We hear a lot these days about dysfunctional government, so it's refreshing to hear about proposals to address nagging and persistent issues in community health.
For example, the state of Maryland in January launched a four-year $16 million pilot project that designates five "Health Enterprise Zones" in communities across the state.
Under the HEZ designation, five community coalitions were picked from 19 applicants to receive funding from the pilot after they identified contiguous geographic areas whose residents are poor and suffer from significant levels of chronic illnesses such as asthma, diabetes, and cardiovascular diseases.
If all goes as intended, HEZs might pay for themselves—if they reduce health disparities among the racial and ethnic minority populations within the zones, improve access to cost-effective and coordinated primary care services, and reduce costs through a reduction in hospital admissions, readmissions, and emergency room visits for otherwise non-emergent care.
Bon Secours Baltimore Health System, through its affiliation with the West Baltimore Primary Care Access Collaborative won HEZ designation with a plan that includes expanding primary care services by adding eight new primary care physicians, 10 other associated primary care providers, and an extensive support and outreach staff.
Gregory Kearns, director of strategic management at Bon Secours, is also the interim project director for the collaborative.
"The collaborative is 16 organizations that came together back in 2010 with the understanding that we are all operating in this community but the community still is having some of the worst health outcomes in the area," Kearns explained in an interview.
"We really needed to assess the primary care capacity. We looked at this from a different level, not just from a healthcare level, but also what are the barriers to care, whether it is transportation or the ability to afford the medication, or to deal with housing modifications you might need."
The health challenges facing the residents of West Baltimore could be applicable in hundreds of socio-economically depressed communities across the nation.
"There is a lot of poverty and much shorter life expectancy, with significant levels of chronic disease, whether it is cardiovascular diseases, asthma, diabetes, HIV/AIDS, etc.," Kearns says.
"We have seen a large reliance on emergency rooms to meet primary care needs with a large percentage of the care in the ER being for illnesses or services that otherwise would be better seen in a primary care setting. A lot of the reason there is there is a lack of healthcare providers in the community, which we are looking to fix with our health enterprise zone application to add and attract new providers into the community."
"Part of it is a cultural issue of thinking the ED is the best or most convenient place to receive care, and part of it is letting chronic diseases escalate to the point where they become an acute illness and need emergency treatment. There are also a lot of social determinants that we are looking to address, whether it is access to healthy food, or access to safe recreational fitness facilities. West Baltimore does not have a lot of assets in this regard at this point and what we want to do is turn the focus on that."
The West Baltimore HEZ will focus on coordinating care through patient-centered medical homes. Outreach and education will be spearheaded by community health workers who will be deployed across the four zip codes in the zone to speak on topics that include disease management, fitness and nutrition, while ensuring that the residents they meet have access to primary care.
"A big component of this is the strengthening and development of the patient-centered medical home model with a large focus on care coordination across all of our collaborative sites—making sure patients are having handoffs from one entity to the next, from one clinic to a doctor, or community based organization that can help meet social needs," Kearns says.
"That is really the approach we are looking at, which is let's build an infrastructure that allows for care coordination, but also builds that structure that allows for common delivery of education and outreach and then strengthen the existing base so that we are working better together."
Adopting electronic health records appears to be a money-losing proposition for most physicians, especially specialists and those in smaller physician groups.
The average physician would lose $43,743 over five years after adopting EHRs and only 27% of physicians would profit through the transition away from paper records without federal financial aid. And even when the $44,000 in meaningful use incentives are added to the pot, only 41% of physicians would be in the black, according to the study published this month in Health Affairs.
The study examined data gleaned from 49 community practices of varying sizes and specialties that were part of the Massachusetts eHealth Collaborative, an EHR pilot project. Meaningful use incentives were not in place for the period examined by the study. However, the study authors added the value of the meaningful use incentives on top of their initial projections.
"We knew the literature said that in general practices tend to be able to recoup the cost of the EHR investment in a relatively short period of time and this was the first opportunity to study a wide and more diverse group," study coauthor Julia Adler-Milstein of the University of Michigan School of Information and School of Public Health said in an phone interview.
"What we had heard from practices was how hard it is to make the transitions from paper to electronic health records. These are your typical practices. A lot of them are very small and they don't have the organizational capabilities to support a major organizational change. We continued to be reminded as we worked with these practices and collected this financial data how they are trying to run a small business and this is a very challenging experience to go through."
Primary care practices with six or more physicians generally were more likely to see a profit with their EHRs than were smaller physician groups or specialists. This was more likely when the new technology was used to add more patients to the daily schedule and to improve billing processes so that accurate codes were used and fewer claims were rejected.
"It seemed like with primary care there was more opportunity to reduce costs," Adler-Milstein says. "There were more of them that saw savings in dictation compared with specialty practices. It may suggest that dictation is in wider use in primary care and there could be more potential savings in practices are able to eliminate dictation costs."
About 55% of the practices saw a reduction in the cost of paper medical records. However, nearly half of the practices saw no savings there because they continued to use paper records even after switching to EHR.
"As we were in these practices collecting data, some said that for malpractice protection they perceived that they needed to keep paper-based documentation," Adler-Milstein says.
"Oftentimes they would create things in the electronic system but also print them out and store them. They were oftentimes documenting on paper or they weren't able to make the full switchover and become completely paperless. You say EHR and the assumption is paperless, but the reality is there are a lot of things that are still hard to do in EHR."
Adler-Milstein says the study suggests that federal meaningful use incentives alone are not adequate to ensure that the vast majority of practices don't lose money on EHR.
"You are going to have to make a lot of other changes to figure out how to realize cost savings. That is a clear message for practices: You have to figure out other opportunities to save money if you want to come out ahead," she says.
"The other key finding is the value of the incentives looks really different depending upon whether you are a small or a large practice. These economies of scale go really far in large practices and in small practices they don't go very far," she says. "When you are in a one- or two-man shop it is hard to find the person who can step back and say ‘what do we need to do differently?'"
"The other big things in the small practices are the types of changes you need to make. A lot of them are around reducing staff. In these practices it is often someone's husband or wife who is the front desk person or they have a person who's been with the practice for 20 years. Just because you have EHR you are not going to cut their work hours by half or one-third because on a personal level it is so hard."
"I can understand why there was a one-size-fits-all incentive, but this data suggests that the economics of the EHR adoption look different in different practices. If I am a policy maker I am going to be concerned about the impact this is going to have on small practices."
Even though small practices face a significantly higher hurdle to successfully use EHR, Adler-Milstein says she still believes adoption is worth the hassles.
"We need to move to EHR forward for a number of reasons, but if I am a small practice I am going to really think about a few things," she says. "One is how to decrease the cost of adoption and the cost of the system itself. To the extent you can reduce the upfront cost that is going to help bring down the amount you have to figure out how to make up elsewhere. Increasingly there are new models taking this into account for small practices to decrease the big upfront costs."
She says small practices should look for help from their regional IT extension centers, or even consider some sort of joint venture or cooperative with a larger healthcare entity.
"To the extent that that is palatable to a practice there is a lot of advantage to working with a larger organization that can bring down the cost and help with a lot of the other changes that need to go along with EHR adoption to make it easier on small practices," she says. "This is not to say it is not doable for small practices. But it's a much harder road and going into it with that awareness and taking the time to figure out the best approach is what I would spend my time doing."
While she considers herself an advocate for EHR, Adler-Milstein says she is fearful that the findings in the study will be used by critics to call the movement a failure.
"The real struggle we are in now is around how these systems were sold—as a magic wand and not as a tool," she says. "They are not a magic wand. You don't put them in and the next day you see higher-quality lower-cost care. The reality is there is a lot of hard work that has to go into seeing the benefits. In small practices they need help and support to do that hard work."
"For me it's nice to have evidence to point to what we need to do differently to realize the benefits. And I hope that is the attitude that others will share—which is we need to figure out how to do this right."
Fee-for-service medicine is a financially unsustainable payment model that should be phased out by the end of the decade, a study commissioned by the Society for General Internal Medicine recommends.
The study released Monday by SGIM's National Commission of Physician Payment Reform calls for an aggressive five-year transition into blended payment models such as patient-centered medical homes or accountable care organizations that reward outcomes quality and value. During the transition, the commission said fee-for-service would be "recalibrated" to correct payment inequalities for services such as evaluation and management.
Commission Chairman, Steven A. Schroeder, MD, professor of health and healthcare at the University of California, San Francisco, says he went into the year-long project last March thinking that fix fee-for-service could be fixed, but concluded after months of study that an aggressive phase-out makes more sense.
"It's so complicated to fix it and we've been trying for 30 years," Schroeder tells HealthLeaders Media.
"It promotes higher volume, and because the valuations tend to be huge, to create more high-tech things. It changes the mix of services that a physician provides because there is such a gray area in healthcare. At the margins it creates incentives to do more costly things."
Schroeder acknowledges that a transition away from fee-for-service will be complicated. "Phasing out implies that it will take some time," he says. "There may be pockets due to size or geographic isolation or difficulty in getting other forms of payment. You will still have some stand alone fee-for-service, but the commission's sense was we should try to make these more oddities than common practice."
Richard "Buz" Cooper, MD, a healthcare economist at the University of Pennsylvania's Wharton School, told HealthLeaders Media in an email exchange that eliminating fee-for-service has been a popular idea in the healthcare reform movement but that "it's hard to find evidence that FFS makes a difference."
"My impression from the various studies is that the added productivity of physicians under FFS counterbalances their poorer productivity under other systems of compensation, and the net result is that there is little difference," Cooper says.
The commission's 12 recommendations include increasing reimbursement for evaluation and management services for all physicians, while holding flat reimbursements for technical services provided by surgeons, radiologists and other specialists. Schroeder says fee-for-service does not reward physicians for preventive healthcare consultations and discourages them from spending time with chronic care patients to create a care regimen.
The skewed incentives of fee-for-service have created a widening pay gap between specialists and primary care physicians and have contributed to the nation's shortage of primary care physicians. The study notes that radiologists earned $315,000 on average in 2011 while primary care physicians earned $158,000.
Schroeder says that while holding flat reimbursements for specialty care would likely be resisted by specialists, they also would be compensated for evaluation and management services.
"What is different is we are not saying this is not just a primary care issue," he says. "It's an E&M issue which pertains to most specialists, to gastroenterologist and cardiologist and neurologist who have a mixture of E&M and technical procedures. All boats will rise on that. We are not just saying let's just do a special subsidy for primary care doctors."
American Medical Association President Jeremy Lazarus, MD, reviewed the report and said in an emailed statement to HealthLeaders Media that "many of the ideas discussed in the physician payment report, such as the need to eliminate the Medicare physician payment formula, are consistent with AMA policy, which is developed by our House of Delegates with members from all state and national medical specialty societies."
"However," Lazarus added, "much of this report reflects the view of only one specialty and does not reflect the broad, diverse field of medicine."
The commission report also calls for equal pay for physician services regardless of the setting. The study noted that Medicare pays $450 for an echocardiogram in a hospital and $180 for the same procedure in a physician's office.
"Right now you have terrific incentives for hospitals and physicians doing the procedures to let the hospital buy them up," Schroeder says. "They can have a major increase in their billing for the same product and the public is stuck with increased fees. This is an example where you are getting no extra value. You are just paying more."
The commission also calls for the elimination of the widely reviled Sustainable Growth Rate cap, with the $138 billion cost of removing the reimbursement cap paid for by identifying and reducing overuse of Medicare medical services.
Anders M. Gilberg, senior vice president, government affairs with the Medical Group Management Association, says many of the recommendations brought out in the report are "generally in line" with previous reports from other groups, commissions and think tanks.
"There is a recognition in this paper that you wouldn't simply be able to save money in Medicare just looking at the physicians' services piece of the pie alone. Physicians' services are only about 12% of the Medicare payment," Gilberg says. "It seems like what they are thinking here and what others are thinking is what can physicians do to prevent hospitalizations and in less-costly settings. My gut reaction is that it does have that bigger-picture focus that looks across multiple aspects of Medicare for savings, which is what you'd have to do to really save the system money."
Schroeder says many of the recommendations in the report will face significant opposition from vested interests in the healthcare sector. Still, he hopes the report will "advance the dialog" about how transitioning compensation models.
The difference now, he says, is the widespread understanding that the growth in healthcare expenditures—now averaging about $8,000 annually per person in the United States—is unsustainable.
"I have been following this stuff since the 1970s. I have never seen it this intense and I have never seen the non-healthcare sector so vested in solving this issue," he says.
"The status quo is always comfortable. It's always hard to get people to accept change if they think they are giving something up. On the other hand there is this huge realization that compared to the last 30 years the cost question is here to stay. It's not a question of 'if' but 'how.'"
"There is going to be a lot of back-and-forthing. When you take money out of something the people who are affected are going to push back. There is $3 trillion in the healthcare system now. We are at 18% of GDP. Many prestigious bodies have said there is a tremendous amount of wasteful care, so I can't believe we can't find ways to work things through."
"I would urge the players to try to carve the best kind of solution they can to maximize value to patients, make doctors and hospitals feel like they are providing good value, and bend the cost curve. Will it do so? I certainly hope so."
The deadline has passed and the doomsday scenario of federal budget cuts that were designed to be too painful to contemplate are about to kick in.
The across-the-board cleaver cuts will lop $1.2 trillion off the federal budget over the next nine years, averaging more than $109 billion each year. This includes $11 billion in Medicare funding in 2013 in the form of 2% reimbursement cuts.
Reaction in the healthcare sector has been largely a resigned shrug. After witnessing gridlock and brinksmanship in Washington over the last several years, healthcare executives who spoke with HealthLeaders Media this week expressed concern about the long-term effect of the cuts, but also said they were preparing for some scenario that involved doing more with less money.
Chris Van Gorder, president/CEO of Scripps Health in San Diego, says sequestration cuts are just the latest in a series of budget challenges that healthcare executives have had to face from all levels of government.
"The federal government and federal legislators only look at [Centers for Medicare & Medicaid Services] cuts. The states only look at Medicaid cuts. The counties only look at their responsibility. Sometimes it appears to providers as if all of these agencies don't look at the combined impact of their decisions," Van Gorder said in an email exchange.
"For example, we are preparing for Medicare reimbursement and (Disproportionate Share) reductions called for in the (Affordable Care Act). In California, the governor is reducing Medi-Cal reimbursement and we know that due to trickle down impact, the county will end up looking at County Medical Services reimbursement. This is all on top of reductions we are anticipating in commercial reimbursement starting in 2014 with the insurance exchanges."
"When we add sequestration, we will see additional unexpected reductions of 2% in Medicare reimbursement. But to add to that, we will need to look at the impact of reductions in research funding and graduate medical education and others types of reimbursements or grants some organizations receive that will also trickle down due to cuts in their budgets. Remember, the providers are at the very end of the economic food chain."
Craig Samitt, president and CEO of Madison, WI-based Dean Clinic, acknowledges that the cuts will force providers to do more with less but said that "the bright side is that sequestration will further instigate organizations to transforms from volume to value."
"Dean's focus is on better care at a lower cost. That strategy has taught us that in the world of bundled payments there are an array of strategies that can be implemented to reduce cost and make up for reductions in fee-for-service reimbursements," Samitt said.
"For us, sequestration creates even greater urgency to try and transform from a sickness care company to a wellness care company."
"I am sure there are differing views that the sky is falling with sequestration," he says. "It certainly puts pressure on us to deliver care at lower costs. But it should open our eyes to an alternative care model that focuses on wellness and prevention and care coordination. It will further catalyze the importance of moving in a new direction."
Standard & Poor's analyst Martin Arrick said in a report issued Thursday that most hospitals examined by the bond rating agency weren't unprepared by sequestration. "Most of the providers we rate have already budgeted for basically flat Medicare revenue for fiscal year 2013, and providers also have robust cost-containment strategies in place to meet these challenging cuts," Arrick said.
"Nonetheless, the sequestration reductions will, in our opinion, contribute to compressed earnings and cash flow immediately, which could impact credit ratings over time.";
That sentiment was echoed by Adam Rogers, an attorney at DLA Piper's Miami Health Care Practice.
"A lot of providers, even though they are starting to get worried, they are also taking a wait-and-see approach," said Rogers. "Everyone knows that when this administration and Congress are 'working together' things tend to happen, if at all, at the last minute. No one budges until they have to."
Rogers says many providers expect that President Obama and Republicans in Congress will strike some sort of deal, even if sequestration remains in effect after April, to retroactively reimburse Medicare for the cuts imposed in the sequestration period.
"A lot of providers are used to hearing about the sky falling with the sustainable growth rate cuts and then at the last minute or retroactively it always gets patched," Rogers says. "That is probably in people's minds that 'they really aren't going to let us go out of business.' But as hard as it's been for this Congress and administration to get something done, I am not sure that when they do get something done how user friendly it will be."
Van Gorder says Scripps has been preparing for an era of flat or even reduced reimbursements, in whatever form they might take. At some point, he says, "even for Scripps and large healthcare systems like ours, we can reach a breaking point where we will have to look at programs and all aspects of care delivery."
"We are nearing that breaking point," he says. "I suspect that smaller and independent facilities have reached and are probably past the breaking point. If all of these cuts and reductions come to pass you will be seeing a significant increase in lay-offs of healthcare providers, program closures and organizations going into bankruptcy."
Van Gorder says he expects the effects of the cuts to be felt increasingly over the months and years. "We are already feeling the pressure from cuts in state and commercial reimbursement. Sequestration will hit us later this year and the planned cuts in DSH and additional Medicare in 2014," he said.
"So we are already feeling the pain and unless something changes, it will just grow over the next couple of years. But we are not standing still either. We are working every day to lower costs by reducing unnecessary variation and by building in system-wide efficiencies - while not forgetting quality along the way."
Men represent less than 10% of the nurse workforce in the United States, a U.S. Census Bureau report shows. Their numbers are steadily increasing and they now make significantly more money on average than their female colleagues.
The report, Men in Nursing Occupations, uses data gleaned in the 2011 American Community Survey which found that 9.6% of the nation's registered nurses were men, up from 2.7% in 1970. Men also comprised 8.1% of the licensed practical and licensed vocational nurses, up from 3.9% in 1970.
In 2011, there were 3.5 million employed nurses in the U. S. and 78 percent were registered nurses.
Full-time female nurses earned 91 cents for every one dollar earned by their full-time male colleagues. For both full-time and part-time nurses, the survey found that men earned an average of $60,700 per year and women earned $51,100.
While men typically out-earn women, the gap is much smaller in nursing than it is across all occupations in the national workforce, where women earned on average 77 cents for every one dollar earned by men.
The study's author, Liana Christin Landivar, a sociologist with the Census Bureau's Industry and Occupation Statistics Branch, says there are "a variety of factors" explaining why male nurses make more than female nurses.
"I wouldn't pin it on one thing," Landivar says. "You can look at education. You can look at work hours. You can look at industry. Women are more likely to be in elementary and secondary schools and less likely to be in hospitals," which tend to pay more.
Landivar says men are more likely to acquire professional or doctorate degrees and to gravitate towards higher-paying specialties. For example, only 1% of employed nurses in the United States are nurse anesthetists, yet 41% of them are men. The specialty pays, on average, $162,900.
While the census study does not look specifically at family demands as a factor in the pay disparities, Landivar says there are numerous studies that suggest that women with children are more likely to work fewer hours and don't have the schedule flexibility of their male colleagues.
The study also found that:
There were 3.5 million employed nurses in 2011, about 3.2 million of whom were female and 330,000 male.
Unemployment was lowest among nurse practitioners and nurse anesthetists—about 0.8% for both. For registered nurses and licensed practical and licensed vocational nurses unemployment was 1.8% and 4.3%, respectively.
Of the employed nurses (both sexes), 78% were registered nurses, 19% were licensed practical and licensed vocational nurses, 3% were nurse practitioners, and 1% were nurse anesthetists.
While 72% of registered nurses (both sexes) left home for work between 5 a.m. and noon, 19% worked the evening or night shifts.
64% of registered nurses (both sexes) worked in hospitals, and 30% of licensed practical and licensed vocational nurses worked in nursing care facilities or hospitals.
Edward Briggs, ARNP/DNP, president elect of the Florida Nurses Association, says he expects men will continue to join the nursing ranks.
"The economy is part of it. Nursing is known to be a profession where there is always a job opening and usually it's a well-paying job and it's well respected," Briggs says.
"Men are now seeing nursing as being a viable option as a career whereas before it was seen as a woman's job. Now in the media people are seeing men as nurses and it's become more acceptable. I speak a lot at colleges and I am seeing more and more male faces out in the audience. We are going to see a progressive increase in the numbers of men going into nursing."
As for the pay discrepancy between male and female nurses, Briggs agrees with Landiver's assessment that many factors are at play.
"Women have [many] more demands in the way of family and children. Men do a lot more overtime. They're willing to take those extra hours and earn time-and-a-half," he says. "And another factor is many men are quickly pushed into management positions. There is still that stereotype of seeing men as better managers and leaders, and one of the demands of management is you have to be flexible with your hours and time. So men are able to do those variable hours as opposed to women who have more demands with family."
With the clock ticking on sequestration and its cuts to healthcare funding, it seems callous to pile onto rural providers with more gray news.
And yet, lost this week amid the lead-story brouhaha over the self-inflicted wounds administered by our federal elected officials were two items that illustrate the challenges of bringing physicians to rural America.
First, the New York Times reported that a 15-member commission created more than two years under the Patient Protection and Affordable Care Act and charged with assessing the needs of nation's healthcare workforce has never met because funding hasn't been allocated.
Of course, nobody expected the National Health Care Workforce Commission would solve the problems of recruiting and retaining physicians and other clinicians into underserved areas. And the federal government is doing other things to encourage physicians to settle in underserved areas with debt-relief programs such as the National Health Service Corps.
However, a high-profile commission could have raised public awareness about these chronic, widespread and growing clinician shortages in rural areas.
Also this week, the Association of American Medical Colleges issued its annual report, Physician Education Debt and the Cost to Attend Medical School, and found that while the average debt load for medical school graduates in 2012 was $170,000—up 5% over 2011—those new doctors did not prioritize debt as the driving force in their decisions to seek a particular specialty.
In fact, "education debt" placed 11th—dead last—on the list of "influence of various factors on the specialty choice of 2012 graduating medical students."
Upon review, the low priority of debt obligation in making a lifelong career decision makes sense. Yes, $170,000 in student loans is nothing to sneeze at, especially if you've just acquired a doctorate in phrenology.
However, we're talking about highly compensated professionals. Although you wouldn't know it by listening to them, physicians are among the highest paid classes of workers in the United States. Primary care docs fresh out of residency can earn about $170,000. That's a much better debt-to-salary ratio than the typical law school graduate or new veterinarians.
Atul Grover, MD, a general internist and AAMC's chief public policy officer, tells HealthLeaders Media that student loan debt concerns among medical school graduates have been overblown by policymakers and the media.
"That was the conventional wisdom, but I don't think it was informed by very good studies," Grover says. "As we have done better and better surveys over the years from our graduating classes and gotten better information about what is driving their specialty choices, we have noted for a couple of years now that there doesn't appear to be a clear relationship to debt."
The problem, however, is that many of the government programs that are designed to attract physicians to rural areas center on student debt deferment, reduction, or forgiveness, an incentive we now learn that these young docs don't prioritize.
"When it comes to the actual specialty choice, debt does not seem to be that much of a big driver. It has more to do with people's personality and how well that fits what they want to spend their day doing. What we don't know is whether it had an influence on people's willingness to serve underserved communities," Grover says.
"If you have a large amount of debt and you are worried about making your loan payments, while it may not affect your specialty choice it may affect your decision to serve an underserved population that has a high Medicaid population with lower reimbursements. We already have trouble getting physicians to see Medicaid patients now. And Medicare is always on the edge with the (Sustainable Growth Rate [formula])."
The results of the report also suggest that finding actionable and effective enticements to bring physicians into rural areas could be problematic. Many of the enticements the young doctors cited when they chose a particular specialty were based on personal opinions and preferences such as personality fit, lifestyle choices, work/life balance, and future family plans. It would be hard to develop a rural healthcare physician recruiting strategy around intangibles such as "role model influence."
The AAMC study is limited because it surveys medical school students who've already accepted the burden of amassing debts. The study cannot gauge the intimidating effect of these debts in chasing away would-be physicians from attending medical school in the first place—particularly students from minority groups or lower socio-economic backgrounds.
"Does it discourage them from going into medicine because they may not understand how it is possible to repay very large debts of $170,000 to $180,000?" Grover says. "From that standpoint, if you are scaring off potential physicians from rural and underserved areas because of that huge price tag and those are the very students more likely to go back and serve those communities, then debt is a much bigger issue."
Many observers, including Grover, believe that the best way to find physicians willing to serve in rural and underserved areas is to recruit medical school students from those same areas.
"If you look at a lot of public medical schools like the University of Mississippi and the University of Arkansas, where they specifically are taking students from the state, that is part of their mandate as a public university," Grover says. "They do a much better job of keeping those doctors in their states and also going back into their communities, because that is where families are."
That is not as easy as it sounds.
"The challenge there is we can't start that at medical school or even college. It's a K-12 issue," Grover says. "People have to understand that this is an opportunity to aspire to do this when they are going through middle school. When you get to college it is often too late."
"The other thing we find is if you want to get physicians in rural areas, it's not just helpful that they are from rural areas. Their spouse has to be from a rural area. So, we have to get rural physicians and then match make for them," Grover says with a laugh, although it's not clear if he's joking.
Nonprofit hospitals should diversify their investment portfolios and reduce heavy bond and cash allocations while exploring alternative investments such as equities, a Commonfund Institute report recommends.
William F. Jarvis, managing director of the Commonfund Institute, the nonprofit research arm of Commonfund, investment advisors to nonprofit institutions, says nonprofit hospitals need to adopt the Endowment Model of investment management used by many universities that relies upon "a highly diversified portfolio of assets with a higher than usual tolerance for illiquid assets."
Jarvis, the author of the study, (PDF) notes that during the 2008-09 economic collapse, healthcare organizations' portfolios suffered losses that were nearly as severe as other nonprofits, but did not recover as quickly.
He says heavy allocations to fixed income investments and cash, which totaled nearly 40% of the average nonprofit healthcare organization's portfolio, were due largely to rating agency requirements that tie favorable bond ratings to portfolio liquidity.
Because of that pressure, Jarvis says that many nonprofit hospitals remain concerned that any reallocation of assets will hurt their credit ratings. "Historically the nonprofit healthcare organizations have taken their investable assets and put them into pools that are not as diversified as other types of nonprofits," he said.
"When we've asked them why is it that you have, for example, less in the way of equities, less in the way of alternatives investment, and so much more in the way of bonds, and fixed income and cash, they say 'it's because the rating agencies who rate the bonds we issue look to our investable assets as a potential repayment pool for the bonds to secure the rating on the bonds. Since we have to keep issuing these bonds to keep refreshing our physical plant we are sort of trapped.'"
Jarvis argues that healthcare organizations are better off with more highly diversified and liquid portfolios to support bond repayment. As organizations move toward implementation of more diversified portfolios, he says, rating agencies will need to be more flexible in their liquidity requirements.
"First thing, it's not completely a result of the Affordable Care Act, but it's certainly given impetuous by that, is the declining reimbursements for services provided, particularly from government but also from private payers going forward. The revenue model is changing so that the undiversified endowment is going to be insufficient to replace the reduced reimbursements," Jarvis explained.
"The second thing is the change that is being forecast in delivery methods. Part of this bond issuance structure is related to the traditional model of the big brick-and-mortal central hospital complex in the middle of the city with a physical plant that has to be refreshed and high technology input."
That traditional physical plant model appears to be changing.
"What I am hearing is that the care delivery for many of these institutions is changing to be much more light on the ground, much more clinic-based, with mobile clinics in shopping areas and in suburbs closer to the patients, even for fairly high impact procedures," Jarvis noted.
"So the cost and the financing of these is a different question than it was 10 or 15 years ago when you had a big central complex and you had to build a new wing or you had to gut the old wing and put new stuff in it every 10 years."
Jarvis says board members at one hospital talked about setting up clinics and operating rooms in big box retail buildings, "all on a very light and mobile basis, with walls that could be moved around as the need arose, and much less expensive."
He says it's time to "call out the rating agencies" for their failure to recognize and adapt to the changing landscape in healthcare.
"The interests of bond holders are poorly served by the existing endowment structural model that exists now," he says. "Over the long term, if you are issuing a 20-, 40-, 50-year bond you want a well diversified portfolio because only a well diversified portfolio is best positioned to provide the best risk-adjusted return that is going to be part of the financial health of the institution that will be repaying the bonds."
Jarvis says interest rates are at Zero now, and can't go any lower.
"Therefore bond portfolios are going to go down in value when interest rates start to rise. Rating agencies must know this. They are not stupid people," he says. "I would posit that having less dependence on this yield curve risk would be rather prudent risk management but we don't see a change coming in the description of what the optimal model should be. That is partly why I wrote the paper, to put together things that are not terribly novel but are lying around in plain sight."
Cincinnati-based Catholic Health Partners and Akron-based Summa Health System have signed a letter of intent to create a strategic partnership, the two Ohio health systems announced.
Summa announced in July that it was looking for a like-minded, larger non-profit partner to enhance its service lines and other strategic initiatives and to strengthen its financial position. Under such a partnership, Summa would give its new partner a minority stake in the organization but Summa would retain majority ownership and local control. Final negotiations to secure the partnership that are expected to be completed by this summer.
"When we began this process, we were very clear that we would only enter into an agreement with a non-profit organization that shared our mission, vision and values," Tom Strauss, Summa president/CEO, said in prepared remarks. "While there still is a great deal of work to be done during the next several months to finalize a partnership, I believe that CHP shares our view that the way healthcare is delivered in our nation must change. At Summa, we are well positioned for future success, but together with CHP, I believe that we can truly be transformational."
Summa is in the midst of a three-year strategic planning process in anticipation of the myriad changes and challenges that healthcare is undergoing with the Patient Protection and Affordable Care Act, payment reforms, and other sweeping challenges.
The health system has launched a performance improvement initiative to become more efficient throughout the organization, which the health system said offers "clear synergies with CHP around the areas of care redesign, revenue cycle, supply chain and enhanced productivity that will help us realize more efficiencies and value for our community."
That "common vision" for care delivery notes that:
Both organizations have Accountable Care Organizations participating in the federal government’s Medicare Shared Savings Program.
Both organizations have embraced a Patient Centered Medical Home strategy with several practices being certified as National Committee for Quality Assurance Level 3 medical homes.
Both organizations are transitioning to value-based payments through initiatives such as the Center for Medicare & Medicaid Innovation’s Bundled Payment pilot and the Centers for Medicare & Medicaid Services’ Partnership for Patients.
Summa board Chairman Norman Wells, Jr. said in a media release that officials had spoken with "several national healthcare organizations" in the vetting process before choosing Catholic Health Partners as "the right group to join us on our journey to transform the delivery of healthcare."
PA Court OKs Hallmark Affiliation with Jefferson Regional MC
The Orphan’s Court of Allegheny (PA) County has approved Highmark Inc.’s affiliation with Jefferson Regional Medical Center, which brings Highmark once step closer to an affiliation with West Penn Allegheny Health System.
Highmark says the ruling clears the way for Jefferson to be affiliated with Highmark and parent organization UPE, a 501 (c) (3) organization no later than March 1. West Penn Allegheny Health System's affiliation with Highmark and UPE only requires approval from the Pennsylvania Insurance Department to be able to close.
The federal government this week detailed plans to award $250 million to six states poised to test multi-payer payment and service delivery models that reward positive health outcomes while reducing costs.
The funding under the State Innovation Model awards is the first of nearly $300 million in innovation grants available under the Patient Protection and Affordable Care Act to entice states to build innovative delivery systems that lower Medicaid costs.
"Too many Americans receive care that is fragmented, unreliable, and generates poor health outcomes," Health and Human Services Secretary Kathleen Sebelius told reporters during a Thursday afternoon teleconference.
"The good news is we have numerous examples across the country of how improvements in care delivery can both lower costs and improve health. New strategies for coordinating care, for managing chronic diseases, to reducing errors, waste and duplication can keep patients healthier while lowering spending at the same time."
"States have long been innovators and leaders in promoting these kinds of improvements through their Medicaid programs. The awards we are announcing today will give these states the freedom they need to take these efforts to the next level by coordinating efforts with private payers."
Over the next three-and-a-half years, six states will receive grants ranging from $33 million to $45 million in grant money for their initiatives, including:
Arkansas, which will get $42 million to create an infrastructure that will place a majority of state residents into patient-centered medical homes by 2016, with a focus on team-based care, chronic disease management, and preventive services.
Maine, which will get $33 million to test its plan to align benefits from its MaineCare Medicaid program with benefits from Medicare and commercial payers. The model supports multi-payer ACOs that agree to deliver value-based care in return for performance-based payments.
Massachusetts, which will get $44 million to build on its groundbreaking work to support primary care practices as they transition into patient-centered medical homes.
Minnesota, which will get $45.2 million to develop its statewide Accountable Health Model, which is designed to allow every person in the state to receive team-based, coordinated, patient-centered care that improves access to medical care, long-term care, behavioral healthcare, and other services
Oregon, which will receive $45 million to continue development of a coordinated care model that will use the state’s purchasing power to realign healthcare incentives and payments. The Oregon Coordinated Care Model will reward value over volume and align incentives with improved population health.
Vermont, which will get $45 million to develop a health system that achieves full coordination and integration of care throughout the life of the patient. The Vermont model will increase care coordination and financial alignment between specialists and primary care practices using value-based reimbursements.
CMS hopes the state models produce greater results when implemented broadly and combined with additional state-wide reforms.
"These are all groundbreaking models that bring together public and private payers to dramatically scale up the kind of coordinated patient centered care we know works best," Sebelius said. "Our hope is that the best ideas will be spread throughout the country."
A unanimous U.S. Supreme Court ruling this week that makes it harder for local hospital authorities to claim immunity from federal antitrust laws will likely have little practical effect on most hospitals mergers taking place across the nation, observers say.
In a running two-year old legal battle, the Federal Trade Commission challenged as anticompetitive Phoebe Putney Health System, Inc.'s proposed $195 million acquisition of rival Palmyra Park Hospital, in Albany, GA from HCA.
The FTC alleged that Phoebe Putney constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."
In June, 2011 a federal district judge ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act. The FTC appealed the ruling to the 11th Circuit Court of Appeals but lost again.
On Tuesday, however, the high court ruled that the appeals court had "loosely" interpreted a state law cited by Phoebe Putney to justify a merger that would give the consolidated health system control of about 85% of the market in the region. The high court reversed the appeals court ruling and sent the case back to federal district court.
Jay Levine, a specialist in healthcare antitrust issues with the Washington, DC office of Bradley Arant Boult Cummings LLP, says the high court's ruling clarifies a standard for state action immunity that could have broad implications for a broad array of industries beyond the healthcare sector.
Beyond that, however, Levine says the ruling won't apply for the majority of hospital mergers and acquisitions.
"The Supreme Court clarified that the 11th circuit interpretation of foreseeability was far too loose. In that respect it could have broader implications. But most transactions among hospitals today are not done pursuant to any hospital authority, are really just private transactions so state action really isn't applicable," Levine told HealthLeaders Media.
"For a normal private transaction between a hospital system, for example reducing the number of hospital from four to three, and not done pursuant to any state policy or not done under the auspices of a hospital authority or the like, this will not impact that whatsoever."
Levine says the ruling could prompt a reexamination of state policies that encourage integration through Accountable Care Organizations and other collaboratives encouraged by the Affordable Care Act.
"Then it could have an implication because if you are different practice groups or you are a (Physician Hospital Organization) and you want to do something because a state authorizes us to get together to create this sort of network, then if you are going to try to avoid antitrust scrutiny by pointing to that state mandate and saying there is a clear articulation of state policy to displace competition," Levine says.
"You are going to have to prove that your conduct was a foreseeable result of that state mandate and that now that foreseeability standard is not as loose."
Mark Pauly, a health economist at The Wharton School of the University of Pennsylvania, shares Levine's assessment about the impact of the high court ruling, and notes that only a small fraction of community hospitals are government owned.
"The proportion of community in hospitals in the United States that would have this kind of state protection is very small. It can't matter in most places," Pauly says. "The only statement that I thought was way out of line was the chairman of the FTC who said this decision is a big victory for consumers who want to see lower healthcare costs. Given that the community hospitals almost never have this arrangement with the state I don't see how it is a big victory for consumers."
