Saying it could "no longer subsidize the record profits of a health insurance conglomerate," Stellaris Health Network this week announced that its contract with Empire Blue Cross Blue Shield expired April 1 after six months of fruitless negotiations.
The nonprofit health system based in Armonk, NY, sent a sharply worded notice of the contract termination this week to thousands of Empire policyholders, who use the four Stellaris hospitals, including Lawrence Hospital Center in Bronxville, Northern Westchester Hospital in Mount Kisco, Phelps Memorial Hospital Center in Sleepy Hollow, and White Plains Hospital Center.
"Our nonprofit community hospitals can no longer subsidize the record profits of a health insurance conglomerate, and that is what Empire expects us to do," said Arthur A. Nizza, president/CEO of Stellaris Health. "Our hospitals are committed to providing quality medical services to the communities we serve. However, that commitment cannot be met if we are forced to accept reimbursement rates that are far below the cost of providing the services."
Stellaris sought a reimbursement increase of 15%, while Empire's counter-offer was "in the single digits," Empire Director of Public Relations Sally Kweskin confirmed.
Empire, a subsidiary of WellPoint Inc., disputed Nizza's interpretation of events in its own contract termination notice to policyholders.
"The issue at the center of the negotiation is Stellaris' demand for higher-than-market reimbursement rate increases," Empire said. "Though Stellaris earns a substantial profit on Empire's business and operates profitably overall, they continue to demand annual double-digit rate increases during the proposed period of the new agreement."
Nizza countered that Stellaris did not ask Empire for reimbursement increases that are any greater than what they already receive from other insurers in the market.
"In order to maintain their position in providing high-quality health services, Stellaris Hospitals need an adequate revenue base," he said. "In the past six months, Stellaris Hospitals have reached renewal agreements with two national and two regional insurance companies. Empire has stood alone in its refusal to agree to reimbursement rates that are even close to those that other insurance companies in the market are paying."
Empire called Nizza's justification inadequate. "With hospitals' costs being almost 50% of healthcare costs, the rate increase Stellaris is demanding would be directly reflected in increases in member premiums, medical expenses, and cost share amounts," Empire said. "Stellaris has made no effort to justify this increase other than to say that what they want from Empire is what they get from other payers. They are ignoring the fact that their rates already provide them with market competitive reimbursement."
Nizza said hospitals and physicians are struggling while Empire's parent WellPoint reported record revenues and profits in 2009, with total revenues of $61 billion with net income of $4.7 billion, nearly double its 2008 results.
"This is the same WellPoint that was recently criticized by a Congressional committee for raising rates by as much as 39% for individual insurance plans in California. The Congressional committee also rebuked WellPoint for raising rates for subscribers while spending millions on lavish corporate retreats," Nizza said.
However, Empire said the insurer and WellPoint are operating on a 4% margin, and that Stellaris is profitable too. "Nonprofit is a tax designation only—it doesn't mean for a second that Stellaris isn't profitable," Empire said, in a follow-up media release addressing Nizza's complaints. "When hospitals attempt to deflect from the issue by pointing to our profits, they ignore one key fact—most of our business is self-funded. That means that the customer directly pays the claims expense. There is no mark-up or margin. If the claims is $50, the customer pays $50; if it's $25,000, the customer pays $25,000, so increases impact our customers dollar for dollar."
Empire said that more than 70% of its commercial business at Stellaris hospitals come from customers in self-funded arrangements. "Frankly, our customers who pay these costs deserve a better explanation for a 15% increase—when the system is already earning a 20% margin on Empire's business," Empire said. "The truth is that systems, such as Stellaris, have market power that enables them to effectively cost shift to private payers and, therefore, they haven't had to focus on cost structure."
Nevertheless, Nizza said Empire and WellPoint have "not yet gotten the message" sent through health reform.
"The era of health insurance companies running roughshod over hospitals and patients in their unbridled quest to reap huge profits for their investors is over," Nizza said. "For the health of our nation and our communities, the time has come for the insurance conglomerates to join with the hospitals and healthcare community to invest in our healthcare system and not just bleed the system to gain record profits for their investors."
The healthcare sector created 26,800 jobs in March and the overall economy created 162,000 new jobs, according to Bureau of Labor Statistics preliminary data released this morning.
The national jobless rate remained steady at 9.7%.
Ambulatory services accounted for 15,500 payroll additions in March, after reporting 6,700 payroll additions in February. Hospitals accounted for 1,900 new payroll additions. Nursing and residential care facilities reported 9,400 payroll additions, and physicians' offices reported 1,000 payroll additions.
The healthcare sector has been one of the few areas of job growth during the recession, creating 228,700 new jobs in 2009, and 588,000 new jobs since the recession began in December, 2007.
BLS information from February and March is considered preliminary and may be revised.
State medical boards took 5,721 disciplinary actions against physicians, an increase of 342 actions over 2008, according to the newly released Summary of Board Actions report from the Federation of State Medical Boards.
The report details the state-by-state disciplinary actions taken by its 70-member medical boards, along with information about the context in which each board operates, including standards of proof required when prosecuting cases and the healthcare professions regulated.
Lisa Robin, senior vice president of advocacy and member services at FSMB, says the growing number of disciplinary actions against physicians in 2009 reflects "a pretty stable trend over the past decade," as the effort to identify and discipline wayward physicians has improved with the pooling and sharing of information.
"The federation has a disciplinary alert service that has been very beneficial tool," Robin says. "When we receive an adverse action from a state board or entity that reports to us, within 24 hours we notify all boards where that physician holds a license. We know that more than 20% of physicians hold more than one license. So, as information sharing improves with those types of tools that can support boards, we will see increases."
Annual Summary of Board Actions reports since 1990 can be found in the Physician Data Center section of the federation's Web site.
Humayun J. Chaudhry, president/CEO of the FSMB, cautioned in the introduction to the Summary to resist the temptation to rank or compare state medical boards because they operate with vastly different financial resources, levels of autonomy, legal constraints, and staffing levels. Instead, Chaudhry said, the Summary is best used to track trends in physician discipline within each state over time.
To assist tracking, the report includes the FSMB-designed Composite Action Index (CAI), which is a weighted average of disciplinary actions taken against physicians practicing in a state, as well as all physicians licensed by that state. Actions affecting physicians' licenses, such as revocations and suspensions, are weighted more heavily in a state's CAI.
"The CAI is a barometer that can signal significant changes in a medical board's disciplinary activity level," Chaudhry said. "Changes in a board's funding, staffing levels, changes in state law, and many other factors can impact the number of actions taken by a board."
Even with the improved disciplinary actions, Robin says medical boards across the nation are facing budget crises that have impacted virtually every state.
"It's a huge issue and something we are very, very concerned about," she says, adding that some state budget cuts have led to employees being furloughed or laid off.
"Boards investigate complaints as they receive them, but they need a staff to do that. It is labor intensive. The regulatory side is very expensive for boards, and you have to have qualified people. Some boards have to share investigators with unrelated boards."
Even though most state medical boards are funded by dedicated revenues from licensing fees, desperate state legislatures are stripping their budgets, taking licensing fees, or swiping reserve funds, Robin says.
"The boards have a critical role in public protection and they have to be adequately funded to be able to do their jobs," she says.
Capital BlueCross announced this week that it has eliminated 182 jobs in what the Harrisburg, PA-based health insurer said is an ongoing effort to increase efficiency and lower operating costs.
"At Capital BlueCross, we have been doing what all businesses are doing during this uncertain economic time—we're looking at every way possible to be more efficient, to keep our costs down, and to be even more competitive and strong," William Lehr Jr., Capital BlueCross president/CEO, said in a media release. "Advances in technology, particularly, enable us to reduce our costs at Capital BlueCross and its subsidiary companies, while still providing award-winning service."
The health plan said its cost-control efforts have identified new technologies to improve efficiencies in operations, such as claims processing, while decreasing manpower needs.
"It is tremendously painful for this close-knit company to say goodbye to colleagues. But we are comforted by the certainty that it is necessary to do so, and that it is our obligation to do so," Lehr said. "We owe it to our customers to do everything we possibly can to put downward pressure on their rising premiums. And we owe it to our company to take the steps we must to be as efficient and competitive as we possibly can be."
A federal grand jury in Manhattan has indicted a former re-insulation contractor for allegedly participating in a bid-rigging scheme at New York Presbyterian Hospital, the Department of Justice announced.
The indictment also alleges that former contractor David Porath and co-conspirator Andrzej Gosek filed false tax returns for their participation in a conspiracy. The three-count indictment, filed under seal on Feb. 18, was unsealed Wednesday in the U.S. District Court in Manhattan.
According to the indictment, between 2000 and March 2005, NYPH awarded several re-insulation contracts to Porath's company. The indictment alleges that Porath and his co-conspirators created the false appearance that NYPH was awarding contracts based on competitive bids by submitting fraudulently high bids by competitors, which allowed Porath's company to appear to be the low bidder.
The indictment charges that Porath and Gosek, the owner of a Langhorne, PA, company that provides asbestos abatement services, conspired to defraud the Internal Revenue Service. Between October 2000 and February 2005, Porath allegedly gave Gosek checks made out to companies in Brooklyn, NY, purportedly for work done at NYPH by those companies as sub-contractors to Porath's company. In fact, the companies had not performed the work, according to the Department of Justice.
The Brooklyn companies cashed the checks and Gosek delivered the cash back to Porath, who reportedly took false deductions on his company's and his personal federal tax returns. Porath is also charged with filing a false federal tax return on or about Feb. 17, 2005, according to the government.
The bid-rigging violation carries a maximum 10-year prison sentence and a $1 million fine. The tax fraud conspiracy violation carries a maximum penalty of five years in prison and a $250,000 fine.
The charges are the result of an ongoing federal investigation of bid rigging, fraud, bribery, and tax-related offenses relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mount Sinai Medical Center. So far, eight people and three companies have pleaded guilty to charges arising from the investigation.
NYPH did not immediately respond to a request for comment on the charges.
Winter Park, FL-based Adventist Health System and University Community Health in Tampa Bay have signed a non-binding letter of intent to explore a possible merger, the two health systems announced jointly. The move is part of a growing consolidation trend that analysts predict will occur over the next few years.
"It is too early in the due diligence process to share any concrete details," said Mike Schultz, president/CEO of Adventist Health System's Florida Region, in the joint statement. "What I can confirm is that both systems are focused on uninterrupted quality care to our patients and dedicated to the service of our employees."
AHS and UCH formed a joint venture in February 2007 to build the 80-bed Wesley Chapel Medical Center, a community hospital and healthcare complex in Pasco County. That relationship prompted both organizations to consider a full merger, the health systems said.
"After working so closely together on the joint venture for the past three years, we have decided to explore opportunities that allow us to deliver heightened healthcare services to our expanding patient population. It helps that we already are working together and have like-minded missions that stress patient-centered service," said Norm Stein, president/CEO of UCH, in the release.
"AHS and UCH are committed to enhancing the accessibility and quality of medical care to the Tampa Bay area," said Don Jernigan, president/CEO of Adventist. "Long-term planning is essential to the success of healthcare systems and we believe our patients, employees, and communities will all be blessed from bringing these systems together."
Adventist Health System is the largest nonprofit Protestant healthcare provider in the nation, operating 37 hospitals in 12 states, with more than 6,600 beds, and 50,000 employees serving four million patients annually. Adventist operates 17 hospitals in Florida.
Nonprofit University Community Health operates five community hospitals in the Tampa Bay area, including University Community Hospital, UCH-Carrolwood and Pepin Heart Hospital in Tampa, Helen Ellis Memorial Hospital in Tarpon Springs, and the long-term acute care hospital in central Pasco County.
Online job ads in most employment sectors across the economy dipped by a total 29,600 listings in March, but demand for healthcare practitioners and technicians rose for the month, a new report shows.
The Conference Board Help Wanted OnLine report, which tracks more than 1,000 online job boards across the United States, found that advertised vacancies for highly skilled healthcare practitioners and technical occupations, such as registered nurses and radiographic technologists, experienced the largest March gain, up 88,100 to 627,300.
The gain reflects increases in demand for physical and occupational therapists, nurses, and speech pathologists. Labor demand for health support occupations also rose 13,800 to 125,400, the report said.
Demand in the healthcare labor market varies substantially from the higher-paying practitioner and technical jobs to the lower-paying support occupations. In March, advertised vacancies for healthcare practitioners or technical occupations outnumbered the unemployed looking for work in this field by almost 3 to 1, and the average wage in these occupations is $32.64/hour, the report said.
In sharp contrast, the average wage for healthcare support occupations is $12.66/hour and there were almost three unemployed people looking for work in the field for every advertised vacancy, the report said.
In the overall jobs listings, February and March showed a combined drop of 97,000 job listings, which followed three months of large increases, totaling about 750,000 advertised vacancies. There are about 10.9 million unemployed, or 3.76 people for every online job listing, the report said.
"The upturn in labor demand over the last five months (+ 647,000) is a clear signal that the labor market is beginning to recover from the recession," June Shelp, vice president at The Conference Board, said in a media release. "However, the recent February and March data suggests that employers may still be somewhat cautious about significantly expanding their workforce as we are preparing to enter the Spring hiring season."
The Association of American Physicians and Surgeons has filed a lawsuit to overturn the Patient Protection and Affordable Care Act, claiming the health reform mandate to buy health insurance is unconstitutional under the Fifth and 10th amendments, the Commerce Clause, and the authority to tax.
"If the PPACA goes unchallenged, then it spells the end of freedom in medicine as we know it," Jane Orient, MD, executive director of AAPS, said in a media release. "Courts should not allow this massive intrusion into the practice of medicine and the rights of patients." Orient also predicted "a dire shortage of physicians if the PPACA becomes effective and is not overturned by the courts."
Among its litany of complaints, Tucson, AZ-based AAPS said in its suit, which was filed Friday in U.S. District Court in Washington DC, that the individual insurance mandate that takes effect in 2014 will enrich insurance company executives, but violates the Fifth Amendment protection against the government forcing one person to pay cash to another.
The AAPS said the reforms also violate the 10th Amendment, the Commerce Clause, and provisions authorizing taxation, which AAPS said cannot be invoked because the premiums go to private insurance companies. The complaint also noted that the "traditional sovereignty of the states over the practice of medicine is destroyed" by the reforms.
AAPS wants the federal courts to enjoin the government from promulgating or enforcing insurance mandates and require HHS Secretary Kathleen Sebelius and Social Security Commissioner Michael Astrue to provide an accounting of Medicare and Social Security solvency.
Simon Lazarus, public policy counsel with the National Senior Citizen Law Center, reviewed the AAPS suit and called it "incoherent" and "baseless."
"I had not heard of this organization and now I am beginning to understand why," Lazarus told HealthLeaders Media. "They are complaining about physicians having to participate in Medicare Part A. Physicians don't have to participate in Medicare Part A. All of us know there are doctors who simply do not accept Medicare. There doesn't seem to be any factual basis for this and it also has nothing to do with the healthcare reform bill."
Lazarus says the AGs suits are clearly motivated by politics and not constitutional law. "This is a way of stoking and continuing to stoke public fears that healthcare reform is a massive and unprecedented invasion of personal liberty, when it is not," he says.
Lazarus says the argument for the constitutionality of the insurance mandate is simple. "Deciding not to buy health insurance is not a non-activity. It is a calculated decision to put off buying insurance or paying for healthcare until you think you need it," he says. "It is perfectly sensible for the government to say 'we want a universal coverage system, but to do that we need a universal buy in.'"
Lazarus says the mandate is "within the Congress' authority to regulate interstate commerce and it is certainly within Congress' power to design taxes and spend money for the general welfare," he says. "This kind of a system of expenditures and taxes is very common in our law."
Lazarus calls the lawsuits "wildly premature" and further evidence of a political motive. "The federal government is likely to hit these suits not by arguing the merits, but by saying they have no standing to raise speculative injuries to individuals," Lazarus says. "Only the individuals can raise those questions. None of these injuries have yet occurred, if they ever were to occur."
It's not clear who invented the backless hospital gown, but evidently patient dignity was not part of the equation.
The news this month that U.S.-born fashion designer Ben de Lisi's patient-friendly hospital gown redesign was among the winners of a competition by Britain's National Health Service got no small amount of media attention, in part, because everyone who's ever worn a standard hospital gown has vivid memories of that unsettling draft astern.
With respect to Mr. de Lisi, this is not new. In fact, quilters in Westerville, OH, near Columbus, have been offering free designs for patient-friendly hospital gowns since 2005. In that time, their pattern has been downloaded more than 46,000 times, and hundreds of paper patterns have been delivered, all at no cost.
"It's a way we can give back," says Joan Hawley, the owner Lazy Girl Designs, a quilt and handbag design company she runs with her husband. "Most of the people in the quilt industry are from a nurturing background: nurses, school teachers, homemakers. We contribute in the ways we can to the world around us. This is one thing my company can do."
Hawley got the pattern from a design by fellow quilters who had made a customized hospital gown for a friend with leukemia.
"They got so many requests for it that I offered to formalize it into a pattern. So they came up with a design and the instructions on how to put it together," she says. "It was collaboration: they on the front end, me on the back end."
The gowns are designed with the patient and the provider in mind. "For instance, to access monitoring the chest with a stethoscope or a heart monitor with wires or other leads, we created a really attractive access point at each shoulder so the gown can be folded forward unbuttoned or un-Velcroed so you can have some modest access to the chest without inconveniencing the patient." Hawley says.
The gowns also have a pocket over the chest that is large enough for a standard heart monitor, which does not have to be disconnected when gowns are changed.
Of course, one of the more popular alterations is the expanded backside coverage. "It has a little bit of extra fabric covering just where you need it with two ties for security. You can keep everything in place," Hawley says.
It's easy to joke about drafty hospital gowns, but Hawley says the redesigned gowns have genuine therapeutic value for people who are often frightened and highly stressed about being in a hospital.
"The hospital gowns you get wherever it is you land have been worn by everyone else and they are used to the point where there is barely a fiber there. They are nearly transparent, really quite worn. There is no personality. It just adds to the sterility of the environment," she says. "But to have a friend or a loved one pick out some fabrics that reflect your taste, or personality, or sense of humor, it gets you talking on another level with the staff and the practitioners. It's an ice breaker."
Hawley says she's gotten "tremendous feedback" about the gowns.
"I just got an e-mail from a nurse in a hospice where some local Girl Scouts are making gowns for the patients," she says. "A student pursuing her Master's in Fine Arts is doing her thesis on her own journey with an illness that she has, and she is using the gown as a basis for a sculptural project."
Hawley recently made several of the gowns for her 72-year-old father, with novelty patterns that featured classic cars and playing cards, two of her father's passions.
"He absolutely loved it. They did everything but whistle," she says. "We offer a children's size gown and the mothers who write in and tell us the stories about what the children and the families go through. There are tragically so many stories. It gives you a sense of what they are going through."
After more than one year of bitter, partisan and often insipid fighting, the healthcare reform legislation that President Barack Obama signed last week is now the law of the land.
Get ready for the mother of all learning curves, as Congress—one of the nation's least trusted entities (along with bankers and journalists)—passes its handiwork to the nation's most trusted professionals–healthcare workers.
This is a daunting task. Simply by the nature of their work, and their personal contact with patients, doctors, nurses, and others, direct-care providers will be charged with explaining the intricacies of the most complex, comprehensive, and truly life-changing federal legislation since the creation of Medicare in 1965. Their patients will probably be confused, perhaps skeptical, or even frightened about how the new reforms will impact their care. This is completely understandable after more than one year of scare tactics and deliberate distortions about "death panels," killing grandma, and faceless Washington bureaucrats rationing care.
"The difference between the way the bill was fought legislatively and what is actually in the bill is enormous," says Frederick E. Turton, MD, an internist from Sarasota, FL, and chair of the Board of Regents of the American College of Physicians. "In fact, there are a lot of good things in this bill that make patient care immediately better, and the physician is going to have to carefully explain this to his or her patients on an issue-by-issue and occasion-by-occasion basis."
Patients might display their fear or confusion in the questions they ask. "Generally, the questions arise in a patient-doctor encounter when the patient says something like 'Please order this test before the government says I can't have it,"' Turton says. "In fact there is no rationing in this bill whatsoever. The most important part is that doctors and patients can see each other again because 94% of legal residents will have access to health insurance, and that is a big deal."
Turton concedes, though, that no matter how healthcare providers feel about these reforms, nobody really knows if they are going to work over the long run. "There are so many moving parts to this legislation and it kicks in over such an extended period of time that it is difficult--if not impossible--to say exactly how this is going to translate into practice," he says.
Understanding the reforms and how they impact patients will take time. "I believe a natural process would be a good way of describing it," Turton says. "The tenets of the bill will survive based on their merits. Secondary consequences will occur based on merits that we didn't understand. As time goes by we will understand this bill much more than we do now."
In the short term, however, Turton says the confusion over the new reforms will probably be worse than confusion he witnessed when Medicare Part D was implemented. "We really didn't understand that, and it took some while. In particular, with the donut hole, it took a lot of patients telling me 'please don't prescribe another medication because I am in the donut hole' for me to understand what that meant," Turton says. "And this bill is magnitudes of order bigger than Medicare Part D. It is going to take us much longer to figure out what the real consequences are."
What about those physicians, nurses and other direct-care providers who don't like the new reforms? How can they balance that discontent with their responsibilities to their patients? Turton isn't worried.
"They will do what they have always done, which is take care of their patients, and use the resources available to them in the best way they can to take care of their patients," he says. "Politics is one thing, but taking care of people is quite another."
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