It might be the challenge of being on the playing field for the rollout of the Patient Protection and Affordable Care Act. Or, it might be a lack of qualified successors, or a board of directors that just can't say goodbye, or even something as mundane as a gutted 401(k).
Whatever the reason, many healthcare CEOs age 55 and older say they're in no hurry to retire.
A May survey of 200 CEOs by executive search firm Witt/Kieffer found that only 24% are planning to retire within four to five years. Of those, 14% will retire within three years and 8% plan to retire within one year.
Nearly half of respondents?42%?are more than five years away from retirement and 12% have no retirement plans in place.
Most surprisingly, of those in the age 55-59 group, 71% either have no retirement plans, or plan to retire in more than five years.
Elaina Genser, senior vice president/managing director at Witt/Kieffer's western region says 88% of the CEOs say they have goals achieve before they retire and 83% said they wanted to help with the challenges ahead in healthcare, including PPACA.
"There are a lot of them thinking 'this the biggest thing since Medicare. I want to be part of it, and then I can leave,'" Genser tells HealthLeaders Media.
Three out of four CEOs say their boards don't want them to leave, and 52% say no one at their hospital is qualified to replace them.
Genser says the survey points to the need for succession planning in the C-suite, even for CEOs who aren't ready to retire. "As people get older, things happen health-wise. You have to balance it," she says. "You always want to train more than one successor. If they leave to go somewhere else, you wouldn't have anybody. This is about protecting the organization."
While noting that hospital boards usually name successors, Genser says that doesn't mean CEOs should play no role in the planning.
"The CEO should have a conversation with the board and say 'it is the fiduciary responsibility of the board and myself that we take a look at this. I don't have any plans to retire. This is my personal timeline, but we ought to start taking a look,'" she says.
Succession planning shouldn't necessarily be limited to the CEO.
"Maybe the entire executive team is aging in place and you need to start to look at succession planning around the organization as a whole," she says. "Then it does not become a situation where 'Oh we are worried the CEO is going to leave' and that gives a signal that others should start looking because who knows what will happen? It's more of a mindful approach to prepare for the future at all levels, just in case and to be prepared."
Succession planning allows hospital leaders to evaluate the skills, and skills gaps, of their would-be replacements to determine what experiences and exposures they need before taking over.
Genser says it's important for senior CEOs who are nearing retirement to understand that the demands in leadership have changed considerably over the decades since they launched their careers.
"We have a lot of bright young people coming out of graduate programs that are not getting the same opportunities that people had 20 years ago," she says. "It used to be that 20 years ago you could walk into an assistance administrative role and essentially be in the C-Suite in some role. Now you are lucky to get a director-level position for one department."
Genser says most current CEOs were younger than 35 when they landed their first leadership jobs. "If you look now at the number of people who are CEOs under 35 it is a very small number," she says. "In that time, I will grant you, healthcare has become more complex. But I also think people are reluctant to give those responsibilities to younger people as fast as they were given them themselves."
In addition, she says, the consolidation of the hospital sector is "radically" changing the role of the C-Suite and that could make it harder to find well-rounded and experienced senior leadership in the coming years.
"For example a hospital finance position, which before had responsibility for debt and treasury and bond issuances and even revenue cycle, may be part of a system now where all of those things are corporate," she says. "So, in some functional areas there is going to be a shortage, particularly of independent CFOs who can go the whole gamut."
"That is true even for CEOs who are probably called presidents in some of these systems. They are really more like operating officers," Genser says. "We are seeing a shift in the whole dynamic of organizational structures and where that is going. There will always be good talent. The question is can you attract it based on how you are structured if you need to go outside your organization? Or, can you grow and build it and develop it inside your own organization?"
Spending more on trauma care does not necessarily improve survival rates, a national study suggests.
Research published in The Journal of Trauma and Acute Care Surgery finds that the cost of treating trauma patients in the western United States is 33% higher than the cost for treating similarly injured patients in the Northeast.
Researchers, however, don't know why.
"Spending more doesn't always mean saving more lives," said study leader Adil H. Haider, MD, a trauma surgeon, associate professor of surgery at the Johns Hopkins University School of Medicine and director of Hopkins' Center for Surgical Trials and Outcomes Research. "If doctors in the Northeast do things more economically and with good results, why can't doctors out West do the same thing? This study provides a potential road map for cutting unnecessary costs without hurting outcomes."
The Hopkins study analyzed three years of data from the Healthcare Cost and Utilization Project's Nationwide Inpatient Sample. They identified 62,678 adults with a primary injury in one of five areas: blunt injury to the spleen, collapsed lung and bleeding in the chest, shinbone fracture, mild traumatic brain injury and liver injury.
The Hopkins researchers note that trauma-related disorders are among the five most expensive medical conditions. After controlling for variables such as chronic diseases that could bias the findings, the researchers estimated that the average per-person cost in the Northeast for trauma care for all five injury types combined was $14,022.
The cost was 18% higher in the South, 22% higher in the Midwest and 33% higher in the West.
The most expensive care was for liver injury and the average cost of care in the Northeast was $16,213. The cost was 18% more in the South, 22% more in the Midwest and 35% more in the West. The Northeast had the lowest costs for all five injury types while the West had the highest, even after factoring differences in the consumer price index.
Michael F. Rotondo, MD, FACS, a trauma and acute care surgeon, chair of the department of surgery at the University of North Carolina in Greenville, told HealthLeaders Media he "was not surprised" by the study's findings "by virtue of the fact that the healthcare practice in the country is incredibly variable."
"All politics are local but all healthcare is local as well," says Rotondo, who is also and chair for the Committee on Trauma at the American College of Surgeons. "As someone who worked in an urban environment at the University of Pennsylvania for 10 years and now for 13 years have been in a rural environment, that is clearly the case in terms of style of practice, and that is true, but also in the economics of practice. It is very different from one region of the country to another."
While he called the study "thoughtful and provocative" Rotondo says its value is limited because it relies upon "high level administrative databases" that don't delve into the specifics of each case.
"By virtue of the methodology available to the investigators they were not able to say what is driving the expenses," he says. "The message I get out of this and exactly why the College of Surgeons supports this sort of research is that we have to focus on hard-edged comparative effectiveness where we are looking at the quality of the outcomes and the cost."
Rotondo says there could be any number of reasons for the price variance. "There is tremendous advantage to having hospitals near each other and lots of physicians in a region because it allows the providers to do collective bargaining in essence with suppliers. This could be strictly a difference in pricing related to implants or it could be pharmacy costs. It may not have anything to do with physician fees or practice patterns," he says.
"When we look at our supply costs in rural environments, they are much higher because of the way contracts are drawn. We have a lot more work to do to sort out and get down to answer these sorts of seminal questions and this is the kind of research that spurs on us."
Ricardo Martinez, MD, the former director of the National Highway Transportation Safety Administration, told HealthLeaders Media that trauma care has made great strides in improving survival rates, "and now we have to look at what is the most cost-effective care." He says the Hopkins study provides an excellent reason to promote evidence-based medicine.
"With all the growing data we have to look at the information coming out to see what is truly of value and what doesn't make a difference," says Martinez, an emergency physician who is now CMO with Atlanta-based North Highland consultants.
"For example, the growth of ultrasound has eliminated a lot of CT scans, but that takes years to disseminate and become adopted. Trauma care is one of the programs that has the best data so can we use that data to be more cost effective. We know it saves lives and we can use it to save money too."
Martinez says the growth in the use of telemedicine, more sophisticated databases, and the Internet is creating and spreading knowledge at a dizzying rate. "The problem is being overloaded with information so we have to maintain our focus," he says. "What is best for the patient and what is the best cost-effective way to do that?"
Haide said researchers looking to cut costs must not look only at survival rates alone to make sure the more expensive care isn't better in some way. He said higher-cost regions may have patients with less pain and fewer disabilities after recovery.
"If surgeons are fixing tibia fractures in the West in a way that's more expensive but makes patients more comfortable, that would not be a trivial finding," Haider said. "We really need to drill down and figure out what parts of care improve outcomes and what parts drive up costs without improving any outcomes or aspects of care important to patients."
The study was funded by the National Institutes of Health's National Institute of General Medical Science, the American College of Surgeons and the Hopkins Center for Health Disparities Solutions.
Massachusetts, in the vanguard of healthcare reform, is at it again.
Healthcare policy wonks are trying to gauge the effects of the sweeping 349-page healthcare reform bill that Massachusetts Governor Deval Patrick (D) signed into law on Monday. It already appears that rural healthcare providers stand to benefit specifically in at least a couple of areas.
One provision requires the any state-run public healthcare programs including Medicaid to pay critical access hospitals in Massachusetts 101% of reasonable costs, thus matching the Medicare reimbursement under the federal critical access hospital criteria.
"It recognizes the importance of critical access hospitals and reimburses them at a rate that allows them to stay in business," says State Rep. Smitty Pignatelli, (D-Lenox) the sponsor of the provision. His western Massachusetts district includes Fairview Hospital in Great Barrington, one of three critical-access hospital in the state.
"On some quality of care services these critical access hospitals were reimbursed 70%-80% of actual costs. We wanted to bump it up to 101% of the actual cost. It is a lifeline actually because of the need for these hospitals," Pignatelli says.
"Fairview Hospital is the economic engine for the district. But because of their rural nature they were forced to get into other levels of care that they weren't being reimbursed for at all. The hospital established a dialysis unit because folks from my county were travelling up to an hour at 10 p.m. on a Sunday in the middle of winter for dialysis treatments. So these reimbursements will level the playing fields for hospitals."
The law, which supporters say could save the state nearly $200 billion over 15 years, also improves reimbursements for care provided by physician assistants and nurse practitioners. Pignatelli says that is particularly a concern for rural areas that have a hard time recruiting primary care physicians.
"Here in Western Massachusetts we have a serious lack of primary care physicians. Now we are going to be reimbursing nurse practitioners and physician assistants who hadn't been recognized before for providing quality healthcare," Pignatelli says.
"Before, a doctor's office would not be reimbursed unless the doctor did the work or they would get paid at a much lower rate than what the actual costs were. Now they will get paid for it as they should. It will reflect the quality of the care you are getting more so than who is providing the care."
"It's a validation," Pignatelli says, "that they are providing the same quality care as their primary care physicians and it is enhancing the opportunities in rural areas where it is very difficult to attract a primary care physicians."
The Massachusetts Hospital Association has taken a guardedly supportive view of the legislation while stressing that it is still reviewing the fine print. Anuj Goel, MHA's vice president of legal and regulatory affairs says it's hard to predict the effect on healthcare delivery in Massachusetts until the state actually interprets the provisions and implements the law.
"The only thing I do know for certain is the effective date is November 5th," Goel says. "We know what the legislative language says but we aren't sure what the state is interpreting, how they are going to apply it, or the contractual and regulatory policy."
Goel says it's difficult to assess how much higher Medicaid reimbursements might be for critical access hospitals, for example, because the existing reimbursement system "is very long and convoluted."
"The way we pay hospitals under the Medicaid program is through a bundled rate. So it varies based on case mix and a lot of other factors that go in the contracts," he says.
In addition, he says, the law creates two new statewide agencies for hospitals large and small to contend with and there is no way of knowing how another level of bureaucracy could affect administrative costs.
Critics of the new law say it's a government takeover of healthcare delivery in Massachusetts, which in 2006 was also the first and only state in the nation to mandate that every citizen have health insurance. Pignatelli says that "to a point" the critics of the law are correct. But he quickly adds that government has to do something drastic to slow runaway cost growth in healthcare.
"Prior to 2006 nobody was without care in Massachusetts. It was a question of who was paying for it. People were using the ER as their primary care physician and taxpayers were paying for it," he says. "This is the next bold step. Massachusetts has been ahead of every other state in the country when it comes to tackling this issue."
He concedes there is no guarantee that the law will realized anything near the $200 billion in savings that supports hope for. "It's all a projection. Let's you and I talk in 15 years to see if it is true," he says. "There are so many moving parts that it is going to be hard to quantify at the end of the day. But it's a recognition that this is the next big bold step to try to deal with the affordability aspect of healthcare."
New federal rules for electronic claims payments will cut red tape and could save healthcare providers and plans as much as $9 billion over the next decade, the Department of Health and Human Services says.
The interim final rules, announced this week, use the healthcare electronic fund transfer standards that the federal government adopted in January. The EFT and electronic remittance advice operating rules, also announced this week, are projected to save between $2.7 billion and more than $9 billion in administrative costs over 10 years by cutting manual administrative processes for providers and plans, HHS said in a media release.
"These new rules will cut red tape, save money, and ensure doctors spend more time seeing patients and less time filling out forms," HHS Secretary Kathleen Sebelius said.
Under existing manual payment systems, physicians and hospitals deposit paper checks and post and reconcile claims payments in their accounting systems. HHS says receiving payments electronically and automating the posting of the payments will reduce administrative time and expenses for physicians and hospitals.
Studies have shown that the average physician spends three weeks a year haggling with payers over bills. It has been estimated that in a physician’s office two-thirds of a full-time employee is needed for each physician is to conduct these administrative tasks.
The new operating rules include best business guidelines for electronic transmissions and tackle sticking points that physician practices and insurers have with electronic transactions. For example, the rule announced this week requires insurers to offer a standardized online enrollment for EFT and ERA so that physicians and hospitals can easily enroll with several health plans to receive electronic transactions.
The rule also requires health plans to send the EFT within a set amount of days of the ERA. That helps providers reconcile their accounts more quickly, HHS said in the media release.
Susan Turney, MD, president/CEO of the Medical Group Management Association-American College of Medical Practice Executives, says her organization "strongly supports" the regulations adopting EFT and ERA.
"Receiving and processing paper checks is cumbersome and inefficient. These standardized operating rules will increase efficiency and allow practices to allocate resources to patient care instead of wasteful administrative tasks," Turney said in prepared remarks.
The regulation takes effective upon its publication in the Federal Register on Friday. The comment period closes Oct. 9. The compliance date for operating rules for the healthcare electronic funds transfers and remittance advice transaction is Jan. 1, 2014, HHS said.
Is healthcare job growth good for everyone who isn't in the healthcare sector? That's a question I ask just about everyone who's willing to weigh in on the topic.
Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce, said in June that healthcare sector cost and job growth are byproducts of an inefficient and fragmented healthcare system. He estimates that by 2020 one-in-five dollars spent in the overall economy will go to healthcare. That's money that will have to come from other areas of the economy.
In addition, he estimates that the healthcare sector will create 5.6 million new jobs, from drug reps to bedside nurses, by 2020.
"There is a dilemma here, and it gets at the root of the healthcare issue in general. We are paying twice what other advanced industrial nations pay for healthcare. They are at 9% of GDP and we are at 18% and headed for 20%," Carnevale said in June. "We've built a huge sector, but the productivity growth has been negative for a while. Our estimates on the productivity growth are basically -1%. In manufacturing productivity is +8%. We are supporting a huge apparatus in healthcare and no doubt there are huge inefficiencies."
Others argue that healthcare sector job growth is a natural evolution for a mature society and should not necessarily be met with wringing hands.
"There seem to be two economies—the healthcare economy and the non-healthcare economy. One of the problems in healthcare policy is the attempt to understand healthcare economics in the context of the rest of the economy," says Richard "Buz" Cooper, MD, Senior Fellow at the Leonard Davis Institute of Health Economics at the University of Pennsylvania and director of the Center for the Future of the Healthcare Workforce.
"What is driving the growth? It's the evolution of civilization and right now we are evolving from having better basic needs like clean water and sanitation to the desire that society as a whole improve the health and wellbeing of people."
Rather than wondering if the healthcare sector is creating too many jobs, Cooper says we should consider what the economy would look like without those jobs, particularly in Rust Belt cities such as Cleveland, Detroit, Pittsburgh, and Philadelphia.
"I just got back from Cleveland. Without the developments in healthcare in Cleveland you could wrap it up in a paper bag and blow it away. I spent most of my career in Philadelphia. What is the economy of Philadelphia? It's four medical schools and the university," Cooper says. "What are young people going to do? They aren't going to work in a brewery and an automobile plant is all robots. This is the way the economy is moving. It isn't Chicken Little the sky is falling in. You fight this and you are fighting the economy."
Carnevale says data shows that more people are hired at a faster rate in healthcare than output is increasing, which translates into negative productivity. Cooper doesn't disagree with the data, but he says the comparison is misleading and does not take into account the complexity of healthcare. Treating patients is not the same as the manufacturing process.
"If you buy more iPads you aren't creating more jobs here because they're made in China. Healthcare has a different product and it's hard to measure the productivity of the product," he says.
"So if the worker is putting in an artificial knee it takes so much time, or the healthcare worker is doing a throat swab to test for strep throat, how do you measure that productivity? You can't really increase the rate of throat swabs. So, worker productivity tends not to increase because they can't do it faster."
"The nature of healthcare has changed so much so that the worker is doing is so much more complicated and time-intensive work. Healthcare is different from other things because most of it can't be automated," he says. "What you are doing is hard to measure in comparative terms and secondly it's high touch and it can't be outsourced either, for the most part. So yes you are going to create a lot of jobs."
Speaking of new jobs, the Bureau of Labor Statistics reports that the healthcare industry created 12,000 jobs in July, marking the second straight month of slower job growth for the sector that reported 29,500 new jobs in May.
Healthcare created 11,300 jobs in June and 175,400 jobs in the first seven months of 2012 which represents about 16.5% of the 1.059 million jobs created in the larger economy. Healthcare created 173,500 jobs in the first seven months of 2011 and 269,000 jobs for the entire year.
In the larger economy, BLS reported that 163,000 new jobs were created in July, led by 49,000 new jobs in business and professional services and 25,000 new jobs in manufacturing. Despite the better-than-expected numbers, the nation's unemployment rate remained essentially unchanged at 8.3%.
BLS data shows ambulatory services, which include physicians' offices, led healthcare with 8,900 new jobs in July. Hospitals created 5,300 jobs, and nursing and residential homes dropped 2,200 jobs. BLS data from June and July are preliminary and may be revised considerably in the coming months.
More than 14.3 million people worked in the healthcare sector in July, with more than 4.8 million of those jobs at hospitals and more than 6.3 million jobs in ambulatory services, which includes more than 2.4 million jobs in physicians' offices.
In the larger economy, BLS said 12.8 million people were unemployed in July, which was essentially unchanged throughout 2012. The number of long-term unemployed, defined as those who have been jobless for 27 weeks or longer, remained at 5.2 million people in July, representing 40.7% of the unemployed.
I watched a feel-good piece on television a few weeks back about an 87-year-old family doctor from Rushville, IL (pop. 4,300) who knows his patients by their first names because he was the attending physician when most of them were born.
He charges $5 for office visits and works seven days a week.
Inside the storefront office where Russell R. Dohner, MD, has practiced family medicine since 1955, a television journalist assures us that the good doctor "still does things the old fashioned way." No appointments are necessary. After-hours emergency patients use the back door. Medical records are kept on paper and stuffed in filing cabinets. Calls are taken on a rotary telephone. And prescriptions are sent to the pharmacy down the street.
As for a computer, Dohner says, "I never had one."
Dr. Dohner comes across as a remarkably selfless and saintly man who has dedicated his life to the health and well being of his community. He is a Norman Rockwell painting incarnate. But the story also makes clear that Dr. Dohner is a noble anachronism. There are thousands of older country docs across the nation like Dr. Dohner, but we all know that they don't make them like that anymore.
That's not a slap against younger physicians, many of whom still make significant sacrifices of time, resources and money to provide uncompensated care. We cannot expect physicians to work seven days a week and charge $5 for office visits. It is also unrealistic and unfair to expect that physicians will practice medicine until they're nearing the age of 90.
I was reminded of Dr. Dohner and the dizzying pace of change in the delivery of medicine in this country after writing this story—1 in 3 Physicians Plans to Quit Within 10 Years—about an online survey by healthcare staffing recruiters Jackson Healthcare which found that 34% of physicians say they plan to leave the practice of medicine over the next decade.
Sheri Sorrell, market research manager for Jackson Healthcare, says that many physicians are upset by the sweeping changes in medicine being brought on by healthcare reform and market demands.
"A lot of them are very concerned about the depersonalization and corporatization of medicine," Sorrell says. "It used to be [that] the family doctor treated your family for years, basing the decisions on what [was] best for you and your family. Whereas an employed doctor not only has to take into account not only what is best for you and your family, but also what the organization will allow him to do, and what the organization's guidelines for treating you are."
No one should doubt the sincerity of the doctors' concerns. However, the "used to be" method of practicing medicine that Sorrell refers to relied on a fee-for-service model that has been a key driver in rising healthcare costs.
Donald Berwick, MD, the former and controversial administrator of the Centers for Medicare and Medicaid Services, noted in a study this spring that waste, fraud, and abuse exceed 20% of total healthcare expenditures in the United States. Medicine can no longer afford to simply "do what is best for you and your family" in an uncoordinated manner that doesn't attempt to streamline processes and identify wasteful redundancies.
While many of us can remember a simpler time for healthcare delivery, those days are gone for good.
The driver here is not ideology or politics. The driver is money. Healthcare is becoming increasingly unaffordable for many of Americans with annual cost growth that is two- to three-times higher than the rate of inflation in the overall economy. (That may be about to change in Massachusetts, where a cost containment bill is on the way to being signed by Governor Deval Patrick (D).)
Even with the gradual implementation of the Patient Protection and Affordable Care Act healthcare costs will continue to stress family budgets. To keep the lid on costs, a growing number of people are joining, or have been dumped into, high-deductible health insurance plans that are designed to reduce utilization by making a trip to the doctor's office or an elective procedure too expensive.
That certainly is one way to ration care.
And speaking of money, it is also important to remember that most patients have annual incomes that are only a fraction of what their doctors earn. No one should begrudge physicians for being among the highest paid class of workers in the United States. Their profession is difficult and demanding and often requires long hours. Physicians have spent more than a decade in school and residency and often accrue huge debts to earn their MD.
That said, a physician complaining about compensation when he earns $200,000 or considerably more each year should take a look around at how others in his community are faring in this sputtering economy.
Perhaps the doctors who told the Jackson survey they wanted to quit were acting out of anger, frustration, and fear about the pace of change in healthcare and how it will impact the profession they love. Their concerns are understandable. Everyone fears change, especially when we perceive we have little control over it.
Similar concerns and anxieties have been raised by millions of displaced workers in the United States, most of whom don't have anywhere near the job prospects of physicians. Of course, most of these displaced workers can't afford to contemplate retirement either.
It will be interesting to see how many of these physicians who now say they want out of the profession actually make good on their vow.
In what may be the first such marketing play of its kind, Milwaukee-based Aurora Health Care is offering employers who join the Aurora Accountable Care Network guaranteed savings averaging 10%.
In a twist, Aurora is using savings generated from its own integrated health plan for its 48,000 employees and dependents as the benchmark for other employers. The health system's employee health plan has shown that it can bend the healthcare cost curve.
Between 2001 and 2010, per-member-per-month costs for the Aurora employee health plan rose 6.2% per year on average compared with the national average that rose 10.7% a year. Between 2008 and 2010 Aurora says its plan's costs rose 1.5% a year against a national average increase of 9%.
"We think it changes the game because it is the first time for us in this marketplace that an integrated delivery system is able to contract and work with employers longitudinally to take full value of the integration that we offer," says Rick Klein, Aurora's executive vice president of Growth and Market Development.
"For 15 years we have had the ability to manage and work with all aspects of the system: hospitals, physicians, pharmacy, [and] lab to be able to provide great care at a very cost-effective price for our own employees," Klein says. "We have been able to prove that the value of this integrated system in this marketplace is worth about 7% when you look at it longitudinally over the episodes of care."
Klein says Wisconsin employers who want to join the Aurora Accountable Care Network, which is being offered through Aetna beginning Jan. 1, 2013, must submit three years of data detailing the type of healthcare services they've purchased for their employees.
"The employer has to supply the data, the claims that they have historically experienced for three years and what we do is take a look at exactly what type of care and how much care was delivered in that period," Klein says. "We apply our own intelligence, using our own employees for the last 15 years. We look at the integrated value that Aurora brings and we put a guarantee on that, understanding that if we provide all the care we can be more efficient than the market in general."
"We have supplemented that with other national databases," he says. "This is the evolution from the healthcare system that historically has worked with employers on a single type of charge to much more longitudinal whole population management as it relates to their employee population."
The network plans are fully insured and feature two tiers of benefits and co-pays. They are designed for small and mid-sized businesses, and large, self-funded employer plans are also available. The savings are generated primarily through coordinated care for patients, lower co-pays with network providers, and better health outcomes.
"We are guaranteeing a PMPM trend line and an experience over a three-year period that is better than what the current employers' experience would be. We've seen generally it as low as 7%. On smaller employers that have a lot of care that hasn't been organized we've been as high as 13%," Klein says. "We say to the employer, integrated care is cost effective and high quality and if they are not buying integrated care currently we think there is an opportunity to save money and increase the quality of the care delivered."
The Aurora Accountable Care Network has more than 1,500 physicians, 15 hospitals, and 160 clinics in eastern Wisconsin and northern Illinois and uses system-wide electronic medical records and real-time claims analysis. Plan members will have care managers who schedule appointments, help patients contact physicians, and coordinate follow up care.
Klein says he's not aware of any other integrated care models in the United States that offer guaranteed savings. But he says Aurora and other accountable care networks understand that the only way to slow the staggering increase in healthcare costs is to coordinate care to achieve better outcomes.
"The idea that healthcare organizations in the future are going to be taking that responsibility is clear," he says.
The sputtering national economy, a rising federal deficit, and lean state budgets are getting blamed for debt downgrades in the not-for-profit healthcare sector which are expected to continue through the rest of the year and beyond, according to Moody's Investors Service.
"It is a negative outlook," says Lisa Goldstein, associate managing director at the bond rating agency. "We have had a negative outlook on this sector since November 2008, starting with the financial crisis. It speaks to continued pressure on hospitals financial performance for the next 12 to 18 months."
The federal deficit and strains on state budgets could result in reduced funding for Medicare and Medicaid, which could affect patient volumes and reimbursements, Goldstein says.
In the second quarter of 2012, the $2.78 billion of downgraded debt of the US not-for-profit healthcare sector exceeded the dollar amount of upgraded debt, $2.11 billion, for a ratio of 1.32 to 1. Moody's said the finding contradicts eight of the past 13 quarters in which total upgraded debt exceeded downgraded debt. Many of the upgrades were for larger systems that carry more debt than smaller providers.
"It's too short of a time to call it a trend," Goldstein says of the second-quarter results. "There is a lot of volatility of the sector. We caution that it is just three months and three months today may look very different from the prior quarter."
In fact, the Q2 results were skewed mainly because several larger not-for-profit providers had their ratings downgraded, including Kettering Health Network in Kettering, OH, and Fairview Health Services in Minneapolis, MN, according to the Moody's report, US Not-For-Profit Healthcare Quarterly Ratings: Downgraded Debt Trumps Upgraded Debt in Second Quarter 2012, Reversing Prior Trends.
Overall, there were 12 downgrades in the second quarter and nine upgrades for a ratio of 1.33 to 1, which Moody's reports is consistent with the negative conditions faced by the not-for-profit healthcare sector.
For the first half of 2012 there have been 23 downgrades affecting $4.2 billion in debt and 20 upgrades affecting $4.8 billion.
Of the downgraded providers in the second quarter of 2012, 56% had total operating revenue of $500 million or less while 56% of upgraded providers with operating revenues of $500 million or less. "This near equal split is a departure from the typical trend of smaller providers being more susceptible to downward ratings pressure due to multiple negative factors that put them at a disadvantage relative to their larger peers," Moody's said.
Goldstein says larger systems tend to be rated higher "because we see safety in numbers, strength in size, and critical mass."
"That being said we work with many small- to medium-sized hospitals that will demonstrate to us that because they are smaller they are very nimble and can make decisions more quickly and launch those strategies and execute on those strategies," Goldstein says.
"It is very much a broad statement to say larger equals better debt servicing. Although at the end of the day most of the large systems have higher ratings than the medium- and small-sized credits because they have gained efficiencies from their size of scale," she says.
"They usually have more leverage when dealing with third-party vendors and payers. One of the strengths we see in being large is they typically have a portfolio of hospitals and strong diversification of cash flow. Whereas if you are small and single site, if there is a tornado in that town you have no other facilities in the town to compensate if that particular facility is damaged."
Blaming low compensation and the hassles of healthcare reform, 34% of physicians say they plan to leave the practice of medicine over the next decade, according to a new national survey.
The online survey of 2,218 physicians by Atlanta-based healthcare staffing recruiters Jackson Healthcare also found that 16% of the respondents said they will, or are strongly considering , retiring, leaving medicine, or going part-time in 2012.
Sheri Sorrell, market research manager for Jackson Healthcare, says many of the essay responses from responding physicians were quite lengthy and emotional, especially as they related their reactions to the sweeping changes in medicine that will be brought on by healthcare reform and market demands.
"Some doctors wrote books for us in here. A lot of them are very concerned about the depersonalization and corporatization of medicine," Sorrell says. "It used to be the family doctor treated your family for years basing the decisions on what is best for you and your family. Whereas an employed doctor not only has to take into account not only what is best for you and your family but also what the organization will allow him to do and what the organization's guidelines for treating you are."
Of those physicians who said they plan to retire or leave medicine this year, 56% cited economic factors and 51% cited health reform as among the major factors. Of those physicians who said they are strongly considering leaving medicine in 2012, 55% or 97 physicians, were under age 55.
"That's what we were most surprised about; that the majority of the folks that were considering leaving medicine or planning to leave medicine this year were under 55 years old. The key takeaway is that they're not retiring; they're quitting," Sorrell says.
The online survey was conducted between April 19-27, before the U.S. Supreme Court's affirmation of the Patient Protection and Affordable Care Act. While most physicians in the survey panned the ACA, they often did so for different reasons.
"They are upset on both ends of the political spectrum," Sorrell says. "There is a certain amount of doctors who feel like the ACA went way too far with the government stepping in between them and their patients. And the other group says we didn't go far enough. We need a single-payer system in this country if we are going to address the challenges of medicine. You see both contingents and they are equally displeased. It's implement and improve versus repeal and replace."
Sorrell says Jackson Healthcare will continue to survey physicians to see if they make good on their threats to leave, or if they're just angry about the overall state of healthcare delivery and compensation. "It will be interesting to see in the coming years how this bears out; if really the folks who are strongly considering leaving really did," she says.
The survey also found that specialists were more inclined to leave medicine in the next decade, including:
Oncologists and hematologists — 57% said they would retire by 2022
Otolaryngologists — 49% said they would retire in the next decade
General Surgeons — 49% said they would retire by 2022
Cardiologists — 45% said they would retire in the next decade
Representatives for rural hospitals from states across the nation will head to Washington, D.C. next week to lobby for renewed funding for low-volume adjustment and Medicare-dependent hospitals.
The provisions are set to expire at the end of the federal fiscal year on October 1 and the National Rural Health Association says that could jeopardize the solvency of hundreds of hospitals that are often a critical source of healthcare in their rural communities.
About 212 hospitals across the nation have MDH status, which requires that they be in a rural area, have no more than 100 beds, and show that Medicare patients represent at least 60% of their inpatient days or discharges. A study done for NRHA found that in 2009 MDHs operated at a negative 4% margin on average.
Without hospital-specific and transitional outpatient payments the study estimated that those MDH margins would have fallen to negative 12.6%.
NRHA's March for Rural Hospitals is on July 30-31. More than 50 rural hospitals and organizations are attending, and NRHA is extending an open invitation to anyone who cares about the issue. "We are all hands on deck at this point. Anybody can show up. It is a free conference. We aren't asking anyone to pay anything," says David Lee, NRHA's manager of government affairs and policy.
NRHA is asking rural health providers to support the bipartisan Senate Bill 2620 (HR 5943), which will renew for one year funding for both Medicare-dependent hospitals and low-volume hospitals.
"We are trying to raise the noise level on both of these provisions," Lee says. "They affect relatively few hospitals, so the people who are affected need to be as loud as possible because some of the other provisions can drown them out. And we hope these rural provisions aren't forgotten when everything else is looked at."
Even in this gridlocked and dysfunctional Congress, rural healthcare providers should remain optimistic about the chances for SB 2620. For starters, it's not terribly expensive. The Congressional Budget Office has scored a one-year extension as costing less than $100 million over 10 years, which Lee called "a very small number relative to the federal budget."
Also, the bill is one of the few items in Congress that has bipartisan support in both chambers. The Senate sponsors are heavyweight Sens. Charles Schumer, (D-NY) and Chuck Grassley, (R-IA). The House companion legislation has 29 cosponsors from both parties.
It doesn't matter if a state bleeds Red or drools yellow dog Blue, every senator and many representatives have rural constituencies and these elected officials understand the important roles that hospitals—and their employees—play in their communities.
"Some of these hospitals account for as much as 20% of the economic production in their communities," Lee says. "They are the largest employer or the second largest after their school district in their rural county. They are very important not just to deliver care but driving the economy and attracting outside business to come there by making sure there are adequate healthcare services."
On Monday, rural hospital advocates will meet with Congressional staffers to discuss the status of the bill and other legislation that affects rural health. On Tuesday those advocates will fan out and meet with their respective Congressional delegations.
Practically speaking, SB 2620 would kick the MDH/LVH can down the road for another year. It's not clear if there is any momentum towards a longer-term fix. Perhaps extending MDH and LVH provisions will become an annual event in Congress, similar to the Sustainable Growth Rate sideshow that has become the bane of physicians' lobbies.
At this point in this toxic political environment, if money continues to flow, a short-term fix may be the best hope for rural hospitals. There are worse fates.
