The funds expected to be generated by the sales of hospitals, home health businesses, and non-hospital real estate will be used to pay down $15 billion in debt.
Community Health Systems is negotiating with seven entities to divest 17 hospitals, home care businesses, or non-hospital real estate properties, CEO Wayne T. Smith said in a conference call Wednesday with analysts. The transactions are expected to be completed by mid-2017.
"Estimate proceeds from these transactions include working capital projected to generate $1.2 billion," Smith said. "A substantial portion of these proceeds will be used for further debt reduction."
"It is also worth noting that the interest level in our assets is extremely high," Smith said. "We are receiving interest from a number of parties and we will provide updates as we receive definitive agreements and reach the close of the transactions."
The announcement came as Smith tried to put a positive spin on weak third quarter that saw $4.3 billion in net operating revenues, down 9.6% when compared with the same period in 2015. Smith blamed the drop on low volumes and higher-than-expected expenses.
"It goes without saying that we are not pleased with our performance in the third quarter," Smith told the analysts. "Over the years we have seen some variability but our inconsistent performance recently in the third quarter simply has not been good enough."
"Operationally, we have experienced a great deal of change over the past few quarters," he said. "Assimilation of the HMA hospitals has been more difficult than anticipated. The recent spin off of Quorum Health, realignment of our divisions, a number of new division presidents and vice presidents, the promotion of our new chief operations officers (Tim L. Hingtgen), consolidations of many of our back office functions and IT conversions, ultimately these changes will help to strengthen the company for the better long term success. Some of these changes have created challenges in the near term."
Smith said that the divestitures were not unanticipated.
"We knew when we bought HMA, just as when we acquired Triad, that we would have to rationalize our portfolio, that we had facilities that did not fit," he said.
"As we look to the future, we want to make sure we are in sustainable markets where we have good opportunities to deploy our resources and capital so that we can expand in those markets going forward. We will continue to look at properties. We will continue to evaluate our properties, in terms of ones that are beneficial."
Smith said that reducing debt is not the only motivation for the divestitures.
"We haven't set any specific target number in terms of debt pay-down," he said. "We are more concerned about having improved margins and ensuring that our operations work efficiently and that our performance improves as well."
Researchers challenge the usefulness of the plethora of perennial hospital rankings that are largely ignored beyond the executive suite and doctors' lounges.
Have hospital rankings reached the saturation point?
A research brief from the University of Michigan's Center for Healthcare Research & Transformation suggests that hospital rankings, ostensibly designed to enlighten healthcare consumers, have morphed into a confusing array of metrics and methodologies that are now largely ignored outside of the healthcare echo chamber.
"One of the overall messages we have is that we do have to take these rankings with a grain of salt because they measure different things and they do come out with different results when you compare them," says Kirsten Bondalapati, MPH, a co-author of the brief.
"Another thing we need to think about is how the consumer or patient perspective fits into this," Bondalapati says. "Some of the rankings are geared toward hospital quality improvements, and some are geared more toward patients, providing them information about what hospital to go to. One thing that could be improved is making those intentions a little clearer so we know what each ranking system is trying to do."
The research brief examined nine (yes, nine!) prominent hospital rankings that are published each year and found that individual hospitals ranked all over the board.
Among the findings:
In 2012, 37% of hospitals were highly ranked on one of nine hospital ranking systems;
In 2015, 53% of Michigan acute care hospitals received a high rank on at least one of nine hospital ranking systems, but only 22.5% received a high rank on at least two ranking systems;
Consumers in a CHRT focus group said they don't use rankings to choose a hospital because the rankings do not always include information that they're interested in and are not presented in a consumer-friendly manner.
Bondalapati believes much of the confusion could be cleared up if the ranking systems communicated with one another and standardized evaluation methods.
A Wide Variety of Ranking Systems
"It might be difficult for that to occur because all of these ranking organizations are different, with different missions and even in different markets. Some are nonprofits, some are for-profits, some are government organizations," she says.
"Another suggestion is to have a third-party unbiased entity that would look at the ranking and all the quality measures and do their own analysis to make this more understandable for patients," she says.
That makes perfect sense, but it's doubtful that will happen because there is little incentive to change.
In all likelihood, each of the ranking systems uses a different methodology specifically to differentiate themselvesfrom the other rankings. They're each carving out a niche because they know some hospital somewhere will score well on it.
Hospital marketing departments understand that if they don't earn a top grade from Ranking A, they can shop around and find a high score from Ranking B, C, D, E, F, G, or H, or I and hang a self-congratulatory banner atop their website.
"One of our strongest recommendations is that we incorporate a patient perspective more into these hospital rankings so that we know who is catering to the hospitals and who is catering to the patients," Bondalapati says. "And if they are catering to the patients then they should be addressing patient needs instead of their own needs."
Sorry, but if the primary incentive is to make things clearer for patients, don't hold your breath.
Clinicians at a federally qualified health center are collaborating with their colleagues at a nearby medical center to operate a four-bed labor and delivery unit.
They're bucking a trend in Centreville, AL.
Most rural hospitals in Alabama closed their obstetrics programs decades ago, owing to a combination of low volumes and high costs and liability. Instead, expectant mothers were sent to the nearest big city hospital for deliveries.
Last November, Centreville's Bibb Medical Center opened a new, four-bed labor and delivery unit that is on track to deliver about 100 babies in its first year. The opening marked the first time in 20 years that babies have been delivered in Centreville, located about 53 miles southwest of Birmingham.
Despite the low volume, averaging eight to 10 births per month, the program works because of a commitment and collaboration between Bibb administrators and clinicians and their colleagues at the nearby Cahaba Medical Care, the town's federal qualified health center, and the Cahaba Family Medicine Residency Program.
"We have a good relationship, and that is not always a foregone conclusion," says John B. Waits, MD, a family physician, CEO of the FQHC, and director of the residency program.
"It has been a very deliberate intentional relationship, where we have cultivated trust with each other, given a little, taken a little, and it is a very positive symbiotic relationship. Often there is a firewall between hospitals and ambulatory, but our model is completely different."
While there is risk and cost associated with such a low-volume service line, Waits says the hospital, the FQHC and the residency program each gain something, too.
"For the hospital, having a maternity center means having more volume in the hospital as a whole and better relationships for mothers bringing their children back for services," Waits says.
"That doesn't make them whole, but the second piece is that we have built a family medicine residency in a rural area to address the workforce disparities. To be accredited, we need to have maternity care happening. We put it in the budget for our health center. Obviously, our residency program can't fund labor and delivery, but that helps. Part of that cost is in the budget."
"For our community health center, we have written several portions of our grant portfolio around maternity care, around prenatal care, postnatal care and the first five years of life," he says.
"Some of the people we have hired in our community health center and in our residency program, nurse anesthetists, some of the labor and delivery nurses, we share some of the personnel costs it takes to run this labor and delivery unit."
"So, you have three relatively distinct but interwoven institutions with their own mission statements. It's a collaboration and we make ourselves whole with this low-volume unit."
Who Pays for What?
"We keep it very simple," Waits says. "We told the hospital that we would handle the medical staff costs. The hospital knew going in that they did not have to hire doctors to cover the labor and delivery. It's our group. If we are short a doctor, we work a little extra. We recruit our nurse partners. When we do a delivery, we bill for the physician fee like most groups do. But there are no hospital-employed physicians."
"The hospital bills for their stuff. They have put up the capital costs to build the unit. The hospital hires nearly two-thirds of the nursing. When a patient comes in, the hospital does the supplies, the equipment costs, which is traditional. The hospital bills Medicaid, BlueCross, whomever, for the facilities fees and per diems and that sort of thing."
The medical group includes nurse practitioners who function as midwives, and help hospital staff as needed. "The nurse anesthetists are on the faculty for the residency program, and they're teaching the residents to put in central lines and manage airways and lumbar punctures or help with the labor epidurals or the C-sections."
Why Bother?
Waits says delivering babies helps preserve the community's care continuum.
"Numerous studies in lots of rural contexts have shown that the loss of a rural labor delivery unit worsens infant mortality rates and portends the loss of many other services," he says. "In Bibb County, once labor and delivery went, so did local prenatal care. Similarly, care in the first five years of life became more difficult to achieve."
And when hospitals stop delivering babies, they're no longer prepared for emergency or even precipitous deliveries, Waits says.
"Institutional memory is lost. Harm comes because people aren't prepared for these routine things," he says.
"Then, there are emergencies and urgencies and care that needs to happen in the first year of life for the child, the first five years of life, etc. The focus tends to turn away from mother/baby in those first five years and that's when you lose that knowledge."
"The final part of that answer is just the reality of doctors and nurses who train and fall in love with this time of life as a part of their profession," Waits says.
"If these services aren't being rendered, you're not able to recruit and retain that work force. They're going to go somewhere where they're taking care of mothers and babies, not just nursing home patients."
A shortage of mental health resources is putting undue stress on hospital emergency departments as holding areas for some of the most vulnerable patients they serve.
It is no surprise to anyone working in a hospital that emergency departments have become the de facto dumping ground for patients in psychiatric distress.
An online survey released this week of 1,716 emergency physicians from across the nation paints a grim scene of psychiatric patients waiting long hours, and even days, for an inpatient psychiatric bed.
"Three-quarters of emergency physicians responding to our poll reported seeing patients every shift who required hospitalization for psychiatric treatment," ACEP President Rebecca Parker, MD, said in a conference call with journalists on Monday.
"The problem is that once the decision to admit is made, it can be nearly impossible to find an inpatient bed for these patients."
Parker said that more than 10% of respondents to the polls reported that they had six to 10 ED patients waiting for inpatient psychiatric patients during their last shift.
"All of these patients require care and monitoring while they are in the emergency department, which keeps our physicians from treating new patients who come through the door. This ripple effect is real," Parker said.
"More alarming is that almost one-quarter of our poll responded that they have patients waiting two to five days for a psychiatric bed. Can you imagine waiting in the ED for a bed for days at a time! It's awful! Yet, the inpatient beds for psyche patients just aren't there."
21% of psychiatric patients versus 13.5% of medical patients required admission to the hospital.
11% of psychiatric patients versus 1.4% of medical patients were transferred to another hospital.
23% of psychiatric patients versus 10% of medical patients stayed in the ED more than 6 hours.
7% of psychiatric versus 2.3% of medical patients stayed in the ED for more than 12 hours.
"We have a potential perfect storm," says Lippert. "Decreasing psychiatric inpatient beds. Insufficient accessible outpatient psychiatric centers for crisis stabilization, and then increased emergency department crowding. We are really seeing the growing crisis of unmet psychiatric need."
14-Hour Waits
Renee Hsia, MD, author of recent study on the topic that appeared in Health Affairs, attended the ACEP teleconference and noted that "the absolute number of psychiatric visits increased by 55%, from 4.4 million to 6.8 million between 2002 and 2011, far outpacing the growth of non-psychiatric visits."
"The disparities between [waits for] psychiatric and non-psychiatric patients are very stark. In 2011, the 90th percentile length of stay was 1,378 minutes for psychiatric patients, and 543 min for non-psychiatric patients, which amounts to a difference of almost 14 hours," Hsia said.
"This is especially disturbing when you realize that in 2002, psychiatric and non-psychiatric patients had virtually no difference in the length of stay for these patients."
Why is this happening?
"It's important to note that between 1970 and 2006 state and county psychiatric inpatient facilities went form around 400,000 beds to less than 50,000 beds," Hsia said.
"Starting in the 1960s there was a large deinstitutionalization of mental healthcare from the inpatient to outpatient facilities. Unfortunately, they closed a lot of inpatient beds without shoring up the outpatient resources."
HHS says the new payment system for Medicare clinicians provides flexible options that encourage 'pick-your-pace' participation by small practices and sole practitioners. It goes into effect in January.
The federal government on Friday finalized sweeping Medicare payment reforms for clinicians that were called for under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.
The new rules, which begin on Jan. 1, 2017, and which will take years to fully implement, replace the flawed and reviled Sustainable Growth Rate funding formula and are designed to reward quality over volume in the Medicare program that serves more than 55 million people.
The 2,398-page document is the end result of an arduous process that involved a months-long nationwide listening tour by officials with the Centers for Medicare & Medicaid Services who met with nearly 100,000 people and compiled nearly 4,000 public comments.
"This is a landmark effort to move the healthcare system forward," CMS Acting Administrator Andy Slavitt said at a Friday teleconference.
"Transforming something of this size is something we focused on with great care. The policy we finalized is the result of the user-driven policy effort where our staff put down our pens and went into the field to hear from physicians and patients."
"Overall, the comments we received from across the country can be summed up this way: Make the transition to MACRA as simple and as flexible as possible," he said.
The centerpiece of MACRA is the Quality Payment Program, which creates two pathways that over the next year will let clinicians pick their own pace in the transition from a fee-for-service to payment models that reward quality over volume.
Payment Path 1: APM
The first path, called the Alternative Payment Models (APM), begins in 2019 and gives clinicians the opportunity to make more money if they're willing to take more financial risks for performance, use electronic medical records, and report quality measures to CMS.
In the first year, APM also provides a flexible performance period, so that clinicians can dive in immediately. Those who need more time can prepare for participation later in the year.
Clinicians who receive 25% of Medicare covered professional services, or 20% of Medicare patients through a fast-tracked Advanced APM in 2017 can earn a 5% Medicare incentive payment in 2019. Slavitt said that about 100,000 clinicians are expected to try this more aggressive payment model, and the hope is that more clinicians will join in the coming years as the program evolves.
Payment Path 2: MIPS
As many as 500,000 clinicians are expected to travel the second, more gradual path, called the Merit-based Incentive Payment System (MIPS). The financial incentives for accountability and the use of electronic medical records, are not as generous, but the risk is not as great. However, physicians who don't submit any data to Medicare in 2017 risk a "negative 4% payment adjustment."
Slavitt said MIPS is designed to allow physicians "to focus on patients not paperwork. We've made major steps which will continue over the coming year, but cutting the number of measures in half and simplifying how the program works."
Medicare is expected to pay about $1 billion in bonuses for high-quality care to clinicians in both Advanced APMs and MIPS in 2017, in addition to a positive payment adjustment of .5% under MACRA.
CMS estimates that 380,000 clinicians will be exempted from the new payment models because of their low volume of Medicare patients and billing.
To broaden participation to include small practices and specialties, CMS in 2018 will roll out an Accountable Care Organization Track 1+ model that provides more flexibility for clinicians. CMS is also considering reopening some existing Advanced Alternative Payment Models for application to allow more clinicians to join these types of initiatives. Slavitt said about 25% of eligible clinicians will be a part of the second path of Advanced APMs by 2018.
MACRA also provides $20 million each year for five years to train clinicians in small practices of 15 clinicians or fewer and those working in underserved areas. Beginning December 2016, local organizations will offer free, on-the-ground, specialized help to small practices using this funding.
CMS has also launched a Quality Payment Program website to explain the program and help clinicians identify the measures most meaningful to their practice or specialty.
In a conference call with reporters, Slavitt stressed that MACRA was very much a work in progress that would evolve with the practice of medicine, and with new medical technologies.
"The bottom line is we are trying to get doctors back to what they do best, care for patients, through a lot of simplification and support," Slavitt said. "We view these coming years as the first steps into a program that will continue to improve, not an attempt to create a perfect system."
When weighted for enrollment, more than 68% of enrollees in plans with prescription drug benefits are in contracts with four or more stars, a three percentage point drop from 2016.
Nearly half of the nation's 364 Medicare Advantage plans with prescription drug benefits (MA-PD) earned four stars or higher in the Centers for Medicare & Medicaid Services five-star scoring scheme for 2017, CMS reported Thursday.
When weighted for enrollment, more than 68% of MA-PD enrollees are in contracts with four or more stars, a three percentage point drop from 2016. In addition, the number of active and rated contracts, and the percent of MA-PD enrollees weighted by enrollment in contracts with four or more stars in 2017, is approximately the same as in 2016.
When weighted by enrollment, more than 90% of MA-PD enrollees are in contracts with ratings of 3.5 or more stars, CMS said.
Sean Cavanaugh, deputy administrator and director of the Center for Medicare, said in a blog post this week that Medicare's prescription drug programs have improved significantly in the past decade. In 2009, for example, only 27% of enrollees were in plans with four stars or more.
"Plans that are rated higher deliver a higher level of care, such as improving the coordination of care, helping enrollees to manage diabetes or other chronic conditions more efficiently, screening for and preventing illnesses, or making sure people get much-needed prescription drugs," Cavanaugh said.
"A high rating also means that these plans give better customer service, with fewer complaints or long waits for care."
For the 55 Medicare Part D Prescription Drug Plans (PDPs) rated in 2017, 49% (27 contracts) received four or more stars. When weighted by enrollment, 41% of PDP enrollees are in contracts with four or more stars, which represents a nine percentage point increase from 2016, CMS said.
Two plans were slapped with a low-performing Icon:
Phoenix Health Plans, Inc., a subsidiary of Tenet Healthcare Corporation, with 13,777 enrollees
GHS Managed Health Care Plans, Inc., a subsidiary of Health Care Service Corporation, with 4,550 enrollees.
Both plans received summary ratings of 2.5 stars or less from 2015 through 2017, which means that their contracts with Medicare could be terminated in 2017 if they don't improve.
As in past years, non-profit plans continued to outperform for-profit plans in the 2017 Star Rankings for MA-PDs. Approximately 70% of non-profit plans received four or more stars, compared with only 39% of for-profit MA-PDs. And, just as in 2016, 63% of non-profit PDPs received four or more stars, compared with only 24% of for-profit PDPs.
As in prior years, the length of time that a particular plan had with Medicare Advantage was another key indicator of success. More than 56% of the MA-PD plans that earned four or more stars have been involved with the program for more than 10 years. None of the 59 MA-PD contracts with five years or fewer experience in Medicare Advantage earned five stars, while more than 47% of earned three or fewer stars. View full details.
Methodology
For the 2017 Star Ratings, CMS said outcomes and intermediate outcomes continue to be weighted three times as much as process measures, and patient experience and access measures are weighted 1.5 times as much as process measures.
For the 2017 Star Ratings, outcomes and intermediate outcomes are weighted three times as much as process measures, and patient experience and access measures are weighted 1.5 times as much as process measures. CMS assigns a weight of 1 to all new measures. The Part C and D quality improvement measures receive a weight of 5 to further reward contracts for care improvements provided to Medicare enrollees.
For the past eight years, Sevier County in East Tennessee has partnered with a federally qualified health center to provide remote access to basic acute- and primary-care services for more than 14,000 students in the county's public school system.
The promise of telemedicine is delivering now in East Tennessee.
For the past eight years, the public schools of Sevier County, located just east of Knoxville, have relied on Cherokee Health Systems to provide more than 11,000 acute and primary care episodes and screenings for the system's 14,000 students.
In the 2015–16 school year alone, there were 1,631 visits across 23 schools in Sevier County, the largest rural school district in the Volunteer State,
It's a program that measures its return on investment with metrics such as reduced absenteeism and improved access to care. Before the affiliation, it was not uncommon for as many as 20% of the students and educators at Sevier County schools to be stricken during flu season, forcing school-wide closures.
In the past five years, however, there have been no school closings in the county due to the flu, and program organizers at the federally qualified health clinic and the school system credit the partnership.
Deb Murph, RN, COO at Knoxville-based Cherokee Health Systems, says the main emphasis of the telemedicine program is to keep children in school by addressing health issues early and pre-emptively inside the school walls and eliminating travel time to clinicians' offices.
"If they were having to leave and get checked for an acute illness they would have to leave school and that usually means a half-day missed or more than that," Murph says. "The ideal was to place the services where the children are located and address their acute healthcare needs on the spot instead of having them leave."
Providing access to care inside the school also means that a parent or another relative in the more isolated areas of Sevier County (with a median family income of $40,000, about $4,000 below the state average) may not have to take time away from work to either bring a student to a clinician's office, or stay with them at home.
Tallying the Cost
Murph says the cost of the telemedicine visits are about 15% to 20% higher than an office visit, but that does not account for the saved travel time, avoided absenteeism on students and teachers, and time away from work for their parents.
Under the program, which requires parental consent, students are screened for acute and potentially contagious health issues such as strep throat and flu by a school district nurse, who decides if an uplinked telemedicine visit over a secure site for the students with a Cherokee Health nurse practitioner is needed for a more comprehensive exam.
The Cherokee Health nurse practitioner can provide real-time diagnoses and treatment plans, or refer students for more complex care, all of which is coordinated with the school nurse, the students and their families.
In addition, the telemedicine visits are used to monitor chronic conditions for some students, such as high blood pressure and diabetes, and to promote sound preventive medicine, and proper nutrition. As part of routine exams, students are often examined for lice, bed bugs, and other skin irritation issues during the tele-conferences.
When we talk about the potential of telemedicine to improve access to care for isolated patients in rural America; to provide pre-emptive primary care that addresses health issues early and before they become more problematic; and to engage patients in their own health, that is exactly what is happening in this relationship between Sevier County's public schools and Cherokee Health.
The results of a survey of physicians practices "can be seen as a referendum not just on the current state of quality measurements of physicians, but also of electronic medical records," says the lead study author.
This article was originally published on March 9, 2016.
Physician practices spend more than $15.4 billion each year reporting quality measures that nearly three out of four physicians believe do not reflect the best measures of quality, according to a study this week in Health Affairs.
Researchers from Weill Cornell Medical College and the Medical Group Management Association surveyed 394 physician practices from across the nation found that physicians and their staff averaged 15.1 hours per physician per week processing quality metrics, which is the equivalent of 785.2 hours per physician per year, at an average cost of $40,069 per physician per year.
The survey, funded in large part by The Physicians Foundation, found that physicians spent 2.6 hours per week dealing with quality measures, time that could have been used to provide care for an additional nine patients. The times spent processing data varied greatly depending upon the practice specialty.
Specialists spent considerably less time and money on reporting data when compared with primary care physicians. For example, primary care doctors averaged 3.9 hours per week dealing with quality measures, compared with 1.1 hours for orthopedists, with an average annual cost of $50,468 for PCPs, compared with $31,471 for orthopedists.
"To some extent our survey can be seen as a referendum not just on the current state of quality measurements of physicians, but also of electronic medical records," says study lead author Lawrence Casalino, MD, with the Department of Healthcare Policy and Research at Weill Cornell Medical College. "We are talking about substantial amounts of time—$40,000 per physician per year, almost three hours a week, and a lot more time from staff. That's not trivial."
Casalino spoke with HealthLeaders Media about the survey findings. The following is an edited transcript.
HLM: Why did you do this study?
Casalino: I do a lot of research involving physicians. Having to deal with [quality measures] is one of their chief complaints. There have been a lot of anecdotes, but not much evidence over the years about how much time this is really taking from them. We thought we would take a look at that.
HLM: What are physicians telling you?
Casalino: We had a free text area in the survey where anyone could write what they wanted. Here's one person: 'You get so focused on making sure that you are clicking the right fields in the (electronic medical record) that you lose touch and connection with the patients. It is very sad what medicine has come to.' That's a family practice physician. An orthopedic surgeon wrote: 'The current system for measuring 'quality' is simply a reporting mechanism for documenting check boxes, not really an indication of a person's health.'
HLM: Your survey found that only one-in-four physicians believe that the quality measures moderately or strongly represent quality of care. Please explain that disconnect.
Casalino: The physicians' view is that some of the quality measures record things that are real, but maybe not as important as things that aren't measured. It's like looking for the keys under the lamppost because that's where the light is better. For example, diagnosis, how well a physician does diagnosis is not measured by any quality measure, but that may be the most important single thing a physician does.
Physicians understand that and they respect other physicians who are good diagnosticians. They don't necessarily respect other physicians who remember to check all the right boxes in the EMR.
I don't mean to imply that these quality measures are useless. Diabetics should get annual retinal exams. They should get A1Cs checked regularly. Women should get mammograms. Those things are measured by quality.
But the general physician perception is that only 27% of practices thought the measures were moderately or highly representative of their quality of care. The percentage that actually used the measures to improve quality in their practice was similar.
In the long run, the idea of using systematic processes to improve the health of your entire population of patients in your practice is the right idea. Simply doing the best you can for whatever patient is in front of you while they are in front of you isn't enough anymore. But from the individual physician's point of view they see it as more hassles interfering with their ability to spend time with their patients and an unfunded mandate.
HLM: How do you strike a balance between reporting quality measures and reducing hassles for physician practices?
Casalino: We need better measures and there is a lot of work going on in that area. We need more measures for specialists, because right now the burden is very heavy on the primary care physicians. The measures for specific specialties, there are very few of them.
It'd be nice if these measures evolve so that they better measure quality. Some of the things that might count, such as avoidable readmissions, you can't really measure that at the level of an individual physician.
The numbers of patients aren't large enough to get statistically reliable results. The more meaningful the measure is, the harder it is to do for all but the very largest and really large organizations. That is a real problem. Therefore, the measures tend to be things that you can measure and get statistical reliability. So the measure isn't 5% one year and 80% the next year and 30% the next year for the same physician, which is what can happen if you only have measures for seven patients.
That is a particularly big problem because the [Sustainable Growth Rate] fix mandates value-based payments going down to the level of the individual physician. [The Centers for Medicare & Medicaid Services] is grappling right now with the Congressional mandate to do that, and how they are going to carry that out.
The two biggest things that would help are first of all, standardization of the measures. We didn't go into too much detail in the study, but it just drives practices crazy when you have lots and lots of different measures for diabetes that are almost the same, but not quite coming from different health plans. There is no excuse for that. It just kind of happened, and once it happened there is a cost for everyone to make a change, particularly payers.
The Core Quality Measures Collaborative goal of standardizing measures would be a big help. The other thing that would be a big help is that if EMR are better designed so that quality data could be either sucked out of them by external entities, or easily generated by the practices themselves and easily sent to the external entity.
The more that things can be measured without anyone having to do extra work, the better this will be. But we are a long way from that right now.
HLM: How do you see this playing out over the next five or 10 years?
Casalino: It's hard to predict a timeframe, but eventually we will get to a place where the measures are fairly standardized. And the measures ought to keep getting better and more meaningful, and where it is possible, to get them out of the EMR when it's possible. That is the direction we're moving. The frustration is that there hasn't been a lot of rapid progress with EMRs and measures not being standardized.
In the meantime, if you wanted to dramatize it, a whole generation of physicians is being sacrificed. It's great to measure things. It's great to have EMRs. The reorganization of the healthcare system is by and large a good thing. But for the hundreds of thousands of physicians who have to live through it this is very tough.
For them, it's all burden and no benefit as far as they can see. It's a lot of work that they don't get rewarded for, and they're not convinced that it is making care better for their patients. It's been that way for a while, and it doesn't look like it is going to change soon.
The TN-based not-for-profit health system more than doubled its size this week with the acquisition of four hospitals in Mississippi and Florida.
Curae Health, Inc.CEO and President Steve Clapp spoke with HealthLeaders Media this week about the acquisition of four hospitals, what it will mean for the not-for-profit hospital chain, and the communities that these hospital serve.
Curae executives believe these small community hospitals will benefit from an affiliation with a smaller company that specializes in operating in rural settings.
The following is a lightly edited transcript.
HLM: These acquisitions will more than double the size of Curae. What is prompting this?
Clapp: When we formed Curae Health in 2014, the intent was to help identify and work with small rural hospitals such as this, and that has been the opportunity that was presented to us.
We've looked at nearly 50 hospitals over the past year, which illustrates the challenges and the desire for hospitals to align with larger institutions. With us being a nonprofit, rural-focused-only company, that has created a lot of interest.
HLM: Do these hospitals make money?
Clapp: They are profitable facilities, but it is probably CHS's place to comment on that.
HLM: How do you make this work financially?
Clapp: As a non-profit organization, we are not paying corporate federal income tax, so we get some relief there. We are able to participate in the 340B Drug Pricing Program as long as we meet the criteria.
These are cost-reduction strategies that are not available to the for-profit sector, so we are able to lower our operating expenses below what for-profit organization can realize.
The second strategy has been focusing on the revenue opportunities and the volume retention inside the community. Our company is purely focused on what services we can provide and patients we can retain in our communities.
When they leave the community for tertiary level services, we don't necessarily concern ourselves with where they go. We are trying to move to what probably and more properly could stay in the community. We are trying to develop that service and expand the outpatient side so we can reduce the outmigration.
The third thing is, we are a smaller company, so we can provide lower overhead costs as well.
HLM: Do you have economies of scale, or will these hospitals be independent of one another?
Clapp: We will be able to realize some economies of scale. We've already got an executive team, so you're not adding to the C-suite leadership. Now, it's a matter of adding staffing and management position, but we aren't going to have add a whole lot of higher ups.
HLM: Changing these hospitals to nonprofit means a loss of tax revenues for these communities. How have they responded?
Clapp: We are talking with them. There is a potential loss of some of that revenue, but some of the property will continue to pay property taxes, for instance on the medical office building. We also hope to add jobs back in, so there is a larger employee base in the community as we build up the complement of services.
We hope to offset the potential tax loss with an increase number of jobs in the local community, as well as allowing patients to stay home for more services.
If you look at the number of rural hospitals that have closed across the country, a lot of people don't want to be in that boat.
So while there is a chance that it could affect part of the property taxes, we are trying to position these things so we can keep the hospitals open longer for the community benefit. These hospitals are usually the largest employer in a community. They pay the highest wages in the market, and they are a vital piece to recruit industry in a community.
HLM: What changes will the people in these communities see at these four hospitals in the months ahead?
Clapp: Being a nonprofit, we have a responsibility to be good stewards of the assets. Part of our model is we keep the local boards in place. They will continue to have the local authority for oversight of medical staff, budget approval, credentialing, and strategic planning approval.
Our model is very integrated with the local medical staff, the local boards, to help us develop the direction for the hospital that is needed in that community.
I see it as a community partnership approach. This is the business that we are responsible for taking care of, and it requires all of our input. We're hoping that it is a more open and participatory process as we go through it.
HLM: Where does Curae get its funding?
Clapp: We were able to acquire the original hospitals from LifePoint through bank loans. We were able to refinance some debt at the end of last year to add some capital to acquire services and equipment for these hospitals.
We are working with our bank partners to grow and add the capital and financial resources we need. We also have used a real estate investment trust to help us with financing, to raise capital as part of our strategy.
HLM: What is the value of the CHS acquisitions?
Clapp: I have agreed with CHS that that is their area to comment on.
HLM: What has to happen for Curae to succeed?
Clapp: What we add to the equation is a working and living knowledge that says 'we understand small towns and the challenges they face. We can relate.' If you're not from a small town, sometimes it is hard to relate. I know that sounds odd, but from my perspective it's a big deal, because I know what it is like to live in a town of 8,000 because I have all my life.
The second thing is we have to be a disciplined operator of hospitals. We have to have a successful team that has the experience of managing multiple facilities. We are identifying the best processes to put in place. We are trying to build that management team that has the broader experience to grow this company and manage it properly.
Third, we have to perform. We have to execute on the strategies we have that we have developed with the medical staff, the management team and the local communities.
HLM: What will be the common traits of Curae hospitals?
Clapp: First and foremost, we are a rural hospital operator. We will not be in metropolitan markets. The second thing is we want to be a well-run hospital company. Our model is focused on retention of patients and recapturing the patients back into the community and building the confidence of those individuals who are seeking services outside.
To do that we have to have a good plan and know what we are and what we are not. We won't most likely ever be doing open-heart or neurosurgery in our hospitals.
But what we should be doing is outpatient cardiac, outpatient oncology, and the predominant primary care hospital services; general surgery, GI, inpatient medicine, swing beds, general psych, medical detox, etc. There is going to be a certain core set of services that are going to be developed and provided in our hospitals that maybe tertiary doesn't focus on.
You talk about a culture around a hospital company; we want to be extremely good corporate citizens and community stewards of the assets.
As a nonprofit we have an obligation to our communities and to our board that says we are a good community partner. Whether that is working with students who may want to come in, or fundraising activities, we also have a role as a community citizen.
HLM: Do you anticipate affiliations with larger health systems?
Clapp: Yes. As we go into these markets we look for the opportunities for clinical affiliations that would benefit our hospitals and the communities they serve.
HLM: How big can Curae get?
Clapp: Curae is going to have a southeastern footprint. We have had opportunities to look at hospitals outside of the region, but we realized that here's where you get the efficiencies of operations and management and the ability of sharing resources, and that would include medical staff between two hospitals that are close to each other.
But, we have some more hospitals that we are looking at. So, there is an opportunity for us to have more hospitals within the network.
A federal prosecutor blasts Tenet for 'taking advantage of vulnerable pregnant women in clear violation of the law.' A kickback and bribe scheme allegedly helped the hospital chain obtain more than $145 million in Medicaid and Medicare funds based on illegal patient referrals.
Tenet Healthcare Corporation and two subsidiaries will pay more than $513 million to resolve criminal charges and civil whistleblower suits for a kickback scheme that illegally steered more than 20,000 undocumented, pregnant Medicaid recipients to Tenet Atlanta-area hospitals, the Department of Justice said Monday.
Two hospitals that were managed under subsidiary Tenet HealthSystem Medical Inc. will plead guilty to conspiracy to defraud Medicare and Medicaid, and to paying kickbacks and bribes in violation of the Anti-Kickback Statute as part of the investigation. The deal was announced in August and finalized this week, but awaits a judge's approval in U.S. District Court in Atlanta.
In criminal and civil complaints, federal and Georgia state prosecutors alleged that in 2013 and 2014 THSM Inc.'s Atlanta Medical Center Inc., North Fulton Medical Center Inc., Spalding Regional Medical Center Inc. and Hilton Head Hospital paid bribes and kickbacks to the operators of Clinica de la Mama prenatal care clinics serving primarily undocumented Hispanic women in return for the referral of those patients for labor and delivery medical services at Tenet hospitals.
These kickbacks and bribes allegedly helped Tenet obtain more than $145 million in Medicaid and Medicare funds based on the resulting patient referrals, DOJ said.
Prosecutors said expectant mothers were told at the clinics that Medicaid would cover the costs associated with their childbirth and the care of their newborn only if they delivered at Tenet hospitals.
In some cases, the women were told that they were required to deliver at Tenet hospitals, leaving them with the false belief that they could not pick the hospital of their choice. As a result, prosecutors said many expectant mothers traveled long distances from their homes to deliver at Tenet hospitals, putting their health and safety and that of their newborn babies at risk.
Prosecutor: 'Tenet Cheated' Medicaid
"Our Medicaid system is premised on a patient's ability to make an informed choice about where to seek care without undue interference from those seeking to make a profit," John Horn, U.S. Attorney of the Northern District of Georgia, said in prepared remarks.
"Tenet cheated the Medicaid system by paying bribes and kickbacks to a pre-natal clinic to unlawfully refer over 20,000 Medicaid patients to the hospitals," Horn said. "In so doing, they exploited some of the most vulnerable members of our community and took advantage of a payment system designed to ensure that underprivileged patients have choices in receiving care."
In the civil settlement, Tenet, the nation's third-largest for-profit hospital chain, will pay $368 million to the federal government, the state of Georgia and the state of South Carolina to resolve claims in a whistleblower lawsuit filed by Ralph D. Williams.
The federal share of the civil settlement is $244 million; Georgia will recover $122.8 million; South Carolina gets $892,125; and Williams gets $84.4 million. Tenet will also retain an independent compliance monitor for at least three years to address and reduce the risk of any recurrence of violations of the anti-kickback statutes by any of its hospitals, DOJ said.
Other Tenet Actions
Tenet Chairman and CEO Trevor Fetter said Monday his for-profit hospital chain's "conduct in this matter was unacceptable and failed to live up to our high expectations for integrity."
"The relationships between the four hospitals and Clinica de la Mama violated the explicit requirements of our compliance program and were inconsistent with the strong culture of compliance we've worked hard to establish at Tenet," Fetter said in prepared remarks.
"We take seriously our responsibility to operate our business in accordance with the highest ethical standards, every day and in every interaction."
The criminal complaint against Tenet notes that the executives who worked at Atlanta Medical Center, and North Fulton Medical Center "concealed material facts" of the scheme from Tenet lawyers and outside counsel "because they knew that the agreements would not be approved if the true nature of the Clinica arrangements were disclosed to lawyers." Tenet said that the executives involved in the scheme no longer work for the hospital chain.
This week's settlement marks the latest brush with the law for Tenet, which in 2012 was fined $42.7 million after the company self-disclosed overbilling Medicare for services provided by inpatient rehabilitation facilities. In 2006, Tenet agreed to pay more than $900 million to settle an investigation of alleged unlawful billing practices, primarily through improper "upcoding," and "outlier" payments for inflated charges.
Atlanta Medical Center, North Fulton Medical Center, were sold to WellStar on April 1.
