The success of a year-long pilot program of patient centered medical homes has prompted Pittsburgh, PA-based Highmark Inc. to broadly expand the initiative in two states.
"Our goal is that in about a year from now 75% of all our doctors in our network will be part of a patient-centered medical home, and will be working effectively and efficiently amongst themselves as primary care physicians and with their specialist colleagues," Paul Kaplan, MD, senior vice president of provider strategy and integration at Highmark, told reporters at a teleconference Wednesday afternoon.
The PCMH model began in 2011 with 160 primary care physicians in 12 practices, covering about 45,000 Highmark members. Effective this month, the program will be expanded to include nearly 1,050 primary care physicians in 100 practices covering 171,000 Highmark members in Western and Central Pennsylvania and West Virginia, Highmark says.
Michael Fiaschetti, president of health markets at Highmark, told reporters that the pilot project saw a nearly 2% reduction in costs per member per month while traditional care delivery programs within Highmark saw cost increases. The demonstrated savings, he says, will serve as a catalyst to greatly expand the PCMH model in the coming years.
"Our goal a Highmark over the next three-to-five years is to transform the way we interact with physicians, hospitals and all healthcare providers," Fiaschetti told reporters. "We want to move from a pure or straight fee-for-service environment where we pay for volume and move to a pay-for-value environment. This is a foundation to that movement - the patient-center medical home is foundational to accountable care organizations or any other type of pay for value program that we do."
"Our goal would be that in the future, physicians who drive value—meaning higher quality indicators and an overall more reasonable trend or cost—will get more money than they do today in a fee-for-service system. But they will be paid based on that value and not on just driving more units of service. That is what we want to get to."
Highmark said the results from the pilot program showed that:
Inpatient acute admissions dropped on average for the pilot practices by 9%
30-day readmission rate dropped on average for the pilot practices by 13%
Seven-day readmission rate dropped on average for the pilot practices by 14%
There was a 5% decrease in total per-member-per-month costs for coronary artery disease members and a 3.5% decrease for diabetics during the pilot
Fiaschetti says the key to success with the PCMH is to get physicians to embrace the team approach, and for the payers to reward success.
"In their offices they would have care coordinators who would spend more time with the chronically ill patients and get them the right level of care, get them the right education, and coordinate their care in a more intense fashion," he says.
"In exchange, we are going to provide higher incentives for better managing those patients based on certain quality and cost parameters. Quality will always be 50% of the incentive equation. We aren't going to compromise quality for cost. This isn't the old days where that may have happened 20–25 years ago in some of the old HMOs. It is very much a blend of cost and quality."
Fiaschetti said the quality indicators would be designed around nationally recognized benchmarks, particularly as they related to chronic illnesses such diabetes and congestive heart failure.
"The overall cost will be around the total per capita cost per member and the incentives will be different," he says. "Physicians can earn more money for better care and overall there will be a huge return because we will eliminate emergency visits, unnecessary admissions and readmissions, all those things that raise costs and frankly aren't good for the patients."
"We hope the outcomes are better health for the patients at a lower cost for the patient and the system," he says. "We believe that there is a huge return on this and what it is going to take is a different approach, a much tighter alignment than we've had in the past. We will be exchanging much more data about services that have been provided to these members, data about clinical information around these members."
Adam Powell, a healthcare economist and president of Payer+Provider Syndicate, a Boston-based consulting firm, says Highmark's recent findings from its PCMH pilot are consistent with the positive results seen at Blue-sponsored PCMH initiatives in South Carolina and North Dakota.
"While the additional care coordination resulting from the expansion of the PCMH initiative will likely improve the quality of care, it is important to maintain a bit of caution about the potential cost savings," Powell wrote in an email exchange with HealthLeaders Media.
"Similar savings will only likely be seen in the recently added practices if the practices in the pilot were representative of typical practices contracting with Highmark. Furthermore, the benefits of PCMH are still a bit murky. A July 2012 report by [the Agency for Healthcare Research and Quality] found insufficient evidence to precisely determine the clinical and economic benefits of the PCMH model."
"Quantifying the benefits of PCMH has been hampered by variation in the way that it is implemented. Given that Highmark has approximately 5 million members, expanding access to PCMH to include less than 5% of total membership represents a conservative approach. The lessons learned from this modest expansion will help Highmark be successful in its quest to cover 75% of its members with pay-for-value arrangements by 2015," Powell wrote.
Alvin Hoover, CEO of King's Daughters Medical Center in Brookhaven, MS, took the reins this month as chair of the American Hospital Association's Section for Small or Rural Hospitals in 2013.
The 24-person governing council represents small or rural hospitals in the AHA's policy process and member services initiatives. Hoover spoke recently with HealthLeaders Media about the challenges that small and rural hospitals will face in the coming year.
HLM: In your view how are small and rural hospitals faring these days?
AH: Times are a little bit scary for hospitals, particularly for small and rural hospitals. They typically don't have the volumes of patients they have in urban and suburban hospitals. You have a lot of hospitals out there and their census is eight or 12 patients a day and it is hard to come by economies of scale when you are seeing those few patients.
Figuring out how to do things differently is going to be a real challenge. There are threats to the critical access hospital program. Some legislators think that paying an extra 1% on top of your costs is too much. It's not for small and rural hospitals. Those critical access hospitals have to figure out how to be efficient and effective with their care. Those are words you will hear me say all year long.
We have to improve quality in a way that is different than before. We have to figure out how to do it with fewer resources. For small and rural hospitals those are daunting challenges because they are often the first and the last places where you can get healthcare.
HLM: What do you see as your top priorities as chair of the Small or Rural Hospitals Governing Council?
AH: The first challenge is going to be reimbursement. With healthcare reform every organization, whether it is a hospital or a nursing home or whatever is facing tremendous challenges on the reimbursement side from the federal government. Medicare/Medicaid is seeing tremendous changes.
We are seeing changes on the state level too. It's important that as a governing council we are getting information on that impact from our constituents and if we take that message in a clear and coherent way to Congress so that they can hear it we can educate Congress about what we are doing and get them to buy in.
It's going to be more important than ever for our legislators to hear from the grassroots.
HLM: Are the concerns of small and rural hospitals being heard in the halls of Congress?
AH: I think we have a place. If you look across the demographics of our country, you'd find a lot of rural states and those legislators hear us when we come to Washington. They are aware of how important hospitals are to their local communities.
King's Daughters Medical Center is the third-largest employer in Lincoln County. I have a message and a platform that allows me to be heard. Across America a lot of times the hospital is the largest employer with the best-paying jobs.
If you eliminate those from small communities they are going to dry up and blow away.
HLM: What other issues facing small and rural hospitals do you hope to address in your tenure as chairman?
AH: There are always opportunities to get the message heard on the small things. Even in this fix that Congress did right before the end of the year there were some low-volume adjustments that they plugged back in. There is the Medicare-dependent hospital stuff that they plugged back in.
But the overarching challenge is going to be to helping the legislators understand that massive cuts to reimbursement to try to lower the deficit can't all be on the backs of hospitals. We presented some options to the legislators about what they can cut besides healthcare and we are going to take that message to them again.
We know we have to be more efficient and effective in the care we give and we have to eliminate waste in our system. But that takes a little time so they need to work with us on how they adjust the reimbursements for hospitals to give us the time to work on those efficiencies.
We are going to look at quality, which you can tie back to reimbursements, value-based purchasing, and the penalties we are seeing coming down for not providing good care or having good scores. In small and rural hospitals a lot of times you just don't have the resources.
Big hospitals face the same challenges on a larger scale but they typically have some resources available on the quality side and the performance improvement side that small and rural hospitals don't have. We are going to have to learn how to do quality and develop a quality culture in our hospitals. It has to be different than business as usual. We have been asked to do more with less year after year.
Performance improvement programs at small hospitals need a cultural shift, where each employee is empowered to have a voice and make changes and believe that when they have an idea and bring it forward someone is going to consider it.
We've got to figure out how to get the waste out of our system. We want to figure out how to get people out of the waiting rooms and getting care. We have to learn how to be efficient with resources, whether it is human resources or supplies, the actual care that we give, we want to be as efficient and safe and effective as we possibly can.
HLM: Given challenges like economy of scale, low volume, and patient migration, should small and rural hospitals reassess the services they are offering?
AH: We all have to examine our service lines and see what we can afford to do well. But it's foolish to think that small and rural hospitals should throw in the towel.
Who lives in rural America? Elderly people live in rural America. How difficult is it for them to drive down the road for an hour to get care? By golly it's better for them to get care at home in small town America where they have the friends and support versus driving to a big town.
The people who live in my community don't want to drive to big towns to get their healthcare. The folks who bypass you are folks with means and the ability to pay and who have children who can drive them back and forth. But a lot of people in rural America don't have that luxury.
The nation's largest Catholic health system is expanding.
Saint Francis Care, Inc. in Hartford, CT, has signed a letter of intent to join the for-profit Ascension Health Care Network.
Licensed for 617 beds and 65 bassinets, Saint Francis Hospital and Medical Center is the largest Catholic hospital in New England. Ascension Health Care Network, the nation's first for-profit Catholic health system, is an affiliate of Ascension Health Alliance, the nation's largest Catholic health system.
"This is an important step in advancing the mission of both Ascension Health Care Network and Saint Francis Care," Leo P. Brideau, president/CEO of Ascension Health Care Network, said in prepared remarks.
"We share a common goal of providing high-quality, efficient care that responds to people's physical, emotional and spiritual needs while aggressively advocating for the well-being of our patients and their families, and ensuring healthcare is available to those who are poor and vulnerable. We believe this relationship has the potential to improve healthcare at both the state and regional level."
Specific terms of the agreement are confidential. Ascension Health Care Network subsidiary is a joint venture with Oak Hill Capital Partners that provides alternative funding sources for provider acquisitions.
Maine's Mercy Health System to merge into EMHS
Portland-based Mercy Health System of Maine on Jan. 14 signed a letter of agreement that will "integrate" the system into Brewer-based Eastern Maine Healthcare.
"Signing the definitive agreement is another significant step toward fulfilling our bright future as a member of EMHS," Eileen F. Skinner, president/CEO of Mercy Health System of Maine, said in prepared remarks. "EMHS supports our mission and our identity as a Catholic healthcare system. We look forward to continuing to work with our EMHS colleagues through the approval process and the eventual integration of Mercy into EMHS."
The definitive agreement details the actions and commitments both health systems will undertake for Mercy to become an EMHS member. In addition to a commitment to operate Mercy according to the Ethical and Religious Directives for Catholic Health Care Services, a local board will continue to provide oversight for Mercy, the two health systems said in a joint media release.
The regulatory approval process is expected to take six to nine months, and will require the approval of the Vatican. Financial terms of the deal were not disclosed.
The Chester County (PA) Hospital and Health to join Penn Health
The Chester County Hospital and Health System this month signed of a non-binding letter of intent to join the University of Pennsylvania Health System. TCCHHS already has existing relationships with Penn in the areas of cancer, radiology, radiation oncology and maternal fetal medicine.
"Throughout this process we spoke with many excellent organizations, but it quickly became clear to our Strategic Planning Committee and our Board of Directors that the potential to join the University of Pennsylvania Health System was the best decision for our community and our Health System," William W. Wylie, Jr., chairman of TCCHHS said in prepared remarks.
The Chester County Hospital has 220 beds and is building a new patient tower that will open this summer with capacity for an additional 72 rooms. The providers hope to finish the due diligence process and complete the transaction by this spring. Terms of the Letter of Intent were not disclosed.
Chicago's Holy Cross Hospital joins Sinai Health System
Holy Cross Hospital in Chicago joined the Sinai Health System on January 16 as a full corporate member, the two providers said in a joint announcement.
As a member of Sinai Health System, Holy Cross Hospital will remain a Catholic hospital and fully comply with the United States Conference of Catholic Bishops Ethical and Religious Directives for Catholic Healthcare. The Sisters of St. Casimir will continue as the religious sponsor of Holy Cross Hospital, according to the joint media statement.
Sinai Health System, a Chicago-based private, not-for-profit organization, is now comprised of seven member organizations: Mount Sinai Hospital, Holy Cross Hospital, Sinai Children's Hospital, Schwab Rehabilitation Hospital, Sinai Medical Group, Sinai Community Institute and Sinai Urban Health Institute.
The system has more than 800 physicians on its hospital medical staffs and 695 licensed beds. Sinai is an affiliate of the Jewish United Fund/Jewish Federation of Metropolitan Chicago.
Billings (MT) Clinic Joins Mayo Clinic Care Network
Mayo Clinic this month named Billings (MT) Clinic as the newest member of the Mayo Clinic Care Network.
Billings Clinic, Mayo's first affiliated health system in Montana, is the largest healthcare organization in the state and provides primary and specialty regional medical care for all of Montana, the western Dakotas and northern Wyoming, with a regional population of more than half a million. Billings Clinic is a community-governed, physician-led multispecialty healthcare organization with 3,600 full- and part-time employees, more than 320 physicians and non-physician providers, a 272-bed hospital, a research center and a 90-bed rehabilitation and assisted living facility.
"This new relationship creates an even closer connection between Billings Clinic and Mayo Clinic, giving patients with very complex health issues more efficient access to some of the world's most highly specialized clinical care at Mayo Clinic," Billings Clinic CEO Nicholas Wolter, MD, CEO, said in prepared remarks. "Culturally, our two organizations have many similarities, including a commitment to an integrated care delivery model and physician leadership.
For years observers have been predicting the impending migration of physicians into direct pay or concierge medicine, where no longer will they have to accept low Medicare and Medicaid reimbursements or haggle with private payers.
Has that time finally arrived?
A recent survey of more than 13,500 physicians found that 6.8% of them would "embrace" direct pay or concierge medicine within the next three years. That includes 9.6% of practice owners, 7.7% of primary care physicians, and 6.4% of specialists, according to the survey conducted by physician recruiters Merritt Hawkins for The Physicians Foundation.
"This is a building crescendo because of a number of things that have happened to physicians or could happen to them," says Mark E. Smith, president of Merritt Hawkins.
"We keep kicking (the Medicare Sustainable Growth Rate funding formula) down the road and the docs' confidence becomes less and less that those chickens will come home to roost," he says.
A fear of major reimbursement cuts is among the top three threats cited by healthcare leaders surveyed in the HealthLeaders Media 2013 Industry Survey.
"There are a lot of unknowns with what will happen with reimbursements and the [Patient Protection and] Affordable Care Act, what it will ultimately cost and what will change. There are big questions about who will be in control of bundled payments. There are a lot of legitimate concerns and unlike a lot of professions physicians have a lot of options."
Reid B. Blackwelder, MD, a family physician in Kingsport, TN, and president-elect of the American Academy of Family Physicians, says his organization has no specific policies in place around direct pay practices. However, he says a proliferation of the direct pay practice model could create access issues.
"It depends again on how the physicians chose to provide that care," Blackwelder says. "It doesn't mean that it is a good or bad thing. As individuals choose to practice medicine in a certain way and patients choose to find that care we just want to make sure that all patients have access to the right care from the right person at the right time."
The AAFP in its 2010 practice profile found that 3% of respondents practiced in a cash only, direct care, concierge, boutique, or retainer medical practice. Blackwelder remains skeptical that significant numbers of primary care physicians will migrate to direct pay practices.
"We've been hearing for a long time that this is about to take off, but I have also read a lot about physicians who chose that model but it didn't meet their needs," he says.
"I am a little unsure that this is the time we are going to see a breakout just because there is so much economic uncertainty right now that will remain for the foreseeable future. SGR has gotten tapped down for a year but we have a lot of issues about what we are going to do with the [PPACA] and the debt ceiling and other deficits. Given these economic uncertainties it would be a challenging time to boldly go off in a new direction."
Merritt Hawkins' Smith says changes in the healthcare payer market will lure physicians into direct pay practices. "You can take a private practice it and convert it to a concierge practice and make life greatly better for the physician," he says.
"They will become much more prosperous and reduce their business responsibilities by 90% and their employer responsibility but 75%."
"The old model is 2,500 to 3,000 patients in a panel. The practice generates $400,000 to $500,000 a year and overhead is 50%-60%. In that model these physicians are going to see between 25 and 30 patients a day. One would argue you are on the hamster wheel," Smith explains.
"In the concierge model the patient pays $1,500 to $1,800 a year for unlimited access to the doctor. But if you look at what you pay for premiums for your insurance, that is $120- $150 a month—that's a high end gym membership. The concierge target is to have 600 patients in the practice. On the low end with $1,500 with 500 patients that is $750,000. The docs are going to see five to eight patients a day but there is no real overhead."
Then there's the billing, says Smith. "There is no billing or collecting. There is a one-time fee that you put on a credit card. So you are dropping your overhead to 10%-15% and managing with one full-time employee while your patients spend all the time in the world with you."
Even if overhead is 20%, he points out, that's still means net revenue of $600,000 to provide managed care for a fraction of the people. "You are still working hard, but you are going to spend an hour with each patient rather than eight minutes. I find physicians attracted to that," he says.
"In a panel of 2,500 to 3,000 patients finding 500 to 600 who want to convert with you to this is not much of a challenge."
Tom Blue, executive director of the American Academy of Private Physicians, a professional association for direct pay physicians, estimates that there are about 4,400 physicians in direct pay private practices.
"Recognize that private medicine is almost entirely a primary care phenomenon. And my hunch is that this will settle out with 15% of primary care physicians operating in this kind of model in the next five or six years," Blue says. "I think we are poised to see a pretty good surge."
Blue says the time is right because of a convergence of supply and demand factors.
"On the physicians' side, you've got a growing realization among primary care doctors that the business model of the independent or small practice is likely not sustainable and they just having a harder time keep the lights on," he says.
"They are working faster and faster and it is not satisfying and potentially not viable. It's likely we will see the extinction of the small independent practice in the traditional sense. You have that forcing doctors to explore alternative business models."
Blue says private practice also allows physicians to better serve a smaller number of patients.
"Private medicine in the early days used to represent a moral dilemma around displacing a large number of patients to attend to the needs of a smaller number," he says. "Today that moral dilemma is largely offset by the dilemma of ‘is it right to deliver care that is not the best I can do thousands of people or do I deliver really good care to smaller numbers?' More physicians are able to reconcile the decision with their own personal principles and that is driving more doctors into private medicine."
The anticipated surge of about 32 million new insured patients under the PPACA in 2014 is expected to exacerbate the physician shortage, and the increasing cost of health insurance coverage, with its higher premiums, co-pays and deductibles, also makes direct pay practice more appealing to a growing number of consumers, Blue says.
"The pace of healthcare has gotten to the point where it has begun to strip the consumer perception of quality down to the bone," he says. "In an environment where the physician relationship is scarce free market principles would suggest that people who value that relationship are now looking for alternative ways to secure it for themselves."
"For people responsible financially for their own health with high-deductable plans there is a growing appreciation for the value of preventive care and staying healthy as opposed to reacting when you are sick," he says.
"The economic value of preventive care is beginning to increase in the minds of the consumers because of the financial responsibility."
Blue says self-insured companies are already seeing the value of hiring private practice physicians to provide on-site primary care for their workers. "Making care more accessible and convenient reduces hospitalizations and specialized care. It's a formula that is playing out conclusively and we are seeing more companies that want to take control of that relationship," he says.
For physicians who are sick of the hassles around practicing medicine, Smith says direct pay may be the perfect remedy.
"It's the easiest way for a doc to go off the grid," he says. "I've heard people describe it as a bit of a time warp. You get to go back 30, 40, 50 years and remove the insurance hassles from your practice and have this practice of 600 patients or so that you handle."
If the measure of success is intent and outcomes then the federal government's efforts under the Medicare Modernization Act of 2003 to train more physicians in primary care and to practice in rural areas have been a failure.
A study published this month in Health Affairs looked back on the mandate in the legislation to redistribute nearly 3,000 residency slots among the nation's hospitals. The researchers found that only 12 of the 304 hospitals that had received additional positions starting in 2005 were considered rural, and received only 3% of all positions redistributed.
And while primary care training had positive net growth after the redistribution, the growth of subspecialty training was twice as large and diverted would-be primary care physicians into subspecialty training.
Only 3% of rural hospitals got additional slots
"The really concerning thing is that the legislation specifically prioritized rural training so you would expect that the intent would be to significantly increase rural training. Only 12 rural hospitals received additional slots and that was only 3% of the total additional slots redistributed. Most of us would agree that that probably didn't meet the legislative intent," says Candice Chen, lead author of the study and an assistant research professor at the George Washington University School of Public Health and Health Services.
"The primary care issue is a little more complicated," Chen says. "We found that coming up to the redistribution a lot of the hospitals that got slots had been likely converting their primary care to non-primary care slots."
"Many of them increased their primary care training so in those hospitals where you had lost some primary care training you did manage to gain some back. But we saw a significantly larger increase in non-primary care training slots. And there was a subset of hospitals that received additional primary care slots and continued to convert them into non-primary care slots."
Chen says outcomes demonstrate the need for more coordination of medical workforce development on a national level.
"Each one of those GME programs is out there for individual organizations meeting their hospitals' and communities' needs and when you cobble them all together we are not getting what we need over all the country," she says.
"We need some more analyses and planning on a national level so we can start asking 'how can we get what we need out of this system as a whole? How do we build those requirements into the system so that in another 10 or 15 years, or even sooner than that, people aren't scrambling to find a primary care provider.'"
Legislators lack "granular knowledge" of GME
Perry A. Pugno, MD, vice president for education with the American Academy of Family Physicians, says he is not surprised that the goals of the 2003 legislation were not attained.
"When this first came out we contacted the people who were putting forward this legislation and said you really should have talked to us beforehand and we could have helped you write it so there were fewer loopholes that would allow the outcome that you got to occur," he says.
"The people who write this legislation see the problem, they are trying to make a difference, but they don't have the granular knowledge of the nuances for how GME functions and how trainees go through their training in enough detail to plug the holes from which these kinds of distributions occur."
"We knew small rural hospitals were probably not going to jump through all the hoops necessary to try to get some additional physicians and that the larger academic centers that train lots of specialists would eventually get their hands on many of these positions, which is exactly what happened."
Pugno says some of the shortcomings in the 2003 legislation could be alleviated under the Patient Protection and Affordable Care Act.
"There are provisions in the[PPACA] that are trying to direct funding and support toward addressing rural training and the care of disenfranchised populations and things like that," he says.
Don't blame hospitals
"The conversation about redirecting money towards outcomes of training programs is probably the most effective. The caveat is that they need to be looking at the outcomes from people who are at least two years out from their residency training. One of the problems with these programs is there is a lot of talk about 'we are doing primary care training because we have all of these residents in internal medicine and pediatric residency programs.' But half of the pediatrics go into subspecialties and 90% of the internal medicine residents go into subspecialties."
Chen says it's not fair to lay all the blame on hospitals for skirting the intent of the legislation.
"People want to make hospitals the bad guys, but it's not as simple as that. Most hospitals are trying to meet a community need, particularly the smaller community hospitals," she says.
Much work to be done
"All the odds are stacked against them because of the way our payment systems are stacked up. They are incentivized to convert their primary care residency programs into specialty programs. They can generate more revenue that way and support some of the procedures and things that hospitals do that will bring in more revenue and make sure the bottom line is safe. I spend a lot of time looking at community-based hospitals that don't have a lot of margin. They are struggling and we don't want to see anything happen that would put those hospitals into even more jeopardy."
"The what-needs-to-be-done list is very long," she says. "A lot of people say it just can't be about GME or residency programs and we agree. We need changes in how we pay for care to strengthen the primary care workforce and incentivize people to go into primary care. We need payment and practice reforms. Primary care providers want to provide the best care, but when they feel like a hamster on a wheel they can't."
Even conceding payment and practice reforms, Chen says medical schools GME programs will still have a huge role in realigning the physician workforce. "It has to be done at the same time. If you don't, the educational system can hold back the reforms," she says.
"I would argue we have the best system in the world in terms of providing quality physicians. But there is no match in the kinds of physicians we are producing in terms of specialty and geographic distribution."
Poor distribution of physician placements
"How," asks Chen, "do we not only get the highest quality physicians but how do we get a workforce that matches the needs of the country and will support the payment and practice reforms that are aimed at getting us more comprehensive and cost efficient care?"
While the results from the 2003 legislation clearly fall short of the aspirations, Pugno says the mandate still raised the profile of primary care physicians.
"It's not a failure from the perspective that Congress is concerned about making the most of the money that they are putting into GME," he says.
"They fully recognize the need for more primary care. They fully recognize that we have maldistribution of physician placements and if we do more rural training we would have more physicians practicing in rural areas. So the basis from which they are coming and the things they are trying to fix are things we spent a decade trying to get them to recognize. So it is progress in the right direction. They just need to get some help tightening up how they write this legislation so they get the outcomes this legislation was designed to get."
The nation's leading hospital and physician associations offered variations on the same message this week when they replied to the federal government's request for comments on Stage 3 meaningful use implementation: We support what you're doing, but slow down!
The College of Healthcare Information Management Executives summed up the feelings of many physicians and hospital leaders when it asked the HIT Policy Committee and the Office of the National Coordinator for Health IT to "reconsider the speed and scale for achieving Stage 3 meaningful use objectives by 2016."
"We see no value in setting unrealistic performance thresholds or expectations before current evaluations of what we have accomplished have been undertaken," CHIME said in a letter to National Coordinator for HIT Farzad Mostashari, MD.
"[E]very desirable EHR-related objective cannot feasibly be met by 2016, nor do we see any value in attempting the rushed adoption of various EHR uses by that time. Instead, verifiable and continuous progress should be the goal."
Pam McNutt, CIO at Dallas-based Methodist Hospital System and member of CHIME's Policy Steering Committee, said in prepared remarks that the main message to regulators "is that we shouldn't look to cram everything into Stage 3. The modernization of America's healthcare system is a decade-long progression. We need to make sure that the HIT Policy Committee is looking at more than just the Stage 2 measures and objectives when making recommendations to HHS; that's why we strongly urged thorough evaluations of to-date accomplishments and progress."
The Federation of American Hospitals, representing more than 1,000 for-profit hospitals, suggested in its formal comments that ONC extend the current two-year roll out cycle for meaningful use stages by an additional year for Stage 2 and Stage 3, and future stages.
"We raise these concerns not to suggest that we should not move the Meaningful Use program forward, but rather that we take a judicious approach to Stage 3," FAH said in its letter.
"Providers are almost focused solely on being compliant with requirements, rather than optimizing the technology that has already been implemented. Meaningful Use is not, and cannot be, the sole focus of providers. Too many important areas are being neglected as a result—harmonization of eMeasures, population health, patient identification and matching, etc. We urge policymakers to stop regulating providers to the point that they simply do not have the time or bandwidth to use their (Certified EHR Technology) to improve care."
The American Hospital Association wrote in its formal comments that the ONC's proposal includes a "very ambitious" set of recommendations for Stage 3 that would make more than 40 changes to Stage 2 requirements.
"The AHA believes it is too soon to define the meaningful use requirements for Stage 3. As of September 2012, fewer than one-third of hospitals had met the Stage 1 requirements and received a Medicare incentive payment," Linda E. Fishman AHA's senior vice president, public policy analysis and development, said in a letter to Mostashari.
"In addition, hospitals have not yet had experience with Stage 2, given that the full set of final rules and specifications were just released last fall and no products to support Stage 2 are currently available."
American Medical Association Board Chair Steven J. Stack, MD, in the association's formal comments, reiterated a "continuing concern that the meaningful use program is moving forward without a comprehensive evaluation of previous stages to resolve existing problems. A full evaluation of past stages and more flexible program requirements will help physicians in different specialties and practice arrangements successfully adopt and use EHRs."
The American College of Physicians in its letter to ONC said Stage 3 measures need to be focused on measuring patient outcomes rather than on a growing collection of "functional measures." ACP said the proposed Stage 3 measures are nearly identical to those in previous stages.
"Stage 3 of Meaningful Use should encourage patients and practices to innovate, discovering creative ways to use the certified EHR technology they worked so hard to implement in Stages 1 and 2 and determining what has the greatest beneficial impact on the healthcare quality and value for patients, families and communities," said Michael H. Zaroukian, MD, chair of ACP's Medical Informatics Committee and author of ACP's letter.
"A number of the proposed Stage 3 measures necessitate significant increases in clinical documentation, involve new and potentially complex workflows, are likely to be difficult for many eligible professionals to understand and implement, or depend on technologies that are not yet widely deployed or shown to be usable in busy practices."
In our October Intelligence Report, 19% of leaders said that they still need to pull 11% or more out of their operating budget. When making budget cuts, especially deep cuts, what can the C-suite do to avoid harm to quality care and staff morale?
This article first appeared in the January/February 2013 issue of HealthLeaders magazine.
Chris D. Van Gorder
President and CEO
Scripps Health
San Diego
On budget cuts in a changing landscape: It's hard to know how much needs to be pulled out of operating budgets yet, and it will be an issue dictated by federal, state, and local reimbursement cuts and competitive issues. I think many organizations will need to reduce their operating budgets between 10% and 20%—some maybe even.
On the need for transparency: It's important to be open and transparent with employees about these issues and to engage them in the process of reducing costs. It's also critical that physicians be engaged in the process with management. Everyone wants a successful organization and wants to continue the mission so it's critical to engage everyone in the process. We have to do everything we can to protect jobs right now.
Why would any employee help to reduce costs or engage in the process if that means they will lose their own job?
On morale and displaced employees: We place any employee impacted by a position elimination into a career resource center. While we can't always promise the same job or the same work location, we can help an impacted employee find another position in the organization. The key to maintaining employee morale is to do everything we can to retain jobs while we design new work processes that will be more efficient, eliminate waste in operations, and restrain hiring so we have positions in which to place loyal Scripps employees who have their jobs impacted by these changes.
Michael D. Williams
President and CEO
Community Hospital Corporation
Plano, Texas
So many folks say if one hospital has x number of FTEs per adjusted occupied bed, then another hospital can have the same. That is really not true. It needs to be hospital specific relative to what areas have the opportunities for improvement in process, maintenance, or improvement of clinical outcomes and a reduction in costs.
Secondly, any time there is any level of reduction in an organization it is so important—maybe the most important factor—to be transparent with the medical staff and the community and the hospital employee population about why this reduction is necessary.
Along the way, celebrate success. When those goals are met, in some fashion it is important to acknowledge the role that the staff has had in achieving the results. To have some type of low-key celebration or whatever is appropriate that says, "We are in this together, we recognize the contributions you have made, now let's celebrate this success."
Also, you have to take the time and not just say "We had a bad month and so consequently we are going to have to cut something," but what are the trends in that particular institution that say we have to do something differently? Is it reaction to something happening in the industry? Or is it specific to the strategic financial plan of the organization that is being looked at?
John R. Sigsbury
President and CEO
Emanuel Medical Center
Turlock, Calif.
We are going through some of this right now. The sentiment is that you have to really pull out of the management staff before or during any other cuts you make in the rank-and-file. A lot of the mistakes that organizations make and the misread they have with culture in their organizations is you have to put everybody on the same plane.
For the cuts, 5% is a great target. The pain you go through in the organization isn't worth anything less than that. In terms of quality care, you have to rely on the people at the bedside. If you haven't engaged them in a conversation and you haven't explained the realities, you are in big trouble. You have to look at the patient types, the complexity of care, and you have to understand what the needs of the caregivers are in providing that bedside support.
You have to make sure that every day on every shift those issues are being covered. Then management that remains has to be very visible with patients. They have to engage patients. And you have to make adjustments as you get feedback from patients.
The magnitude of the cost cutting that we need to do requires us to look at all the relationships in the organization and our medical staff is a key player in maintaining the standard of care. No cost cutting would be effective without the support of the medical staff.
Terrie P. Sterling
Executive vice president and COO
Our Lady of the Lake Regional Medical Center
Baton Rouge, La.
The first thing you already should have in place is a good communication channel. We have two strategies that we use a lot. One is town hall forums, face to face with an executive. We developed a script in those town hall meetings to ensure that specific topics are discussed. Every year, as we have seen it coming, we have talked about everything from value-based purchasing to changing reimbursements to the impact of the current climate. It sets the tone and informing your staff in real time about what is going on through true communication and sharing.
Secondly, we have a controlled blog that has an online Q&A with me. For example, as we manage labor productivity and overtime, we talked about Medicaid cuts and the reasons why we have to review labor productivity to get to better, lower benchmarks. And as we are managing overtime, we talked about every department being a target.
Establishing trust and communication long before you need it in difficult times is what you have to do; be transparent and honest. I expect to be able to explain to our 5,000 team members what we are doing in simple terms and our rationale and how it fits our values and how we are going to do it. Thus far we have been able to hold to those principles.
Federal officials on Monday rolled out a table-rattling 474-page proposed rule designed to clarify and promote consistency around eligibility, benefits, and appeals for people enrolling in health insurance exchanges in 2014, and to provide more flexibility for states' Medicaid programs.
"Today, we are proposing a rule to provide Americans with access to affordable, high quality health coverage and give states more flexibility to implement the law in a way that works for them," Health and Human Services Secretary Kathleen Sebelius said in a media release.
On Jan. 1, 2014 the Affordable Care Act expands Medicaid coverage to include adults who earn up to 133% of poverty—$14,865 for an individual or $30,656 for a family of four, while other people looking for coverage will be able to buy it through a health insurance exchange. HHS said the rules proposed Monday will make it easier for consumers to learn if they're eligible for Medicaid or tax credits.
The proposed rule includes information on how consumers will receive communications on eligibility determinations and how they can appeal eligibility denials. It also gives states flexibility in designing benefits and determining cost sharing in the Medicaid program.
Under the proposal, state-based exchanges may choose to rely on HHS for verifying whether an individual has employer-sponsored coverage and conducting some types of appeals, HHS said.
Given the length of the proposed rule, providers and payers were still leafing through it Monday afternoon to try to determine the impact on their corner of the healthcare sector.
"Our folks are going through the regulations, but yes, we have raised a number of concerns about affordability," Robert Zirkelbach, vice president of strategic communications for America's Health Insurance Plans, in an email exchange.
"For the new exchanges and market reforms to work, coverage needs to be affordable and there needs to be broad participation in the system," Zirkelbach says.
While HHS talks about keeping insurance affordable, Zirkelbach points to an analysis by Oliver Wyman which estimates that an ACA-mandated $100 billion sales tax on health insurance "will increase premiums in the insured market on average by 1.9% to 2.3% in 2014," and by 2023 "will increase premiums 2.8% to 3.7%."
"We remain concerned that major provisions of the law, such as the new health insurance tax, will increase premiums and result in many younger and healthier people forgoing insurance until they need it—thus driving up costs for everyone else," Zirckelbach says.
RAND researchers are walking back a report that the nonprofit public policy think tank issued in 2005 estimating that the widespread adoption of healthcare information technology could trim more than $81 billion each year from the nation's healthcare tab through improved efficiencies.
Instead, a new RAND analysis by a new team of researchers, published this month in Health Affairs, notes that seven years later, expectations about the safety and efficiency of HIT mostly have not been met, and annual healthcare spending has increased by $800 billion.
"The failure of health information technology to quickly deliver on its promise is not caused by its lack of potential, but rather because of the shortcomings in the design of the IT systems that are currently in place," said Dr. Art Kellermann, the study's senior author said in a media release.
"We believe the productivity gains of health information technology are being delayed by the slow pace of adoption and the failure of many providers to make the process changes needed to realize the potential," Kellermann said.
The new RAND study blamed the underperformance on several factors, including: sluggish adoption of HIT systems, along with balky systems that are hard to use and aren't interoperable; and a failure by providers and hospitals to adjust care processes to better benefit from HIT.
However, just as the 2005 RAND study over-estimated the potential savings with implementation of HIT, several observers tell HealthLeaders Media that the latest RAND report may be prematurely drawing too dire a picture of HIT adoption.
"We're moving as fast as we can"
John Halamka, MD, CIO at Beth Israel Deaconess Medical Center in Boston, says that the savings from EHR haven't been realized yet because "we are still at an early stage of EHR implementation, healthcare information exchange connectivity, and decision support. Meaningful Use Stage 2 in 2014 will take us to a new level that will begin to reduce redundancy, over treatment, and waste. Stage 3 in 2016 will take us even further by enhancing outcomes."
"We're on a journey and I have every expectation we'll change the practice of medicine to improve its value (quality/cost)," Halamka wrote in an email exchange. "We're moving as fast as we can to accomplish this and I believe by 2016 we'll realize the improvements we're seeking from the meaningful use foundation we've built. Expecting significant cost reductions by 2013 is not realistic at this point in the process."
A lot of the nagging HIT problems
Jeff Smith, assistant director of public policy with the College of Healthcare Information Management Executives, concedes that HIT has been off to a sluggish start in some areas, but he says that is to be expected.
"It is something that you see especially in the technology world when you have these great expectations about what technology can do and when you start to implement the technology especially on such a wide scale you see that it doesn't always meet the highest expectations," Smith says. "I think when they came out with the $81 billion annual savings that was a high expectation first of all and it's a difficult calculation to come up with consistently."
That said, Smith adds that the report also identifies a lot of the nagging problems with HIT, including issues with interoperability and usability, the fragmentation of the vendor market, and a lack of patient-generated data.
"When we are looking at academic articles, they are relying on data in a high-tech world and even data up until now is going to have a certain bias towards the old way," he says. "So when you look at this article and other articles that focus on 'is health IT worth the ROI?' you really have to think 'well the data they are using is by and large contingent upon a world that was fragmented.'"
Stage 1 took great leaps and bounds toward the adoption of election health records, but it's not going to be until we get to Stage 2 that we start to see things coalesce, especially around standards that will lead to greater interoperability," he says.
"My initial reaction is [that] if they revisit this same study in another five years and they may the same conclusions then we might have some problems, we might really need to reassess what is going on.
"But the pieces that have been put in place in Stage 1 meaningful use generate data that didn't exist before and the pieces for Stage 2 will align the data in a standardized way so people can use it, and you are going to see a leapfrog effect."
EHR adoption "in its infancy"
Pamela McNutt, senior vice president/CIO at Dallas-based Methodist Health System, says HIT advocates were a little naïve early in the process.
"There was a bit of over-simplistic thought that if we just purchased and installed some software that suddenly everyone would start connecting and talking and it is premature," McNutt says. "Even people who have met high levels and are ready to meet Meaningful Use Stage 2 still have to work to get efficiencies."
"Adoption is happening, but it is still in its infancy," she says. "It is not mature, even for people who've met meaningful use Stage 1. That is the reason there are stages, they bring us to different levels of maturity. And this whole healthcare information exchange idea is also in its infancy. We haven't had enough time to see the impact. We do need organizational change. Things like shared-savings programs, medical homes that are going to drive the change from different directions. We are getting there but we aren't there. But nobody should be looking at this and saying it didn't work."
McNutt says the whole idea of "efficiencies" in HIT is a bit undefined. "We have to talk about what are the efficiencies we are looking for," she says.
"I don't think anyone went into this thinking that this would cut hours out of doctors' and nurses' time every day. But are we going to get better outcomes, less complications, less morbidity and mortality. That all adds up to dollar savings in a different kind of way, but I don't think I'd call that efficiency."
McNutt says using HIT to reduce costs won't happen until it can be done on a population health basis.
"When records from all providers, post-acute, acute, pharmaceutical, when all of that can be put into a usable record, that is where we might begin to have some savings," she says.
"But the RAND study does make a point that probably is true—that even if you have all the tools in the world to see what is going on in the patient you have to change your work flow to use the information from those tools."
Providers across the nation launched 106 new Medicare Accountable Care Organizations on January 1 in the latest ramp-up of the coordinated care program. Since the program's inception in late 2011, more than 250 ACOs have been formed in almost every state, Centers for Medicare & Medicaid Services officials said Thursday.
"By CMS's estimate these total organizations are serving more than 4 million Medicare fee-for-service beneficiaries. That represents more than 10% of the overall fee-for-service program," Jonathan Blum, CMS acting principal deputy administrator and director of the Center for Medicare, told reporters in an afternoon teleconference.
"Beyond the growth we are pleased by the diversity—both geographic diversity and organizational diversity. Forty-nine states plus the District of Columbia and Puerto Rico now have one or more ACOs operating within that area. But also the organizations that are participating are large and small, physician-led and physicians partnering with hospitals," Blum said.
The formation of Cedars-Sinai Accountable Care, which is the new ACO for Cedars-Sinai in Los Angeles, is a means of preparing for implementation of the Patient Protection and Affordable Care Act, says Thomas Gordon, CEO of Cedars-Sinai Medical Delivery Network, an umbrella group of physicians' organizations associated with Cedars-Sinai Medical Center.
"When you look at healthcare reform, and the need to improve patient care and reduce the cost of care, this program was a way to do that," says Gordon, who will head up the ACO. "All the doctors and executives thought this was the right approach."
About half of all ACOs are physician-led and serve fewer than 10,000 beneficiaries. About 20% of ACOs include community health centers, rural health centers, and critical access hospitals that serve low-income and rural communities. Fifteen of the newest 106 ACOs are under the Advanced Payment Model, which provides physician-based or rural providers with greater access to upfront capital to invest in staff, electronic health record systems, or other infrastructure needed to improve care coordination. Medicare recoups advance payments through future shared savings, CMS said.
The shared-savings initiatives began in late 2011 when CMS launched the Pioneer ACO program for large provider groups able to take greater financial risk for the costs and care of their patients over time.
Dignity Health Arizona, a three-hospital system in Phoenix, was very interested in the Pioneer ACO program but found the specifications too lacking in detail, says Chief Integration and Development Officer Mark Hillard. Dignity Health Arizona spent the ensuing 15 months establishing a network of physicians to enter into an ACO structure, now launched as Arizona Care Network.
This ACO encompasses more than 1,200 physicians—300 primary care and 900 specialists—across greater Phoenix. "It took a lot of time [to create the ACO network] because the concepts of the ACA are complex and hard to explain, but these providers are very interested in protocols and taking variation out of clinical care," says Hillard, who is also CEO of Arizona Care Network.
Medicare beneficiaries using ACOs can choose doctors inside or outside of the ACO. The ACOs share with Medicare any savings generated from lowering the growth in healthcare costs, while meeting 33 quality-of-care measures that address coordination, patient safety, prevention, and specialized care for at-risk populations.
Federal officials have estimated that ACOs could generate about $940 million in savings over the next four years. However, Blum says more time is needed to assess the programs' effectiveness.
"These are programs that started just in 2012 and it's too early to talk about results. But we are very optimistic that the program will reduce overall costs, particularly the fact that we have so many more physicians coming into the program," he says.
Blum says he believes ACOs will demonstrate their worth by squeezing savings out of an inefficient healthcare delivery system. "There is clearly wide variation in healthcare spending across the country. There are clearly ways to improve care," he says.
"The opportunity that's presented by the ACO program is not to provide care in the same way at lower payment rates but to fundamentally change care, to improve the care coordination, to avoid unnecessary care, to reduce rehospitalizations, to improve post-acute care, to ensure that pharmacy benefits are aligned with traditional medical benefits."
Of the more than 250 ACOs in the shared-savings program, only eight have chosen the so-called "risk track" that provides greater earning potential if metrics and savings are met, but also leaves providers on the hook if those savings don't materialize.
In addition to the 106 new ACOs, Blum says an additional 60 ACO applications were rejected.
"By far the biggest reason for organizations not getting a contract from CMS was the statute that says that ACOs have to demonstrate they can serve a population of 5,000 beneficiaries," Blum says.
"To demonstrate true cost savings beyond random variation there has to be a sizeable population, so Congress determined the population was 5,000 or more. We are bound to follow that."
The next application period for the shared-savings program that begins in January 2014 is summer 2013.
Also this week, HHS is crediting the PPACA with reducing the growth rate of Medicare spending. According to a new report from HHS, Medicare spending growth per beneficiary hit "historic lows," averaging 1.9% from 2010 to 2012, which is more than one percentage point lower than the average annual growth of 3.2% per capita for the Gross Domestic Product.
Projections by both the Office of the Actuary at CMS and by the Congressional Budget Office estimate that Medicare spending per beneficiary will grow at approximately the rate of growth of the economy for the next decade, breaking a decades-old pattern of spending growth outstripping economic growth, the report said.
