On Sunday, May 22, a category EF5 tornado ripped like a buzz saw through Joplin, MO. Within minutes, at least 142 people were killed, hundreds were injured, and much of the town was destroyed, including the 367-bed St. John’s Mercy Regional Medical Center.

And just as quickly, the 2,200 employees at the gutted hospital faced the prospect of losing their jobs. That’s when Mercy Health System CEO Lynn Britton made the decision that may come to define his leadership at the system, which operates 30 hospitals in four states. Britton launched a talent-sharing program designed to keep as many Mercy workers as possible employed through the rebuilding effort.

Britton spoke with HealthLeaders Media recently about the decision, and the nearly $1 billion commitment that Mercy has made towards rebuilding Joplin’s healthcare infrastructure.

HLM: The decision to keep staff on the payroll was made just hours after the tornado struck. Why was that a priority?

Britton: “For a variety of reasons. With Hurricane Katrina, a lot of healthcare professionals who didn’t have a place to work tended to leave New Orleans to find work, and once the healthcare organizations were thinking through how to get back on their feet, there wasn’t a professional medical community to support them. So I absolutely didn’t want that to happen in Southwest Missouri. We felt it was critical that we kept everybody employed – but not just sitting on a sofa collecting a paycheck. They needed to be using their clinical skills and keeping them sharp to make sure the medical community was going to be there when the new hospital opened.”

“Then there is the economic side of it. One government agency said that if those 2,200 people had not kept their jobs, about 13,000 (other people in the community) would have lost their jobs because it takes that much in support for the healthcare system. It made sense from an economic perspective, for the community it made sense, from the continuity of healthcare services into the future it made sense.”

HLM: Would it not have been cheaper to lay off employees?

Britton: “Not in the long run. Those people would have had no choice but to go somewhere else to find a job. We are building a new hospital and when we open it back up we would have been spending enormous amounts of money to recruit that very talent back into the community. I would much rather have a resident professional medical community stay there and continue to deliver care and evolve with us and be part of dreaming the dream for the new community. So no, I’m not going to say that it would have cost less.”

HLM: How were you able to find that many jobs in such a short time?

Britton: “We started a program called talent sharing. We had enough Mercy facilities in the surrounding area that I’d hoped that many of [the employees] could find work there. I was also hoping that other hospitals in the area that were going to see some temporary growth in volume because of the displaced patients from St. John’s – that they wouldn’t want to staff up and recruit a workforce knowing that volume was eventually going to go back to St. John’s, and that they might be willing to use some of those resources to meet that temporary growth in demand, and they were.”

Britton: “The organization [that temporarily hires the Mercy employee] pays the hourly rate that they would for that position, and the Mercy coworker still keeps their original rate and benefits on our nickel and we bill and collect on the hourly rate at the other organizations. It helps offset but it doesn’t cover all the costs for that coworker.”

HLM: You’ve found work for about 95% of your St. John’s employees. Are you surprised by the success?

Britton: “I was pleased. We knew it would be a big challenge. It sounded daunting. I am a firm believer that you have to have big goals and dream a little, especially in moments like this that are crises situations. You can’t just accept it. You have got to get busy and work your way through it. So, giving people big goals like we did was important in the recovery, in the community, and in the professional recovery as well. Because you’ve lost everything, the place that you went to work every day and socialized with 2,200 people is gone. You have to have a focus and a way to bring yourself back to a new reality. Big goals that seem audacious or daunting are just what it takes.”

HLM: How has this affected employee engagement at St. John’s?

Britton: “It’s off the charts. They’re actively participating in designing the new hospital, and their work in the temporary facility is extraordinary. All the indicators show they are a very engaged workforce and very appreciative of what has been done to help them through this.”

HLM: Mercy has committed about $950 million towards the rebuilding effort in Joplin that will include a new 327-bed hospital. Did you have any concerns about the level of the investment in such uncertain economic times?

Britton: “I have had people say to me, ‘Those were terrible business decisions. Were you worried about your job? What did the board think about that?’ The short answer is if I had gone back to the board and said, ‘Let’s take the insurance money and run,’ that would have been a termination reason right there. Because we did the right thing, I never worried that the board would view it as a bad business decision. I knew they would view it as the right thing to do, and that is exactly what they did.”

HLM: What advice would you give other healthcare leaders facing similar crises?

Britton: “Clearly understand the situation and make some quick, appropriate decisions. Don’t be ambiguous ever about what you are going to do and how you are going to do it, and be bold when you face those moments. People will not remember if you didn’t get a decision just quite perfect during a moment like this, but they will absolutely remember if you don’t do anything or you are just in a state of inaction. That is far worse and does far more damage than being slightly off on one or two decisions at some critical moment.”

Emergency physicians in the state of Washington have filed a lawsuit against a state plan to classify more than 700 diagnoses as non-emergent, and limit Medicaid reimbursements to no more than three non-emergent visits to the emergency department each year.

"The state has been mandated to try to save $72 million over the next two years, and this will clearly impact emergency care," Stephen Anderson, MD, president of the Washington Chapter of the American College of Emergency Physicians, told HealthLeaders Media.

"The list at the moment includes chest pain, hemorrhage during miscarriage, infections of the leg that can result in amputation, passing out for no reason, heart arrhythmia. It's frightening."

Anderson says the new restrictions could impact healthcare access for the poor and those most in need of care in at least 19 other states that have worked with Washington State to develop the policy, which went into effect on Oct. 1. "If this plan goes into effect, other states will certainly follow suit," he said.

The emergency physicians have asked a judge in the Superior Court of Washington for Thurston County to slap an immediate injunction on the new restrictions. In a media release, ACEP spelled out its concerns about the suit, alleging that the state: 

• Has not implemented a rulemaking process that included stakeholder comments; yet the plan is being forced on hospitals and providers with no warning.
• Violated the requirements that this be a collaborative process as outlined by the legislature.
• Violated the requirements that this be a list of non-emergent diagnoses as outlined by the state legislature.
• Misconstrued the ability to bill patients for services. Federal law prevents physicians from meeting Medicaid requirements for billing patients through the Emergency Medical Treatment and Active Labor Act (EMTALA), and state law blocks hospitals from billing under charity requirements.
• Is violating the federal Prudent Layperson standard by applying it to managed care patients.

Because EMTALA requires emergency departments to examine patients seeking care, "we still have to see them and we have to make sure they don't have an emergency," Anderson says. "The problem is that sometimes it takes a full evaluation to figure out that this burning crushing chest pain is heartburn and not a heart attack. What the state is saying is yes by federal law you have to see them and do the work up, but when you're done with the work up, if it turns out it wasn't a heart attack then you aren't going to get paid for any of that."

Jim Stevenson, chief communications officer for the Washington State Healthcare Authority, says ACEP has "misrepresented a little bit" the new restrictions. "The code doesn't refer to all chest pains. It only refers to non-cardiac, non-specific, generalized chest pains," Stevenson says. "This is not someone who is coming to the hospital in the belief that there is an emergency. It would probably be someone who has been at the emergency several times before with the same complaint. Many of these un-generalized complaints do end up looking for narcotics as a treatment."

The Washington State Health Care Authority issued a statement explaining the new restrictions and noted that the three-visit limit would not apply to:

• Children placed by the department in out-of-home care with foster parents, relatives, or other caregivers
• Clients delivered to the ED by ambulance, police or EMTs.
• Visits for mental health diagnoses or for clients seeking detoxification services
• Visits that result in an inpatient admission, emergency surgery, or admission for observation. 

The authority said the program also created an "exception to rule" process by which hospitals can appeal non-emergency billings on the grounds of special circumstances.

"In point of fact, 97% of our clients can live very comfortably with this three-visit limit," Jeffery Thompson, MD, the authority's Medicaid's CMO, said in a media release. "The small number who exceed that limit are responsible for scores of visits – and most of them are for chronic conditions and complaints of pain – visits that usually end with a narcotics script."

Anderson says the new restrictions have the potential to "punish" that same 97% of Medicaid patients for the sake of clamping down on the 3% who allegedly abuse the system. "My bigger concern from a provider standpoint is that somebody is going to sit at home with their sick kid who has already had to go in three times, and now they're at home having trouble breathing," Anderson says.

"Or somebody is going to sit home with chest pains, or they are going to sit at home with a stroke. Some of these diagnoses are absolutely against the mission statement of the American Heart Association and the American Stroke Association about seeking care promptly."

Anderson says ACEP has alternative ideas for saving money that will not drastically impact care, including:

• implementing a stricter prescription narcotics policy for EDs that could save $30 million by reducing the number of people who come to the ED for pain relievers;
• increasing the use of psychiatric generic medicines, which could save the state about $130 million a year;
• increasing the use of generics in the emergency department;
• creating hotlines staffed by RNs who would steer patients to primary care alternatives.

"We want to save the state money because we shouldn't be at the table complaining unless we have alternatives," he said.

Acute care hospitals in Pennsylvania want Congress to examine ambulatory surgery centers as a target for reimbursement cuts or other revenue measures. The hospitals believe that a review by the "super committee" charged with balancing the budget will show that ASCs are cherry picking lucrative commercially insured patients and shirking care for lower-paying Medicare, Medicaid and indigent care.

"We are asking the super committee to understand that hospitals nationwide have a $155 billion in cuts in the foreseeable future already on the table," as part of the Affordable Care Act,  said Michael P. Strazzella, senior vice president for Federal Relations & Political Development at the Hospital & Healthsystem Association of Pennsylvania.

"Those cuts include $9 billion in Pennsylvania alone. There needs to be some recognition that there are other people who can afford to take those kinds of cuts without impact the care they provide," he said.

A report last month by the Pennsylvania Health Care Cost Containment Council showed that there are 266 ASCs in the state, up from 72 one decade ago. The council reported that ASC total profit margins have exceeded 26% in each of the past three years, while acute care hospitals see margins averaged 5.2%. HAP says that is partly because Medicaid accounted for only 4.5% of ASC revenue in 2010, compared to 11.8% of general acute care outpatient revenue.

"The pressure on acute care hospitals is increasing because there is a larger demand on public and private payers. We are seeing more people lose their private insurance and move to Medicare and Medicaid, even as those payments have decreased," Strazzella told HealthLeaders Media.

In addition, Strazzella says Pennsylvania's acute care hospitals have seen their state Medicaid reimbursements cut by 4% in fiscal year 2011-12.

However, Pam Erdel, president of the Pennsylvania Ambulatory Surgery Association, says HAP is making an apples-to-oranges comparison on operating margins because ASCs and hospitals use different calculations. "For ASCs, the salaries paid to physician-owners are not counted as overhead. In the hospital that is all taken out before they report their operating margins. It would be similar to removing all the staff salaries from the operating costs of a hospital before calculating their margins," she says.

Erdel says two-thirds of ASCs nationwide provide care at reduced rates for patients who are underinsured or not uninsured. "We feel bad for hospitals in that they are having reduced rates, but we already started out with less. We get paid on average 56% of the rate that the hospital gets paid for doing the same procedure, because Medicare set it up that way," she says.

Erdel says it's ironic that HAP would target ASCs for criticism when "the most lucrative ASCs are owned by hospitals," and those hospitals belong to HAP. "I would love to bridge that relationship with the HAP because we have a lot to offer each other," she says.

This article appears in the September 2011 issue of HealthLeaders magazine.

Our annual industry survey shows that healthcare leaders are somewhat mixed on the effectiveness of comanagement models for service lines, with 43% finding them effective or very effective, 44% neutral, and 13% ineffective or very ineffective. In this era of healthcare reform, do you believe this shared governance model will become more relevant or less?

I’ve had a lot of success involving physicians in service lines, looking at the various vendors and the various expenses in the program. They have been very constructive in finding ways to improve quality, reduce length of stay, reduce the cost of implants. When they get involved, even without incentive, I have found they become very protective of the hospital’s resources and have serious discussions
with vendors about ‘You’ve got to do better than that.’ The objective should always be to have physicians actively and constructively involved.

There is a level of trust that goes back to the relationship being more important than whatever structure you put together. If they see a common goal and if they understand—either as an employer or as the hospital they choose to use—that it needs to remain financially viable, if they see that savings go to other programs they want to see developed, you get a lot of cooperation. If they perceive that all it does is pad the bonuses of administrators, they are probably not as willing to work with you.

A lot of it is relationships. They have to be docs you trust and, in essence, people you want to be in business with. You just can’t say ‘I am going to create this comanagement program. I can’t stand the docs but I am going to do it anyway.’ That is just asking for trouble. It truly has to be almost a joint venture. The service line has to be separated out. The ones that I have seen that work are a true comanagement. There is a board, and it’s not just a medical director but a lot of docs involved.

It can work with an employed model. It would be more on the incentive side. The advantage is there are some doctors who don’t want to be employed, and this is a way, especially with the specialties, to allow them to be engaged with the organization without being employed.

When everybody is working toward the same objective, everybody—physician and otherwise—is going to be cognizant of costs. If you have a management team made up of physicians and administrators, the doctors would say, for example, one of the reasons this particular service line costs so much is that the operating room turnaround is 28 minutes, and down the street at the ambulatory surgery center the turnaround is 15 minutes. The reason is that we as doctors manage it and it affects our revenues.

There is historically a culture of distrust that comes from a lack of transparency, a lack of understanding of each other’s perspectives. In most hospital systems the physicians have never been given the data in a way that allows them to be held accountable.

Creating alignment: Depending on the market and the situation, I find that clinical comanagement works well, sometimes as a subset of a joint venture. In joint ventures, we would give the management of the joint venture option to the physicians and we would find that they did a good job with driving down costs and improving satisfaction. There was an extra incentive as managers. In the models where there is just clinical comanagement, it works with a sophisticated group of physicians who are integrated and willing to work together as a team. When you have a fragmented medical staff or group of individuals, it is harder to drive that because you have to create some kind of legal structure.

If you don’t have good leadership that understands the model, then forget it; it’s not going to work. Some leaders still don’t understand the comanagement model, and they are trying to run it like they own everything—that there shouldn’t be any physician input.

And physicians aren’t used to being managed that way, so they have to have a good feel for the management above them.

There is an inherent distrust. CV and orthopedics are the big service lines, but the other place comanagement would work is OB, particularly with its liability. If you can package a group of doctors and get a liability policy, you can save them money and provide them with office space and bundle the whole thing. General medicine is still going to balk at comanagement.

Hospitalists are hospitalists. That is a different ball game with those guys. Call, management of the process to get the patient admitted and out of there quickly, utilization of their supplies—that kind of thing—they are a tougher group to manage, per se. And they are so short in supply that it is difficult to recruit for that. Most of those guys are looking at quality of life plus bucks and that is a difficult group to recruit to and manage for that.

This article appears in the September 2011 issue of HealthLeaders magazine.