Health system executives saw a median salary increase of 3.6%, while hospital executives saw an increase of 2.6% in the last year. Physician assistants saw a 4.05% bump.
Median base salaries for health system and hospital executives rose 3.1% in the past year, according tosurvey data from Sullivan, Cotter and Associates, Inc.
The data, reportedly gleaned from more than 400 health systems and 1,300 hospitals, found that large systems with more than $1 billion in revenue and large hospitals with $300 million or more in revenue saw median base salaries increase at a faster rate than their smaller counterparts. The increases were both above average at 3.6% and 3%, respectively.
Health system executives saw a median increase of 3.6%, while hospital executives saw an increase of 2.6%.
Tom Pavlik, Managing Principal, Sullivan Cotter, says some of the compensation increases are related to the size of the systems, "but also to the complexity of the roles."
"It is a combination of the growth in the organization, the growth in the role, and the growth in the span of responsibilities for the executives," he says. "We are starting to see new positions come along for executives that have clinical integration or population health expertise. We didn't have those positions in the survey five or 10 years ago."
Pavlik says today's healthcare executives are grappling with the transition to value-based care, consolidation and integration strategy, all in an increasingly competitive healthcare sector.
"Does the expertise have to be broader or deeper? The answer is both," Pavlik says. "There has to be a deeper knowledge of our current healthcare delivery environment. But now we are having to look beyond the typical acute care setting to looking at health plans, health insurance markets, ambulatory care, and physician networks. If you look at the vertical and horizontal integration, it is happening in both directions and that will impact roles as well."
Thechanges in base salary were consistent with 2014's overall change. However, total cash compensation increased 6.9% for top executive positions. This is higher in health systems at 7.4%, and up from 1.8% in the 2014 findings.
Pavlik says the prevalence of annual incentives has remained the same but the number of healthcare organizations paying incentive awards and paying at target levels increased in 2015.
"More organizations paid out incentive awards and those that did paid at target levels or higher for a significant number of those organizations. That drove total cash to a nearly 7% increase from last year," Pavlik says.
PAs See Solid Compensation Growth
Physician assistants fared relatively better than executives. The median base salary for PAs in 2014 was $93,800, a 4.05% increase over 2012, according to a survey from American Academy of Physician Assistants.
AAPA administered the online survey between February and March, 2015. More than 10,000 AAPA members and nonmembers responded.
The AAPA administered online survey heard from more than 10,000 respondents. Fifty-four percent of all PAs received monetary bonuses and more than 75% receive some other form of compensation, such as research stipends, profit sharing, student loan repayment, paid relocation, tuition reimbursement or signing bonuses.
"PAs are a dynamic and driving force across all of healthcare. This survey is invaluable to those who are looking to change specialties or geographic location, or who just want to understand their position in the marketplace," AAPA CEO Jennifer Dorn said in prepared remarks. "It's also a key tool for employers, as they recognize and reward the crucial role PAs play in reducing costs, increasing access for patients and delivering quality care."
The survey additionally found that:
PAs at critical access hospitals ($115,000), industrial facilities ($115,000), and hospital emergency departments ($101,920) reported the highest median compensation levels.
PAs in the cardiovascular and cardiothoracic surgery specialty reported the highest median base salary ($117,000) followed by interventional radiology ($105,500), emergency medicine ($102,960) and pediatric surgery ($102,500).
PAs with less than one year of experience had a base salary of $85,000, which rose to $89,000 for those with 2 to 4 years, and $96,000 for those with 5 to 9 years' experience.
Founded in 1968, AAPA represents approximately 104,000 certified PAs across all medical and surgical specialties in all 50 states, the District of Columbia, the U.S. territories and the military.
This is not the first alert directed at falls, which are described as a "complex, chronic problem." The alert is directed at healthcare facilities in general, not only inpatient settings.
Despite widespread prevention efforts, patient falls remain a dogged and dangerous problem in healthcare settings, The Joint Commission says.
In a Sentinel Event Alert issued last week, The Joint Commission noted thatpatient falls with serious injury are among the top 10 sentinel events reported to its database, which has received 465 reports of patient falls with injuries since 2009. Of those falls, 63% resulted in death.
Erin DuPree, the Chief Medical Officer and Vice President for The Joint Commission Center for Transforming Healthcare says that this latest sentinel alert is not the first directed at falls, which have proved vexing for many providers.
"It's a complex, chronic problem and with the complexity of healthcare organizations today it is why we are still dealing with falls," she says.
"Ultimately, a lot of the falls work has been around identifying who is at risk and who are the high-risk patients. Really, especially in the hospital setting or any healthcare setting, all patients are at risk at some level. It's a different approach when you look at it from that lens."
The Joint Commission defines a sentinel event as a patient safety event not primarily related to the natural course of the patient's illness or underlying condition that reaches a patient and results in death, permanent harm, or severe temporary harm where intervention is required to sustain life.
Although the majority of falls reported to The Joint Commission occurred in hospitals, the ECRI Institute also reports a significant number of falls occurring in non-hospital settings such as long-term care facilities.
"This alert is about healthcare facilities in general," DuPree says. "A lot of the understanding around falls has come from the inpatient setting, but this alert is targeted to healthcare facilities in general."
The sentinel event alert cites these common contributing factors for falls:
Inadequate assessment
Communication failures
Lack of adherence to protocols and safety practices
Inadequate staff orientation, supervision, staffing levels, or skill mix
Deficiencies in the physical environment
Lack of leadership
DuPree says provider leaders have to ask themselves some tough questions about fall prevention strategies in their organizations.
"The first things leaders need to ask themselves is are they just trying to meet compliance with CMS or are they committed to preventing falls in their organizations, which would require them to understand their outcomes and their aims."
"Are they really aiming to prevent falls for every single patient? Then, look at how other staff and management teams are approaching the problem. Are they approaching it in a systematic, data-driven way? Are they using robust process improvement, or are they just throwing every solution set at the wall and hoping it works?"
Erin DuPree
DuPree says consistency across the entire organization is also a challenge.
"Everyone says 'oh yeah we have a falls risk assessment. We put that in our EMR,'" she says. "But when they drill down in a systematic data-driven way, they find that it's not implemented consistently or well. Every nurse has their own definition of what different aspects of the assessment mean and maybe it's not built into their orientation and so the new nurses don't even know and they learn through osmosis. So, the implementation and delivery of these preventive measures are done inconsistently."
DuPree says it is also important that every healthcare organization understand its own specific challenges and not rely on a one-size-fits-all approach.
"It's very important that they discover what their issues are to target solutions to their unique needs. That is at the heart of these tough, chronic issues in healthcare today," she says. "The approach to improvement is usually far too basic for the complexity of these problems. That is what we find in healthcare today. One size does not fit all, but that is the approach used by a majority of healthcare organizations today. We will not improve or transform in healthcare using that approach."
Some major healthcare systems, including Lifepoint, Tenet, and Geisinger have made recent announcements about mergers, acquisitions, and partnerships.
Nearly two years after signing a letter of intent, Geisinger Health System has finalized its acquisition of AtlantiCare, an integrated health system based in Atlantic City, NJ.
The acquisition took effect on Oct. 1, shortly after the deal cleared regulatory review by state officials.
"This is one of the most important things to create a sustainable AtlantiCare and one that will have the ability to be successful in the new world of the Affordable Care act and new value-based models," AtlantiCare President/CEO David Tilton told reporters after a signing ceremony at AtlantiCare.
David Feinberg, MD, and David Tilton
"The innovations and the change that we will see in healthcare here and across the nation are really a result of changing consumer views about healthcare, the Affordable Care Act, and its impact on healthcare," Tilton said. "What we are trying to do is create those models and those payment systems that will be appropriate for the consumer in the future. We have a partner now that has a proven track record in doing just that."
Tilton said Geisinger's "proven care models" have found traction at AtlantiCare, the 2009 winner of the Malcolm Baldrige Award. AtlantiCare operates an accountable care organization serving about 40,000 people, and is participating in the Medicare Shared Savings Program.
"We're bringing them into both our inpatient settings and our ambulatory settings so that our physicians can practice according to these proven models that have been customized for AtlantiCare and the way we practice in Southeast and New Jersey, and the needs of our patients here locally," Tilton said.
Geisinger CEO and President David Feinberg, MD, said the health systems share a commitment to deploy evidence-based medicine programs, enhance capabilities and clinical services, optimize the use of the electronic health record and clinical informatics, and implement population health management and value-based payment models. He said the collaboration between the two systems began about nine months before Thursday's signing ceremony.
"The results are outstanding. We've seen decreased utilization of unnecessary ER visits, decreased hospital admissions," he said. "The things that Geisinger is known for we're really excited to bring to this platform in Atlantic City."
Baptist Health South Florida, Bethesda Health to Merge
Coral Gables-based Baptist Health South Florida and Bethesda Health in Boynton Beach have agreed to merge, with a transition period culminating on Sept. 30, 2017.
In a joint media release, the two health systems said they would use the two-year transition period to "enhance effectiveness in their operations and share best practices to address the ongoing evolution of the healthcare industry."
"The challenge of healthcare reform not only requires better access to care for all, but also the improvement of efficiencies, quality, and outcomes. To survive the evolution of healthcare in our country today, we must be progressive and adjust our operations so that we remain accountable and stable," Baptist Health President and CEO Brian E. Keeley said in a letter to employees announcing the deal.
"By partnering with Bethesda Health, together we can develop and share best practices that can only enhance our commitment to our patients, employees, physicians and the communities we serve."
Brian E. Keeley
Roger L. Kirk, president and CEO of Bethesda Health, said in media release that the changing nature of healthcare makes it "essential to forge partnerships that can ensure our organizations remain on the leading edge as providers of quality medical care. As not-for-profit hospitals, we share similar missions and a common vision for improving the health of our respective communities that can be significantly strengthened by this affiliation."
Bethesda Health includes two hospitals, 670 physicians and more than 2,500 employees.
The UT Southwestern Accountable Care Network (UTSACN) will align primary and specialty care physicians, hospitals, and payers to provide better access to care, better clinical quality, and control costs. The network is made up of faculty physicians at UT Southwestern Medical Center and independent physicians practicing in Dallas County and surrounding areas, UT Southwestern said.
Bruce Meyer, MD
"This new network between UT Southwestern faculty and independent physicians reflects our commitment to a common standard of care that is of the highest quality," Bruce Meyer, MD, executive vice president for health system affairs at UT Southwestern, said in prepared remarks.
"For patients, the network offers more choices and greater access to world-class medical services closer to their homes, ranging from primary care to the most complex specialty care. For physicians, the clinical integration achieved through the network enables them to have advanced analytics and comprehensive patient information at their fingertips to better manage care."
The ACO will hold value-based contracts and fee-for-service contracts, and will rely on the combined physician leadership of GAPN and UTSW, using input from community and faculty physicians to create effective practice transformation.
"To be successful in the current environment of health care, physicians need to lean in to change. That is, embrace and implement clinical integration, population health management, and aligned reimbursement models," said Jim Walton, DO, MBA, president/CEO of Genesis Physicians Group, which includes about 900 specialists, and 450 primary care physicians.
"Physicians who don't make changes now or in the near future may run the risk of becoming marginalized by the shifting payment system," said Walton who will serve as president of the ACO.
The network links community physicians with the faculty practice and resources of UT Southwestern. Members will have access to tools for population risk stratification, predictive modeling, sophisticated disease registries, point-of-care management, automated appointment reminders, patient-centered medical home expertise, and practice-level quality and utilization performance reports with peer comparisons.
UT Southwestern has a faculty of more than 2,700 providing care in 40 specialties to about 92,000 hospitalized patients and oversee approximately 2.1 million outpatient visits a year.
LifePoint to Buy St. Francis (GA) Hospital LifePoint Health says it will purchase St. Francis Hospital, a 376-bed not-for-profit hospital in Columbus, GA.
Financial terms were not disclosed for the deal, which must first clear state regulatory hurdles. St. Francis will convert to for-profit status when the deal is finalized, which is expected by year's end.
"As part of LifePoint, St. Francis will have access to the support and resources needed to not only move beyond our previous financial challenges, but to strengthen our operations and advance how we care for our communities in the future," Richard Y. Bradley, chairman of the St. Francis Hospital Board of Trustees said in prepared remarks.
Under the deal, LifePoint has agreed to preserve local services and St. Francis' charitable mission. No layoffs are planned, and the hospital's 2,800 employees will be rehired when the transition is completed, after a pre-employment screening. LifePoint has also agreed to pay off St. Francis' outstanding debts.
The joint venture includes all Baptist Health System hospitals, Tenet's Brookwood Medical Center, and each organization's related businesses. Under the joint venture arrangement, Tenet is the majority partner and will manage the network's operations.
The JV unites Baptist Health System's four hospitals—Citizens Baptist Medical Center, Princeton Baptist Medical Center, Shelby Baptist Medical Center and Walker Baptist Medical Center—with Brookwood Medical Center. Together, the new system has more than 1,700 licensed beds, nine outpatient centers, 68 physician clinics delivering primary and specialty care, more than 7,000 employees and approximately 1,500 affiliated physicians.
Keith Parrott, the former CEO of Baptist, was named CEO of the JV. "This new partnership will strengthen our collective efforts throughout the region while also preserving and supporting the Baptist tradition and our faith-based approach to quality healthcare," Parrott said.
The presence of people with academic affiliations on the boards of for-profit healthcare companies is not necessarily illegitimate, but does pose questions about conflict of interest or the appearance of it, researchers say.
Conflict-of-interest regulations have removed drug company pens and note pads from physicians' offices, but they haven't addressed the propriety of academic leaders and researchers serving on the boards of for-profit healthcare companies, a new study suggests.
Researchers from the University of Pittsburgh School of Medicine found that nearly 10% of for-profit healthcare company board positions they examined were held by people with academic affiliations. The findings, which appear in the current issue of The BMJ, found that these board members were compensated an average of $193,000 in 2013, and that many of them also held stock in the companies.
Timothy Anderson, MD
Study co-author Timothy Anderson, MD, chief medical resident in Pitt's Department of Internal Medicine, says the findings show that academic leaders and professors may have relationships with for-profit companies that fall outside the parameters of the Physician Payments Sunshine Act.
"Often when we talk about conflicts of interest in medicine, we are talking about physicians receiving pens and meals from sales representatives," Anderson says. "The stakes are much higher for the board members in our study."
The Pitt researchers analyzed public disclosures of all publicly traded U.S. healthcare companies listed on the NASDAQ exchange and New York Stock Exchange in January 2014 that specialized in pharmaceuticals, biotechnology, medical equipment, and providing healthcare services.
Of the 442 companies with publicly accessible disclosures on boards of directors, 180 (41%) had one or more academically affiliated directors in 2013. These individuals included professors, trustees, CEOs, vice presidents, presidents, provosts, chancellors and deans from 85 non-profit academic research and healthcare institutions. The 279 academically affiliated board members received annual compensation totaling over $54 million and owned more than 59 million shares of company stock.
Questions About Conflict of Interest
Anderson says the presence of academics on for-profit company boards is not necessarily illegitimate, but it does pose legitimate questions about conflict of interest or the appearance of it.
"Our view is not to pass judgment," he says. "We wanted to paint that landscape of how diverse these sorts of relationships are. Some may be quite beneficial and some might be quite concerning, but until we really understand what relationships exist, it is hard for the medical and academic community to have a good discussion about what we should do to minimize the risks and maximize the benefits of these collaborations."
"We do not expect a one-size-fits-all approach would work in managing these relationships, but we risk undermining the public's trust if these conflicts of interest are not addressed openly," he says.
The researchers did not disclose the names of the academically affiliated board members in their analysis. Anderson says the goal is to highlight the issue, not the individuals.
The Sunshine Act requires nearly all payments to physicians and academic medical centers be reported annually by pharmaceutical and medical device companies. The act does not require separate reporting of payments for serving as a company director.
Anderson says the problem could be larger than what his research uncovered.
"The Sunshine Act is limited to looking only at physicians and not people who aren't docs," he says. "It is also only subject to companies that currently sell a product that Medicare pays for. It will cover someone who covers drugs or medical devices but perhaps not a company that is still in development."
Anderson says sitting on a for-profit company board poses particular conflict-of-interest concerns for academics because it can split their loyalties. As academics, they have a primary duty to their patients, their colleagues, their research, and their academic institutions. As paid members of a for-profit board, they have a fiduciary obligation to act in the best interests of shareholders.
"Sometimes those two sets of responsibilities may overlap and sometimes they may not," he says.
"We know if someone is helping run a clinical trial there is some risk, but there is also some benefit from the knowledge gained in a clinical trial. It is a little less clear whether running a company from the board room is something that is going to benefit patients or research."
Anderson and his colleagues hope their study will spark a discussion.
"Some commentators have proposed just not allowing it; telling faculty 'we are comfortable with you participating with the research within the industry or other endeavors, but not leading a company because we feel that would be too great a conflict,'" he says.
"Other commentators recommend limiting how much reimbursement or time their faculty can spend in these roles. We talk about the dollar figures in this paper, but we don't have data for how much money is an influencing amount versus how much is appropriate for reimbursing services. A lot of folks have pointed out that there is not any evidence that this helps or harms individuals or companies, so future research should probably try to determine if there is any benefit or harm to these relationships."
In the second hearing this month to review competition in the healthcare marketplace, the CEOs of Aetna and Anthem and executives of the American Hospital Association told lawmakers about the benefits and perils of health plan mega-mergers.
A House subcommittee on Tuesday heard the pros and cons of two proposed mega-mergers involving four of the nation's largest health insurers.
Mark Bertolini
In the second hearing this month to review competition in the healthcare marketplace, the Subcommittee on Regulatory Reform, Commercial and Antitrust Law heard from a table of payers and providers, including Mark Bertolini, chairman and CEO of Aetna Inc., and Joseph R. Swedish, president and CEO of Anthem Inc.
Last week Bertolini and Swedish told Senators that "robust choice and competition will remain in the Medicare market."
They delivered a similar message Tuesday when the House subcommittee asked for an explanation of the benefits or perils of health plan mega-mergers.
"The acquisition of Humana is about bringing together two companies that are highly complementary," Bertolini said in prepared remarks. "Aetna has traditionally been a large commercial health insurance company while Humana has been a large Medicare company known for its leadership and expertise in Medicare."
"After the acquisition, Aetna will have a product portfolio balanced more evenly between commercial and government products such as Medicare and Medicaid. While this deal is primarily about Medicare, coming together will enable us to offer more consumers a broader choice of products and access to higher quality and more affordable health plan options."
Swedish told the subcommittee that Anthem's proposed merger with Cigna comes at a time when "health insurance is flush with competition."
"The number of health insurers increased by 26% in 2015 with 70 new entrants offering coverage," Swedish said in prepared remarks. "Increased competition in insurance means more choices for consumers. Further, when considering the various segments that make up health insurance, individual, small group, international, larger employer, Medicare Advantage, Medicaid, etc., it is apparent that this transaction will result in minimal shared local markets both geographically and by product segment."
Tom Nickels, executive vice president of the American Hospital Association, told the subcommittee that any benefits coming from the concentration of the health insurance industry would "pale in comparison to the enduring harm the deals could impose on healthcare consumers and providers."
"Among the claims that the insurers make to defend the acquisitions of their closest competitors are that the companies are complementary without significant overlaps and/or allow them to extend to lines of business they could not enter otherwise," Nickels said.
Andrew W. Gurman, MD
"These claims have— and should have —been met with significant skepticism. That also is true of their statements declaring that all healthcare is 'local,' followed by a recitation of national statistics on the number of supposed competitors to imply that there is more than sufficient competition in local markets. However, this is not the case. If all healthcare is local, then only the competitors in a particular local market count in assessing the anticompetitive impact of the deal. Our analyses… show that more than 800 markets for the Anthem deal and more than 1,000 markets for the Aetna deal lack sufficient 'local' competitive alternative."
American Medical Association President-elect Andrew W. Gurman, MD, told the committee that the nation's health insurance market was already heavily consolidated and that the proposed Anthem/Cigna and Aetna/Humana mega-mergers would just make things worse for consumers and providers.
Gurman cited AMA analyses released this month showing that the combined impact of proposed mergers would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states.
"We are at a critical decision point on health insurance mergers, because once consummated, there is simply no going back,"Gurman said in prepared remarks. "Post-merger remedies are likely to be both ineffective and highly disruptive. You can't unscramble an egg. Thus, we believe that the time for heightened scrutiny and careful consideration is now, before proposed mergers take effect and patients are irreparably harmed. The solution lies in more, not less, competition."
Relying only on risk-adjustment characteristics approved by Medicare—age, sex, and diagnosis—puts safety net hospitals in line for significant financial penalties for higher readmissions rates, researchers say.
More research is suggesting that a hospital's patient mix has a direct bearing on readmissions rates.
The latest evidence comes from Harvard researchers, who published a study this month inJAMAInternal Medicine that factors race, education level, poverty, disability and other socio-economic factors when measuring hospital readmissions.
Study lead author Michael L. Barnett, MD, a fellow in general internal medicine and primary care at Harvard Medical School and Brigham and Women's Hospital, says that relying only on risk-adjustment characteristics approved by Medicare—age, sex, and diagnosis—puts safety net hospitals in line for significant financial penalties for higher readmissions rates.
Michael L. Barnett, MD
Barnett recently spoke with HealthLeaders Media about his study findings and offered some recommendations that could level the playing field for hospitals with more challenging patient demographics. The following is an edited transcript.
HLM: What prompted you to do this study?
Barnett: The hospital readmissions reduction program is very much top of mind for hospitals across the country. The third round of penalties was just announced and almost 2,600 hospitals face penalties of $420 million for excess readmissions and 90% of those hospitals were penalized last year.
It appears that hospitals that serve disproportionate numbers of safety net patients get higher penalties and are disproportionately penalized more severely than other hospitals. There has been an active debate to what extent should the readmissions reduction program—which does not take into account any factors other than age, sex and diagnoses—account for other social and clinical factors.
HLM: How did you compile your study, and what did you find?
Barnett: We used a national representative survey of Medicare patients admitted to the hospital from 2009 to 2012. From this survey, we abstracted a very comprehensive set of 29 different characteristics encompassing a lot of social and clinical factors that CMS currently doesn't account for, including illness, disability, race, poverty, and social supports. We asked to what extent all of these characteristics that are not currently used by Medicare are associated with the risk of readmission after we account for everything that Medicare accounts for.
We found that a majority of them were significantly associated with readmission risks—obvious stuff like education, income, race, and disability. Then we asked which patients are admitted to hospitals with high versus low publicly reported readmission rates, and to what extent are these characteristics distributed differently across these hospitals.
For instance, are hospitals that have high publicly reported readmission rates more likely to have patients with lower education, lower income, more disability, or more illnesses? That is what is going to determine whether or not adjusting to those factors will change the hospitals' expected readmission rate.
We took all these factors we collected and we added them into the factors that Medicare adjusts for in a model to predict readmission rates. We found that incorporating all these characteristics would decrease the difference in the readmission rates between the highest and lowest performers by 48%.
When we adjusted for everything that Medicare uses, we found that the top and bottom quintile hospitals readmission rates were 4.4 percentage points apart. When we incorporated everything that we found in our study we shrunk that difference down to 2.3 percentage points. Even though the numbers seem small, the magnitude of the penalty is directly tied to how far off your readmission rates are from the national average.
So any adjustment that is going to change your readmission rate relative to the national average is going to affect your penalty. Our analysis suggests that the penalty is being disproportionately leveled on hospitals serving those who are at a higher risk of admission and readmission, [and those who are sicker] and poorer.
HLM: Were you able to put a dollar figure on the cost of these penalties for safety net hospitals?
Barnett: It is something we wanted to do and a lot of people have asked for it. Unfortunately, our data is a national representative survey. We don't have a big sample in any individual hospital, so we can't tie a dollar amount to it.
HLM: Why is CMS reluctant to make concessions for socio-economic factors in patient populations?
Barnett: CMS's position has been that adjusting for socio-economic factors potentially holds hospitals that are serving disadvantaged populations to a lower standard. The concern is that it could dis-incentivize hospitals to address healthcare disparities.
What we propose is a more sophisticated risk adjustment and program design that can lead to a program where you can address disparities and incentivize quality.
There are a number of pieces of legislation recently passed and currently in Congress addressing this issue. There is the IMPACT Act passed in 2014 which directs HHS to examine the effects of socio-economic status on quality and resource use for Medicare patients. If those studies find a relationship between those factors and quality measures, they require the Secretary to make recommendations for how Medicare can adjust for them.
HLM: What can be done to ensure more balanced risk adjustment?
Barnett: We have a couple of suggestions. We acknowledge that risk adjustment is difficult. We have to accept that the data we access isn't the sort of stuff you can gather for every single patient on Medicare. One or our recommendations is based on an alternative payment models like global payments that preserve incentives for hospitals to reduce readmissions without unfairly penalizing them based on their patient populations.
Of course, those kinds of programs require some sort of risk adjustment for how much you pay the hospital.
Another model we put forward is inspired by the ACO program, where ACOs are rewarded based on their improvement versus their historical average, which in the case of the ACO program is based on prior cost growth. We would have to come up with a different kind of metric for something like readmissions, but we want to incentivize improvement at each hospital, and what the readmissions reduction program does is compare every hospital to a national average.
There is an incentive for every hospital to improve, but to have every hospital held to a similar standard. We think that it could be better to incentivize improvement based on prior performance and come up with a new system where the benchmark you are performing against is either held constant or gradually increases over time so hospitals have an incentive to improve and maintain improvements. But we are also not holding them to an unrealistic standard. It's not like every hospital can improve readmissions every year. That's not possible.
The CEO of Horizon BlueCross Blue Shield of New Jersey defends its value-based care collaborative, which has been criticized by the Medical Society of New Jersey.
Horizon BlueCross Blue Shield of New Jersey's statewideOMNIA Health Alliancevalue-based care collaborative is getting a rocky reception in the Garden State.
At its launch earlier this month, the alliance of the state's largest insurer with six health systems (comprised of 22 hospitals) and the state's largest physician group was called "an unprecedented collaboration that will significantly transform how healthcare is financed and delivered in New Jersey for the better," by Robert A. Marino, chairman and CEO of Horizon BCBSNJ.
Robert A. Marino
Since then, however, the collaborative has faced criticism and concernsthat it might create competitive disadvantages for hospitals and physicians outside of OMNIA, or create access issues for some citiesthat aren't represented in the alliance.
Marino spoke with HealthLeaders Media about the rollout, and addressed some of the criticism. The following is an edited transcript.
HLM: Are you surprised by the rocky rollout?
Marino: We felt strongly, given who we are in New Jersey and our industry and given what our customers were telling us, that the current system is not sustainable. We needed to do something different, innovative and bold.
When you announce anything that is new, that is innovative and bold, there is going to be some fear of change and further it is complicated by a significant amount of misunderstanding and misinformation out there and we are trying to do our best to correct this.
HLM: The Medical Society of New Jersey has expressed concerns that OMNIA "may not have adequate provider networks or realistic consumer costs. We have been saying for years that we have network adequacy problems in this state, and that they are only being exacerbated as narrow and tiered networks are introduced." Is this a valid concern?
Marino: They might be confusing the definition of a 'narrow network' with a 'tiered network.' We are not introducing a narrow network in the state of New Jersey. We are introducing a tiered network, meaning that our entire broad-access network is the basis of this new product and that is the largest broad-access network in the state.
Our members will continue to have access to the same broad-access networks that they have always had access to. With respect to the tiered network in terms of professional coverage, we have 52% of all primary care physicians in Tier 1. When you add all the specialists it is something like 62% to 64% of all professional providers are in Tier 1. We clearly meet the access standards that are imposed on us by the state of New Jersey and actually exceed them.
HLM: The New Jersey Hospital Association has raised questions about "geographic coverage and access to care; whether it will exacerbate out-of-network issues; and education and awareness – so that consumers fully understand their coverage and the potential out-of-pocket impact." Are these concerns valid?
Marino: With respect to the out-of-pocket impact, perhaps the hospital association isn't aware of the plan design. Members who choose to use a Tier 1 facility will see substantial savings in their out-of-pocket cost in the form of lower deductibles, [and] in some cases no deductibles.
Members still are going to have access to the broad network. There isn't any disincentive to use a Tier 2 provider. The benefits will be essentially the same as they are today. It is basically an incentive-based product design for Tier 1 while still providing broad access to the wider network with essentially the same product design as today.
OMNIA is one of several product offerings we have. We are not withdrawing any products. Our customers will still have access to a broad portfolio of Horizon products. We are just providing an additional choice with the addition of the OMNIA product.
With respect to tiered networks, if my memory serves me correctly, it might be the hospitals in New Jersey that first developed the tiered network concept for their own employee benefits plans.
HLM: Are there any concerns that OMNIA could hinder competition in New Jersey?
Marino: I am not certain that the OMNIA alliance or the products we have in the market are in any way going to limit the competition here. It might actually accelerate some of our competitors also shifting toward value-based benefits designs.
HLM: Observers have criticized the lack of transparency in the process of selecting OMNIA hospitals.
Marino: The process that we used to prioritize and ultimately select our hospital partners was a very deliberate, strategic, almost proprietary process. No hospital was invited into something that resembles an RFP-like process. There were six broad categories that we used in the prioritization process, including: clinical quality, the service offering across the continuum of care, consumer preference data from publicly available sources, value-base care capabilities, scale of the organizations we selected, and their commitment to value.
There is a misconception that we didn't ask certain hospitals to participate. We asked no hospitals to participate. We identified the potential partners we wanted and we approached them. They had no knowledge that they were being prioritized in this process.
HLM: Do you anticipate regulatory hurdles?
Marino: We believe our products in the marketplace to support the new alliance are consistent with regulation both at the federal and state level. I don't anticipate any regulatory roadblock at this time.
HLM: When do you hope for OMNIA to be operational, and how many lives will be covered?
Marino: It's difficult to project the demand because it's the marketplace that tells you whether or not the product is going to be acceptable and meets the demand. In the first year, 2016, our best projection is that about 250,000 members will select the product out of our nearly 3.9 million members.
HLM: How seriously do you take these criticism?
Marino: Obviously we are listening very hard to the critics. We embarked on a significant education program. We are trying to correct a lot of misinformation out there. We are hopeful once people understand what we are trying to do some of the pushback will subside.
We believe we are doing the right thing. We are listening to our customers and we simply believe that in order to contain out-of-control healthcare costs we have to move to a value-based system. All I can tell you is we are committed to doing this. We think we are on the side of goodness on this one.
"Our goal is to have a smooth transition to ICD-10 both from a payment perspective and from the service around that payment," says CMS's ICD-10 ombudsman.
Even the threat of a government shutdown will not stop the Oct. 1 switch to ICD-10, the Centers for Medicare & Medicaid Services says.
"In the event of a shutdown we will continue – and I want to be clear on this -- to pay claims," CMS Principal Deputy Administrator Patrick H. Conway, MD, told media during a telephone conference call on Thursday.
Patrick H. Conway, MD
"We will continue to implement the ICD-10 transition. We do planning at any time when there's the potential of a government shutdown [and] we will continue to pay claims. We will continue to be operational and we will make the transition to ICD-10."
William Rogers, MD, CMS's ICD-10 ombudsman, added that "the MACs will still be operating. They'll still be accepting claims and claims will still be paid, and we are sure of that."
If government is kept operational by a continuing resolution, Conway says nothing would change.
"We would continue to process claims, the MACs would continue to pay claims and we would execute the ICD-10 transition," he says. "In terms of staffing we have the flexibility to ensure that core operations are operational and in effect and we say our payment systems are a core piece of the Medicare system that will continue to be fully operational."
"We do think service around core customer service and provider service functions are critical, so we would prioritize those, whether it be ICD-10 or other areas," he says. "Our goal is to have a smooth transition to ICD-10 both from a payment perspective and from the service around that payment."
Rogers says it's not clear if his office of the ombudsman would be considered a vital service during a government shutdown.
"We just don't know," he says. "It really is the different legal issues that have to be considered about what emergency operations and what aren't. So, honestly we don't know at this point. People who aren't in this room are deciding what we can do and can't do in case of a shutdown in terms of staffing here at CMS."
On other issues related to ICD-10, Conway says it will take "a couple weeks before we have a full picture" of the transition.
"First off, very few providers file a claim on the day of the office visit, lab, or surgery. Most provider batch their claims and submit them every few days," he says. "Generally speaking Medicare claims take a couple of days to process and can take approximately two weeks. The Medicaid claims can take up to 30 days to be submitted and processed. For this reason we expect to have more detailed information after a full billing cycle is complete."
"We recognize that this is a significant transition and we have set up processes and operations to monitor the transition in real time assess our systems and investigate and address issues as they come in through the ICD-10 coordination centers."
Conway says that providers having problems with claims submissions should first contact their billing vendor or clearinghouse. If problems persist, they can contact their Medicare administrative contractor, or the ICD-10 ombudsman at CMS.
"Most smaller practices just use a Superbill," he says. "It requires an expansion of the number of diagnoses on the Superbill but they can easily crosswalk their ICD-9-based Superbill to an ICD-10 Superbill. Once they've done that it's business as usual in the office. I expect that small practices should have little or no expense involved."
Regardless of whether patients come in for primary care or behavioral care, they get both. "People were showing up with physical, social, and psychological needs that we had to address if we were going to provide comprehensive care," says a health system's COO.
Decades before population health, patient-centered care, promoting wellness, and improving care access became focal points of healthcare reforms, federally qualified health centers were already doing that.
Knoxville, TN-based Cherokee Health Systems has been ahead of the curve for more than 30 years, although they came at that linkage from a slightly different direction. The FQHC began as a provider of pediatric behavioral health service back in 1968 but came to see from firsthand experience that many patients had no access to primary care.
"We started primary care services in 1983, mostly because our patients needed primary care," says Parinda Khatri, PhD, a clinical psychologist and CCO at Cherokee Health. "We were in rural areas working with vulnerable safety net populations and we saw a tremendous need for primary care. People were showing up with physical, social, and psychological needs that we had to address if we were going to provide comprehensive care."
Cherokee Health opened as one behavioral health clinic in Morristown, TN. It now has a staff of more than 600 people in 14 counties in East Tennessee. Residents of this part of Appalachia, which includes some of the most economically challenged areas of the country, now has access to integrated behavioral health, dental, primary care, and pharmacy services for more than 64,000 low-income and vulnerable Tennesseans.
"We strive to organize a team to partner with the patients to cover a spectrum of care over their lifetime," Khatri says.
'Give Everybody a Primary Care Home'
Regardless of whether a patient comes in for primary care or behavioral care, Khatri says the patients get both. The behavioral health staff ask patients if they have a primary care home, and the primary care staff ask patients if they have access behavioral health services.
"We're building a mindset of comprehensive care with primary care and behavioral health providers. We believe strongly in access. We say there's no wrong door," she says. "People can come through the primary care door and they will be asked about their behavioral health status, they will get behavioral health screenings. That is standard."
"Our goal is to give everybody a primary care home. The therapists are trained to ask if you have a primary care provider. If the answer is no, they ask, 'can we be your home?' The entire team is trained and willing to talk to them about their health and how they're functioning in life. If someone feels they have a behavioral health issue, at the point of care a behaviorist is brought to them. Substance misuse, depression, smoke cessation, stress management; the moment the patient is asking for help, we provide it in the care setting."
Khatri says finding the clinicians to provide primary care and behavioral health in a largely rural, economically distressed region is particularly challenging. "I would go so far to say that it's harder for people working in the safety net because with our population we have to address significant health disparities and multiple complexities and social considerations beyond diagnostic complexities," she says.
The clinic uses integrated charts that can be read by all members of the care team to ensure that behavioral and primary care needs are being addressed.
"We try to be as creative and innovative as possible," Khatri says. "This is very counter to the way healthcare has been organized traditionally, where it's siloed and patients have to navigate their way through it.
With staffing always a challenge, Cherokee Health has formed clinical partnerships with the University of Tennessee to provide physicians, residents, nurses, pharmacists, behavioral health clinicians, and other health professionals. That affiliation has created a valuable pipeline for recruiting staff.
"We've hired quite a few people who have trained with us because they get to know us and we get to know them," Khatri says. "I don't know how we could have built and staffed this model without doing our own training. We catch them early and train them in our model and build those relationships, but staffing remains a significant challenge."
"We are going to be heavily reliant on technology to expand access to care," Khatri says. "We want to get away from the fee-for-service, face-to-face visit. We want to use technology so people can call in on a cell phone or Skype. The majority of our care is going to be provided via electronic technical devices and not in a traditional office setting."
Khatri also wants to use predictive analytics to reach at-risk patients earlier. "Our goal is not to wait until someone becomes sick. We want to be able to track them and reach out before they get sick," she says. "Using this clinical information and predictive analysis we can become more strategic in how we provide care. We can deal more with prevention and not always chasing the high utilizers. We don't want to wait until we have a diagnosis. We want to reach them before that. That is the only way we can bend the cost curve."
The National Committee on Quality Assurance honored Cherokee Health last week for its "whole health approach. "The work they do is especially noteworthy given the challenges of the patient population they serve, which includes migrant farmworkers and a growing homeless population," NCQA noted.
Khatri says the NCQA award is an acknowledgement Cherokee's efforts "to enhance a culture of health."
"We are not content to say that we will meet the basic criteria to be a patient-centered medical home. We call ourselves a behaviorally enhanced healthcare home," she says. "We look at the overall needs of the patients and try to be as creative and innovative as possible to meet those needs."
An Institute of Medicine report estimates that most people will experience at least one diagnostic error in their lives and that the severity of these errors will "worsen as the delivery of healthcare and the diagnostic process continue to increase in complexity."
Diagnostic errors are a factor in 10% of patient deaths, account for as much as 17% of hospital adverse events, and are a leading driver of medical malpractice claims, according to a sweeping report released Tuesday by the Institute of Medicine.
The report, Improving Diagnosis in HealthCare, calls diagnostic errors "a blind spot" in healthcare delivery that has been around for decades which persists across all care settings and harms "an unacceptable number of patients."
The report offered a "conservative estimate" that 5% of U.S. adults who seek outpatient care experience a diagnostic error, and that most people will experience at least one diagnostic error in their lives, "sometimes with devastating consequences."
"Despite the pervasiveness of diagnostic errors and the risk for serious patient harm, diagnostic errors have been largely unappreciated within the quality and patient safety movements in healthcare," the report said. "Without a dedicated focus on improving diagnosis, these errors will likely worsen as the delivery of healthcare and the diagnostic process continue to increase in complexity."
The committeedefined diagnostic error as: "The failure to (a) establish an accurate and timely explanation of the patient's health problem(s) or (b) communicate that explanation to the patient."
The report blamed diagnostic errors on "a wide variety of causes, including:
Inadequate collaboration and communication among clinicians, patients, and their families;
A healthcare work system that is not well designed to support the diagnostic process;
Limited feedback to clinicians about diagnostic performance;
A culture that discourages transparency and disclosure of diagnostic errors—impeding attempts to learn from these events and improve diagnosis."
"Improving the diagnostic process is not only possible, but it also represents a moral, professional, and public health imperative," the report said. "Achieving that goal will require a significant reenvisioning of the diagnostic process and a widespread commitment to change among healthcare professionals, healthcare organizations, patients and their families, researchers, and policymakers."
Diagnostic Error 'Underappreciated'
John R. Ball, MD, chair of IOM's Committee on Diagnostic Error in Health Care, which compiled the report, explained why diagnostic error has remained "underappreciated."
"The data on diagnostic error are sparse, few reliable measures exist, and often the error is identified only in retrospect," Ball wrote in a preface to the report. "Yet the best estimates indicate that all of us will likely experience a meaningful diagnostic error in our lifetime.
While acknowledging the pervasiveness of diagnostic errors, Ball warned against calls for mandatory public reporting.
"The committee believed that, given the lack of an agreement on what constitutes a diagnostic error, the paucity of hard data, and the lack of valid measurement approaches, the time was simply not ripe to call for mandatory reporting," Ball said.
"Instead, it is appropriate at this time to leverage the intrinsic motivation of healthcare professionals to improve diagnostic performance and to treat diagnostic error as a key component of quality improvement efforts by healthcare organizations. Better identification, analysis, and implementation of approaches to improve diagnosis and reduce diagnostic error are needed throughout all settings of care."
This latest IOM report comes nearly 16 years after its landmark study To Err Is Human: Building a Safer Health System, which estimated that as many as 98,000 people in the United States die in hospitals each year from preventable medical errors.
Ball said he hopes this follow up study will "highlight the importance of the issue and direct discussion among patients and healthcare professionals and organizations on what should be done about this complex challenge."
