The office of the Massachusetts Attorney General says it will investigate the closure of a 196-bed acute care hospital owned by Steward "in the context of [its] legal obligations."
Three years after Steward Health Care System bought the bankrupt Quincy Medical Center and agreed to keep it open for 10 years, the for-profit health system has announced that it will shutter the 196-bed hospital on Dec. 31.
The announcement by Steward last Thursday prompted Massachusetts Attorney General Martha Coakley to announce that her office will investigate the closure, which would leave the city of 93,000 people just south of Boston without an acute care hospital.
"We have just been notified about this decision and are currently reviewing it in the context of Steward's legal obligations," Coakley said in a brief media statement.
Steward's purchase of QMC in September 2011 was approved by Coakley's office but came with many strings attached. At the time, her office said in a media release that: "The Attorney General's approval of the Quincy Medical Center transaction will ensure that the hospital emerges from bankruptcy in the best position to provide Quincy's 92,000 residents with access to a full service acute care hospital and maintain key jobs…"
A key stipulation was that Steward would "maintain an acute care hospital in Quincy that provides at least the same scope of services during a 10-Year No Close period." Steward also agreed to maintain 22 inpatient geriatric psychiatric beds at QMC, along with significant capital upgrades.
In addition to the AG's agreement, a separate Massachusetts state law requires hospitals that are closing to provide a 90-day notice window and to submit to a public hearing, neither of which Steward appears to be doing with QMC.
In a lengthy media release posted on its QMC website, Steward Hospitals President Mark Girard, MD, did not address the apparent discrepancies with the AG's agreement from 2011. Calls to Steward for comment Friday were not returned.
Girard blamed the closure on low volumes, declining reimbursements from Medicare, and underfunding from Medicaid. He noted that in the past 20 years QMC has needed more than $100 million in city and state bailouts before falling into bankruptcy.
He also said that Steward has dropped an additional $100 million into the hospital since its purchase in 2011, but that the hospital continues to lose about $20 million a year.
"On an average day, only one-fifth of all beds are occupied and it has become abundantly clear that local residents no longer seek inpatient services from Quincy Medical Center," Girard said.
Steward said the closure shouldn't greatly affect patient access because there are 15 acute care hospitals located within 10 miles of QMC in the hospital-saturated Boston area. There are also 12 surgery centers, 21 urgent care centers, more than 150 nursing homes, 130 outpatient behavioral health sites, and more than 500 physicians within that radius, Steward says.
Instead of an acute care hospital, the shuttered QMC will be replaced "with a more sustainable healthcare system to meet the community's needs," Steward said. That network will include:
24-hour emergency room access
Separately sited, urgent care centers
A multi-specialty clinic in Quincy
Radiological services including X-Ray, mammography, CT, and ultrasound
Steward PCPs and specialist physicians in Quincy
Continued access to 15 hospitals within 10 miles of QMC, including a Steward hospital four miles away
Transportation links to other community health access points
Adam Powell, a healthcare economist and president of Boston-based Payer+Provider consultants, says Steward knew it was gambling when it purchased several financially struggling not-for-profit hospitals in eastern Massachusetts, "but as a result of that, they have a substantial network that was built quickly in this market."
"What Steward has learned over the past several years is that there has not been substantial demand for commercial inpatient services at QMC," Powell says. "QMC is roughly a half-hour drive from the more-famous hospitals in downtown Boston and as a result the patients who have the finances and the transportation have elective inpatient procedures performed downtown or at competing institutions."
"As a result, says Powell, "QMC has been left mostly with outpatient procedures and inpatient procedures performed on Medicare and Medicaid patients. It's been a tough financial slog for Steward and 2014 was looking worse than 2013."
Volumes are down because the region is over-bedded, Powell says. "That was the problem to begin with. The government poured money into it and then Steward poured money into it," he says. "First you think maybe more money or different management would solve the problem, but it appears that neither has solved the problem. The problem may be that there is no need."
In the meantime, Massachusetts Nurses Association spokesman David Schildmeier says the union is "working closely" with Steward to find jobs for the more than 200 registered nurses who will be displaced by the closure.
"Steward has frozen all open positions throughout the 10 remaining hospitals in Massachusetts," Schildmeier says. "We are hoping the 221 nurses we represent get preference on positions that are open so that they don't lose employment and they get all the benefits and pay that under the law they are owed."
The hospital employs 680 people, all of whom will be paid for the next 60 days, Steward said.
Among the new rules are provisions that will pay for remote chronic care management. "The combination of the chronic care management code and being able to use it in conjunction with monitoring of those chronic conditions is a big step forward," says the American Telemedicine Association.
Gary Capistrant
Senior Director of Public Policy at ATA
New rules from the Centers for Medicare & Medicaid Services significantly broaden coverage for chronic care telehealth services.
The rulemaking changes are inside the 1,185-page document detailing Medicare payments to physicians and other providers.
The American Telemedicine Association, which had sought the expanded coverage for five years, notes that among the rules are provisions that will pay for remote chronic care management using the new current procedural terminology (CPT) code 99490, with a monthly unadjusted, non-facility fee of $42.60.
"For us, it was more important to begin to specifically address chronic care," says Gary Capistrant, senior director of public policy at ATA. "The combination of the chronic care management code and being able to use it in conjunction with monitoring of those chronic conditions is a big step forward and a very substantial change for Medicare."
Capistrant says the new rules also represent an acknowledgement by CMS that reimbursing for chronic care could prove to be cost effective.
"It's an important policy move. Whether it is sufficient, time will tell, but it is certainly a step in the right direction and an important initiative," he says. "There has been a lot of focus on primary care, even with the Medicare population. That may be the 80% of the people but it is only 20% of the problem. There's an increasing emphasis on looking at the 80% of the problem that is 20% of the people, and that is chronic and specialty care. They understand that the government is spending a huge amount for chronic care conditions and that there is a value managing those to reduce the overall expenditures."
As a practical matter, Capistrant says, the new evaluation management code for chronic care management will be a much more commonly used because "it's a better fit between management and monitoring."
As for the reimbursements, Capistrant says "only time will tell whether those amounts are sufficient to get physicians to focus on chronic care management and monitoring. I think it will be attractive to physician community, geriatricians and others who deal with these chronic conditions."
"First, they'll have to see what is involved in being a chronic care manager and to what extent you want to add that to your practice. It may involve some internal staff changes," he says. "There are services required that a lot of physicians just don't do right now, in part because they are not paid for it. This is probably the kind of thing that physicians may not be too interested in doing for one or two patients, but if they can get 100 or 200 patients then they've got the economies of scale going to make it work right."
Hospitals might also take a greater interest in chronic care management if only to avoid readmissions penalties. "More than 2,000 hospitals have a penalty this year in their Medicare rates because of readmissions," Capistrant says. "There is an increasing demand for this kind of service and it fits together."
The new rules also include seven new covered procedure codes for telehealth, including annual wellness visits, psychotherapy services, and prolonged services at physicians' offices.
Key stakeholders say the results of a federal report are "disappointing, yet predictable" and call once again for the Centers for Medicare & Medicaid Services to shorten the 2015 reporting period.
News Tuesday from the federal government that less than 17% of the nation's hospitals have reached Stage 2 capabilities under Meaningful Use requirements was met with consternation but not surprise from a coalition of provider associations.
The news came Tuesday during a briefing by the Department of Health and Human Services' HIT Policy Committee, which also reported that less than 38% of eligible hospitals and critical access hospitals have met either stage of Meaningful Use so far in 2014.
The same report also showed that only 2% of eligible professionals, including physicians, dentists, optometrists, and certified midwives, have met MU Stage 2, although they have until the end of February, 2015 to meet that benchmark.
The news prompted key stakeholders to issue a joint statement calling the results "disappointing, yet predictable" and to renew calls for the Centers for Medicare & Medicaid Services to shorten the 2015 reporting period.
"The low number of EP attestations to date is clear evidence that physician practices and their vendor partners have faced significant challenges in meeting the more onerous Stage 2 requirements of meaningful use," said Anders M. Gilberg, senior vice president, government affairs, with the Medical Group Management Association.
"Shortening the reporting period in 2015 is a much needed change if the program is to remain viable and is a critical step if the nation is to continue making progress toward the goal of interoperability," he added.
Russell P. Branzell
CMS data shows that more than 3,900 hospitals must meet Stage 2 measures and objectives in 2015 and more than 260,000 eligible professionals will need to be similarly positioned by Jan. 1, 2015.
Given the low attestations for 2014 and the large number of providers likely unable to fulfill Stage 2 for a full 365-days in 2015, providers have pressed for a shortened reporting period in 2015, mirroring the policy of 2014.
Russell P. Branzell, president/CRO of the College of Healthcare Information Management Executives, says the government's own data validates the concerns of providers and IT specialists who've called for "a sensible glide-path into 2015."
"Providers have struggled mightily in 2014, in many instances for reasons beyond their control," Branzell said. "If nothing is done to help them get back on track in 2015, we will continue to see growing dissatisfaction with EHRs and disenchantment with Meaningful Use."
When CMS issued its final rule in September, provider groups sent a letter to Health and Human Service Secretary Sylvia M. Burwellrequesting additional time for hundreds of thousands of providers meet Stage 2 requirements. Provider groups have said that a shortened reporting period will positively affect program participation and policy outcomes.
American Medical Association President-elect Steven J. Stack, MD, also called on CMS to eliminate its "one-size-fits-all" approach to meeting MU goals.
"The AMA recently released a blueprint to outline ways to improve the Meaningful Use program, as well as a framework outlining eight priorities for more usable EHRs," Stack said.
"We believe the stringent pass/fail requirements for meeting Meaningful Use, combined with a tsunami of other overlapping regulations, are keeping physicians from participating in the Meaningful Use program."
The evidence supporting differences in health outcomes between high-income and low-income populations is "indisputable," says Steven H. Lipstein, president and CEO of BJC Healthcare. Using non-risk adjusted outcomes to calculate performance measures disproportionately punishes providers who care for disadvantaged populations, he says.
A National Quality Forum panel wants the federal government to take into account socio-demographic factors for patient population health outcomes when risk adjusting pay-for-performance performance measures.
Steven H. Lipstein
President and CEO,
BJC Healthcare
Steven H. Lipstein, president and CEO of St. Louis-based BJC Healthcare, was a member of the NQF panel that issued the report in October. Lipstein says numerous studies have shown that patients from less-affluent communities have poorer health outcomes, even though the care they receive in the hospital is the same as people from wealthier communities. As a result, he says, hospitals that serve predominantly poorer communities will be unfairly penalized.
Lipstein spoke with HealthLeaders Media about the panel's report. The following is an edited transcript.
HLM: Why does socio-economic status affect health outcomes?
Lipstein: In St Louis, mainly [in] the neighborhoods north of the city, you go into communities that are characterized by low household income, high poverty rates, high housing unit vacancy rates, high unemployment rates, and a high percentage of the population that didn't complete high school.
When you look at those five indicators you are looking at a community that is lacking social and economic infrastructure. When you live in a community without grocery stores, drugs stores, without transportation, with high crime rates, the health outcomes in that neighborhood are much worse than you would experience in neighborhoods that are characterized by a more-affluent population.
The evidence supporting the difference in health outcomes is indisputable. What is challenging right now is that the healthcare policy makers, specifically CMS (the Centers for Medicare & Medicaid Services), believe that health systems, doctors, hospitals, nurses, and other healthcare professionals, can overcome those disparities and produce the same outcomes at the same cost as compared with more affluent communities.
That is just not true. There is no evidence to support that finding.
HLM: CMS raises concerns that adjusting for socio-demographics will create tiered care standards that will adversely affect the poor. Is that a legitimate concern?
Lipstein: What people are concerned about is that if you risk-adjust for socio-demographic status, you will somehow cover up poor quality provided to patients of lower socio-economic status.
Nobody is advocating for covering up anything. In fact, after we do the risk adjustments, you will see in the recommendations that were proposed by the expert panels that the National Quality Forum convened, the performance measures would include specifications for stratification of the clinically adjusted version of the measure based on the socio-economic factors used in the risk adjustment.
That means you would actually display the results of all hospitals' performances according to different socio-demographic variables. You would see if there were better outcomes for poorer patients than for more-affluent patients. All of that would be transparent and visible so there would be no obscuring examples of poor quality.
Socio-demographic risk adjustment, if you're going to use those measures solely for quality assessment and improvement, then it is important to highlight differences among socio-demographic groups. But when you are using these measures as part of a pay-for-performance system, as CMS is doing, what you end up doing is punishing disproportionately the providers who care for disadvantaged populations.
You punish them in one of two ways: either their outcomes are not as good as hospitals that serve patients from more-affluent communities, or if their outcomes are the same and it just costs more to produce the same outcomes for a vulnerable patient as it does for an affluent patient, then CMS calls the provider who produced that same outcome a low-value provider because the quality is the same, but the cost was higher and CMS equates that to lower value.
HLM: Doesn't CMS take socioeconomic status into consideration when it designates critical access, low-volume and safety net hospitals?
Lipstein: They are not. The federal government looks at safety net hospitals as if they are all the same, and they are not. There are safety net hospitals in some jurisdictions that are able and willing to tax themselves to support safety net care.
If you were to look at the tax base that supports Denver Health, or Cook County Medical Center or Grady Memorial Hospital, or Parkland in Dallas, and then look at the taxing jurisdictions that support rural communities or the boot heel of Missouri, or East Baltimore, or North Philadelphia, you would find the local jurisdictions are very different.
There are 51 different state Medicaid programs. That means eligibility for Medicaid is variable across the United States. When CMS says we are going to look at dual-eligibility as an indicator of a person's poverty or life circumstances, think about that.
A childless adult in Missouri is not eligible for Medicaid, but in 27 other states that childless adult is eligible up to 138% of federal poverty, or an income of $32,000 a year for a family of four. So, the individual life circumstances of people who are ineligible for Medicaid are highly variable across the United States.
HLM: What do you want?
Lipstein: We want CMS and all payers, in their pay-for-performance programs, to risk-adjust health outcomes, to risk-adjust costs to produce those outcomes, and to risk-adjust premiums payments if we got to that for the socio-demographic characteristics of the community in which the patient lives; not the community where the hospital or the patient resides, but the community where the patient lives.
The risk-adjustment methodology that we use at BJC Healthcare looks at the socio-demographic characteristics of individual census tracts. Ascribing them to each individual patient, we can then calculate a discharge-weighted poverty rate for each hospital in our state. That means it's the poverty rate not of the hospital or where it resides, but the poverty rate of where the patients live who use that hospital.
In our report, hospitals with the highest discharge-weighted poverty rates by census tracts are the same hospitals with the highest all-cause readmission rates in our system. In order not to penalize doctors and hospitals under pay-for-performance of value-based purchasing or risk-based contracting, you need to adjust their outcomes, costs, and premiums to account for the degree of difficulty associated with serving vulnerable populations. By doing that we will encourage hospitals, doctors, nurses, healthcare professionals to invest future capital in serving disadvantaged patients.
Right now what I am concerned about is that CMS is presiding over a pay-for-performance environment in which they are rewarding the provider community for investing its future capital in serving more-affluent populations. The market already provides the rewards for serving more-affluent populations. CMS doesn't have to help them do that.
Right now, the fact that there are health systems in Detroit, Michigan paying the maximum penalty for readmission rates, while hospitals in Scottsdale, Arizona pay no penalty for readmission rates, is a re-direction of federal resources from a poorer community to a more affluent community, and I don't understand why our government thinks that is good public policy
HLM: Is a price tag attached to this risk adjustment?
Lipstein: It would be neutral. The penalties could still be assessed but they would begin to fall on different providers. The federal government could save the same amount of money but it would end up assessing penalties on hospitals in more-affluent communities at a higher rate than it does today.
HLM: Does your proposal create the tiered standards of care that CMS is concerned about?
Lipstein: If CMS were correct, then we may have hospitals in our health system or hospitals nationwide that are not paying penalties for readmission rates because they've served patients who are discharged into home environments or communities that can support their recovery and convalesce more easily than they could in more-disadvantaged communities.
Why would CMS disproportionately favor those hospitals even though they are doing no better at managing the experience of care when the patients are in the hospital or the transition of care to the patient in the home environment?
The key point is we are trying to be fair to providers who serve vulnerable patients and we are trying to encourage them to continue to provide services to vulnerable patients or even expand those services in the future. But if they are disproportionately affected by the federal government's pay-for-performance and value-based purchasing program, that will be a contributing factor to their financial challenges.
If you lose your ability to meet your financial challenges by shifting costs to more-affluent patient populations, you go out of business.
The number of hospitals that have failed in the St Louis-metro area—and we presented almost 40 years of data—are all hospitals that lost the ability to address their financial challenges and they disproportionately served vulnerable communities.
Completion of the deal would unify the two Philadelphia-area health systems, creating a system with a combined 18,000 employees under a shared governance model.
Abington Health and Jefferson Health System plan to merge into a single system that would be the second-largest in the Philadelphia area.
Stephen Klasko, MD, MBA
President and CEO
Thomas Jefferson University
and TJUH System
Senior leaders at both health systems made the joint announcement Tuesday afternoon after their respective boards approved a letter of intent to move toward a merger, which would create a system with a combined 18,000 employees, second only in size to Penn Medicine.
The deal is expected to be completed in the first half of 2015.
"These are two incredibly strong, clinically and financially, healthcare systems that are merging not because they need to, but because we believe that Philadelphia and the Abington community deserve the best," Stephen Klasko, MD, president/CEO of Jefferson said in an interview with HealthLeaders Media.
Laurence Merlis, president and CEO of Abington Health, said the two health systems are going forward with the aim of a full merger after weeks of close negotiations.
"We looked at this market and also looked at what was occurring across the country in healthcare," he said. "We recognized that we needed to look for other strong players in this market to be bold and innovative and begin to transform healthcare from volume and sickness to one based on value and wellness. We think creating a unique partnership in a fully merged organization allows us to provide value in a large metropolitan area."
Klasko says both systems see a full merger as the best relationship.
Laurence Merlis
President and CEO
Abington Health
"The whole key in the new wave of things is going to be close enough to where you can create a model that helps you achieve the triple aim," he said. "The problem with some of the other relationships that have happened is they are almost countercultural to that. 'I am getting together with you, but I am still going to keep my board as my board and your board is your board so I can't reduce beds here and add beds there.'"
Merlis calls the model "unique in that it will be attractive to others who have the same philosophy and culture that we have seen between Abington and Jefferson."
A key component of the merger would be a shared governance model and a "hub-and-hub" structure for the new health system, as opposed to the more common hub-and-spoke models. Jefferson and Abington would have equal representation on a combined board, along with a few independent trustees.
No money would be exchanged to complete the merger.
"That is what is unique about this. It is a 100% equal merger," Klasko says. "Combined university and health system Jefferson is about $2.3 billion and Abington is about $800 million. We will be reporting to a single board that will govern these combined assets without dealing with any money transfers."
"There are only a few of health systems who've been able to maintain our ratings in this difficult time and are still profitable. The fact that our boards were wise enough to do this at a time when we are at our highest strength, both of us, as opposed to waiting until we had to do something, differentiates us from the way most boards have thought about it."
Jefferson, the larger of the two health systems, includes flagship Thomas Jefferson University Hospitals, the largest freestanding academic medical center in Philadelphia. Services are provided at five locations: Thomas Jefferson University Hospital and Jefferson Hospital for Neuroscience in Center City Philadelphia; Methodist Hospital in South Philadelphia; Jefferson at the Navy Yard; and Jefferson at Voorhees in South Jersey.
Abington Health, with more than 6,000 employees, includes flagship Abington Memorial Hospital, in Abington and Lansdale Hospital in Hatfield Township, and five outpatient facilities that combined serve more than 39,000 inpatients, 134,000 emergency patients and more than 653,000 outpatient visits each year, Abington said in a media release.
More than 1,400 physicians are on staff at both Abington Memorial Hospital and Lansdale Hospital. Abington Health Physicians is an employed network of primary care physicians and specialists, the health system said.
The two systems began intense negotiations in late September that culminated in the letter of intent approved by both boards and. They have 120 days to reach a definitive agreement and Merlis and Klasko say they expect it to finalize the merger early next year.
If the deal goes through, Klasko will lead the new health system. "We put this organization together with the best interests of the organization and our community. Dr. Klasko will be the president and CEO of this new enterprise," Merlis said. "He brings a tremendous vision and background to lead an organization that includes the university and two large health systems and other components."
Merlis says his own role in the new system has yet to be determined.
"We are looking at what the management structure should be for an organization with this complexity and we will figure that out as we move forward and I look forward to participating at that system level," he says.
Klasko says he's "excited about the leadership that Larry brings" into the merger.
"And not just Larry, but his senior management team. Larry and I and our teams will be sitting down over the next 30–45 days to look at what is now a very large system and finding the best roles for everybody."
The name of the merged system will include the names of Jefferson and Abington. "We are going to embark on a branding strategy and it will include the great brands of both," Merlis says. "Jefferson has a 109-year history as an innovative academic medical center and university and Abington Health Network has enjoyed the top brand in this area. Both of us want both of our names on this."
Wednesday's announcement marks Abington Health's second attempt in two years to find a partner. In 2012 the health system ended talks to merge with Holy Redeemer Health System when concerns were raised about Abington Memorial's plans to stop providing abortions.
In March, Jefferson Health parted ways with Main Line Health. Klasko said at the time: "We collectively realized that the existing corporate structure needs to be changed to allow us to be more entrepreneurial, nimble, and responsive. Jefferson looks forward to an increasingly vibrant clinical and academic relationship with Main Line Health."
The outcome of a case before the Supreme Court has the potential to extend far beyond teeth whitening and mall kiosks to state regulatory boards governing the actions of physicians, says a healthcare antitrust lawyer observing the case.
It's always risky to predict how the U.S. Supreme Court will rule on a case simply by interpreting a transcript of the oral arguments.
The eight-member North Carolina board, which includes six dentists elected by other dentists, had been the subject of a complaint by the FTC in 2010 for violations of the FTC Act after the board banned non-dentists operating in mall kiosks from performing discount teeth-whitening procedures.
Jay L. Levine, a Washington, D.C.-based healthcare antitrust lawyer and disinterested observer of the case, says the high court's ruling is expected early next year, and the implications of the ruling extend far beyond teeth whitening and mall kiosks.
"If the FTC wins and this board is considered a private actor and you'll always need state supervision for such boards, then obviously a lot of regulatory boards that are made up of practitioners of that industry, doctors, lawyers, etc., will need to have active supervision," he says.
"There will need to be some state entity that regulates their activity and that is not made up of people from the industry itself. Does that necessarily mean that a non-neurologist is going to tell a neurologist how to perform a surgery? I highly doubt that. But it may well mean that a non-neurologist, a bureaucrat, or an agency is going to be ruling on a recommendation, let's say, of how many years you need to be in practice to be state certified."
"I don't think it is going to be so terrible because I presume they will take the input of the people in the industry, but that is the logical conclusion if the FTC wins."
If the North Carolina Dental Board prevails, Levine says we can expect that many states will chose to maintain the status quo. "As long as there is a clearly articulated state policy to displace competition, they will be able to do pretty much whatever they want, whether or not that is what the state intended or not, until the state legislature either changes that policy to displace competition or the governor disbands the board."
Dental Board v. FTC
In a lively hour-long discussion, the justices grilled dental board attorney Hashim M. Moopan and FTC attorney Malcolm L. Stewart, deputy solicitor general with the U.S. Department of Justice.
Justice Stephen Breyer told Moopan that "the object of the antitrust laws is to prevent private individuals who compete with each other in business from getting together and making agreements. That kind of interest seems present here."
Moopan had said that the "fundamental key" to the dental board's argument was "not just that they're designated as state officials, but they are charged with a state law duty to enforce state law. They are not acting pursuant to their unfettered private discretion to choose whatever choices maximize their personal profit."
"The fundamental question here is whether federal courts need to second guess these state administrative questions."
Justice Ruth Bader Ginsburg noted that antitrust exemptions fall under federal law, not state law. "The federal law sets the dimensions of what fits within the state action. It's not up to the state to create the state action exemption. It's federal law and what its metes and bounds are are also federal law.
Moopan agreed, but noted that the Supreme Court's previous rulings on the Sherman Antitrust Act "do not apply to the acts of states or their officials when implementing laws directed by the legislature. And absent extraordinary circumstances, I would think that Congress did not intend for federal courts to second-guess whether a public entity is really private."
Breyer asked Stewart if a ruling in favor of the FTC would create a scenario where bureaucrats could overrule brain surgeons on professional credentialing.
"What the state says is, 'We would like this group of brain surgeons to decide who can practice brain surgery in this state. I don't want a group or bureaucrats deciding that," Breyer said.
Stewart acknowledged that "what is true of the Dental Board of North Carolina could also be true of the neurology or the more general medical board in another state."
That prompted Justice Antonin Scalia to interject: "Really? Really? You are going to have a review board composed of non-neurologists deciding de novo whether a particular person should be admitted or a particular rule should be adopted? I don't want that. I want a neurologist to decide it."
Misgivings on Display
Levine says the justices displayed misgivings with both sides of the argument.
"They have no desire to give carte blanche to state boards that are comprised of private actors and have them run amok without any active state supervision to fix prices," he says.
"At the same time, Justice Scalia specifically said that he does not want a non-neurologist deciding who can and cannot practice neurology. That analogy got picked up by a number of justices."
"My suspicion is they may split the baby here," Levine says. "It will be interesting to see how they come down as to what determines a private actor or not. They may very well try to articulate a line that whether you're a private actor will depend upon the type of activity you are asked to rule upon."
Levine says the justices may try to articulate a fine point "where you're a private actor if the board's activities essentially rule on what would otherwise be run-of-the-mill competitive activity."
"But if what the board is inherently supervising is something that is not the hallmark of competitive activity, but is really something that is relegated to the states in terms of safety and the like, then I can see the justices articulating a rule that they are not going to second-guess the state legislature's delegation of power to that board."
A ruling on the case is not expected until early 2015.
CareNow specializes in urgent care, family practice, and occupational health services. In 2013, its 24 locations served approximately 9% of the Dallas-Fort Worth population.
HCA has purchased CareNow, a privately held chain of 24 urgent care centers serving Dallas-Fort Worth. Financial terms were not disclosed.
When the deal is finalized, CareNow will become a division of HCA, which already operates 11 hospitals and more than 50 ambulatory care sites in the Dallas-Fort Worth Metroplex.
The deal is expected to be completed before the end of 2014.
"CareNow has a strong brand and will add an exceptional network of urgent care centers and 130 physicians that complement our hospital, emergency, and outpatient services in Dallas-Fort Worth," Sam Hazen, president of operations for HCA, said in prepared remarks. "This transaction represents two trusted providers coming together to deliver a broader and more integrated level of quality healthcare services."
CareNow was founded in 1993 and specializes in urgent care, family practice, and occupational health services. In 2013, CareNow centers served approximately 9% of the Dallas-Fort Worth population.
HCA is the nation's largest for-profit hospital chain and operates 165 hospitals and 113 freestanding surgery centers in 20 states and England. HCA North Texas network includes 5,500 physicians and 12,000 employees in Dallas-Fort Worth.
"If you look at the lay of the land in Dallas-Fort Worth, the two biggest players are Baylor Scott & White Health, and Texas Health Resources. There is Methodist Health System, but they are a smaller player and HCA is in the Methodist range," says John G. Self, founder and president of John G. Self Associates, a consultant and veteran observer of the Dallas-Fort Worth healthcare sector.
'A Play for Population Health'
"This is an acquisition designed to enhance HCA's market position for population health management," he says. "CareNow is an interesting company. They are a patient-centric, Web-based company, which means that if you aren't feeling well and you don't have a primary care physician you can make an appointment on line so you don't have to sit and wait at the clinic. That's kind of a sexy little change."
Self says the acquisition "makes sense for HCA" because it gives them market reach and a bigger footprint and it's not a huge risk for them in this market.
"They bought a company with an apparent good reputation and a little bit of an innovative approach to accessing their care," he says. "This is a play for population health. We know they have to have some level of size to compete effectively for patients who will use your facility and essentially commit to you as a beneficiary. That's what it's all going to be about."
A 9% Revenue Increasein Q3
Also Tuesday, HCA released third-quarter financial results, and announced that the board of directors had authorized the repurchase of up to $1 billion in outstanding common stock.
"Results for the Company's third quarter reflect a continuation of solid volume trends and improving payer and service mix," HCA President and CEO R. Milton Johnson said in prepared remarks.
When compared with the third quarter of 2013, HCA third quarter 2014 saw:
Revenues increase 9% to $9.220 billion
Net income total $518 million, or $1.16 per diluted share
Adjusted EBITDA increase 14% to $1.8 billion
Cash flow from operations increased 25.3% to $1.1 billion
The third-quarter results for HCA suggest that for-profit healthcare systems are continuing to enjoy a windfall in revenues in 2014 with the advent of Medicaid expansion under the Affordable Care Act.
Industry-wide, a recent PwC Health Research Institute analysis found that the nation's five largest for-profit hospital companies were seeing a stark contrast with their combined 538 hospitals in expansion and non-expansion states.
For example:
Hospitals in the 24 states that have rejected expansion continued to see flat or sagging admissions and little if any reduction in the numbers of uninsured and non-paying patients.
Hospitals in the 26 states and the District of Columbia that expanded their Medicaid coverage to include an additional 7.2 million people, and accepted the billions in federal dollars that accompanied it, saw a significant rise in Medicaid inpatient admission and a concurrent decline in self-pay and charity care.
Earlier this year HCA revised its earnings outlook to account for better-than-expected revenue. The company hospitals in five expansion states saw Medicaid admissions grow 32% with a corresponding 48% drop in uninsured admissions through the first half of the year. Uninsured volume also declined 2% in non-expansion states.
Reacting to the departure of two more ONC leaders, the head of the AMA calls for more flexibility with meaningful use certification requirements "so that vendors have more freedom to innovate and tailor their products to meet physicians' needs."
UPDATE: On Tuesday the Department of Health and Human Services clarified that Karen DeSalvo, MD, was not leaving the Office of the National Coordinator, but was stepping aside temporarily to help coordinate the federal government’s Ebola response. In response to the clarification, AMA President-elect Steven J. Stack, MD issued this statement: "The American Medical Association is pleased to learn that Karen DeSalvo will remain involved in the Office of the National Coordinator for Health Information Technology. We look forward to continuing to work with her to fix the Meaningful Use program and achieve an interoperable technology infrastructure."
The second leadership shuffle in less than one year at the Office of the National Coordinator for Health Information Technology could "jeopardize the growing momentum around [Meaningful Use] interoperability," the American Medical Association said.
AMA President Robert M. Wah, MD, in remarks released by his office Monday, said the announced departures last week of ONC Director Karen DeSalvo, MD, and Deputy Director Jacob Reider, MD, "leaves a significant leadership gap" at the office charged with overseeing and coordinating the nation's adaptation of interoperable electronic health records.
Lisa A. Lewis
DeSalvo was named national coordinator for HIT in December 2013, replacing Farzad Mostashari, MD. Last week, DeSalvo stepped down temporarily from the job to become the Acting Assistant Secretary for Health at the U.S. Department of Health and Human Services, where she will concentrate primarily on the Ebola response.
Reider said he was leaving ONC to practice medicine closer to his family in Albany, NY. Lisa A. Lewis has been named acting national coordinator.
Wah renewed the AMA's call for ONC to be more flexible with MU certification requirements "so that vendors have more freedom to innovate and tailor their products to meet physicians' needs."
"Interoperability and data portability are critical components for transforming clinical practice and improving health outcomes," Wah said. "Unfortunately, physicians have been facing challenges with several poor performing EHRs that are not interoperable. Without widespread interoperability, the value proposition of EHRs has not been realized and the adoption of new innovative models of care has been hindered."
Earlier this month AMA released a blueprint to improve MU Stages 1 and 2 and provide suggestions for Stage 3, as well as a framework outlining eight priorities for more usable EHRs.
The AMA, the American Academy of Family Physicians, and several other professional organizations and health systems earlier this month asked HHS Secretary Sylvia M. Burwell to address systemic snags and glitches around the interoperability of electronic health records that they say are frustrating providers and doing little if anything to improve patient care or reduce costs.
"Currently, health information stored in most EHRs/EMRs and other HIT systems and devices do not facilitate data exchange but 'lock-in' important patient data and other information that is needed to improve care," the letter says.
Citing data from the Office of the National Coordinator for HIT, the letter notes that only 14% of physicians can electronically transmit health information outside of their organizations. The main barriers to data exchange continue to be "strict MU requirements and deadlines that do not provide sufficient time to focus on achieving interoperability."
The eight co-signers recommend a handful of changes that they say could improve the meaningful use process, including:
Streamline and focus meaningful use certification requirements on interoperability, quality measure reporting, and privacy/security.
Remove certification mandates and instead allow for a flexible and scalable standard based on open system architectural features such as application program interfaces. This will allow data to move more freely across the healthcare system, reducing data lock-in and promoting more usable systems.
Foster stakeholder collaboration to promote new HIT that is focused on clinical care needs.
Remove restrictive MU policies that stifle HIT innovation.
Allow vendors and providers adequate time to develop, implement, and use newly deployed technology and systems before continuing on with subsequent stages of the MU program. Testing and achievement of specific performance benchmarks should occur before providers are held accountable for any new MU requirements.
The ONC's push for MU has been riddled with delays and criticism from providers and vendors.
In our May Intelligence Report, leaders listed their greatest challenges regarding their ED. HealthLeaders Media Council members discuss the biggest challenge they are facing and what approaches they are taking to address that.
This article first appeared in the November 2014 issue of HealthLeaders magazine.
Julie Dunlop, RN
BSN, MRO-A
Director of Emergency Preparedness
East Liverpool
(Ohio) City Hospital
One of our major problems is patient flow. We get a lot of patients who are underinsured or uninsured. We have a lot come because there are only two hospitals in the county. We sit where West Virginia, Pennsylvania, and Ohio meet. We get a lot of patients from all three states. We are a tiny ER. We have probably only 22 beds. Of those, only 10 are urgent care beds. The rest are fast-track. So we can get overwhelmed fast.
For workflow we use a lot more physician assistants. They see probably 60% of our patients. Right now we are going through a lot of restructuring, closing floors down because of the financial status of the community. We fly a lot of our patients out who need critical care because we just don't have the doctors available.
We also redesigned the whole system to make it faster. Our time to discharge is usually less than an hour unless it is an urgent patient, but we usually have them out of here in less than four hours or admitted upstairs. Once they are admitted we have a nurse assistant who will take patients up to the floor, if they don't need a cardiac monitor, while the nurse is giving a report.
Kyle Martin, MD Medical Director for the Emergency Department,
St. Mary's Hospital
Madison, WI
Probably the trickiest balance we have been trying to find this year is rightsizing our nurse staffing. We wanted to have a nursing ratio that more closely matched our patient volume and demand. We actually downsized and as soon as we did that, of course, we found that our volumes went back up beyond what they had been budgeted for. We started to see changes in our metrics in terms of door-to-doc times and patient satisfaction.
As you downsize, your nurses become overworked and frustrated. We had a double-whammy crisis of downsizing combined with an exodus of nurses who then felt overworked, which then exacerbates the shortage even further.
We have made steps to right the ship. It is tricky because you could have your nurses at an appropriate four-to-one ratio and have eight more patients walk in and you are quickly overwhelmed. It's not like a surgery-and-procedure center where you know your scheduled caseload for the day. In the ER, you can let someone go home and 20 minutes later you've got a whole new influx of patients. That is the tricky part of being a leaner organization: having the appropriate ER staffing levels but also having the capacity to ramp up when you need to. Currently, we are quite happy with the balance we have achieved.
Alex M. Rosenau, DO, FACEP, CPE Senior Vice Chair of Emergency Medicine
Lehigh Valley Health Network
Allentown, PA
The biggest challenge we have is throughput: when we are finished with our patient, having a place for that patient to go. There are deep-rooted causes for throughput problems, and their root causes will not be the same in every hospital. Some places are underbuilt. Other places have more processes and not enough hospitalists. In some places it's the reimbursement and the financial issues of an institution. In some places it may be the composition of the team in the ED. There is more than one set of causes. There is more than one set of solutions.
We do know the proper place to treat a patient is not a hallway. The patient is not in the hall because the ED is inadequate. The patient is in the hall because the facility response is inadequate. In most cases it is that the resources don't exist upstairs. Hospitals are still not built for seven-day-a-week care. Things are run differently on Saturdays and Sundays.
In many cases the C-suite is on the job. They have more data and wisdom than we give them credit for, but there are financial, budgetary, and planning issues that have to do with uncertainty in the changing reimbursement environment, and that has had a large effect on the ability of hospitals to expand their care.
Sue M. Cadwell, MSN, RN, NE-BP Director of the ED Initiative
HCA
Nashville, TN
On the many challenges EDs face. The biggest challenges are a combination of all of those things [listed in the survey] because they all impact one another. We are trying to look at traditional ways of judging emergency department performance, such as metrics and throughput, and tying that to clinical quality that is specific to how the patient presents. We are trying to see if there are ways to take patients who present with some of the most common chief complaints and provide care faster, much like the industry did with STEMIs, for example.
On efficiencies and variables. There is no one answer for addressing all of the issues that impact EDs. At HCA, we have many hospitals that obviously have some commonality in the way they do things, but there are often some differences based on things like volume, physical layout, specialty care, and other variables.
On patient needs. The strategy has to be giving the patient exactly what he or she needs. In the past, some emergency departments have had processes that were designed to handle patients and emergency resources all the same way, without taking into consideration the acuity of the patient's presenting problem. Finding the right way to do things requires putting patients first. We want to be respectful of their time, but at the same time be certain caregivers are given enough time to do their best. The key is having EDs that use proven processes while allowing for tailored care that meets patients' needs.
When hospitals acquire physician practices—ostensibly to create accountable care organizations that better coordinate care and eliminate waste and redundancies—the cost of care goes up, not down, researchers find. But that's not the last word.
One of the most ferocious debates in the healthcare sector is whether or not provider consolidation leads to higher or lower costs.
After years of speaking with very smart people on both sides of the issue, I can unequivocally say: Maybe.
Consider the study published this week in the Journal of the American Medical Association. Researchers at the University of California, Berkeley, found that when hospitals acquire physician practices—ostensibly to create accountable care organizations that better coordinate care and eliminate wasted and redundancies – the cost of care goes up, not down.
"This is about the total cost of care. This is about consolidation," says study lead author James Robinson, professor and head of health policy and management at UC Berkeley's School of Public Health.
"The ideal of the ACO movement is that consolidation is a way to get to coordination and coordination is a way to get to cost moderation. What we find here is that consolidation is not necessary nor sufficient to get to that cost moderation endpoint, and it can go in the opposite direction."
Robinson's team analyzed 2009–2012 data on 158 major medical groups and 4.5 million patients in California. Groups were divided into three categories: owned by physicians, owned by a local hospital or hospital system, or owned by a large hospital system in multiple markets.
Cost Measures
The cost measures included physician visits, inpatient hospital admissions, outpatient surgery and diagnostic procedures, drugs, and all other forms of medical care, according to UC Berkeley.
Controlling for the mix of severely ill patients and cost geography, per-patient expenditures were 19.8% higher for physician groups in multi-hospital systems compared with physician-owned organizations. At groups owned by local hospitals, per-patient costs ran 10.3% higher compared with physician-owned groups.
"It's not that hospitals are getting together and raising their prices," Robinson says. "This is hospitals acquiring medical groups and then total costs go up, physician costs, hospital costs, drug costs. That says they are not raising prices directly, but rather that hospitals are big organizations. They have a lot of overhead and layers of complexity. They have ambulatory services centers they want to keep full. They have imaging equipment they want to use. And when they own a physician group they probably—not in writing but implicitly—say 'you shall use our hospital and our imaging equipment,' and that is expensive."
Robinson also sees the consolidation as a variant of the rich-get-richer syndrome.
"It is particularly expensive if the entity that purchased the medical group happens to be the consolidated high-priced facilities, and the reason there is good suspicion to think they are is because those are the people with the balance sheets to buy medical groups," he says.
"That is the dilemma in the hospital consolidation. The expensive hospital buys the cheap hospital and turns it into an expensive hospital. The most expensive hospitals are buying the medical groups and they channel those admissions to that hospital."
AHIP Weighs In
There is no greater champion of the consolidation-means-higher-costs argument than America's Health Insurance Plans, and they applauded Robinson's study.
"Once again, the rhetoric of provider and hospital consolidation adding greater efficiency to the health system does not match the reality," AHIP spokeswoman Clare Krusing said in an email exchange. "For patients in highly consolidated markets, they are facing higher costs without any indication of an improvement in the quality of care."
The American Hospital Association takes a different view. They believe that many studies, including Robinson's, which show higher costs related to consolidation are based on flawed, skewed, or obsolete data.
"The researchers analyzed data from 2009–12. Even in California the market has moved so far and so fast that this study is a little out of date and a little out of touch," says Melinda Hatton, AHA general counsel.
Hatton notes, for example, the launching last month of Anthem Blue Cross Vivity, a conglomeration of seven health systems in the Los Angeles area that are forming an integrated care network to compete with Kaiser Permanente.
"Vivity show you that hospitals, whether they are in California or other markets, recognize that particularly for outpatient services they have to be cost competitive or they are not going to be sustainable," Hatton says.
Why Acquisitions Happen
There are a number of reasons why hospitals acquire medical practices beyond improving leverage with payers, Hatton says.
"You cannot make cost and quality goals set both by the government and the private sector unless you are able to work with physicians in a way that affiliations short of mergers and acquisitions don't allow you to work with them that way," she says.
"Part of it is the regulatory barriers. Whether you are talking about Stark or anti-kickback or civil monetary penalties, our whole regulatory structure is based on an outdated 20th-century model that no one believes is the way to improve cost and quality in the healthcare system."
"Unless you are tightly aligned with your physicians, you are going to sustain increasingly large readmissions penalties, you are going to see penalties under hospital acquired conditions increase. More importantly, consumers at every level are looking for those kinds of entities in the healthcare field that can actually provide a continuum of care and not just episodic care that leaves the consumers having to try to navigate a healthcare system by themselves."
Retail Medicine
In an era of high-deductible health plans, with consumers fronting more of the cost, Hatton says, hospital outpatient services have to be cost competitive with upstart retailers such as Walgreens and CVS Health (formerly CVS Caremark). However, she concedes that hospitals likely will never be able to match prices with retail medicine.
"There are requirements that hospitals have for their physician practices that outpatient ambulatory centers don't have," she says. "But you have to think about the quality implications and the patient safety implications. The safer the environment, the more it's going to cost, but it has to be a competitive price or consumers are going to take their chances with a place that doesn't have to meet those requirements. Everybody recognizes that."
I have no reason to doubt that Robinson's study is an accurate reflection of his findings. It also passes the common sense test, and Hatton's concessions on the higher costs of hospital outpatient services, however justified those costs may be, validate Robinson's findings.
However, Hatton is also correct. A lot has changed in healthcare delivery in less than two years. Since the passage of the Patient Protection and Affordable Care Act, the big driver has been the dramatic rise of the high-deductible health plans. Their growth forces patients to become smarter healthcare consumers.
In a new era of price transparency, hospitals can pitch the quality argument when explaining to consumers why their services cost more. But as the big box retailers have shown us, you have to be in the ballpark.
