In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. All of them are playing a crucial role in making the healthcare industry better. This is the story of Lori Swanson.
This profile was published in the December, 2012 issue of HealthLeaders magazine.
"There is a time a place and a way for a hospital to collect money but the ER isn't it."
For Minnesota Attorney General Lori Swanson, the case against Accretive Health Inc. started out as a straight-forward HIPAA violation investigation.
An employee at the Chicago-based revenue cycle management and debt collection firm lost his company laptop in a smash-and-grab while his car was parked at a Minneapolis restaurant. The unencrypted computer contained health records for more than 23,500 people.
As prosecutors began investigating the theft they also began to hear troubling reports from patients and Accretive employees about the company's business practices at three hospitals it had contracted with in Minnesota.
"I personally met with over 60 patients who were asked to pay money in the hospital. It was just unbelievable what was being asked of them," Swanson says. "There was a lady who just had her baby and she was literally told before you can take your baby home you have to put $800 on your credit card. She did.
"Another woman, we call her Jane Doe No. 3 in the papers, she was having a miscarriage. Pregnant with her first child, she went to the ER and they demanded right there in the middle of the miscarriage that she pay on a credit card. She did lose her baby that night. That kind of conduct has no place in an American hospital," Swanson says.
"In one case a child had swallowed a bottle of pills, didn't want to live anymore. The mother whisked her child to the ER in the middle of the night. They administered a charcoal solution to start absorbing the overdose," Swanson says. "Mom was literally taken from her daughter's side at that point even though the doctors needed to talk to the mom to get information about the daughter's mental state. She didn't know if she was going to live or die. The mom was asked to pay $500 on a credit card so she could return to her daughter's bedside."
Oddly, in almost every case, the patients did have health insurance. "The hospital would get paid eventually," Swanson says. "There is a time a place and a way for a hospital to collect money but the ER isn't it," she says. "When you go to the ER you don't have a wallet with you. You are fleeing your home for emergency treatment. It just was unconscionable what these patients were put through."
Swanson says she understands the financial constraints that hospitals are under and that they have the right to pursue outstanding debts. But she says there is no excuse for Accretive's tactics.
In July, Accretive agreed to pay the state of Minnesota $2.5 million, which will be put in a restitution fund to compensate patients. Also as part of the settlement, Accretive is banned from doing business in the state of Minnesota for at least two years and cannot re-enter the state for six years without the consent of the attorney general. The attorney general had alleged violations of state and federal health privacy laws, and of state debt collection laws. The settlement contains no admission of liability or wrongdoing, Accretive noted in a statement.
Swanson says she believes the investigation and the widespread publicity it received struck a nerve with the public, and that the settlement sent a message to other hospitals and debt collectors.
"When you go to the ER you want to enter a sanctuary where they are going to care about treating your medical condition and stabilizing your emotional suffering," she says. "Anybody can have a heart attack or be in a car accident and have to go to the ER. It is people's worst nightmare that it would happen to them or a family member, and at the worse time in your life a bill collector comes at you as a number on a balance sheet instead of a patient who needs care. There is a consensus that there is a time, a way, and a place for hospitals to collect money but this was the wrong place, time, and way to go about it."
I spent a recent afternoon reviewing some of my columns from 2012.
Clearly the biggest issue facing all healthcare providers, both rural and urban, this year 2013 and into the next decade or longer is the implementation of the Patient Protection and Affordable Care Act.
There are still a lot of questions about the rollout, particularly as they relate to Medicare/Medicaid reimbursements and the development of state-and federally sponsored healthcare exchanges.
With that in mind, it's easy to forget that rural and community-based healthcare providers have other challenges that precede or are not directly tied to PPACA. That's what I'd like to look at today.
Rural Patient Migration
The story that I found most interesting in 2012 concerned patient migration from rural areas. As I noted in September, a study found that nearly half of Tennesseans living in rural areas who seek healthcare drive past the hospitals closest to their homes to look for care in more urban settings, even when their local hospitals offer the same services.
Unfortunately, the data used to compile the study doesn't say why rural patients travel farther from home to get their healthcare.Study author Steven L. Coulter, MD, president of the BlueCross BlueShield of Tennessee Health Institute says "that actually is the question of the hour."
"My speculation is that they perceive, whether true or not, that the services are better elsewhere. We really can't make a policy-level judgment based on the data we have found. All we can say is people are mobile and they are moving. What we can't say is whether that is a good thing or a bad thing, because we haven't looked at clinical outcomes or the economic impact on the communities that these small hospitals serve."
These findings suggest that profound changes are underway for rural hospitals, at least in Tennessee. Maybe it's time for rural hospitals to wave the white flag for elective procedures and instead focus on services that take advantage of their proximity to patients: Trauma and chronic care.
The Affordable Care Act will place a renewed emphasis, and money, on chronic care treatment. Coulter believes that rural hospitals are a perfect source point. Instead of traveling longer distances for their more-frequent chronic care consultations, patients could drive to the hospital down the street.
The Obesity Battle in Rural America
Generally speaking, rural providers have to care for an older, sicker, less educated, less-affluent and more overweight population. That poses any number of challenges in this era when reimbursements shift away from fee-for-service and more toward outcomes.
In September, I wrote about a University of Florida study published in the Journal of Rural Health which found that 40% of rural residents are obese, compared with 33% of urban residents.
Earlier studies had already shown that overweight and obesity is a bigger problem in rural areas, but those studies put the difference in the 2% to 3% range. That estimate is now doubled. With about 60 million people live in rural America, and assuming that the UF findings are valid, 24 million rural residents are obese as measured by the Body Mass Index.
"The problem [is that] the earlier studies were based on surveys that asked people to self-report height and weight," UF study author Michael G. Perri told HealthLeaders Media. "The study we did was based on measured heights and weights. One thing we are well aware of is that people tend to underreport their weight and over report their height. Everybody is five to 10 pounds heavier than they report and an inch shorter than they claim."
Obesity is a preventable condition that is linked to any number of serious and expensive-to-treat chronic diseases and other medical conditions such as Type 2 diabetes, coronary heart disease, high-blood pressure, cancer, sleep apnea, osteoarthritis, liver and digestive tract complications, and even mental illness.
"We simply cannot ignore the link between obesity and poverty, and the disproportionate impact this is having on rural America," Alan Morgan, CEO of the National Rural Health Association, said on the advocacy group's Web site. "If we truly want to decrease healthcare costs and improve the nation's health status, we are going to have to start viewing obesity as a top-tier public health concern for rural Americans."
This greater demand to provide and manage care for the obese will come as healthcare reform turns towards reimbursement models that reward quality outcomes and prevention over fee for service. Rural healthcare providers must get on the front end of this epidemic and emphasize prevention. Unfortunately there doesn't seem to be much coordination for this in any broad fashion.
"They are coming from totally different angles. We have people with different world views," he says.
"The folks in cooperative extension are coming largely from the perspective of agriculture. They feel somewhat uncomfortable moving towards healthcare as part of their mission. The folks in hospitals and clinical care see cooperative extension as the folks who help farmers and run 4-H clubs. There hasn't been a concerted effort to bring the two groups together."
What's Driving the Community Hospital M&A Boom?
Clearly, PPACA is a major component of the drive toward hospital mergers and acquisitions. But this trend has been accelerating since before Barack Obama was elected president. Irvin Levin Associates tells us that there has been a steady increase in hospital M&As over the past decade, growing from 38 deals involving 56 hospitals in 2003, to 90 deals involving 156 hospitals in 2011.
Lower payment rates from all payers will invite consolidation as hospitals look to reduce costs and improve economies of scale and market leverage with payers and vendors.
Physician-employees, technology, and regulatory compliance are driving up the cost of doing business.
Accountable care organizations reward integrated healthcare delivery that improves quality at reduced cost.
In the face of these challenges, scores of otherwise stable and well-managed not-for-profit community hospitals and health systems have joined with larger health systems in any number of partnership models. The strategy for many of them is to negotiate now from a position of strength rather than waiting for market pressures to force a move.
The biggest knock on hospital M&As is the loss of local autonomy. Hospitals are often the biggest employers and economic engines in the regions they serve and a source of local pride. No matter what guarantees are put in place the boards at most acquired hospitals are usually reduced to advisory status and their control is greatly diminished.
Scores of other hospitals across the nation have seen which way the winds are blowing. Increasingly they are willing to forfeit a certain amount of autonomy in exchange for access to the capital and clinical and business expertise that will improve their position in a highly competitive market.
There was more exasperation than applause coming from the major players in the healthcare sector this week after Congress approved a stopgap measure to delay until March 1 a trip off the so-called "fiscal cliff."
Passage in the House late Tuesday of the "American Taxpayer Relief Act of 2012" (HR8) essentially delayed most of the tax hikes and sweeping budget cuts that were to begin on Jan. 1. The Senate version passed early Tuesday morning.
Lawmakers in the 112th Congress congratulated one another on their willingness to work together to solve the problem they created entirely by themselves and then offered public promises to address questions unanswered when the 113th Congress convenes this week.
Impact on Physicians
The Taxpayer Relief Act features major provisions affecting funding of Medicare and Medicaid. The most significant healthcare provision is the continuation until Dec. 31, 2013 of the Medicare Physician Fee Schedule Sustainable Growth Rate, which had been scheduled for a draconian 26.5% cut on Jan. 1.
Word that the SGR cuts would be delayed for another year was met with a shrug from most physicians' associations. David L. Bronson, MD, president of the American College of Physicians, captured the reaction of most physicians' professional associations when he said in a media release that the Act "falls well short of ACP's goals of enacting a permanent replacement to the Medicare SRG formula and enacting a fiscally and socially responsible alternative to across-the-board cuts."
"In the short term, this legislation helps ensure access to high-quality medical care for Medicare beneficiaries, and ensures that physician payments under Medicare will not be cut through 2013," Bronson said.
"However, a greater bipartisan effort is still needed in the coming year to approve legislation that permanently repeals once and for all the flawed SGR formula, and transitions to payment models that provide predictable annual updates to physicians participating in Medicare, while being aligned with the provision of high quality and efficient care."
The $25.2 billion cost of extending the SGR over the next 10 years will come primarily at the expense of hospitals and other providers—including some subspecialists—in the form of Medicare "offsets."
Impact on Hospitals
The largest hits for hospitals will include: an "adjustment" in the Inpatient Acute Care Hospital Documentation and Coding, which is expected to save about $10.5 billion over 10 years, starting in 2014; reduced bundled payments for end-stage renal disease, which is expected to save about $4.9 billion, starting in 2014; and a further reduction from 25% to 50% for therapy multiple procedure payments, with savings of $1.8 billion over 10 years, starting April 1.
The general perception of the Relief Act is that hospitals were the big losers. That perception was not diminished with American Hospital Association President/CEO Rich Umbdenstock's complaint that fixing the SGR "should not be done by jeopardizing hospitals' ability to care for seniors in their communities."
"That's why we are very disappointed at the approach taken in this measure," Umbdenstock said in prepared remarks. "Additional payment reductions will make it harder for patients to access the care they need and depend on."
Umbdenstock said the AHA will continue to work with Congress to "find a permanent solution to the Medicare physician payment problem, while remaining vigilant against additional cuts that could be harmful to hospitals' ability to fulfill their mission of caring."
Impact on Patient Population
That sentiment was echoed by Bruce Siegel, MD, president/CEO of the National Association of Public Hospitals and Health Systems. Under the Act, safety net hospitals and other providers with larger Medicaid populations will see cuts to their disproportionate share payments totaling about $4.2 billion over 10 years.
"While this agreement averts severe economic hardships for the nation, it nonetheless puts at risk essential healthcare for millions of vulnerable people," Siegel said in prepared remarks. "Solving one side of the provider equation must not come at the expense of the other—particularly the hospitals and health systems that care for a disproportionate share of Medicaid and other low-income patients."
Beyond the SGR extension and further "adjustments" for other Medicare and Medicaid providers, the legislation only delays until March 1 additional and sweeping cuts mandated by the so-called Sequestration.
Those reductions include across-the-board cuts of 9.4% for defense spending, 8.2% for non-defense spending, and 2% for Medicare payments. Those cuts come due right as Congress and the Obama administration debate another extension of the federal debt ceiling.
"It certainly looks like a stopgap measure. Hurry up and wait until the end of February when we hit the debt ceiling again, and we have to figure what to do again," says Bill Copeland, a healthcare consultant with Deloitte LLP.
He says there is nothing to indicate that anything will change in the next two months that would lend itself to a longer-term solution.
"Everything that I've seen indicates that we will continue to push it out to see if someone else has a better answer," Copeland says. "It is a bitter pill that we are going to have to swallow at some point especially around healthcare. We don't seem to have a really good answer other than continuing to push it further out. Whether they come out with another one-year fix for SGR or they do something more grand and whether they come to grips with some of the things they are trying to do with Medicare I don't know. It doesn't seem like it was going to get into this bill for sure. It is hard to think they are going to get anything accomplished in two months."
Long-Term Effects
Richard "Buz" Cooper, MD, a healthcare economist and senior fellow at the University of Pennsylvania, says it's too early to predict the long-term effects of the Act.
"On the one hand, it accomplishes some income redistribution, with higher income and investment taxes borne by wealthier individuals and with the retention of unemployment insurance and income tax credits for poor families," Cooper said in an email exchange.
"But the untold story has to do with things beyond this legislation, like the added payroll taxes for Medicare and the ACA, taxes on medical equipment, and the steep increases in Medicare B premiums for upper income retirees. It will take a good deal of analysis to figure out exactly what the tax picture will look like for 2013 and beyond."
Neil Nelson, MD, wears many hats in Gibson City, the east-central Illinois town of 3,400 or so souls where he grew up and now practices primary care.
In addition to being an internist and pediatrician, Nelson, 53, is a licensed pharmacist. He has a deputy sheriff's Stetson that he dons occasionally as a volunteer auxiliary police officer with the Ford County Sheriff's Department. And when he's not helping the sheriff, Nelson can be found helping his 77-year-old mother with various farm chores on their nearby acreage.
Of course, Nelson never takes off his doctor hat. Even when he's working at law enforcement or farming, Nelson remains on call 24/7 to attend to the 5,000 or so active patients in his practice. And even though he concedes he is something of a dinosaur, Nelson's not complaining.
"This is something you have to enjoy and if you don't enjoy it don't get into it," says Nelson, who in December was named the winner of the 2012 Country Doctor of the Year award.
"Pick a different specialty where you don't have to work 24/7. Pick a sub-specialty where you can work 8-5 with time off without any worries," he says. "But if you like patients and you want to have your own practice and you want to be a doctor like in the old days, go ahead and do this. You just have to be aware of the commitment that is necessary for this type of practice."
The annual Country Doctor of the Year Award has been around since 1992 and "recognizes the spirit, skill, and dedication of rural medical practitioners" in communities of 30,000 or less.
"Dr. Nelson is a true home town hero," said Sean Ebner, president of Staff Care, which sponsors the award. "He is both an integral part of healthcare in the community he grew up in as well as one of its most caring private citizens."
Nelson grew up in Gibson City, located about 120 miles south of Chicago. From an early age he knew he wanted to be a doctor, a farmer, a pharmacist, and a cop.
"I had always wanted to go to medical school since I was five years old. And then a pharmacist came to our school during professions day and a doctor came after that. I thought it'd be good to have a pharmacy background before I went to medical school," he says.
With the guidance and support of pharmacy and physician mentors in Gibson City, Nelson first went to pharmacy school and worked in that field for a couple of years before going to medical school. He says being a pharmacist has helped his medical practice.
"I am not afraid to use medications when they come out," he says. "With aging patients or with kids, a lot of physicians don't have the background in pharmacy like I do, so they are afraid to give medications. Being a pharmacist I learned how to use the medications properly and when to use them in certain medical cases and I feel comfortable with medications. A surgeon has a scalpel. Well, I have my pen to order medications that make people well and I don't hesitate when it comes to that."
Nelson says the decision to return home to practice medicine made him anxious. "At first I was scared to come back here because I didn't know what the perception of the people in the community would be to a hometown boy who they had watched going through high school," he says.
"Sometimes people don't consider the people who grow up in their hometown in a professional way and they might be uncomfortable going to a physician in their hometown because they've known you your whole life and watched you grow up and feel too close to you as a friend to come to you as a doctor," he says.
"But when I came here, it was mostly just the opposite. I attracted people in my office because I was from the community and they trusted me."
Being rooted in a small town also gives Nelson the opportunity to fulfill another childhood dream of becoming a volunteer sheriff's deputy. "Sometimes you get bored doing the same thing over and over again and it gives me a chance to get out and do something different so I can keep my concentration when I come back to work," he says.
"I enjoy being involved in emergency situations and helping folks. Sometimes it's a problem if you are involved in a call and one of the people doing something illegal is one of your patients. Then it is hard, but you have to switch hats and do the right thing and hope they'll understand."
Of course, being a hometown hero can be a double-edged sword.
"Everybody knows who you are. Whenever I go I will run into somebody I know. And when I come back to the office a patient will say 'I heard where you were the other day,'" Nelson says.
"I had a secret girlfriend in Danville (46 miles away) that I didn't tell anybody about but as soon as I got there I ran into somebody from Gibson City. It's pretty hard. You get stopped in the grocery store. I get mobbed by my patients who want to know about tests and reports and just to talk to me. A lot of patients get a good feeling talking to their doctor. It's almost like being a celebrity."
With so many commitments, Nelson hasn't taken a vacation in 12 years. "People get so upset when I leave town because they don't feel they get as good a service from other doctors," he says.
"I just have a close attachment to most of my patients. I give them my phone number and they can call me 24/7 whenever they have a problem or a question. I just feel like I have an obligation to my patients. They are almost like my family since I am not married and I don't have any children."
Winning the Country Doctor of the Year award means that Staff Care will pay a temporary physician to cover Nelson's practice for a couple of weeks. Nelson says he's going to take advantage of the offer.
"I don't know where I'll go, but people have recommended Hawaii. I wouldn't mind going to Europe. I've always wanted to do that."
The growing number of joint ventures and mergers between non-profit and for-profit hospitals may signal a warming trend in longstanding frigid relations as the rival sectors come to recognize the merits of working together in an evolving healthcare environment.
At least, that's the opinion of James E. Burgdorfer, a principal at Juniper Advisory LLC,the privately held, Chicago-based investment banking firm that provides merger and acquisition advice for nonprofit hospitals.
"A significant and growing minority of hospital leaders are taking the view that it might be inevitable that nonprofit status for hospitals could at some point in the future go away," Burgdorfer says.
"There are two reasons for that. One is that there are more attacks being made by counties and cities and states against tax exemption around the country. As more cities and counties are in desperate need of money they are going to go after nonprofits more and more."
"And number 2, there is a general feeling that with the passage of the [Patient Protection and] Affordable Care Act and the Supreme Court's ruling upholding it that down the road sometime there isn't going to be much charity care because everybody is going to have insurance. The thought is starting to register that maybe the charitable care exemption is going to go away."
In a new era of tighter regulation and smaller margins, Burgdorfer says the operational differences between for-profit and nonprofit hospitals also "has narrowed dramatically."
"Nonprofit hospital companies are definitely operating more like a for-profit company and for-profit companies over the last 20 years have been trying hard to improve quality and the relationships with the communities they serve," he says. "A lot of experts today would argue—and there is a lot of truth in their argument—that there isn't a lot of difference between the two."
"However the fundamental differences remain intact. They have different sources of capital that are backing them. And there is an inherent need to work together and to have access to both debt capital, which has historically backed the nonprofit sector and equity capital which has historically been a large source of capital for the for-profit hospitals. It is wise for them to see the inherent strength in coming together for these joint ventures."
A sign of this warming trend, Burgdorfer says, is the growing popularity of the buyer joint venture, in which the nonprofit hospital sells a majority ownership to a for-profit partner, while still retaining a minority interest that includes an active role in hospital governance.
BJVs allow non-profit and for-profit hospitals to combine and tap their traditional strengths. For non-profit hospitals that means maintaining clinical services, community relations, and an institutional reputation. The for-profit partners offer access to capital and business management. While the BJV means that the new health system changes to a for-profit entity, the partnership continues to operate under nonprofit principles that include access to charity care.
A prime example of a BJV would be the partnership that was finalized in September when Duke LifePoint Healthcare acquired Marquette General Health System, a regional referral system that serves a 15-county region in Michigan's Upper Peninsula.
"Conceptually it's very simple," Burgdorfer says. "It's a way for for-profit hospital companies and non-for-profit companies who have historically been at odds with each other to work together and own hospitals together either buying building them buying them or jointly throwing a bunch of hospitals that they own independently into a commonly owned group."
"My own personal view is that buyer joint ventures could be a harbinger of that change in that for-profit companies and 501(c)3s really are the agents of change in the hospital industry. As they begin to work together maybe that is the beginning of the end of the difference between for-profit and not-for-profit. But that is 20 years away."
Burgdorfer says keying on the technical and legal details of BJVs is not as important as understanding how the arrangements "represent a fundamentally new way for former foes, nonprofits versus for-profits, to work together in owning things; not just to work together or affiliating but owning things together. That is where their enormous importance in the future lies. That is the fundamental change."
He says the 2010 BJV in Florida of Shands Healthcare and its three University of Florida-affiliated hospitals by investor-owned HMA of Naples provides another good example of the changing sentiment.
"Historically, you would not have seen someone like the University of Florida working with HMA, but that has been a rip-roaring success," Burgdorfer says.
"The University of Florida sold a majority stake in its rural hospitals surrounding Gainesville and retained full ownership of its tertiary academic medical center. They got a lot of money out of it. They no longer have to run these little county hospitals that they aren't good at running because they run big academic hospitals."
"HMA does a better job of running these little hospitals. That is their business. And the referrals are going up. They are all happy as a pig in mud," he says. "Hats off to the University of Florida to being willing to consider change like that. Most big nonprofits don't want to engage in that kind of change because they think for-profit companies are evil."
When Massachusetts imposed its first-in-the-nation statewide ban on ambulance diversions on Jan. 1, 2009 some providers voiced concerns that the policy would lead to longer emergency department wait times and delayed ambulance turnarounds.
A study shows that those concerns have not materialized.
In fact, the average ED wait time and ambulance turnaround dropped in the nine Boston-area hospitals whose records were reviewed in the study, which appeared this month in the online version of Annals of Emergency Medicine.
Researchers examined ED records for all of 2008, the year before the ban was imposed, and for 2009, using length of stay as the measure for crowding. The data showed that none of the nine hospitals' EDs saw an increase in length of stay for admitted or discharged patients, and there was no increase in ambulance turnaround time, despite an increase in overall ED patient traffic.
Overall, ED volume at the nine hospitals increased by 3.6% after the diversion ban but length of stay fell 10.4 minutes for admitted patients and ambulance turnaround time fell 2.2 minutes, the study found.
"For us, the key point was that times went down at all. We had heard that things were going relatively well but we wanted to approach it quantitatively," says study coauthor Laura G. Burke, MD, MPH, an emergency physician with Beth Israel Deaconess Medical Center in Boston.
"We actually were surprised we found some decreases. The key take home is that it didn't cause disaster. Considering how frequently hospitals in our state and across the country have used diversion, that is an important finding that we eliminated it across the board and things went well."
Not only did the study alleviate fears about ED backlogs, Burke says the results also undermine arguments that diversion is an effective strategy for combating overcrowding.
"There were concerns when the ban was imposed that diversion had been the way of doing business for some time and it was a significant policy change so there were definite concerns that it would cause problems for hospitals," Burke says.
"But there has been research in emergency medicine that has looked at what are the main causes of ED crowding. The thought is that it is output factors that lead to ED crowding, predominantly boarding of admitted patients in the ED. If you want to impact crowding, ambulance diversion isn't the best way to go about it. Hospital-wide factors such as lack of bed availability or insufficient staffing cause boarding in the ED, which is a much greater contributor to crowding."
In addition, Burke says, diversion causes problems for patients and hospitals.
"If you are followed primarily at one hospital and forced to go to another hospital that causes problems for patients. When one hospital is on diversion it causes problems for other hospitals," she says.
Diversion planning also forces hospitals to construct overly complicated Rube Goldberg-type contraptions designed for a strategy that doesn't work. "I talked to people who have been involved in diversion for a long time and they talked about this whole infrastructure created for diversion and when to go on diversion but it really doesn't solve the problem of crowding and it creates a lot of problems," Burke says.
Massachusetts imposed the ban on ambulance diversions after a decade-long study determined that "diversion has been shown to be ineffectual in addressing ED overcrowding, and its elimination is in the best interest of patient safety." Bay State hospitals are prohibited from diverting ambulances unless the ED is on "Code Black" status for contamination, fire, flooding, or other disasters that limit operations.
"Massachusetts hospitals have led and continue to lead the nation in finding ways to reduce ambulance diversion," says Anuj Goel, the Massachusetts Hospital Association's vice president of legal and regulatory affairs.
"In 2009, we were the first state to restrict the use of ambulance diversion by developing a collaborative environment for hospitals, physicians, ambulance companies and state regulatory agencies to find ways to address administrative and regulatory barriers to this effort. Today, we've moved beyond ambulance diversion to focus on patient flow for care provided before and after emergency department visits, to assist patients in our communities receive both timely and effective medically necessary care."
Burke says the announcement of the diversion ban in June, 2008 forced hospitals to abandon a flawed strategy to address ED crowding and look at the problem from a new direction in the months before the ban was imposed.
"Several hospitals took that six months before the implementation of the ban to make some changes," she says. "We asked people informally what they did to prepare for the ban. There were all sorts of things to improve flow. Now hospitals have made these changes to improve patient flow and that led to decreases in patient crowding."
While pleased with the study's findings, Burke concedes it has "limitations" that might gloss over some wait time issues.
"We looked at medium monthly length of stay so there could be smaller isolated periods of crowding that our study doesn't take into account," she says. "We are not trying to say that the ban is going to cause your crowding to go down but in our study sample it didn't cause an increase in crowding."
A wide-ranging study of the nation's hospitals has found that, while surgical "never events" are rare, they still pose a threat to patient safety and a considerable financial burden to hospitals.
Foreign objects such as towels and sponges are left inside patients' bodies about 39 times a week, wrong procedures are performed on patients 20 times a week, and wrong body site operations are performed about 20 times a week, estimates a study from the Johns Hopkins University School of Medicine. In all, the study counted 80,000 "never event" episodes that resulted in hospital payouts of about $1.3 billion between 1990 and 2010.
Study leader Marty Makary, MD, an associate professor of surgery at the Johns Hopkins University School of Medicine, says he's not surprised by the findings.
"Many surgeons know how easy it is to leave a sponge behind. Sponges will often change colors. They are packed in tightly. We may put in 20 sponges during a case and have to take all of them out. So it is actually not inconceivable that we could leave a sponge behind," says Makary, who is also the author of Unaccountable:What Hospitals Won't Tell You and How Transparency Can Revolutionize Health Care.
"In the majority of cases nothing happens," he told HealthLeaders Media. "The sponges are undetected, so they aren't even captured in the study we did. There are many more undetected sponges than the ones we measured. We put artificial things in patients all the time, like mesh and prosthetics. The body just incorporates it. It's sterile when it goes in. Sometimes these sponges can get infected or even cause pain, and in those situations it will prompt a scan or an X-ray and it will be discovered and surgically removed."
Using the National Practitioner Data Bank, Makary's researchers found malpractice judgments and settlements for surgeries associated with retained foreign bodies, wrong sites, wrong procedures, or wrong patients. They identified 9,744 paid malpractice judgments and claims over 20 years, with payments totaling $1.3 billion. Death occurred in 6.6% of patients, permanent injury in 33%, and temporary injury in 59%. Using published rates of surgical adverse events resulting in a malpractice claim, the researchers estimate that 4,044 surgical never events occur nationally every year. More serious events involved costlier settlements.
"We've never really had a way to measure this on a national level," Makary says. "Until now we have relied on estimates from voluntary reports from hospitals, and we know that is haphazard." The NPDB is a good source for malpractice claims data for never events because it filters out frivolous lawsuits, he says.
While the study's findings may appear to be alarming, Makary believes they are low-balled. "Although we believe the cases we identified are real, we don't know what the upper end of the range is. We are simply describing the lower end of the range. We believe these are accurate and true cases because hospitals don't pay money for frivolous lawsuits."
"The problem could be three to four times larger than the cases we identified in our study," he adds. "If 60% to 75% of retained objects are never detected and those that are may not necessarily result in a hospital payment, we know that the one-in-seven, one-in-eight, or one-in-nine that we are seeing in the data represent only a fraction of the true scope of the problem."
The study found that surgeons between the ages of 40 and 49 were responsible for one-third of the never events, compared with 14.4% of surgeons over age 60. "That was an interesting finding. I don't have the real explanation for that finding. It may be that once you are a high-volume surgeon you are at the most risk," Makary says. "But it disproves or at least lends less credence to the idea that younger surgeons and very old surgeons are the ones who have the most events associated with them."
In addition, 62% of surgeons were cited in more than one malpractice report and 12.4% were named in separate surgical never events. "All doctors have a 62% chance of being sued. Most of them are frivolous lawsuits, so I can't draw much from that," Makary says. "But the 12.4% having previously been involved in a paid settlement for a retained foreign body tells us that we have a high-risk group, and perhaps education efforts or other prevention efforts can be directed toward this high-risk group."
Makary points to protocols such as post-operative checklists and technology that already exists to flag retained sponges. "We have sponges with radio frequency ID tags sewn into the sponge, where a sensor can detect during or after an operation if one of these things is still in the abdomen," he says. "It's technology that makes sense. I've tried it and it works. Hospitals should adopt this technology if they want to get serious about reducing the human factor in this problem."
As troubling as never events are, Makary says they are probably impossible to eliminate because surgeons and other clinicians practice medicine in complex, labor-intensive, high-pressure environments. "For example, the wrong-patient, wrong-procedure confusion will continue to be something that will be a longstanding challenge, even though these events are rare," he says.
Makary believes that increasing transparency in the reporting of never events will motivate hospitals into action. "Some states now have public reporting of never events, like Pennsylvania. It affects hospitals' consumer ratings," he says. "The transparency increases the accountability and the amount of resources a hospital devotes to the problem."
When community hospitals close, the immediate thought is of the loss of access to healthcare for the people in the service area.
No less important, however, is the economic impact of the closing. Hospitals are economic engines, oftentimes the largest employers in their communities. The ripple effect of a closure is felt almost immediately by the local businesses and municipalities that depend upon the salaries and taxes that hospital employees pump into the local economy.
New Jersey State Assemblyman Jerry Green (D-Middlesex, Somerset, and Union) saw firsthand the effect that the 2008 closing of the 355-bed Muhlenberg Regional Medical Center had on Plainfield, NJ, and the thousands of lives that were disrupted with the shuttering.
"It has had a tremendous impact job-wise," Green says. "At one time we had a little over 1,000 employees, the majority of whom lived in the Plainfield area. Local vendors that offered different services to the hospital were no longer able to do that. We had doctors in the immediate area that used the facility that no longer could afford to do business in the area because the hospital is no longer there, so they have moved out. That was revenue for them. It meant the people who live in the community that worked for them no longer have jobs. These same 1,000 people spent their money in town."
JFK Medical Center now operates Muhlenberg as a satellite emergency room and for outpatient clinical care. JFK's plans to turn the hospital into a shopping and residential development have been criticized by some city residents.
Green is the sponsor of A-3043, also known as the Heath Care Facility Repurposing and Revitalization Tax Credit Act. The bill, which is wending its way through the state legislature, would allow over 10 years, tax credits equal to100% of capital investment for developers who buy former hospitals that have lost their state certificate of need and who repurpose the buildings as medical arts malls.
To qualify, developers will have to demonstrate that:
They need the tax credits to make project financially viable
At least 50% of the net leasable space of the repurposed building will be dedicated to non-acute healthcare and support services
The facility "will not destabilize the supply and delivery of acute care health services in its market"
The tenants will employ at least 100 people
The developer will spend at least $10 million on the project
That it will yield a net positive effect for state and local government
"It's needed because we have a lot of hospitals in New Jersey closing," Green says. "There is no other way of financing someone coming in that might want to reopen it maybe as a scaled-down facility. Without some creative financing that is hopeless."
Green says the bill is carefully drawn so that these repurposed medical arts buildings would not provide in-patient acute care, nor would they compete with nearby hospitals for other services. "We are not competing with other hospitals but we are offering hospital services that are needed," he says.
The bill does not affect the budget, Green says, so he is confident that it will pass the Democrat-controlled Assembly and Senate. He hopes it will have the support of Republican Gov. Chris Christie.
"This could be a role model to save other hospitals that right now are on the bubble, but it's up to the governor," he says. Assemblyman Green and other community boosters should be commended for their efforts to mitigate the effects on a hospital closure on local economies. Opening a medical arts facility where a hospital once stood will no doubt create some new jobs and tax revenues.
To be clear, however, no medical mall can come close to replacing the lost jobs and revenues that vanish when a 24/7/365 hospital closes.
The announcement on Friday that Baylor Health Care System and Scott & White Healthcare intend to merge changes the landscape for healthcare delivery in the service areas around Dallas and Temple, TX, where the systems are based, respectively.
Even by Texas standards the two health systems are large by themselves. Combined and renamed as Baylor Scott & White Health, the $7.7 billion behemoth would become the largest nonprofit integrated delivery system in the state and possibly in the southwest, and one of the 20 largest health systems in the nation.
While the merger improves the unified system's economies of scale, efficiencies, market share, and negotiating clout with payers, there are questions about whether or not the accelerating trend of hospital consolidations such as this are escalating healthcare costs for consumers.
"This partnership is the right thing for Baylor. It's the right thing for Scott & White. And, it's the right thing for our communities," said Drayton McLane, Jr. chair of the Scott & White board of trustees, in a media release announcing the merger plans.
"Both health systems are well-organized, well-run, best-in-class organizations. We can learn from each other, and I think this only benefits the patients we serve by allowing us to deliver better quality care and increased access to care."
Some observers are not so sure.
In June, for example, the Robert Wood Johnson Foundation issued a review of previous studies on the effect of hospital consolidations and found that it "generally results in higher prices. This is true across geographic markets and different data sources. When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20%."
On the other side of the ledger, the RWJF review also cited previous research indicating that hospital competition improves quality.
But the projected effect on healthcare costs as a result of consolidation has garnered wide concern. Last month, America's Health Insurance Plans cited the costs borne by consumers as a factor in the amicus brief it filed in a federal appeals court supporting the Federal Trade Commission's challenge of a merger of two hospitals in Toledo, OH.
"Experience demonstrates that hospital consolidation results in higher prices for medical services and higher health care costs for consumers and employers," AHIP President/CEO Karen Ignagni, said in a media release accompanying the brief.
"Consumers have borne a tremendous cost from anticompetitive hospital mergers… A hospital transaction that eliminates competition between significant competitors increases the ability of those formerly competing hospitals to demand and obtain higher prices. Those increased prices are ultimately paid by consumers, who also must bear the additional harm created by reduced incentives to improve quality."
However, Richard "Buz" Cooper, MD, director of the Center for the Future of the Healthcare Workforce at New York Institute of Technology and a Senior Fellow in the Leonard Davis Institute of Health Economics at the University of Pennsylvania, says providers should not be scolded for trying to survive in a changing landscape.
"The consolidated providers (hospitals and physicians) can bargain better for a fairer piece of the pie. Big insurers and big government had most of the power. And that has forced consolidation," Cooper said in an email exchange with HealthLeaders Media.
"The biggest inflationary driver that I see is compliance, information technology, etc., jumping through all of the useless hoops. Just ask hospitals who they are hiring. The real consequence of ObamaCare is forcing provider consolidation, not for quality, value and all of that stuff but to be able to survive. And not only survive against the payers but survive against the regulators."
Adam Powell, a healthcare economist and president of Payer + Provider Syndicate, a Boston-based consulting firm, says the merger could prove to be a mixed bag for consumers in the affected service areas.
"This is an interesting merger because it involves two healthcare systems that are largely not overlapping. They are in geographically distinct areas," Powell says.
"As a result you have potential benefits and potential costs for consumers. On the benefits side, Scott & White is unique in that it is an integrated delivery system. It contains both hospitals and its own plan. This competence could potentially be rolled out to Baylor. If that happens this will be in the consumers' best interests because working together payers and providers can help deliver a quality product at a lower cost through vertical integration."
"On the other hand, this does give this larger health system leverage when negotiating with outside insurers," he says.
"Currently each is negotiating separately. Now this larger hospital system can more easily say 'take it or leave it' to health plans and get higher rates as a result. Currently it is possible for a plan to have Scott & White and not have Baylor or vice versa but as a merged entity payers will have to take it or leave it with both of them."
Powell says if the Scott & White Health Plan, a not-for-profit Health Maintenance Organization, is extended to include Baylor that could reduce costs by offsetting much of the "double marginalization" that occurs when hospitals and the plans are separate and each trying to make a profit.
"When you have integration you don't have the double marginalization issue. You don't have them working at arm's length. You have them working together to produce a high-value, high-quality service," he says.
"We have seen this at Geisinger (Health System) and Kaiser Permanente. There are a number of integrated delivery systems that are renowned for the quality and value they deliver. Having Scott & White move its competency to the Baylor system will eventually help them do that as well."
A patient classification system that was installed in 2008 to better measure the severity of illnesses and payment accuracy for Medicare beneficiaries shows that hospitals are successfully contending with a more complex and costlier caseload, the American Hospital Association reports.
And now that the federal government's Medicare Severity-adjusted Diagnostic Related Groups data makes that clear, AHA officials say, the federal government doesn't want to pay for the results.
The Medicare ranks include about 48 million people, with 10,000 Baby Boomers becoming eligible each day. An AHA Trend Watch cites data sources showing that four out of five Medicare beneficiaries suffer from chronic disease and two-thirds of them have two or more chronic diseases.
For example, the prevalence of obesity among Medicare beneficiaries has doubled since 1987. In 2009-10 38% of seniors were obese. Diabetes among seniors has increased from 18% in 2002 to nearly 27% in 2010.
"Chronic disease is rising among Medicare patients," says Caroline Steinberg, vice president for trends analysis at AHA. "It is not at all surprising that the new patient classification system that they developed to better account for the resources used by sicker patients is picking up more resource use and resulting in a higher case mix and leading to higher Medicare payments because of this."
The problem, Steinberg says, is that the Centers for Medicare & Medicaid Services "doesn't want to pay more for the rising severity that has been uncovered by their new, more accurate payment system."
"This is an issue that we have been going back and forth with CMS on for at least five years," she says. "They developed a payment system to better capture the severity of illness and it is working as far as we can tell. But now they are going back and saying ‘Gee we don't want to pay more because this system is picking up more and sicker patients. We want to pay you as if you were under the old system.'"
The data shows that even as Medicare patients contend with more and more chronic illnesses, they are also living longer thanks to effective medical care. In 2009 American life expectancy was 78.2 years, an increase of 1.8%, or 17 months, since 2000.
It is projected that the number of Medicare beneficiaries will more than double over the next 40 years. By 2020, the over age 85 population will reach 6.6 million people, up from 5.5 million in 2010, AHA says.
"The technology has allowed people to live longer with a whole host of chronic diseases which a generation before they might have died from," Steinberg says. "It improves quality of life, but that makes healthcare more expensive."
For example, between 2000 and 2008 age-adjusted death rates for heart disease and cancer fell by 28 percent and 12 percent, respectively. Survival rates for heart attack patients have improved by about 70% in that timeframe thanks to pharmaceutical and technological advances.
However, the success comes at a cost. Average inpatient Medicare spending per patient increased from $10,336 in 1999 to $14,009 in 2006, according to data cited by AHA.
Steinberg says the federal government has already taken back billions of dollars from hospitals "because what we call sicker patients they're calling a change in the documentation and coding. We are at the point where we are saying ‘you need to stop. You've taken more than you should have taken. You need to refine your methodology to better assess the impact of rising patient acuity.'"
The government is challenging its own data comes as hospitals are already contending with sweeping changes in the way healthcare delivery is compensated. The shift away from fee-for-service payments and towards capitations and bundled payments has many hospitals "straddling two very different environments," Steinberg says.
"There is this one-foot-on-the-boat-and-one-foot-on-the-dock feeling that many hospitals have now. Many of them may have different payment arrangements."
