Data collected from 11 states strongly suggests that the question to ask about the patient-centered medical home model is not whether it reduces healthcare costs and improves outcomes, but how well.
Forgive me for preaching to the choir, but another round-up of studies released this week re-confirms what we already know: Patient-centered medical homes improve health outcomes and reduce costs.
In fact, the question is no longer "will they work?" Evidence increasingly settles that question. Now the questions center around just how effective PCMHs can be in reducing costs and improving outcomes.
Consider the findings in an analysis released this week from the Patient-Centered Primary Care Collaborative. It's a composite of peer-review and industry-generated studies, showing that the PCMH model is reducing costs of care, unnecessary emergency department and hospital visits, and increasing the use of preventive services and improving population health.
These findings are more than regional success stories. The study includes data from 20 PCMH projects in 11 states from New Hampshire to Alaska, and national data from PCMHs serving active-military and veterans, which show that 60% of the PCMH evaluations reported decreases in cost of care or use of unnecessary services, while 30% saw improved population health.
Diabetes Care Results
The Colorado Multi-Payer PCMH Pilot Model that focused on diabetic care posted particularly impressive result over three years, which included:
A 15% reduction in ED visits, compared with 4% for a control group;
18% fewer inpatient admissions compared to an 18% increase for the control group;
No increase in specialty referrals compared with 10% increase for the control group; and
A return on investment ranging from 2.5:1 to 4.5:1 for every dollar spent by WellPoint on the pilot.
In addition, 95% of the patients said the care was efficient and well organized and 97% said they would recommend the program to family and friends.
The Blue Cross Blue Shield of Michigan Physician Group Incentive Program reported that practices with full PCMH implementation had savings of $26.37 per patient per month and a 5.1% higher "prevention composite score" than colleagues in traditional practice settings.
While not every PCMH pilot can claim these levels of success, virtually every pilot examined by the Collaborative demonstrated improvements over the traditional fee-for-service practice model that provides incremental, episodic care and incentivizes volume.
No Easy Path to PCMH
These measureable results reflect the remarkably simple concept behind PCMH, which is to proactively manage patient chronic care to reduce expensive episodic care. The results are healthier, engaged patients and reduced costs.
We are hearing from any number of providers across the nation, however, that the actually journey to become a PCMH is not easy. The process is rife with snafus with electronic medical records, interoperability roadblocks, reimbursement challenges, and grueling federal mandates and timelines.
It's important to remember that these PCMHs are largely pilot projects that are providing the first rough drafts of how a value-based care model will work. The PCMH is still a work in progress, but it's already demonstrated that it can reduce the cost of care, reduce ER visits and inpatient admissions, improving population health, access to care and patient satisfaction. Even with the rough spots, that seems like a reasonable trade-off.
There is nothing to suggest that any start-up woes in the PCMH model are permanent. In fact, it seems reasonable to presume that PCMHs will continue to improve care and efficiencies while reducing costs as they gain more experience and refine the model.
Early Finding Stand Up to Scrutiny
Clearly, the Collaborative has a bias here in placing PCMHs in the best possible light. But I don't think they're cooking the data and I would be happy to speak with any skeptics who can show me that the PCMH model doesn't work. Of course, skeptics should be prepared to provide their blueprint for "bending the cost curve" in healthcare.
Obviously, I am an unabashed fan of the PCMH. The returns may be preliminary, but the trends are inarguable. It is gratifying to see that a complex but innovative care model which makes so much sense is delivering on its potential for improving care while reducing costs. Even better, we should fully expect that these results will improve in the coming years.
For now, the composite results gathered by the Collaborative are very impressive. PCMH advocates shouldn't be afraid to crow about the findings. As Walt Whitman once wrote: "If you done it, it ain't bragging."
Physicians' associations generally support improving access and transparency in Medicare reimbursement records within the proper context and with privacy protections, but caution that "you can't always use this data as a proxy for quality."
The federal government has issued a new policy for public disclosure of physicians' Medicare payments.
Jonathan Blum, principal deputy administrator for the Centers for Medicare & Medicaid Services said in a statement posted Tuesday by CMS that the modifications, posted in the Federal Register, will improve transparency and accessibility for the public while maintaining the privacy of Medicare beneficiaries.
The policy takes effect 60 days after its publication in the registry, which is expected this week. Blum says CMS will evaluate requests for individual physician payment information or requests for information that combined with other publicly available information that could be used to determine total Medicare payments to a physician on a case-by-case basis.
CMS will also generate and make available aggregate data sets regarding Medicare physician services for public inspection.
"Given the advantages of releasing information on Medicare payment to physicians and the agency's commitment to data transparency, we believe replacing the prior policy with a new policy in which CMS will make case-by-case determinations is the best next step for the agency," Blum wrote.
"However, CMS also recognizes the valid concerns raised by many stakeholders over protecting the integrity of the data. As CMS makes a determination about how and when to disclose any information on a physician's Medicare payment, we intend to consider the importance of protecting physicians' privacy and ensuring the accuracy of any data released as well as appropriate protections to limit potential misuse of the information. And as always, we are committed to protecting the privacy of Medicare beneficiaries."
Physicians' Reactions
Representatives from physicians' associations said Tuesday they were still reviewing the new policy, but that they generally support improving access and transparency in Medicare records as long as the data is placed in its proper context.
Reid B. Blackwelder, MD, president of the American Academy of Family Physicians, says the his organizationhas been involved in the comment process for the modifications and continues to support the move towards greater transparency in medical records and billing.
"There can be a lot of value in releasing payment data, especially if it is focused on ensuring and improving quality of care," Blackwelder says. "The key continues to be the correct use. The trouble with data is [that] it's numbers. We emphasized the real need to ensure appropriate context. We want to make sure they just don't release numbers because you can get a lot of assessments or conclusions drawn that may not be true unless you have appropriate context and consideration."
Shari Erickson , vice president of governmental and regulatory affairs at the American College of Physicians, says the college also embraces "the move towards more data transparency overall in the healthcare system. That is going to be needed particularly as we move into this bold new world of value-base payments. You really are going to need more transparency to do that effectively."
Like Blackwelder, however, Erickson says putting the data in its proper context is critical. " There are definitely some protections and caveats that should be looked at with any data source that is being reported on, " she says.
Pay Data Not 'A Proxy for Quality' "There should be reasonable transparency around the process of the data collection and reporting of that data so we know where the data comes from and what it means and what are its limitations. All of those things need to be up front anytime data is reported to the public. It needs to be reported in a meaningful and hopefully useful way for the public and the audiences that it is intended for."
Jennifer Gasperini, senior government affairs representative for the Medical Group Management Association, says everyone wants transparency. "The trickier issue is how we are measuring some of these things," she says. "For that reason you can't always use this data as a proxy for quality. It is something we will be looking at and continuing to watch."
Blackwelder says he doesn't believe the rules modifications will have much of an effect on the day-to-day operations of most physicians' offices. "We feel very strongly that with any release of data that the physician has an opportunity to review and ensure that the data is correct. Otherwise there isn't going to be anything a physician is going to notice in day-to-day practice," he says.
A survey from the American College of Healthcare Executives reaffirms the top issues affecting community hospital leaders. Among the top-of-mind issues: Government funding cuts, the shift to value-based purchasing, and CMS and state regulations.
For the tenth straight year "financial challenges" have been listed as the number one concern of healthcare executives, according to an annual survey from the American College of Healthcare Executives.
Coming in second was healthcare reform implementation, followed by government mandates, and patient safety and quality, both of which ranked third.
"You've heard the famous quote: No margin no mission. This just reflects the enormous stresses that hospitals are under right now," says Deborah J. Bowen, president/CEO of ACHE.
"Everybody is reducing operating costs and thinking differently about how they are going about moving from fee-for-service to these value-based payments where quality and finances are accounted for. It's not business as usual by any stretch of the imagination."
The 388 community hospital CEOs who responded to the survey were asked to rank 11 issues affecting their hospitals in order of importance and to identify specific areas of concern within each of those issues.
Among financial concerns, for example, government funding cuts ranked highest, led by inadequate reimbursements for Medicare and Medicaid, followed by an anticipated increase in bad debt due to high-deductible health plans, decreasing patient volumes, staffing costs, competition from other providers, and inadequate funding for capital improvements.
Within the healthcare reform rollout, the top issues were reduced operating costs, aligning incentives for payers and providers, the shift to value-based purchasing, physician alignment, and regulatory uncertainty.
Within the category of government mandates, the top concerns were CMS audits, implementation of ICD-10, CMS regulations, state regulations, and increase government scrutiny by the IRS, the Office of the Inspector General, and the Justice Department.
Patient safety and quality concerns included engaging physicians to improve the quality culture, redesigning care processes, pay for performance, and redesigning work environments to reduce errors.
Bowen concedes that the survey provided few surprises.
"What is a little interesting is this juxtaposition of government mandates and patient safety and quality and how the government mandates were high last year and patient safety and quality are even higher this year in terms of concerns and engaging physicians and redesigning care," she says.
"It speaks well to the fact that the industry is moving forward in their quest to redesign care, but they are painfully aware that the environment they are doing that in is fraught with other constraints that they have to be very realistic about."
Though void of surprises, Bowen says the survey provides a state-of-industry snapshot about the concerns of hospital leadership.
"It is pointing out some real concerns to grapple with," she says. "We've seen concerns around financial challenges. A lot of that has to do with Medicare funding and we all know the predicament that a lot of states were in with respect to funding Medicaid. In some respects that is not necessarily a new problem, but the magnitude is getting larger and larger as we seek to cover patients in growing numbers as Obamacare takes hold."
"We know that bad debt and everything else is going to get worse with high-deductible plans. In some respects it is more of the same, but the magnitude and the order of it might be changing somewhat," she says. "I also think there is promising news in the sense that patient safety and quality care are moving forward in a very challenging time."
Bowen says she doesn't expect the concerns of healthcare executives to shift much in next year's survey either.
"We won't see anything wildly different, but we will see some of the same themes, perhaps in a different order," she says. "Financial challenges have been on the top of the list for a long time because you have to have a certain amount of money to keep organizations afloat. It is interesting that patient safety and quality and redesigning care and engaging physicians are tops on the list. The order may shift a little bit but I don't think this is momentary transition. It's going to take a little while for accountable care to take hold and be the new paradigm for healthcare."
Tighter margins, industry consolidation, and uncertainty surrounding healthcare reform, are tamping down healthcare hiring. "Everyone is afraid of what will happen and is too scared to hire," says one healthcare economist.
We're getting conflicting narratives about healthcare job growth.
The story line we've heard for the last decade or so tells us that healthcare is an excellent job growth market, particularly for people with advanced degrees and specialties.
That narrative has been backed up by consistent data from the Bureau of Labor Statistics, which has shown that the healthcare sector is one of the more robust job growth engines for the overall economy. In the last decade, for example, BLS data shows that the now-$2.8 trillion healthcare sector created more than 2.7 million jobs, with most of those new jobs in ambulatory services.
Until recently, there's been some sort of unsubstantiated belief that healthcare was immune from the growing pains and economic downturns of other industries. There was also a consensus belief was that healthcare reform and the expansion of health insurance coverage through commercial exchanges and Medicaid would only increase the demand for skilled healthcare workers, particularly clinicians and information technology experts.
While the immunity theory has pretty much been debunked, in some respects it still holds true that skilled clinicians will continue to be in demand.
However, in the last few months of 2014 a new narrative has emerged. In December, the healthcare sector shed 6,000 jobs, led by 4,100 job reductions in ambulatory services and 2,400 reductions at hospitals. That was not just a one-month blip. BLS data shows that in the fourth quarter of 2013, hospitals shed 500 jobs. Unfortunately the data is not granular enough to show us specifically what kinds of jobs are being lost.
The healthcare sector created 207,600 new jobs in 2013, considerably down from the 320,600 healthcare jobs created in 2012, but more in line with historical trends from the past five years.
A breakdown of BLS preliminary data for 2013 shows that hospitals created only 9,800 new jobs in 2013, well below the 73,300 jobs created in 2012 and the lowest total since 2009, when only 2,700 hospital jobs were created in the midst of a deep recession. Ambulatory services continue to be the primary job creator for the healthcare sector, posting 180,100 new jobs in 2013. That's down from 208,400 jobs created in 2012. Nursing and residential homes created 17,700 in 2013, less than half of the 38,900 jobs created in 2012.
What's going on here?
'Too Scared to Hire'
Medicare reimbursement cuts, an avalanche of sweeping and complex new federal mandates from meaningful use to ICD-10, the looming shift toward value-based payment models, the sector-wide shift toward out-patient services and population health, and the general uncertainty about how the Patient Protection and Affordable Care Act will play out has led many providers to re-evaluate their hiring practices.
"Everyone is afraid of what will happen and is too scared to hire," says Richard "Buz" Cooper, MD, a healthcare economist at the University of Pennsylvania. "Most are feeling the pressures of reimbursement cuts and are getting rid of employees. In the contest that is unfolding between government, insurers and providers, both government and insurers are mega-sized, while providers are too small to fend them off. No surprise that providers are consolidating."
Add to that, healthcare spending growth is at 53-year low. Actuaries at the Centers for Medicare & Medicaid Services earlier this month said that the 3.7% increase in healthcare spending in 2012 tracked the fourth straight year of relatively slow growth and actually declined slightly as a percentage of the gross domestic product.
And as much as Obama Administration officials would love to take credit for this spending downturn, the real driver here is the consumer. Healthcare spending slowed dramatically during the recession, because people either lost their insurance coverage through layoffs, or they delayed elective procedures and other medical care because of the general economic uncertainty.
As we emerge from the recession, we find that the healthcare landscape has changed, thanks largely to the advent of the high-deductible health plan. As consumers shoulder most of the cost of their care through higher co-pays and deductibles it seems only logical that they will cut back on personal spending on healthcare goods and services, which CMS says account for about 85% of total national healthcare spending.
Facing these daunting external challenges, it makes perfect sense that providers are reluctant to hire more staff. Labor costs are the largest slice of providers' budgets so naturally that'd be the first place they'd look for reductions when margins tighten.
Two Job Healthcare Markets Emerging Mergers and consolidations undoubtedly are playing a huge role in layoffs. Merge two hospitals or a physicians' group and suddenly a lot of administrators and support staff become redundant. And there is no indication that M&A activity will slow anytime soon as providers struggle for leverage with payers.
What will 2014 bring? Based on what I'm reading and hearing, we will see the continued trend of two divergent job markets within the healthcare sector.
For support and administrative staff there will continue to be tepid, marginal growth, not because there is growing demand, but because healthcare is simply a massive, labor-intensive industry. The healthcare sector accounts for more than 14.6 million jobs so attrition is inevitable. People retire. People get fired. People quit. People move. People are replaced. We will see job growth but likely not the pace that we've seen over the past 10 years.
The Conference Board regularly tracks online ads for healthcare support jobs—the "have nots" of the healthcare universe—and finds that there are more than two people looking for every job advertised. The jobs also pay about $13.36 an hour.
That factoid is inverted for skilled clinicians, executives and technology folks; aka the healthcare "haves." The Conference Board shows that there are more than two jobs advertised for every skilled healthcare jobseeker, with an average salary of $35 an hour.
Anecdotally, recruiters across the country routinely tell me they're finding a robust market for skilled clinicians in every part of the country.
The bottom line: Healthcare providers are consolidating in an era of tighter margins and decreased utilization. Of course hiring is going to take a hit. Because of its vital nature, the healthcare sector may be more resistant to the economic forces that affect every other industry. It's not immune.
Preliminary data from the Bureau of Labor Statistics shows that in 2013, hospitals created the lowest total number of jobs since 2009.
The healthcare sector created 207,600 new jobs in 2013, considerably down from the 320,600 healthcare jobs created in 2012, but more in line with historical trends from the past five years, according to Bureau of Labor Statistics data released Friday.
A breakdown of BLS preliminary data for 2013 shows that hospitals created only 9,800 new jobs in 2013, well below the 73,300 jobs created in 2012 and the lowest total since 2009, when only 2,700 hospital jobs were created in the midst of a deep recession.
Ambulatory services continue to be the primary job creator for the healthcare sector, posting 180,100 new jobs in 2013. That's down from 208,400 jobs created in 2012.Nursing and residential homes created 17,700 in 2013, less than half of the 38,900 jobs created in 2012.
In December, the healthcare sector went out with a wimper in 2013, shedding 6,000 jobs for the month, led by 4,100 job reductions in ambulatory services and 2,400 reductions at hospitals.
In the fourth quarter of 2013, hospitals shed 500 jobs, BLS preliminary data shows. At the end of 2013, the healthcare sector accounted for 14.66 million jobs, including 6.6 million in ambulatory care, 4.83 million in hospitals, and 3.22 million in nursing and residential care.
BLS data for December and November is considered preliminary and subject to considerable revision.
The reimbursement squeeze on hospitals is on, and healthcare leaders in search of opportunity are finding partners and making deals.
As the new year unfolds and financial challenges mount, hospital executives seeking business opportunities continue to make deals with like-minded organizations.
Duke LifePoint in $120M Deal with Wilson Medical Center
Duke LifePoint Healthcare will form a joint venture with the 294-bed Wilson Medical Center in Wilson, NC, in a deal that includes $120 million in capital investments and resources to strengthen and grow the hospital.
Under the terms, Duke LifePoint would own 80% of the joint venture, while Wilson Medical Center and the community would have a 20% stake. The joint venture would commit to $120 million in capital investments at Wilson Medical Center over the next decade.
Governance of Wilson Medical Center would be shared equally by Duke LifePoint and Wilson through the creation of a 10-member board with equal representation from both organizations. The joint venture would become a taxpaying organization.
Duke LifePoint owns four hospitals, including Maria Parham Medical Center, Henderson, NC; Marquette General Health System, Marquette, MI; Person Memorial Hospital, Roxboro, NC; Twin County Regional Healthcare, Galax, VA; as well as DLP Cardian Partners, a Charlotte, NC-based company that offers hospital-based catheterization labs and mobile catheterization services.
Banner Health to Acquire Casa Grande RMC
Banner Health will acquire Casa Grande Regional Medical Center, a 177-bed, not-for-profit community hospital located about 50 miles south of Phoenix, AZ, the two providers announced jointly. Financial terms were not disclosed.
"CGRMC's mission has always been to make a positive difference in the lives of those we serve through compassion and excellence in patient care. This fits perfectly with Banner's mission as well. Furthermore, joining with Banner allows CGRMC the best opportunity to grow this facility in the long term. We look forward to a bright future," said Rona Curphy, president/CEO of CGRMC.
The deal is subject to regulatory approvals, but is expected to be completed this spring. Banner has also agreed to provide interim funding as needed in order for CGRMC to continue regular operations until the acquisition is complete.
Banner Health President/CEO Peter S. Fine said the acquisition "will build on the strong foundation provided by Casa Grande Regional Medical Center to expand Banner's non-profit mission of excellent patient care to the community of Casa Grande. Community residents can count on the full suite of clinical performance processes and technologies that are the foundation of Banner's ability to provide industry-leading care."
Headquartered in Phoenix, Banner Health is one of the largest non-profit health care systems in the country. The system operates in seven states with assets that include 23 acute-care hospitals, the Banner Health Network, Banner Medical Group, long-term care centers, outpatient surgery centers, and an array of other services.
WellMont Health Weighs Its Options
Kingsport, TN-based Wellmont Health System has begun an evaluation of its strategic options, which executives say may include aligning with another health system.
Wellmont CEO Denny DeNarvaez said health systems across the country are preparing for increasing demands for upgrading information technology, quality mandates, and population health management in an environment of low inpatient volumes, reimbursement cuts, and potential performance penalties under the Patient Protection and Affordable Care Act.
DeNarvaez says the seven Wellmont hospitals serving Northeast Tennessee and Southwest Virginia face a litany of challenges because of extremely low Medicare payment rates and the high volume of Medicaid and uninsured populations, and the recent decisions by state the governors of Virginia and Tennessee not to expand Medicaid.
"As stewards of a valued community resource, our board of directors and leadership team know it is our responsibility to preserve and advance healthcare in our region," DeNarvaez said in prepared remarks.
"Unlike many health systems, Wellmont is fortunate to be in a position of clinical strength and relative financial stability thanks to the great work of our physicians, co-workers and leadership. The board and the administration are committed to continue pursuing all internal options to ensure the financial stability of our health system for the future."
DeNarvaez says the "guiding principles" that will govern the assessment include:
Significant financial strength to advance medical, technological and organizational innovation and to develop new care models
Optimization of information and medical technology systems
A robust physician network and physician recruitment capacity and commitment to physician leadership
"By proactively embarking on this process, we are taking our future into our own hands and creating a stronger health system for the communities we serve," DeNarvaez said
HMA Stockholders Accept CHS Merger Offer
Stockholders at Naples, FL-based Health Management Associates have voted overwhelmingly to accept the previously announced merger agreement with rival Community Health Systems, Inc., of Franklin, TN. The deal was announced jointly last week by the two for-profit hospital chains.
HMA said its stockholders approved the transaction with approximately 98.7% of the votes cast at a special meeting on Wednesday favoring the agreement, representing approximately 81.7% of HMA's outstanding common shares.
CHS Chairman, President, and CEO Wayne T. Smith, Chairman said he was "pleased that HMA stockholders have seen the significant strategic value in combining with CHS. We are working now to finalize regulatory approvals, and we expect to complete this transaction quickly so that we can integrate our two companies and deliver on our plans for long-term growth and value creation."
The deal is expected to be completed prior to the end of this month and is subject to customary closing conditions, regulatory approvals, and the absence of certain adverse developments.
The deal combines two of the largest publicly traded hospital chains in the nation. CHS owns, leases, or operates 135 hospitals in 29 states with an aggregate of approximately 20,000 licensed beds. HMA through its affiliates operates 71 hospitals in 15 states with approximately 11,000 licensed beds.
Over the past three years, Charles Ornstein has led several initiatives that have created easier access to critical healthcare data on quality and costs while working at the independent, nonprofit news organization, ProPublica.
This profile was published in the December, 2013 issue of HealthLeaders magazine.
It's hard to make an argument against transparency in healthcare.
When pressed, hospitals, insurers, nursing homes, physicians, and government officials all say they're "for it" and go on about how transparency will play a critical role in "bending the cost curve" by allowing patients to become wise consumers of their healthcare dollars.
When it's time to go public, however, that altruism often evaporates, as few really want anyone else to know how much they charge for something, or how much they get paid for it, or if they're having quality issues. So that heralded release of information is delayed, or it's hidden in a massive data dump, or it's placed into a context that most consumers could never fathom.
Charles Ornstein and the investigative reporters at the independent, nonprofit news organization ProPublica—often also working with the nonprofit Association of Health Care Journalists—have led several initiatives in the past three years that create easier access to critical healthcare data on quality and cost.
"The goal of transparency is first to ensure that the public is informed, that they have all of the information easily at their disposal when they have to make important and personal healthcare decisions," Ornstein says. "Secondly, it is to create discussion about if our healthcare system is as safe as it can be, and if it is not, what can be done to make it safer. Finally, the importance of putting the information out in an easy-to-use and easy-to-analyze way is that you provide a level of context that wasn't necessarily there before."
In 2010 Ornstein and his ProPublica colleagues launched the Dollars for Docs online tool that allows the public to see if their physicians have a financial relationship with pharmaceutical companies.
"We created that because drug companies had begun putting in online information about their payments to physicians but they didn't do it in a way that was easily searched or aggregated or analyzed," Ornstein says. "We thought we could do it in a way that brought transparency to the topic rather than translucency."
In August, 2012 ProPublica launched a site that facilitates public access to nursing home inspection reports. "The goal was to take the data the federal government was collecting on its Nursing Home Compare website about nursing home inspections but make it much easier for people to search through information," Ornstein says.
Earlier this year Ornstein, who serves as an AHCJ board member, and the AHCJ finalized a two-year effort to make hospital inspection reports readily accessible online. "Up until now people have had to file Freedom of Information Act requests with the Centers for Medicare & Medicaid Services for their local hospitals' inspection reports," Ornstein says. "You would not expect a member of the public to do that.
Even many journalists wouldn't do that because it takes time and you don't know what you're going to get. The idea was the federal government collects this information. It may not use it. It may not look at it. But journalists certainly should have this information at their disposal so that they could assess the quality of their local hospitals and rather than just judge them on reputation or patient satisfaction they can actually see what health inspectors found."
Ornstein says the transparency movement in healthcare is accelerating. "Part of the reasons for that are the changes in our healthcare system," he says. "As additional costs and decision making are pushed to consumers, they have to have the information available to make a decision. They have to have cost information if they are on the hook for a greater share of the cost, and they will also want to have quality information so they can determine if the trade-off is worth it."
That growing public demand for access to healthcare information is still running into resistance from some in the medical establishment.
"There are those who still have a very paternalistic view of the healthcare system, which is [that] nobody is smart enough to understand the way it works except for those who run it and they should be putting in place whatever they believe is necessary to protect the patients and it is not the role of pesky journalists or inquisitive patients to take them to task," Ornstein says. "But these initiatives, which are putting information in the public domain, necessarily require hospitals to look at these things themselves and to hopefully correct problems before they harm patients."
Ornstein believes those objections will dissolve as transparency demonstrates that it can help improve quality and patient safety even as it reduces costs. "When reporters write about problems within the healthcare system, the goal is that the problems will be fixed," he says. "If you are able to write a story about hospitals that make mistakes, you would hope that not only would the hospital you are writing about fix the problem but that other hospitals would read about it and would make sure it doesn't happen at their hospital."
Offering patients extended recovery time by keeping them overnight in an ambulatory surgery center may comply with CMS regulations, but Maryland's Office of Health Care Quality and the Maryland Hospital Association are voicing concerns about patient safety.
An ambulatory surgery center in suburban Washington, D.C., is taking federal regulations down to the final minute.
The Massachusetts Avenue Surgery Center, LLC, in Bethesda, MD, says it will fall within Centers for Medicare and Medicaid guidelines when it hold patients overnight because the stays will be no longer than 24 hours.
"Under CMS rules a surgery center may keep a patient for no more than 23:59," says Randall Gross, executive director at MASC, which provides mostly orthopedic, GYN, and general surgery services.
"There are a lot of procedures our docs have not been able to do, [such as] total knees and total hips, that are done at the hospital and then the patients are either sent home or sent to a rehab center and sent home the next morning. All we are really doing is extending the recovery time and creating an environment where our patients can spend 12 more hours here approximately."
Gross says he requested clarification from the state of Maryland and was assured that any recovery periods within the 24-hour window were acceptable under CMS regulations. MASC is negotiating with payers now and hopes to begin offering procedures that may require extended recovery times by March.
"Everyone is going to win here," he says. "Patients are going to win because they don't have to go to the hospital and be subjected to that environment. And the extra rates that they are paying, their co-insurance and deductibles, are much higher in the hospital. Payers win because they pay us a lot less money and we win because we get the ongoing business."
Quality Concerns
Barbara Fagan, program manager of ambulatory care services in the Maryland's Office of Health Care Quality, confirmed that MASC will be operating under the federal guidelines. However, she says that doesn't necessarily make it a good idea.
"We don't have a policy. We enforce the CMS regulations and I am going to tell you if you were to be a lawyer in court, [that] technically because it says it can't be 24 hours, 23:59 would be within that definition for an ASC," Fagan says.
"But I always tell anyone who asks that if you are going into an ASC and you are there for 23 hours for a procedure, I would question whether that is the safest place to have a procedure done."
Fagan says ASCs are not designed for prolonged stays. "The hospital is going to have housekeeping and changing linens and food service and none of that is required at an ASC. Me personally, I wouldn't want to be in a surgery center if I had to be there for 23 hours."
The Maryland Hospital Association has raised also concerns about overnight stays at ambulatory surgery centers. MHA spokesman Jim Reiter says any number of potential problems could arise when patients stay overnight in ambulatory surgery centers.
"Their very name implies that they are not equipped to keep patients overnight. They are designed for outpatient treatments," Reiter said in an email exchange with HealthLeaders Media.
'A Hospital is a Hospital'
"The issue is not how much volume hospitals might lose. The issue is the safety of the patients involved. Investing in meals, linens, and other things does not make an ASC a hospital. What happens if something goes wrong? The patient will be taken to the nearest full-service hospital, where he or she probably should have been anyway if the treatment required an overnight stay."
"And how likely are these places to accept uninsured and Medicaid patients, as hospitals do? Not likely. Will they "cherry pick" the patients who have coverage, leaving the others for the rest of the state's consumers to pay for through our unique system of paying for hospital care in Maryland, which ensures that all get the hospital care they need whether they can pay or not?"
"In short, a hospital is a hospital. If these places want to be hospitals, they should go through the regulatory process, open an emergency department, have 24-hour professional health care provider coverage, and do all the other things that ensure care is available for everyone who needs it, 24 hours a day, 7 days a week."
Gross says he's not overly concerned about what hospitals think of the idea.
"I don't think the hospitals have anything to say about it. This is Medicare law. This is CMS regulation," he says. "As the technology has changed, there is so much more shifting out of the hospital and so much more we can do on an outpatient basis."
"This is procedure driven. Anyone having a particular procedure, we would plan on having them overnight. It does not change the profile of our patients. They are still healthy patients. The people who would have issues that would keep them in the hospital, we don't want them."
Now that the rules of healthcare delivery have changed so dramatically, we need to be clear about our new relationship. If you thought haggling with insurance companies was rough, just wait until you hear my expectations.
Greetings Providers! By way of introduction, we've met before. I am one of the hundreds of millions of people out there who were once referred to as your patients. Going forward, however, it'd be more accurate if you thought of me as a healthcare consumer. This is a business, after all, and you're selling me a product. So we need to be clear about our new relationship.
Let me assure you, now that the rules of healthcare delivery have changed so dramatically, the idea of the healthcare consumer is not a mere buzzword. This is now a matter of my "skin in the game" and my cold hard cash.
For years healthcare policy wonks have said that the best way to reduce cost growth in healthcare is to educate patients and make them smarter consumers. And the fastest way to educate anybody on anything is to make them pay for it.
And that's where I am now.
For as long as I can remember I was in a traditional health insurance plan where I paid a certain amount in premiums, a certain amount in co-pays, and a certain amount in deductibles. It was a pleasant enough relationship, however insupportable. I didn't understand how it worked because I didn't have to.
I was sorry to see it priced out of existence. My employer and I both saw our health insurance premiums skyrocket over the decades and it was clear that we had to change the way we paid for coverage. So, I bumped into a high-deductible health plan. Now my premiums are lower, but my co-pays and deductibles are higher – a lot higher. All of those various payments and services that you used to haggle over with my insurance company have been dumped into my lap.
Now that I'm the one who will be paying the freight on the first $5,000, or $7,000, or $8,000 and higher of my healthcare costs, here's what you can expect from me.
1. I Want Transparency
Tell me why I need it and what it's going to cost, up front. Make it easy for me compare your costs with the hospital/practice/walk-in clinic down the street. Transparency is highest on my list of priorities because without knowing how you do business, when you do business, how much you charge for your business, we can't do business.
2. I Want it Cheap
Surveys say that healthcare consumers value "quality care." But now that I have to pay more for that quality, I want it cheaper. If your prices are higher you'd better be able to explain why, but I'll still probably go elsewhere.
If you want me to pay $3,000 for an MRI, you'd better be able to explain why I need it. And if the doc-in-the-box down the street can do the MRI for less, I'll have them send you a copy of the images. If it's 2 AM and the emergency department is my only option, you'd better be prepared to provide a detailed list of charges when you present my bill, and you can expect that I will haggle.
I will not pay $100 for an ice pack or $30 for an aspirin. And don't slap me with a "facilities fee." What it costs you to keep your doors open and your lights on is not my concern. Finally, don't expect me to pay additional fees six months or a year down the road when you correct a mistake on my bill.
3. I Want it Now
Don't make me take time off from work to sit in your waiting room for an hour for a harried 15-minute visit with a physician's assistant and a $150 bill. Drug stores are open 24/7. Banks are open later. Even airlines are more consumer friendly than providers!
Extend your office hours later in the day and on weekends to accommodate my schedule. Provide easy Internet access to my personal health account. Improve office scheduling so that I don't have to wait long. Have someone available for telephone consultations. Ensure that your office is easily accessible and close to my home.
I don't see my demands as unreasonable. I am merely asking the healthcare sector – a $2.8 trillion industry that consumes nearly 20% of the gross domestic product – to be as accountable and transparent with it products as any other retail industry.
Here's where I get unreasonable: Even if you deliver on transparency, quality, access and price, I may not pay you.
Maybe I am a deadbeat who never had any intention of paying you. It's more likely that I simply can't afford it. A $5,000 deductible might not seem like a lot of money to docs and healthcare executives with six-figure incomes. However, the median income in the United States in 2012 was about $51,000 and the $5,000 deductible that comes out of my pocket represents at least 10% of my gross pay.
I switched to the high-deductible plan for its lower premiums and as protection against a catastrophic illness or injury. I'm rolling the dice on everything else. So we'd better come to some E-Z credit terms on a payment plan. You've already provided the service, which takes away almost all of your leverage and gives me less incentive to pay. If the haggling gets nasty, you can send bill collectors after me, but they'll probably have to wait in line.
And rest assured that any number of websites and consumer action groups will blossom for people like me who don't really understand how all of this healthcare reform works and what we have to pay for and what the charges cover. We newly informed and suspicious healthcare consumers will be vigilant against perceived rip offs. We will read the stories about price shifting and gouging in healthcare – whether real, fabricated, or exaggerated – and we'll be determined that it won't happen to us.
So, I hope we are clear on what you can expect from our new relationship in the coming years. Most encounters won't devolve into nickel-and-dime haggling over who pays how much for what and why, but a growing number will. If you thought it was rough haggling with insurance companies, wait 'til you get a load of me.
Healthcare spending in 2012 grew more slowly than the growth of the overall economy, says CMS. While the Obama administration was quick to credit the healthcare reform law, federal actuaries cite other factors—chiefly the economic recession.
Healthcare spending grew 3.7% in 2012 to $2.8 trillion, marking the fourth straight year of relatively slow growth and the slowest sustained period of healthcare cost growth in the 53 years that the statistic has been tracked, the federal government announced on Monday afternoon.
An analysis by the Office of the Actuary at the Centers for Medicare & Medicaid Services shows that the $2.8 trillion spent on healthcare in the United States in 2012 represented 17.2% of the gross domestic product. That's a decline from 17.3% of GDP in 2011 because healthcare spending in 2012 grew more slowly than the 4.6% growth in the overall economy. The report appears in the January issue of Health Affairs.
Obama Administration officials were quick to credit the Patient Protection and Affordable Care Act for the slowest growth rates ever recorded in the 53-year history of the National Health Expenditure Accounts.
"For the second straight year, we have seen overall healthcare costs grow slower than the economy as a whole. This is good news," CMS Administrator Marilyn Tavenner said in prepared remarks. "We will continue to work with tools given to us by the Affordable Care Act that will both help us control costs for taxpayers and consumers while increasing the quality of care."
The authors of the report noted, however, other factors were at play, mainly the nationwide economic recession.
"The low rates of national health spending growth and relative stability since 2009 primarily reflect the lagged impacts of the recent severe economic recession," Anne B. Martin, an economist at CMS and lead author of the study said in prepared remarks. "Additionally, 2012 was impacted by the mostly one-time effects of a large number of blockbuster prescription drugs losing patent protection and a Medicare payment reduction to skilled nursing facilities."
In fact, the study said that the ACA had "minimal impact on aggregate health spending through 2012." However, several provisions of the sweeping reforms affected "certain subcomponents" of national health expenditures, namely the increase in the Medicaid rebates for prescription drugs, the Medicare "donut hole" drug coverage gap program, the expansion of coverage for dependents under the age of 26, and minimal medical loss ratios for commercial plans.
The slower growth tracked with personal healthcare spending on healthcare goods and services, which the study said accounted for 85% of total national healthcare spending and which grew by 3.9% in 2012 – up .4% from 2011. The slight uptick was linked to accelerated growth in hospital, physician, and clinical services.
Offsetting that growth, however, was slower growth in spending for prescription drugs and nursing home care. Out-of-pocket spending for Medicaid grew faster in 2012 than in 2011, while private plans and Medicare saw lower spending growth than in 2011, the report said.
CMS offered this detailed breakdown of healthcare cost growth in 2012 compared with 2011:
Hospital spending (4.9%)
Reached $882.3 billion in 2012, an increase of 1.5 percentage points over the 2011 growth rate due to faster growth in both price and non-price factors. Price growth (as measured by the Producer Price Index for hospital services) picked up slightly in 2012 to 2.5%, compared to 2.1% a year earlier. Non-price factors, which include use and intensity of services, also grew faster than in 2011.
Physician and clinical services (4.6%)
Growth increased from 4.1% in 2011 to reach $565 billion in 2012 due primarily to increased growth in non-price factors, such as the use and complexity or intensity of services. Physician services, which accounted for 80% of this spending, grew by 4% in 2012, up from 3.5% growth in 2011.
Medicaid expenditures (3.3%)
Growth increased from 2.4% in 2011 to reach $421.2 billion in 2012. Nevertheless, these were the two slowest annual rates of growth in the history of Medicaid, excluding 2006 when Medicare Part D was implemented and changed the way Medicaid paid for some beneficiaries' prescription drugs. These slow growth rates were due primarily to slower enrollment growth and efforts by the states to control costs following the expiration of enhanced federal matching rates.
Out-of-pocket spending (3.8%)
Spending growth increased faster in 2012 compared to 2011 when growth was 3.5% due mainly to increased cost sharing for physician and clinical services. The growth was moderated by reduced out-of-pocket spending on previously expensive prescription brand-name drugs that had lost patent protection. Total out-of-pocket spending reached $328.2 billion in 2012.
Retail prescription drugs (.4 percent)
Spending growth slowed from 2.5% in 2011 to reach $263.3 billion in 2012. This reduced growth rate was driven largely by a slowdown in overall prices for prescription drugs as an unusually large number of name-brand drugs such as Lipitor, Plavix, and Singulair lost patent protection in late 2011 and in 2012.
Nursing care facilities and continuing care retirement communities (1.6%)
Spending growth slowed from 4.3% in 2011 to reach $151.5 billion in 2012. This slower growth was primarily due to a one-time Medicare payment reduction to skilled nursing facilities to adjust for a large increase in payments in 2011.
Private health insurance (3.2%)
Continued slow growth in total premiums (following 3.4% growth in 2011) was mainly due to low growth in enrollment in 2012, which remained 9.4 million enrollees fewer in 2012 than in 2007. Net enrollment gains in high-deductible health plans, which generally have lower premiums and higher cost sharing than other more popular plans, also contributed to the slow premium growth in 2012.
Total private health insurance premiums reached $917.0 billion in 2012. For medical benefits, per enrollee spending accelerated slightly, from 2.9% growth in 2011 to 3.2% in 2012, both near historic lows, and was primarily due to increased growth in spending for hospital care and for physician and clinical services.
Medicare spending (4.8%)
Growth slowed slightly (compared to 5% growth in 2011) to reach $572.5 billion in 2012. Growth in fee-for-service expenditures, which accounted for nearly three-quarters of total Medicare spending, slowed from 4.3% in 2011 to 2.7% in 2012. Medicare Advantage spending accounted for the remainder, increasing 10.9% in 2012 (compared to 7% in 2011).
Total enrollment in Medicare for all beneficiaries jumped 4.1% in 2012--the largest one-year increase in 39 years, as the oldest members of the baby boom generation became eligible to enroll in Medicare in 2011. Slower growth in total Medicare spending in 2012 was primarily due to a one-time payment reduction for skilled nursing facilities.