of telemedicine services were disabled beneficiaries with mental illness who were generally sicker and poorer than the average Medicare beneficiary.
It also found that that the "vast majority" of these visits were for behavioral health services. The numbers aren't overwhelming, but for many of these vulnerable people telemedicine is a lifeline.
In tribal communities, such as the Fort Peck Indian Reservation in Montana, "initial internal reviews and anecdotal evidence suggest that the physical distance [of psychiatric consultations by videoconference] helps patients open up about difficult experiences more quickly than if they received therapy in-person, potentially speeding up treatment progress," according to the Billings Gazette.
Is the Glass Half Empty? Or Half Full?
JAMA study lead researcher Ateev Mehrotra, MD, an internist, pediatrician, and associate professor of Medicine and Health Policy at Harvard Medical School, takes the half-empty/half-full approach to telemedicine.
"The glass half full perspective is that after all these years of conversation and interest in telemedicine, we see very steady and fast growth in the number of telemedicine visits that are provided for Medicare beneficiaries, despite all the restrictions and complaints about how the Medicare rules are outdated." Mehrotra says.
"The fact that there have been more than 100,000 of these telemedicine visits provided in the Medicare population is a big number if you compare it to things like bypass operations and other things in the Medicare population. From that perspective it is relatively big numbers."
"The glass half empty aspect is pretty much the opposite. Less than 1% of the Medicare population rural beneficiaries are being affected," he says.
"Yes, it is growing fast but it hasn't had a big population-level effect. It does take a while for things to take off and the numbers might be even higher in 2014 and 2015."
Mehrotra says some of the blame goes to Medicare for its conservative approach to expanding telemedicine. The Centers for Medicare & Medicaid Services limits payments for telemedicine care to patients living in rural areas who receive a live-video visit at a clinic or other facility.
"The reimbursement to the provider of a telemedicine visit is the same as an in-person visit, and on top of that there is a small additional fee that is given to the hosting site," he says. "The concern is that it is very limited in terms of who can get a telemedicine visit. The debate is often about why we are limiting this only to rural beneficiaries."
At the state level, the response has been uneven, with turf wars erupting over licensing requirements, regulation, efficacy, and scope of practice.
Even with that foot-dragging, progress creeps forward. More than half of the 50 states have passed parity laws mandating that telemedicine visits be reimbursed as the same level as in-person visits.
"Telemedicine is very geographically varied," Mehrotra says.
Barriers to Telemedicine Expansion
"In some states there are very high rates of usage, and in other states there are very few telemedicine visits. The question is why isn't it growing even faster? I don't know the answer to that question."
He says some explanations include the "crazy reimbursement structure" for telemedicine. "This plan may be covering it, and this plan may not," Mehrotra says. "So, as a physician, it is hard to go all in on telemedicine because you're not sure."
There are also issues around the quality of the technology. "In many of these rural communities they may not have the level of high-speed internet necessary to support a video teleconference," Mehrotra says.
Another reason is the ambivalence of physicians. Mehrotra says many physicians aren't sold on the efficacy of telemedicine, and that even when they support it, they may not have time to put it into practice.
"There is not a huge pool of doctors who are willing to do this," Mehrotra says.
"The average doctor it is not sitting in the office with lots of extra time on their hands to expand their business with telemedicine. Providers are busy enough, so when you already have a demand for in-person visits in your office you may not see a huge call for telemedicine visits in another county or state."
That has led to speculation that a growing number of physicians will dedicate themselves to telemedicine, rather than dedicating one or two days a week to remote care.
"I don't even know what the word would be. 'Telemedicinist?'" Mehrotra says.
"You are seeing a number of companies that are focused only on telemedicine care. They feel that the skill set necessary to provide telemedicine visits is different, and that you have to be fully committed to it as opposed to doing it here and there on the side like a hobby."
Of course, there's another huge problem with telemedicine. Nobody knows if it works. Anecdotal evidence suggests that it does, it passes the common sense test, and some smaller clinical tests have shown that telemedicine is just as effective as in-person visits in treating or monitoring conditions such as depression and diabetes.
However, there is no evidence that telemedicine has improved the health of rural Medicare beneficiaries, in large part because there aren't enough rural Medicare beneficiaries using it. "The whole point is not that we are replacing in-person visits but that we are providing a complement for those rural beneficiaries who can't get in to see a provider," Mehrotra says. "We don't know if that has led to an improvement in health."
Despite all the stutter steps, Mehrotra has big hopes for telemedicine.
"When we think about telehealth to improve care, it doesn't always have to be a video visit. It could be text or email, or you answer a series of questions and do an e-visit," he says.
"It is a broad umbrella for telehealth and there is a lot of potential to improve access and improve the quality of care that we provide in rural communities and everywhere else in the nation. We are still figuring this out."
Meta-study finds only one patient safety indicator out of 21 meets the scientific criteria for being considered a true indicator of hospital safety.
Adverse events recorded in billing data that are used to gauge and rank the safety of hospitals are woefully inaccurate, according to Johns Hopkins researchers.
In a meta-study published in the journal Medical Care, only one patient safety indicator (PSI) out of 21 met the scientific criteria for being considered a true indicator of hospital safety, says the study's lead author, Bradford Winters, MD, associate professor of anesthesiology and critical care medicine at Johns Hopkins.
The potentially inaccurate measures evaluated in the meta-study are also used by several high-profit public rating systems, including U.S. News & World Report's Best Hospitals, Leapfrog's Hospital Safety Score, and the Centers for Medicare & Medicaid Services Star Ratings.
"These measures have the ability to misinform patients, misclassify hospitals, misapply financial data, and cause unwarranted reputational harm to hospitals," Winters said in remarks accompanying the study. "If the measures don't hold up to the latest science, then we need to re-evaluate whether we should be using them to compare hospitals."
Of the 21 PSI measures developed by the Agency for Healthcare Research and Quality and CMS, 16 had insufficient data and could not be evaluated for their validity. Five measures contained enough information to be considered for the analysis.
Only one measure—PSI 15, which measures accidental punctures or lacerations obtained during surgery—met the researchers' criteria to be considered valid.
Winters recently spoke with HealthLeaders Media about the meta-study's findings. The following transcript has been lightly edited.
HLM: Why is billing data used if it is so inaccurate?
Winters: A lot of it has to do with the fact that it is easy to obtain.
Coders already do the medical billing for hospitals, so these administrative databases exist because they are generated out of the billing process.
All the ICD-9 and ICD-10 codes wind up in these administrative databases and they're easy to query using software packages. Doing direct chart reviews as a secondary process is laborious. It takes time for coders who are often already working hard to get the billing work done.
Folks might say the coders are already reading through the charts to do the billing coding, so why not ask them to do the adverse event reporting process?
You could, but you'd have to have a guideline and a process for them and it would still add extra time.
Imagine if you were competing one database for billing and another database for adverse events. That would be very valuable, but it would take more time.
Consequently, medical chart reviews are only done as a small sample.
HLML Why is billing data so inaccurate?
Winters: It starts with unclear or incomplete documentation by the clinicians. That is part of it.
The coders may misinterpret things. The doctors or nurses may have in their minds clearly documented what happened but the coder may misinterpret it.
There is the potential to accidentally provide the wrong code by the coder. A lot of them have overlapping numbers and they can sound fairly similar. So there is the possibility of a transcription error and the wrong code is picked.
You may have applied the wrong code, or you may not apply all the codes that should be applied. A patient stay in the hospital, particularly a patient who is very sick and stays for a long time, can have a lot of codes.
Sometimes they get skipped over by accident and don't get in there. So an adverse event that was found in the chart didn't get coded at all in the administrative database or it got miscoded because it was misinterpreted.
HLM: Could you not say the same things about the accuracy of clinical data?
Winters: You could have the same problem. When you are pulling 100 or 200 charts to do this medical record review, the folks looking at it are looking with a lot of detail.
They're picking up the things that may have been missed or misinterpreted. But it is true that a medical chart review could miss things. If it is not complete, or the language in the chart is ambiguous, you could still make the same mistakes.
That being said, the medical chart is considered the gold standard. It's not perfect, but it is the standard by which we make the comparison.
HLM: Will billing data accuracy improve with the use of ICD-10?
Winters: I don't think we know. A lot of the increased granularity of ICD-10 has to do with improving the ability to epidemiologically track diseases.
We know that there was one study that we put in our meta-analysis that looked at the effect of documentation of "present on admissions "and it did seem to improve the validity of some of these measures.
Whether it improves them enough to reach the threshold that we argue should exist before you use these measures as tools to determine hospital reimbursements still remains to be determined.
ICD-9 didn't seem to work very well. We can't assume that ICD-10 is going to be a cure for this. We have to prove it, because there is lots of money on the table for hospitals.
If they are denied reimbursements on pay-for-performance schemes, they have to have a valid measure.
HLM: Will the move toward value-based reimbursements improve the accuracy of billing data to track safety?
Winters: It is unclear, but we need to invest in the research of healthcare delivery in these areas to make these determinations.
We can't assume these things are going to be true or untrue depending upon your optimistic or pessimistic point of view. We have to put them to the test.
HLM: Why was PSI 15 the only safety metric to meet your criteria for accuracy?
Winters: That is a good question.
The type of data that was available in the papers that we used for this meta-analysis doesn't allow us to answer this. My speculations is that maybe there is less ambiguity about what constitutes this particular PSI.
When it is documented in the chart as something that happened to the patient in the hospital, the documentation that tends to go with it by clinicians is fairly unambiguous. But that is supposition. We have no idea from the records we used.
HLM: Based on your findings, are these various hospital safety ratings useless?
Winters: They are potentially flawed. Where these PSI and HAC (hospital-acquired condition) measures are a component of these ratings scales, they are potentially introducing error into them. They are potentially inaccurate, but we didn't measure directly those ratings scales' accuracy.
I would be overstepping our results to say they're useless.
That being said, the validity of the PSI and HAC measures are not particularly good. If they are going to be a component of a larger measure that is going to be used to measure pay for performance that is concerning and needs to be addressed.
HLM: How would you fix this?
Winters: As we suggested, first of all, we think there needs to be transparency about how these measures, such as CMS's Star Ratings are developed.
Some measures may be good. Some may not be. It has to be openly and transparently debated as to which measures are valid sufficiently to be used for this kind of scheme.
Providers need to be at the table, insurers need to be at the table, as well as the government. It needs to be open and transparent. To simply say the measure is good enough is adequate.
We proposed the 80% framework based on threshold theory, which is a process that one determines whether a medical value such as a laboratory value is valid enough to be used for the decision-making process.
We propose a framework where that gets applied to the pay for performance process. That's arguable, but whatever these cut offs should be needs to be transparently discussed.
Maybe it should be 75% or 70% but there needs to be a transparent discussion of how this is going to be put together for pay for performance and reimbursement.
HLM: Is doing nothing an option?
Winters: If it turns out that ICD-10 or eventually ICD-11, which has specific components that are supposed to improve the ability to identify adverse events, improves the predictive value of these metrics and they all climb into the 80% range, it will be a non-issue.
But if there are no changes, people like me will continue to say that they aren't accurate enough to use for reimbursement.
The screening program is described as a "win, win, win" for consumers, payers, and Walgreens, especially if it improves adherence to medication, says the retailer's CMO.
Retail pharmacy giant Walgreens and the nonprofit Mental Health America this week launched a collaborative mental health answer center to heighten consumer awareness and reduce stigmas associated with mental health.
The platform will connect people to MHA's free Online Screening Program, which uses clinically-based but relatively simple and direct online screenings for conditions including depression, anxiety, bipolar disorder, and post-traumatic stress disorder.
"We have known for a long time that mental health conditions are more prevalent than other common diseases that get a lot of attention and support," says Walgreens CMO , MD.
"For example, one in four or five adults in this country at any given time are suffering from a mental health condition like depression or anxiety or post-traumatic stress disorder and that is more common than diabetes and heart diseases combined."
"As a consumer-based, pharmacy-led healthcare company, we have to step up and offer a range of solutions to our consumers that come into our stores or visit our website every day seeking answers and needing support for mental health."
"It is the right thing to do for us and our partners who are providers as well," Leider says.
Early, timely interventions are often a critical component for diagnosing and improving mental health, and Leider says that Walgreens and MHA have set a goal to complete 3 million online screenings by the end of 2017.
Leider says the program centers around four pillars:
Awareness
Screening
Care facilitation
Therapy support
"Number one, we want to provide increased awareness to our consumers about the prevalence of mental health conditions and the warning signs," he says. "Many people who are depressed, for example, as the most common mental health condition, don't even know they're depressed."
"The second is to increase screenings to provide access to really simple tools that a patient or consumer at Walgreens could do in five minutes to be alerted that they may well have depression," he says.
"The third is once they know they have a problem, to connect them with a trusted source of care and evaluation. The fourth is to use our pharmacy services to support patients once they are put on a medication."
PCPs Lack Time and Resources
Leider says 27,000 pharmacists and 1,100 nurse practitioners in Walgreens' nearly 8,200 stores and clinics nationwide could play "a huge role" in helping patients monitor and stay on their medications.
"We have six million people coming into our stores every day, and another two million coming to our website or our mobile app. The ability of our pharmacists and 8,300 stores to really support patients are incredible value drivers," he says.
"We have the No. 1 healthcare app in America, maybe the world, and the No. 3 retail app. The pure footprint that we have physically and digitally enables us to increase awareness of our consumers, whether they come to the stores or the website."
"On the other end of the spectrum, I am a primary care physician. I can tell you that the busy primary care doctor does not have the time or the resources to be doing these kinds of medication support activities in their office," Leider says.
"Even if they did, when you are describing the medication for the patient and having a dialog about whether they have depression or post-traumatic stress syndrome, at that time the patient isn't totally hearing all the facts you're giving them."
"But the ability of our pharmacists to reinforce this information about side effects and waiting for the medications to take effect is absolutely critical," he says, "and very hard for a primary care doctor's office to achieve in one visit."
The pharmacists and nurse practitioners will not undertake the screenings themselves, but will refer consumers to the website, Leider says, largely out of patient privacy concerns.
"The major support from pharmacists have revolved around the medications that are commonly prescribed, such as antidepressants, [and] antianxiety meds," he says.
A 'Win, Win, Win'
"Their role is to educate patients about the utility and effectiveness and expected side effects, and when to contact the clinicians with side effects or efficacy. It's what we are doing already, but we're just providing our pharmacists and nurse practitioners with some augmented training."
Leider describes the screening program as a "win, win, win" for consumers, payers, and Walgreens, especially if it improves adherence to medication.
"The patient wins because they are much more likely to feel better and get a response to their therapy, be more productive and have a better life," he says.
"It's a win for the payer because a patient suffering from untreated mental health problems spends more money on medical services. They are costlier because they are seeking more solutions from the health system and they aren't managing their comorbid diseases."
"And frankly, to us, patients being adherent to their medication is valuable to Walgreens," he says.
"The patients are filling their prescriptions more regularly and we get economic value out of that, as well as the patient loyalty."
The two health systems said they've signed a letter of intent to explore an exclusive affiliation. No timetable was offered for when the deal would be finalized.
Susquehanna Health, the Williamsport-based four-hospital health system serving Northcentral Pennsylvania, is pursuing an affiliation with regional giant University of Pittsburgh Medical Center.
In a joint press release, the two health systems said they've signed a letter of intent to explore an exclusive affiliation. No timetable was offered for when the deal would be finalized, and neither system suggested what the affiliation will look like when it's agreed upon. Whatever the arrangement, it likely will require state regulatory approval.
"Over the past two years, we've thoroughly explored partnerships and our guiding principle had always been: 'what's best for our patients?"' Susquehanna Health CEO and President Steve Johnson said in an email exchange with HealthLeaders Media. "UPMC emerged as a wonderful cultural fit for our patients, health system, and community. It's the right thing for our patients and for our community."
"This partnership means the continued growth of our organization, more opportunities to bolster our existing services and introduce new specialty services to the region, more effective physician recruitment and retention, a new, competitive insurance option and access to the intellectual capital of one of the pre-eminent academic medical centers in the country," Johnson says.
Susquehanna Health Board Chairwoman Ann Pepperman said UPMC was picked because of its "compatible fit with our faith-based, service-oriented culture and a relationship that enables us to grow services for our community and continue to add family-sustaining jobs. UPMC has a proven track record of investing in and growing services for patients in the Erie, Altoona and Bedford communities. In addition, UPMC supports and maintains the Catholic tradition of its member hospital, UPMC Mercy in Pittsburgh."
UPMC CEO and President Jeffrey A. Romoff said that by "combining our world-renowned healthcare and research programs with our value-driven insurance products, UPMC is able to offer patients and employers clinically integrated programs to better manage the community's health. Together we will enhance and position UPMC Susquehanna Health as the leading provider of world-class care at the lowest possible cost in northcentral Pennsylvania."
Susquehanna Health hospitals include Williamsport Regional Medical Center, Divine Providence Hospital in Williamsport, Muncy Valley Hospital in Muncy, Soldiers & Sailors Memorial Hospital in Wellsboro. The system employs close to 4,000 people in an 11-county service area
UPMC is the dominant health system in western Pennsylvania and the largest nongovernmental employer in Pennsylvania, with more than 60,000 employees, more than 20 hospitals, more than 500 doctors' offices and outpatient sites, a more than 2.9-million-member health insurance division, and international and commercial operations. The system is affiliated with the University of Pittsburgh Schools of the Health Sciences.
The Susquehanna affiliation is the latest in an aggressive line of expansions by UPMC, that includes Pittsburgh's Mercy Hospital in 2008, Children's Hospital in Lawrenceville in 2009, Erie's Hamot Medical Center in 2011, Altoona Regional Health System in 2013, and Jameson Health System in New Castle earlier this year.
VUMC will now be guided by its own board of directors comprised of university and academic medical center leadership, and community business and civic leaders.
Vanderbilt University Medical Center in Nashville has separated itself legally and financially from Vanderbilt University and is now a fully independent, nonprofit hospital.
VUMC President and CEO Jeff Balser, MD, PhD, said in prepared remarks that the new status means that the medical center is "now optimally positioned for the future of health care delivery."
"We have taken care to assure VUMC will remain seamlessly connected to Vanderbilt University in fundamental ways, including a vast array of educational and research programs aimed at training the leaders of the future and driving innovation through discovery science," said Balser, who remains dean for the Vanderbilt University School of Medicine.
The announcement caps a restructuring process that was first announced in late 2014 and included 20 transition teams and involved a multitude of faculty and staff. VUMC will now be guided by its own board of directors comprised of university and academic medical center leadership, and community business and civic leaders.
As an independent hospital, VUMC will have direct capital market access to assure it can compete effectively in the health marketplace. Its flexible governance structure will also support the continued growth of the Vanderbilt Health Affiliated Network, which is the largest provider-organized network of doctors, regional health systems and other health care providers in Tennessee and surrounding states, the hospital said in a media release.
Teaching and research collaboration and connections between the University and the Medical Center remain a strategic priority for both institutions.
The consolidated system that emerges from the deal, with more than 15,000 employees, would provide integrated care services to a broad geographic area in Southeastern New England.
Southcoast Health and Care New England have entered merger talks that, if finalized, would create an eight-hospital, $2 billion not-for-profit health system serving Massachusetts and Rhode Island.
The announcement is the latest development in partnership talks that started in November. In a joint media release, the two health systems said they will develop an affiliation agreement, begin the regulatory approval process in both states, and undertake due diligence reviews.
The consolidated system that emerges from the deal, with more than 15,000 employees, would provide integrated care services to a broad geographic area in Southeastern New England.
Under an agreed-upon framework, Southcoast Health President and CEO Keith Hovan will be president and CEO of the new health system parent company; Care New England CEO Dennis Keefe will be CEO of the Population Health initiative for the unified system; Care New England's board will select the new chair of the system parent Board, and the Southcoast Health board vice chair will be vice chair. Southcoast Health and Care New England will each select 10 people to serve on the new system parent board of trustees.
The Population Health initiative will be a signature program for the new system. Both Care New England and Southcoast Health have established Accountable Care Organizations and have been working to advance innovative approaches to care that improve outcomes, enhance patient experience and reduce cost.
Care New England includes Butler Hospital, Kent Hospital, Memorial Hospital of Rhode Island, Women & Infants Hospital of Rhode Island, the VNA of Care New England, The Providence Center, CNE Wellness Center and Integra, a certified ACO created in collaboration with the Rhode Island Primary Care Physicians Corp.
Southcoast Health includes Charlton Memorial Hospital in Fall River, St. Luke's Hospital in New Bedford; Tobey Hospital in Wareham; and Southcoast Behavioral Health in Dartmouth, a joint venture hospital with Acadia Healthcare.
'Eat your broccoli' isn't a new, sexy message, but healthful eating remains the best way to prevent or contain chronic diseases, and it's something that every hospital in the nation could and should be doing to promote population health.
The best way to a control chronic disease such as diabetes is to prevent it from happening in the first place.
With that in mind there has been a major push over the past decade by hospitals across the nation to promote healthful eating for patients, employees and visitors.
This is not a sexy new topic. "Eat your broccoli" isn't a grabby headline. It is fundamentally important, however, it is blocking and tackling, it is ABCs, it is back to basics, and every other applicable cliché, and it is something that every hospital in the nation could and should be doing in this new era of population health.
That's what they're doing in Kansas, the heartland state with some of the nation's highest rates of obesity.
The Kansas Hospital Association's Hospital Education and Research Foundation says 25 hospitals in the Jayhawk State—many of them in far-flung rural areas—have changed their food and beverage policies. Under a three-year Healthy Kansas Hospitals initiative, gone are the fried foods, potato chips, crème doughnuts and sugary drinks, long the staples of hospital cafeterias. They've been replaced by healthier options, including fresh fruits, smoothies, made-to-order deli wraps, and salad bars with bountiful options beyond iceberg lettuce, ranch dressing and a sprinkling of Bac~Os.
These hospitals are also making prominent the nutritional value and calorie content of the foods they sell in their cafeterias and vending machines and providing their employees with educational materials that promote good nutrition and a healthful diet.
The logic is obvious. If this nation is ever to contain this epidemic of overweight and obesity, then hospitals and their employees—often among the largest employers, and most high-profile citizens in their communities—will have to step up as role models.
James Blackwell is CEO at Clara Barton Hospital & Clinics, a 23-bed critical access hospital in Hoisington, KS, serving more than 25,000 residents of Barton County, and one of the 25 hospitals to adopt the healthful eating initiative. The transition has been relatively easy, he says, but identifying the return on investment for the hospital's 200 employees and the community they serve may take some time.
"ROI is actually something that is not really quantifiable through a short-term effort," Blackwell says. "We want to lead by example so we set these things forth. Our employees engage in it. In time we will be able to see the benefits but that is a long-term effect."
"That's what we're going for when we lead the charge in the community," he says. "You can only swing that kind of perception with a long-term effect, and that is what we are trying to accomplish here."
More Healthful Options
Clara Barton CNO Jane Schepmann says the bigger challenge in adopting the healthful foods model was "a little bit of a change of culture. Folks really like that comfort food, and that might be a little different than, say, New York City."
"We try to offer a healthful entree or two. There is always a soup available. We've got hummus and premade salads in the refrigerator. We have a sandwich cooler with fresh wraps that are off the charts, by the way."
For the night shift workers, Schepmann says the hospital wants vending machine options that include hummus, fruit and vegetables "as opposed to chips and a pop."
Importantly, the shift to healthier foods does not come with a higher price tag. "We did not raise our prices," she says. "Our supplier is very willing to work with us on items. The company that stocks our vending machines is very enthusiastic."
Blackwell adds that "from a dollars and cents standpoint, since we have made this change, our revenue has increased. We call it Clara's Corner Café, but we also have a new dietary manager who has brought some new menu items that have caused a stir. For example, the salad bar used to just offer iceberg lettuce. We now have spinach and romaine to offer more nutritional value.
Clara Barton employees have formed a wellness committee to generate other ideas to promote good health, such as participation in athletic events, walk-a-thons, etc. The hospital is promoting a 5-K race this fall, and sponsoring bike rides. This week, the hospital is sponsoring a smoothie recipe contest among employees. The winners get a gift certificate.
"We're trying to give them some ownership," Schepmann says.
The hospital has formed a mutually beneficial partnership with the local grocery store. "We look at what their sale items are for a given week and we are offering the public a healthful recipe using the items that are on sale."
They're also partnering with the local day care schools to promote healthful eating, working with the children to raise crops in the community gardens, and serving those garden-grown vegetables in the hospital cafeteria. "We invite the children in to partake with us, and work with them on healthier snack options," Schepmann says.
Ultimately, Schepmann hopes the healthful eating initiative at the hospital will spark a change of culture in the larger community.
"We want to promote a healthy culture," Schepmann says, "where folks are taking responsibility for their own health."
"This is telling us that the taxing system may not be working properly if nonprofit hospitals are making a lot of profit and not necessarily putting it back into the community," researcher says.
Seven of the 10 most-profitable hospitals in the United States are nonprofit hospitals, each earning more than $160 million from patient care services, according to a study in Health Affairs.
"We were pretty surprised. I had no idea what hospitals would be the most profitable, and which were not," says study coauthor Gerard Anderson, professor Health Policy and Management at Johns Hopkins Bloomberg School of Public Health. "This is telling us that the taxing system may not be working properly if nonprofit hospitals are making a lot of profit and not necessarily putting it back into the community.
The study analyzed fiscal year 2013 for more than 3,000 acute care hospitals of which 59% were nonprofit, 25% were for-profit, and 16% were public. The study used net income from patient care services to measure profitability and left out profits from non-patient care activities such as investments, charitable contributions, tuition, and parking fees.
"We used Medicare cost reports; essentially the total revenues that they get from patient care and the total expenditure associated with patient care," Anderson says. "It is the only uniformly collected data that I know of on all hospitals in America. If you use general accounting principles, hospitals have a lot more flexibility to include or exclude costs."
By those measures, the most profitable hospital in fiscal 2013 was Gundersen Lutheran Medical Center, a 239-bed hospital in La Crosse, WI, that collected $302.5 million, or $4,241 per patient. In stark contrast, more than half of all hospitals examined in the study lost a median $82 from patient care services.
In general, the study found that hospitals that were part of a health system were more profitable, and Anderson says that likely because they can leverage higher payments from commercial plans, which in turn pass those costs onto their enrollees.
"They are using that to raise prices and accumulate surpluses and some of them are using this surplus to buy more hospitals," he says.
Hospitals with the highest price markups earned the largest profits. Rural hospitals, those with 50 or fewer beds and major teaching hospitals tended to lose more than urban hospitals, larger hospitals and those with minor or no teaching component. The three for-profit hospitals on the Top 10 list are owned by HCA.
"When you go to a specific hospital you are going to that hospital for your care. If that hospital is making a profit, you are not getting all of the services that you are paying for," Anderson says.
In a statement on its website, Gundersen CFO Dara Bartels said the study "does not reflect our costs, as an integrated health system, for the care we provide in a multi-state, largely rural region with a high Medicare patient mix, and does not analyze data on quality of care."
"The portion of the cost report the authors used excludes administrative and shared costs per Medicare rules, with results varying between organizations," Bartels said. "We would rank much differently if these costs were considered. Analyzing Medicare cost reports of a single care center may have been relevant 20 years ago, but using the same methodology now for an integrated health system network isn't constructive."
Bartels said a study by the Dartmouth Atlas showed that Gundersen has the lowest cost of care per Medicare beneficiary in the country.
"We are also a national leader in providing care in the last two years of life by spending less per patient episode of care; shortening patients' length of stay in the hospital; having fewer patient complications and making fewer patient safety errors," Bartels said. "We are dedicated to high-quality, affordable care that balances inpatient and outpatient needs and reinvests earnings into health care programs, services and facilities in the communities we serve."
Anderson says "all of that is taken into account in the analysis."
"If they have a lot of Medicaid then their revenues are going to be less," he says. "It is true that we are not looking at whether or not they provide good quality care. We don't claim to be talking about quality at all. But we have taken into account all the factors that would explain why you are a profitable or non-profitable hospital with respect to patient care."
According to the study, the 10 U.S. hospitals with the highest profit from patient care services are:
Gunderson Lutheran Medical Center, Nonprofit (La Crosse, WI) Profit: $302.5 million
Sutter Medical Center, Nonprofit (Sacramento, CA) Profit: $271.9 million
Stanford Hospital and Clinics, Nonprofit (Palo Alto, CA) Profit: $224.7 million
Norton Hospital, Nonprofit (Louisville, KY) Profit: $211.2 million
Medical City Dallas Hospital, For profit (Dallas, TX) Profit: $210.3 million
Swedish Medical Center, For profit (Englewood, CO) $192.5 million
Hospital of the University of Pennsylvania, Nonprofit (Philadelphia, PA) Profit: $184.5 million
Methodist Hospital, For profit (San Antonio, TX) Profit: $172.4 million
Sacred Heart Medical Center, Riverbend, Nonprofit (Springfield, OR) Profit: $171.2 million
Carle Foundation Hospital, Nonprofit (Urbana, IL) Profit: $163.5 million
Anderson says the communities served by these high-profit hospitals should re-examine their relationships because these communities are footing the bill for higher healthcare costs but they're not collecting taxes on it.
"A lot of the communities where these hospitals are located are having financial difficulties," he says. "The hospitals, which are making money, aren't contributing to the financial reserves of that community. They are obviously employing people, but they are earning substantial profits and not paying any of those profits to the communities."
While the majority of the hospitals were collecting revenues on a fee-for-service model in 2013, Anderson says it's not clear if they can continue to reap handsome profits when the fee structure moves into value-based purchasing.
"That is one of the reasons why we did this study," he says. "We wanted to provide a baseline as to what are the hospitals doing well before value-based purchasing comes on, and then seeing if the same hospitals are able to respond to the new environment. In the old environment, the more you did the more you got paid. In the new environment, the better quality you provide the more you are going to get paid. It is a fundamental shift in payment and the question is will the same hospitals prevail."
Other hospitals on the list also complained that their profits were taken out of context.
Carle Foundation Hospital spokeswoman Jennifer Hendricks-Kaufmann says "the report considers only one year and omits important details like the system's losses, expenses and one-time government payments that occurred in 2013 and that omission makes Carle appear more profitable than the organization actually was."
"It's a significant omission and the authors admit there are factors they could not accurately address. We strive for a 2% to 3% margin, which we reinvest into patient care, including $44 million in charity care at cost to more than 27,000 people in 2013 alone. As a non-profit our community benefits, not shareholders."
Susan Phillips, Penn Medicine's senior vice president for Public Affairs, says the "excess revenue derived from clinical care at HUP is used to subsidize initiatives across the organization, including supporting and improving critical programs like a Level I trauma center and neonatal intensive care units, as well as funding biomedical research activities and education and training efforts in the Perelman School of Medicine."
PeaceHealth spokeswoman Marcy Marshall says the report "does not reflect how we reinvest the dollars back into our community."
"Our mission calls for us to reinvest our revenues back into our communities' health needs," Marshall says. "Each year consistent with the expectations that our community has for us as a nonprofit, these revenues are used to fund critical health and health improvement programs, capital investments and community benefit programs."
For example, in 2013 PeaceHealth investments totaled more than $128.3 million and included a $10 million expansion of the behavioral health services; $22 million for new diagnostic imaging and surgical technology, and $16 million to improve access to primary care and specialty care services.
The American College of Physicians and the Alliance for Academic Internal Medicine have issued a list of reforms that include exploring a performance-based GME payment system.
Primary care advocates, including two physicians groups, are calling for a realignment of funding for Graduate Medical Education that better responds to the nation's urgent and growing need for primary care physicians.
The American College of Physicians and the Alliance for Academic Internal Medicine issued a list of reforms in a joint policy paper published Monday in Annals of Internal Medicine.
ACP President Wayne J. Riley, MD, a clinical professor of medicine at Vanderbilt University, says calls for GME reforms have for years "been floated from various quarters," but with little success.
"The view of the ACP and the Alliance is that those discussions have been disconnected from the real workforce issues we have," Riley says. "The real issues are the number of physicians that we're projecting for the changing demographics of the country and the fact that GME is the ultimate determinative factor in the number of physicians who actually practice."
One of the most glaring problems is the simple lack of residency slots, a number that was capped by Congress at 1996 levels under the Balanced Budget Act. Since then, more than 20 medical schools have opened or expanded class sizes, creating a bottleneck in the physician supply at the residency level.
It's not clear if creating more primary care residency slots would come at the expense of other specialties. Riley says that there needs to be a balanced view of the number of specialists versus primary care physicians, although he concedes that may be more difficult that it sounds.
"There may be a perverse incentive to tilt toward specialty training programs that is not cognizant of the fact that we have a significant mal-distribution of primary care physicians in particular and a projected shortage of physicians in general over the next 25 years at a time when Americans are living longer, but consuming more healthcare," he says.
"The demographics and the utilization of healthcare services continues to increase. Expanded insurance has made healthcare more accessible, and therefore in need of more physicians. We have reached the point where this needs to be brought front-and-center to the policymakers in Washington, DC, and the state capitals."
Lack of Coordination, Coherency
Another problem, Riley says, is the lack of a coordinating body at the federal level to determine workforce needs. Medicare pays about $10 billion each year to fund residency slots, but has little oversight for how that money is directed or spent at individual residency programs.
"The heterogeneity of the residency programs contributes to the confusion and lack of coherency," Riley says. "Bringing rationality into the GME program and the way it is funded will help create some more hegemony around the GME that would better serve the nation and the public well."
Riley says the Affordable Care Act created a workforce commission to determine how many physicians, nurses, and other providers are needed, what specialties are needed, and what regions need them.
Congress has yet to fund it.
"The commission would do that very hard analytic work," he says, "looking at the data and trends and making recommendations to Congress and the executive branch about how best to assign resources. But it has not been funded. That is another part of the conundrum."
Riley says the ACP/Alliance doesn't believe the federal government should have to shoulder all the cost for GME.
"It should be an all-payer situation where providers, insurers, etc., contribute to a common fund for GME because they do benefit by having well-trained physicians," Riley says.
On the other extreme, the ACP has rejected calls to end Medicare funding for GME.
"The reason Medicare got into the business of GME is to drive quality into the healthcare system," Riley says. "Pre-Medicare paying for it, residency trainings were of very low quality. Because Medicare is such a big contributor to GME, the quality has gone up significantly. It has been a key driver to improve training and competency of physicians. It should never be abandoned, but it should be reformed and better linked to the clear workforce demands we have going forward."
Riley says that doesn't mean that Medicare's funding mechanism for GME should not be reformed. Medicare now uses two mechanisms: direct graduate medical education payments (DGME) to hospitals for residents' stipends, faculty salaries, administrative costs, and institutional overhead; and an indirect medical education (IME) adjustment developed to compensate teaching hospitals for the higher costs associated with teaching.
"We are saying, 'homogenize it into one single per-resident fee that follows the resident,'" Riley says. "So, if for a period of your training you are in an urban hospital, but you would prefer to work in a rural hospital, that payment will follow you to a rural training hospital."
"Now, under the rules, that's pretty much precluded at a time when we want to better distribute physicians and encourage young residents toward careers in rural areas. The structure of GME prevents them from getting training experience in different environments."
Even with these reforms, Riley says residency programs will still have to struggle with a perceived bias against primary care specialties that is not-so-subtly reinforced by the huge discrepancies in compensation between primary care physicians and specialists earning two and three times as much.
The ACP/Alliance paper also called for
Exploring a performance-based GME payment system that would need to be achieved without destabilizing the system of physician training;
Pilot projects to evaluate potential changes to GME funding and to promote innovation;
Payments for "well-functioning ambulatory settings" that provide training for internal medicine-pediatrics residents.
"There is a conscious and unconscious bias against pursuing primary care careers because of differential in pay," Riley says. "The other driver is that medical students are coming out $150,000 to $200,000 in debt. That contributes to a perverse incentive that unwittingly entices medical students who may be inclined to choose primary care to something else because of the debt loads and the salary differentials."
