Pioneer Community Hospital is the third to close this year in Mississippi, a Medicaid non-expansion state. It's upsetting to learn about these closings because they don't just provide necessary care, but also vital jobs, and a sense of community in the rural areas they serve.
I hadn't planned on writing back-to-back columns on rural hospital closings, but these events are becoming far too common. Last week it was Bowie, TX. This week, it's Mississippi. The situations aren't quite the same, but the endings are all too familiar.
Mark Norman
Pioneer Community Hospital of Newton, MS, said it has lost its critical access status and will close on Dec. 1. The Centers for Medicare & Medicaid Services last year rescinded Pioneer's critical-access status, effective Dec. 1, 2015, after determining that the hospital did not meet the 35-mile distance requirement from other hospitals.
Pioneer CEO Mark Norman did not return calls for comment, but he issued a statement explaining that the hospital could not survive without the cost-plus-1% enhanced payments that come with critical access status.
"[In] September of 2010, USDA allowed Pioneer Community Hospital of Newton to purchase the hospital from the previous owner, with the CAH designation being an essential requirement for the transfer to occur," Norman said. "The loss of the CAH designation makes the operation of the hospital no longer financially feasible. This revised interpretation of the mileage regulation, 1820(c)(2)(B)(i)(I) and (II), is a complete reversal of CMS's original interpretation that allowed the facility to remain financially operational for the past five years."
Pioneer's emergency department will close on Dec. 1, and the hospital will accept no more admissions after Dec. 1. "Patients already admitted to the facility will be discharged upon the completion of their care and treatment," Norman said.
Pioneer plans to maintain a clinic in Newton with extended operating hours, but Norman said "residents of Newton County in need of future emergency medical care will need to seek the attention at another hospital in Forest, Meridian or Union."
Red Ink
Even with critical access status, Pioneer was running in the red. American Hospital Directory data for 2014 shows that the hospital generated $32 million in total revenues, but lost $580,000.
It's upsetting to read about these rural hospital closings because most of us understand what critical roles they play, not just in providing care, but also for fostering a sense of community and generating and facilitating local economic development.
A study out this month by the Center for Mississippi Health Policy identified nine hospitals in the state that were in danger of closing and estimated that those hospitals represented more than 2,600 jobs, generated more than $8.6 million in state and local taxes, and close to $290 million in economic activity. Ironically, Pioneer was not on that endangered hospitals list because the Center used 2012 data for its analysis.
Pioneer's closure means the money generated by scores of relatively well-paying healthcare jobs will no longer circulate throughout the tiny community, located 64 miles due east of Jackson.
"We really don't know how this is going to play out, but there were about 130 jobs that were full-time and part-time," Newton Mayor David Carr told me. "We're a small town, about 3,400… most of [the 130 of] them full time and a lot of them paying pretty good for small town Mississippi."
"Also, it was a part of the community as far as events and things like that," Carr says. "They sponsored health fairs, a lot of stuff like that that you usually don't think about. They had a nice cafeteria. I'm a member of the Lions Club and the Rotary Club. We had our meetings there every week. That's a minor thing, but it's all part of it when you add it all up."
Pioneer is the third hospital to close this year in Mississippi, a Medicaid non-expansion state. Kilmichael Hospital shuttered converted to a health clinic. Natchez Community Hospital closed this month as part of a consolidation with Merit Health Natchez.
In the Crosshairs
Whenever I hear about these rural hospitals closing I am reminded of a conversation I had in 2012 with James E. Orlikoff, then a senior consultant at the Center for Healthcare Governance. He warned that critical access hospitals were in the crosshairs as federal regulators looked to trim costs.
"Anytime you face an economic crunch when you have carve-out artificial protections, they can't last," Orlikoff told me three years ago. "Is it evitable? Yes. 'When' and 'how' are the questions… I tell my critical access hospitals to strategically plan on three years to be off the cost-plus model."
Orlikoff said then that the critical access funding cuts will come sequentially, rather than all at once. "Many critical access hospitals don't fit within the rules, so first they will be the first to lose their protected reimbursements. Then the cuts will migrate to all critical access hospitals, especially as other markets can show the efficiencies that can be taken."
Orlikoff warned in 2012 that many critical access hospital leaders were in denial.
"Many of the leaders here are so embedded in that protective philosophy, that they don't know what their finances are. They don't know how much inefficiency they have in the system. So when the time comes, they are going to be paralyzed," Orlikoff explains. "If they start thinking about it now, maybe they can get ahead of the curve."
I tried to contact Orlikoff this Thanksgiving Week to update his prescient comments. He didn't return my call. Then I thought why bother? It's clear that what he told me in 2012 applies now.
The not-for-profit healthcare sector is not immune to cyber security threats, particularly as they relate to patient records and the disruption of medical technology, Moody's Investors Service says. And larger healthcare systems are more vulnerable than stand-alone hospitals.
The dramatic rise in IT system security breaches across all sectors of the economy – from banking to government and including healthcare, has prompted Moody's Investors Service to include "cyber risk" as a "stress-testing scenario" when assessing credit scores.
"A cyber threat's severity and duration determine how we reflect the risk in our analysis and ratings," the bond rating agency said in a report this week. "To be clear, we do not explicitly incorporate the risk of cyber attacks into our credit analysis as a principal ratings driver. But across all sectors, our fundamental credit analysis incorporates numerous stress-testing scenarios, and a cyber event—like other event risks—could be the trigger for those stress scenarios. A successful cyber event's severity and duration will be key to determining any credit impact."
The not-for-profit healthcare sector is not immune to the threat or its consequences, particularly as it relates to patient records and the disruption of medical technology, Moody's says.
"An information breach would likely not materially disrupt services and the financial impact would be limited," Moody's says. "A breach in medical technology security would present more immediate risk and impair the hospital's reputation, volumes, and financial performance. Whether or not such a cyber-event would be covered by a hospital's medical malpractice insurance is untested."
Lisa Goldstein, associate managing director, public finance group at Moody's, compares preparing for cyber risks to preparing for Medicare or Medicaid cuts. "We look at it through the lens of any hospital's next year's operating and capital budget; what the expenditures are going to be; what the pressures on operations may be," Goldstein says.
"When it comes specifically to cyber security, what component of your annual expense budget does that represent? Are you even talking about it? Are you pretty far down the road in trying to contain this risk, or just starting?"
While any hospital could be the target of a cyber attack, Moody's says larger healthcare systems are more exposed than stand-alone hospitals. "This is largely due to the highly centralized IT function at many of these regional and national systems that have domain over more patient records and medical technology than a stand-alone hospital. As a mitigant, however, many of the large systems have access to external liquidity, such as lines of credit, in addition to their own cash reserves."
Goldstein says the response to cyber risk has varied greatly from hospital to hospital. "We are not hearing from all of our rated hospitals and health systems that this is a key concern to them. Some are talking about it. Right now most are not," she says.
"That speaks to where they are on their IT cycle spectrum. There are hospitals and health systems that 10 years ago went through their major IT conversion and are in a better position now to focus on cyber security. Then there are others on the side of the fence who are just gearing up in 2016 for their IT electronic medical records. Cyber security is way out there."
Overall, Moody's said the not-for-profit healthcare sector maintains a higher risk awareness of cyber security than other sectors of the economy, which is a credit positive.
"Most hospitals have completed or are in the process of installing new patient information systems which likely have better safeguarding features than prior technology," Moody's said. "We estimate that one-quarter to one-third of a hospital's annual capital budget is for information technology needs. In step with the capital budget, a growing portion of the operating budget is related to IT upgrades, warranties, security, and training."
Goldstein says hospitals also are aware of the increased need for strong internal protocols as more information is increasingly shared with external parties, such as vendors, patients, payers, and physicians.
"You have a lot more fingers in the pot with exchanges accessing data, traditional insurers, and the government systems are now linked electronically," Goldstein says. "Now the patient can access their own data so they have their fingers in the pot as well."
Goldstein says it appears that hospitals and health systems that make cyber security a standing agenda item at board meetings generally have a stronger grasp of the problem and are often farther along the road toward protecting data.
In other news: Two western New York state hospitals are affiliating, and in Oregon, publicly owned and financed OHSU says it will convert a $50 million debt from Moda Health Plan Inc. into a 25% equity stake in the privately owned, financially troubled insurer.
Providence, RI-based Care New England Health System and Southcoast Health System, Inc., based in Fall River, MA are discussing a "strategic partnership" that, if consummated, would create one of the largest not-for-profit health systems in New England.
"We believe the complementary services of Southcoast and the geographic span of their service area will enable us to advance the high quality, high value continuum of care we have been building," CNE President/CEO Dennis D. Keefe said in a joint media release.
"We already see the common ties to community and an unwavering commitment to mission and values both our organizations share, and we look forward to further study of the partnership potentials that could come to fruition in a new vision for healthcare delivery for our region."
CNE's four hospitals saw about 228,000 inpatient days and generated more than $1 billion in revenues in 2014, and finished the year $8.5 million in the black. The slightly smaller four-hospital Southcoast Health recorded 178,000 inpatient days and generated about $968 million with $5 million in surplus.
A unified healthcare system would include eight hospitals, a network of ambulatory sites, two accountable care organizations, more than 1,700 aligned physicians and providers, and a continuation of the academic relationship with The Warren Alpert Medical School of Brown University.
"Southcoast has long been focused on providing the very best care within our region of Southeastern Massachusetts and Rhode Island, finding ways to remain highly competitive, cost effective, and at the forefront of technological and strategic change," Southcoast President and CEO Keith A. Hovan said. "We believe that Southcoast can be a strong and complementary partner for Care New England, and that together our respective organizations could form the foundation of a highly competitive, community-based and value-driven integrated health care system throughout southern New England."
Care New England was founded in 1996, and today it is the parent organization of Butler Hospital, Kent Hospital, Memorial Hospital of Rhode Island, Women & Infants Hospital of Rhode Island, the VNA of Care New England, The Providence Center, CNE Wellness Center and Integra, a certified ACO created in collaboration with the Rhode Island Primary Care Physicians Corporation. Care New England includes 970 licensed beds and 216 infant bassinets.
Southcoast Health System includes Charlton Memorial Hospital in Fall River, St. Luke's Hospital in New Bedford and Tobey Hospital in Wareham; and Southcoast Behavioral Health in Dartmouth, a joint venture hospital with Acadia Healthcare, an international leader in psychiatric and addiction care.
Oregon Health to Buy 25% Stake in Moda Health Plan
Publicly owned and financed Oregon Health & Science University said it will convert a $50 million debt from Moda Health Plan Inc. into a 25% equity stake in the privately owned, financially troubled insurer.
Last year, OHSU said invested $50 million in Moda to promote vertical integration of its health care system. The investment was in the form of a 4% surplus note—a common financial instrument in the insurance industry specifically designed to provide capital. The note matures in 2024. Under a letter of intent, OHSU may convert the surplus note into an equity position in 2016. Any final agreement would require approval by the boards of directors of both OHSU and Moda, and regulatory approval from the Oregon Insurance Division.
Moda borrowed the money from OHSU last December, but suffered a large financial hit this year when the government reneged on the risk corridor program created under the Affordable Care Act. Moda was anticipating nearly $90 million from the payments, but received only $11 million.
In October, the insurer was placed "under review with negative implications" by the insurance rating firm A.M. Best Co.
Two NY Hospitals Join UR Medicine
Jones Memorial Hospital, a 70-bed hospital in Wellsville, NY, and Noyes Health, a 67-bed hospital in Dansville, NY will join UR Medicine now that affiliations have been unanimously approved by each hospital's board. With the affiliations, UR Medicine's network now includes five hospitals in western New York state, including Strong Memorial, Highland Hospital, and Thompson Health.
UR Medicine is also working with St. James Mercy Hospital in Hornell to preserve its inpatient services and to obtain state funding to build a new outpatient services facility that would also provide 15 inpatient beds for complex patients.
Jones, Noyes, and St. James Mercy hospitals already collaborate to bring UR Medicine oncologists, cardiologists, neurosurgeons and other specialists to all three communities. Two weeks ago, construction began on the new Ann and Carl Myers Cancer Center in Dansville, part of the Wilmot Cancer Institute that will provide oncology services for the region.
"The changes taking place in America's healthcare system have significant implications for rural hospitals and the communities they serve," University of Rochester President Joel Seligman said in prepared remarks. "The regional approach of UR Medicine ensures that these hospitals remain the cornerstone of local healthcare and also an economic anchor for their communities."
Financial terms were not disclosed, but when the deal is finalized Avera will become the second-largest health insurance company in South Dakota, serving nearly 200,000 people. However, Avera will operate Avera Health plans and DAKOTACARE as two separate organizations.
DAKOTACARE's provider network includes 100% of South Dakota's hospitals and more than 98% of the state's physicians and pharmacies.
"Avera is committed to maintaining the DAKOTACARE brand, the broad network of providers, and the positive relationships with the more than 400 insurance agents across the state," said Rob Bates, senior vice president of Avera Health.
With the acquisition, Avera says it can now offer consumers a choice provider network through DAKOTACARE and a value network plan through Avera Health Plans.
Avera has more than 16,000 employees and physicians in more than 330 locations and 100 communities in a five-state region.
Northwestern's KishHealth Acquisition OK'd by IL
The Illinois Health Facilities and Services Review Board has unanimously approved Northwestern Medicine's previously announced plan to acquire DeKalb-based KishHealth System.
With the regulatory approval in place, Northwestern Medicine will grow to more than 90 locations, including six hospitals, with a combined workforce of 26,500 employees and physicians in eight Illinois counties. Kevin Poorten, president and CEO of KishHealth, will remain in that role after it becomes part of Northwestern Medicine.
With regulatory approval in place, Northwestern Medicine said it anticipates KishHealth joining the health system before the end of this year.
Newly Merged VHA, UHC to Be Called 'Vizient, Inc.'
VHA Inc. and UHC merged this Aprilto create the nation's largest member-owned healthcare company, and on Jan. 1, 2016 the new company will be known as Vizient, Inc.
"The new name represents the full capabilities of the combined organization, from supply chain expertise to forward-thinking insights into cost and quality performance," the Irving, TX-based company said in a media release. "The comprehensive products, services and expertise of Vizient will help members significantly improve their financial, clinical, and operational performance and achieve greater value for patients and communities."
The merged company represents more than $50 billion in annual purchasing volume and serves more than 5,200 health system members and affiliates and 118,000 non-acute healthcare customers, from independent, community-based healthcare organizations to large, integrated systems and academic medical centers.
Unlike many rural hospital closures that occur despite public outcry and angst, the people of Bowie, Texas had the opportunity to save their hospital. They literally elected not to.
Nearly 50 years after it opened, the doors have finally closed for good at Bowie Memorial Hospital, a 51-bed independent community hospital serving Bowie, TX.
Employees gathered Monday morning for a brief closing ceremony that included lowering and folding the flags at the entranceway, goodbye hugs and handshakes for colleagues, and locking the doors to the emergency room that since 1966 had provided this community of about 5,100 souls 24/7/365 access to care. A handful of administrators will spend the next two weeks in the empty building clearing up paperwork before the lights flicker off one last time.
Larry Stack
The closing means that many of the hospital's 138 employees will have to find jobs elsewhere, and many are expected to leave this town located midway between Fort Worth and Wichita Falls. Other town residents who require easier access to care are also likely to uproot to leave.
The Bowie residents who stay and require hospital or emergency care must now travel either 19 miles northeast to Nocona General Hospital or 28 miles southeast to Wise Regional Health System. Hospital closings have become far too common in non-urban America these days. Researchers at the University of North Carolina report that at least 59 rural hospitals have closed since 2010, almost all under financial duress. Bowie Memorial reported that it had lost $900,000 last year.
Unlike many of these rural hospital closures that occur despite public outcry and angst, however, the people of Bowie had the opportunity to save their hospital.
They literally elected not to.
A Nov. 3 referendum to create a hospital taxing district that would have raised property taxes by 17 cents (about $150 a year on a $100,000 house) was defeated by 53% of the voters.
Local media reported that Bowie residents who opposed the tax hike feared that there were no guarantees that the hospital wouldn't come back in future years with demands for more.
Bowie Mayor Larry Stack says he remains "totally baffled" that town residents did not support the tax increase, even though town and Bowie Hospital Authority officials made it clear that the hospital would shutter without the new revenue stream.
"We were one of two rural hospitals in Texas that did not receive tax support," Stack says. "Really, it's pretty amazing that the hospital was able to remain operational for as long as it did. It's hard to get that point across to people about how the payment system works, especially when you have a high Medicare census that's nearing 80%."
Mayor Stack spoke with HealthLeaders Media about the closing and its effect on the community. The following is an edited transcript.
HLM: What do you do now? Stack: That's a good question! We have only one choice currently and that is to transport our citizens to Nonona or Decatur. Our city medical director has told us to continue to use the same medical directives that he had provided previously, which is to take the patients to the closest adequate facility.
Now as far as what we do with the hospital, the hospital board is working on that. I don't know what is possible at this time. Our hospital is needed here because of the large amount of Medicare patients and uncompensated care we have.
The long-term fix was tax support to generate the revenue to keep the hospital viable, and of course that did not happen. My suspicion is that an urgent care clinic at some point will come to Bowie, but I don't know how that business model will fit in here. It's my understanding that urgent care clinics' emergency rooms are not recognized by Medicare. Only emergency rooms associated with hospitals are recognized by Medicare.
And when the hospital was open, the Medicare census was nearing 80%. I don't see how that would be viable for an urgent care center here. I know they do that in urban areas where the population is younger and you have a higher percentage of private insurance."
HLM: How did Bowie Memorial find itself in financial straits? Stack: I served on the hospital board for 16 years until 1996. This hospital opened in '66. It was chartered as a non-taxing entity. So the hospital always operated close to the vest and kept costs real conservative. We cash-funded our depreciation. It was very financially successful.
In 1993 when the government passed the Medicare Reform Act, the board knew at some point it was going to greatly affect the revenue of the hospital because we didn't have any room to cut costs. In '94 we told our administrator to set up a hospital taxing district. We weren't going to have a vote right then, but we wanted it in place because at that time you had to go to the state legislature to get that set up and our legislature meets every other year.
We didn't know when we needed to have that vote but we wanted it taken care of. The mistake we made then was not to have a referendum right then for a very small tax increase.
We decided to come up with all other ways to generate revenues. We started a physical therapy program. We started a home healthcare program. We started durable medical equipment rental. We built an assisted living center that was very profitable that offset our loss of revenues and it all worked pretty good. But as time went on, the payments got less and less and the Medicare census grew. So, that was a problem.
HLM: Why did voters reject the tax increase? Stack: We had our first vote four years ago and it didn't pass. So the hospital really struggled to get to this point. In addition to all that stuff, our economy is heavily oil field related. Over the past six to nine months, there is one large employer here who had 600 people and now it's down to 300 and that was spread to a lot of other people who were doing oil field-related activities.
So, a lot of people didn't have jobs, or had their hours cut way back. It was hard for those people to support the tax increase because honestly, they didn't have the money.
And then the opposition bunch, which was basically citizens that lived outside the city limits, ran a hard campaign against it. A lot of the information they put out was not entirely accurate and the bunch here that was running the 'for' campaign tried to combat it as best they could.
But sometimes it's difficult to change people's minds. If you take all that into consideration, it's the perfect story type deal. But for the life of me, I cannot understand why people in a town this size of over 5,000 would not want to have a hospital. I don't know if people just thought it wouldn't close, but I am baffled. I am totally baffled.
HLM: How will local government respond to the closure? Stack: This will have to be paid back in some other way. There is no free lunch. One of the things we had done, if you are a citizen of Bowie proper and our ambulance picks you up to takes you to the city hospital and let's say that trip is $1,500 and your insurance only pays $500 we accept that as full and final payment. We don't hassle you for the difference. That is a benefit you get for paying your taxes. Or if you don't have insurance we do the same thing. We don't hassle you. We let it go.
Well, that costs us about $350,000 to $400,000 a year and you can kind of justify that by the fact that you are taking those patients to your hospital. That is going to go away. Now we cannot afford to create a deficit to take people to places further away. The city council is considering an ordinance change that says you have to pay your own tab when you go to the hospital, and we will file liens. That's a perfect example of what is going to happen.
Montague County only pays us $18,000 a year to provide ambulance service for the southern half of the county. Well, we are going to have to take a hard look at that. That doesn't even begin to cover the associated costs.
HLM: How do you think not having a hospital will affect Bowie's ability to recruit new businesses?
Stack: It's going to be difficult. Available medical care is one of the top things people look for. My first line of defense is to look at every possible avenue. I am writing letters to our state and federal elected officials to see if there are programs they can help us with and get this thing put back together as some sort of hospital of some size. I don't know at this point, but it is a definite negative.
Unfortunately most of those people who worked at the hospital with their specialties will not be able to find work here if they decide to stay in that same field, so we are going to lose population too. It's a gut punch.
HLM: Is there anything else you'd like to mention? Stack: Only that if anybody has any suggestions about what we might do I'd be more than happy to listen to them.
Despite some differences based on size, academic medical centers, community hospitals, and for-profit and not-for-profit hospitals have all seen quality improvements since 2002, says the head of The Joint Commission.
Nearly one-in-three hospitals that submitted quality and performance data to The Joint Commission earned a coveted spot on the accreditor's Top Performers on Key Quality Measures list.
"Achieving top performer status is not easy and for many hospitals it took years of hard work," Joint Commission President Mark R. Chassin, MD, said on a Tuesday conference call. "More than ever, hospitals are focusing on what counts. This represents real progress. We clearly have a long way to go on these and other measures of healthcare quality."
The Joint Commission's 2015 report used 49 accountability measures to determine how hospitals perform on evidence-based care processes for conditions such as heart attack, surgical care, inpatient psychiatric services, perinatal care, pneumonia and stroke.
The report will not be published in 2016, Chassin said. "For 2016 we've decided to take a one-year hiatus and assist our accredited hospitals in managing the journey and evolution of electronic clinical quality measures. In January the Joint Commission will launch Pioneer in Quality, a program focused on helping customers reach top performer status in the electronic clinical quality measures world."
Of the more than 3,300 hospitals that submitted data for the 2015 report, 1,043 hospitals (31.5%) made the Top Performer list, which required them to achieve a cumulative performance of 95% or above across all reported accountability measures.
Chassin cautions that while the Top Performer program identifies hospitals that provide superior performance on specific measures, it is not a blanket endorsement of all services provided at any particular hospital.
"The evidence is crystal clear that quality varies quite a lot within individual hospitals from one service to another and from one measure to another," he says. "That is why we are very careful to specify in this report exactly which measures resulted in each top performer achieving their recognition."
This year's report added accountability measures for tobacco treatment and substance use, and inpatient psychiatric services.
Chassin says academic medical centers, community hospitals, and for-profit and not-for-profit hospitals all are seeing quality improvements.
"There are remaining some differences between hospitals depending upon how large or small they are. But the main trend is that everyone has improved dramatically, especially if you go back to 2002," he says.
Chassin said he doesn't think the financial incentives imposed by CMS have played a huge role in improving quality.
"The time during which the most dramatic improvement in performance occurred (was) well before the financial penalties were put in place by CMS," he says. "The only financial penalty that was in place in this period was the penalty for not reporting any data at all. Specific penalties attached to specific measures came long after hospitals had achieved the vast majority of this improvement. And that temporal observation is consistent with a bunch of research that shows that financial penalties tied to specific measures didn't really add much to the improvement that had already taken place."
Instead, Chassin credits The Joint Commission with providing the platform that empowers and incentivizes hospitals to measure and monitor their quality markers.
Standardized Measures
"The principle driver is that The Joint Commission going back to 2002 established the first standardized set of information that hospitals could collect across the nation," he says. "Indeed, we required them to as a condition of accreditation to measure quality in a selective number of conditions, and that number has gone up over the years. We were the first organization to publicly report the results of those data collection on quality measures. [Centers for Medicare & Medicaid Services] followed shortly after, and for a number of years in the 2000s, The JC and CMS were nearly perfectly aligned in the definition of measures, in the public reporting of those measures, and the public reporting really drove a huge amount of improvement."
Since then, he says, a lot of other organizations have jumped on the hospital ratings bandwagon.
"Now we have lots and lots of organizations reporting on quality," he says. "Leapfrog, Health Grades, Medicare's measures derived from their billing data, which we don't believe are valid measures of quality. So there are a lot more sources of information. We believe these accountability measures are still the best, but that public reporting period in the early and mid-2000s was the major driver that got hospitals' attention and they learned how to improve on these measures."
How TJC Criteria Differ
Chassin says the Joint Commission has a strict set of criteria that distinguish its ratings from other hospital raters.
"For example, we will not use measures like CMS uses that are derived from data from hospital bills because they don't pass our criteria for accurately identifying complications, or some patient subgroups," he says.
"We also will not use outcome measures like CMS and Healthgrades and others use because they rely on billing data to do risk adjustment. Those billing data don't have any information on the severity of the condition which is one of the most important things you have to adjust for in comparing different patient populations."
"Another player out there likes to label hospitals with one letter grade. That's demonstrably misleading. Quality varies enormously within hospitals, from one service to another, and from one measure to another," he says. "It just flies in the face of decades of hospital research which shows that variability does not allow that kind of measure to be accurate."
"There is a lot of noise out there in the hospital quality measurement field," he says. "We encourage hospitals to tune out the noise and to focus on measures that are most important to their own patient populations. The most important quality improvement that hospitals can do is to understand what risks their patients are facing, what improvements are necessary for their patients, and to act on those incentives."
In other recent business developments, Henry Ford Health has signed a letter of intent to acquire Allegiance Health, Tenet Health is exiting the North Carolina market, and the FTC is delaying a hospital deal in West Virginia.
The American Medical Association is asking the federal government to block two proposed mega-mergers involving four major health insurance companies, deals that the physicians' association say would drastically reduce competition and increase healthcare costs for consumers.
James L. Madara, MD
AMA President James L. Madara, MD, said in a letter to Assistant Attorney General William Baer, with the Department of Justice's antitrust division, that the proposed acquisitions of Humana by Aetna and of Cigna by Anthem would create "significant concerns with respect to the impact on consumers in terms of health care access, quality, and affordability."
"The proposed mergers are occurring in markets where there has already been a near total collapse of competition," Madara said. "Under the U.S. Department of Justice/Federal Trade Commission merger guidelines, the proposed mergers are presumed to enhance market power in a vast number of commercial and Medicare Advantage markets. Because of persisting high barriers to entry in health insurance markets, the lost competition through these proposed mergers would likely be permanent and the acquired health insurer market power would be durable."
Aetna and Anthem issued statements challenging the AMA's assertions.
"We believe the combination of Aetna and Humana will improve the healthcare system and offer consumers more choices and greater access to higher quality, more affordable care," Aetna said. "Our proposed transaction is primarily about the Medicare marketplace, where there is robust competition and choice. We are confident that our transaction will receive a fair, thorough, and fact-based review from the Department of Justice and the states."
Anthem said the letter "merely reiterates the comments the AMA has made previously and does not reflect the actual facts regarding Anthem's acquisition of Cigna."
"Together, Anthem and Cigna, which have limited overlap in a highly competitive industry, will be in a better position to improve consumer choice and quality," Anthem said. "Additionally, we will deliver for consumers by operating more efficiently to reduce our own costs, while enhancing our ability to manage the cost drivers that negatively impact affordability for consumers.
Anthem argued that a combined Anthem/Cigna would accelerate the transition from volume- to value-based payments, and that the bigger company would have more leverage to negotiate lower rates from physicians and hospitals, which would be passed on to consumers.
"Consolidation among hospitals and physician groups is a real and growing concern for consumer affordability," Anthem said. "A recent analysis found that physician prices for groups acquired by hospital systems jumped by 14%, on average. A separate study showed that large, self-insured employers paid lower prices for care in markets where insurers had a better negotiating position."
Henry Ford Health to Acquire Allegiance Health
Jackson, MI-based Allegiance Health will be acquired by the Henry Ford Health System, a five-hospital system based in Detroit. The two health systems signed a letter of intent this month and if all regulatory hurdles are cleared the acquisition should be completed in early 2016.
Georgia Fojtasek
"Joining with Allegiance Health is an important strategic step for Henry Ford as we broaden our expertise and reach beyond southeast Michigan," Henry Ford president Wright Lassiter, III, said in prepared remarks. "We appreciate how important Allegiance is to the Jackson community, and how dedicated its staff and physicians are to the health of their neighbors. We look forward to working with them to expand and enhance the services they provide to Jackson County and the entire south central region."
Allegiance Health includes a 480-bed community-owned health system in Jackson, with a strong emphasis on community partnerships.
Allegiance Health President and CEO Georgia Fojtasek said that joining Henry Ford will allow for greater access to new technologies and enable clinicians from both systems to develop new approaches to patient care. It will also enable Allegiance Health to expand its services and build clinical capacity, as well as improve facilities and technology.
Under the deal, Allegiance Health leaders and community leaders will continue to represent local interests on the board of trustees and governance committees. Allegiance will adopt Henry Ford's Epic electronic medical records system.
FTC Delays WV Hospital Acquisition
The Federal Trade Commission says it will block Cabell Huntington (WVA) Hospital's proposed acquisition of St. Mary's Medical Center.
"The combination would create a dominant firm with a near monopoly over general acute care inpatient hospital services and outpatient surgical services in the adjacent counties of Cabell, Wayne, and Lincoln, West Virginia and Lawrence County, Ohio likely leading to higher prices and lower quality of care than would be the case without the acquisition," the FTC said in an administrative complaint.
The FTC will also seek a temporary restraining order on the merger pending an administrative hearing. On the local level, the merger has received the approval of the West Virginia Attorney General's office but is still awaiting approval from the West Virginia Health Care Authority and the Catholic Church.
"If this proposed acquisition goes forward, it would eliminate important competition that has yielded tremendous benefits for Huntington-area residents," Steve Weissman, deputy director of the FTC's Bureau of Competition, said in prepared remarks. "The merged hospitals would have a market share of more than 75%, and local employers and residents are likely to face higher prices and reduced quality and service at the combined hospital."
The complaint alleges that the two hospitals are each other's closest competitor for health plans and patients, and that the acquisition would substantially lessen competition between the hospitals for patients and for inclusion in health plan networks. The complaint also alleges that, at times, the parties have attempted to limit their intense head-to-head competition through collusive conduct, such as restrictive marketing agreements.
CHH and SMMC issued a joint statement of disagreement with the FTC's findings.
"It is our opinion that the FTC's action announced today misreads the highly competitive landscape in our Tri-State region and overlooks the enormous community benefits that would result from the combination of CHH and SMMC," Kevin N. Fowler, president/CEO of CHH said in prepared remarks. "Despite the FTC's decision, we remain committed to this acquisition as we believe it assures quality medical care for the residents of our region."
Keith Pitts
West Virginia Attorney General Patrick Morrisey signed off on the deal in July.
Tenet Healthcare Leaves NC
Tenet Healthcare Corporation will sell its two hospitals and other operations in North Carolina to Duke LifePoint Healthcare.
Financial terms were not disclosed for the sale, which is expected to be finalized by mid-2016. The sale includes the 137-bed Central Carolina Hospital in Sanford, NC, and the 355-bed Frye Regional Medical Center in Hickory, NC, and 19 physician practices.
"Tenet has long enjoyed serving the Sanford and Hickory communities through our network of trusted hospitals and caregivers," Tenet Vice Chairman Keith Pitts said in prepared remarks. "As we evaluated strategic alternatives to ensure the long-term success of these operations, we chose Duke LifePoint because of their growing statewide network, impressive leadership teams and focus on quality and value."
William J. Fulkerson Jr., MD, executive vice president of Brentwood, TN-based Duke University Health System, says the acquisition means that Duke LifePoint will expand to nine hospitals in North Carolina and14 hospitals nationwide.
William J. Fulkerson Jr., MD
"Tenet and Duke LifePoint share a commitment to high-quality, patient-centered care, and we look forward to a seamless integration as we bring these facilities into our network," he said.
As part of the deal, Duke LifePoint will maintain all services provided at both hospitals, and offer jobs to all employees of the hospitals.
Navicent, Mercer U. Create 'Disruptive' Center
Macon, GA-basedNavicent Health is partnering to with Mercer University to create a Center for Disruption & Innovation to promote innovation and collaboration among healthcare leaders in the drive toward evidence-based research and value-driven processes.
Ninfa M. Saunders
"We call it disruptive because to have a new space we have to disrupt the current space," says Ninfa M. Saunders, president and CEO of Navicent Health. "If you are trying to change something, you have to mess it up first. Unfortunately, you can't just do that in the middle of everything else going on in healthcare because there are patients there and we must continue to innovate without completely messing up everything."
Saunders says the center will focus on optimization healthcare delivery and reducing practice variation, "disruptive innovation" to generate new approaches to processes, and develop and commercialize new products in conjunction with Mercer's schools of biomedical engineering and business.
"We are developing a laboratory where we can look at what is going on in the current space and what are the different models that we could try," Saunders says. "Today in healthcare we don't have a research and development office. We think of something, we implement it, we test it, and hope it works, and we continue to tweak. This will allow us to do some of the concept development in a lab."
If an EPC does enough big projects, "one or two or three a year, you more than pay for your entire budget," says the head of Penn Medicine's Center for Evidence-based Practice.
Evidence-based practice centers in hospitals can facilitate and accelerate the use of best practices to improve care and save money, research suggests.
Penn Medicine has had an EPC since 2006. A recent review of the center's first eight years found that nearly 250 analyses were produced mainly at the request of clinical departments, purchasing committees and CMOs, primarily for drug and device performance.
The researchers analyzed an internal database of evidence reviews performed by Penn Medicine's Center for Evidence-based Practice and then conducted an anonymous web survey of all of those who requested a report during the last four of the Center's eight fiscal years.
Craig A. Umscheid, MD
The survey data of 46 respondents found that 98% of report requestors said the scope of the review and level of detail was "about right," and 77% said reports confirmed their tentative decision. When asked whether the report informed their decision, 79% "agreed" or "strongly agreed." The survey respondents also found the reports easy to request, easy to use, timely, and relevant, resulting in high requestor satisfaction, Penn Medicine reported.
The most common reasons cited for requesting a report was the EPC's skills in identifying and synthesizing the available evidence, and the EPC's objectivity.
Study lead author Craig A. Umscheid, MD, director of Penn Medicine's Center for Evidence-Based Practice, and a practicing internist, says the EPC's credibility underscores the value of a neutral center in an environment where clinical departments and hospital committees may have competing interests, and where politics and external influences such as industry may negatively influence institutional decision making.
Umscheid spoke with HealthLeaders Media about the value of EPCs. The following is an edited transcript.
HLM: Can you call Penn Medicine's EPC a success?
Umscheid: It all depends on how you define success. In our study we were able to show that if you have a center available and it is positioned within a layer of a health system that is responsible for decision making, people will access the center, use the center for a variety of topics, and when they access us we can get the work done so that it can be used in a timely manner. So if you define success in that way, we have demonstrated you can be successful.
HLM: Generally speaking, how long does it take for best practices to be commonly adopted?
Umscheid: Traditionally, this is referred to as the knowing/doing gap; the gap between what we know works and what we actually do on the ground. Oftentimes you will see a number such as 17 years before research that is published is translated into practice. I think that number is incredibly outdated.
It is much more rapid nowadays. That can be a good thing and that can be a bad thing. In terms of whether doctors practice current medicine, it is variable. It could vary by the provider within an institution. Some physicians are more conservative. Some specialties are more conservative.
Other physicians and specialties are more interested in being on the leading edge. That is their culture, whether that is best for their patients or not. And then institutions have their own cultures of being conservative or leading edge cultures. It is difficult to generalize.
HLM: Do you see EPCs accelerating the adoption of best practices?
Umscheid: I absolutely see them as such. I see our work as for the most part implementation work. People come to us with questions that are informed by a variety of events. Whether it is news media, patients, or problems that are identified on the ground. They want to know what are the best practices for achieving 'X' or is 'A' really better than 'B.'
We can help synthesize that for them quickly, or find syntheses that are already available and get that to them to inform the decision-making for their unit or their clinic or their hospital.
So often people say physicians need to read their studies more or guidelines have to be more updated, but the systems that we have in place are exactly the systems that create the outcomes we are seeing. That's a Don Berwick quote. If we want to change the outcomes we have to change the systems. The types of centers we are describing have the potential to provide infrastructure to assist not just individual providers, but institutions and integrating evidence into practice to improve care.
HLM: Could a hospital or health system with fewer resources create an EPC?
Umscheid: Most institutions could do this. It doesn't have to be on as large a scale as we have. Most corporate layers of institutions could probably hire or redeploy someone with a skill set for assessing evidence to do this in a more explicit way for high-priority decisions. In fact, there are probably many institutions that do this, but it is less formal or publicized or evaluated.
HLM: Do you believe these EPC fosters culture of improvement?
Umscheid: That is a change we have seen over time and it's a palpable change; people asking for the evidence in a position to make important decisions. It's really gotten a foothold and we have been able to catch the ear of people who are respected in their hospitals and clinics and it has slowly changed the culture here.
HLM: Are you able to determine a return on investment?
Umscheid: We don't have a systematic assessment of our ROI. What we have done, particularly over the first few years and particularly for large projects that are amenable to this, is estimate impact on outcomes that have direct links to costs.
For example, in the past we did a large review comparing different products to prevent surgical site infection so one of the products was a standard Betadine that you put on your skin versus a new product call Chlorhexidine, which costs more money, but which dramatically reduced surgical site infections when compared with Betadine.
We found about a $400,000 savings for one hospital for the use of that product, and for a number of different projects we have done those types of estimates. And if you do enough of those big projects, one or two or three a year, you more than pay for your entire budget, which is about $1 million a year.
That is particularly true nowadays because in the past few years the policy environment in the U.S. has focused much more on value-based purchasing and pay for performance. If we don't meet these process or outcome metrics, we lose money or reimbursement. If we are able to actually implement a process and outcomes or measures improve all of these things can result in increased reimbursements or savings.
HLM: Should EPC researchers continue to practice medicine or should they remain separate?
Umscheid: It is absolutely critical for someone who is leading a center like this to be practicing clinically, to be seeing patients regularly and working with colleagues in the clinical context regularly. If you don't do that, your credibility is lacking and your perspective when you're helping to inform staff about these reviews isn't as robust and realistic and relevant as it should be."
HLM: How has the role of the EPC evolved since it started?
Umscheid: It's been gradual. When we set up this center back in 2006 we assumed we would be looking at drugs and devices and mostly informing the formulary committee, or the health system purchasing committee about buying 'Device A' versus 'Device B.' As we developed more traction, and gained more colleagues and fellowships, much of the work we do now is about best practices and processes of care, helping different groups identify those best practices for achieving better outcomes be it in an outpatient or inpatient setting, and many of those colleagues are clinician or nurse colleagues. It's become less about drugs and devices and more about processes of care.
The annual list of health technology hazards from the ECRI Institute identifies the potential sources of danger that warrant the greatest attention for hospitals in the coming year. Eight of the top 10 hazards for 2016 are new to the list.
Contaminated flexible endoscopes is No. 1 on the annual list of Top 10 Health Technology Hazards that hospitals and other providers could confront in the coming year, according to the ECRI Institute.
"Clinical alarms has been at the top for the last four years consecutively. This year it got bumped down to No. 2," says Rob Schluth, senior project officer in the health devices group at ECRI, an independent nonprofit group with a focus on improving patient care.
"I wouldn't say that is because alarm hazard isn't critically important. It certainly is, but it's gotten a lot of attention over the years. The Joint Commission's National Safety Goals has helped create a lot of movement. We are aware of a lot of healthcare facilities that have done a lot of good work trying to address that hazard."
Schluth says improper flexible endoscope reprocessing "bubbled up to the top" with the scores of consultants and analysts at ECRI who composed the 2016 predictor.
"In 2014 and 15 there was a fair amount of press about CRE [Carbapenem-resistant Enterobacteriaceae] infections as a result of endoscopes that weren't properly disinfected between uses," he says. "In addition, ECRI Institute for the past several years has done a number of investigations at healthcare facilities where things could have been handled better. It's a process problem in a lot of cases. If you are doing things incorrectly consistently you could end up affecting a lot of patients. That, coupled with the press the CRE was receiving all helped add to bumping that topic to the top of the list."
ECRI's Top 10 Health Technology Hazards list identifies the potential sources of danger that warrant the greatest attention for the coming year. Schluth says the list reflects ECRI staff's judgment about the risks that should receive priority consideration.
"It's a judgment process. It's not a mathematical process" that involves about 100 analysts, says Schluth. "We ask them to nominate topics. What are they seeing? What are they reading about? What are people reporting to them? And, from what they know, what do they think are worthwhile topics for this list?"
Forward-Looking
The analysts weight their predictions by considering factors such as the severity, frequency, breadth, and preventability of the hazard.
"Some people will stumble on 'isn't it the most number of reports you get?' but one of the purposes for this list is not to tell a history of what happened in the past. It's to help predict what you need to worry about next year," Schluth says. "In doing that you can't rely on the numbers of reports. You have to use the judgment that you've gotten based on testing medical devices, which the people in this group do, and investigating incidents and reading the literature and that kind of thing."
Eight of the top 10 hazards for 2016 are new to the list. "Some of those are related to topics we have covered in the past. There may be different angles. There are certainly persistent issues out there," Schluth says. "We've been doing this list about nine years and clinical alarms has been either No. 1 or No. 2 every year. That in particular is a very complex issue for healthcare facilities to get their arms around."
"With every year we toss out the last year's list and start from scratch. The fact that we do that makes it even more interesting that some of the same topics still get covered," Schluth says. "A lot of times these are complex problems, difficult to correct. There may be new information that comes out each year that we want to share with people to help them make better progress toward addressing the issue."
One new item on this year's list includes a warning on the misuse of USB ports on medical devices. "That was an interesting suggestion. Certainly it wasn't anything that had occurred to me, but that is the type of issue that you see happening more frequently as you go forward as information and medical devices merge," Schluth says.
"USB ports are on these medical devices so that information can be shared back and forth. It's almost a consumer electronics things, but for a medical device, if someone plugs in a smartphone to recharge it at the USB port, there have been reports of that causing problems with the software of the medical device. Things you wouldn't think were an issue with new technologies or new uses for technology can cause problems, especially in a software driven device."
There's no such thing as an "ideal ratio" of physicians per state, and many factors have to be taken into consideration to get an accurate assessment of physician access, says a Merritt Hawkins executive familiar with the data.
Northeastern states, led by Massachusetts, score highest in the nation on a new assessment of physician access.
The Physician Access Index, released Wednesday by Irving, TX-based physician recruiters Merritt Hawkins looks at 33 variables that could affect access to physicians, including, physicians per capita in each state, percentages of the state populations with health insurance, household income, access to urgent and convenient care, and Medicare/Medicaid acceptance rates.
Kurt Mosley, vice president of strategic alliances for Merritt Hawkins, says there's no such thing as an "ideal ratio" of physicians per state, and that other factors have to be taken into consideration to get an accurate assessment of access.
"It's one of those things depending on the state," he says. "In Massachusetts they have the highest physician to population ratio, but in our wait time survey they were the highest because 97% of the state is insured. There are always those factors. That is why we wanted to get our point across."
The Better the Metric, the Lower the Score
Massachusetts, which has 324 physicians per 100,000 population, finished first in the scoring with 442 points, while Oklahoma, with 182 physicians per 100,000 population, came in 50th with 1,096 points.
Using close to three dozen variables from sources as varied as the U.S. Census and the Association of American Medical Colleges provides interesting nuances to physician distribution and access to care. New York, for example, trains one-in-four physicians in the United States, yet is ranked 11th in physician access. New Mexico finished third from the bottom in the overall rankings, but ranks sixth in patient encounters per capita in Federal Qualified Health Centers.
Atul Grover, MD, chief public policy officer for the AAMC, says the high physician per capita ratio in Massachusetts and New York are accurate, but doesn't tell the whole story. He credits Merritt Hawkins with attempting to provide a more detailed picture.
"They may appear to have a lot more physicians in the workforce, but that workforce may not be as available," he says. "Or if you look at the per capita numbers, the demographics of the people that are in that per capita population maybe very different, [and] may have higher healthcare needs."
"Think about some of the inner cities in Massachusetts and New York. Those needs may be very different in terms of high chronic disease, low health literacy, high minority populations, more people on Medicaid, than you have in say Dubuque, Iowa. This study tries to capture some of that by looking at rates of Medicaid and poverty. Those are all steps in the right direction.
In addition, Grover says, more than 50% of physicians in Massachusetts are on the faculty of some medical school or institution. "They may be able to offer only 20% to 30% of their time clinically and the rest of their time is spent teaching or in research, both of which are important, but aren't going to factor into access in the same way that a non-faculty community physician is providing care in a rural setting."
Emphasize State Strengths
Mosley says it's important that states understand their strengths and weaknesses as they try to recruit more physicians.
"Oklahoma has to look at this and say, 'we have to be more aggressive,'" he says. "The four factors that doctors always relocate for are quality of life, quality of practice, geographic location, and financial compensation. What can that hospital in Oklahoma do? Can they affect quality of practice? Absolutely. The issue of lifestyle and geographic location they can't do anything about. They're where they are. You focus and work aggressively on the opportunities you can control."
Mosley cited Texas as a state that has become "smart about recruiting doctors."
"Five years ago they did tort reform. Pain and suffering was limited to $250,000 and doctors started coming back into the state," he says. "They just refunded their state loan repayment program and it's better compensation than national health services corp. And the state is starting to fund their own residency programs."
"Our big issue has been to raise the cap on residency slots, nationally, but it's not getting done. Bills have been on the floor in Congress since 2007 and nothing has happened," Mosley says. "States are starting to see it's not going to come from Medicare funding, so they have to grow their own. The idea is to grow your own and keep them. And states like Texas are responding by trying to increase autonomy for nurse practitioners and physician assistants, and expand telehealth."
With a dallying dysfunctional Congress, Grover agrees that it may be time for states with acute physician shortages to start funding their own residency slots.
"States are going to have to at least take part of the burden," he says. "We have seen some action on that front in Florida, Texas, and Georgia state legislatures if not fund the positions then at least fund the hospitals that are willing to start training programs until they can build up to a Medicare cap and get some sort of a reimbursement from the feds as well."
One thing Congress definitely should not do, Grover says, is take away residency slots from states such as New York and Massachusetts and give them to other states with lower physician-patient ratios.
"When you talk about a lack of residency slots in Texas or Florida, it is not a zero-sum game where you can afford to take away resident training positions from New York, Minnesota, or Pennsylvania," he says. "Those states are now supplying a lot of physicians to states like Idaho and Wyoming and Montana. The challenge is there are not enough training slots, so places like Florida and Texas need to think about how they grow their training, whether through the creation of new teaching programs at prior nonteaching hospitals, which Florida and Georgia are doing, or working on legislation on the state and federal level to expand funding for residencies."
"There is more training going on in the Northeast because they've established those programs and made those commitments for a long time," Grover says. "If 50% of the hospitals New York are teaching hospitals and only 17% of the hospitals in Arizona are teaching hospitals, then there are a whole lot of hospitals there that could choose to start training residents."
Research shows that in six out of seven specialties, higher-spending physicians faced fewer malpractice claims, suggesting that defensive medicine might protect doctors from litigation. But there is no definitive cause and effect.
Physicians who spend more money and resources treating patients are less likely to face malpractice claims than their more frugal colleagues, a Harvard Medical School study shows.
Study lead author Anupam Jena, MD, an internist at Massachusetts General Hospital, and an associate professor of healthcare policy at Harvard Medical School, says the findings suggest that defensive medicine might protect "higher-spending physicians" from litigation, although there is no definitive cause and effect.
"We don't know whether or not higher-spending physicians are in fact motivated by defensive medicine, so we can't specifically say that this is defensive medicine at work," Jena says. "All we know is that it is higher spending doctors getting sued less than lower spending doctors."
Anupam Jena, MD
Jena and his colleagues examined more than 18 million hospital admissions in Florida from 2000 to 2009 with data on the malpractice histories of the 24,637 physicians who treated those patients during their hospital stay. The studyfound that in six out of seven specialties, higher-spending physicians faced fewer malpractice claims, accounting for differences in patient case-mix across physicians.
Among internal medicine physicians, the 20% in hospital spending (approximately $19,000 per hospitalization) faced a 1.5% probability of being involved in a malpractice incident the following year, compared to 0.3% in the top spending quintile (approximately $39,000 per hospital admission).
"In addition, we found that if you follow the same physician over time and use that same physician as their own control, when that physician spent more, he or she was less likely to be sued than in years in which he or she spent less," Jena says.
"The last finding was in a specific case study of obstetrics, in which we found that doctors who perform more C-sections get sued less often. That is notably because C-sections have often been thought of as being in part defensively motivated in the United States."
Jena spoke with HealthLeaders Media last week about his study and what the findings suggest. The following is an edited transcript.
HLM: What prompted this study?
Jena: If you think about what doctors worry about most in their careers malpractice rises to the top of the list. We had done some work in TheNew England Journal of Medicine a few years back that showed that in high-risk specialties, 100% of physicians are sued by the end of their career. And even in low-risk specialties, 70% of physicians are sued by the end of their career. From a lifetime perspective, that means that malpractice is extraordinarily salient to the physician.
As a result of that salience, a number of studies over two decades have looked at defensive medicine, which is the ordering of tests and procedures and other medical services solely to reduce the risk of malpractice liability. That is a different issue than what I would call good deterrent medicine, meaning that if malpractice liability leads a doctor to more appropriately order screening colonoscopies to detect colon cancer, we wouldn't want to call that defensive medicine. That's actually the intended effect of the malpractice system. Whereas if there is additional ordering of tests and procedures but there is no benefit, then we think of it as being defensive medicine.
Either way, as long as there is an effect of spending on malpractice risk, it could help explain why it is that doctors are reluctant to reduce utilization in the face of healthcare reform efforts that are asking them to do so.
HLM: Does this study validate defensive medicine?
Jena: No! It suggests that defensive medicine might "work" but it is not conclusive evidence. This is the first study to even look at this question. For many years we have presumed that defensive medicine works, meaning that if doctors do more and spend more they're less likely to be sued. Yet, it is entirely plausible that malpractice claims actually stem from the patient-physician relationship as opposed to how many tests or procedures a doctor orders. It's not a foregone conclusion to find this negative association that we did.
Nonetheless, we do find that higher-spending doctors get sued less often than lower-spending doctors. It could be either because that higher-spending actually improves outcomes or reduces errors, which would reduce malpractice claims. Alternatively, it could be that higher spending signals to patients and others that a more exhaustive workup was done, and that is reassuring in a sense that it reduces malpractice claims. Of course, the big issues is we don't know why doctors who spend more do so. We don't know if it is defensively motivated. All we know is that if they spend more and they get sued less often.
HLM: Can we equate higher spending with better care?
Jena: From this paper we can't necessarily do that. The literature has varied thinking on this. Some studies will show that higher spending is not associated with better care. There are a number of other studies that show just the opposite. In fact, we have a paper underway now that shows that higher spending is associated with better care when we look at individual physicians.
HLM: What are some of the other limitations of this study?
Jena: We don't know the mechanism by which higher spending is associated with fewer malpractice claims. It could be that higher spending is again associated with higher quality of care. Or, it could be that higher spending is simply reassuring to patients, attorneys, judges, and juries, and that prevents malpractice claims. We just don't know what the mechanism of our findings are.
HLM: What can be done to reduce defensive medicine?
Jena: From a research perspective, we have to better understand the mechanisms involved. From a policy perspective, it is important to recognize that our ability to get doctors to reduce utilization in healthcare services has been somewhat limited in the last few years, even though we've been doing a lot to try to get them to do so.
There could be a trade-off that physicians have to make between lowering utilization, which is good for the healthcare system and could even be good for the patient, certainly good financially, against the potentially higher risk of malpractice.
HLM: Do you see a role for tort reform?
Jena: If you live in an environment were almost all doctors are practicing defensive medicine, then a change in tort reform may not have any effect because even in states where tort reforms exist or in states where the liability environment is "favorable" you still see physicians reporting that they practice defensive medicine. It could be that tort reforms don't really reduce defensive medicine, but that doesn't mean that there is not a lot of defensive medicine already going on.
HLM: Why is malpractice such a hot-button issue for physicians?
Jena: What we most certainly cannot insure against are the non-financial costs of malpractice; the anxiety over being involved in a lawsuit, and the possibility that your name will be publicly recorded for having been sued and lost a malpractice case. All of these things are extraordinarily difficult. If you talk to a physician who's been sued, many of them will tell you it was the worst experience of their life.
