Intermountain Healthcare will pay the federal government $25.5 million to resolve self-reported Stark Law and False Claims Act violations for improper financial relationships with referring physicians, the U.S. Department of Justice said Wednesday.
Federal officials said in a media release that Intermountain's Stark violations centered on employment agreements that paid physicians bonuses that improperly considered the value of patient referrals, and on improper office leases and other compensation arrangements between Intermountain and referring physicians.
"The Department of Justice has longstanding concerns about improper financial relationships between healthcare providers and their referral sources, because such relationships can corrupt a physician's judgment about the patient's true healthcare needs," Stuart F. Delery, Acting Assistant Attorney General for the Department's Civil Division, said in prepared remarks.
"In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make healthcare more affordable for patients."
Intermountain CMO Brent Wallace, MD, said in prepared remarks that the Salt Lake City-based provider and the largest health system in Utah discovered the possible violations in 2009 during its "regular review process" and immediately voluntarily disclosed them to the U.S. Attorney's Office in Utah for review.
"Intermountain's management recognized that potential penalties could be significant, but at no time was there ever any consideration given to not self-disclosing the issues," Wallace said. "These issues were primarily technical in nature and involved things such as lack of proper paperwork involving leases of physician offices and service agreements. That individual physicians are listed in the attachments to the agreement does not mean that a physician committed any wrongdoing of any kind."
Wallace said all of the issues detailed in the 2009 self-disclosure have been corrected and that "none of these issues adversely affected in any way the quality, appropriateness, or cost of patient care at Intermountain hospitals and clinics."
Wallace said some of the blame for the violations were "due to the complexity of nearly 300 pages of federal regulations and commentary governing relationships between hospitals and physicians that have evolved and changed over time and were modified in 2007."
"Intermountain should have monitored this situation more closely. We are embarrassed that these issues occurred and regret that our controls at the time were inadequate to properly monitor these matters," Wallace said.
"Since discovering these concerns Intermountain has improved its controls by implementing a rigorous centralized process to track all physician agreements. Intermountain added additional staff, implemented advanced tracking software, created oversight councils, and put additional training in place to assure compliance with all relevant regulations. Intermountain will continue the practice of regularly evaluating and monitoring all business practices to ensure legal and regulatory compliance. We have learned from this experience and are a better company as a result."
Federal prosecutors said that they have used the False Claims Act to recover more than $10.2 billion since January 2009 in cases involving fraud against federal healthcare programs.
The basics of the study are thus: Researchers from Harvard Medical School and the Harvard School of Public Health examined administrative data from nearly 10 million Medicare fee-for-service admissions for acute myocardial infarction, congestive heart failure, and pneumonia between 2002–2010.
Comparing 30-day mortality rates of CAHs and non-CAHs in urban and rural settings, they found that while CAHs and non-CAHs had comparable mortality rates for the three conditions in 2002, CAHs gradually fell behind each year to the point where by 2010 CAHs mortality rates were 13.3% and non-CAH mortality rates were 11.4%, a difference of 1.8%.
In an interview, the study's lead author, Karen E. Joynt, MD, MPH, a cardiologist and an instructor at the Harvard Medical School and Harvard School of Public Health, offered her interpretation of the findings:
HLM: Were you surprised by your findings?
KJ: "We were actually. We had done a paper two years ago in which we looked at critical access hospitals in a cross-sectional fashion, a one-time look at outcomes and resources at critical access hospitals. We received quite a bit of feedback on that work from rural providers.
Many of them said it is not fair to look at one point it time because we have improved over time. You should look longitudinally. We thought that was a fair request and we did, and to our surprise we found that critical access hospitals had been performing, at least on mortality, relatively equivalently to non-CAHs earlier in the decade, but that over the past 10 years we have seen a separation of outcomes."
HLM: Are you confident that your study makes an apples-to-apples comparison?
KJ: Everyone on in the study is a Medicare patient over the age of 65 and not in a Medicare HMO. I don't think there is any reason to think that the difference between rural and non-rural patients, or more relevantly rural patients that go to critical access hospitals versus rural patients that go to other rural hospitals, that the differences in their characteristics should have changed so much over time as to make these results appear from nowhere.
Certainly rural patients are different from urban patients, but in most research the people who do the best are suburbanites. I don't think this is driven by simply the fact that rural patients are so much sicker and so much older because we control for things like age and diabetes. We don't perfectly control for things like smoking or obesity because we can't measure those. But I don't think the changes over time have been so vast that that is what we are looking at here.
HLM: How significant is the 1.8% difference in mortality rates?
KJ: What it is telling us is that we have left these hospitals behind because 1.8% of the absolute mortality rate is 1 in 50 people. That is more than 10% of the actual rate, so in clinical trial speak it is a significant relevant risk.
But what is important here is not the specific numbers, but recognizing that the effort to carve these hospitals into a separate program than the remainder of the hospitals in the country has not done them any favors and it hasn't done any favors for the people seeking care at these hospitals.
If you live in rural Maine or rural Nevada and you present to your local hospital having a heart attack in this day and age we should expect that a system of hospital care will figure out how to treat that patient as optimally as possible.
What this [research] points out to me is not so much a problem with the hospitals as it is a systems problem. It's not realistic to expect that these small hospitals should have the same resources as other hospitals do. Having a 24-hour cardiac cath lab in a hospital with 10 beds doesn't make any sense.
But if you live out there and you have a heart attack, we should have a system that gets you where you need to be. With telemedicine and other technologies it seems like as a system we could do better for rural patients.
It's not that these hospitals are doing a bad job. It's that we are asking them to do an impossible job if they are not supported. I am a cardiologist. I work in an academic medical center. The resources that I have at my disposal at an academic medical center are completely different from the resources that a physician has working at a critical access hospital. I cannot imagine how hard that job must be.
The doctors working at critical access hospitals are probably the hardest working doctors in medicine. [That means] being the only person in a hospital trying to take care of someone who with a hip fracture and someone who walks in with a heart attack and someone who walks in with heart failure or a stroke wherein today's era of medicine we are changing the guidelines for the treatments for these things on a few monthly basis.
This may be pointing out that with the advancements we have been able to make treating heart attacks and heart failure and to some degree pneumonia, these hospitals and rural patients are getting left behind. That seems like a fixable problem.
HLM: Do you believe the CAH Program has been a success or a failure?
KJ: There were two big components of the Critical Access Hospital Program. One was to give them cost-based reimbursements. The other was to exempt them from quality reporting. They are not included in value-based purchasing. They are not included in accountable care organizations. They are not included in public reporting.
Part of the program worked terrifically. The closures have dropped tremendously. There really are areas in which there would be no medical care if it weren't for this program. But leaving them on their own and saying 'good luck' has not been a good solution.
I understand that (the Centers for Medicare & Medicaid Services) was trying to relieve these hospitals of an administrative burden by not including them, but the consequence seems to be that no one knew these outcomes were not improving at many of these critical access hospitals in the way that we were seeing mortality from many inpatient conditions drop over the last decade.
That to me in this era of transparency and trying to build better systems and being more patient-centered doesn't make much sense as a long-term strategy.
Another issue is [that] there are plenty of critical access hospitals that are not rural or isolated. It is hard to understand the rationale if it is a medium-sized hospital in a suburb for why their under this different set of regulations.
At this point we should be thinking about systems and transparency and not leaving out rural communities. It feels wrong to me that we are OK with folks in rural areas having worse outcomes than folks in urban areas. We can do better than that.
HLM: Your study suggests that "new efforts" are needed to improve mortality rates at CAHs. What do you recommend?
KJ: Finances and the quality should be separate. Regardless of how the hospitals are financed if you are providing care to Medicare patients in this day and age… people deserve to understand data and to see what is happening at their local hospitals and exempting 1,000 hospitals from having to participate in quality monitoring is not a good long-term solution.
HLM: Do you believe that the reporting exemptions for CAHs should end?
KJ: I do. The burden of reporting can be lessened if that is the barrier. If the barrier is we need to have them electronically report because they don't have the infrastructure to be able to have a person doing the chart instruction, then let's find electronic records systems, which would help all small rural hospitals.
Saying they are too small to collect data is not realistic in this day and age. Something about the participation in these quality programs and reporting really does make a difference in what these hospitals are able to do. Small rural hospitals that aren't critical access hospitals still have to submit their quality data and have to function in the same roles as everybody else.
HLM: How do you address criticisms that your study relies on administrative data to measure clinical outcomes?
KJ: I agree there are limitations to administrative data, but it doesn't make it useless. Administrative data can show us a pattern and then we need clinical and qualitative data to understand why. The wrong response to this paper would be to say there is obviously no problem. This is all a trick of administrative data. That is a little biased.
The appropriate response is that it looks like there is a problem in that these hospitals appear to be falling further and further behind.
What we need to do now is to ask why and what can we do about it. If we determine that it's all because the patients are older and sicker then OK, let's figure out what we need to do to take care of older sicker rural people. And if we find out it's because patients are declining transfer to the big city hospital because they want to be close to home, OK then let's find telemedicine or tele-ICU or other consultations to bring the care to them so they can stay close to home.
It's not fake data. These are real people. They are dead. These are Medicare patients, someone's grandmother who died. It is true that administrative data will give you statistically significant results for very small differences because we have millions of people. That is a sample size issue.
But the differences, particularly for acute MI are clinically relevant. It is more than a third higher mortality over the last decade for heart attacks where the rest of the country has been improving care for heart attacks. That is not write-off-able.
Let's stop ignoring these hospitals and see if we can think creatively to help rural patients do better.
HLM: How should CAHs reforms be implemented?
KJ: We need to get the stakeholders from critical access hospitals at the table and hear from them what they need. I'm not the person who will come up with a solution. My guess is that critical access hospitals could lay out for us 'these are the barriers I face in trying to get my patients access to X,Y,Z care and these are the things that could make my job easier.' We should listen to the critical access hospitals and find out how federal and state policies can connect them better and enable them more and give them more resources.
I don't actually care about the hospitals so much. I care about the patients. If your grandmother lives in some rural place you want to know that there is some community institution close to home where she can go if she needs something and where they can make a decision about what is best for her, on whether or not the things she needs can be provided there, and that she can come back there to get whatever she needs when she is done in the big city.
The system as it is now is not very robust for rural patients.
The nation's critical access hospitals have higher mortality rates on several key measures than do urban and rural hospitals without the specia l designation, and the trend steadily worsened over the past eight years, according to a new study by Harvard researchers.
Researchers from Harvard Medical School and the Harvard School of Public Health examined administrative data from nearly 10 million Medicare fee-for-service admissions for acute myocardial infarction, congestive heart failure, and pneumonia between 2002–2010.
The researchers compared 30-day mortality rates of CAHs and non-CAHs in urban and rural settings. They found that while CAHs and non-CAHs had comparable mortality rates for the three conditions in 2002, CAHs gradually fell behind each year to the point where by 2010 CAHs mortality rates were 13.3% and non-CAH mortality rates were 11.4%, a difference of 1.8%.
"What it is telling us is that we have left these hospitals behind because 1.8% of the absolute mortality rate is one in 50 people. That is more than 10% of the actual rate so in clinical trial speak it is a significant relevant risk," Karen E. Joynt, MD, lead researcher of the study, said in an interview.
"But what is important here is not the specific numbers but recognizing that the effort to carve these critical access hospitals into a separate program than the remainder of the hospitals in the country has not done them any favors and it hasn't done any favors for the people seeking care at these hospitals," says Joynt, an instructor at Harvard Medical School and the Harvard School of Public Health.
When the Critical Access Hospital Program was created by Congress in 1997, qualifying CAHs could have no more than 25 beds and had to be located at least 35 miles from the nearest hospital. Since then states have been given leeway to broaden eligibility and now only 20% of the CAHs current meet the distance requirement and nearly one in four U.S. hospitals is designated as a CAH.
CAHs are exempted from prospective payments but are reimbursed at 101% of costs. They are also exempted from national quality improvement programs.
Joynt says that while the higher reimbursements have allowed scores of CAHs to keep their doors open, it may be time to reconsider their exemptions from reporting and quality improvement programs.
"Part of the program worked terrifically. The closures have dropped tremendously. There really are areas in which there would be no medical care if it weren't for this program. But leaving them on their own and saying 'good luck' has not been a good solution," she says.
"I understand that (the Centers for Medicare & Medicaid Services) was trying to relieve these hospitals of an administrative burden by not including them. But the consequence seems to be that no one knew these outcomes were not improving at many of these CAHs in the way that we were seeing mortality from many inpatient conditions drop over the last decade. That to me in this era of transparency and trying to build better systems and being more patient-centered doesn't make much sense as a long-term strategy."
The American Hospital Association took issue with the findings and said the "data presented now are not a reliable presentation of what is actually happening at critical access hospitals."
"CAHs and other small hospitals have engaged in a variety of practices designed to identify and rapidly transfer patients who could benefit from more aggressive interventions at nearby hospitals that have the capability of intervening. One reason for seeing a rise in mortality in some CAHs could be because the hospital may tend to keep patients that are too sick for transfer or not stable enough. As a result CAHs' data maybe skewed toward patients who are sicker," AHA said in an email exchange.
The contentious study also prompted an editorial rebuttal in the same issue of JAMA from Stanford University researcher John P.A. Ioannidis, MD, who wrote that "even if the differences in CAH vs. non-CAH mortality rates are genuine, this does not mean that policy makers should necessarily advocate for CAHs to collect and report performance data or to participate in quality improvement programs, change their payment mechanisms, or both."
"The study by Joynt et al can minimally inform such decisions. Trying to impose quality data collection and reporting in such hospitals that have already strained resources may actually do more harm than good. Even for non-CAHs, the evidence is tenuous that performance and quality initiatives do work."
Gary Tiller, CEO of Ninnescah Valley Health Systems, Inc. in Kingman, KS, which operates the 25-bed Kingman Community Hospital, says the study "has renewed my lack of faith in the Harvard School of Public Health."
"This is all much ado about nothing. There are a lot of ways to look at the data depending upon what you want to do with it," Tiller says.
"They said we don't participate in quality reporting or quality initiatives. I don't know where they got that notion. We've done so much of it. We are reporting well over 100 data points now and the great bulk of the CAHs are doing that. They obviously never went out to a CAH."
"I don't need more paperwork. I've had to divert way too many staff hours to that kind of crap already. I am not really thrilled about having to do more of it."
Joynt concedes that the use of administrative data for clinical studies has limitations "but it doesn't make it useless."
"Administrative data can show us a pattern and then we need clinical and qualitative data to understand why," she says. "The wrong response to this paper would be to say there is obviously no problem. This is all a trick of administrative data. That is a little biased."
"It's not fake data. These are real people. They are dead. These are Medicare patients, someone's grandmother who died. It is true that administrative data will give you statistically significant results for very small differences because we have millions of people. That is a sample size issue. But the differences particularly for acute MI are clinically relevant. It is more than a one-third higher mortality over the last decade for heart attacks where the rest of the country has been improving care for heart attacks. That is not write-off-able," Joynt said.
"The data doesn't tell us the details about why and it doesn't tell us how we can fix it. It tells us maybe there is a problem here. Let's stop ignoring these hospitals and see if we can think creatively to help rural patients do better."
"The relationship between Shriners and the Mayo Clinic Children's Center has been a long-standing and rewarding one, and by formalizing our collaboration, we'll be able to work even more closely together to enhance the care we provide children," David Hayes, MD, medical director, Mayo Clinic Care Network, said in prepared remarks.
Shriners provides specialized pediatric orthopedic care in a seven-state region and is part of a network of children's hospitals located across the U.S., Canada and Mexico. Mayo Clinic Children's Center specialties include orthopedics, rheumatology, hand surgery and neurology and consist of 200 pediatricians and surgical subspecialists from more than 40 medical and surgical specialties. The center provides care for more than 50,000 children and teens each year, Mayo Clinic said.
In a separate announcement, Mayo said that Saint Marys and Methodist Hospitals in Rochester will transition to a single licensed hospital operating under the name Mayo Clinic Hospital – Rochester.
The change is effective January 1, 2014 and Mayo Clinic said in a media release that the consolidation will "better reflect Mayo Clinic's integrated hospital practice, ensure accurate reporting of data, and reinforce our ability to prove the value of Mayo Clinic care, while still honoring the commitment to the organization's founders' values."
Mayo Clinic said it now has a "single integrated hospital practice" divided between two hospital licenses and two legal entities, and regulations mandate separate reporting of quality, financial and operating data for the two hospitals to organizations such as the Centers for Medicare & Medicaid Services, The Joint Commission, and The Leapfrog Group.
The separate reporting had created an increasingly "incomplete and incorrect picture" of the care being delivered. "Reporting as one hospital will ensure that regulatory agencies, payers and patients have accurate information about Mayo Clinic," the clinic said in a media release.
The change was approved by the Academy of Our Lady of Lourdes (Sisters of Saint Francis), and Saint Marys Hospital will no longer be designated as a Catholic healthcare institution.
"Although the Catholic identity and the name of Saint Marys Hospital will change, much will remain the same," Sister Marilyn Geiger, Sisters of Saint Francis, said in prepared remarks. "The chapel will continue to be used as a Catholic chapel, a public place of worship available to patients, their families, employees, and local residents. The Sisters of Saint Francis and Mayo Clinic will continue to work together to perpetuate the Franciscan Mission and the values of Mother Alfred Moes and Dr. W.W. Mayo."
Healthcare economist Adam Powell says he believes the two initiatives are being driven by "somewhat different motives."
"The Shriners initiative is about increasing revenue, while the hospital integration is about reducing variability in quality measures," says Powell, president of Payer + Provider Syndicate, a Boston-based consulting firm.
"The participation of Shriners in the Mayo Clinic Care Network is beneficial for Mayo, in that it provides an additional customer for the eConsults and AskMayoExpert services. This move would have been advantageous for Mayo under any circumstances, but has likely been facilitated by recent technological advances and greater acceptance of telemedicine. The general trend towards greater use of evidence-based medicine has likely also motivated Shriners to adopt the AskMayoExpert service."
"The integration of Saint Marys and Methodist Hospitals within the Mayo system represents an effort to reduce costs and red tape, in light of growing hospital regulation and reporting requirements," Powell says. "By combining quality data from two hospitals, Mayo will have data representing a larger population, and as a result will have less random variation in outcomes. Given that value-based contracts are tied to quality outcomes, it is vital for Mayo to do everything that it can to reduce random variation. As hospital systems transition towards value-based payment, we may see more efforts to stabilize metrics."
Despite the portrayals of rocky home lives and marriages on the brink in TV soap operas and primetime dramas, an overwhelming majority of physicians' spouses and partners say they are happy with their relationships, Mayo Clinic research shows.
The study, "The Medical Marriage: A National Survey of the Spouses/Partners of US Physicians,"published this month in Mayo Clinic Proceedings, found that 85% of the 891 spouses or partners of physicians who responded said they were satisfied with their mate, and 80% said they'd pick a physician again if they had to revisit the choice.
Three-quarters of the physicians' spouses or partners who responded to the survey were female, and 40% of the respondents had a full-time job and worked at least 30 hours a week outside of the home, the survey shows.
"It gives us data that shatters some stereotypes," Tait Shanafelt, MD, lead author of the survey and a Mayo Clinic hematologist and oncologist, said in an interview.
"First, in a large proportion of relationships the physician is a woman. In the majority of the relationships, the partner has a career of his or her own and is working a substantial number of hours outside the home," he says. "It also shatters the stereotype that is promulgated on TV that physicians' personal relationships are always of poor quality and they are at risk of divorce. That doesn't bear out in the data."
Shanafelt says the survey also challenges perceptions that the professional characteristics of physicians' jobs are going to determine whether or not they are satisfied in their personal lives. "There is nothing to suggest that the surgeon is going to have a less-satisfying marriage than a person in a non-surgical specialty or that it is all about the hours worked or if I am in academic or private practice," he says.
"What was striking was when we did the multi-varied analysis, none of the professional characteristics was related to relationship satisfaction, with the exception of the number of nights on call. In some ways, that can be reassuring to physicians who are in some of the greater intensity specialties that demand more hours. Those things unto themselves don't preclude satisfying relationships on the home front."
One of the biggest drivers for spouse or partner satisfaction was the amount of "awake time" spent each day with their physician partners.
"That was far more important than whether they were in a certain specialty and how many hours a week they worked," Shanafelt says. "This could help physicians who are trying to nurture good relationships begin to not blame shortcomings necessarily on the professional life."
"Here again, there was a very strong response affect for that amount of time spent together awake. Each 20-minute increment up was a step up toward a greater degree of satisfaction, and partners and spouses were less likely to consider a divorce," he says. "It seems like you can have a demanding area of specialization and heavy work hours, but if you are making sure you still invest in that personal relationship it can still be of great quality."
The study was funded by the American Medical Association and the Mayo Clinic Department of Medicine Program on Physician Well-being.
The American Hospital Association has a message for the federal government on the topic of patient experience surveys: Enough already!
In a letter this week to Marilyn Tavenner, acting administrator for the Centers for Medicare & Medicaid Services, AHA suggested that plans to add a new survey about patient experiences in hospital outpatient surgical departments and ambulatory surgical centers would be a lesson in overkill that would confuse patients and prove burdensome and expensive for hospital administrators.
Ashley Thompson, AHA's vice president and deputy director of policy, wrote in the letter to Tavenner that AHA has long supported and recognized the value of Consumer Assessment of Healthcare Providers and Systems surveys "as tools to help hospitals improve the engagement and satisfaction of patients and families."
"However, the AHA urges CMS to reconsider the necessity of a new, separate survey tool for ASCs and HOSDs," Thompson said in the letter.
"We are concerned that the CAHPS program already includes multiple overlapping survey tools creating confusion about how to assess the patient experience across multiple care settings, as well as excessive survey administration burden. Instead of a separate survey, CMS should incorporate a small number of supplemental survey questions targeted at facility-level issues for ASCs into an existing CAHPS survey."
AHA was responding to CMS's January 25 request for information that sought input from hospitals about the proposed survey. The comment period ended on Tuesday.
CMS acknowledged in its request for information notice that "two related CAHPS surveys exist: however, they do not collect information specific to the patient experience of care in HOSD/ASC facilities."
The Hospital CAHPS (HCAHPS) survey collects data on inpatient experience and care ratings but does not include patients who receive outpatient surgical care from a hospital-based outpatient surgical department or patients who got that care from freestanding ACSs, CMS said.
The Surgical Care CAHPS survey focuses on inpatient and outpatient surgeries and includes questions about the patient's experience before, during and after the surgery. However, the survey focuses on the care provided by the physician and not the facility, CMS said.
Thompson countered in her letter that the CG-CAHPS and Surgical CAHPS "already include information highly relevant to assessing experience of care in ASCs and HOSDs."
"The CG-CAHPS survey evaluates practices and individual providers on several issues, including access to appointments, physician communication with patients, courtesy of office staff and follow up on testing results," she said.
"The Surgical CAHPS survey captures similar information, but with a focus on surgical care in both the inpatient and outpatient settings. Patients rate the quality of pre-and-post procedure information provided to them, the helpfulness of office staff, and communication with surgeons and anesthesiologists before and after the procedure."
Thompson raised concerns that the "proliferation of CAHPS surveys" confuses patients and makes it difficult for them to accurately assess their experience
"If CMS implements yet another survey relevant to ambulatory surgical patients, then patients would receive three separate but similar surveys for exactly the same care episode," she said.
In addition, Thompson noted that CAHPS already survey physicians, hospitals, nursing homes, dialysis facilities and home health agencies, and there are plans to build surveys for emergency departments and hospice care.
"Patients who receive care in two or more of these settings could receive multiple surveys," Thompson said. "Typically, surveys are not distributed until days or weeks after a patient has received their care. This may create confusion about which provider or facility is actually being assessed. A patient may inadvertently attribute a positive or negative experience to the wrong organization."
Thompson raised concerns about the cost and administrative burdens of the surveys and suggested that CMS allow hospitals to choose lower cost surveys to mitigate the financial burden imposed by the process.
In addition, she said CMS could enhance existing CAHPS surveys by reassessing how scores are adjusted for the severity of patient illness. She pointed to a Cleveland Clinic study which found that patient satisfaction scores declined significantly as the severity of the illness worsens.
"These findings indicate that hospitals that treat the most severely ill patients may have systematically lower scores," Thompson said. "We believe this trend also may affect scores for other surveys in the CAHPS family. We encourage CMS to conduct an analysis that assesses the extent of the issue, and identifies potential mechanisms for enhancing how CAHPS scores are adjusted for patient factors."
The healthcare sector should be given a pat on the back for innovative work over the past few years that has "bent the cost curve" to a point where healthcare inflation is riding a few percentage points higher than overall inflation.
That may seem like faint praise. The 4% annual increase in healthcare spending in 2011, as reported by the Congressional Budget Office in February, grew faster than most paychecks. Still, it's about half of the rate seen in the early 2000s, according to a recent analysis by Moody's Investors Service.
Analysts have acknowledged that much, but not all, of that slower cost growth can be attributed to the effects of a dragging economy marked by higher unemployment, the loss of health insurance coverage, and the advent of high-deductible health insurance plans. Better management plays a role too, as providers scan the healthcare cost spectrum from patient throughput to floor wax for savings through new efficiencies and waste-cutting measures.
All of this in-house reordering by providers is only half the battle. As has been noted, if we want to reduce healthcare expenditures we have to change the behaviors, expectations, and decisions made by healthcare consumers, a.k.a. patients.
This will be considerably harder to do than carving out new throughput efficiencies or entering a group purchasing organization. That's because providers will be battling decades of conditioned behaviors by healthcare consumers, who are taught to believe that their health problems can be solved with the right pill or the next new test or a "routine" operation.
A primary care physician during a wellness exam may have 20 or 30 minutes once a year or so to talk with a patient about eating right, losing weight, quitting smoking and exercising more. The moment that patient leaves the physician's office he is bombarded by advertising and messaging that urges him to do exactly the opposite.
When these consumers begin to suffer the effects of that overindulgence, be it acid reflux or high blood pressure or lower back or knee pain, they're assured that relief is close at hand with the right mix of pharmaceuticals, cutting-edge cancer therapy, or the latest orthopedic procedure. They're urged to "consult with your doctor." That is subtle way of telling healthcare consumers to pressure their docs into prescribing a material solution that someone is selling instead of addressing the underlying behaviors that are causing the problem.
This dynamic has to change. And the best way to change it is to educate and involve patients in their own care. This can transform them from healthcare consumers demanding the next great cure into discerning advocates for their own health.
Again, this will not be easy because the countervailing winds in our consumer culture celebrate uncritical overindulgence and easy remedies.
This week, the American Board of Internal Medicine Foundation announced that it would grant about $70,000 in funding to each of 21 state medical societies, specialty societies, and regional health collaborative as part of its year-old Choosing Wisely campaign. The campaign wants to create a dialog between physicians and patients about medical tests and procedures that have been identified by medical specialty societies as either unnecessary, wasteful, or even harmful in some cases.
"What it will do is change the conversation by using shared decision-making between the patient and the provider," says Cally Vinz, vice president of Minnesota's Institute for Clinical Systems Improvement, which wants to expand the Choosing Wisely campaign across the Land of 10,000 Lakes.
"We also hope to change the perspective of the consumer as they come in by educating them about what they shouldn't be asking for or shouldn't be expecting if it is not high value," Vinz explains.
"Then the provider is comfortable with having a conversation and the health plan isn't covering it in the same way because it is an unnecessary exempt. This goes across the whole continuum from the consumer's expectation to the provider's system that supports him to do the right thing to have the conversation and the healthcare coverage supporting the right kind of testing."
The ABIM Foundation was smart to enlist the support and advice of medical specialty societies. It is heartening to see that these professional medical organizations are dedicated to quality care and want to ensure the right treatment at the right time, even if it means reducing the number of MRIs for lower back pain or fewer antibiotics prescribed for sinusitis.
In the next two months, Vinz says, the Choosing Wisely campaign with the help of the medical societies will identify and focus on five medical tests or interventions that are not value-driven or are not recommended in most cases.
"We will be focusing on those initially and identifying how we can educate employers, consumers, and care providers that these are unnecessary," she says. "As we do that and talk to consumers and employers about these things we will learn lessons about how to take on another five or 10 or 20 tests or interventions because there are hundreds of them."
Vinz acknowledges that the Choose Wisely movement will have a hard time changing the ingrained expectations of healthcare consumers but she is also optimistic.
"Patients want what they want when they want it but they don't want unnecessary care," she says. "They don't want things that put them at risk because sometimes these tests can cause harm or send you down a path that isn't helpful. We have to help to educate them about being a partner in their health, working with their providers and employers in shared decision making."
Vinz believes that Choosing Wisely will "get the conversation started."
"It has to start somewhere," she says. "United States citizens have to start to learn that more isn't always better and expecting more isn't always going to be helpful and safe for you."
Not-for-profit hospitals are better managed and are learning to do more with less revenue. Now the question is whether or not the sector can continue to find savings in the coming years with much of the low-hanging fruit plucked and an aging demographic increasingly straining resource, Moody's Investors Service says.
Mark Pascaris, vice president and senior analyst at the bond rating agency, says that not-for-profit hospitals will continue to endure a negative credit outlook for the near future because of challenges to top-line revenues.
"The federal government pulling back on Medicare reimbursements, commercial payers becoming tighter in the types of rate increases they give to hospital and health systems year over year— that hasn't changed," Pascaris said in an interview.
"But we believe that as a sector, particularly among the rated hospitals, the management teams have become more focused on expense management and really have weathered the storm coming through the recession and the subsequent anemic economic recovery."
The Congressional Budget Office in February reported that total healthcare spending for the past three years increased at a historically low level of about 4%, which was slightly higher than 3% inflation in 2011 in the overall economy as measured by the Consumer Price Index.
That slowing of healthcare inflation, fueled in part by reduced federal funding, has mixed credit implications for not-for-profit hospitals, Moody's notes. Pascaris, however, says four years of significantly lower healthcare inflation cannot be attributed solely to the slow economy or reduced revenues.
"That first couple of years of that low pace of healthcare inflation, folks were attributing it to the Great Recession and higher unemployment and people with jobs either losing health insurance or being transferred to high-deductible plans. All of those things certainly were a factor," he says. "But now that we are at a multi-year trend of this kind of inflation in our view a component of this has to do with improved management in the sector driving down a lower sector-wide rate of inflation."
Medicare and Medicaid spending now represent 23% of the federal budget, the largest slice. The CBO has projected that by 2020 spending on Medicare and Medicaid will be cut by $200 billion less than what it had projected for the programs in March 2010. Because Medicare and Medicaid combined generate about 57% of gross revenues for most not-for-profit hospitals, the effects of any funding cuts are significant.
"On balance, however, we view the trend favorably for the industry as it drives management efforts across the sector over multiple years to control spending and portends a more efficient delivery model than in past years," Moody' says in Lower US Healthcare Inflation is Credit Positive for Not-for-Profit Hospitals.
"The trick," Pascaris says, "is going to be on the expense management side of things keeping that pace moving forward."
"The percentage of the population age 65 and older is expected to grow and grow over time and those are the folks who consume more healthcare resources," he said. "That coupled with a lot of the expense management efforts over the last three or four years have been low-hanging fruit like renegotiating supply contracts and right-sizing staff levels, things of that nature."
Many hospitals are focusing on the next level of expense reductions that include harder-to-find and longer-term efficiencies in areas such as enforcing standardized clinical protocols, improving patient throughput, hand-offs, and post-discharge care coordination.
"At some point you have to reengineer the process of healthcare management, which is really where a lot of the more sophisticated and aligned health systems are right now in trying to redevelop the throughput of healthcare—rethinking that altogether," Pascaris said.
"We think the next phase of expense management is probably going to be more difficult in terms of restructuring the process of healthcare delivery and that is probably going to be a bit more disruptive coming into an era where more of the population is at that Medicare eligibility," he said.
"It is going to be that much more of a challenge moving forward, which is part of the reason why we have seen and will continue to see more consolidation in the industry, more hospitals joining together or joining larger health systems to take advantage of economies of scale."
Health insurance providers have spent less than 1% of the premium dollars they collected from policy holders on quality initiatives, a Commonwealth Fund study said.
Insurers spent $2.3 billion on quality improvement activities in 2011, an average of about $29 per policyholder, the report said. Spending on quality initiatives is mandated in a provision of the Patient Protection and Affordable Care Act.
"You have to have a little bit of a caveat here because this regulation was just starting in 2011. They're dealing with coordinated care and it is in the embryonic stages here of how they are going to allocate those costs," says study coauthor Michael McCue of Virginia Commonwealth University.
"They have to be able to accurately measure all of these various activities and allocate those costs. The big plans, back when this data was reported, were still in the planning stage of how they were going to be measuring quality of care activities. The majority of the dollars paid out in premiums are going towards medical expenses. These are activities that help promote quality of care."
The PPACA's medical loss ratio rule requires insurers to spend at least 80% or 85% of premiums on medical claims and quality improvement activities, or else pay rebates to consumers. To calculate medical loss ratios, the report, Insurers' Medical Loss Ratios and Quality Improvement Spending in 2011, linked quality improvement expenses to activities that are likely to improve health outcomes, prevent hospital readmissions, improve patient safety and reduce medical errors, and increase wellness and health promotion.
Insurers spent 17% of the total quality improvement spending on health information technology upgrades, 51% on improving health outcomes, 9% on preventing hospital readmissions, 10% on patient safety, and 13% on wellness, the study found.
It also identified substantial variations in quality improvement expenditures ranging from $40 per member among the top quartile to $12 per member in the bottom quartile. The median expenditure among provider-sponsored plans was $37 per member and $23 by non-provider-sponsored plans. Nonprofit plans spent $35 per member and for-profit plans spent $19.
Robert Zirkelbach, spokesman for America's Health Insurance Plans, says insurers have complained that federal regulations weren't "capturing all of the activities that plans do to improve quality for patients."
"There is a big move towards partnering with doctors and hospitals to change how we pay for care so we are rewarding quality and value over volume of services provided. Plans are doing that all across the country, but that is not reflected in these numbers," Zirkelbach said.
"Plans increasingly provide patients with more access to information and data about quality and cost of medical services, providing online and on mobile devices, information and claims history personal health records so they can make more informed health decisions. That is not included."
"We are making sure that more physicians in health plan networks are providing high-quality care, credentialing them, making sure they provide the kind of care that patients need, but that isn't included. Efforts to prevent and deter fraud from occurring in the healthcare system that has not only cost implications, but patient safety and quality implications as well, [such as] doctors providing fake medicine and charging plans is going to hurt patient care. It is those types of things that aren't included but plans are doing and investing significant resources to do so it is not fully capturing the full picture," Zirkelbach says.
In the individual market, 8% of nonprofit plans owed consumer rebates, compared to 47% of for-profit insurers, while 7% of provider-sponsored plans in the individual market owed rebates compared to 40% of non-provider sponsored plans, the report said.
Nonprofit and provider-sponsored plans were more likely than for-profit and non-provider-sponsored plans to meet the health reform law's medical loss ratio requirement that they spend at least 80% to 85% percent of premiums on medical claims and quality improvement, the report said.
McCue says publicly traded insurers have the added pressure of answering to stockholders. "Mostly they are going to try to target that as much as they can to generate some kind of profit. However a not-for-profit plan will generate some return but they are not driven by their stockholders," he says.
"If you think about the mission or goal of a publicly traded firm that is to maximize stockholder wealth. They try to appease stockholders. Not-for-profits have their mission, although profit is not the primary motive so more of those dollars may be paid out into medical expenses."
The report suggests that costs and benefits are more important to consumers shopping for health insurance coverage than are issues such as quality of care, which means that health insurers are not incentivized to invest in quality improvement initiatives.
"Some consumers, because of the fact that they are going to be mandated to buy insurance, are going to be very cost-driven initially," McCue says. "But once they become part of a health plan and utilize the providers of that plan then quality may become an issue to them."
Despite the commitment and valiant efforts of healthcare providers across the nation to improve health in their communities, they can't do it alone.
The benefits of a half-hour visit with a healthcare provider can quickly evaporate if the patient returns to his own reality and resumes the unhealthy behaviors that prompted his call for care in the first place.
It's increasingly clear that any attempt to improve population health will require a coordinated effort, not just tactically between healthcare providers, but also strategically and involving healthcare providers, educators, government, businesses and charities such as the United Way.
Fortunately, there's a handy tool out there to help providers and other community leaders identify the health needs of their areas. The 4th annual County Health Rankings assesses the health of almost every county in the United States and ranks the counties within their states. The rankings were compiled by the University of Wisconsin Population Health Institute in conjunction with the Robert Wood Johnson Foundation.
The data provide a status report on critical population health metrics such as morbidity, access to care, overweight and obesity, tobacco and alcohol use, sexual activity, educational attainment, pre-natal and infant health, and teen pregnancy.
Angela R. Russell, a researcher at the University of Wisconsin Population Health Institute, says the data provides an "annual snapshot" at a somewhat granular level that is detailed enough to allow local leaders to develop targeted remedies.
"It shows where they are doing well and where there are opportunities for improvement," Russell says. "On the national level and the local level a lot of the conversation has focused on healthcare and our data set and research shows that healthcare is important. But our research also tells us that much of what affects our health occurs outside of the doctor's office. In fact, where we live actually matters to our health."
Russell wants healthcare providers to use the rankings as a starting point and then to dig a little deeper to find out what their communities are up against. After all, it's hard to fight when you don't know your opponent.
"As a health administration, you get a better sense of your actual service area and know the challenges and opportunities you face," Russell says. "It would tell you a lot about your community health. It would tell you if folks in your service area are dying before they should. It will tell you if you have a high rate of low birth weight babies being born in your area. It can tell you a lot about health behaviors. Are people smoking more? Are they obese? Are they physically inactive?"
The data also show that there are a variety of factors that influence the health of the community that go beyond health behaviors and access to care. "It also includes socio-economic factors such as education, poverty, income, community safety, and the physical environment," Russell says. "The data also show that there are some counties that can be right next to each other and some can be very healthy and some are not."
And that's why improving population health cannot be left solely to providers.
"We want this to serve as a call to action for local leaders across the nation… by working together we can improve the health of the nation from the ground up. It really takes us all working together. If they are going to change the health of the county they have to work alongside educators and the United Way and maybe the local chamber of commerce."
Russell cautions that changing population health is not easy.
"One thing we recognized is that it takes a long time to make change," she says. "We have been putting out this data for four years, but we know things aren't going to change overnight. It's going to take persistent and consistent hard work of leaders across the nation to see change over time."
And finally, if your county is on the bottom or near the bottom of the list with some of the worst health issues in your state, don't despair.
"In fact, use it as a call to action," Russell says. "The rankings give us hope and tell us there are things we can do today to create cultures of health where we live, where we learn, and where we play."
