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.
The federal government is making available to states $275 million to design and test cost-effective care delivery and multi-payer coordination models.
"As a former governor, I've seen states in action and know what great laboratories they are for innovations we can put into practice nationwide," Health and Human Services Secretary Kathleen Sebelius said in a media release.
States may apply for the funding from two separate pots depending upon how far along they are in planning systems to deliver coordinated care for the millions of people who are expected to receive health insurance coverage under the Affordable Care Act.
"They want to give states the room to innovate and find ways to address the quality and cost issues," says Neva Kaye, managing director for health system performance at the National Academy for State Health Policy.
"States are in a lot of different places in that effort. Some are ready to launch or have done a lot of work in that area and some are just starting to think about what they might do. This is trying to get the support out to the states and meet them where they are," Kaye says.
The states are expected to design or test their cost-effective multi-payer payment and delivery systems for Medicare, Medicaid, and Children's Health Insurance Program enrollees with input from stakeholders across the care delivery spectrum, including private payers, providers, employers, and community leaders.
Model Testing awards totaling $225 million will be available for five states over the next three or four years that can demonstrate that they are ready to implement their already developed integrated care models.
The remaining $50 million in the Model Design pot will be divided between 25 states that are not as far along the implementation continuum. The money will be used to provide financial and technical assistance for those states as they decide what types of systems improvements would work best for them.
Kaye says HHS recognizes that different states will require different care delivery designs.
"What works in Vermont may not work in Texas, and what worked in Texas may not work in Idaho. But part of what worked in Vermont may work in Idaho," she said. "It isn't that you do everything in lock step but certainly you could align incentives and align approaches which would make it easier on the providers and also enable the payers to send a consistent message."
Kaye says coordinating scare primary care resources will be particularly important as millions of people obtain health insurance coverage in the coming years under the Affordable Care Act.
"People coming through the door, particularly in the expanded population, they are unlikely to have had the preventive and primary care that they need because they wouldn't have had coverage. They are going to come through the door looking for that. We know how stretched primary care providers are and how little time they get to spend with patients and now they are going to have more patients," she says.
"In some senses primary care has to rearrange itself, perhaps move more toward a team-based approach with the medical home program that some states have launched."
"Another thing they'll need is to agree on a common set of metrics so you know the primary care provider has kept the patient well, so the providers aren't being pulled in several different directions and they can really focus on providing care," she says. "It isn't so much that there is confusion about what the goals are and what are the possible strategies for getting there. What they need is the part that figures out what strategies are going to work to get me down that path."
The state applications for funding will be reviewed by CMS and its independent Office of the Actuary and by an independent review panel. CMS said it expects to offer a second round of Model Testing awards next year.
Common sense says that nurses subjected to bullying on the job will look for work somewhere else. Indeed, in some cases bullying by supervisors or colleagues may be surreptitiously designed to encourage the victim to quit.
That sort of malignant winnowing, it appears, is not without consequences.
A study from Canada shows that bullying has a corrosive effect on the morale and job satisfaction of not only the intended victim, but also on the nurses who witness the maltreatment of a colleague. That dissatisfaction can manifest itself in high turnover or the intent to look for a new job or other negative job behaviors, according to the study Escaping bullying: The simultaneous impact of individual and unit-level on turnover intentions, which appeared in the July issue of Human Relations magazine.
"The results of this study show that people are not only aversively affected by their own experience of being bullied, but that the bullying experiences of others in their work units can have significant effects as well. Our results show that merely working in a work unit with a considerable amount of bullying is linked to higher employee turnover intentions," the study said.
Workplace bullying is particularly germane to healthcare because, as the study notes, it is "a prevalent phenomenon in the healthcare industry and nurses tend to have a greater likelihood of experiencing such harmful behaviors than other healthcare professionals. Furthermore, bullying in the healthcare industry is associated with a host of negative job-related and health-related outcomes."
The study's four authors, faculty members at the University of British Columbia, said their findings suggest that bullying violates the "deontic model of justice" which provokes a negative response regardless of the victim because the behavior violates accepted standards.
"We argue that working in an environment in which others are bullied will create a sense of moral uneasiness that will contribute to their own turnover intentions, regardless of whether one personally experiences bullying," the study said.
Nurses are more likely to empathize with a bullied colleague rather than with the abusive coworker or supervisor.
"Such perspective-taking leads one to experience cognitive or emotional empathy, which includes imagining how another feels or actually sharing in another's feelings," the study said. "These empathetic responses can contribute to the understanding that a significant moral violation has occurred and the recognition that the victim does not deserve his or her mistreatment. As a result of this moral uneasiness, bullying at large within a work unit will increase employee intentions to quit their work group."
The study surveyed 357 nurses at 41 units at a "large health authority in a western Canadian city." The nurses' average age was 43 years, and their average tenure was 16 years. The average unit size was 31 nurses, and nine nurses responded for each unit.
As mentioned earlier, the study most interestingly suggests that the urge to look for work elsewhere might actually be as strong or stronger for the nurses who witness the bullying than for the victims "because the discrepancy between one's relatively positive treatment by others, compared with others' experience of bullying, evokes stronger deontic concerns. Witnessing others being bullied already evokes a sense of moral indignation, but the added discrepancy between one's own good treatment and others' poor treatment, makes it seem even more unfair."
As a result, the study's authors said they could predict turnover intentions in a particular ward either by how much an individual nurse was the target of bullying or by how much a nurse perceived a bullying environment in his or her ward.
"This is potentially interesting because we tend to assume that direct, personal experiences should be more influential upon employees than indirect experiences only witnessed or heard about in a second-hand fashion. Yet our study identifies a case where direct and indirect experiences have a similarly strong relationship to turnover intentions," the study said. "These findings point to the potential importance of a growing area of research in organizational behavior that gives attention to and addresses third party experiences."
If we look at these findings a little more subjectively and from our own personal experiences, the nurses' sense of outrage when a colleague is bullied shouldn't be surprising. It's a natural human response. It doesn't matter if it is fast food restaurants or neonatal ICUs, few people want to work in a hostile environment, even if they are not the target of the hostilities. It is not pleasant to see the people you work with and rely upon humiliated and stripped of their dignity.
It's important to remember, however, that high unemployment and a sputtering economy forces workers in many industries to suffer through these indignities. Well aware of their value and scarcity in the labor market, nurses do not have to tolerate it.
Undoubtedly the Patient Protection and Affordable Care Act is providing for interesting times now for healthcare delivery in the United States. At this point, calling it a blessing or a curse would be guesswork.
Supporters of the PPACA cannot deny that implementation of the sweeping reforms will be a daunting task that may, ultimately, fail. Many critics of "Obamacare," however, have provided no realistic alternatives to bending an unsustainable healthcare cost curve beyond vaguely worded demands for vouchers, block grants, and buying health insurance across state lines.
One reason why the American Hospital Association and other hospital groups supported the PPACA was because of its pledge to expand health insurance to tens of millions of people now uncovered, including dependent children age 26 or younger. But as Moody's Healthcare Quarterly pointed out this month, that new revenue source for not-for-profit hospitals will be offset by Medicare reductions of $150 billion over the next 10 years, along with an additional $14 billion in Medicaid disproportionate share payments.
In addition, PPACA imposes new payment models that include lower reimbursements for hospitals with high readmissions and low patient satisfaction scores, and the effect of those is still unknown.
A study in the Archives of Internal Medicine estimates that safety net hospitals will take an additional hit on reimbursements because Medicaid patients tend to distrust the healthcare system and that distrust is reflected in their lower patient satisfaction scores.
Private payers will follow the government's lead and suffer less tolerance for cost-shifting, preventable errors and other quality issues.
As a result, Moody's deemed "credit neutral" the U.S. Supreme Court's ruling in June that PPACA is constitutional. The rating agency said the high court's decision would have no effect on a negative outlook for the not-for-profit hospital sector.
"Furthermore, significant uncertainty remains over the future of U.S. healthcare policy given the size of the federal budget deficit, which has increased since the passage of PPACA in April 2010," Moody's said. "For not-for-profit hospitals, which account for the vast majority of American hospitals, this uncertainty continues to heighten credit risk in an already pressured operating environment."
Causing more uncertainty for not-for-profit hospitals was the Supreme Court's concurrent ruling last month that removed penalties for states that refused to expand their Medicaid programs under PPACA. So far, the governors of Florida, Louisiana, Texas, South Carolina, and Mississippi have said they will opt out, and the governors of five other states have signaled that they are leaning that way.
"I stand proudly with the growing chorus of governors who reject the Obamacare power grab," Texas Gov. Rick Perry said this month in a letter to Health and Human Services Secretary Kathleen Sebelius. "Neither a 'state' exchange nor the expansion of Medicaid under this program would result in better 'patient protection' or in more 'affordable care.' They would only make Texas a mere appendage of the federal government when it comes to healthcare."
It's worth noting the grandstanding hyperbole in these election-year pledges to reject billions of dollars in federal money. Observers have noted that much of this opposition will quietly melt away after the polls close in November.
"It's easy to say right now, 'no, no, no, Obamacare is an abomination and Medicaid is dysfunctional,'" John Holahan, the director of the health policy center at the nonpartisan Urban Institute, told CBS News. "Long-term, it's an awful lot of money to give up and the hospitals need it and the managed health care plans need it… I think eventually they will figure out a way to say yes."
That may be true. But how much comfort can hospital executives in Texas and in her like-minded sister states take from assurances that their governors will "eventually" fold on the issue? How can anyone draw up a budget or offer with confidence projections for financial performance amid so much uncertainty?
At the same time that the PPACA provides a set of great challenges for hospitals, they are also struggling with other mandates such as the cost and complications associated with implementing meaningful use of electronic medical records and switching to ICD-10 diagnostic and procedural codes.
Ultimately, hospital leaders in the next decade will face some of the greatest challenges in U.S. healthcare history as they attempt to implement the sweeping reforms of PPACA and other mandates while maintaining financial viability in an era of lower reimbursements.
Outside of a war zone it is hard to imagine a more fluid, uncertain, yet rigorous set of metrics and demands that have to be met.
The newly validated Patient Protection and Affordable Care Act is expected to expand health insurance to as many as 40 million individuals now without coverage. This leads to the question: Who will see them?
With coverage expanded so extensively in such a relatively short time, the American Nurses Association believes that one of the most effective means of meeting the healthcare needs of these newly insured patients will be through advanced practice registered nurses.
"What we know about those patients through things like the National Center for Health Statistics and health interview surveys is that they have been deferring primary care: wellness, screening, well child care, and some chronic care meds," says Peter McMenamin, senior policy fellow at ANA. "Given insurance, they will have more access to healthcare and these are the kinds of things that APRNs and RNs are particularly well suited to do."
The U.S. Bureau of Labor Statistics' occupational outlook handbook estimates that by 2020 there will be a demand for 712,000 additional RN jobs. From 2010 through 2020 the demand for RNs is projected to grow by 26%, well above the 14% average growth rate for all occupations.
The good news is that the nation's nursing schools have doubled the size of their graduating classes over the past decade. The bad news is that there remain huge waiting lists for qualified nursing school applicants, mainly because of faculty shortages and limited access to clinical sites.
"It is not that the shortage is gone, but [that] there has been an increase in the younger cohort of nurses entering the workforce," McMenamin says. "In 2000 U.S. nursing graduates came to about 70,000. In 2011 U.S. graduates came to more than 140,000. It is changing the age distribution of the workforce but at the same time we have 3.1 million nurses, so even 100,000 a year don't change the distribution very quickly."
The ANA says the U.S. nurse workforce median age is 46 now and about half is nearing retirement.
"We have a lot of Baby Boomer-aged nurses and they have not retired because of the economy," says Janet Haebler, RN, associate director for state government affairs with the ANA.
"As that changes, or as they continue to age, we are going to see them leave. And it is a dramatic number of people. With the nursing schools, the enrollments are up, but we also have wait lists and part of that has to do with the shortage of faculty, and those individuals are also aging out. We can predict that if we don't make some dramatic changes that we are going to see another or continued shortage that is going to exacerbate in the next five to 10 years."
The ANA is focusing its efforts on maintaining Title VIII educational funding for nursing workforce development. In addition, it is hoping to address the huge turnover in RNs, many of whom leave the workforce within two years of graduating from nursing school.
Haebler says that can best be addressed by improving the nursing work environment. "We are always advocating for safe staffing levels, mandatory OT prohibitions, safe patient handling policies, workplace violence prevention programs. All of those factor into the work environment and retaining qualified nurses," she says.
Haebler says ANA is also working to loosen the constraints on scope of practice for APRNs, which was recommended by the Institute of Medicine's The Future of Nursing report.
"Specifically we're talking about things like the supervisory requirements and collaborative practice agreements where the physician who may never see the patient only reviews the records and the APRN is charged to have that agreement with that physician," she says. "We're talking about the limited prescriptive authority where APRNs may only be allowed to prescribe a Schedule II substance for a certain number of days and then the patient has to come back. That is not good for the patient. It is not necessary."
Haebler says lower-skilled healthcare workers might seem logical candidates to train and advance in the nursing ranks, but it's not that easy. "It has nothing to do with the fact that there is not access or availability. A lot of it has to do with basic education," she says.
"Nursing requires a strong background in sciences and many of these individuals did not choose the professional nursing route to begin with because they did not have that strong background. You have to have a foundation in chemistry and biology before you can take anatomy and physiology and nutrition and microbiology. Many people are thwarted because they have to go back and deal with the basics that they missed in high school. So many of the people had to struggle, they got discouraged."
The U.S. Supreme Court's ruling last month upholding the Patient Protection and Affordable Care Act resolved constitutional questions about the sweeping law. Now states are left with the challenge of implementing it.
And reports show a huge variance in readiness from state to state, particularly as it relates to health insurance exchanges.
"There are a number of states, about one dozen, that have made significant progress on their decision-making and what they are going to do about exchanges," says Sandi Hunt, a principal at PriceWaterhouseCoopers. "They have passed legislation. They have begun the process of planning for the exchange. But even those that are taking very active approach have a huge amount of work to do to be ready to go by 2014 and there are large numbers of states that have to make the decision to either accept the federal exchange or develop the state exchange."
Hunt says the biggest challenge for most states is deciding "how active they want to be in the health insurance market and if they want to be active how to do that in a way that makes the whole insurance market work," she says. "There are some important decisions to make in terms of how active the states want to be, if they just want to allow the health plans to offer whatever plans they want, or if they want to guide the market to more delivery system reform."
Hunt says the core issues that every state has to think through when devising their exchanges include questions on eligibility and insurance market reforms. "But the decisions each state makes are going to reflect their own circumstances. They all have to think about the same questions, but how they answer them is unique to their circumstances," she says.
For example, Utah is taking a free market approach with its exchanges and allowing relatively easy access to the exchange for anyone selling a health plan. "Other states want to provide more information to consumers and take more direction in how they offer products in the market," Hunt says.
Maggie Elehwany, vice president of government affairs and policy with the National Rural Health Association, says it's difficult to say what effect the health insurance exchanges will have in rural areas. "In theory it sounds good, but we don't know yet how it will play out," she says.
"Often if you look at rural areas, there isn't a choice. There are one or two plans. So this has the potential to expand options, which is great in theory. But we are concerned about a lot of the exchanges not doing the outreach to rural areas," she says. "We are intrigued with the co-op concept of different entities coming together to be able to have a plan. Dairy co-ops and wheat co-ops have been found to be effective in rural areas."
Elehwany says the nonpartisan NRHA did not endorse or oppose the ACA, but supported "building blocks" in the law that bolster access to healthcare in rural areas. The challenge now, she says, is to ensure that those building blocks are funded, particularly in critical areas that address provider shortages in rural areas.
"There was a significant expansion of the National Health Service Corps and a big investment in area health education centers which foster a program of growing your own physicians, nurse practitioners, that kind of stuff," she says. "We loved the redistribution of residency slots that targeted rural areas and the 10% bonus for primary care payments. Those were temporary. They may be funded for a short period and the funding will end."
On the Medicaid front, several states, including Florida, Wisconsin, Texas, Kansas, Maryland, and Louisiana, will also have to wait and see how the battle to expand their Medicaid programs plays out. The Republican governors of these states have said they will opt out of the ACA's call to expand Medicaid to insure more of their citizens. Texas Governor Rick Perry penned a letter to HHS Secretary Kathleen Sebelius, in which he describes Medicaid as "a system of inflexible mandates, one-size fits-all requirements, and wasteful, bureaucratic inefficiencies.
Nevertheless, even though the Supreme Court's ruling last month upheld the right to opt out of the Medicaid expansion, Hunt says the governors in those states will face mounting pressure to partake.
"The pressure is going to come from two places," Hunt says. "First there are millions of people who will be left out of health insurance reform if the governors decide not to go forward with Medicaid reform. And second the providers have been relying upon the Medicaid expansion as a way to cover those large numbers of uninsured."
Elehwany says many people who are otherwise firm supporters of rural healthcare may resist supporting any provisions of the ACA for fear of political blowback. "They don't want to look like they are supporting any part of it. That has been incredibly frustrating," she says.
"The great thing about being a rural health advocate is we have friends who are Democrats, Republicans, and Independents. But because some of these provisions are in healthcare reform, it is tainting that relationship."
The arrival of accountable care organizations creates another set of hurdles for rural providers. "ACOs are challenging to rural hospitals and rural providers because of the isolation and the low volume of patients they treat," Elehwany says. "They are worried the larger healthcare system might purchase them and they will lose their autonomy. Also per capita rural patients are older and sicker with a higher percentage of chronic diseases. The rural ACOs might not be able to demonstrate equally and be able to share in the savings that others envisioned in the ACOs."
On other fronts, the biggest single challenge to rural healthcare in the near term predates the ACA. Elehwany says it critical that Congress extends beyond the Oct. 1 expiration date the special funding status for about 200 rural Medicare dependent hospitals across the nation. "If they lose this Medicare reimbursement rate, we will be terribly concerned," she says. "We have heard a lot of facilities will close their doors if they lose this payment and that will cut off a lot of critical access to care for rural seniors."
Another antecedent of the ACA, the federal stimulus package, provides billions of dollars in funding to create or enhance access to healthcare information technology. Elehwany says that even with the incentive money for HIT improvements many rural providers are still hobbled by a lack of front-end capital, access issues and the aggressive timeframe for implementation.
"We think that it is a very laudable goal. HIT can probably nationwide reduced medical errors and lead the way to telemedicine which we believe is a way to overcome a lot of access issues in rural areas," she says. "But a lot of these facilities are small and they don't have the resources to purchase the materials or they don't have the staff. Often your CFO is also your HIT guy. So it is a capital issue. It's a workforce training issue."
"Some areas don't even have the broadband capabilities to do this. It is a big, expensive burden for a lot of small rural health facilities to bear," she says.
"Yes everybody wants to be up-to-speed. We love the carrot and we see the stick coming, but we need to realize that not everybody is on a level playing field. Some folks are going to need a little more time and a little more technical help."
Federal officials announced Monday that 89 Accountable Care Organizations opened on July 1 in 40 states and Washington, DC and will serve 1.2 million Medicare beneficiaries.
Jonathan Blum, principal deputy administrator anddirector of the Center for Medicare, said in a teleconference that another 400 provider groups have filed notice that they will apply to be in the next wave of shared savings ACOs that become operational on Jan. 1, 2013.
"That gives us even more confidence that this program will grow over time and more organizations will come in over time," Blum told reporters at a midday teleconference.
The 89 new ACOs bring to 154 the total number of provider groups in the voluntary Medicare shared savings initiatives. That includes 32 ACOs in the Pioneer ACO Model named last December by the Center for Medicare and Medicaid Innovation, and six Physician Group Practice Transition Demonstration organizations that began in January 2011.
As of July 1, more than 2.4 million Medicare beneficiaries are receiving care from shared savings ACOs, and almost half of the ACOs are smaller physician-led organizations that serve fewer than 10,000 beneficiaries, Blum says.
"What is significant is the degree of provider physician interest," Blum explains. "Contrary to some fears that were expressed last year, we have a very strong program that exceeds our goals for the first year. We have over 2.4 million beneficiaries being served by these ACOs and we really see this thing led by the physician community to improve patient care."
Blum says the Medicare Shared Savings Program, part of the 2010 Affordable Care Act, by some projections could save the Medicare trust fund up to $940 million over four years. However, he believes it’s too early to tell if the ACOs are already on their way toward the stated goals of saving money and improving care quality.
"Obviously this is going to be a key factor that we track very carefully," Blum says. "We have a very strong interest to ensure that beneficiaries get better services than they do today. We will make this data transparent to the public but it is too early to tell given that the program is still in its early stages."
Only five of the 89 new ACOs chose the so-called two-sided risk model that has greater earning potential but also puts providers on the hook if savings metrics fall short. Blum says "by far" most organizations chose the safer one-sided risk model, which pays only on achieved savings. All ACOs in their second contract period will have to take two-sided risk.
The 89 new ACOs were selected from an applicant pool of more than 150 providers. Beginning this year, ACO applications will be accepted annually. The application period for the Medicare Shared Savings Program that begins in January 2013 runs from Aug. 1 through Sept. 6.
Simeon A. Schwartz, MD, president/CEO of White Plains, NY-based WESTMED Medical Group, says the shared-savings program had the financial incentives to compel his 200-physician primary care-focused multispecialty practice to become an ACO.
"We think the savings are largely going to come out of hospital utilization because we see already in our organization that there have been many opportunities to move care to the outpatient setting," says Schwartz, who joined Blum on the midday teleconference.
"Because of the different price Medicare pays us versus the hospital for the identical service outpatient services in the physician setting is a big savings right there," Schwartz says. "Then if you are able to provide urgent care services instead of ER services that is a big savings. Finally if you have sufficiently coordinated outpatient programs working with community providers such as nursing organizations and others you are able to further decrease hospital utilization. We are hoping to see savings of 5% or 10% over the course of the three years of the program."
Schwartz says WESTMED has hired case managers to better analyze patient data, which will help the group identify and coordinate care for high-risk patients and plug other care coverage gaps.
"We consider it a trifecta," he says. "The government will do well, the patients will do well, and we will do well. And we hope it turns out to be successful."
The healthcare industry created 13,000 jobs in June, a significant drop from the sector's 33,300 new jobs in May. The overall unemployment rate, however, remained unchanged at 8.2%.
Nevertheless, Bureau of Labor Statistics data released Friday shows that healthcare created 169,800 jobs in the first half of 2012, which represent 18.7% of the 902,000 jobs created in the overall economy so far this year. Healthcare created 141,300 new jobs in the first half of 2011.
June Shelp, a lead author of theThe Conference Board Help Wanted OnLine monthly report, says she is seeing lots of "churn" among skilled clinicians in the healthcare labor market.
"The reason you see so many advertised vacancies for healthcare is that it is a fairly scarce commodity," Shelp says. "There aren't as many nurses and doctors as we'd like and they are much more prone to move and change when the opportunity is there, opening up grounds for other people."
That churn, Shelp says, suggests that there is growing confidence—at least among skilled healthcare workers—in their career prospects as the economy stumbles along.
"That tends to mean more people are looking for a job. They're willing to quit where they are and try something new. That is all somewhat positive. The net result is a lot of additional new hires," she says.
And even though skilled healthcare workers remain in high demand, Shelp says there is evidence that hospitals, physicians' offices and other healthcare employers are ready to replace low-performing or malcontent workers. "They are willing to get rid of the person who is not right," she says.
BLS data shows ambulatory services, which include physicians' offices, led healthcare with 4,800 new jobs in June. Nursing homes created 4,500 jobs and hospitals created 3,700 jobs. BLS data from May and June are preliminary and may be revised considerably in the coming months.
Shelp says "demand for nurses more or less has been in the same ballpark since 2005," when the HWOL data series began. "We're talking just under 250,000 ads a month that are looking for nurses, new ads and reposted ads," she says. "Because the number of people who are qualified for nursing jobs hasn't changed, we see what is beginning to grow is the demand for nursing assistants and a big increase in the need for healthcare support functions."
"I look at physical therapist, for example. That demand has gone up. Occupational therapists have definitely gone up. Physicians' assistants clearly have gone up," Shelp says. "When you can't find the right person, then you begin to change what it is exactly that you need."
In the larger economy, nonfarm payroll employment rose by 80,000 in June, led by modest job growth in professional and business services, temporary help services, and management and consulting services. Job growth in the overall economy has fallen steeply in the last four months after averaging 252,000 new jobs in both January and February, BLS reports.
Halfway through 2012, healthcare job growth is slightly ahead of the pace set in 2011, when healthcare created 296,900 jobs and accounted for more than 18% of the 1.6 million new jobs in the overall economy.
More than 14.3 million people worked in the healthcare sector in June, 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 12.7 million people were unemployed in June, which was essentially unchanged from May. The number of long-term unemployed, defined as those who have been jobless for 27 weeks or longer, remained at 5.4 million people in June, representing 41.9% of the unemployed.
There's debate on whether or not that growth in the healthcare sector is healthy for the rest of the economy. Healthcare and education occupy an odd place in the overall economy as two sectors with positive job growth and negative per-worker productivity (as measured by the gross domestic output divided by the number of people working in the sector.) Every dollar that goes into healthcare is a dollar taken from elsewhere in the economy.
Shelp works in the realm of data and she is hesitant to predict the pace of healthcare job growth in the coming years, especially now that the constitutional questions around the Patient Protection and Affordable Care Act have been addressed.
"I don't do an awful lot of forecasting, but if I was thinking about it, given the population, I am not sure where we are going to go with this new healthcare piece that is out there," she says. "Clearly it is not going away. In fact there will continue to be demand. Exactly how that changes I don't know."
