On March 21, 2010, the House of Representatives passed President Barack Obama's sweeping healthcare reform bill, signaling the beginning of a watermark decade for the healthcare industry. In the wake of the bill's passage, hospitals and health systems are struggling to adapt to a variety of changes: planned Medicare and Medicaid reimbursement cuts, additional requirements and regulations, the beginnings of ACO development and a move from fee-for-service to pay-for-performance for providers nationwide. To mark the anniversary of the passage of reform, four healthcare leaders discuss the state of the healthcare industry one year later.
1. It is time to accept inevitable changes. Tom Strauss, president and CEO of Summa Health System in Akron, Ohio, says the time for griping about healthcare reform is over. The mostly amicable tone at the State of the Union gave pause to those who still see healthcare reform as a battle between two opposing parties. "The question now is really whether we can work together tomorrow," he says. "We believe at Summa that this healthcare industry we find ourselves with is seriously flawed and unsustainable." He says despite the controversies over individual measures, healthcare reform moves the industry in a generally positive direction: away from a system where physicians are only paid to treat sick patients. "[That system] doesn't lend itself to collaboration, integration or a multidisciplinary approach to care," he says. "As an example, if we have a good flu season, the hospitals are all full and we all make a lot of money. What's wrong with that picture?"
Chris Van Gorder, president and CEO of Scripps Health in San Diego, Calif., agrees that healthcare reform is in many ways a representation of an already-existing movement. "Healthcare reform probably didn't change the direction our organization was going, but it increased the speed of the changes we wanted to put in place," he says. "It became a catalyst to align our physicians and our managers under what were radical changes we needed to make in our structure and organization." For the last 11 years, Scripps Health has been working to change its system from a group of silo hospitals, ambulatory networks and pluralistic medical staff to a system of integrated physicians and hospitals. With extra incentives for integration in place due to healthcare reform, the system has sped up that change, moving from a largely vertical structure to a horizontal structure starting in Oct. 2010. He says he believes the horizontal structure will be essential for implementing "reduction of variation in how we work, reduction of variation in quality and cost and reduction of variation in safety."
2. Tort reform will play a larger role in 2011. In a nod to supporters of tort reform in January's State of the Union, President Obama said he was "willing to look at other ideas to bring down costs, including one that Republicans suggested last year — medical malpractice reform to rein in frivolous lawsuits." The statement followed the introduction of a tort reform bill on Jan. 24 that would cap noneconomic damages in malpractice cases at $250,000 — similar versions of which have been introduced on a regular basis by House Republicans since 2002 and have repeatedly failed to pass in the Senate. At a Jan. 27 Senate Health, Education Labor and Pensions Committee hearing, Secretary of Health and Human Services Kathleen Sebelius said she plans to outline the parameters of medical malpractice reform. On Feb. 16, the House Judiciary Committee approved a Republican medical liability reform bill after fending off more than twenty Democratic amendments. The bill will head to the House floor next for final consideration.
Mr. Strauss says he expects tort reform to be discussed in greater detail in 2011. "We think [the tort reform bill] is a great first step," he says. "In the past, those efforts have been stalled in the Senate and President Obama has opposed those caps." He says the need for tort reform to prevent "frivolous lawsuits that cause doctors to overtreat patients" is even more pressing as the healthcare industry focuses its attention on decreasing costs.
Congressional Democrats have traditionally opposed caps on noneconomic — or "pain and suffering" — damages because they feel they could usurp the power of the jury system. President Obama's statement on tort reform represents a significant success for Republicans, though the future of noneconomic damages remains to be seen.
3. Collaboration between systems is essential for ACO development. Everyone in the healthcare industry seems to be talking about ACO development, though the official regulations have yet to be released. Mr. Strauss says his system defines accountable care as "a group of healthcare providers who come together to define a patient population's care in coordination with each other and are rewarded for not only improving quality and safety but for controlling the total cost of that population." Summa Health System launched its ACO in January and has taken steps to evaluate evidence-based models of care to create new reimbursement models for improving quality and decreasing cost. "We have basically 100 people across our system for the last year and a half working on developing areas of information technology, provider network components, financial models and care delivery models," he says. "We're starting with a pilot program around the biggest one, which is congestive heart failure, and we're kicking off this month to fine tune all the components — hospitals, physicians and insurance, as well as acute home health care — that need to come together to improve the health of that population."
He says because accountable care is such a large undertaking, health systems have to work together to exchange "best practices" and plans around ACOs. Mr. Strauss recently met with heads of such systems as Geisinger Health System in Danville, Pa., Baystate Health in Springfield, Mass., and University Hospitals in Cleveland, Ohio, to discuss various ACO prototypes. Ms. Ubbing says systems in Ohio are beginning to look at what can be accomplished through ACOs, "not just at the Medicare ACO level, but at the broader idea of what you can do with a network and what alignment you need for services beyond the scope of your own facilities," she says.
4. Patient care can't be improved without involving the patient. Many measures of healthcare reform depend on better communication between patient and provider. In March 2010, additional requirements on non-profit hospitals took effect, mandating facilities to conduct "community needs assessments" to determine the health of the local community or face a $50,000 annual tax for failing to do so. Starting in 2012, hospitals with excess preventable hospital readmissions will receive reductions in Medicare payments. If the healthcare industry aims to reduce spending, providers must communicate regarding patient care to make sure the same tests and visits do not repeat themselves unnecessarily. Mr. Van Gorder says a challenge for providers will be helping patients navigate a complex healthcare system with multiple gateways and providers. "We have started thinking about patient navigators to be the key person a patient can contact to help bridge [the gaps] between physicians and ask questions about the system," he says. "We have patients who are terminal and who have a difficult time trying to figure out what care they get in the acute setting versus hospice setting versus home setting." He says while Scripps has not come up with a perfect solution to improve provider-patient communication, a "patient navigator" could help give patients a point of contact when they feel lost.
Mina Ubbing, president and CEO of Fairfield Medical Center in Lancaster, Ohio, and chair of the board of trustees for the Ohio Hospital Association, says her hospital's required community needs assessment has emphasized significant health problems in the community. "One of our big issues is around healthy lifestyles — more specifically, obesity and the disease stream that leads to," she says. In 2010, the hospital introduced "accountability for wellness" to its employees' health plan. While the system is voluntary, employees who don't volunteer for wellness accountability have a higher health premium. The hospital is looking to roll out the system in the local community as well.
5. Hospitals must figure out how to absorb billions of dollars in Medicaid and Medicare cuts. In June 2009, President Obama outlined $313 billion in cuts to government healthcare spending over the next 10 years. The cuts involve slowing Medicare payment increases, cutting reimbursements for imaging services, skilled nursing and inpatient rehabilitation facilities and long-term care hospitals and reducing subsidies for hospitals that provide care for the uninsured as more people gain coverage. Explaining the rationale behind the cuts, President Obama said, "Any honest accounting must prepare for the fact that healthcare reform will require additional costs in the short term in order to reduce spending in the long term." He wasn't exaggerating: Healthcare leaders agree that one of the most significant challenges of the next few years will be learning how to operate with reimbursement cuts. "We have billions of dollars in cuts for Medicaid and Medicare, [and we must] try to understand how we can sustain that," Mr. Strauss says. "Any kind of change is going to be painful."
Mr. Strauss says to offset decreased reimbursements, hospitals must focus on treating patients around prevention and wellness. "Almost 30 percent of what we do to patients in this country may not be needed," he says. This necessitates true accountability to evidence-based practice, he says. As computerized physician order entry becomes more prevalent, physicians can benefit from embedded evidence-based practices that remind providers of industry standards throughout the care process.
Nathan Tudor, CEO of 25-bed Otto Kaiser Memorial Hospital in Kenedy, Texas, says the reduction in hospital funding is worrisome for his facility, which treats around 75 percent Medicare patients. "Any type of cut we receive in Medicare funding would significantly impact our hospital and what we're able to do here," he says. His approach is similar to Mr. Strauss' recommendation: Recently the hospital has become involved in a national initiative to reduce hospital-acquired urinary tract infections, as well as a Texas initiative to reduce hospital readmissions occurring within 30 days of discharge. "In a rural hospital, you have to stay creative and think outside the box," he says. "We always watch our costs, and we look at different ways to expand revenue and service funds."
Please contact Rachel Fields at rachel@beckersasc.com with any questions.
Read more on healthcare reform:
-President Pledges to Widen States' Ability to Alter Medicaid
-GOP Proposal to Avert Federal Shutdown Wouldn't Defund Reform
-Hospital Trade Groups File Court Brief Upholding Reform Law
1. It is time to accept inevitable changes. Tom Strauss, president and CEO of Summa Health System in Akron, Ohio, says the time for griping about healthcare reform is over. The mostly amicable tone at the State of the Union gave pause to those who still see healthcare reform as a battle between two opposing parties. "The question now is really whether we can work together tomorrow," he says. "We believe at Summa that this healthcare industry we find ourselves with is seriously flawed and unsustainable." He says despite the controversies over individual measures, healthcare reform moves the industry in a generally positive direction: away from a system where physicians are only paid to treat sick patients. "[That system] doesn't lend itself to collaboration, integration or a multidisciplinary approach to care," he says. "As an example, if we have a good flu season, the hospitals are all full and we all make a lot of money. What's wrong with that picture?"
Chris Van Gorder, president and CEO of Scripps Health in San Diego, Calif., agrees that healthcare reform is in many ways a representation of an already-existing movement. "Healthcare reform probably didn't change the direction our organization was going, but it increased the speed of the changes we wanted to put in place," he says. "It became a catalyst to align our physicians and our managers under what were radical changes we needed to make in our structure and organization." For the last 11 years, Scripps Health has been working to change its system from a group of silo hospitals, ambulatory networks and pluralistic medical staff to a system of integrated physicians and hospitals. With extra incentives for integration in place due to healthcare reform, the system has sped up that change, moving from a largely vertical structure to a horizontal structure starting in Oct. 2010. He says he believes the horizontal structure will be essential for implementing "reduction of variation in how we work, reduction of variation in quality and cost and reduction of variation in safety."
2. Tort reform will play a larger role in 2011. In a nod to supporters of tort reform in January's State of the Union, President Obama said he was "willing to look at other ideas to bring down costs, including one that Republicans suggested last year — medical malpractice reform to rein in frivolous lawsuits." The statement followed the introduction of a tort reform bill on Jan. 24 that would cap noneconomic damages in malpractice cases at $250,000 — similar versions of which have been introduced on a regular basis by House Republicans since 2002 and have repeatedly failed to pass in the Senate. At a Jan. 27 Senate Health, Education Labor and Pensions Committee hearing, Secretary of Health and Human Services Kathleen Sebelius said she plans to outline the parameters of medical malpractice reform. On Feb. 16, the House Judiciary Committee approved a Republican medical liability reform bill after fending off more than twenty Democratic amendments. The bill will head to the House floor next for final consideration.
Mr. Strauss says he expects tort reform to be discussed in greater detail in 2011. "We think [the tort reform bill] is a great first step," he says. "In the past, those efforts have been stalled in the Senate and President Obama has opposed those caps." He says the need for tort reform to prevent "frivolous lawsuits that cause doctors to overtreat patients" is even more pressing as the healthcare industry focuses its attention on decreasing costs.
Congressional Democrats have traditionally opposed caps on noneconomic — or "pain and suffering" — damages because they feel they could usurp the power of the jury system. President Obama's statement on tort reform represents a significant success for Republicans, though the future of noneconomic damages remains to be seen.
3. Collaboration between systems is essential for ACO development. Everyone in the healthcare industry seems to be talking about ACO development, though the official regulations have yet to be released. Mr. Strauss says his system defines accountable care as "a group of healthcare providers who come together to define a patient population's care in coordination with each other and are rewarded for not only improving quality and safety but for controlling the total cost of that population." Summa Health System launched its ACO in January and has taken steps to evaluate evidence-based models of care to create new reimbursement models for improving quality and decreasing cost. "We have basically 100 people across our system for the last year and a half working on developing areas of information technology, provider network components, financial models and care delivery models," he says. "We're starting with a pilot program around the biggest one, which is congestive heart failure, and we're kicking off this month to fine tune all the components — hospitals, physicians and insurance, as well as acute home health care — that need to come together to improve the health of that population."
He says because accountable care is such a large undertaking, health systems have to work together to exchange "best practices" and plans around ACOs. Mr. Strauss recently met with heads of such systems as Geisinger Health System in Danville, Pa., Baystate Health in Springfield, Mass., and University Hospitals in Cleveland, Ohio, to discuss various ACO prototypes. Ms. Ubbing says systems in Ohio are beginning to look at what can be accomplished through ACOs, "not just at the Medicare ACO level, but at the broader idea of what you can do with a network and what alignment you need for services beyond the scope of your own facilities," she says.
4. Patient care can't be improved without involving the patient. Many measures of healthcare reform depend on better communication between patient and provider. In March 2010, additional requirements on non-profit hospitals took effect, mandating facilities to conduct "community needs assessments" to determine the health of the local community or face a $50,000 annual tax for failing to do so. Starting in 2012, hospitals with excess preventable hospital readmissions will receive reductions in Medicare payments. If the healthcare industry aims to reduce spending, providers must communicate regarding patient care to make sure the same tests and visits do not repeat themselves unnecessarily. Mr. Van Gorder says a challenge for providers will be helping patients navigate a complex healthcare system with multiple gateways and providers. "We have started thinking about patient navigators to be the key person a patient can contact to help bridge [the gaps] between physicians and ask questions about the system," he says. "We have patients who are terminal and who have a difficult time trying to figure out what care they get in the acute setting versus hospice setting versus home setting." He says while Scripps has not come up with a perfect solution to improve provider-patient communication, a "patient navigator" could help give patients a point of contact when they feel lost.
Mina Ubbing, president and CEO of Fairfield Medical Center in Lancaster, Ohio, and chair of the board of trustees for the Ohio Hospital Association, says her hospital's required community needs assessment has emphasized significant health problems in the community. "One of our big issues is around healthy lifestyles — more specifically, obesity and the disease stream that leads to," she says. In 2010, the hospital introduced "accountability for wellness" to its employees' health plan. While the system is voluntary, employees who don't volunteer for wellness accountability have a higher health premium. The hospital is looking to roll out the system in the local community as well.
5. Hospitals must figure out how to absorb billions of dollars in Medicaid and Medicare cuts. In June 2009, President Obama outlined $313 billion in cuts to government healthcare spending over the next 10 years. The cuts involve slowing Medicare payment increases, cutting reimbursements for imaging services, skilled nursing and inpatient rehabilitation facilities and long-term care hospitals and reducing subsidies for hospitals that provide care for the uninsured as more people gain coverage. Explaining the rationale behind the cuts, President Obama said, "Any honest accounting must prepare for the fact that healthcare reform will require additional costs in the short term in order to reduce spending in the long term." He wasn't exaggerating: Healthcare leaders agree that one of the most significant challenges of the next few years will be learning how to operate with reimbursement cuts. "We have billions of dollars in cuts for Medicaid and Medicare, [and we must] try to understand how we can sustain that," Mr. Strauss says. "Any kind of change is going to be painful."
Mr. Strauss says to offset decreased reimbursements, hospitals must focus on treating patients around prevention and wellness. "Almost 30 percent of what we do to patients in this country may not be needed," he says. This necessitates true accountability to evidence-based practice, he says. As computerized physician order entry becomes more prevalent, physicians can benefit from embedded evidence-based practices that remind providers of industry standards throughout the care process.
Nathan Tudor, CEO of 25-bed Otto Kaiser Memorial Hospital in Kenedy, Texas, says the reduction in hospital funding is worrisome for his facility, which treats around 75 percent Medicare patients. "Any type of cut we receive in Medicare funding would significantly impact our hospital and what we're able to do here," he says. His approach is similar to Mr. Strauss' recommendation: Recently the hospital has become involved in a national initiative to reduce hospital-acquired urinary tract infections, as well as a Texas initiative to reduce hospital readmissions occurring within 30 days of discharge. "In a rural hospital, you have to stay creative and think outside the box," he says. "We always watch our costs, and we look at different ways to expand revenue and service funds."
Please contact Rachel Fields at rachel@beckersasc.com with any questions.
Read more on healthcare reform:
-President Pledges to Widen States' Ability to Alter Medicaid
-GOP Proposal to Avert Federal Shutdown Wouldn't Defund Reform
-Hospital Trade Groups File Court Brief Upholding Reform Law