In fact, most physicians I know probably don't even appreciate the insinuation that anyone could even ask the question, never mind whether it's possible or not. And I get that. No one who learns and trains as long and hard and goes into debt as much as physicians do is much in the mood to be told how, when, or where to practice medicine once they're past that personal finance nightmare.
You read that headline, and all the tropes about managing physicians come to mind—that it's like herding cats, it's a thankless job, and, best of all, that it's impossible.
If it is, we're all in for trouble, because healthcare is bankrupting us. Everyone needs to be managed, whether they're the president of the United States (managed, at least in theory, by the voters, and checked by Congress and the courts) or a country doctor. If not, we get what we have now in some cases, which is management without data; management without evidence (incidentally, that's probably one reason physicians have historically so hated to be "managed").
I doubt if he would appreciate me attributing this quote to him—so I won't—but as a good source told me in a recent conversation, "the era of the "M-Deity" is over," referencing the abbreviation for the term medical doctor.
Strong words. I asked him what he meant.
He couched his answer in the context of how hospital and health system CEOs should see the physician-administration relationship. In his view, the idea of hospitals and health systems treating the physician as a customer is exactly what's gotten healthcare in trouble financially. Because in the end, treatment orders, in most cases, are written exclusively by doctors. He suggests CEOs develop structures where the hospital or health system is sharing risk with physicians as partners and not as customers to whom you pander.
Lest physicians reading this column think this is a case of "blame the doctor" for all of healthcare's woes; it's not. Physicians want to be treated as adults anyway, he says. But any way you cut it, for both physicians and administrators, you have to "go big or get out."
Consolidation is already progressing steadily. In every community of 500,000 people, he predicts we'll see healthcare owned and controlled by a couple of $2.5 or $3 billion (revenue) enterprises instead of six hospitals and 1,500 independent practices.
That means managing physicians. But managing physicians takes far more skill than managing, say, a factory shop floor. Or maybe it doesn't, but that's another story.
In this narrative, physicians have lots more education, and lots more power, than that. The question is how to do it well.
Many physicians, being prior victims of management failures, could probably tell you, if you let them. If management's about taking better care of patients (and critically nowadays, taking better care of populations), physicians are for the most part a ready audience. If it's about money and costs, they tune out. Yet it's all linked.
If you've been covering healthcare as long as I have, your notes and stories over the years are full of comments from and about hospital and health system leaders who tried to manage their physicians, and failed spectacularly. Speaking of tropes, managing physicians over the years has come to be seen as a "career-limiting event" among CEOs. Often, the last event in their tenure boiled down to a vote of no-confidence from the medical staff.
Whether or not they've been successful, or even correct in the way they've chosen to manage their physicians, senior leaders have the right idea: Physicians need to be managed like everyone else. Even leaders need management.
But many physicians are recognizing that their ability to influence healthcare, for the good of the patient, can be more fully realized by a management role of their own. I've had as many as a dozen CMOs tell me they had no idea what they were getting into when they were named CMO, which entails more and more these days, actually managing patient care, and by proxy, managing physician behavior.
Ditto for the burgeoning ranks of physician CEOs in hospitals and health systems. That doesn't mean they regret it. For the most part, they are exhilarated. They appreciate the scale on which they can influence patient care, which, after all, is why the vast majority of them got into medicine to begin with.
This month in HealthLeaders magazine, I write about several organizations that are putting their physician management skills to the test. Perhaps they'll succeed, perhaps not. Physicians have always been leaders in their organizations, whether or not they wanted the role. But that leadership role has been far from multidimensional.
That's changing rapidly. Physicians are leading the development of clinical protocols and managing their financial repercussions as never before.
Generally, I try to keep my personal life out of these columns. Most of you don't know me, after all, and I figure you're probably much more interested in my views on healthcare leadership strategies than in the details of my personal life.
But infrequently, the two dovetail, and my experience last week with my insurance policy and my son's pediatrician's billing policies perfectly highlights the difficult work that is in store for those of us who would like to see more value in healthcare.
Having just turned two, my son was due for a well check. Well checks, thanks to my health insurance policy, represent the only healthcare my family receives at no out-of-pocket cost. He gets his shots if needed, and is weighed, measured, poked, and prodded. So my wife took him in.
During the course of the examination, which includes checking the ears, of course, the doctor found a previously unknown ear infection and prescribed an antibiotic. My wife thanked the doctor and was soon on her way to the drugstore and home.
A couple of weeks later is the point at which I feel like we entered the Twilight Zone. That's when we got a bill for an "office visit" on the day my son had his well visit. Note that we only had one visit; this will be important later.
Because we are required to meet a high deductible before our insurance starts paying for sick care, payment for this second office visit comes out of our own pocket. Separately, presumably, the insurer also got a bill for an "office visit" since the well care checkup, as I mentioned, is covered.
Wanting to know more about how it's justified to bill two office visits for the price of one, I called my insurance company. The following is the maddening discussion that ensued with a person I'll call Michael (not his real name), and it's pretty much verbatim:
Me: Why, when my child goes for a well visit, and the physician finds an ear infection, do I have to pay for another office visit?
Michael: Yes, they are allowed to do that, as bad as it may be. The way it works, as long as it's a routine service, you would not incur fees. If you go thinking it's a wellness visit and they find something, the way they send the coding over, the coding for the ear infection processes differently—as another office visit.
Another way to look at it, too, is for a wellness visit, the second anything is abnormal, that would properly take the different benefit. I'll put a note about this conversation, but just to really make sense about this, I wish the doctors would do it differently, and maybe schedule a second visit.
Me: But Michael, that doesn't solve the problem. Scheduling a second visit to treat something you already found during the first free one when the only treatment is a prescription? That would mean even more ridiculous bureaucratic nonsense—the equivalent of scheduling another visit just to fill in the blanks on some form. My point is: This is double billing. I mean, you guys are the insurers; you negotiate these things with the docs, why do you allow this?
Michael: Well, it's negotiated, but this is something we haven't been able to get them to do. A lot of other patients complain about it, and this is a conversation you need to have directly with your doctor.
Me: Well, we have had that conversation, and they gave me the same runaround that you're giving me. This is not your fault, but this is a big reason why my employer and I use you to interact with the provider. You have negotiating power. Alone, we don't. In fact, they tell us they have to bill twice for this kind of visit. They told my wife it's a federal law, but I've yet to find any law that governs this, and I cover healthcare for a living.
Michael: Well, they don't have to. They don't have to do anything, but when they process the ear infection, it's a different code, and they know it generates another bill.
Me: Well, it doesn't sound like I have the power to do anything about it other than get a new doctor. Michael: I see where you're coming from, but they would probably all try to do it this way.
Me: Well, at my level, and at the level of me paying for my own care up to $1,000 per child or adult, it's wrong. I mean, she has to look in his ears as part of the well visit. Just because she found an ear infection that she writes a prescription for shouldn't give her the ability to effectively double-charge us for an office visit. I would be OK with paying for one of the two, but this kind of thing is why healthcare takes up 20% of the national budget.
Michael: I agree with you and I sympathize, but according to the contract, this is the way it works. I am going to put a note on your account that we talked with you about it.
Me: Thanks, I guess.
Michael: We might be able to have conversations about this with the doctor's office.
Me: I understand healthcare is a mess, but in the past we never saw it. That was before people with insurance were paying for their own healthcare out of pocket. But y'all need to do a better job of negotiating stuff like this where the doc does no more work, but gets paid twice.
Michael: I'll put a note on your account about this sir.
Me: Thanks for your help.
So, that's where we left it, and that's where it will probably continue to be left. I like to think I am relatively sophisticated at navigating the healthcare system, but I'm at a loss on how to navigate this.
If this is what we can all expect to encounter when trying to resolve a simple primary care visit (or visits, depending on your point of view, apparently), it's tough to see how the individual consumer can ever be expected to alter practices like this. The only choice I have is to find a new doctor, and as the insurance company representative noted, all doctors do this.
What no one seems equipped to do is answer the question of why.
If you're a nonprofit hospital or health system leader, it may seem that no matter what you do to benefit your community, someone's always pointing out your shortcomings and how you could do more. Some examples are more egregious than others, of course.
Much of this bad publicity surrounds efforts promoting healthcare access and finance for the most vulnerable people in the community. Time magazine may have just discovered this problem, but we and others in the trade press have documented over the years instances when nonprofit hospitals and health systems have gotten into trouble with their nonprofit status.
Most often, it's because some of them have aggressively pursued payment from the so-called "self-pay" population after charging them full price for services, that is, without the benefit of discounts available to government or commercial payers. Those problems have been addressed by many as hospitals and health systems have built detailed financial assistance policies, but nonprofit status must continually be justified as the healthcare marketplace undergoes dramatic change.
The IRS has instituted new rules regarding community benefit reporting, although many see it as an information-gathering exercise to develop more precise rules on what hospitals and health systems need to do to justify their nonprofit status in the future. The PPACA itself contained several provisions concerning tax exemption.
Yet still hospitals tend to get themselves in trouble. Just last year, a CEO ultimately lost his job after efforts to collect on such patients that got out of hand.
Patient advocates have long been a thorn in the side of hospitals and health systems with respect to healthcare access and issues of overcharging the poor. They've done good work. Without them, many of the most egregious examples of hounding poor and sick patients for payment might have gone unnoticed or underreported.
But hospital and health system leaders are in a difficult position as well. Healthcare payment is complex and certainly hospitals deserve compensation for their work, but with rules and regulations so murky, how do you know how much is enough? The labyrinthine flow of money through hospitals and health systems that culminates in an often meager bottom line makes this work difficult as well, and offers plenty of opportunities for obfuscation surrounding where the money is really flowing.
As important: How do you protect yourself and your system from charges that you are taking advantage of people least able to afford care?
First, you could start listening to what some of these groups have to say instead of treating them as enemies. Piedmont Healthcare in Atlanta went one step further by hiring one of the dedicated people who has been pushing it and other hospitals in Georgia to do better.
Piedmont hired Holly Lang a year ago as the director of community benefits for the health system. Seven months later, it promoted her to deputy director for a new community benefit initiative called the Georgia Center for Healthier Communities. Partly a lobbying organization on the local and state level, more important, says Lang, is its mission to improve health and healthcare throughout Georgia's communities.
Lang gives that statement gravitas by her own reputation, which, she recognizes, is at risk if the organization doesn't live up to its lofty goals.
Over the years, predominantly in Georgia, Lang has been a thorn in the side of nonprofit hospitals as both a reporter and a patient advocate. She grew up poor in rural Georgia, and, after college, became a health policy reporter for Scripps-Howard and later, the Associated Press.
"I was very unpopular," she says. "Everyone just hates you."
She was frustrated as a reporter, but not because of the haters.
"I always had health in mind and was concerned with issues around health access," she says. "I was assigned to that beat and covered it with enthusiasm, but I was frustrated with seeing the issue as a reporter and not doing the actual work."
So she left reporting, to the relief of many senior executives at the nonprofits she covered, but that relief would be short-lived. She quickly resurfaced at Georgia Watch, a nonprofit consumer advocacy organization in Atlanta.
There, she headed the Georgia Hospital Accountability Project, in which she worked closely with state and national stakeholders and federal policymakers in establishing standards for the community benefit obligations of nonprofit hospitals.
"At Georgia Watch, we took the viewpoint that healthcare is a finance issue for many," she says. "For the uninsured, the underinsured, and those unable to fully self-manage complex care, the role that hospitals play in people's lives surrounding healing, but especially surrounding bankruptcy, was and is huge."
About 85% of the hospitals in Georgia are nonprofits. They are some of the biggest employers and landowners in their local areas, and are tax-exempt because of the role they are supposed to play in helping the poor receive care that they can't necessarily pay for.
"Some do a tremendous job in how they approach the poor in their communities, but not all demonstrate that obligation to their community," she says of Georgia nonprofits.
She feels now is an exciting time in community benefit because the provisions in the PPACA dovetail nicely with the idea of healthcare instead of sick care.
"It's kicking off the external focus hospitals are now beginning to have, and given how seriously they're taking it, it's truly an opportunity to benefit these populations," she says. "With penalties for preventable readmissions and value-based purchasing, it's shifting in such a way that it's all helping us refocus our efforts on the community into keeping folks healthy. This different economic model can work for everyone if it's done well."
Lang came to Piedmont at the request of the chief marketing officer and director of external affairs, who had previously worked at Grady Hospital, Atlanta's safety-net system. "I'll be honest and say I was a little hesitant because I was used to being on the other side of things," she says. "I was afraid I couldn't truly work for the community and I felt strongly my obligation was to the people and I didn't want that to shift. When I realized that the ultimate goal was the same, I decided to try."
Lang's role is not hospital- or even Piedmont-specific. Her job is to analyze policies that promote or hinder progress in the area of healthcare help for the poor, period.
The center is looking at access to proper care, mental health and inpatient-outpatient transition issues, self-management issues and obesity and heart care. This should, she notes, help with preventable readmissions and access to care.
The center is working to develop a low-income patient navigator program with funding from the Kaiser Foundation of Georgia targeting patients at or below 200% of poverty level. They're also working on transportation to doctor visits and for the uninsured, helping fund the doctor visit. Child care issues, prescription access issues, and durable medical equipment needs are all important aspects of keeping patients out of the hospital.
Lang is heartened at the way fiscal incentives are forcing hospitals to have this focus. "I'm not sure if this could have happened in the past because it's hard for hospitals and others to accept the positive role that advocacy can have," she says. "I would never have been in this role a few years back."
While the proof will be in the progress the center makes in the next few years, Lang is encouraged because she feels many of the problems with the poor population and healthcare can be solved much less expensively than many assume.
"I emphasize the win-win all the time, because it's there for hospitals and patients," she says. "Often what [the poor] need is not very expensive."
With apologies to Garrison Keillor and the world of Lake Wobegon, I simply had to borrow his phrase about the citizens of that fairy-tale land. It's just the first thought that came to me as I was reviewing the HealthLeaders Media 2013 Industry Survey, published in January.
We have solid data on how healthcare industry leaders view their organizations and the industry nationwide, and it gets pretty granular. The Premium versions get you additional analysis from our team of editors and researchers.
Because I cover leadership, I'm particularly fond of the CEO-only version of the report (also free), for which I wrote the companion analysis of the findings. The overall survey and the CEO-only version share the same second question:
Overall, how do you assess the current state of your own organization?
CEOs who responded to the survey, such as Bruce Elegant from Chicago's Rush Oak Park Hospital, had nuanced comments about the move to value-based care. But they may be too optimistic about their own organizations' "track."
What intrigued me most upon reflection was the fact that 78% of hospital and health system CEOs live in a land where all the hospitals and health systems are above average, including them. I'm no math whiz, but the definition of average means half the things being measured are below the middle, while half are above. In our example, that means 38% of those CEOs are wrong in their self-analysis.
From the statistics about waste and harm in healthcare—not to mention cost (which is what gets us into this mess, after all)—we know that about half of executives are doing a poor job of coordinating care. About half of you are doing a poor job of measuring and enhancing quality. About half of you are misjudging your market position. And about half of you are likely to be in a worse place strategically a year or five years from now than you are today. The scary—and hopeful—thing is, how it turns out is all based on actions over which you have some control.
It's fairly easy to understand why the "above average" myth carries some weight. What CEO doesn't think his or her efforts are paying off, regardless of the measure? Besides, it's not a scientific measure; iIt asks for an opinion on your or your health system's general performance. But its results can be revealing because clearly so many of you are wrong.
Everyone aspires to be on the right track, and if you're not on the right track, doesn't that mean that your work is beyond pointless because it's detrimental?
No, it doesn't mean that, but I think that's why a lot of CEOs gravitated away from "wrong track" as an answer. Sometimes, acknowledging that your organization is on the wrong track is the first step toward putting it on the right one.
In the real world, half of the hospital and health system CEOs will underperform and half will outperform the norm. By these responses, only 10% of you think you are in that group (12% were undecided). I typically hate it when researchers allow a wimpy response like "undecided" or "don't know," but in this case, it really fits, and more of you probably should have chosen that answer.
The really tough work on your part is to figure out whether you are on the left or right of the bell curve. That might call for some serious introspection, but you have to be honest with yourself, and perhaps more critically, get your team to be honest with you about the success of your endeavors. We'd all like to be above average, but healthcare operates in the real world, and so should you.
Cincinnati's Catholic Health Partners hasn't always put a premium on supplier diversity. In fact, back in 2007,which really isn't that long ago, less than one percent of its total spending on supplies and services was on minority firms.
Today, it's important enough for Ohio's fourth-largest employer (and largest health system) to take the trouble of releasing a self-congratulatory press release on the achievement of reaching nearly 10% (or $92.6 million) of its total spending on women-and minority-owned businesses.
Beyond the obvious public relations value of such an accomplishment, what's so important about supplier diversity? To find out, I spoke with Michael Connelly, the system's chief executive officer.
"It was pretty appalling," he says, of the 2007 number.
Connelly says all the right things about spending on so-called diverse businesses. At one percent, it doesn't come close to reflecting the makeup of the community. As a religious-based nonprofit organization, Catholic Health Partners has a commitment to reflect its community in its business practices. Neither does a one percent spending level on diverse businesses reflect the makeup of the
management and staff of CHP.
"The issue is to make sure those who were never in the bidding process to begin with are included," says Connelly. "It's the right thing to do."
Fine. I get it. Those are admirable reasons.
But as our conversation progressed, I discovered, to my surprise, that increasing that diversity spending level is less important for the public relations and feel-good reasons many people assume it is. In fact, it's more important ultimately not only because it extends to include elements of the community that didn't benefit from CHP's huge purchasing power in the past, but also because CHP wasn't able to benefit from them either.
As Connelly says, less-visible benefits accrue to organizations that keep close tabs on this metric. Focusing on improving diversity spending, if it costs are low, is the right leadership move for an industry that claims it is all about reducing waste in healthcare.
"There's another important aspect to this and [that is] the belief that this is stimulating competition," Connelly says. "In the end we get better quality at better cost, because you in effect throw a new competitor into the mix. Everyone wins from doing this."
Everyone, that is, except maybe overpriced vendors, because let's dispel one myth right now. It's not that any of these women-owned or minority businesses get preferential treatment. They have to win the bid on price just like everyone else. When I asked about this, Connelly responded with true incredulity, but I had to ask the question.
"Of course they have to win the bid," he says.
It's about leadership, not necessarily about righting a wrong, and leadership requires synthesizing the important reasons surrounding any initiative, and making sure that not only do those initiatives provide solid thinking on the social and political reasons such changes are undertaken, but also for business reasons.
Why not go with the status quo?
Building up your diversity spending it not as easy as it sounds. Some lines of business are traditionally not places where women- or minority-owned businesses can effectively compete.
"It's hard to get a minority banking vendor, for example," says Connelly.
Many hospitals or healthcare facilities spend a lot on big supplier vendors, many of which, like GE and Johnson & Johnson, are huge multinational corporations, owned by shareholders—not women or minorities. Second, it's difficult to get certified as a minority vendor under CHP's definitions.
"You could have a sham deal where person is the minority lead," Connelly says, "but how much is really happening for the community with that person?"
To weed out that activity, CHP follows best practices developed from Procter & Gamble and healthcare powerhouses like Kaiser to encourage and qualify minority contractors.
How diverse is the contractors' workforce? Those and other qualifications can be measured, and are, in CHP's calculations. CHP has a diversity council which Connelly chairs, for its management and staff. That group's interest in diverse spending goals led to collection of data on how best to improve, thanks to advice from a retired P&G executive who comes from one of a group of large corporations that have achieved a billion dollars in diversity spending.
That executive made a compelling pitch to CHP about involving other Cincinnati and regional hospitals in rallying around this initiative. "The Cincinnati Health Council became the vehicle," says Connelly.
Hospitals and health systems in the area sponsored a diversity supplier symposium. Now in its fourth year, it brings together vendors and national public speakers to help women- and minority-owned businesses compete.
"No one likes to see disparity," he says, "so having a win-win that advances quality and lower costs, and reduces disparity is very rewarding."
This article appears in the March 2013 issue of HealthLeaders magazine.
If your hospital or health system is currently using an all-physician anesthesia group, this might be a ripe opportunity to cut costs without compromising patient safety, say many advocates.
The issue of whether hospitals can be reimbursed by CMS for using unsupervised certified registered nurse anesthetists is a contentious one, but it has been decided since 2001, when a Medicare and Medicaid regulation change allowed states to opt out of a requirement that nurse anesthetists be supervised by an anesthesiologist. Some 17 states have done so, but even in states that haven't, many chief executives could achieve significant savings by creating anesthesia care teams with anesthesiologists in a central, supervising role. But it's tough and fraught with potential discord, not least because of surgeon resistance, but also because of the persistence of legacy all-physician anesthesiology groups.
Yet the conversion to CRNAs can, and in many cases, must be done, says Preston Simmons, chief operating officer and interim CEO with Providence Regional Medical Center in Everett, Wash. Providence Regional, a 491-bed, acute-care hospital that is part of the Providence Health & Services' 37 acute care ministries in West Coast states, changed to a "care team" approach in 2011.
"It really boiled down to alignment with where we needed to go as a hospital and a community," he says. "Our model was very costly, and the existing group was not aligned around creating a value equation for us. What I mean by that is that it was us having to push them along as opposed to them pushing efficiency and effectiveness."
That it's expensive for many hospitals to offer an all-physician anesthesia team to its surgeons is unquestionable. Anesthesiologists on the whole say that all-physician anesthesia means better-quality care, and it's still a dominant model. But as in most contentious subjects, the truth can depend on the particular circumstance or situation.
Simmons says Providence leadership had tried for years to align the legacy anesthesiology group with quality and service goals, to little avail.
"This group had a multimillion-dollar subsidy and not as comprehensive coverage as we would like. We asked them to look at different models that could create more value while reducing cost, but they struggled to do that," says Simmons.
Among the models that Simmons asked the legacy group to consider was a model that included CRNAs as a way to provide more locations and more coverage outside the OR at a lower cost per encounter. Other ideas included monitoring of quality and safety data and standardization of processes.
"It got to a point where they chose not to change models, despite a lot of the hospitals in the state and around the country using a CRNA model," he says.
Hardball tactics followed.
"We mutually talked and said, 'Okay, what we want to do is an RFP,' " Simmons says. "We did that and the day after we sent that out, they gave us a 90-day termination notice because they were trying to force us to sign a contract."
Essentially, within 90 days, Providence Regional had three bad choices: Incorporate an entirely new anesthesia group into practice, sign a new contract with the legacy group at unfavorable terms, or be left without anesthesiologists. None of the options was attractive, but the leaders chose to switch. They're glad they did.
"At a higher level, we left a relationship that was antagonistic, without aligned incentives, and based on a historical clinical and operational model," says Dave Brooks, the CEO of Providence Regional until he moved to St. John Hospital & Medical Center in Detroit in February.
"We did our darnedest to try to evolve that with the existing group, but it got to a breaking point, unfortunately, so we moved to a new partner," he says. "Now we're very aligned, paying less, providing more coverage and at better quality, we think—we had troubles measuring it in the past—and we believe we have a model built around the future, not the past."
In Providence Regional's case, says Simmons, he's confident his current arrangement with a national anesthesia group, Somnia Anesthesia of New Rochelle, N.Y., is better not only for surgeons and the hospital, but also for patients.
By the time the legacy group issued its contract termination notice, the surgeons, who at first were not universally supportive of the idea, were on board with the change, but prior to that ultimatum, they had to be convinced over a long period of time, during which the hospital formed a panel—with broad physician participation—aimed at improving the relationship with the legacy group.
The surgeons' eventual alignment with administration "probably required a two- to three-year period of clarity around the hospital escalating its communication that this relationship wasn't adding value to us," Simmons says. As the physicians on the panel sought solutions over two to three years, he says, they realized the depth of the divide.
"Some surgical leadership who were very much against this, as they became more involved, it became clearer to them that we had irreconcilable differences," he says. "Doing something like this is very high risk, so you can't do this without consensus and a strong partnership with key physician leaders."
With cost control such an administrative imperative, groups that provide an anesthesia care team that includes CRNAs under physician supervision can represent a big improvement in cost and access. Mary Ouimet, senior vice president and chief nursing officer with Wheaton Franciscan Healthcare–All Saints, was part of the team making the decision on a legacy all-physician anesthesia group two years ago. Like Providence Regional, the old model became cumbersome and outdated largely because of growth of the Racine, Wis.–based 368-bed facility.
"We were growing from more of a community hospital to a medical center operation. We were expanding service lines, growing new segments of business in different specialties, and that was creating new demand," Ouimet says. "I could see a difference between what we needed and what we had, and we had a mismatch. The old model wasn't necessarily a fit."
Ouimet looked to high performers demonstrating all best practices in the industry and ultimately decided to go with the group now known as Team Health of Knoxville, Tenn., which uses a CRNA-supervision model.
"Outside the main OR, locations where we needed anesthesia were growing and we needed a way to better meet the needs of all," Ouimet says.
The ability to match the care team model to her needs was important in a new partner, she says, as well as its ability to work with some of the providers the hospital had used under the previous model. But also important was cost savings per encounter, she says.
"Under the old anesthesiologist model, for the same price you have less coverage. But it's not just a dollar thing; it's about skill sets. We were doing procedures in remote locations at odd hours because of anesthesia availability."
Ouimet found she could leverage a much broader team that included an advanced practice nurse provider with a physician supervisor. "We could cover more physical ground, with more eyes on the patient and more flexibility," she says. "Plus, there's more coordination, and handoffs aren't as abrupt."
And, unlike the Providence Regional transition, Wheaton Franciscan Healthcare–All Saints had the added benefit of cooperation from the prior anesthesiology group.
There was need to convince surgeons as well as patients who might expect an anesthesiologist to be present throughout the surgery. But a 30%–40% holdover in anesthesiologists on the team from the previous regime helped, as did a public information campaign.
"We took that as an opportunity to really educate on this," she says. "The anesthesia group, Team Health, was good at understanding the problem, because they wanted to work in partnership with our surgeons and wanted to be credible."
Eventually, Ouimet says, as the new group accommodated requests from some surgeons that anesthesiologists be present throughout surgery, surgeons largely became comfortable with the new group and demands for that type of accommodation fell sharply.
"Now we don't have people not doing cases here because we can't meet the need," she says.
Cindy Lilley, RN, BSN, MSHA, is director of surgical and perioperative services at Legacy Good Samaritan Medical Center in Portland, Ore., part of Legacy Health, which has 1,100 beds and net operating revenue of $1.3 billion in fiscal 2012. She speaks to the improvement in flexibility the hospital's new model of anesthesia—also using Team Health—has provided since it switched to the medically supervised anesthesia model using CRNA in September 2010.
"Part of the challenge was the inability to have flexibility in the schedule," she says. "For example, you start your day with 10 scheduled surgeries and you have 10 anesthesiologists, one per room, and then you have an urgent add-on. In a traditional model, you'd have to bump a surgeon."
In part, that flexibility has increased efficiency in the OR, and now surgeons encounter fewer delays and fewer cancellations. The move has also increased revenue and margin from additional cases that can be added. The hospital is getting higher surgeon and patient satisfaction scores, Lilley says, and volume has increased. Now, CRNAs can get cases going so there's no bump in the surgical schedule when add-ons come in.
To do so, the anesthesia team created what Lilley calls a "flip room concept," which consists of a team of nurses who can move from room to room so that "the surgeon talks to the patient, sees the family, and then goes into the next room for the next patient, reducing the amount of time between cases," she says. "What that has done is compressed the schedule so we're pretty much done in the OR around 7:30 at night."
Previously, they had to work until 11 p.m. or midnight.
Now, with more anesthesia providers available at any given time, Lilley says, "if there's a code in the house or if an anesthesia provider is needed in endoscopy or cath lab or if someone comes in emergently, we have the capability of sending anesthesia providers to those areas and not affect the OR," she says. "From a customer service point of view, surgeons don't see any bumps."
Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com
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This article appears in the March 2013 issue of HealthLeaders magazine.
Is your integration strategy more focused on avoiding penalties or are you focused more on embracing full collaboration? It's a question Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, asks CEOs all the time.
You may not have ever heard the question phrased quite like this, and you may not think you know the answer yet. That's OK, but as the senior leader in charge of making healthcare work, (that is, operate with a margin), you'll probably know where you stand on that question by the time you finish reading this column.
"These two strategies are complementary, but very different," Keckley says.
You have no choice about integrating to avoid penalties—that is, reductions in revenues that will come from failing to avoid readmissions for the same malady within 30 days, for example, or from reimbursement penalties that will occur if you experience so-called "sentinel events," but the scope of your organization will be very different from those who fully embrace collaboration.
Neither answer is necessarily "correct" for everyone, but you have to be the decision maker on what's correct for your organization. There is a right or wrong answer there. Trouble is, given the unsettled state of healthcare right now, you may not know whether you've answered correctly according to your organization's circumstances until it's too late to change course.
"If it's just for penalties, you make more prominent the role of intensivists and discharge planners, and you're much more conscious of the frail elderly and managing them in an acute setting, simply to avoid being penalized for avoidable complications or readmissions or suboptimal functional status (in the case of implants)," says Keckley. "That level of coordinated care represents table stakes."
"If it's just for penalties, you make more prominent the role of intensivists and discharge planners, and you're much more conscious of the frail elderly and managing them in an acute setting, simply to avoid being penalized for avoidable complications or readmissions or suboptimal functional status (in the case of implants)," says Keckley. "That level of coordinated care represents table stakes."
In addition to those table stakes, you may believe as a CEO that in your market a number of employers and health plans are also interested in two- to three-year contracts with a clinically integrated organization to manage a population on a capitated basis with performance incentives.
If so, you'll probably still rely on some of the same things you'll need to comply with the basic rules of the new game, but truly innovative integration requires more primary care, more mid-level practitioners, and more strategic relationships.
"Both [strategies] operate from the same chassis, but when we talk to the hospitals, they don't understand the difference in the two, saying, in effect, the first strategy is 'just compliance,'" Keckley says.
That could be as far as you want to go, and that could be the right answer for your organization. But if you step back from that line of thinking, both approaches are really addressing the same fundamental issues of how to best organize healthcare services across sites and professional groupings.
The only difference is that in the first scenario, any re-engineering of processes, relationships, and ownership structures comes from the position of avoiding giving up revenue. In the second, you're at risk for some additional income you might receive, or in order to do the deal, you might have to accept a lower base pay to participate.
"Both are tied to financial outcomes. Both are transparent. Both require interaction with payers. And both are multidisciplinary," Keckley says.
He sees a leadership attitude almost as though innovation into an ACO-type structure by definition means capitation with CMS, Aetna, or Humana or Blue Cross, for example. "It could mean that or it could mean capitation directly with Georgia Power or Wal-Mart," Keckley says. "That requires a different and broader set of clinical services."
It also requires guts and a determination to innovate.
What we're seeing, despite all the complexity surrounding re-engineering a calcified, too-expensive, and needlessly unsafe healthcare system, is an obvious race to the lower-cost operating platform. That means you can't start from the assumption that if your costs are in check, you can negotiate harder.
What may be required, if your organization is to lead an accountable care organization (in the general sense) is pretty sophisticated coordinated care management expertise. This is not something hospitals have traditionally done very well.
That's why we're seeing so many new partnerships with disease management firms, academic medical centers sharing best practices, and any other type of collaborative partnership between the strangest of bedfellows.
These folks are not shy about blowing up their operating model and trying new things. Risk is inherent in such decisions. You're halfway there if you presume that in the future, the site of care is less important than making sure that care has the best chance of improving the patient's outcome.
Your attitude is important when deciding your approach to integration and care management and new contractual relationships with payers and other healthcare providers. The key question to answer, according to Keckley, is how ambitious should you be in putting the pieces together to integrate clinically. The answer hinges on how you view the threat or opportunity from taking on risk for outcomes.
As CEO, only you can answer that question. The only wrong answer is "I don't know."
More specifically, talk of mergers, acquisitions, partnerships, and the development of strategies to manage the health of populations represents the change hoped for by healthcare's top leaders. But hope and change at the ACHE Congress, which runs March 11–14 in Chicago, are tempered by fear and caution.
Just to put a point on the rapidity of the changes facing healthcare, the Cleveland Clinic and for-profit hospital chain Community Health Systems announced a partnership, one of dozens announced since the U.S. Supreme Court affirmed the majority of the Patient Protection and Affordable Care Act last summer.
Strange times indeed.
In previous years at the ACHE Congress, talk of health insurance exchanges, the Medicaid expansion, and other changes being brought about largely by the PPACA was largely esoteric. This year it is evident that leaders are having to deal in a very real way with a declining revenue environment and a healthcare system that attempts to reward them (and punish them) based on value.
Attendees of the ACHE Congress have been treated to dozens of presentations this week showing that leaders are not only contemplating the changes they'll have to make, but also that they are making serious investments in labor, systems, and facilities to help meet the challenges of the future.
As hospitals and health systems try to plan the shift away from fee-for-service, they're aggressively hiring nurse practitioners, physician assistants, and other allied health providers to help extend their physician talent. And they're buying or partnering with organizations like federally qualified health centers, physician practices, skilled nursing facilities, home health, and even health plans.
These investments are a calculated risk, as hospital and health system leaders are hoping to replace some of the revenue loss that will happen as they attempt to keep patients out of the high-cost environment of the acute-care hospital. Most are expecting a revenue cut of about 20% over time as commercial rates settle toward Medicare reimbursement rates.
Urbana, IL–based Carle Foundation Hospital and Carle Physician Group, which merged three years ago, currently has 21 openings for advanced practice providersand expects to hire 40 more over the next few years. These people are difficult to find but necessary to improve access.
Bob Edmondson, chief strategy officer for Westminster, MD.-based Carroll Hospital Center, has invested heavily in disease management experts and patient navigators, but is unsure whether the accountable care organization route is right for his organization. Yet Carroll and other hospitals often face a new threat of competition from many fronts, including physicians.
"Are we going to go toward ACOs, or are we just going to be a part of one? In some markets, health insurers are running them. Cigna is setting up 300 nationwide," says Edmondson. And physicians can form ACOs, too, if they have the critical mass. "This is a real red flag. If the physicians can get their act together and collaborate, they will be formidable."
By next year's ACHE Congress, when most of the provisions of the PPACA have been implemented, healthcare executives will begin to see whether their investments are paying off, in the form of wringing waste and inefficiency from a healthcare system that is very rapidly becoming unaffordable.
The Independent Payment Advisory Board, a creation of the Patient Protection and Affordable Care Act, has lots of enemies, even though it doesn't really exist yet.
The American Medical Association is against it, and so is the American Hospital Association according to a letter released just last week. Lots of people in Congress, despite the fact that as a group, they're responsible for the fact that it became part of the law, are also against it.
They've introduced at least three bills since the beginning of the year to try to repeal it. Almost laughably, the AHA's recent letter to Sen. John Cornyn (R-TX), says it supports repeal (he's filed a repeal bill) because IPAB "permanently removes Congress from the process of making decisions regarding Medicare payment."
Ask supporters of the sustainable growth rate formula (if you can find any) if that statute ever "permanently removed" Congress from meddling in Medicare payment decisions. That formula, voted into law with the Balanced Budget Act of 1997, has been delayed by, guess who—Congress—umpteen times since 2002.
That was the first time that lobbying groups successfully convinced Congress that the payment revision for that year (-4.8%) would mean doctors would drastically reduce their Medicare patient panels as a result.
Poof. Cut. Gone.
Now, thanks to many such delays since then, the scheduled cut to physician Medicare rates on January 1, 2013, had been projected at a ludicrous 26.5%. The most recent "fiscal cliff" budget deal has again put off that cut until January 1, 2014, and it will likely never take effect again, even though it remains law.
Given how well they have handled the general budget, the deficit, and the national debt, removing Congress permanently from the process of making decisions regarding Medicare payment might be just the thing to get some control over the healthcare cost monster. If only it were so easy.
Let's remember for a minute: IPAB doesn't yet exist and both the AMA and AHA supported the passage of the Affordable Care Act. While the groups concede the cost problem, they fight like mad to make sure the costs don't come at their members' expense. They shouldn't be expected to do anything else.
But that doesn't mean Congress should necessarily listen to them any more than any other lobbyist group that is trying to prevent its ox from being gored. Healthcare spending is likely to devour all federal spending in a couple of decades unless something is done to control its growth, yet even when something like IPAB gets made into a law, Congress tries to kill it before it even exists.
I'm no general defender of the omnibus PPACA, but let's be honest and admit that despite the many changes the law will inflict on the business of healthcare, cost control isn't one of the major ones. In fact, that's the main criticism of the Act. Despite its name, it does very little to make healthcare more affordable.
In fact, IPAB, which was created as a version of the Medicare Payment Advisory Commission (MedPAC) that actually has the teeth to implement its regulations, is perhaps the only piece of the legislation that will actually attempt to hold down medical cost growth. Congress routinely ignores recommendations of MedPAC, so that clearly doesn't work, which is why IPAB was created in the first place.
And yet hospitals, physicians, and many other medical interests are attempting to make it stillborn. Not to worry. They still have lots of time to kill it off, as they will not be subject to IPAB's decisions until 2020!
Reading the opposing views of IPAB, the charge that it puts an "unelected" team of "bureaucrats" in charge of healthcare payment policy makes it seem un-American.
Yet that claim puts me in the same frame of mind as those (generally politicians again) who decried the stupidity of the sequester yet never found a way to do it better. In that case as in this one, remember that Congress created both IPAB and the sequester. That's why it ultimately went into effect.
No one who depends on getting elected for his or her (generous) paycheck ever wants to make a decision that cuts government funding to those who elect them. Yes, taking a meat cleaver to the federal budget isn't the most effective way to reduce spending, but given the nature of the game, it appears to be the only thing that works.
Maybe the fact that IPAB members don't have to worry about getting re-elected (the 15-member board is appointed by the President to varying terms) is the precise reason so many in the healthcare industry are so afraid of IPAB—it might just work. Maybe IPAB is part of the solution. Something has to be. At least we should let it try. As these bills have shown, it can always be repealed.
As heavy snowstorms have moved across the country over the past couple of weeks, it's been hard to believe that spring is just around the corner. And if you're like me, on your first strep infection after your fourth cold of the new year, spring certainly sounds nice.
But for healthcare organizations, their winter, in the form of years of expected reimbursement cuts may be just beginning. In the same way, the sequester that is supposed to take effect later today, could be considered a first snowfall in what seems to be shaping up as a long financial winter for healthcare. It calls for a chilling 2% across-the-board cut in Medicare spending.
Many organizations are preparing, however. The industry seems to be laying in supplies to last through the cold climate in the form of a dynamism of deals the sector hasn't seen in years, even decades.
My head spins with the wave of partnerships, mergers, and other affiliations we're seeing in the hospital and health system space—lately there's been a big one about every other day. These used to be huge news, but they're happening so frequently lately that we're have to do a "roundup" of them on our news desk just to keep up.
As 2014 approaches, when most of the major provisions of health reform start to take effect, it seems hospitals are preparing for the coming revenue winter by huddling together. Is that too dramatic a metaphor?
Not for some of the CEOs with whom I've recently spoken.
They forecast a bleak period of low revenue growth, retrenchment, and adjustment as new reimbursement rules are implemented and tweaked. In such a context, consolidation is a defensive measure, not a growth grab, at least at first.
So they huddle against the revenue chill, which is upon us. Several publicly held hospital companies have recently reported earnings that have disappointed Wall Street. Insurers recently sold off as much as 10% citing costs incurred in preparation for new rules. Those rules will govern how much of their earnings they may retain in profit and how much they must pay out in benefits. Other rule changes have to do with Medicare Advantage funding cuts, the prohibition of lifetime maximum benefits and the inability of insurers to reject applicants for pre-existing conditions.
Regardless of what you think about healthcare reform, one of the big results from it will be that without a major redesign, profits won't be as easy to earn in the near future.
If that's the prelude, the forecast for the actual implementation of such widespread change is frosty indeed. And this is all before we begin to determine the full impact of the forced budget cuts (otherwise known as the sequester) from Congress, as well as austerity under another name that is likely in the near future.
So, extending the metaphor, what does spring look like, and when is it likely to come?
We may have to wait a few years to find out, and there won't be a major announcement or a date on the calendar to mark it.
Some of the mergers most certainly won't work. Some will work brilliantly. Undoubtedly we'll see even more interest in data sharing as hospitals, health systems, and health plans must work more closely together to cut waste in healthcare.
This is the type of waste that comes from defensive medicine and suboptimal treatment protocols masquerading as no protocols at all—not from bad laundry contracts or even from obtaining sales concessions from drug and device manufacturers.
Spring will likely come in the form of changing the practice of medicine—a much more difficult leap.
Some health systems and health plans will likely even take the step of combining operations. There's already the attempt by Highmark in Pennsylvania to acquire the troubled West Penn Allegheny health system in order to better compete with UPMC.
And did anyone notice that the nation's largest health plan, WellPoint, with health plans in 14 states, has named a hospital guy, Joe Swedish, from Trinity Health, to lead it as CEO? He starts work there March 25. How long before discussions begin with major health systems about big data partnerships and shared risk/reward agreements, if not acquisition? I have no special inside information, but I'll bet my antibiotics they start before his first cup of coffee gets cold.
Financial pressure to do these types of deals will not relent. The hospitals and systems active in mergers and acquisitions, from the smallest primary care physician practice to multi-hospital systems think they have a solution. There is high risk involved, of course, but at least they have a plan.