A high employment rate, an acceptable student debt-to-salary ratio, and the evolution toward value-based and retail-based care delivery models suggest that the PA profession is on the rise.
The median salary for physician assistants across the United States is about $95,000 a year, and they're shouldering a median $112,500 in educational debt, according to a new state-by-state survey from the National Commission on Certification of Physician Assistants.
Dawn Morton-Rias, PA-C, president and CEO of NCCPA, calls that debt-to-salary ratio acceptable.
"We remain concerned. You worry about the cost, and the cost is higher than it was 20 years ago, as everything has increased," Morton-Rias says.
"Fortunately, the employability and salary range upon graduation still makes that ratio manageable. There is a good return on investment, in terms of employability, salary, transferring across the disciplines and across the nation to work in a lot of areas. It is still a very good investment of time and money."
Morton-Rias says the nation's 108,500 physician assistants are on average about 38 years old, and they're poised to fill the gaps created with the expected "gray tsunami" retirement of Baby Boomer clinicians.
"We are seeing a huge growth in the profession, now having 199 PA programs throughout the United States and a growing number of institutions looking to develop educational programs," she says. "The high employment rate, and the early transitions into employment upon graduation of new graduates suggest that this is a profession that is on the rise and is continuing to be well respected. Back in the day when I became a PA my dad asked if I was able to get a job with this. I only wish he could see the profession now to see how it has taken off."
Morton-Rias says PAs are well-placed to take advantage of the sea change of transitions in healthcare delivery that include the evolution toward value-based and retail-based care delivery models.
"One of the most important assets in an industry such as healthcare that is changing rapidly is to be nimble, to be able to have a core solid knowledge and skill base upon which to draw, and the ability to meet needs," she says.
"That comes from a broad-based high-level and intense educational background, a rigorous clinical training and certification process and re-certifications processes that keep you on your toes and require that you maintain a deep and active fount of knowledge. It is a rigorous process, [requiring] lifelong learning."
The data collected in the most-recent NCCPA survey show that PAs are providing vital services for underserved populations. Nationally, more than half of patients seen by PAs are covered by Medicare or Medicaid. More than 22% of PAs communicate with their patients in a language other than English. In California, more than half of PAs are bilingual. In New Mexico the number is as are 39%, and in Texas 37%.
"It's important to see how PAs on the macro level are impacting the healthcare landscape with the numbers of patients they are seeing who are recipients of public health insurance, Medicaid and Medicare," Morton-Rias says. "It shows how PAs are communicating and relating to patients of diverse backgrounds by their ability to communicate in languages other than English."
The survey data also shows that 67% of PAs are women, and 87% are white.
"The profession is not as diverse as we'd like it to be," Morton-Rias says. "Some of the demographics don't reflect the patient populations that our PAs are caring for. We would like to work with other organizations in the PA community to think and talk about how that demographic might be affected over the course of the next several years."
"We know that the diversity of perspectives that could be brought to bear on patient care helps improve patient compliance and patient satisfaction, says Morton-Rias. "So, there is a lot of work to be done in that regard. We want to help engage in that conversation."
She says scope of practice and other "turf wars" are becoming less of an issue for PAs because physicians and other clinicians understand that resources are scarce.
"There are so many patients who need care and so many pockets in this country where healthcare is inaccessible," Morton-Rias says. "There is such a need for health literacy and equity at the community level. We have so much work ahead of us to improve the health of the country that we can't waste time worrying about things that are not really going to make a huge difference. There are plenty of patients to be seen across the spectrum. Regrettably, we are not able to reach all of them."
Rural healthcare providers who delay meeting meaningful use implementation requirements put themselves and their patients at a disadvantage, research suggests.
Rural physicians and hospitals have long demonstrated that they're as enthusiastic as their urban counterparts when it comes to implementing health information technology.
While that's encouraging and not really surprising, a study in Health Affairs also notes that many rural providers are more likely to skip a year in declaring they've met meaningful use requirements, which puts them at a financial disadvantage, and creates a digital divide that potentially could harm patients.
The study, compiled by Dawn M. Heisey-Grove, a public health analyst at the Department of Health and Human Services' Office of the National Coordinator for HIT, reviewed meaningful use achievement data from the Medicare and Medicaid Electronic Health Records Incentive Programs between 2011 and 2014.
Dawn M. Heisey-Grove
That data includes information from nearly 550,000 providers and hospitals, and demonstrates dramatic variations among rural providers when it comes to implementation. For example, 91% of podiatrists used HIT, compared with only 9.5% of dentists.
Heisey-Grove spoke with HealthLeaders Media about the study and what the findings might suggest. The following is an edited transcript.
HLM: Why did you do this study?
Heisey-Grove: I started my career at ONC with the Regional Extension Center program, so I am always interested to see the impact they have and the provider populations we call up in this paper are highlighted by that program. It is always important to see the trends and what is happening with them.
HLM: The study seems to offer some mixed results for rural HIT implementation.
Heisey-Grove: The overall adoption numbers are not surprising; the fact that the overall numbers across rural and urban are similar and rural is slightly ahead. When you start digging into it is when you see these huge disparities.
We also see that rural is doing well in other areas that may not have been expected. In the electronic exchanges with other providers, they are doing as well, if not slightly better. But with the electronic exchanges with patients they are still struggling.
These are things that people know, but it is important to get it into public view in a documented way so that more technical and other assistance can be made available.
HLM: Is there a common thread in these variances between urban and rural? Is it simply a matter of scarce resources?
Heisey-Grove: It's nuanced. The thread throughout the original adoption and the subsequent attritions in the meaningful use program can be almost completely attributed to the Regional Extension Centers. The reason why rural adoption is as high as it is is because RECs worked with 50% of the providers and the data show they did much better as a result.
The attrition we see—and it may be a one-year drop off; it may not be permanent—but the REC programs only helped providers with one year. After that the funding was gone.
So what we are seeing is that meaningful use and the ongoing achievement of meaningful use is challenging. Without that assistance rural providers are struggling. That goes for hospitals as well. That is the common thread for the adoption and ongoing use.
HLM: Why is there such a huge disparity between podiatrists and dentists?
Heisey-Grove: I have a hypothesis. The first thing you have to remember is that [the data reflects only] those providers who are registered with the program. It doesn't account for any providers who are not participating in the EHR incentive programs. The numbers may be very different when you look at the non-participants.
The second thing is it may be that podiatrists are participating in a larger portion in the Medicare program, which does not allow skipping from year to year. Dentists are almost exclusively participating in the Medicaid program, which does allow skipping from year to year without losing an incentive payment.
What the subsequent data shows is that Medicaid providers are not making that transition from the initial 'adopt, implement, and upgrade' payment to the meaningful use payment as quickly as the Medicare providers who jumped in and did it. That is the way the programs are structured.
HLM: Is there any suggestion that rural providers are less receptive to HIT implementation?
Heisey-Grove: The data shows the exact opposite. Not a lot of the data in this study speaks to that exact question, but… rural providers are doing higher levels of electronic exchanges with other providers. If they were technophobes, I don't think you would see that.
That shows that if they can they are. There is other data that shows it's more of a resource issue rather than a technophobe issue.
HLM: Would these adoptions be higher if the Medicare HIT incentive program had been extended to include nurse practitioners and physician assistants?
Heisey-Grove: The NPs and PAs are eligible for the Medicaid incentive program, but not the Medicare incentive program. The NP and PA numbers in terms of progress would definitely be different if they were participating in the Medicare program in addition to the Medicaid program.
HLM: You talk about a growing digital divide for rural providers. How could that play out in rural communities?
Heisey-Grove: I will use my father as an example. The provider he sees does not have electronic health records. So, if my father needs to get his prescriptions filled, he has to go to the doctor's office, get a paper prescription, walk over to his pharmacy and get that filled.
If he has an emergency, his records are not going to be accessible to whichever emergency or urgent care center he goes to. In the five or six prescriptions he has, if he doesn't have somebody with him who knows what his prescriptions are, that is going to be a complete and utter failure of the system because they are not going to be able to pull that up readily.
So, the ability for information to follow the patient and be accessible when you need it, and in a format that is usable, is crucial.
If there are gaps because rural providers don't have the ability to capture that information electronically or send it electronically to other providers then those patients are going to suffer. That is what we are going to see. NPs and PAs provided a larger portion of the primary care in those rural environments and if they aren't on board at the same rates as the physicians and other providers in those areas there is going to be a gap as well.
HLM: Because the HIT implementation numbers have dropped off for some rural providers, does that mean that someone somewhere dropped the ball on this program?
Heisey-Grove: It goes back to a resource issue. It's hard to anticipate how hard it is to not only get people on to healthcare IT but to keep them there and maintain that effort. It's not a one off. It's not a 'here's the system and now you can go.' It's an ongoing continuous transition and new things are happening all the time. With the fewer resources available, rural providers are struggling a lot more than providers in large practices or in urban settings that have a larger technical workforce to tap into.
The creators of the 12-step Re-Engineered Discharge protocol say it saves money, but hasn't yet been widely or fully adopted. Follow-up studies have shown that problems arise when RED is diluted.
Five years after its launch, the Re-Engineered Dischargeprotocol is struggling to catch hold in the nation's hospitals.
The creators of the 12-step discharge protocol, which took seven years to compile, say it reduces readmissions and saves money, but hasn't yet been widely adopted.
Suzanne Mitchell, MD
"That's a good question," Suzanne Mitchell, MD, a RED co-creator, said when asked how many hospitals were using RED. "What we have seen mostly is hospitals adapting and cherry picking from a number of different programs. They might take a couple of items from RED and marry them with the Eric Coleman model, which uses a coach that works with patients and caregivers post discharge."
"Because hospitals have mixed and matched based on what they felt they had available and what was familiar to them, it is hard to know who implemented RED as an entire package," says Mitchell, who is also an assistant professor of Family Medicine at Boston University School of Medicine and a physician in Family Medicine at Boston Medical Center.
In fact, even though Mitchell and her BU colleagues developed RED, the protocol isn't widely used at Boston Medical Center.
"BMC has been using adapted versions of RED. It is not disseminated throughout the hospital, but we use it on our designated floor for family medicine, a team-based model," Mitchell says. "It's the same as in many places. A lot of it has to do with the way payments are still based on fee for service," she says.
"We are in a very rapid change in terms of being in alignment and accountable care. But it takes resources to change the way you do things and people don't always feel that RED is going to benefit their particular population."
'Overkill'
Mitchell says it's not uncommon to see three or four readmissions initiatives operating simultaneously at the same hospital. "Nobody knows about the other ones and they are all focusing on different patient problems," she says.
"There is overkill in terms of the patients' experience because many have multiple comorbidities. Cancer has their readmission initiative. The cardiology group has theirs, and family medicine has their own, and everybody is doing something slightly different based on how they see the world. There needs to be more work to strategize and streamline discharge and share transition programs so they actually meet patients' needs."
By design, Mitchell says, the 12 steps identified in the RED protocol are pragmatic and basic, with recommendations that include language assistance when needed, follow-up plans for pending lab results, and providing patients with written discharge plans.
"It's the same reason why airline pilots use checklists," Mitchell says. "They want to make sure everything gets done systematically. We feel that everything on the checklist is important and should be done systematically."
Follow-up studies have shown that problems arise when RED is diluted.
"It's like every process. When people are carrying it out, there is the potential for eliminating or overlooking or not doing something with a high level of fidelity," Mitchell says.
Implementation Lacks Rigor
"Unfortunately when some places around the country have adopted RED, they haven't in most cases kept he program in its entire original form. It is not so much being outside of a research condition as it is institutions making decisions in the planning process to eliminate or adopt certain roles from the original design to meet their needs or resources of the limited commitment from leadership to implement RED."
For example, RED protocol calls for a pharmacist to make the two-day, post-discharge call on a patient to check their medicines and to see if any problems have arisen.
"The reason we had a pharmacist was because we needed someone who had knowledge of medications and the ability to intervene with a problem was necessary to make that call effective," Mitchell says. "Other organizations have said 'we can use a social worker or a community health worker to see how they are doing,' which is sort of a nice-but-not-necessary approach. We've learned that those kinds of adaptations make those calls less effective."
Mitchell says the same thing happens when hospitals use social workers with no clinical background as discharge educators.
"The adaptations of RED don't always translate to an effective model," she says. "Hospitals will cherry pick. They might pick three or four things on the check list to implement. They don't implement the whole thing. That impacts the success of the program."
Mitchells says the best way to ensure the success of the program is go get firm buy-in from hospital leadership.
"It has to be real and visible and it can't be tied to a short-term goal such as readmission reduction in six months. It takes time to change the way organizations do things. It's like turning a ship. When there is loose commitment from leadership everyone knows it," she says.
"Leadership is demonstrated not just by announcements, but resources and a long-term trajectory. It has to be a three-to-five year plan. You also need a really innovative and energized implementation team that is multidisciplinary so that people feel represented in the implementation process. Those are the two most important drivers. It has to be part of the organization's mission. It has to be a decision to change the way the hospital does discharge process. Not a special project—something that is nice, but not necessary."
Although RED was designed years before Medicare's readmissions penalties kicked in, the threat of losing of revenues should further incentivize hospitals to adopt aggressive discharge planning. While RED is not the only way to plan discharges, Mitchell says, it is the only protocol that's designated from inside the hospital, which gives hospitals greater control of the process.
"RED makes sense. It is high-quality care. It prioritizes the discharge and helps people go home and it helps you recognize the patients who aren't prepared or don't know what to do when they go home," she says. "So yes, the RED way is the right way."
A MedPAC recommendation to reduce by 10% Medicare payment rates for 340B hospitals' separately payable Part B drugs has been greeted with a chorus of boos from hospital trade associations.
Pressure continues to build to reform the 340B Drug Pricing Program.
Tom Nickels
The Medicare Payment Advisory Commission last week voted 14–3 to send on to Congress a list of recommendations that includes reducing Medicare payment rates for 340B hospitals' separately payable Part B drugs by 10% of the average sales price.
MedPAC also recommended that the savings be redirected to the Medicare-funded uncompensated care pool, which would help hospitals providing care for the uninsured.
That recommendation was greeted with a chorus of boos from hospital trade associations. Tom Nickels, executive vice president and lead lobbyist for the American Hospital Association, called MedPAC's actions "misdirected."
"MedPAC is penalizing hospitals and the patients they serve instead of addressing the real issue, the skyrocketing cost of pharmaceuticals," Nickels said in prepared remarks.
He also questioned whether MedPAC "has ventured so far afield from their mission" in its call to redirect funding from the 340B program, which is administered by the Health Resources and Services Administration.
"Making a recommendation that penalizes hospitals for their participation in a non-Medicare, public health program that is designed to increase patient access to care is outside of MedPAC's scope, and is inappropriate," he said.
Bruce Siegel, MD
Bruce Siegel, MD, president and CEO of America's Essential Hospitals, said the changes recommended by MedPAC "would produce negligible savings for beneficiaries, while putting vulnerable patients and the hospitals on which they depend at risk."
"In fact, most of the $70 million in estimated beneficiary savings would not go directly to beneficiaries, as 86% have supplemental insurance, according to MedPAC figures," Siegel said in prepared remarks.
Siegel said the commission went forward with its "ill-advised recommendation" without researching the potential effects on 340B hospitals and their patients.
"It is unclear to us why the commission would recommend an inequitable policy, one at odds with congressional intent and destined to reduce support to a select group of hospitals that serve our most vulnerable patients, while ignoring the larger issue of ballooning drug costs," he said.
340B Health, an association of more than 1,000 hospitals that participate in the drug discount program, said in a letter to MedPAC Chairman Francis J. Crosson, MD, that the proposal would fundamentally change the 340B program and there has not been enough analysis about how hospitals would be affected.
"340B hospitals provide significantly more uncompensated care than non-340B hospitals," the advocacy group said in prepared remarks. "The proposal would harm hospitals that provide high levels of care to Medicaid patients even though Congress set the 340B eligibility criteria to explicitly include high-volume Medicaid hospitals. This is not the time to make fundamental changes to the 340B program, especially as 340B hospitals struggle to meet the needs of their low-income and underserved populations in an era of rapidly increasing drug costs."
Francis J. Crosson, MD
Even the Pharmaceutical Research and Manufacturers of America did not agree with MedPAC's recommendations."While it is evident the 340B drug discount program is growing at unsustainable levels and thoughtful reform is needed, this proposal is not the right approach," PhRMA said in prepared remarks. The drug makers lobby declined to provide more acceptable approaches.
In the opposite corner, Ted Okon, executive director of the Community Oncology Alliance, a trade association for independent oncology services providers, says MedPAC's recommendations don't go far enough.
"Frankly, Congress is going to have to do more and specifically in terms of defining who is an eligible patient for 340B and also requiring more transparency and accountability," Okon says. "No one wants to create more bureaucracy on any provider, but 340B has become a black hole on the hospital side and it's not clear that it's the patients who are benefitting. I am a little mystified at why the hospitals wouldn't want to do that proactively so they would be in control of the modifications of 340B and showing how it is benefitting patients as opposed to letting policymakers make those modifications."
MedPAC also recommended that Congress tell the Department of Health and Human Services to:
Update inpatient and outpatient payments by the amount specified in current law, which is projected to be about 1.75%
Distribute all uncompensated care payments using data from the Medicare cost reports' worksheet S-10. The use of S-10 uncompensated care data should be phased in over three years.
The 340B program has come under increasing scrutiny from the federal government in the past year.
In December, the Office of the Inspector General at the Department of Health and Human Services found that Medicare Part B and its beneficiaries paid $3.5 billion for 340B drugs in 2013, about 58% more than the statutorily based 340B ceiling that year, which allowed those beneficiaries to keep about $1.3 billion because the 340B statute does not restrict how those funds are used.
OIG said in its report that some form of a shared-savings program "would have resulted in Medicare Part B savings of $162 million to $1.1 billion in 2013 while still providing covered entities with incentives to purchase those drugs through the 340B Program."
The Government Accountability Office issued a report on 340B in June 2015 and found that 12% of 340B disproportionate share hospitals were among those "providing the lowest amounts of charity care across all hospitals in GAO's analysis."
GAO further found that "per beneficiary, Medicare Part B drug spending, including oncology drug spending, was substantially higher at 340B DSH hospitals than at non-340B hospitals. This indicates that, on average, beneficiaries at 340B DSH hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other hospitals in GAO's analysis. For example, in 2012, average per beneficiary spending at 340B DSH hospitals was $144, compared to approximately $60 at non-340B hospitals." GAO said the differences could not be explained by the hospital characteristics or patients' health status.
MedPAC issued its own report on the 340B Program in May, 2015 and noted that the number of hospitals participating in the program had more than tripled from 2005 to 2013, as had the money spent by "covered entities."
The volume and pace of consolidation, marked by more large deals, more small deals, and more partnerships among hospital providers, physician providers, and insurers will continue "for many years and well past this current decade," says one industry analyst.
By all accounts, hospital consolidation continued at a strong pace in 2015. Kit Kamholz, managing director with Skokie, IL-based Kaufman Hall, has tracked the hospital mergers and acquisitions market for more than two decades. He spoke with HealthLeaders Media this week about market trends in 2015, and what lies ahead in 2016 and beyond. The following is an edited transcript.
HLM: Give us the broad view of hospital consolidation in 2015.
Kamholz: It looks like 2015 is going to be one of the higher numbers of transactions. We are looking at over 100 transactions in hospitals and health systems, which is modestly higher than it has been in the past five years, which has been in the range of 90 to 100 transitions. I don't see it as setting a new trend line.
I see it as modestly higher than prior years but consistent with levels we've seen historically.
HLM: What is sustaining this consolidation?
Kamholz: There are a lot of clouds on the horizon for healthcare providers, and that is leaving independent hospitals to pursue two major initiatives. The first is to develop the competencies that will be necessary to be successful in the value-based business model and with population health management.
The second area is on various levels of cost management. There is probably not a hospital in the country right now where taking some cost out of the system is not being evaluated.
When organizations come to the realization that they cannot accomplish either of those initiatives on their own, or they can't do it fast enough based on how quickly their markets are evolving, that is largely what is leading them to pursue partnerships. Those factors have been consistent for the past several years and we are seeing more of it in 2015.
HLM: What's trending within these consolidations?
Kamholz: We are seeing more of the larger transactions in the marketplace. We went from a period between 2000 and 2010 when there were essentially one or two or no transactions where the target had $1 billion or more in revenue.
Since then on an annual basis, about five to six of those transactions have been announced in any given year. We continued to see that in 2015. Some of the more recent ones in 2015 were Robert Wood Johnson and Barnabus in New Jersey and Penn State and Pinnaclein Pennsylvania.
We are actually seeing a bifurcation between the sizes of hospitals that are transacting. We are seeing [that] more of the smaller transactions occurred in 2015. In approximately 40% of the transactions announced in 2015 the target acquisition had less than 100 beds.
We are also seeing more of the larger transactions, and I'm taking about more than $300 million in revenue. We are getting away from the mid-size community hospitals. We are seeing less of those transactions in 2015.
Another trend that continues from the past two years is partnerships between hospital providers, physician providers, and insurers.
HLM: What is driving these provider/payer partnerships?
Kamholz: The biggest driver is trying to figure out who is going to control the premium dollars. It's really unclear who is ultimately going to be the organization that is going to control those dollars. Clearly the hospitals would like to play that role.
The insurers have played that role historically and would like to continue to play that role, and physicians in certain areas are large enough and have enough geographic coverage that they can play that role in certain markets. It's a jump ball right now to determine who in five years will control those dollars.
HLM: Is there anything particularly unique about hospital mergers and acquisitions in 2015?
Kamholz: One trend we are seeing that is more unique to 2015 than in prior years is portfolio rationalizations by larger health systems. That is divestitures from the publicly traded hospital management companies like Tenet or Community Health Systems, as well as the not-for-profits, particular on the Catholic side. Ascension Health has sold several facilities, as has Catholic Health Initiatives.
HLM: What is driving these rationalizations?
Kamholz: A health system such as CHS owns several hundred hospitals across the country. We see them looking at their portfolio of hospitals and determining which of those hospitals are winners for them, which can no longer be successful for them, or which they don't perceive can be successful, and rationalizing or selling those hospitals.
HLM: Do you believe the Federal Trade Commission has stepped up scrutiny of hospital consolidations?
Kamholz: They clearly are getting more scrutiny at the federal level. That is a trend that probably has been accelerating for four or five years now. It's going to be an impediment to certain transactions getting accomplished going forward.
HLM: What do you see happening in hospital consolidation in 2016?
Kamholz: We are going to see more of the same. We don't see a rapid acceleration or deterioration from the levels of the past five years. I don't know that we are going to get over 100 transactions again, but I would see us being at a level consistent with the past five or six years.
HLM: What's the five-year outlook?
Kamholz: Right now the primary transactions taking place are the smaller community hospitals are joining health systems. At some point, the smaller health systems will join larger health systems, the midsized systems will join larger systems or form their own larger health system. We see the cycle continuing for many years and well past this current decade.
HLM: Is the independent community hospital an endangered species?
Kamholz: I don't know that every independent community hospital will ultimately go away. There may be a role and place for some of those, but the environment is getting significantly more difficult for those folks to be successful. The level of investment that is necessary to develop the competencies to be successful in the value-based care business model is significant.
And not all organizations are going to be able to accomplish that. In certain markets, independent community hospitals will be challenged to achieve a cost level that is competitive in the marketplace when compared with larger organizations.
That said, there is a lot of rural America and there is probably a place for independent community hospitals in those rural settings in some form or fashion.
HLM: The hospital sector went through contractions in the mid-1990s. Do you sense it will be more sustained this time?
Kamholz: I started working in a period that was going through very rapid consolidation in the mid-1990s, largely driven by what was considered to be HMOs driving capitation. Ultimately, that did not materialize at that time.
Then we went through a period where there was relatively limited consolidation. From 2000 to 2010 there were somewhere from 50 to 60 transactions a year. Now we are significantly above that range, and I'd say it's more permanent.
When healthcare expenses account for 20% of the gross domestic product, that is an imbalance in our economy and it is not sustainable. So, while the government is driving certain parts of this, the commercial markets are accelerating this more than the governmental markets.
The first CMS model to focus on the health-related social needs of Medicare and Medicaid beneficiaries will test ways to link clinical and community services and to address health-related social needs through the use of community health navigators.
Rural and community health advocates have long talked about the need to improve cooperation and coordination with social services providers. This makes sense not only because the end result will be better, cost-effective care. It's also a better use of scarce resources at a time when many rural providers are struggling to keep the doors open.
It now appears that the federal government shares that line of reasoning. The Centers for Medicare & Medicaid Services is offering $157 million in seed money over five years for as many as 44 "bridge organizations" across the nation that will assess their Medicare and Medicaid patients' health-related social needs, refer them to community resources, and assign them to "community health navigators" who will help them through the process.
It's the first model for CMS that focuses on health-related social needs of Medicare and Medicaid beneficiaries. It will test ways to link clinical and community services and to address health-related social needs through community referral, community service navigation, and community service alignment.
"We've known for a long time that an ounce of prevention can be worth a pound of cure. Yet our healthcare system doesn't always encourage prevention, especially around unmet social needs," CMS Deputy Administrators Darshak Sanghavi, MD, and Patrick Conway, MD, wrote on the CMS blog.
"These problems can lead to poor health that requires expensive emergency room visits or hospitalizations. Many social needs, such as housing instability, hunger, and interpersonal violence, affect individuals' health. Yet they may not be detected or addressed during typical, short doctor's visits."
CMS offered this hypothetical scenario to show how the program might work: "A mother comes in to a participating community health center for her child with asthma. During a complete social screening, the center learns the mother has been living in a moldy trailer after fleeing a violent home life. They refer the family to a local safe housing program and legal aid to protect her. The center connects her with these services with the aid of a community health navigator. By helping the family find safe permanent housing, we reduce the frequency of the child's visits to the ER for asthma attacks."
Source: CMS
Another scenario could be as simple as finding transportation to a physician's appointment for an elderly patient, or conducting a home fall-risk assessment, or ensuring that a patient's electricity isn't shut off. Each patient comes to healthcare providers with their own set of luggage. (The CMS blog provides more details about how the program might work. The agency is also holding webinars on Jan. 21 and Jan. 27 to explain the application process. Registration is required.)
Sally Beckley, executive director of LifeTime Resources, Inc., in Dillsboro, IN, says the not-for-profit area agency on aging is already providing many of the case management services in its three-county service area that might fall under the Accountable Health Communities project. Still, she likes what she's hearing from CMS.
"I have been very interested in the last five or six years that the federal government is starting to recognize the value of these services," says Beckley. "Up until then there was absolutely no recognition at all, and there has never been a connection between Older Americans Act programs and CMS. They're two different worlds. They don't connect."
Source: CMS
Beckley says the walls between health providers and social services will have to be knocked down if the program is to be successful.
"The healthcare world doesn't think in terms of social services, and so it just doesn't even come to mind to begin with, particularly in our rural area where there aren't a lot of options," she says. "That's where the model that we are developing is. Because we are such a rural area, it is very focused on individualized care plans. If we can help the medical community know when to make a referral to us, then we can figure out how to solve their problem. The guts of what we are trying to do is to help the medical community understand the value of what we do and then be creative in trying to find solutions."
Tim Putnam, CEO at Margaret Mary Community Hospital, says providers at the critical access hospital in Batesville, IN "see so many things that negatively impact health when we deliver acute care services that we can't impact."
"From a small community or rural perspective where you don't have a taxi service, transportation comes out as No. 1," he says. "I see a lot of people who are vulnerable and who need someone who can take a patient home from the ED or someone who can help tighten the handrail in their home or help them shop for the right kinds of food or help prepare a meal. Things like that are what help people live a healthier lifestyle."
Putnam says these interventions could be cost effective, but it can't simply be a program where hospitals go it alone.
"It is going to have to be healthcare delivery organizations working closely with other organizations and agencies. That can vary from a council on aging, public health departments, even local churches and other social organizations," he says. "It is not going to be a hospital or a group of hospitals trying to build this infrastructure themselves. It's going to be trying to leverage what already exists out there and create a common work platform."
There are also some practical problems that will have to be ironed out, such as who gets the check, and who gets paid for what. Putnam doesn't think that will present too big an obstacle.
"We're gaining an expertise in that as we get into bundled pricing and the new payment models so it is forcing people to come together and have that discussion," he says. "I can't say it is going to be smooth all the time. People value their services differently, and how to get paid for that will be an interesting discussion. But it is clearly a discussion that we are having more and more now than we were just a couple of years ago."
Putnam says he's interested in the pilot program but he's not ready to commit.
"It will be a discussion I will have with community partners to find out if it is something they'd be interested in," he says. "If they are, it is something we should look into. But without interest from other parties we would not want to do it alone. That's not the way it needs to happen."
Healthcare jobs accounted for 18% of the 2.6 million new jobs created in the United States in 2015. Coincidentally, healthcare spending represents nearly 18% of the nation's gross domestic product.
Hospital job growth exploded in 2015, with 172,200 payroll additions reported, a 306% increase over the 42,400 jobs created in 2014, according to the Bureau of Labor Statistics.
Overall, the healthcare sector reported record job growth in 2015, with 474,700 jobs created, which represents a 53% increase over the 309,000 healthcare jobs created in 2014.
Ambulatory services continued to lead the way in terms of overall number of jobs created within the healthcare sector, with 258,000 new jobs in 2015, a healthy but relatively modest 12% increase over the 230,000 ambulatory services jobs created in 2014, BLS data show.
Healthcare jobs accounted for 18% of the 2.6 million new jobs created in the United States in 2015. Coincidentally, healthcare spending represents nearly 18% of the nation's gross domestic product.
Christopher DeCarlo, an economist with the BLS, says the job growth "is really not an overly complicated story. It's just supply and demand."
Peter Ubel
"What you would probably find is that the increased costs and increased labor costs are closely tied to wages and benefits," DeCarlo says. "Ultimately what you probably have is more people coming into the healthcare sector as a result of the higher wages and net growth, particularly with the increasing the number of retirees."
The healthcare sector now accounts for 15.3 million jobs, including seven million in ambulatory services, and nearly five million in hospitals.
Good News, Bad News
The growth in healthcare jobs presents a double-edged sword for a nation that already spends close to 20 cents of every dollar on healthcare, far more than any other advanced industrialized nation.
Peter Ubel, professor of business, public policy and medicine at Duke University, says whether the hiring trend is good news or bad is a matter of perspective.
"If you're in the healthcare industry it's good news, but for the rest of the country it's a little bit disturbing," Ubel says.
Healthcare jobs are created in virtually every part of the United States. These are generally well-paying jobs with salaries that percolate throughout the communities and regions served by physicians, nurses and other healthcare providers. At the same time, every dollar spent on healthcare is a dollar that can't be spent on other pressing needs.
"The growth in healthcare jobs is a sign that that part of our economy is growing larger than we can handle, and while it is great for everyone who has those jobs, paying for healthcare shifts tax dollars or it comes out of healthcare premiums, which come from our salaries, and so that's not good news. It's not just the government that is paying for healthcare. About half of healthcare spending is non-governmental, so it is coming out of paychecks and it's money that we could be spending on other things or that we could be saving for retirement."
Nicole Smith, chief economist at the Georgetown University Center on Education and the Workforce, says few sectors of the economy can match healthcare when it comes to long-term job growth.
"For this long and this many jobs the only thing close is education," Smith says. "The two sectors have a very peculiar commonality. They are also two of the least-productive sectors of the economy. If we define productivity as gross output per person employed, and we view both of these sectors as requiring heavy human input… we have this dubious correlation between the lower productivity levels of these two sectors that are also growing fast in terms of jobs created."
The low productivity may be a function of the work required of healthcare providers and educators. "They work with people and people don't necessarily move like machines," Smith says. "It means you don't necessarily get the economies of scale and outputs in a generic fashion in the way you can with models for producing things and products."
"We have created a very complex system of healthcare provision that is still inefficient, and that is still costly, but it is a function that is highly determined by demographics."
Smith cautions that one of the fastest job growth areas within healthcare is for nursing aides and other relatively low-paying fields. "It's less wages, less opportunity, less upward mobility. It's difficult to move from being a nurse's aide to becoming a nurse," she says.
"We don't want to create these end-of-the-road healthcare support jobs if they're a dead-end for some people. We want to make sure that pathways are developed so they can move forward."
The proposed merger between the health systems would place limits on negotiated rates with insurers, and tie healthcare cost growth in two states to the federal Hospital Consumer Price Index and Medical Consumer Price Index.
Leaders from Mountain States Health Alliance and Wellmont Health System last week said their proposed mergerwould invest nearly $500 million in regional health initiatives over the next decade while holding healthcare cost growth below national averages in their two-state service area.
"One of the things you've heard from organizations that oppose these mergers generally is that they lead to substantial price increases," Alan Levine, president and CEO of Johnson City, TN-based Mountain States, said in a media conference call. "No one can credibly say that this merger will lead to pricing increases. It is not possible under the model that we have proposed."
Levine said the proposed merger would place limits on negotiated rates with insurers, and tie healthcare cost growth for their operations in Tennessee and Virginia to the previous year's growth as measured by the federal Hospital Consumer Price Index and Medical Consumer Price Index.
"In both cases it would be the consumer price index for that relevant field, minus .25%, [which] would be our cap," he said. "The first full contract year after the merger is consummated, our plan is for existing contracts, where the fixed automatic rate increases is already agreed to by the payers, we will decrease for that year for 50% the already agreed to rate increases. Thereafter, the cap would be tied to the CPI minus .25% for hospitals and for medical care from physicians."
For example, Levine says the average hospital and physician CPI increases last year were around 3.25%, which would put the merged system on a 3% cap. "And that is our cap," he says. "We may be priced under that cap."
The promise to hold cost growth below the national average is not mere rhetoric, Levine says, because the consolidated system could face "very clear consequences" if those cost containment goals aren't met.
"The Supreme Court has been steadfast in the state action doctrine of antitrust," he said. "There are two things required. One is that it is the policy of the state to permit the supplanting of competition in certain circumstances with regulation. We clearly meet that requirement because it is a policy of Virginia and Tennessee to permit this, as recently affirmed by both legislatures and governors within the last 12 months."
"The second prong of that test is that it has to be actively supervised by the state," Levine said.
"That process has already begun. The states have articulated rules for how the Certificate of Public Advantage application should be submitted. We plan to follow those rules. After the COPA is approved by the state, if we violate any provision of the COPA, the state has the right to terminate the COPA, which would trigger a plan for separation and would subject us to Federal Trade Commission scrutiny at that point."
Levine says he's confident that "a variety of variables" that will allow the merged health systems to provide care at lower-than-average prices.
"By eliminating unnecessarily duplicative capital and operating expense due to unnecessary duplication of services, we can generate savings not otherwise available if the systems were to be acquired by outside hospital systems," he said.
"Also, it is important to note that our region has the third-lowest Medicare Wage Index in the nation. So our operating costs generally are lower than other areas of the nation."
Merger Plans Progressing
Mountain States and Kingsport, TN-based Wellmont leaders say the merger proposal is moving along with enthusiastic support from the boards of directors at both systems, and could gain final regulatory approval from Tennessee and Virginia by mid-year.
The proposal includes nearly $500 million in "transformational investments" over the next decade that include:
At least $75 million to invest in population health improvements to meet the unique health needs of the region through a 10-year plan to be developed with the community and the public health resources at East Tennessee State University;
At least $140 million to expand community-based mental health services, residential and outpatient addiction recovery programs, and tobacco and substance abuse prevention programs as well as to further support children's and rural health services;
At least $85 million to develop and grow academic and research opportunities, support post-graduate health care training, and strengthen the pipeline and preparation of health professionals in the region; and
Up to $150 million to implement a common information technology platform to support the regional exchange of health information, connect our hospitals, physicians and other caregivers, and allow the combined system to offer higher quality, more convenient and more cost-effective care for patients.
"This is a social innovation on a scale that will attract philanthropic grants and investment and be the subject of research studies, trade journal articles, as well as philanthropic and social entrepreneurship case studies for years to come," Wellmont Board Chairman Roger Leonard said.
"This will also prove to be one of the most exciting economic development initiatives in our region in the coming decade," he says. "I mean think about it; close to a half billion dollars' worth of investments back into our region. The economic development professionals in our region ought to be doing back flips right now."
When PPACA politics trumps PPACA policy, hospitals and patients pay the price.
Sometime Wednesday the U.S. House is expected to pass yet another bill to repeal the Patient Protection and Affordable Care Act. President Obama has already said he will veto Senate companion legislation, which means the House vote is purely symbolic. After more than 60 unsuccessful attempts to repeal the bill, what this latest vote actually symbolizes I will leave for others to decide.
Meanwhile, in the real world, a couple of studies released this week illustrate the stark differences in healthcare access and cost between some of the states that have expanded Medicaid under the PPACA and some of the 20 states that have not.
In one study, sponsored by The Commonwealth Fund and issued this week in Health Affairs, Harvard University researchers compared the experiences of about 5,600 low-income adults living in Kentucky, Arkansas, and Texas in late 2013 and late 2014. Within that 12-month window, Arkansas expanded Medicaid using federal funds to buy health insurance through the ACA's marketplaces, Kentucky expanded eligibility for its traditional Medicaid program, and Texas held firm as a non-expansion state.
Many of the Harvard findings are what you'd expect, but still worth noting:
The uninsured rate in Kentucky and Arkansas fell 14 percentage points more than in Texas from 2013, before the full implementation of the coverage provisions, to 2014, after the expansion's full year. The uninsured rate for low-income adults was about 40% in all three states in 2013 but had dropped to 19% in Arkansas, 12% in Kentucky, and 27% in Texas in 2014.
The number of people in Kentucky and Arkansas who reported having trouble paying medical bills fell nine percentage points more than in Texas from 2013-14, while the numbers of people who reporting skipping a prescription because of cost fell 10 percentage points, respectively, in the same timeframe.
The number of adults with chronic conditions such as high blood pressure or diabetes who reported receiving regular care climbed almost 12 percentage points in Arkansas and Kentucky than in Texas.
The share of people who reported that the emergency room was their usual access point for care was about 9.6% in all three states before the expansion. However, that figure dropped five percentage points in Arkansas and Kentucky, when compared with Texas. At the same time, demand for outpatient visits in expansion states pushed overflow into the emergency rooms. As a result, the number of people who said they used the ER because they couldn't get an outpatient appointment rose nearly five percentage points in Kentucky and Arkansas.
A second study by University of Michigan researchers, also appearing this week in Health Affairs, found huge drops in the amounts of uncompensated care delivered by hospitals in expansion states just six months after opening the roles to more low-income people.
David Blumenthal, MD
"This study provides evidence that expanding Medicaid eligibility matters more than how it is expanded, on most indicators," Commonwealth Fund President David Blumenthal, MD, said in remarks accompanying the study. "As states that have not yet taken steps to expand their programs weigh their options, these findings demonstrate the value of Medicaid in making healthcare more accessible and affordable. New approaches to expanding Medicaid should be monitored to ensure these goals are being achieved."
U-M Study Tracks Uncompensated Care
The University of Michigan study in Health Affairsfound that between late 2013 and mid-2014 hospitals in expansion states saw a huge drop in uncompensated care, and a rise in care for patients with coverage, when compared with non-expansion states.
Using a new data source from the Agency for Healthcare Research and Quality's HCUP Fast Stats program, the U-M study examined hospital discharges in the expansion states of Arizona, California, Colorado, Hawaii, Iowa, Kentucky, Minnesota, New Jersey, and New York and found that hospital stays by uninsured patients went down 50%, and stays by people with Medicaid went up 20% over the six-month period that was examined.
Sayeh Nikpay, PhD, MPH
Not surprisingly, it was just the opposite in the non-expansion states of Florida, Georgia, Indiana, Missouri, Virginia, and Wisconsin, all of which continued to experience the same or higher demand for uncompensated care.
For example, Kentucky, where Medicaid enrollment has nearly doubled since expansion, saw a 13.5 percentage point drop in uninsured hospital stays in the first six months after expansion. Georgia, a non-expansion state, saw a seven-point rise in uninsured hospital stays in early 2014.
"In expansion states, we see exactly what we would expect to happen after Medicaid became available to more people," Sayeh Nikpay, PhD, MPH, lead author of the U-M study said in remarks accompanying the release. "Even in these early months, the shift from uninsured to Medicaid contrasts sharply with the steady demand for uninsured care in non-expansion states. This has implications for the financial status of hospitals."
PPACA Politics Trumps PPACA Policy
It became obvious early in this process that the policy argument against Medicaid expansion has no legs. That's because it's never been about anything beyond partisan politics. Studies such as these from Harvard and U-M simply verify what we already know—that a chasm in healthcare coverage and access and reimbursement now exists between expansion and non-expansion states.
Yes, Medicaid has any problems, including low reimbursement. However small that reimbursement, it's better than uncollectable bad debt or charity care write-offs. Medicaid does not create a healthcare need. It provides a funding mechanism, however flawed, to pay for a healthcare need that already exists and that we pay for though cost-shifting and other opaque schemes.
For those who dislike traditional Medicaid, the Centers for Medicare & Medicaid Services has shown flexibility. As noted in the Harvard study, Arkansas used its Medicaid expansion money to extend private market coverage for low-income people. Conservative state leaders in that dark red state should be congratulated for putting politics aside and finding a solution. They demonstrated what can be accomplished with compromise.
Sadly, the political leadership in 20 states has yet to muster the courage to act. Those most affected by the obstinate refusal to expand Medicaid coverage are also the most vulnerable and sickest among us, and the hospitals and other providers who serve them.
Organizations involved in separate deals include LifePoint Health, Duke LifePoint, Baylor Scott & White Health, Tenet, and Community Health Systems, among others.
The hospital mergers and acquisitions market spent the first week of 2016 wrapping up old business from 2015. Several previously announced deals from the past several months were finalized with the New Year. In addition, some new deals were announced in the final days of 2015. Here's a quick update.
LifePoint Health Acquires St. Francis (GA) Hospital
LifePoint Health on Monday finalized its acquisition of the 376-bed St. Francis Hospital in Columbus, GA, which was first announced last fall.
Financial terms of the deal were not disclosed. However, St. Francis, founded in 1950, had been in financial straits since November 2014 when the not-for-profit hospital disclosed a $30 million accounting error.
News media in Columbus, GA reported that LifePoint paid off about $240 million in St. Francis debt, most of which was a loan from the U.S. Department of Housing and Urban Development that funded a hospital expansion in 2011.
St. Francis was also the subject of a lawsuit filed last summer in federal court by Community Health Systems, Inc. related to failed merger negotiations.
Under the LifePoint acquisition, St. Francis will switch to for-profit tax status, and continue its existing charity care policies, with a local board of advisors.
Brentwood, TN-based LifePoint owns community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 21 states.
Duke LifePoint Acquires 2 NC Hospitals
Duke LifePoint Healthcare on Monday finalized its previously announced acquisition of Tenet Healthcare Corp.'s 137-bed Central Carolina Hospital, in Sanford, NC; 355-bed Frye Regional Medical Center in Hickory, NC; and 19 regional physician practices.
Financial terms were not disclosed for the deal, which was first announced in November.
"With the addition of these providers to our network, we've expanded Duke LifePoint's strong presence in North Carolina to include nine hospitals across the state," William J. Fulkerson Jr., MD, executive vice president of Duke University Health System, said in prepared remarks.
"We have opportunities to collaborate with Central Carolina and Frye Regional to provide enhanced services that will help make people in Sanford, Hickory, and surrounding communities healthier and advance the delivery of quality healthcare throughout this region," Fulkerson said.
Under the deal, Duke LifePoint has hired all eligible Central Carolina and Frye Regional employees and will maintain all service lines. With the acquisitions, Duke LifePoint now operates 14 hospitals in North Carolina, Virginia, Pennsylvania, and Michigan.
The sale leaves Tenet with no hospitals in North Carolina. During a conference call with investors, Tenet CEO Trevor Fetter said the Dallas-based company was leaving markets "where we don't believe we can achieve the scale needed to be the most efficient local healthcare provider."
Baylor Scott & White Health, Tenet Complete North Texas JV
Baylor Scott & White Health and Tenet Healthcare Corp. on Monday completed the previously announced joint venture to own five hospitals in North Texas that was announced last March.
The hospitals are: Centennial Medical Center in Frisco; Doctors Hospital at White Rock Lake in Dallas; Lake Pointe Medical Center in Rowlett; Texas Regional Medical Center at Sunnyvale; and Baylor Scott & White Medical Center – Garland.
"Together, we will advance and strengthen the population health model in the greater Dallas area by creating a strong network to improve the wellbeing of people in our communities," Baylor Scott & White Health CEO Joel Allison said in a joint statement.
Centennial Medical Center, Doctors Hospital at White Rock Lake, Lake Pointe Medical Center, and Texas Regional Medical Center at Sunnyvale will transition to Baylor Scott & White Health branding this spring. Physicians, advanced practice providers, and other employees of Tenet's North Texas physician group will transition to Baylor Scott & White Health's physician group, HealthTexas Provider Network.
"We have already made meaningful progress in advancing population health through our physicians' participation in the Baylor Scott & White Quality Alliance, a leading local accountable care organization, and the completion of this joint venture is an important next step in coordinating top-quality, value-based care in North Texas," Tenet CEO and Chairman Trevor Fetter said in a joint statement.
Tenet operates 84 general acute care hospitals, 20 short-stay surgical hospitals, and more than 470 outpatient centers in the United States.
Baylor Scott & White Health was formed from the 2013 merger between Baylor Health Care System and Scott & White Healthcare. The not-for-profit healthcare system reports total assets of $9 billion.
CHS Buys Majority Stake in 2 IU Health Hospitals
Franklin, TN-based Community Health Systems, Inc. will acquire majority ownership of Indiana University Health La Porte Hospital, and Indiana University Health Starke Hospital in northwestern Indiana, the for-profit health system announced in late December.
When the deal is finalized early this year CHS will assume 80% ownership of the hospitals and IU Health will keep a 20% stake. The two IU hospitals will lose their not-for-profit status and become local taxpayers, according to media releases.
Financial terms were not disclosed, but nwitimes.com reported that the La Porte hospital campus alone had an assessed value of $21.76 million, while the Starke hospital property was assessed at $2.37 million, according to their respective county assessor's websites.
IU officials are touting the deal as one that would "create a new organization that will solidify the ability of the La Porte and Starke Hospitals to provide high quality, accessible care to their community long into the future." Although it surrenders a majority stake, IU Health says it will share equal governance of the new system with CHS to ensure that a local voice is included in all future decisions.
"We are pleased to be able to continue our long standing relationship with IU Health La Porte and Starke hospitals," IU Health CFO Ryan Kitchell said in prepared remarks. "This new arrangement will enhance patient care and service, as well as continue to provide access to the specialty care available within the IU Health system."
The Healthcare Foundation of La Porte has been established to receive proceeds from the change in ownership and will use the money to invest in community health initiatives directed by IU Health La Porte and Starke hospitals. This foundation will be governed and managed locally.
"This is a very important step for our organization and one that will have a profound impact on our ability to improve the health of our patients and the communities we serve," said G. Thor Thordarson, president of 227-bed IU Health La Porte Hospital.
"I'm looking forward to a period of significant growth that builds upon the rich history of excellence and innovation in healthcare dating back to the 1800s," he said. "To be able to add to this legacy in such a way is extremely gratifying."
Craig Felty, president of IU Health Starke Hospital, said the affiliation marks the latest step in a long-term growth strategy at the 50-bed hospital. "In a time when rural hospitals are going by the wayside, this speaks volumes to our successes, and we are very pleased to be able to execute a strategic direction that has growth, stability and mission-driven health at the core," he said.
CHS operates 197 hospitals in 29 states across the nation, including 11 hospitals in Indiana with the completion of this acquisition.
"We will support the work of these hospitals to improve the overall health of their communities by investing capital and expanding resources for physicians and employees to deliver high quality care," CHS CEO Wayne T. Smith said in prepared remarks. "Economic development efforts in Northwest Indiana between Valparaiso and South Bend and a new relationship with IU Health make these hospitals strong additions to our network of facilities."
In an unrelated transaction, CHS announced that it has completed the sale of Bartow (FL) Regional Medical Center and its outpatient services to BayCare Health System, Inc., effective Jan. 1.
Norton Healthcare, U of L Settle Kosair Children's Hospital Suit
Norton Healthcare and the University of Louisville announced jointly that they have reached a settlement that ends more than five years of negotiations and two years of lawsuits.
The dispute began in 2013 when U of L objected to Norton's plans to start a pediatric services affiliation with the University of Kentucky Children's Hospital in Lexington. U of L threatened to evict Norton from Kosair Children's Hospital, which Norton built and operates, but which U of L uses for pediatric training and research under a state lease. Norton filed suit and the two sides have been at it ever since.
The agreements, announced jointly late last month, include an amendment to the 1981 land lease between Norton and the Commonwealth of Kentucky for the children's hospital property that secures Norton's ownership and control of the hospital, confirmed by the Commonwealth and U of L. It also allows Norton to continue plans for more than $35 million in additional capital improvements to its children's hospital over the next five years. Those plans had been held up with the litigation.
"The combined agreements stabilize the relationship between Norton and U of L in pediatrics and facilitate additional investments in pediatric care, while also allowing for appropriate collaboration with UK and other providers across the state to advance pediatric care in Kentucky," Norton Healthcare CEO Stephen A. Williams said in prepared remarks.
The package of agreements includes an amendment to the 2008 academic affiliation agreement between Norton and U of L sets an eight-year term with automatic annual renewals thereafter. U of L will be Norton's primary academic partner for pediatrics with at least 90% of the Norton's residency positions at the children's hospital being made available to U of L. U of L guarantees that its pediatric residents will utilize the children's hospital as U of L's primary hospital training site and that the majority of its pediatric hospital admissions will be made to the children's hospital.
Norton will be allowed to pursue other third-party relationships, including the collaboration with UK Children's Hospital, as long as its commitments to U of L are fulfilled, and U of L agreed to participate in collaborative pediatric care joint programs.
Under the terms of the agreement, U of L will receive $272 million over eight years. Norton has extended its current total of $30 million in annual funding for U of L academic support and physician services over the next eight years, with an additional $3 million annually for additional pediatric care investments. U of L also will receive a one-time payment of $8 million to resolve financial disputes. The University of Louisville Physicians group and the Commonwealth of Kentucky are also parties to the agreements, the two sides said.
"We reached fair and mutually beneficial agreements that extend our long-time relationship for providing the highest level of pediatric care to the children of the Commonwealth and beyond," Larry Benz, chair of the U of L board of trustees, said in a media release. "Both organizations are passionate about fulfilling their missions in this regard. We are now focused on how our organizations will combine our strengths to make Kosair Children's Hospital a top tier pediatric hospital in the United States."
