In our February Intelligence Report, three-quarters of leaders indicate that their organization's IT operating budget will increase over the next three years. What is the outlook at your organization, and how are you prioritizing your IT spend?
This article first appeared in the July/August 2014 issue of HealthLeaders magazine.
Vernita E. Todd, MBA
CEO
Heart City Health Center
Elkhart, IN
We spent a little more than $800,000 on IT hardware, software, and support since 2009. The budget probably will be adjusted to reflect additional interfaces with our health information exchange and local hospitals.
The support and maintenance of it is really the most exorbitant cost. ICD-10 is a perfect example. We implemented our EMR and within four months, the ICD-10 rules came out and our EMR didn't fit that; then meaningful use came out and our EMR didn't fit that. The need for e-prescribing came out and our EMR didn't fit that. It seems like every year and a half or so we have a change in regulations that requires an adaptation to the EMR. It's not a plug-and-play thing.
You have to make the decisions about the data you are trying to capture way before you build it. Building it and then finding out that these things have changed sometimes takes you all the way back to the beginning of the drawing board. Sometimes it's an easy tweak. But the maintenance and support of that is a significant cost.
Roger Seaver
President and CEO
Henry Mayo Newhall
Memorial Hospital
Valencia, CA
Our spending should be flat as it relates to the percentage of the budget, but it has been consuming up to 40% of our capital budget for the past five years. In the hospital we're 85% installed and using electronic medical records. There is a lot of work to be done on the full benefits of EMR, of course, and connecting devices, and so on. We are still in the process of doing that, interfacing devices. And the opportunity to do more continues. There is some growth in there, but it is not in the most expensive parts of IT.
Spending is still a significant issue when you combine infrastructure hardware and software. The end of license of Windows software, for example, is almost a $2 million expenditure for this single hospital.
The scariest part right now for me is we are at the beginning of a second infrastructure review that is going to identify all of the areas of infrastructure that we have to bolster, particularly for traffic, the use of much more data flowing through our pipes, which probably aren't big enough, and things like that. So I could get a surprise here on the upside as the assessments come in. We are doing a lot of assessment marrying it up with our business strategic plan to make sure we get the right priorities.
Jeff Thompson, MD
CEO
Gundersen Health System
La Crosse, Wisconsin
On HIT spending over the long haul: Our budget will be flat compared to previous years because we have been very aggressive over the past several years. Might we need to shift some things around? Sure. But we believe we are probably in a spot where we need to be.
On the rewards of early adopters: We felt there was an advantage being out on the edge. Sometimes you bleed a little out on the edge, but in this case it helped us quite a bit. We built our own electronic record more than 20 years ago. That was very successful, and only in the past four or five years did we convert that over to an outside-sourced electronic record. Being an early adopter helped us a lot. It helped differentiate us from other competitors when it came to recruiting.
On the challenges of early adopters: We were all on track to be there exactly on the numbers for ICD-10 and meaningful use when it was going to switch. The delays have cost us money already. We're not big fans of increased complexity in healthcare, but since the rest of the world has long since gone to ICD-10, we felt that was something that was going to happen and we needed to do it.
On the next wave of IT spending: There will be a steady spend in healthcare IT because the upgrades keep coming. The systems need to be improved. We are not as efficient as we need to be. The electronic record is not completely an improver of flow right now. There will be continued investment.
William Lewkowski, CHCIO
Chief Information Officer,
Executive Vice President
Metro Health Corporation
Wyoming, MI
As early as 2005, Metro Health started increasing our IT budget, and we had already invested significantly in clinical systems. We already had growth in our IT spend and our operating budget over the past several years. It still has increases. It would be more in the category of minor increases, but we already are doing near 6.5% operating budget for IT, which is pretty high for healthcare.
We are investing in business intelligence and analytics and population management and a lot of other things, but the overarching thing is our clinicians. We are a digital organization, and that is a core backbone of how we do things.
Our strategies aren't driven by ICD-10 or meaningful use. Those things are by-products of using these systems in a very integrated way that is all about our patients. We start with our patients. We then group our populations, and out of that we make sure that we comply and we know where things are going. The industry is going through a transformation. A lot of that is going to be reimbursements starting to be based on value and not on volume. We are positioning and doing a lot of that not knowing exactly how things are going to lie. You have to have that agility to do that, and that is how we try to organize ourselves.
Year-to-date operating margins have improved from $140 million in 2013 to $184 million in 2014, an Arizona Hospital and Healthcare Association survey finds. And there's been no mad rush to emergency departments, as many had predicted.
For the most part I try to avoid writing about the politics of healthcare in this column. Frankly, there are plenty enough sources to cover that angle, and talking about the partisan aspects of "Obamacare" tends to bring out extremists on both sides of the issue, with everyone intent on generating more heat than light.
It's hard to stay apolitical, however, when it comes to the Medicaid expansion. That's because it was partisan politics by some governors and legislators in some states to reject the additional hundreds of millions in federal dollars that would cover health insurance costs for millions of people who could not afford it otherwise.
Because most states have seen the no-brainer wisdom of accepting Medicaid expansion and embracing health insurance exchanges, the percentage of uninsured people in the United States continues to hit record lows.
The excuse in those states that have rejected the expansion is that they cannot afford to take up the new entitlement once the federal government begins to scale back on its share of the funding.
On its face that's a specious argument and reeks of political cover.
Under Medicaid expansion, which the Supreme Court made optional in 2012, the federal government will pay 100% of the cost through 2016 and 90% of the cost by 2020.
The problem is that those rejecting Medicaid money presume that healthcare is just like any other product, and that the demand will disappear if nobody pays for it. As every hospital administrator understands, however, healthcare doesn't work that way.
The demand will still be there, the uninsured will continue to access their care through the emergency department, and people with insurance and their employers will continue to pay for the "uncompensated care" through "hidden taxes" in the form of higher premiums and cost-shifting.
Rejecting Medicaid expansion only makes sense as a political wedge issue, and it's possible that that calculation could backfire as well. In Georgia, Gov. Nathan Deal, up for reelection in November, has called a special committee to find ways to help the Peach State's struggling rural hospitals, many of which are on the verge of shuttering.
At a recent meeting of the group, however, accepting Medicaid expansion money was not on the agenda. While the people sitting on the committee seem sincere, capable, and committed, the governor's actions provide election year political cover.
Arizona Gov. Jan Brewer, an ardent and vocal opponent of Obamacare, shocked observers in January 2013 when she announced that she would support the Medicaid expansion.
That turns out to have been a good idea. Since Jan. 1, 2014, about 190,000 Arizonians have been covered under the Medicaid expansion, and another 120,000 people gained private coverage.
'A Significant Drop in Uncompensated Care'
This month, an Arizona Hospital and Healthcare Association survey of 75% of its member hospitals found "a significant drop in uncompensated care" over the first four months of 2014, down from $246 million in 2013 to $170 million for the same period in 2014, a decline of 31%.
In addition, year-to-date operating margins have improved from $140 million in 2013 to $184 million in 2014. The hospitals also have not seen a mad rush to the emergency department by these newly covered Arizonians, as many had predicted.
Of course, Medicaid expansion money won't solve everything. Even with the additional federal funding and the expansion of the private coverage rolls, more than 30% of Arizona's hospitals reported in the survey that they are losing money. And the AHHA survey does not factor in about $230 million in quarterly Medicaid assessment fees that hospitals pay the state of Arizona.
Still, it's hard to demonstrate that the Medicaid expansion been anything other than a net positive for the hospitals of Arizona, just as refusing the expansion money has put many Georgia hospitals on the brink of collapse.
If your hospital is in a state that has rejected Medicaid expansion money, it's not too late to act. It's an election year. Your elected officials and the people who voted them into office must understand the real world repercussions of a purely political decision to reject tens of millions of dollars in healthcare funding that could very well determine whether or not your hospital stays open.
Catholic Health Initiatives intends for the business unit formerly known as CollabHealth Managed Solutions to coordinate services for healthcare delivery systems including benefits management, health delivery networks, and health data analytics.
Catholic Health Initiatives has renamed and relaunched a subsidiary now called Prominence Health to oversee, align and coordinate the sprawling health system's insurance plans, care networks and services.
"Prominence Health will significantly advance CHI's ability to excel in a pay-for-value environment," Juan Serrano, CEO of Prominence and senior vice president of payer strategy and operations for CHI, said in a media release.
"Through Prominence, CHI has developed a catalyst to position us as a broadly integrated health system that enables exceptional health services and superior value for the communities we serve."
Established in 2012 as CollabHealth Managed Solutions, the renamed Prominence will coordinate an array of services for healthcare delivery systems including benefits management, health delivery networks, health data analytics, corporate wellness programs, occupational health, disease- and care-management and customer relationship management services, Englewood, CO-based CHI said in a media release.
Prominence, which will also be based in Englewood, will play a critical role as a "bridge" in CHI's transition to value-based care delivery and reimbursement, and a customer-centered "bridge" to population health, connecting communities to a wide range of programs and solutions that help improve overall health and well-being, CHI said.
As an example, Prominence is working directly with employers, creating collaborations that will give customers access to a coordinated health portfolio that features wellness education, preventive screenings, personal health coaching, disease-management support and onsite health services.
Working with CHI health systems and clinically integrated networks, which include 93 hospitals and hundreds of other health facilities in 18 states, Prominence will be able to provide a nationwide array of services, CHI said.
In October 2012, CHI acquired a majority interest in Soundpath Health, a Medicare Advantage plan in Tacoma, WA. Earlier this year, CHI purchased QualChoice, a commercial health plan based in Little Rock, AR.
The organization is extending its reach through strategic geographic expansion, including third-party administration services and Medicare Advantage plans in new markets, including Kentucky, Nebraska, Ohio, and Tennessee.
Serrano said the push into customer-oriented products, high-performing networks, value-based contracting and health-insurance programs will help CHI adapt to a new era of pay-for-performance and population-health management.
It will also accelerate the organization's strategy of integrated health that delivers effective, cost-efficient health management while enhancing access to high-quality care that improves the health of entire communities.
A shift in methodology emphasizes patient safety, reduces the weight of an organization's reputation, and uses better data for more objective assessments, says U.S. News & World Report.
U.S. News & World Report Tuesday released the 25th edition of its much-anticipated rankings of the nation's "Best Hospitals 2014-15" with a modified methodology that doubles the value of patient safety and trims the importance of reputation.
In 12 of the 16 specialties rated by the magazine, the value of patient safety increased from 5% to 10% of each hospital's overall score, while the weight given to hospital reputation dropped from 32.5% to 27.5%.
Ben Harder, managing editor and director of healthcare analysis for U.S. News, says the shift reflects the evolution of the rankings toward more objective assessments made possible by better data.
"The most important methodology change we made this year was to add two new metrics to our patient safety calculations. These were in hospital post-operative hip fractures and in hospital pressure ulcers," Harder says.
"They've been metrics that have been reported for a number of years by the federal government, but there have been reliability issues related to them. Some improvements have been made in recent years that we had been analyzing to determine if the reliability of these two measures warranted inclusion in our rankings model. We made the determination early this year and in fact published in January that we were going to be incorporating these two metrics."
The enhanced safety metrics vaulted Mayo Clinic to the coveted No. 1 spot for the first time on theBest Hospitals Honor Roll 2014-2015, and dropped to No. 3 Johns Hopkins Hospital in Baltimore, which had held the top spot for 21 years in a row from 1991 to 2011, and again in 2013.
"It's noteworthy that Mayo's patient safety score is in the top tier," Harder says. "We report on hospital performance on five tiers and they got a five out of five. Johns Hopkins got a one out of five."
Rochester, MN-based Mayo Clinic wasted no time posting its No. 1 status on its website, complete with the U.S. News logo for which hospitals must pay a licensing fee.
This is an important national ranking, Mayo Clinic CEO and President John Noseworthy, MD, said in video remarks. "There are 16 specialty groups that are identified in this composite ranking and Mayo Clinic is rated No. 1 in eight of those and No. 2 in an additional three, and that really sets us aside from others."
Baltimore, MD-basedJohns Hopkins officials in a media release congratulated Mayo Clinic. They sent a gift basket to Noseworthy that included Berger Cookies, Old Bay Seasoning, Orioles peanuts and other Maryland-made goodies.
Johns Hopkins Hospital President Ronald R. Peterson, and Johns Hopkins Medicine CEO Paul B. Rothman, MD, said in a congratulatory note to staff that "nothing has changed at The Johns Hopkins Hospital. We are still the same exemplary institution with some of the most gifted minds and compassionate and highly-skilled caregivers imaginable. And we are pleased to be recognized as one of the top hospitals in the country yet again."
Driven by Data
The value of reputation, which was 33.3% of the overall score in past years, also declined as a metric in determining the nation's best hospitals. Harder says that's an ongoing trend as better and more objective data become available.
"Essentially, reputation is an important measure, but it is what we call 'proxy,'" Harder says. "It's a useful way of measuring something that can't be measured directly. As better data becomes available to us, more direct data related to outcomes and the quality of the processes of care in hospitals, we naturally look to trim back our reliance on reputation and rely increasingly on reliable objective data like patient safety metrics."
While the U.S. News Hospital Rankings always set of a media blizzard of press releases each July, Harder says the rankings must be considered in their proper context.
"The rankings are not designed for all patients. There is no single dimension where you evaluate a hospital and it applies to all patients equally," he says.
"Our rankings and methodology are carefully designed to identify the hospitals that excel in treating the most medically challenging patients. That is not a routine patient, somebody who is generally healthy and needs a knee replacement or is a candidate for cardiac bypass who doesn't have comorbidities."
Other national hospital rankings from other sources might come up with different rankings, Harder says, because those rankings are measuring something different.
"We have not focused on routine care," he says. "We focus on high-complexity cases where it might make sense to look across state lines or nationally to make sure you are going to the best possible providers."
ContinueCARE hopes to demonstrate that long-term acute-care hospitals can provide cost-efficient care for the 2% to 3% of patients who require long-term acute care after discharge from acute care hospitals.
Leslie Boney, Senior Vice President, CHC
A Community Hospital Corporation subsidiary is finalizing its plans to open or expand seven long-term acute-care hospitals in four states in 2015.
The expansions directed by CHC ContinueCARE come in the midst of a three-year federal moratorium on new LTACH hospitals that was slipped into the Protecting Access to Medicare Act of 2014 at the last moment.
Leslie Boney, CHC's senior vice president of Post-Acute Services, says the Plano, TX-based hospital and healthcare services company secured the seven exemptions before the moratorium went into effect and that all seven projects will be launched in 2015.
Five of the LTACHs would be new developments located in Charlotte, NC; Madisonville, KY; Paducah, KY; Odessa, TX; and Bakersfield, CA. In addition, CHC has secured LTACH status for a facility it operates in Midland, TX, and has filed for a bed expansion at its LTACH in Abilene, TX.
"What is spurring us to want to grow is that it's an underserved patient population," Boney says. "We are finding there are a lot of pockets in the United States that are truly underserved. For example, we are doing two different hospitals in western Kentucky, in Madisonville and Paducah. We put them there because western Kentucky did not have an LTACH and when we did the analysis, we found a need for more than 200 LTACH beds."
"Unfortunately, that will be the end for the three-and-a-half-year moratorium before we can begin looking for other opportunities," she says.
Under the typical LTACH model, Boney says CHC ContinueCARE rents a floor from a short-term acute care hospital.
"The reason you want to do that is for efficiencies that will allow us to purchase lab and radiology and use all the services that are currently in the short term acute versus trying to create them again and having that increased cost," Boney says. "For continuity of care you have the same physicians when you go from short term acute to long term acute."
Boney says CHC ContinueCARE hopes to demonstrate that LTACHs can provide cost-efficient care for the 2% to 3% of patients who require long term acute care after discharge from acute care hospitals. The majority of the LTACH patients are elderly and on Medicare.
"Our patients are there for 25-to-30 days. It's not a huge volume of patients but that patient population will always be there," she says.
"The opportunity of the extended acute stay is just to make sure you get those patients to the point that they can go to a post-acute program that can do it safely, so they can go home and stay home versus bouncing back to acute care again."
The alternative to LTACHs means that short-term hospitals must either hold patients longer or discharge them into inappropriate settings and risk readmissions. "It's a release valve for short-term acute. These patients still need that long stay and there is just no other avenue for them in this market," she says.
"There will always be this group of patients who aren't going to do well in the short-stay environment. This is just an opportunity to give them a level of care the need for that extended stay."
Physicians employed by hospitals enjoy richer benefits and potentially fewer administrative hassles, but physicians employed by private practice express higher satisfaction with their compensation packages, survey data shows.
Physicians working in physician-owned practices are most satisfied with their compensation packages when compared with colleagues working for universities or hospitals, a survey shows.
"A big trend we are seeing is that the hospital-employed physicians seem to be receiving better benefits and more recruitment incentives compared to those in the university setting and physician-owned practices," says ASPR Executive Director Jennifer Metivier.
"With the trends in more hospital employment, hospitals are doing all they can to entice physicians to become their employees. It is not surprising, honestly."
"Overall physicians are more interested in employment opportunities because they don't have to deal with the administrative and overhead issues. They come to work. They treat their patients. They do their paperwork and they go home. They don't have to worry about the business aspect."
Even though hospitals were able to offer richer benefits and recruiting packages and potentially fewer administrative hassles, Metivier says the survey shows that employed physicians working in private practice expressed the highest satisfaction with their compensation packages.
"That is because they are defining it and they are in charge of it themselves," she says. "They're happy with how they are getting paid because they're dictating. In a hospital or university setting, someone else is determining how they are going to get paid."
Of the 314 physicians in 26 specialties who responded, 44% employed by physician-owned practices said they received no funding for Continuing Medical Education compared to 17% of hospital-employed and 16% of university-employed physicians. They also were more likely to receive no time off for CME.
The same trends were seen with paid time off, sick time and recruiting incentives, ASPR reported.
Hospitals offered more signing bonuses, relocation assistance, student loan assistance, and malpractice insurance than other employers, with physician-owned practices offering the least.
"Hospitals and universities certainly have more capital and ability to offer some of those incentives," Metivier says. "You aren't going to find a lot of private practices finding money to pay for student loan assistance. That is something hospitals and universities are more likely to do just because of the financial situations that they are in. They have the capital available to offer some of these incentives and the additional time off, for example, for CME."
As a practical matter, Metivier says, physician-practices often don't have the staff to cover for absent colleagues.
"Whatever it is, they can't afford to have their physicians gone for long because there is nobody there to cover for them. Whereas hospitals have more physicians within the group or they have the ability to hire locum tenens to cover for them."
Physicians responding to the survey reported that they spend 11% of their time doing administrative work such as medical record documentation and chart reviews. However, 65% said they had no time built into their schedules for administrative duties. Physicians in university-owned practices were more likely to have designated hours for administrative work than those in hospital-employed or physician-owned practices.
"We were surprised to see how few hours were being provided for physicians to do that work," Metivier says. "They are spending 11% of their time doing it but a lot of them aren't getting a slot in their schedule to do it. They're having to do it at the end of the day after their clinical hours or squeeze it in where they can which diminishes their quality of life and takes away from their personal time."
It is ironic, Metivier says, that hospitals work so hard and pay so much to recruit physicians but risk losing them because they aren't given enough time for paperwork.
"That is an area that can be greatly improved upon if organizations want to keep their physicians happy. They need to identify more time for physicians to get their administrative work done within their set schedule," she says.
"If you can't keep your physicians happy they are going to go elsewhere and you are back to recruiting again, and that costs a lot of money to go through the process. You want low turnover and one of those key things for physician satisfaction is their schedule."
Less than twelve weeks after a strong tornado crippled a small Mississippi hospital, its interim CEO shares his thoughts on the way forward.
On April 28 Winston Medical Center in Louisville, MS, was severely damaged by an EF4 tornado that killed nine people in the rural county located 90 miles northeast of Jackson.
Interim CEO Paul Black had been on the job for less than one week when the storm crippled the 27-bed hospital and forced the evacuation and temporary closure of an adjacent nursing home.
Black spoke with me in the days after the storm about the medical center's efforts to provide care to a physically and emotionally scarred community.
He spoke with me again this week to provide an update on the medical center's recovery.
Black: We got the temporary facility was up and running by May 19, so we were in a temporary hospital unit that was provided by [Federal Emergency Management Agency] within three weeks of the tornado. That gives us the ability to provide hospital services to the residents here in Winston County. It's not everything we have going, but we are getting close to doing that.
We have the clinic open that is in front of the hospital and it opened about one week later. So, we are back to where we consider our 'new normal' as far as hospital services. We are in the process of repairing part of our nursing home so we can get 76 residents back home.
That is scheduled to open and take patients on Sept. 1. As far as the long-term prospects, we are still collecting data from insurance companies, talking to FEMA and others to determine what our final funding amounts are going to be or what resources we are going to have to rebuild.
HLM: How is the temporary hospital working for you?
Black: It's pretty sturdy. Once you get inside the structure you can't tell you're in a temporary. The inpatient area is a ward concept. There aren't designated rooms, so that is a little different than what people are used to. But we haven't had any complaints. People can put up with that if they are back home being taken care of and don't have to travel great distances.
The biggest issue on the inpatient side that we haven't come up with a solution yet is people are used to having a TV when they are in the hospital and we don't have that service right now.
HLM: Will you refurbish the hospital or raze it and rebuild?
Black: We found out that we did have some structural damage, especially in our three-story tower. So it's looking that it may be more cost efficient to tear down the existing building and rebuild.
HLM: How big would the new hospital be?
Black: We'd be back probably smaller as far as bed size is concerned, trying to offer the same basic services as we did prior to the tornado. We are pursuing the critical access designation.
HLM: Do you have a timeframe on opening the new hospital?
Black: I am not real sure on the construction start but I've been told anywhere from 18–24 months from the date of the storm. We are in a slow process right now. Once we get everything decided as far as funding and deciding what the plan is we are going to do our best to speed up the process as far as construction is concerned so we can get opened as fast as we can.
HLM: How far along are you on planning for the new hospital?
Black: We don't have the numbers yet from our insurance company. Once we get those we are also gathering some reports and giving it to FEMA to let them determine how much the funding is going to be. Once we get those numbers we can start making definite plans. We are now putting out RFQs for architectural services so we can be somewhat ready when those numbers come in and we can start making long-term decisions along those lines.
HLM: What clinical services are unavailable?
Black: We are able to do our geri-psych services but we don't have the facilities that would meet the code requirements to be able to house those patients. And of course, our nursing home is not operational. It will at least partially be back on Sept. 1. We do not have CT or mammogram services but we are looking real hard to try to bring some of that on site within the next month or so.
HLM: What is the community doing to access those services?
Black: They have to travel 20–30 miles to get the services that we were providing. It does put a strain on them, especially when you are talking about the primarily Medicare population that we service here.
HLM: Are you getting help from nearby providers?
Black: We have had a lot of offers for help. Right now we haven't had to rely on any one facility to help us out but if we do have a situation where we need help we do reach out to them. One of the biggest things that other facilities have done for us is for some of the employees we have had to lay off. Some other facilities are making room for them and letting them work part-time at least until we can bring them back on board.
HLM: How many employees were laid off?
Black: We ended up having to lay off about 130 employees. Most of them were in the nursing home. But we are optimistic about being able to bring the majority of them back.
HLM: How did you prioritize the recovery?
Black: Shortly after the storm, when you get your wits about you and you try to figure out what is going on, you start to work with the state department of health to get that temporary facility heading our way. That was our focus from the very beginning.
At the same time we were working on trying to get a building together to get our clinic back open. Those things came together pretty quick, three to four weeks to get those back on line. Once we started treating patients again our next focus was on what we do with the nursing home to get it back open.
Now we are in this slow phase where we are waiting on some evaluations and reports. In the meantime we are talking amongst ourselves about possibilities out there so that when we do get some concrete information that we can go forward fairly quickly.
HLM: What have you learned from this process?
Black: The biggest thing I found out is that the staff really comes together and understands our importance to the community. Sometimes we get a little jaded and come to think of it as just a job like everything else.
When you get into this type of situation you realize how much the community needs to have a hospital and how the employees really start to appreciate the fact that we are needed and that it's something that helps the community, not just from a healthcare standpoint, but from an economic standpoint as well.
HLM: How is the community doing psychologically?
Black: We are handling it OK. We've had our ups and downs, but every day brings a little bit of hope, a little better vision into the future. As each day goes forward and we can make some progress it will be a whole lot better. A big thing for us is when we can get some determinations and a plan for the new hospital that we can put out to the community. That is going to help everybody.
HLM: How are you communicating with the community at large?
Black: We do numerous things. We do some radio spots. We get out and talk to the community. We have our Facebook page. We try to put all sorts of notices and things like that out so the public can see as much as they can. We use the newspaper, all sorts of media to get the word out.
HLM: Any complaints about the recovery?
Black: Sometimes I get a little impatient, but that is just me wanting things to happen faster than they probably can. We want things to be done quickly, but we have to be patient in what we do so we don't knee jerk and make the wrong decision.
HLM: Are you still interim CEO?
Black: I'm still currently just the interim. No decision has been made on that, although things have been busy so that really hasn't come up here in the last few weeks.
HLM: Last time we spoke your office was a loaner pickup truck. Do you have an office yet?
Black: We have some temporary buildings. We rented some space about a half-mile from the temporary hospital. We have our business office, administrative, and medical records up here.
A large study of electronic health records systems, which includes automation of ancillary services such as clinical data repository, pharmacy, and laboratories, shows that they save money for third-party payers and patients, but not necessarily for hospitals.
Abby Kazley
A sweeping examination of more than 5 million inpatient records at 550 hospitals during 2009 identified savings averaging 9.6% per patient – or $731 – from the 19% of hospitals that used advanced electronic health records when compared with hospitals that did not.
The findings from researchers at the Medical University of South Carolina in Charleston were published in the most recent issue of the American Journal of Managed Care. Abby Swanson Kazley, an associate professor at MUSC's college of Health Professions, and a lead author of the study, spoke with HealthLeaders Media Tuesday.
HLM: Were you surprised by these findings?
ASK: I was surprised it was so high. Yes. We had done a similar study in the pediatric population and found there was not cost savings. So we were surprised it was so different in the adult population.
HLM: What was your base measure for cost per patient?
ASK: We looked at the mean cost per patient admission at hospitals—the mean overall total costs for patients with various conditions. The mean overall cost per admission for hospitals without EHRs was $10,790 and with advanced EHRs it was $10,203.
HLM: How did you define "advanced EHR?"
ASK: We wanted to pick a level that would be most consistent with the first requirements of Meaningful Use. It had to have automation of the ancillary services like the clinical data repository, pharmacy, laboratory, and radiology information systems, plus automation of nursing work flow with electronic nursing documentation, medication administration records, and also (Computerized Provider Order Entry).
HLM: Where is the savings coming from?
ASK: We don't have the granularity in the data to answer that but we can speculate. Maybe it's that the automation makes the care more efficient or maybe it is a better charge capture or a more accurate reflection of the care that is received and that patients aren't being potentially overcharged. Or maybe hospitals are more efficient because they have them.
HLM: Why did you need to examine 5 million records?
ASK: We wanted to be as inclusive as possible. There are differences in the types of systems that are used and there is a lot of hope and belief that electronic health records are going to be the magic bullet to increase quality and decrease cost but there haven't been many national studies that have looked at such a large sample of the population to really determine if that is true. We wanted to do our best to figure out whether or not they could save money.
HLM: Why did you limit the study to hospital inpatients?
ASK: We only looked at hospitals and the care that patients got during their stay in the hospital. The only way to really measure outside of the hospital would be if there were quite a few interoperable electronic health records and there aren't.
Right now it's entirely possible that patients are treated by their primary care physician or at a specialty clinic and that electronic health record may or may not communicate with the one in the hospital. It would be virtually impossible based on patient privacy and things like that to link those records together.
That is one of the problems we are facing with the implementation of EHR anyway. The different systems don't necessarily talk to each other. This was a group that we knew we could have control over the care that they had during their time in the hospital.
HLM: What does this say about the competitive advantages with EHR?
ASK: That is what the real implication is from this study. The almost 10% isn't necessarily money saved by the hospital. It is money saved by the third-party payers and patients. If they are interested in the cost of care, and I would certainly expect third-party payers are, and a certain number of patients that are informed of probably are too, to the extent that they can select hospitals that have automated electronic health records they may do so to save themselves that 10%, especially if you are talking about a patient who is going to pay for a procedure out of pocket.
Certainly anyone would want to save money on it if they believed the quality is the same or better, and many hypothesize that the quality is going to be better with these automated system but that was not something we considered in this particular study.
HLM: Your findings are from 2009. Do you expect savings to be greater as more providers adopt EHR and the systems become more sophisticated and interoperable?
ASK: It will be significantly higher when we have EHR systems that can communicate with one another and be interoperable. I suspect right now there is a lot of duplication and redundancy of care when you go to a couple of providers and have the same thing done.
So I think we are going to realize even more cost savings. You certainly would think as the people who work in hospitals become more comfortable with these systems we are going to see some true gains there.
HLM: How do you think ICD-10 will affect savings?
ASK: It is going to depend upon how well prepared the hospitals are and how smooth the transition is with the EHR systems. In some ways that makes it more complex for these EHRs. I didn't necessarily consider that in this study but I could see how it presents an additional challenge, especially for hospitals that are trying to implement and adopt and then make another change because of ICD-10.
HLM: What is the next big question to answer about EHR?
AKS: We need to continue to look at the cost and the quality of the care associated with EHR and we need to look at individual organizations and do system evaluations to see how well the EHRs themselves are working.
We need to look at a national sample which has been unusual in the research to date. That is why there has been so much interest in this study. A lot of studies out there just look at single hospitals and that doesn't tell you much, especially when this is such a national issue.
Boeing is the first employer to sign up with the accountable care organization offered jointly by Providence Health & Services and Swedish Medical Center. It is one of several employer-sponsored plans available in the Seattle area.
Seattle's Providence Health & Services and Swedish Medical Center are launching what they're calling one of the nation's first employer-driven accountable care organizations.
Boeing, with about 75,000 employees in the Seattle area, is the first company to sign up with the ACO, which will launch on Jan. 1, 2015.
Joe Gifford, MD, CEO of the Providence-Swedish Health Alliance, says the ACO will give Boeing employees and their families access to a full range of medical services from primary care to subspecialties.
"The part that is most notable about this is two-fold," Gifford says. "One is its scale. This is not a pilot. This is a huge chunk of the Boeing workforce. The other is that it is a direct offering for the employees of Boeing… the insurer plays a part, but is not the primary player at the table."
"The insurance company truly is there at the table but doing very specific things and the real direct arrangement is between the employer and the delivery systems," he says.
Providence and Swedish affiliated in 2012 in part to improve coordination of population health initiatives and value-based care.
Boeing Preferred Partnership ACOs with Providence-Swedish or UW Medicine Accountable Care Network will be one of several employer-sponsored plans available in the Puget Sound area for the airliner makers' nonunion, unionized, and retired employees.
"What Boeing has been most concerned with is providing high-touch care for their employees," Gifford says. "From the beginning they've told us that we are expected to provide a 'delightful' experience for the employees who become our patients. That has been a touchstone from the very beginning of this arrangement."
"Their vision, of course, is that they get more and more Boeing workers to be within the value proposition of an ACO arrangement," Gifford says. "In order to do so, they want to be sure that the experience of the employees as they touch our system is delightful. So, people are going to see a more high-touch concierge level as they walk in and interact with our healthcare system."
Amenities and benefits of the ACO include:
Same-day or next-day appointments for urgent primary care visits and acute care.
Concierge service that patients can reach by phone, email or Web.
Online and mobile access for scheduling primary care appointments, reviewing test results and emailing the care team.
Proactive support for preventive care and chronic disease management.
Shared decision-making tools to help patients choose the right treatment options for their lifestyle goals.
"The model of sitting down directly with these customers and their associated payers or administrators all at the same table is really a better way to go than the prior model of fee-for-service-based that does not deliver value," Gifford says.
ACOs are not a novel concept for Providence-Swedish Health Alliance. In December 2013 was approved as a one of only three Medicare ACOs by the federal Centers for Medicare & Medicaid Services and serves more than 25,000 beneficiaries in western region of the state.
The lengthy process of vetting potential partners allowed the not-for-profit system to reassess its strengths and weaknesses while it improved its balance sheets.
Dianna Morgan
Orlando Health Board Chairwoman
When Orlando Health announced last fall that it would court partners for a merger or affiliation, the six-hospital health system was following a well-read script used by scores of hospitals and health systems across the country.
So at first glance it came as a surprise late last month when Orlando Health announced that it would not pursue an affiliation with any of the eight or more health systems it had met with confidentially over the past eight months.
When you look a little deeper, however, the decision to go it alone seems well grounded.
Orlando Health Board Chairwoman Dianna Morgan says the long courting process allowed the not-for-profit system to reassess its strengths and weaknesses while it improved its balance sheets. In the end, she said the board at the health system decided they were strong enough to remain independent, at least for now.
"Through the process we just gained confidence about who we were as a system and our ability to compete without giving up independence or control," Morgan says. "We also left the board room agreeing that this is the right decision today, but knowing that this is a dynamic healthcare environment we are in and we need to always stay open to other options."
The health system controls 35% of the market in Orlando, making it the second-largest player behind Adventist Health System's Florida Hospital, which controls 52% of the market. The search for a partner was prompted in 2013 as Orlando Health recorded a $9.3 million operating loss in a year that saw the resignation of CEO Sherrie Sitarik.
In the past several months the health system has stemmed the red ink, thanks in part to a financial improvement plan implemented in 2012 that identified about $174 million in cost reductions for labor, supplies, and maintenance.
Financial Stability Regained
Under the leadership of Interim CEO Jamal Hakim, MD, Orlando Health turned the ledgers and is projected to generate a $36.4 million profit in 2014. Through the first six months of the current fiscal year, Orlando Health had a net operating income of $57.5 million compared to a $2.4 million loss over the same period of fiscal 2013.
Admissions are up too, passing the 100,000 mark for the first time since 2009. In April, Fitch Ratings affirmed an "A" rating for Orlando Health's $848 million outstanding debt, with a stable outlook.
The improved finances lessened the need for a deep-pocketed partner. Now, Morgan says, Orlando Health can focus on "nurturing" clinical collaborations already in place with UF Health and other partners in cardiology, oncology, neurosurgery, pediatrics, urology, and behavioral health.
"We have gone through a pretty exhaustive cost structure analysis and have better aligned our cost structure with our future projections," she says. "That was happening while we were looking at strategic partnerships. We were also seeing our financial results improve quarter-to-quarter. So, at the end of the day, the board I don't think felt we had a burning platform or a reason to enter into a more structured merger."
'Like an MBA in Healthcare'
Morgan says the 10 months have been educational for the board and senior leadership.
"Any process like this must start with a real clear vision of what you are trying to achieve," she says. "It began as an opportunity to gain financial strength. At the end of the day as we became financially stronger we looked at different values that the partnership could bring and yet felt that many of those values could be obtained through our own more disciplined management."
"We began this drive for improved financial results but came away with a strong appreciation for who we are here in a Central Florida community and appreciating our team culture, our physician relations, [and] our ability to continue to grow market share in a pretty healthy market."
Negotiating with top health systems from across the country also exposed Orlando Health to some of the best thinking from some of the best-run organizations in the country.
"You don't immerse yourself in that without coming away with best practices and operations in clinical services," she says. "You gain a little more confidence as you realize that your margins are actually higher than some of the people that you are talking with."
"One of our board members said this was like an MBA in healthcare going through this process. We do believe that as a result we have a board that is certainly is engaged and more educated as to what we need to be in the future."
With the move toward value-based care and population health, however, the mantra in healthcare now is bigger is better. At some point, is an affiliation or a merger for Orlando Health inevitable?
"The only way I would answer that question is by asking how big is big enough," Morgan says. "This is a community that has two large systems, Orlando Health and Adventist System. You would think we've got a healthy equilibrium in this market. We have a respected competitor, but when we get together we can meet the healthcare needs in this community, which is first and foremost our focus."
