Regulatory Challenges, Strategies for Hospital CEOs

Along with hopes of higher quality care and lowered costs, healthcare reform legislation has presented new regulations for healthcare organizations. The new regulation, in addition to previously established rules, can cause significant burdens for hospital CEOs. Hackensack (N.J.) University Medical Center President and CEO Bob Garrett and Carlos Brown, director of compliance at Barnes-Jewish Hospital in St. Louis, share some of the most challenging regulatory issues — both new and old — and strategies to overcome the issues.

Key regulatory challenges

General regulatory overload. From federal laws to state requirements, the number of regulations can be considerable. For example, Mr. Garrett says at HUMC there are often one or two regulatory agencies at the hospital to check licensing, auditing records, patient complaints or other items. "While all this is necessary, it takes staff away from the business of caring for patients," he says. "Our primary focus should be on patient care. When we're taken away from that, it's always a concern."

Audit overload.
The government has made healthcare fraud a priority, according to Mr. Garrett. As with general regulatory overload, while Mr. Garrett recognizes the importance of audits, he suggests the number of audits and agencies monitoring audits may be unnecessary. "The majority of what they find is legitimate errors," he says of regulatory agencies. "But, I wonder if it's an overload." Audits are also time-consuming because staff members have to respond to appeals and manage denials. Mr. Brown says recovery audit contractors pose a challenge for hospitals because the increased demand on hospital staff's time and resources. He notes that while CMS recouped approximately $150 million from faulty audits over the last year and half, the RAC program has already exceeded that amount in the past quarter, suggesting a heightened focus on audits.  

Resource-intensive data reporting. Ensuring the accuracy of data reported publicly is important because it provides information patients may use to make healthcare decisions, and it will affect reimbursement by July 1 of this year. The regulations for reporting data, however, can be challenging because it "requires additional staff to extract data and an ancillary data reporting system," says Mr. Garrett. Furthermore, different regulatory agencies may duplicate requests, causing redundancy.

Public reporting, billing and coding regulations require the most resources in terms of time and documentation, according to Mr. Garrett. The hospital needs to expend resources to teach physicians and staff how to document information and may need to use resources to collect data.

Frequent reassessment of HIPAA safeguards. Mr. Brown says HIPAA is a constant challenge because of the time requirements and the changing technology that poses risks for patients' security. "We are constantly reassessing our safeguards to be ahead [of the changes], but it's a challenge because it seems every day there's a new phone that can take a picture or send [information] to Facebook more quickly."

Uncertainty in healthcare reform. The new healthcare law "is going to be one of the biggest regulatory changes since HIPAA," says Mr. Garrett. Because many of the reforms have not been implemented, hospital leaders should be flexible, particularly in the structure of the organization, to be able to adapt to new rules, Mr. Garrett says. Parts of the reform, like accountable care organizations, affect hospitals' reimbursement, placing more pressure on leaders to be educated and vigilant about new regulations.

Burdensome documentation. Mr. Garrett says required documentation causes a "tremendous paperwork burden" which often calls for additional staff time to complete. For example, the growing complexity of medical records and reimbursement criteria require time and resources for careful documentation.  


Although complex, time-and resource-intensive regulations pose challenges for healthcare leaders, there are various strategies that can ease these burdens. Automating tasks through technology, for instance, can allow leaders to reassign staff to other areas of the hospital, saving time and increasing efficiency. With all strategies, however, hospital executives' commitment and leadership is necessary for achieving the buy-in and focus on compliance of employees, physicians and staff.

Implement technology. "Implement technology wherever possible," Mr. Garrett says. Electronic health records, coding support and other computer-based controls can reduce the time and staff needed to comply with regulations. HUMC's purchasing department, for example, went paperless; all purchasing orders are made electronically. Computer controls can also test noncompliance. For example, Mr. Brown says Barnes-Jewish Hospital, a member of St. Louis-based BJC HealthCare, is using technology to detect errors to help guard against RACs.

Partner with physicians. One of Mr. Garrett's strategies is to "engage our physicians as equal partners in developing solutions." Implementing EHRs, he suggests, should be done with physicians as partners.

Standardize practices. Standardizing approaches, sharing best practices and benchmarking can help hospitals remain compliant, Mr. Garrett says. Standardizing processes and sharing best practices help ensure system-wide adherence to safe and effective care. Benchmarking allows hospitals to compare themselves with similar organizations, which can provide insight into what the hospital does well and what needs improvement.  

Create a compliance program. Mr. Garrett attributes HUMC's success in compliance partly to the "robust corporate compliance program that's well integrated into the culture and business practices," he says. Leaders should assess the organization's current regulatory environment as part of developing a compliance program, according to Mr. Garrett. A compliance program can also include an internal system of monitoring and auditing that prepares leaders for regulatory agencies' audits and identifies areas for improvement. One of the most important parts of integrating compliance into a hospital's culture and business practices is being transparent with the board, medical staff and employees. "The only way you can improve is by being totally transparent," Mr. Garrett says.

In addition, hospital leaders can integrate compliance into the organization's culture through education. For example, Mr. Garrett suggests educating new employees during orientation. Mr. Brown says leaders should emphasize the importance of integrity to employees to help improve awareness of the importance of compliance.

Build appropriate infrastructure.
CEOs can establish the importance of compliance by building appropriate infrastructure, Mr. Garrett says. For example, the CEO can create a team of in-house experts on regulations and appoint compliance officers within each key department. Making the compliance department a senior-level department can also enforce a culture of compliance. At HUMC, the chief compliance officer reports to Mr. Garrett and the audit committee of the board.

One strategy BJC HealthCare uses to remain compliant is through compliance committees. The Hospital has an executive compliance committee that meets quarterly and includes the general council, compliance operational teams and CFOs of the hospitals, among others. Mr. Brown says the inclusion of senior-level leaders, "people who have decision-making authority and a keen sense of the [hospitals'] operations," in the committee allows the system to more effectively and efficiently implement strategies for compliance. Creating a system-wide compliance group "takes the commitment of the most senior leadership," Mr. Brown says. "It starts with a very good champion." He suggests that relegating compliance efforts to less senior leaders is not effective for making true changes that will help the hospital stay compliant. "It's not something you can phone in," he says.

In addition to the executive compliance committee, each BJC HealthCare hospital has compliance workgroups that meet every six weeks to discuss new regulations. The members then report to the executive compliance committee, ensuring that each hospital has a voice in compliance strategies.

The visibility of compliance efforts, officers and training can help establish compliance as part of the culture and business practices of a hospital. At HUMC, the screen savers on nursing units show a large picture of the compliance officer with the question "Who is our chief compliance officer?" to increase awareness of the hospital's focus on compliance.

Access appropriate resources. Mr. Brown says an effective strategy for meeting regulatory requirements is having sufficient resources, including incident management and tracking systems, periodicals and reference materials for education as well as seminars and conferences for training. Networking through seminars and conferences provides a benchmark that helps BJC HealthCare track its progress, according to Mr. Brown.

Important resources for managing regulatory issues also include people. Mr. Brown says "access to internal and external counsel who have sufficient subject matter expertise" is a significant resource for the health system. Knowledge of Stark, HIPAA and language in clinical trials billing and Medicare reimbursement takes time to acquire, Mr. Brown says. "We are fortunate to have a staff of counsel that supports [the hospitals] and senior leadership." Multidisciplinary committees are another important resource that can help leaders gain different perspectives on regulatory issues and potential strategies. A committee at Barnes-Jewish Hospital includes legal, clinical, IT and compliance experts. The IT members have helped encrypt employees' mobile devices to ensure compliance with HIPAA. The multidisciplinary group "makes a difference when we look at tools to anticipate the next level of security needed," Mr. Brown says.

Always be prepared. "Adopt a posture of continuous regulatory readiness," Mr. Garrett suggests. He says readiness does not mean the organization should be obsessed, but instead prepared for regulatory challenges and changes.

Be reality-based.
"Regulatory requirements are here to stay," Mr. Garrett says. Leaders should not avoid regulatory issues, but instead accept their necessity and work to be compliant.

By optimizing the use of technology, partnering with physicians, standardizing practices, creating compliance programs and assuming a state of readiness, hospital leaders will be better prepared to face challenges associated with regulations.

Related Articles on Regulatory Issues:

50 Things to Know About the Proposed ACO Regulations

ICD-10 Straight Talk: Overview

How to Guard Against Errors That Attract RACs Attention

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