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January 23, 2012

Catholic Healthcare West Drops Church Affiliation

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In a move I wouldn’t be surprised to see imitated, big religious hospital chain Catholic Healthcare West has broken its official ties with the Roman Catholic Church, though it will continue to include both Catholic and non-Catholic facilities in its flock.   The chain, which is changing its name to Dignity Health, currently includes 15 non-Catholic hospitals and 25 Catholic hospitals.

The system’s leaders have concluded that they couldn’t meet their ambitious growth targets if forced to adhere to faith-based care guidelines in all of its facilities.

According to CEO and president Lloyd Dean, who spoke to USA Today, he’s had to step away from potential deals several times when partners questioned their role in a Catholic system. This way, it should be much easier for CHW to work with other systems and acquire medical practices, observers say.

I expect to see other faith-based chains consider similar moves over the next year or two. As we’ve noted in this forum before, having to adhere to religiously-based rules can be a bit of a hassle for secular organizations, especially those that hope to compete in tight markets.  Mergers between the two sides can become a Tylenol headache very quickly.

Consider the struggles the University of Louisville (KY) went through in an effort to merge with Catholic-owned St. Mary’s Healthcare, forcing it propose build a “hospital in a hospital” to provide forbidden services. It makes my eyes water just to think about it. With health reform afoot, mergers a fact of life and new partnership models emerging every day, CHW may have done the only thing it could do.

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January 16, 2012

A Snapshot: Is Free Care in Minnesota What It Appears?

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With any luck, we’ve finally left the worst of the financial crash behind, and with it the financial challenge posed by large numbers of medically indigent patients.  A recent report from Minnesota’s hospital trade group underscores how bad things were for patients. It also suggests that the hospitals may not quite be as charitable as they claim.

According to the report, the level of free or discounted care provided by the state’s hospitals shot up 27 percent in 2010, driven largely by falling state coverage and rising unemployment.  The Minnesota Hospital Association said that state hospitals provided $226 million in charity care last year, along with $498.5 million expenses generated by Medicaid patients receiving discounted care that wasn’t reimbursed.

OK, let’s break this down. We’ve got, very broadly, $750 million in direct charity care expenses among 135 hospitals.  While I don’t know exactly what they grossed in 2010, we can be pretty sure it exceeds that figure by at least three or four orders of magnitude.

Sure, several million in charity care per hospital is enough to erode the slim margin most hospitals cope with year to year.  On the other hand, we know it’s not a simple matter of money in, expenses paid for charity care.  The accounting gets more complicated than seven-way chess, and let’s admit it, some of the numbers are a bit dicey at best.

Now, I’m not suggesting any individual hospital is gaming the system worse than others. But I am suggesting that if this is the best they can come up with, they’d better get cracking. Neither the IRS or Congress has much patience for charity care numbers that don’t add up, and municipalities (at least in Illinois) are getting into the “yank the tax exemption” act too.

Bottom line, you better keep your nose clean and those charity care numbers better be above board. If you’re not already, it’s time to avoid accounting tricks and play it straight.

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January 2, 2012

ACO Proves Major Political Turning Point For Boston Hospital Chain

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Transforming a hospital system into a fully-functioning ACO is a huge project, and one which requires a big commitment.  It’s hardly surprising that going through the process would change how its leaders think about their business.  But the following is the first case I’ve heard of in which a hospital system made a major break with its peers over its ACO status.

Apparently,  for-profit Steward Health Care System has just resigned from the Massachusetts Hospital Association, bringing its 10 hospitals (and 11 percent of the MHA’s revenues) with it.  Steward, which was created by the acquisition of six-hospital Caritas Christi Health Care Chain a year ago by VCs, has since picked up four hospitals and done a host of doctor deals.

Not surprisingly, Steward seems to have bruised some competitors’ feelings along the path to ACO-hood, which probably has something to do with its MHA departure, but Steward isn’t copping to that of course.

At this point in its evolution, Steward’s leaders say, the MHA’s positions on politics don’t represent its needs anymore. Particularly when it comes to health reform, Steward’s leaders feel it now has a different take than other members of the MHA, which has to advocate for shared positions across almost 100 hospitals with varied approaches.

As for me, I’m not sure what those differences are; in fact, I’d think that a “real” ACO would be an inspiration for, and partner to, other hospitals on the path to health reform.  In fact, this raises some questions as to how the growing ACO trend will affect hospital relationships this year:

* Are IDNs that work hard at building a true ACO going to upset their peers so much that it will create a drag on their business overall?

* Most healthcare business models have some detractors and some fans, but is this one of the few that can actually divide the industry?

*  Are ACOs a direction every IDN can take, or are there resource constraints (such as the size of a local market or number of unaffiliated doctors) that will prevent some from building one? Will the coming rush create ACO “haves” and “have nots”?

What do you think, folks?  Have you seen anything happening in your markets that might answer these questions?

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December 26, 2011

Hospital Uses Disney Magic To Improve Patient Satisfaction

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Ideally, patients come away from their hospital stay not only healthier, but happier too. So how about taking a page from the Happiest Place On Earth?  Yes, I mean Disney Land.

Dissatisfied with its patient satisfaction scores, one Florida hospital has struck a partnership with Walt Disney Co. to pick up some of that Mouse Magic.  Since then, the hospital’s scores have shot up — and patient volumes, too.

Back in 2009, satisfaction was at rock bottom at 200-bed Florida Hospital for Children. To change its luck, the 200-bed hospital decided to make sure of a pioneering program run by Disney, laying out about $200,000 in consulting fees to bring the entertainment company in.

Not only did Disney help the hospital improve its presentation, it also got tips on improving staff morale and treating patients as customers. (The “staff morale” thing is a bit amusing, since, as all former Florida residents know, Disney’s own employee policies have earned it the title “the Rat.” But I digress.)

These days, when little patients and their parents enter the Walt Disney Pavilion, they’re greeted by a “park ranger” who offers directions, a Disney-theme play area and a ukelele-playing greeter in character costume, according to USA Today.

Behind scenes, some staffers have been tagged as Disney-style “cast members,” and work areas have been renamed “back stage” and “front stage” areas.

While some of this may sound a little silly, it’s generated big results.  Florida Hospital’s patient satisfaction scores have climbed to the 80th percentile of all children’s hospitals nationally. Even better, patient volumes are up by nearly half, administrators told the paper. You can’t beat that with a stick.

Though I’m sure kids are more focused on the fun, park-like attractions, my hunch would be that the back-office changes were as important to Florida Hospital’s transformation as the cosmetic fixes. After all, when it comes right down to it, the parents who pay for care are more worried about things like working with staffers who are upbeat and happy with their jobs.  Still, it’s an intriguing approach overall.

 

 

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December 12, 2011

To Avoid Readmissions, Hospitals Trying Post-Discharge Clinics

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In recent years, hospitals have been under increasing pressure to keep their readmission rates low. The next bump in the road comes in October 2012, when Medicare will begin cutting back on reimbursement for facilities whose readmit rates are too high.

Hospitals are already hard at work at preventing readmissions due to preventable medical errors, which may not be reimbursed at all by Medicare at all. But it seems like they’re still far behind in the care coordination department.

In fact, research suggests that they’re facing an uphill battle, in part because patients often don’t get the kind of follow-up care they need.

In theory, fragile patients  should move smoothly from inpatient care to their PCP, ideally a medical home equipped to coordinate whatever follow-up care needs they have. Few primary care practices are up to speed yet, however.  In fact, some aren’t even sure when their patients are discharged.

How bad is the problem? According to one study quoted in The Hospitalist, only 42 percent of hospitalized Medicare patients had any contact with a primary care physician within 14 days of being discharged.

One solution to this problem might be a “post-discharge” or transitional care clinic offering primary care on or near a hospital’s campus, the article notes. This makes sense. After all, it’s more likely a patient will follow through and get follow-up care if it’s convenient to do so.

The idea behind these clinics isn’t to replace the patient’s existing PCP; instead, the clinic’s hospitalists, advance-practice nurses or PCPs are there to make sure patients absorbed their post-discharge instructions and are compliant with the meds prescribed during their stay.

Some hospitals have invested significant resources in building out transitional clinics, including Beth Israel Deaconess Medical Center, Seattle-based Harborview Medical Center and Tallahassee (Fla.) Memorial Hospital, which partnered with a local health plan to kick off the effort.

That being said, the idea is a new one and few other hospitals have taken the plunge as of yet. It will be interesting to see whether this approach actually works, and particularly, whether one model of transitional care stands out.

P.S.  I’d particularly like to know whether hospitals can accomplish some of these objectives by monitoring patients remotely after they’re discharged. After attending last week’s mHealth show, I’m betting remote monitoring would be cheaper than setting up a new clinic. Can’t wait to see whether hospitals try that route!

 

 

 

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November 27, 2011

Idea That Might Work: “Hospital at Home” Model Delivers Hospital-Level Care

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Far too often, ideas developed by academics end up sitting in a dusty file or published by an insider journal that hospitals CEOs seldom see. In the following case, however, it seems academia and the hospital biz are seeing eye to eye on a new approach to acute care which could offer substantial savings.

A growing number of hospitals have begun to embrace the “Hospital at Home” model, an approach originally developed by the Johns Hopkins School of Medicine which offers hospital care to people in their own homes. HAH is focused on the elderly, not surprisingly given the high cost of caring for them, but I bet it’d offer advantages in caring for chronically-ill patients of just about any age.

While this approach isn’t as whiz-bang neat as, say, bringing an emergency department to a patient’s home — something already done in France — it’s a solid concept.

This model fits hand in glove with maturing technologies which monitor patients from afar while leaving in their home (tracking metrics like blood sugar, patient weight or cardiac functioning and shunting the data to doctors via the Internet).

According to a recent Forbes article, one of the biggest proponents of this approach is Presbyterian Healthcare Services, a New Mexico-based system which manages the largest program in the country. PHS has estimated that treatment averages one-third shorter than equivalent cases treated in an inpatient setting. And the system calculates that it’s saved $2,000 to $3,000 per case, as well. Neat stuff.

Folks, frankly I’m mystified that this approach hasn’t become more standard…or would be, I suppose, if the hospital industry I know and love didn’t have this habit of ignoring trends until they explode in someone’s face.

In any event, if any of you are implementing or even considering HAH, I’d love to hear from you. And if you think that this model can’t work, I’d love hearing from you even more. Let me have it!

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November 21, 2011

Hospital Strategic Partnerships Avoid Mergers, But Create Other Pain Points

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This is one of those periods in health biz history when M&A looks especially attractive.  What CEO wouldn’t give a second thought to getting acquired and picking up a bundle of cash when they’re struggling to survive?

In fact, one attorney with a national health care law firm argues that that as many as 50 to 60 percent of doctors and hospitals are looking for partnership opportunities of late, in part because health reform encourages consolidation.

The question is whether the institutions can put aside their differences long enough to talk business — particularly if they have dueling missions (such as religious charity vs. profit). Not only that, it’s not clear whether partnerships will meet their needs for long, as we’ll discuss below.

Given their druthers, many institutions would prefer to stick it out on their own and do things their own way. And despite the urge to merge, many hospitals are keeping their independence through strategic partnerships, notes Becker’s Hospital Review.

It’s hard to argue that partnerships can have their advantages, as the Becker’s piece notes. Hospitals can cut overhead costs by sharing services and staffing, while expanding on their local reach and adding services they might lack.

Partners can also come together to shore up specific service lines without having to invest heavily on their own. That was the purpose of a recent agreement between Saint Vincent Health Center in Erie, PA and the Cleveland Clinic, which are teaming to further boost the reputation of their already high-profile organizations in cardiac and neurological services, according to the Becker’s piece.

And hospital partners can save big bucks by rolling out the all-but-mandatory EMR system together, too.  Not only do the hospitals save bucks on staffing and technical expenses, they also end up sharing clinical data by default. Ideally, they’ll provide higher-quality care and save money by avoiding duplicate services.

Hospital partnerships may make it easier to build an effective Accountable Care Organization, too. After all, it’s easier to share data and coordinate treatment if you already have a trusting relationship in place, particularly if you’re already integrated clinically.

That being said, partnership building comes with its own set of frustrations. Take last year’s relationship struck by Reston, WA-based Providence Health & Services and Seattle-based Swedish Health Services.

To get along, the two parties had to set up a complicated structure letting Providence’s 27 hospitals keep their Catholic mission, while the five Swedish hospitals stayed non-religious. The two will work together using the Epic EMR to work together on shared best practices and population health.

And that’s far from their biggest headache. Ultimately, hospitals won’t save the kind of money they’d like to save, nor build new business the way they’d hope to, without completing a real merger. At that point, things can get expensive and even more complicated, as individual IDNs or facilities fight to keep key partners of their strategy in place.

Meanwhile, the hospitals in question may find that merging doesn’t meet regulatory approval. Hey, look at what happened when ProMedica Health System of Toledo and nearby St. Luke’s Hospital decided to get hitched. The $1.7B ProMedica chain, has 11 hospitals in Ohio and Michigan, came riding to the financially-ailing St. Luke’s rescue with a $35 million investment in August 2010.

Since then, though, the FTC has cracked down hard on ProMedica, arguing that the deal unfairly monopolizes the Toledo market,  in particularly by raising its share of the inpatient obstetrical services market to 80 percent. (Hey, ask your friendly editor and I have to admit that the FTC’s argument has some merit.)

So, where can hospitals turn if they want to thread their way through the current hospital business climate?

Well, at least one model — promoted by organizations like Paradigm Physician Partners and the LHP Hospital Group – have rolled out a model in which, as privately held companies, they form joint ventures with and sink capital into non-profit hospitals and health systems. LHP, which holds joint interest in some or all of the hospital’s operations through an LLC,  recently closed a deal with Pocatello, ID-based Portneuf Medical Center.

I predict that hospitals will find new ways to take in investment without giving up equity or their non-profit status. If new models pop up on my viewscreen I’ll let you know — I think this’ll be a hot new transaction strategy.

 

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November 14, 2011

Hospitals play unfair games with Medicare observation status

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Most hospital visitors don’t care a whole lot whether they’re classed as inpatients or outpatients  – unless it affects the size of their bill. But lately, many patients are getting hit with unexpected fees after spending days in a hospital, thanks to tricks hospitals are playing in an effort to lower their readmission rate numbers, a newly-filed lawsuit contends.

These days, hospitals are under intense pressure to lower readmission rates, as such rates figure into their ratings on various types of quality scales.  In some cases, of course, they have no direct control of this number, as readmissions often have far more to do with the care they receive from community physicians and their willingness to comply with discharge instructions.

But ever-resourceful administrators have found a loophole that allows them to rejigger the admissions numbers. Under Medicare rules, they’re allowed to keep patients on “observation status,” deliver care and let patients go without ever classing them as inpatients. All of which might be well and good, except that if patients are in a hospital for days, they rack up a big bill — one they’re expected to pay far more of if the visit is billed as outpatient care under Medicare Part B.

Even more delightful for these patients, the fact that they haven’t logged three or more “real” inpatient days means that Medicare won’t pay for follow-up in a skilled nursing facility after discharge. So seniors either do without, or end up having the state pay through Medicaid.

Nice way to look out for patients, guys. Being old and sick and scared isn’t bad enough; now seniors have to wonder if their hospital costs are paid for even with Medicare coverage in place.

With this kind of mumblety-peg becoming fairly common, a consumer group called Center for Medicare Advocacy has filed a lawsuit to call a halt to the fun. The group is asking CMS to simply end observation status as a billable category.

While I sympathize with hospitals to some degree, who are also hoping to dodge scrutiny from the RECs by avoiding inpatient claim reviews, setting up seniors for high costs by playing unfair games is bad for you, the industry and the patient. Cut it out.

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November 7, 2011

Hospital M&A Getting Tough (But Misguided) Scrutiny From Lawmakers

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As us in “the biz” know, the pace of hospital M&A isn’t going to slow down anytime soon. Hospitals are huddling together to scale up for countless reasons.

The reasons for hospital consolidation are just about unstoppable, of course, as they include  a) well-founded fears regarding reform, b) trouble carrying the capital capital costs involved in scaling up health IT infrastructure, c) long-term trends squeezing hospital margins and d) the need to participate effectively  in ACOs, HIEs and other alphabet soup organizations.

Unless the government takes over the entire healthcare system and spends these factors away, they’ll push execs into the arms of their peers regardless of what federal policies roll out.  Yes, the FTC can put mergers on hold, and notably, has gone medieval on a few mergers just to prove it can, but let’s not pretend it has the resources to slow hospital consolidation dealflow much either.

So, I must say I was sort of amused to learn that members of the  House Ways and Means Subcommittee on Health took a  stern look at hospital dealmaking and consolidation last month.  You know, to me it’s like standing in a flooded basement in a rainstorm and focusing on a few cracks in the wall — but I digress.

At the hearing, an economics and health policy professor named Martin Gaynor testified that consolidation was picking up speed. He also asserted that studies show hospital prices going up meaningfully whenever hospital markets consolidate.

Geez, Professor Gaynor, you say that like it’s a bad thing! Doesn’t classical economics allow for the supply side folks to work together too, without breaking the system? Whoops, I digress again.

The hearing, which took place in September, also included data from a Rand Corp. study noting that health plans were consolidating dramatically, and that these mergers were giving health plans too much power.  (Wow, imagine that — health plans having too much power?)

Oh, Lord, why does all of this seem beside the point?  Well, probably because it’s not going to help anyone.  Sure, knowing  what impact hospital M&A is having is part of a well-informed Health Subcommittee’s job description.  And I appreciate that the Subcommittee is trying to look at the bigger picture, one which includes both health insurers and hospitals.

But hearings like this, which assume that pricing indicators are the best way to decide whether the public good is being served, strike me as painfully uninformed. While I’m no economist, I have seen a few deals come and go, and some ill-considered attempts to control dealflow too. After following the health market for decades, I’m convinced that playing Whack-A-Mole and slapping down those “bad guys” who are overcharging/underpaying gets us nowhere.

 

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October 17, 2011

Washington Hospitals Sue Over Cruel and Unusual Medicaid ED Visit Limits

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I’ve heard of some draconian budget-cutting measures, but the following, proposed by officials in Washington state, just about takes the cake. Good to see that the state’s hospitals, along with its doctors, are rightfully attempting to slam the door shut onMedicaid planners’ obscene antics.

A new state plan in Washington proposes to limit payment for Medicaid patients’ emergency department visits, on the extremely dubious assumption that such patients can self-diagnose whether they ought to be there in the first place. Not only is this program unlikely to save any real money (unless you count the money saved by not having to care for dead beneficiaries), it assumes that emergency department staffers are adding useless layers of expertise so often that their services should be choked back dramatically. The truth is, there’s boatloads of evidence that the poor aren’t the biggest users of ED services for non-emergent conditions, but I suppose these state penny-pinches wouldn’t be bothered by the facts.

Get this. The state’s Medicaid folks want to cover only three “non-emergency” visits per year — enough of a disincentive to prevent people from going in the first place — but it doesn’t end there. The plan would classify more than  700 diagnoses as “non-emergent,” including (wait for it) chest pain, abdominal pain and breathing problems.  So, I take it that pregnant women, infants, children, the disabled and the mentally ill are supposed to decide with a home thermometer and a bit of prayer whether they’re actually in danger?

According to the folks suing the state, which include the state medical association, hospital association and chapter of the American College of Emergency Physicians, this program not only endangers patients, but also has thrown a cloud of smoke around payment issues. Specifically, the plaintiffs argue that the state is threatening patients that they’ll be billed directly, while EMTALA and state charity care laws prohibit patient billing.

Folks, if I were a hospital executive, I’d be suing to avoid legal and political messes that will arise here, sure. But I’d be sick to my gut about what such rules would mean to real people, too. I truly hope that’s what the suing hospitals have in mind.

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