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©2010 FTI Consulting, Inc. All rights reserved. Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Editorial EDITORS David Burda editor 312-649-5439 / [email protected] Neil McLaughlin managing editor 312-649-5343 / [email protected] AUGUST 9, 2010 Paul Barr news editor 312-649-5230 / [email protected] David May assistant managing editor/features COVER STORY 312-649-5451 / [email protected] Participation in the CDC’s National Healthcare Safety Keith Horist assistant managing editor/graphics 312-649-5467 / [email protected] Network is voluntary, but hospitals must be onboard by ONLINE January 2011 for central line-associated bloodstream Pat Shrader online editor infections, or they risk Medicare payment penalties. 312-649-5418 / [email protected] A similar requirement is in place for surgical-site Christine LaFave Grace webmaster/copy editor 312-649-5225 / [email protected] infections starting in 2012. “We’re very pleased with the REPORTERS announcement,” regarding the two measures, said Gregg Blesch, Chicago Russell Olmsted, president-elect of APIC. Page 6 312-397-7585 / [email protected] Joe Carlson, Chicago 312-649-5314 / [email protected] LATE NEWS Joseph Conn, Chicago MORE FOR THE STATES / Senate passes $26.1 billion Medicaid package for 312-649-5395 / [email protected] Page 4 Matthew DoBias, Washington the states; a House vote is slated for this week. 202-662-7207 / [email protected] Melanie Evans, New York 212-210-0209 / [email protected] THE WEEK IN HEALTHCARE Vince Galloro, Chicago 8. FINANCE: N.Y. to investigate predatory 12. MEDICARE: Critics pounce on Medicare 312-649-5299 / [email protected] lending in healthcare reports touting the program’s positive outlook Jennifer Lubell, Washington 8. TECHNOLOGY: GE Healthcare-Intel tops READ More in Healthcare in Transition at 202-662-7215 / [email protected] modernhealthcare.com/healthcareintransition Maureen McKinney, Chicago list of proposed deals announced last week 312-649-5287 / [email protected] 10. PHYSICIANS: FTC gave GRIPA OK, but 16. CHAINS: Fight for a small Ohio system Shawn Rhea, New York payers won’t play shows how chains are exploring other markets 212-210-0471 / [email protected] Andis Robeznieks, Chicago 18-22. REGIONAL NEWS: Albert Einstein Healthcare Network receives HUD insurance on loan 312-649-5374 / [email protected] Rebecca Vesely, San Francisco OPINIONS/EDITORIALS 415-538-0204 / [email protected] Jessica Zigmond, Chicago 24. EDITORIAL: We’re making gains against 26. LETTERS: Size is not a good enough 312-280-3130 / [email protected] illness, but we could use more—and less argument for mergers, reader says COPY DESK 25. COMMENTARY: It’s important to stabilize Julie A. Johnson copy desk chief New York City Health and Hospitals Corp. 312-649-5236 / [email protected] Douglas Backstrom copy editor There’s a buzz 312-649-5344 / [email protected] FEATURES about medicinal James Tehrani copy editor 28. SPECIAL REPORT: Health reform law honey, p. 36. 312-649-5237 / [email protected] could lead to a new wave of underinsured READ Outliers online at GRAPHICS 31. BY THE NUMBERS: Hospital CEO Eric Semelroth assistant graphics editor modernhealthcare.com/ 312-649-5346 / [email protected] turnover listed by state outliers EDITORIAL SUPPORT 32. INFORMATION EDGE: A progress report Rebecca Mielcarski special projects/research editor on latest data transmission standards 312-397-5511 / [email protected] 34. NEWS MAKERS: Julia Gray editorial assistant/copy editor Schanel takes over as 312-280-3173 / [email protected] president of Moses Cone Memorial Hospital Modern Healthcare editorial offices at: 360 N. Michigan Ave., Chicago, Ill. 60601-3806; 711 Third Ave., New York, N.Y. 10017-4036; 5 Third MODERN HEALTHCARE (ISSN 0160-7480). Vol. 40 No. 32 is published weekly by Crain Communications Inc., (except combined issues the last two weeks of St., Suite 1111, San Francisco, Calif. 94103-3212; 814 National December), 360 N. Michigan Ave., Chicago, Ill. 60601-3806. Periodicals postage is paid at Chicago, Ill., and additional mailing offices. U.S. subscription price: $159 per year, $252 for two years; foreign subscriptions: add $54 per year. Canadian subscriptions add $91 for one year (includes GST). Sales Agreement No. Press Building, Washington, D.C. 20045-1801. Member of Business 0293547. GST #136760444. Printed in U.S.A. Title® at U.S. Patent Office. © Entire contents copyright 2010, by Crain Communications Inc. Use of editorial Publications Audit of Circulation. content without permission is strictly prohibited. All rights reserved. POSTMASTER: Send address changes to MODERN HEALTHCARE, Circulation Department, 1155 Gratiot Ave., Detroit, Mich. 48207-2912.

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2 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Late News Senate extends higher Manchur named CEO Medicaid funding into 2011 at Kettering Health Network EXECUTIVES >> Melanie Evans The Senate passed a $26.1 billion Fred Manchur has been chosen to package of state aid that extends a succeed Frank Perez, 67, the retiring CEO higher federal share of Medicaid funding of Kettering (Ohio) Health Network. Changes set until mid-2011, clearing the way for a Manchur, 58, House vote early this week and earning currently is the five- plaudits from the provider sector. Under hospital system’s for Omnicare the bill, enhanced federal Medicaid president and chief ig changes are expected at funding—created by a 2009 economic operating officer, and Omnicare after the departure of stimulus package—would be phased he will become Joel Gemunder, 71, the longtime down over two quarters in 2011. The president and CEO president and CEO, and the federal government has been paying a on Dec. 1. Perez, releaseB of second-quarter earnings that 6.2% higher Medicaid match to states. who announced his were down markedly. But that amount will fall to 3.2% in the retirement in May, Omnicare, a pharmaceutical services first quarter of 2011, then 1.2% in the Manchur will assist with the provider, named James Shelton, former second quarter running through June. The transition through chairman and CEO of Triad Hospitals and bill passed on a 61-39 vote. May 2011. Manchur previously was an Omnicare director, as interim president president of the system’s Kettering and CEO. In an earnings call Shelton, 57, Catalyst agrees to buy Medical Center and Sycamore said the search for a replacement CEO and PBM FutureScripts Medical Center. changing Omnicare’s top-down culture were priorities for the Covington, Ky.-based Catalyst Health Solutions, Rockville, Md., No grand jury indictments company’s directors. “This company is not entered a definitive agreement to buy for Jackson Health System driven by the operations of this company,” FutureScripts, the pharmacy-benefit he said. “It’s not field-driven and it’s more management subsidiary of Philadelphia- A scathing, 44-page grand jury report of a top-down process and that’s had, I based Independence Blue Cross, for $225 on the near sudden death this year of think, a negative impact on the company.” million. After the deal’s close—expected one of the nation’s largest public Field employees lack corporate support to take place this year pending customary hospitals, Jackson Health System in for operations and growth, he said, and conditions and antitrust clearance— Miami, has recommended sweeping employees have seen pay cuts in the past Catalyst would manage Independence governance changes but no criminal year. Shelton said the company would Blue Cross’ pharmacy benefits while indictments. The public may have reorganize to align its corporate and maintaining the FutureScripts brand under been stunned on Feb. 2 when Jackson operational interests, which he said should the terms of a 10-year contract. The $225 revised its 2010 budget deficit from not increases costs, but instead spend million sale price includes the future tax $46 million to $203 million, but money more effectively. He said money benefit Catalyst would enjoy based on the leaders at the system should not have currently spent on special teams to prevent structure of the transaction, according to a been, the grand jury report says. losing customers should be invested to news release. Catalyst reported a net System leaders received a grow operations. “We’ve had too much income of $19.5 million on revenue of consultant’s timeline on June 24, corporate wealth and not enough field $890.1 million for the quarter ended June 2008, that said charity-care costs wealth,” he said. 30, beating its performance in the same would exceed tax revenue in 2010. Gemunder’s July 31 retirement quarter last year by 6.4%. The grand jury—which was convened triggered a severance package worth about by the Miami-Dade state attorney’s $130 million, according to the company’s office—recommended making the April 22 proxy statement. Cheryl Hodges, trust independent of the senior vice president and board secretary, Why buy an commissioners to remove politics and also retired from the company. asset tracking make the 17-member body more Omnicare’s second-quarter income from accountable. continuing operations was $21.4 million system that only on sales of $1.52 billion compared with Report cites some $42 million on sales of $1.54 billion the tracks assets? same quarter the prior year. hiring at hospitals Shelton said the CEO search was expected Hiring at hospitals continued to wobble to take four to five months. A spokesman for in July. Preliminary figures from the U.S. Omnicare said that Gemunder and the Bureau of Labor Statistics showed the company’s board have been discussing hospital workforce of 4.7 million succession planning for the past several years. contracting by 2,300 jobs, or 0.1%. For Omnicare serves residents in long-term-care the year ended in July, hospitals have facilities and chronic-care settings. << 800.331.3603 added 34,400 jobs, or 0.7%. www.teletracking.com/RFinfo

4 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Cover Story >> Maureen McKinney

In January 2012, hospitals will be required to report surgical-site infections or face a Medicare payment penalty in 2014. A similar requirement for central line-associated bloodstream infections begins next year.

The infection connection ates a level playing field.” Only a few months remain until voluntary The measures were included in the CMS’ final revisions to the inpatient prospective participation in CDC’s reporting network payment system, or IPPS, issued July 30, and are part of the Reporting Hospital Quality begins, and Medicare dollars are on the line Data for Annual Payment Update program. In the final rule, the CMS left the door open to he CMS has raised the bar for receive full reimbursement for 2014. include other types of infections for future reporting healthcare-associat- The NHSN has been widely praised for its NHSN reporting, including ventilator-associ- ed infections by tying hospi- use of set definitions and protocols, and the ated pneumonia and multidrug-resistant tals’ annual payment update to move is expected to introduce much-needed organism infections. submission of infection data standardization to national reporting of Enrollment in the NHSN is free, but it does via the Centers for Disease healthcare-associated infections, at least for require time and patience, according to infec- ControlT and Prevention’s secure, Web-based those two measures. tion preventionists. Facilities must agree to use surveillance system. “We’re very pleased with the announce- the network’s tools and interfaces, adhere to set Beginning next year, the agency is requiring ment,” said Russell Olmsted, president-elect methodologies and report results periodically. that hospitals use the CDC’s National Health- of the Association for Professionals in Infec- They must also fulfill a number of training care Safety Network, or NHSN, to report their tion Control and Epidemiology, and an epi- requirements. The CDC’s NHSN website fea- incidences of central line-associated blood- demiologist at St. Joseph Mercy Health Sys- tures instructional webcast sessions covering stream infections, in order to receive a full tem, Ann Arbor, Mich. “Using one single plat- enrollment, data entry, surveillance, patient Medicare payment update for 2013. In addi- form with standard definitions helps ensure safety and healthcare personnel safety. For tion, hospitals will need to report on surgical- that the method of evaluating infections in instance, all NHSN users are required to receive site infections beginning in January 2012 to San Diego is the same as it is in Boise. It cre- central-line-insertion practices training, which

6 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

is available as a module on the site. Once training is completed, users receive secure digital certification and can access the network. STANDARDIZED REPORT Currently, almost 2,650 facilities are report- The CMS has added two new measures for healthcare-associated ing data on at least one type of healthcare- infection reporting to its hospital pay-for-reporting program associated infection to the CDC’s network, and 21 states mandate such reporting. The CMS Hospitals Hospitals will likely experience some bumps ■ Is requiring hospitals to submit ■ Are required to report on central in the road as they transition to NHSN report- data for those measures using line-associated bloodstream ing. “The data is important and it’s an excellent the CDC’s National Healthcare infections using the CDC network tool, but there is a fairly steep learning curve,” Safety Network, an online beginning in January 2011 in said Baerbel Merrill, vice president of missions surveillance system that would order to avoid a 2% Medicare lead to higher standardization of payment reduction in 2013. and an infection preventionist at 90-bed reporting. Campbell County Memorial Hospital, Gillette, ■ Are required to report on Wyo. “It does take some time.” ■ May require future NHSN surgical- site infections using the Campbell County Memorial Hospital has reporting for other HAIs such as CDC network beginning in ventilator-associated pneumonia. January 2012 in order avoid a been enrolled in the NHSN for two years, 2% Medicare payment reduction although Wyoming does not require it. in 2014. Merrill used the NHSN’s online sessions and manual to get ready, and she also attended Source: CMS MODERN HEALTHCARE GRAPHIC training courses during an APIC conference. At first, she said, the surveillance process was The NHSN’s training requirements are cus- one well-known initiative called the Keystone time-consuming and frustrating, but with tomized for facility administrators, who oversee project lowered the rate of central line-associated practice it became much easier. “Like any- hospitals’ enrollment and participation, and reg- bloodstream infections by two-thirds in more thing else, you become more efficient with ular users, Reynolds said. The number of trained than 100 intensive-care units in Michigan, and time,” she said. users will vary based on factors such as hospital has since been expanded to a national program She uses the real-time data the NHSN pro- size, but many facilities rely on one or two infec- called On the CUSP: Stop BSI (CUSP is short for vides as a tool for analysis and benchmarking. tion-prevention professionals and then use data- Comprehensive Unit-Based Safety Program). For instance, when she noticed that Campbell entry clerks—who are not required to receive “It’s just one measure, and although hospi- County’s colonization rates of methicillin- specialized NHSN training—for support. tals will have to start reporting on discharges resistant Staphylococcus aureus, or MRSA, Michael Rapp, director of the CMS’ quality beginning in January, they are given 4½ were much higher than the CDC’s national 3% measurement and health assessment group, months after the end of each quarter to sub- estimate, she shared the data with administra- said that in spite of training requirements, hos- mit the data,” Rapp said. In other words, the tors and staff, and then instituted pitals have a reasonable first quarter reporting deadline is new protocols for identifying colo- amount of time to pre- Aug. 15 and the second quarter nized patients before surgery. pare. In the proposed deadline is Nov. 15. changes to the IPPS, the The NHSN is also a critical com- Now’s a good time CMS had initially includ- ponent of HHS’ Action Plan to Pre- According to Lynn Reynolds, an ed both central line infec- vent Healthcare-Associated Infec- infection preventionist at Southeast tions and surgical-site tions, a five-year, multipronged Georgia Health System in Brunswick, infections for reporting program aimed at decreasing rates hospitals that are not yet reporting to in January 2011. But a of HAIs, Rapp said. the NHSN should begin the training flood of comments from Some infection preventionists process now so they are ready to Stricof: Bigger worry is providers and advocacy Merrill: “You become expressed concern about whether the begin submitting data on central line whether hospitals will groups persuaded them more efficient with network will be able to handle the infections in January and avoid the be validating the data. to defer surgical-site time.” deluge of new users. The CDC is 2% cut to their Medicare payment infection reporting until expecting nearly 1,000 new hospitals update. Reynolds was recently appointed to 2012. It was too much too soon, he said. for a total of about 3,500, said Mike Bell, deputy serve on Georgia’s Healthcare-Associated Infec- Central line-associated bloodstream infec- director of the CDC’s division of healthcare tions Advisory Committee and will be charged tions are a good place to start, Rapp added, quality promotion, in a blog post. with developing prevention strategies and because so many states are already mandating But Rachel Stricof, an epidemiologist and boosting statewide enrollment in the NHSN. some kind of reporting for those infections, director of New York State Health Depart- “NHSN requires users to be thoroughly and central line infection specifications are ment’s bureau of HAIs, said the NHSN has trained in their Web-based education before not expected to change. According to the experienced rapid growth in recent years with they can submit data,” Reynolds said, adding CDC, central line infections result in an esti- little problem. New York was the first state to that her hospital has been enrolled in the net- mated 30,000 deaths each year and cost the mandate NHSN enrollment. The bigger worry, work since May 2009. “My advice is to start by healthcare system billions of dollars. Stricof said, is whether hospitals will be validat- dedicating a day to click through the site and Successful prevention campaigns have galva- ing the data they enter into the network. look at the program. It is very user-friendly nized providers and put central line infection pre- once you get used to it. It’s like detective work.” vention high on their priority lists. For instance, See COVER STORY on p. 16

August 9, 2010 • Modern Healthcare 7 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

in The Week Healthcare FINANCE >> Gregg Blesch Providers paid fees to CareCredit to be able to offer the cards, and CareCredit then issued rebates according to how much business was generated, according to Cuomo, who charac- Bad credit terized those rebates as kickbacks. “We look forward to learning more about this N.Y. to investigate predatory lending in healthcare matter and working with the attorney general’s office,” GE spokesman Stephen White said in an onsumer advocates have warned in vices not typically covered by insurance with e-mail and declined to comment further. recent years that medical credit cards no interest if the balance is paid back within a Cuomo has a track record in healthcare can be disastrous for patients certain period, ranging from six to 24 months. that might make any target nervous. In early unaware of what they’re Cuomo, though, said his office 2009, Cuomo went after health insurance Cgetting into. has fielded hundreds of consumer companies over the widespread use of a pro- The cause now has the muscle of complaints from New York residents prietary Ingenix databases to calculate out-of- Andrew Cuomo, the populist New who said that providers pressured network payments to physicians, which the York attorney general and a candi- them into applying for the card and American Medical Association and other date for governor. Last week failed to disclose that an interest rate physicians groups had been fighting for a Cuomo announced his office is of more than 25% would be applied decade. By the end of the year, Ingenix and its investigating allegations of preda- retroactively to any amount not paid parent, UnitedHealth Group, had agreed to tory lending and kickbacks to within the introductory period. pull the plug on the products and pay health providers by GE Money’s Some also said they were charged for $350 million to settle the AMA’s lawsuit. CareCredit. Stoll: Growth in services never provided, which Care- The terms and interest rates CareCredit CareCredit is pitched to patients medical credit cards a Credit paid and failed to reverse the offers are clearly stated on the company’s web- as a way to pay for healthcare ser- “very alarming trend.” charge to the cardholder’s account. site, which includes a section offering cus-

TECHNOLOGY >> Joseph Conn learning-disabled or visually impaired, according to Louis Burns, vice president and general manager of Intel’s Digital Health Tech togetherness Group. Burns will be CEO of the new and as- yet unnamed Sacramento, Calif.-based Slew of IT deals, including GE-Intel, announced company when it becomes operational later this year, according to a news release. aking dead aim at the baby performance measures, the Maryland “What we found is that our beliefs and boomers’ future healthcare needs, Hospital Association’s Quality Indicator products really complemented each other, two technology giants, GE Project, or QIP, for undisclosed terms. And and this seemed like a great next step,” Burns Healthcare and Intel Corp., Ingenix, Eden Prairie, Minn., a division of said in an interview. Tannounced they were forming a joint venture UnitedHealth Group, revealed plans to Financial terms of the agreement were not to tap what’s expected to be a multibillion- acquire Executive Health Resources, disclosed, but the company will be owned dollar market for systems to support Newtown Square, Pa., a company that equally by GE and Intel. independent living and chronic disease provides software and services that help “The end goal is success in this management programs. hospitals with physician medical marketplace, and we’re both committed to Meanwhile, four other healthcare industry management and necessity compliance. doing whatever we have to do,” Omar Ishrak, firms formed new alliances last week with an News of the GE/Intel joint venture comes president and CEO of GE Healthcare, said in increased focus on using information after an April 2009 announcement that the an interview. Ishrak will be chairman of the technology to improve quality analysis and two companies had formed an alliance new company’s board. reporting and to control costs. Patient- focused on disease management and elder- There is little doubt that GE and Intel are satisfaction ratings firm Press Ganey care services and products. The new joint targeting a growth market. “You have the Associates, South Bend, Ind., acquired one of venture also will have a sector devoted to aging of the population—the baby boomers, the nation’s forerunner systems for clinical assistive technologies for people who are of course—are going to be needing more

8 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints tomers tips for “Using CareCredit wisely,” such as “pay on time” and “never miss a payment.” But Cuomo and the consumer advocates are concerned with the way CareCredit cards and others are promoted by healthcare providers, who they say have their own financial interests in the offers that aren’t always clear. “Banks and financing companies do see this THE POST STANDARD/LANDOV as a growth market,” said Chuck Bell, programs director for Consumers Union. “I think the bottom line is consumers look to the health system not to gouge them,” Bell said. “You tend to trust a person that’s wearing a white coat.” Cuomo’s office has issued subpoenas to 10 New York dental, chiropractic and cosmet- ic surgery providers that promote CareCredit, as well as to Chase, Visa and Citibank, which market other healthcare credit cards. “There’s a growing trend of medical credit cards out there, and we find it to be a very New York Attorney General Andrew Cuomo announced at a news conference last week alarming trend,” said Kathleen Stoll, director that he would investigate predatory healthcare lending. of health policy for Families USA, which noted in a 2007 report that a rising number of offering patients credit cards to cover their bills. charges in response to complaints. hospitals are offering cards branded with the Stoll said the national healthcare law passed Cuomo’s office sent letters to a number of hospital’s name. “Consumers don’t always this year will do much to protect patients professional organizations asking whether understand it’s a credit card, and they don’t against getting buried by medical debt with CareCredit paid for their endorsements. The understand the name of the hospital isn’t the provisions such as limits on out-of-pocket American College of Eye Surgeons denied stamp of approval for a credit card,” Stoll said. obligations and the extension of health cover- ever endorsing CareCredit, suggesting that the CareCredit is primarily marketed to by den- age to millions of uninsured people. “But attorney general’s office may have reached tists, chiropractors, plastic surgeons and veteri- there will still be some debt and credit cards that conclusion because CareCredit has been a narians, though a variety of others offer the are not the way to deal with it,” Stoll said. sponsor of the organization’s annual meeting. cards, including orthopedic surgery practices In addition to the apparent financial con- The American Society of Bariatric Physicians and imaging centers. A company called Care- flicts of interest and treacherous repayment declined to comment. Also, the American Payment—which was not named in Cuomo’s terms, customers also have reported that Society of Plastic Surgeons declined to com- news release or implicated in the investigation CareCredit mistakenly paid providers for ser- ment, saying the organization has yet to in any way—caters to hospitals interested in vices never rendered and failed to reverse the receive anything from Cuomo’s office. <<

services, and as we engage technology, more Waldren said soaring healthcare costs and based care to home care, Waldren said. things can be done in a less intrusive way,” improving information technology are Press Ganey’s deal comes ahead of the said Steven Waldren director of the Center driving care to shift from high-cost to lower- CMS’ plans in 2013 to roll out a value-based for Health IT of the American Academy of cost venues, such as from nursing homes to purchasing initiative for Medicare in which Family Physicians. assisted-living environments and from office- providers will have to provide data on patient-satisfaction and clinical quality measures in order to receive full reimbursements. “The notion of having those two datasets side by side is important, because there’s a lot riding on it,” said Nell Wood Buhlman, a QIP executive whose new title is vice president of clinical products marketing for Press Ganey. The Maryland association founded QIP as a way to compare clinical quality indicators among hospitals (Aug. 15, 2005, p. 38). Officials with both organizations declined to release details of the purchase or recent financial data. The Ingenix deal to buy Executive Health Resources is expected to close by year-end, pending regulatory clearance and customary THE PLAIN DEALER/LANDOV closing conditions. Terms were not disclosed. << GE and Intel are looking to tap into the growing baby boomer market for home care. In —with Gregg Blesch, Joe Carlson and this photo, a consumer checks his blood pressure with a home monitoring device. Maureen McKinney

August 9, 2010 • Modern Healthcare 9 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare

PHYSICIANS >> Andis Robeznieks looking elsewhere now and has sought to “create diversity” in the market by recruiting three new Medicare Advantage plans to do business in the area and is looking to add Not a big deal ... yet more self-insured large employers, he said. “We have several other contracts pending,” Payers hesitant about buying IPA model he said. “We had hoped to get employers to approach the payers and they said, ‘Why ealthcare could look like this.” buy it,” said David Narrow, an attorney in the bother? Just go to us directly.’ ” Nielsen said That’s the trademarked slogan healthcare division of the FTC Bureau about 35% of the community’s physicians are used on the website for the of Competition. affiliated with GRIPA, but the IPA contract Greater Rochester Independent The Rochester market is dominated by two for clinical integration is nonexclusive so pay- HPractice Association. Some might argue that payers—Excellus Blue Cross and Blue Shield and ers go around the organization and contract the slogan should be: “Healthcare could look MVP Health Care—and some observers have individually with its doctors. like this—if only the Greater Rochester Inde- blamed GRIPA’s small client base on the payers GRIPA members use a secure, Health Insur- pendent Practice Association had some health dragging their feet. Eric Nielsen, GRIPA chief ance Portability and Accountability Act of plan contracts.” medical officer, doesn’t necessarily disagree. 1996-compliant physician Web portal and GRIPA, an organization that includes 812 “That’s not wrong, payers have been dragging database to share and store patient informa- physicians and their affiliate hospitals: 494-bed their feet,” Nielsen said, adding that executive tion—including clinical data from office visits and hospitalizations, laboratory results, and diagnostic imaging, Nielsen said. And, he said, GRIPA TIMELINE that the database is then used to generate physician quality reports on preventive medicine The Greater Rochester Independent Practice Association has and care management according to physician- struggled to negotiate successfully with private payers, despite an created, evidence-based guidelines. OK from the Federal Trade Commision In theory and according to FTC belief, this approach will improve outcomes and Late 2005 Negotiations with Excellus Blue Cross and lower costs, but Nielsen acknowledges their Blue Shield begin and are continuing small client base has not yielded enough data to prove their case, which has also hin- September 2007 FTC gives OK to negotiate as an IPA dered GRIPA’s growth. “If they insist on September 2007 Negotiations with MVP Health Care begin seeing outcomes data before the contract with us, it’s a Catch-22,” he said. “But we April 2008 Negotiations with MVP end don’t have a lot of data, because we don’t January 2009 Contract signed with Rochester General Health System have a lot of members.” In contrast, Oak Brook, Ill.-based Advo- August 2009 Contract signed with LiDestri Foods cate Physician Partners, which is believed to be the largest clinically integrated IPA with Source: Greater Rochester Independent Practice Association MODERN HEALTHCARE GRAPHIC some 3,400 doctors and eight hospitals, has five years of “value reports” posted on its Rochester (N.Y.) General Hospital and 83-bed turnover at Excellus has also slowed negotiations. website. According to the 2010 report, the Newark Wayne (N.Y.) Community Hospital, Excellus spokesman Jim Redmond, however, clinical integration program’s asthma out- has been working for close to three years to take said leadership changes at GRIPA had a role. He comes initiative saved $16 million based on full advantage of its federal approval to operate said the biggest factors have been the recession national cost averages and resulted in an esti- as an independent practice association, an asso- and uncertainty over healthcare reform. “Excel- mated 37,920 days saved from absenteeism ciation of competing physicians seeking joint lus BCBS remains very interested in the model and lost productivity. The report also states fee-for-service contracts with private payers. the GRIPA represents and we have been in dia- that the organization’s generic drug-pre- In September 2007, GRIPA became only the logue with them for more than a year,” Red- scribing initiative saves payers some $14.8 second clinically integrated IPA to get a favor- mond said in an e-mail. “The conversation did million annually. able advisory opinion from the Federal Trade slow for a few months while the entire country Advocate Physician Partners has contracts Commission. At the time, the organization’s awaited direction on national healthcare reform with 10 payers in the market. Mark Shields, business model was hailed by some as the wave and more definition of the role of accountable Advocate vice president for medical manage- of the future (Sept. 24, 2007, p. 14). But after care organizations. Now that a broader under- ment, said the group has been encouraged by almost three years, there are only two clients standing is starting to emerge, we are speaking the FTC to talk about its program with GRIPA can claim: the employees and depen- not only with GRIPA, but also with a number of providers and policy makers. Shields said that dents of the Rochester General Health System, interested groups of hospitals and physicians doctors are not allowed by the FTC to work of which the IPA is a part, and LiDestri Foods, a throughout upstate New York (our service ter- together on setting prices for services—unless 700-employee manufacturer of sauces, dips and ritory) about how we can best support they are sharing financial risk or they are clin- other private-label and brand-name products. their development.” ically integrated and working together to “There’s no guarantee that when you build Meanwhile, GRIPA’s Nielsen said “a con- “add value to the marketplace” by increasing a better mousetrap that someone is going to tract with MVP is off the table.” GRIPA is quality and lowering costs. <<

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HHS Secretary Kathleen Sebelius, here with Treasury Department Secretary Timothy Geithner, said last week that “because we began making changes right away, the savings from Medicare add up fast.” AP PHOTO

MEDICARE >> Matthew DoBias and Jennifer Lubell Rosier or rose-colored glasses? Critics take Obama administration to task on Medicare projections

wo reports released last week by And in Virginia, a federal judge ruled that a The CMS report focused primarily on the Obama administration officials lawsuit against the 4-month-old law could delivery system changes that will be inherent contend that the new health reform move forward, fueling hope from other state upon the provider community to implement. law will tamp down healthcare officials who have similar legal challenges Those programs meant to help reduce the Tcosts and put Medicare on substantially against the federal government. number of hospital readmissions, reshape more solid footing. While it is unlikely that either event will put how hospitals and doctors are reimbursed and But a growing number of skeptics insists a dent in the implementation of the reform those that target fraud and abuse are expected that the outlook may not be so sunny. Instead, provisions, it underscores to lawmakers and to reduce Medicare spending by tens of bil- they argue that the projections ignore the even Obama that opposition to healthcare lions of dollars. often-messy way that legislation gets imple- overhaul is still vibrant. In a separate report, the Medicare trustees mented. Even Medicare’s chief actuary has The two reports rely on the assumption extended out that scenario over decades in sounded a contrarian note, offering an alter- that the basic core of the reform effort— their annual evaluation of the health of the native take on the Obama administration’s including changes to how providers are paid, Medicare Trust Fund. cheerier claims. programs to streamline and improve care— The trustees concluded that under an over- At the core of the cost and savings argu- would work in lock step to slow ever-rising hauled health system, Medicare’s hospital ment are twin reports—one from Medicare healthcare costs. In the CMS study, the agency trust fund would stay flush until 2029, Trust Fund trustees and another from the found that reform would save Medicare 12 years longer than previously predicted. CMS—that essentially say the almost immediately to the tune of In addition, Medicare’s Part B fund package of sweeping reforms $7.8 billion through 2011 alone and would also see a longer financial life. As is, signed into law by President Barack $418 billion over a 10-year window spending on Part B is equal to about 1.5% of Obama in March would extend the ending in 2019. the gross domestic product. While prior solvency of Medicare longer than HHS Secretary Kathleen Sebe- estimates predicted that spending would previously predicted. lius, during a news conference in increase to 4.5% of GDP after 75 years, the Both reports come after the Washington, heralded the findings. latest report shows a deep cut, to 2.5%, reform law took back-to-back hits. “Because we began making changes because of the reform law. In Missouri, voters going to the right away, the savings from If accurate, analysts agree that it’s a much polls overwhelmingly approved a Medicare add up fast,” she said, rosier scenario than those made in the past. In measure to reverse the federal pro- Silvers says cuts to referring to a raft of measures that a written statement, the American Hospital vision requiring the purchase of physician pay are “not are in the beginning stages of Association tried to see the bright side of the some level of insurance coverage. going to happen.” implementation. findings, offering that the trust fund’s new sol-

12 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints This Week on ModernHealthcare.com vency date of 2029 was “good news.” “I think it is more likely that we have “Making Medicare strong and solvent for ‘kicked the can down the road,’ and we will generations to come is a goal that can be continue to face the dilemma of trying to con- shared by all. The report reinforces that trol healthcare costs and the risk of chasing VIDEO there’s no need for more cutting of hospitals providers and suppliers out of Medicare if because Congress already took so much out,” payments are reduced or do not keep up with the AHA stated. the cost of living,” she said. But increasingly those same policy analysts Regarding the question of whether cuts to see the predictions as an overreach by a physician pay are actually going into effect, White House eager to sell its reform package J.B. Silvers, a professor of health systems man- to a wary public. For starters, the reform agement at Case Western Reserve University package is so intricately woven that even the in Cleveland, said, “that’s not going to hap- slightest tweak—an almost certainty consid- pen.” And if it doesn’t happen, the savings to ering its size and scope—could alter those Medicare will be much lower, he said. Silvers Jay Crosson projections downward. wouldn’t characterize the findings as opti- Former MedPAC Chairrman “Under the assumptions they calculated, it’s mistic—just that the scenario is better than it MODERNHEALTHCARE.COM/VIDEO probably correct,” said Robert Book, was with the passage of health a senior research fellow in health eco- reform. “We’re still driving toward nomics at the Heritage Foundation, a the cliff, but at a slower rate,” he conservative Washington-based said. “We still have to deal with think tank, said about the most recent some issues.” Medicare trustees report. “But it’s Even Richard Foster, who heads REPORTER’S NOTEBOOK based on a bunch of assumptions that the team of actuaries at the CMS, in are not necessarily realistic.” an alternative look at the report Driving the skepticism are provi- released by the trustees, found the sions that may have been given report to be unrealistic. His analysis more credit for cost reduction than Goldberg: It is likely provides a look at “a more plausible possible. For instance, while recal- we have “kicked the outcome for future spending.” culating provider payment based can down the road.” In Foster’s estimate, the changes on productivity adjustments may to provider payment calculations be a cost-saver, it nevertheless could fluctuate and the sustainable growth rate factor, or Joe Carlson wildly, and current estimates in the law are SGR, assumed in the trustees report are, he Reporter considered unlikely. said, “highly unlikely.” Foster makes a num- Modern Healthcare What’s more, both reports assume that ber of changes to the assumptions used by the the double-digit cuts to physician reim- trustees, but most noticeably he runs the MODERNHEALTHCARE.COM/ bursement will hold—something Congress numbers reflecting that physicians will see a REPORTERSNOTEBOOK has yet to allow. Changing the Medicare positive update each year, productivity adjust- payment formula would cost the govern- ments to providers would phase out after ment a budget-busting $275 billion over 2019, and the cost lines for both Medicare 10 years and play havoc with the estimates Parts A and B are altered. made just last week. Under Foster’s alternative take, the hospital WEBCAST Others also voiced skepticism regarding the insurance fund is instead exhausted one year Lessons from the Top: reports. “This report is just the latest warning earlier, in 2028, and Part B is expected to See how hospitals reached the pinnacle bell for members of Congress who know the increase more rapidly, reaching 1.98% of of clinical and financial performance Medicare physician payment system is bro- GDP by 2020 and 5.07% by 2080. ken,” American Medical Association immedi- “So we have great news, but with sort of a MODERNHEALTHCARE.COM/WEBINARS ate past President J. James Rohack said in question or a cloud hanging over it,” Foster reaction to the trustees’ findings. said, referring to the findings. For more Web-exclusive Marion Goldberg, a partner at Winston & Robert Greenstein, executive director of the news, data, video, webcasts and more Strawn, Washington, also isn’t taking any Center on Budget and Policy Priorities, said that comfort in the trustees’ report. Even the while Foster’s view is less optimistic, he never- visit ModernHealthcare.com today. trustees themselves freely state that the report theless does not dismiss the trustees’ report. on the financial status of Medicare is much Foster’s alternative projection, which STAY IN TOUCH rosier than what’s likely to take place, she said. assumes that only 60% of the health reform Trustees, for example, “are skeptical that law’s savings are achieved in the long run, “is providers and suppliers will be able to achieve still a dramatic improvement” over what was the productivity improvements anticipated in projected last year, prior to health reform, the health reform law. In addition, revenue Greenstein said. from Medicare taxes are down, both because In Greenstein’s view, the most likely out- ® of unemployment and underemployment come will be something between Foster’s pre- during the recession,” she said. dictions and those made by the trustees. <<

August 9, 2010 • Modern Healthcare 13 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare

SUPPLIERS >> Shawn Rhea Risky-drugs list in the spotlight Healthcare groups, drugmakers push for changes to improve safety n a rare show of unity, healthcare pro- Advair and the fibromyalgia drug Lyrica. guides that are confusing to both patients fessionals, patient groups and drug To date, 68% of REMS mandates have and doctors. “The continued heavy prescrip- manufacturers are voicing concern over required only that manufacturers create new tion of certain black-box label drugs for the growing list of drug-safety require- medication guides, while less than 10% have which much safer alternatives are available mentsI issued under the Food and Drug required development and implementation of raises questions as to whether even pre- Administration’s Risk Evaluation and Mitiga- the more resource-intense elements-to-ensure- scribers fully understand or appreciate such tion Strategies, or REMS, program. safe-use plans. Both types of plans, however, written warning materials.” During a recent FDA two-day public hear- have elicited concerns from stakeholders. Providers said they too are unsatisfied with ing, the groups agreed that the program is Manufacturers and pharmacists say the the current REMS system, chiefly because they needed to allow some benefi- have been excluded from lending cial yet risky drugs to enter or advice on the design of manufac- remain on the market. But turers’ elements-to-ensure-safe- they also said the safety use plans, which can require that requirements are proving to be doctors receive drugmaker- unnecessarily confusing and in designed certification to prescribe some cases too burdensome to certain drugs and that patients physicians, patients and man- undergo specific laboratory tests ufacturers. before receiving a prescription. The groups are pushing the “Currently, the FDA consults FDA to make significant with manufacturers but not physi- changes to how REMS plans cians,” noted Michael Maves, exec- are developed. utive vice president and CEO of the “Evaluation of existing American Medical Association, in REMS is urgently needed to a May 2010 comment letter to the determine if they indeed FDA. “Manufacturers develop pro- improve patient safety without posed REMS but are not required unduly burdening the health- to consult with physicians. The care system and impairing Advair, the popular asthma drug, is one of the 110 medications on foregoing is deeply perplexing.” patient access,” said American the FDA’s Risk Evaluation and Mitigation Strategies list. Kaiser Permanente officials Medical Association Chair voiced similar concerns in com- Ardis Hoven in written statement to Modern current medication-guide requirements result ments to the FDA in December 2009. The Healthcare. in duplicate development and distribution of group warned that the current REMS system The roughly 3-year-old REMS program the guides to patients, and that the process can has the effect of creating “a separate category was established as a part of the 2007 Food and cause confusion over a medication’s actual of drugs” and that it will require “consider- Drug Administration Amendments Act. The risks and care challenges for providers. ably more labor” from providers to deliver law requires the FDA to determine whether a “Pharmacists and providers are saying that certain drugs to patients who need them. risk-management plan is necessary to ensure the proliferation of medication guides is a Kaiser officials also expressed concern that safe use of a new drug or an already marketed burden and that the guides aren’t easily some drugmakers may be using REMS certi- drug when post-market surveillance or pulled up” on electronic health-record sys- fication and monitoring requirements as an research identifies new safety concerns. tems, said Andrew Emmett, director of sci- excuse to limit their distribution of specific If a drug is determined to need a REMS ence and regulatory affairs for the Biotech- drugs to contracted specialty pharmacies, plan, manufacturers are required to con- nology Industry Organization, a drugmaker thereby driving up prices. struct medication guides that detail the lobbying group. Kaiser and other providers are encouraging drug’s risks and in some cases produce and Bill Vaughan, senior health policy analyst the FDA to establish a stakeholder advisory monitor an elements-to-ensure-safe-use for Consumers Union, stopped short of call- committee, which would make REMS stan- plan. Those plans can include physician ing REMS medication-guide requirements dards recommendations that would be used certification mandates, prescription limits, burdensome but agreed that the current sys- by drugmakers to mitigate risks when such and patient counseling and registry tem is problematic for patients. actions are required. requirements. “We definitely need a simplified, single- No date has been set for the publication of FDA officials have required REMS plans for labeling system that people can understand,” proposed new draft guidance, but the FDA, 110 medications since March 2008. The list Vaughan said. He noted that under the cur- according to a Federal Register notice, is includes frequently prescribed medicines such rent system, a single medication with a accepting comments until Aug. 31 on suggest- as the anemia drug Procrit, the asthma drug REMS requirement can have multiple-user ed changes to its REMS program. <<

14 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

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CHAINS >> Vince Galloro pay $154.1 million for four-hospital Sumner Regional Health Systems, Gallatin, Tenn., which would be a purchase price about equiv- alent to net revenue. Consolidation wave rises Investor-owned hospital companies are more willing to move into Rust Belt markets in Systems look to acquisition as part of health reform part because of healthcare reform, Diaz said. Markets with higher levels of uninsured and hoever expected a bidding war moderate despite all the interest from investor- Medicaid patients should, in the longer term, to erupt over Youngstown, owned hospital companies, Diaz said. provide financial opportunities closer to those Ohio? “Any time there’s competition for assets, found in the fast-growing Sun Belt markets that The investor-owned interest there’s the possibility of the price being driven for-profit hospitals usually stick to, he said. inW Youngstown’s Forum Health, along with up,” he said. “Outside of that deal, we haven’t The companies also are attracted to these the much larger deals announced this year in seen evidence that that is happening. The prices deals—including Vanguard Health Systems’ Boston and Detroit, are examples of these purchase of six-hospital Detroit Medical companies moving beyond high-growth mar- Center and Cerberus Capital Management’s kets in the Sun Belt, according to a report purchase of six-hospital Caritas Christi from Moody’s Investors Service. At the same Health Care, Boston—because they offer the time, the competing bids from Ardent Health chance to enter a new market with a signifi- Services and Community Health Systems for cant market share, Diaz said. In the case of the three-hospital, tax-exempt Forum Health the established hospital chains, these deals system show what could happen to acquisi- also offer the chance to expand the size and tion pricing if too many companies chase after geographic diversity of their hospital portfo- too few deals, said Dean Diaz, vice president lios, he said. and senior credit officer for Moody’s. Moreover, the general increase in interest Nashville-based Ardent’s initial bid for among investor-owned hospital chains for Forum, which filed for Chapter 11 protec- Trumbull Memorial is part of Forum Health, acquisitions shows few signs of slowing down, tion in U.S. Bankruptcy Court in which Community outbid Ardent for. Diaz said. “We expect the consolidation wave Youngstown in March 2009, was for to continue going forward, and I think it can $69.8 million with a capital commitment of are favorable with deals from several years ago.” continue for some time so long as the credit $50 million to $70 million. Community, Even with the competition between two markets remain open and there’s no drive up Franklin, Tenn., then announced its bid of companies, the final sales price wasn’t even in price from competition,” he said. $100 million and a capital commitment of half of Forum’s total revenue of $393.5 million Other than a 10-bed hospital bought in $80 million over five years as it became the for 2009, according to a financial disclosure to 2008, Iasis Healthcare, Franklin, Tenn., has only other bidder qualified to participate in a bondholders. The system posted an operating been quiet on the acquisition front since 2007, bankruptcy auction held last week in a Cleve- loss of $1.4 million and an overall loss of $16.3 but David White, chairman and CEO, noted land law office. Community prevailed in the million. Health Management Associates, last week that the company hired a new busi- bidding at $120 million, or almost 72% high- Naples, Fla., is paying about $145 million for ness development officer. er than Ardent’s $69.8 million offer, accord- two-hospital Wuestoff Health System, Rock- “We have begun to get in the game,” White ing to Forum and Community. ledge, Fla., a system with about $290 million in said during an earnings call. “There’s nothing So far, the competition for Forum is the annual net revenue (Aug. 2, p. 12). LifePoint teed up at this time, but it’s getting to be a bit exception, as prices for hospitals have remained Hospitals, Brentwood, Tenn., has agreed to more active.” <<

COVER STORY from p. 7 higher infection rate because you’re able to than 90, to report central line-associated catch more of them.” bloodstream infections using the NHSN. “We think validation is critical because we Five states—New York, Maryland, South VCU uses the network’s data for bench- want to ensure everyone is doing things the same Carolina, Tennessee and Connecticut—have marking and performance improvement, way,” Stricof said. In one survey of New York hos- some sort of formal process for validating, or Ober said, and with nearly 100% compliance, pitals conducted before the NHSN requirement double-checking, NHSN data. Olmsted said other they are in good shape to meet the CMS’ new was instituted, nearly all reported using set defin- states are headed in that direction. requirement. The problem, she said, is that it itions for identifying infections. But upon closer Janis Ober, director of epidemiology at Vir- is extremely difficult in most instances to be inspection, she said, they had made small adjust- ginia Commonwealth University Health Sys- sure hospitals are reporting properly. ments that made data comparison very difficult. tem in Richmond, echoed Stricof’s sentiment “You need trained infection preventionists “If I’m comparing Hospital A to Hospital and pressed for the need for validation. Ober who go to facilities and review records to see if the B, I need to make sure they use the same case leads the mandatory reporting task force for definitions have been applied appropriately,” definitions and the same inclusion and exclu- APIC’s Virginia chapter and, in late 2007, she Ober said. “It’s a huge concern because people sion criteria,” Stricof said. “It’s especially crit- led a successful effort to get all of the state’s are putting so much store in that number ical because better surveillance often means a acute-care hospitals, which number more without checking to see if it is correct.” <<

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FINANCE >> Melanie Evans With less exposure to equities comes lower expected returns, Manning said, which may leave Partners with less money for capital without strategies to offset the more-modest gains. Back in black The system is undertaking a multiyear planning effort and reviewing its options, he said. Not-for-profits see much better returns in ’09: report Patrick Burke, head of investment manager Vanguard’s not-for-profit group, said the ot-for-profit hospital and health he said. In 2009, the average annual five-year strain on balance sheets from markets’ drop in systems in 2009 regained most of return was 3.5%. Sedlacek said organizations 2008 and early 2009 has left organizations the prior year’s investment losses, responded to markets’ volatility by shifting equally concerned about volatility and liquidity but portfolios have not fully of investments. Not-for-profits also adjusted recoveredN and annual returns, on average, investments against the risk of inflation, but have been roughly flat since 2007, according more recently have grown wary of the risk of to one snapshot of the industry. deflation, he said. Equities, international and domestic, led The hospitals and systems in the Common- the 2009 rebound with average returns of fund survey reported a combined $76.8 billion 37.3% and 31.2%, respectively, and only three in assets in 2009, which includes working capi- investment vehicles—private equity real tal, funded depreciation, endowment and foun- estate, venture capital and private equity— dation funds and other separately treated assets. had negative returns compared with 2008, Fixed income accounted for 41% of invest- when not one asset class showed gains, Burke: Strain has Sedlacek: Five-year ments; domestic equities, 22%; international according to the most recent results from the produced volatility, returns aren’t keeping equities, 15%; alternatives such as real estate, annual Commonfund Institute survey. liquidity concerns. up with inflation. commodities and distressed debt, 15%; and Among the 85 hospitals and systems sur- short-term securities and cash, 7%. veyed by the Commonfund Institute, the more assets into fixed income. Alternatives had an average return of 17% research arm of the not-for-profit investment Michael Manning, the deputy treasurer for but within the asset class, private equity real manager Commonfund, Wilton, Conn., the Partners HealthCare System, said risks within estate, venture capital and private equity average annual return for the year that ended the healthcare industry—not investment declined 25.8%, 10.5% and 7.2%, respectively. Dec. 31, 2009, was 18.8%. markets—have prompted the 10-hospital sys- The category was boosted by commodities and That’s compared with the 21.2% drop in tem to scale back its exposure to equities to managed futures, 32%, energy and natural fiscal 2008 as financial markets faltered. reduce volatility. Manning said the hospital resources, 28.2%, and distressed debt 20.8%. Verne Sedlacek, president and CEO of the sector faces greater risks as public and private The average 2009 return for fixed income Commonfund, said the recent market volatility insurers face cost pressures. Partners shifted was 11.7% and cash 1%. has left tax-exempt healthcare organizations some of its portfolio into investments such as Commonfund surveys hospital and system with five-year average annual returns that do commodities and other real assets, he said. defined benefit pension plans separately. Pen- not keep pace with inflation and capital or other The Boston-based Partners saw its long-term sion portfolios had a total of $26.8 billion in spending needs. Hospitals and systems typically assets return 24% as of Dec. 31, 2009, compared assets and reported an average annual return of seek long-term returns of 4.5% plus inflation, with a negative 27.9% the prior year, he said. 21.5% after dropping 26.3% the prior year. <<

AHRMM ROUNDUP >> Shawn Rhea middle of healthcare reform, and this is our chance to do something.” Participants during other conference events Made ‘relevant’ echoed Orthman’s assessment, saying supply- chain managers can expect to have broader Materials managers say health reform a boon input into drug formulary decisions, the adoption and implementation of universal aterials managers will play an focused on the expanded and more influential product-tracking standards and the use of increasingly important role in role materials managers can expect to play as comparative effectiveness data in selecting the delivery of healthcare their hospitals work to achieve the better products. Lowell Church, vice president of under reform legislation, patient outcomes and lower delivery costs Materials Management for Adventist Health in Mpanelists said during the 2010 Association mandated by healthcare reform legislation. Roseville, Calif., said during a panel on drug for Healthcare Resources and Materials “Supply chain professionals have been purchasing decisions that it will be increasingly Management conference trying to be relevant for years,” said Dennis important for supply chain executives to focus This year’s AHRMM conference was held Orthman, senior director for Strategic on finding the most cost-effective products. He Aug. 1-4 at the Colorado Convention Center Marketplace Initiative—a supply chain added that those products won’t necessarily be in Denver. The number of attendees could not consortium—during a dinner to discuss global the least expensive ones, but the ones that do be obtained by deadline. Attendees largely product-tracking standards. “Now we’re in the the most efficient job treating patients. <<

August 9, 2010 • Modern Healthcare 17 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Regional News

NORTHEAST Development insurance on a $292.5 million create 450 full-time jobs and offer loan to build a hospital in East Norriton, emergency medicine; general medicine and EAST NORRITON, Pa.—The Albert Einstein scheduled to open by fall 2012. The surgery; cardiology; obstetrics and Healthcare Network, Philadelphia, and the hospital, named the New Regional Medical gynecology; oncology; orthopedics; 166-bed Montgomery Hospital Medical Center, will include 146 beds, including an interventional radiology, vascular and Center, Norristown, Pa., received U.S. eight-bed neonatal intensive-care unit and a cardiology services; cardiac surgery and Department of Housing and Urban 20-bed obstetric unit, HUD said, and will catheterization; neonatal intensive care; and advanced electrophysiology.

GREAT NECK, N.Y.—North Shore-Long Island Jewish Health System said it has created a Population Health Department and named Jacqueline Moline as its vice president and chairwoman, the system said in a news release. The department will recruit occupational physicians and nurse practitioners, epidemiologists, industrial hygienists, an industrial psychologist, and an ergonomist. It will promote research and interventions to examine how lifestyle and jobs can affect health. The department will also develop health and wellness strategies, the system said. Moline was previously vice chairwoman and associate professor at New Regional Medical Center is scheduled to open by fall 2012. the Mount Sinai School of Medicine’s department of preventive medicine.

MIDWEST and oversee the Illinois Health Information Exchange and will work to promote adoption We will change CHICAGO—Vanguard Health Systems, of electronic health-record systems and the way you Nashville, said it has completed its health information exchange participation. acquisition of two hospitals from tax-exempt Illinois will receive $18.8 million in federal think about Resurrection Health Care, Chicago. Investor- funds from the American Recovery and owned Vanguard said in a securities filing Reinvestment Act of 2009 to develop and revenue cycle that it ended up paying $45.4 million in the maintain the exchange, according to a news improvement. deal, which included working capital. release. The law is effective immediately. According to documents filed to win For the better. certificate-of-need approval from Illinois MADISON, Wis.—The Wisconsin Supreme regulators, Vanguard was scheduled to pay Court ordered the state government last $40 million for 181-bed Westlake Hospital, month to return $200 million drawn from a Melrose Park, and 152-bed West Suburban fund established to mitigate the costs of RESULTS DRIVEN REVENUE CYCLE SOLUTIONS Medical Center, Oak Park. The deal gives medical liability. Under a 1975 law, Vanguard three hospitals in the near west healthcare providers are required to pay suburbs of Chicago, including 338-bed assessments into the fund and carry a MacNeal Hospital, Berwyn, and 12 hospitals certain level of malpractice insurance. The We produce world-class revenue cycle and reimbursement solutions designed for maximum with 16 campuses in four states. Vanguard’s fund pays out the portion of malpractice eﬃ ciencies. proposed purchase of six-hospital Detroit claims in excess of that limit. In 2007 state

SOFTWARE SOLUTIONS AND SERVICES Medical Center for $1.27 billion (including lawmakers approved legislation providing for a capital commitment of $850 million) is the transfer of $200 million from the liability REVENUE CYCLE REIMBURSEMENT still pending regulatory approval. The deal fund to prop up the Medicaid program. The leaves Resurrection Health Care with six transfer caused assessments to rise by

CIRIUS GROUP DELIVERS hospitals, all in the Chicago area. nearly 10%, and the fund had to draw a loan from the state’s investment fund to cover a Dramatic Return on Investment Unmatched Commitment to Compliance SPRINGFIELD, Ill.—Illinois healthcare negative balance. The Wisconsin Medical Best of Class Operational Eﬃ ciencies providers moved one step closer to Society filed a lawsuit in 2007 to challenge Unrivaled Expert Consultants Superior Support Services interoperable electronic data-sharing as Gov. the transfer, which was dismissed by a Peace of Mind Pat Quinn signed a bill creating the Health lower court that ruled the fund did not create ciriusgroup.comciriuciriuriuriuusgroup.cusgroup.cusgusguu comcom Information Exchange authority. Under the contractual obligations to providers, before new law, the state authority will establish reaching the Supreme Court on appeal.

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MIDWEST Rapids, about 25 miles from Zeeland. study considered multiple organizational The decision to pursue the deal came structures that would allow ZCH to GRAND RAPIDS, Mich.—Zeeland (Mich.) after the 52-bed hospital spent a year continue to serve patients and the Community Hospital has signed a considering the best path forward, community well into the future,” Zeeland nonbinding letter of intent to explore according to a news release from last President Henry Veenstra said in the becoming a member of Spectrum Health, month announcing the beginning of an release. Zeeland Community Hospital a four-hospital system based in Grand open-ended due diligence period. “The already is a member of the Spectrum Health Regional Hospital Network, which includes group purchasing and access to safety and quality initiatives. Meanwhile, Northern Michigan Regional Health System, parent of 214-bed Northern Michigan Regional Hospital in Petoskey, terminated an agreement exploring a union with Spectrum Health at the end of July. In announcing the end of negotiations, Northern Regional Health System President and CEO Reezie DeVet cited differences in “the vision for the delivery of local healthcare services, leadership structures and board of trustee models.”

TELL CITY, Ind.—Perry County Memorial Hospital plans to build a 117,000-square- foot replacement facility. The county-run critical-access hospital intends to pay for Zeeland (Mich.) Community Hospital has signed a nonbinding letter of intent to explore the $46 million project out of operations, joining Spectrum Health, which is about 25 miles away in Grand Rapids, Mich. according to a news release. The 25-bed

SOUTH OLIVE BRANCH, Miss.—Methodist Le HOUSTON—Rehabilitation provider Bonheur Healthcare, Memphis, Tenn., will HealthSouth Corp. plans to add to its JOHNSON CITY, Tenn.—Mountain States build a 100-bed hospital in Olive Branch growing presence in Texas with the Health Alliance said it has won certificate- after receiving a certificate of need from construction of a 40-bed hospital in of-need approval to build a $69 million the Mississippi Health Department. The northwest Houston, the Birmingham, Ala.- surgery center on the campus of its certificate allows for a project cost of based company said. The facility is 475-bed Johnson City Medical Center. $137.1 million and includes authorization scheduled to break ground in the fourth The surgery center’s 16 operating rooms to offer open-heart surgery and quarter of 2010 on 6 acres under contract will replace the 15 operating rooms therapeutic cardiac catheterization in the Cypress area of Houston. The services, according to the health announcement comes on the heels of department. The certificate also lists news of the company’s definitive requirements for treating charity and agreement to buy Sugar Land (Texas) Medicaid patients, providing trauma Rehabilitation Hospital, a 35-bed inpatient services, being an in-network provider in facility in southwest Houston. The new state and school employee health plans Houston hospitals would add to 13 and providing outpatient services in rehabilitation hospitals HealthSouth adjacent counties that do not have a operates throughout Texas, along with one hospital. Methodist expects to complete long-term, acute-care hospital. planning for the hospital in a few months and begin construction early in 2011, with CHAPEL HILL, N.C.—Blue Cross and Blue The Johnson City Medical Center surgery a two-year construction time line. Shield of North Carolina said last month campus is in the planning stage. Memphis-based Baptist Memorial Health that it plans to cut its administrative Care Corp., which previously requested a costs by 20% as part of its response to currently located within the hospital. The hearing on Methodist’s proposal, said in healthcare reform. But a spokesman for new operating rooms will be about twice a written statement that it is studying the the not-for-profit Blues plan said as large as the old ones to allow the use CON decision. Any appeal of the decision healthcare cost inflation must be of modern technologies such as robotics. must be filed in Mississippi chancery addressed, too. The North Carolina Blues Planning for the 98,000-square-foot court within 20 days of the health spent $341.3 million on general center will take about a year, with the department’s ruling, according to administrative expenses in 2009, center opening perhaps in 2013. Methodist. according to its annual filing with the

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Perry County Memorial Hospital is planning a 117,000-square-foot replacement facility. hospital is to be constructed on 38 acres certification standards of the Leadership located about six miles from the facility in in Energy and Environmental Design which the hospital has been housed for system, which encourages energy and the past 60 years, serving Perry and water efficiency, carbon dioxide emission Spencer counties in Indiana and Hancock reduction, and sustainable use of County in Kentucky. Plans for the building, resources. Aurora said it would be the scheduled to be completed in fall 2012, first such hospital in the state. The facility include three operating rooms, private puts an emphasis on its orthopedic care, patient rooms and a dedicated including a separate entrance for the emergency room entrance. department and four dedicated operating rooms, along with a 24-hour emergency GRAFTON, Wis.—When the new Aurora department, neonatal intensive-care unit Medical Center in Grafton opens its doors and other specialty services. The on Nov. 1, it will use 35% less energy 520,000-square-foot hospital was initially than the typical U.S. hospital because of proposed as an 89-bed facility, but the extensive use of environmentally friendly bed count was adjusted upward based on equipment, systems and devices, Aurora demographic trends and an increased officials said in a news release. The number of patients projected through What if sources 107-bed hospital is being built to the recent physician alignment activity. of revenue leakage

North Carolina Insurance Department. and are operated by and leased to were clearly marked? That was about 7.2% of its 2009 revenue affiliates of Reliant Healthcare Partners, of $4.72 billion, according to the filing. which provides inpatient rehabilitation and Trouble is, they aren’t. The Blues plan recorded net income of healthcare operations in Texas. “We are $59 million in 2009, down sharply from excited to begin a relationship with You must locate them. $157.8 million in 2008, according to the Reliant Healthcare, who operates But how? Craneware Revenue filing. For starters, the health plan has hospitals that are state-of-the-art and Integrity Solutions™ give you the eliminated most of the open positions it located in excellent markets,” Edward needed visibility to identify, address, had, spokesman Lew Borman said. North Aldag Jr., Medical Properties Trust’s Carolina Blues has more than chairman, president and CEO, said in a and prevent revenue leakage. 4,000 employees. Besides its workforce, written statement. “We are already the health plan is studying changes in its exploring opportunities to finance processes, the sale of real estate and additional Reliant hospitals, which when To download the “Revenue everything else related to administrative considered with other properties in our Integrity in Healthcare” costs, Borman said. Cutting acquisition pipeline, reaffirm our optimism white paper, and learn how administrative costs is only part of the about strong growth in our property problem of healthcare cost inflation, portfolio.” The leases have initial terms to prevent revenue leakage Borman said. “Everybody, I think, expiring in 2033. Each lease may be within your organization, recognizes at this time that the renewed by the operator for two terms of join the movement at healthcare legislation didn’t do enough to 10 years each, subject to certain address the rising costs of medical care,” conditions. “We’re delighted to have MPT stoptheleakage.com he said. as our landlord and that our operations will continue as usual. There won’t be any BIRMINGHAM, Ala.—Medical Properties changes for us,” Ellen Lytle, Reliant’s Trust acquired the buildings of three executive vice president for business inpatient rehabilitation hospitals in Texas development, said in an interview. for an aggregate purchase price of Medical Properties is a Birmingham, Ala.- $74 million, the company announced in based real estate investment trust that June. The facilities are in the Austin, acquires and develops net-leased Dallas and Houston metropolitan areas healthcare facilities.

August 9, 2010 • Modern Healthcare 21 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

more space for parents in pediatric The size of the surgery center will double, Regional News rooms. Environmentally healthy and from 7,000 square feet to 14,000 square sustainable building design and feet. Six new operating rooms will be WEST construction were used in the expansion added, for a total of 20, and they will be plan. Providence Health & Services is a outfitted with the latest equipment and HOOD RIVER, Ore.—Providence Hood not-for-profit Catholic healthcare system better workflow. The number of pre-surgery River Memorial Hospital has completed a located in the Pacific Northwest. and recovery areas will double to 74 beds. 79,000-square-foot expansion and Families will have additional waiting-room renovation project. The $50 million ANCHORAGE, Alaska—The state of Alaska space. Banner Good Samaritan has a Level last month approved a certificate of need I trauma center. “This expansion shows our for the expansion and renovation of commitment to the community and that we Providence Alaska Medical Center in will continue to grow and change to meet Anchorage. Called the Generations project, the community’s healthcare needs,” said the $150.3 million reconstruction will Banner Good Samaritan CEO Larry Volkmar, modernize the not-for-profit hospital’s in a news release. newborn intensive-care unit, maternity care, cardiac and other surgical services, PHOENIX—Vanguard Health Systems, pharmacy and ancillary areas. “Generations Nashville, has agreed to pay $6.1 will allow us to continue providing the best million for the Arizona Heart Institute, a care possible for generations to come,” Phoenix cardiology practice that filed for Providence Hood River Memorial completed said Richard Mandsager, chief executive of Chapter 11 protection last month in a 79,000-square-foot expansion. Providence Alaska Medical Center, in a U.S. Bankruptcy Court in Phoenix. The news release. Construction is slated to asset purchase agreement was filed project includes a new main entrance, begin in January 2011, with a completion along with the Chapter 11 petition on family birth center, surgery center, target of December 2016. July 30. At a hearing this week, the diagnostic imaging center and a chapel. bankruptcy court is scheduled to The hospital’s surgery center features 18 PHOENIX—Banner Good Samaritan consider a motion to set an expedited new private rooms and has doubled in Medical Center has broken ground on a schedule for the auction of the size. A renovated emergency department $71 million surgical services expansion cardiology practice. The agreement offers more privacy in triage rooms and project, expected to be completed in 2012. anticipates a closing date by Sept. 15.

SOUTH Williamson County, where Johns Community is located. Scott & White, which A Conversation TAYLOR, Texas—For the second time in is affiliated with Texas A&M Health Science with about a month, Scott & White of Temple, Center College of Medicine, announced in Beacon Texas, announced that it is partnering with July that it was formally partnering with a local hospital and expanding its reach, 60-bed Trinity Community Medical Center, Partners this time with a critical-access hospital. Brenham, Texas. Officials with the 23-bed Johns Community ANNAPOLIS, Md.—The 4-month-old federal health reform law could result in hundreds of millions of dollars in savings for Maryland, cutting the number of that state’s uninsured by half and helping change how healthcare is delivered, according to a new report released by a state-appointed task force. Under the reform package, Maryland expects to see roughly $829 million in Get expert insight on HIE savings from 2011 through 2020, though and learn how to reap various factors could ultimately change that Johns Community Hospital in Taylor total. But in 2020, the state is projected to federal investment subsidies intends to merge with Scott & White. spend $46 million more on healthcare than when you install an EMR. it would have absent the health reform law, Hospital, Taylor, have signed a letter of according to the Health Care Reform Visit intent to merge with Scott & White, a news Coordinating Council. Gov. Martin O’Malley ModernHealthcare.com/beacon release from the system said. The deal created the council to help bridge the includes the hospital’s 24-hour emergency thousands of changes dictated at the department and health center clinic, and federal level with Maryland’s own healthcare the medical staff would remain open under rules and regulations. Often at the forefront the arrangement. The merger is expected to of health reform, the state already has be completed Sept. 1. Scott & White’s expanded its Medicaid program, runs a high- physician network already includes 120 risk insurance pool and created a pool of physicians in 10 regional clinics in incentives for employers.

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360 N. Michigan Avenue | Chicago, IL 60601 | 877.812.1581 | ModernHealthcare.com Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Opinions Editorials Some progress to report We’re gaining in fight against cancer and HIV, but other gains are bad news

s the healthcare industry continues to face plenty of functional, Last month also brought exciting news in the fight to defeat HIV/AIDS. operational and clinical challenges, it’s the same for our health Almost daily during the XVIII International AIDS Conference held in prognosis in general. Although there’s been good news in Vienna, there were reports of new drug combinations to help keep infec- recent weeks on a number of fronts, we, as a nation, face afflic- tions in check, as well as other potential breakthroughs in the quest to tionsA that will probably always dog us. block new cases of the virus. Remember that it wasn’t so long ago when Providers continue to be confounded by patient-safety and quality infection with HIV was a quick death sentence. Again give thanks to the issues. Patients entering a hospital are still too vulnerable to contracting physicians and researchers for today’s long-term survival rates. infections they didn’t have upon admission or experiencing We also know that in many nations, much of Africa for other life-threatening complications. Then there are overdoses instance, the lack of resources to fight HIV means the outlook of radiation in routine medical testing. Wrong-site surgeries. remains grim for the populations of those more underdevel- Dangerous drug interactions. Because we’re human, such mis- oped regions. Even in our own country disparities in treatment takes will never disappear, but we can and must continue to are apparent, one factor that led the Obama administration to demand an ongoing path to improvement. recently launch a new national strategy to fight HIV. At the same time, we can’t say there hasn’t been progress Meanwhile, the administration continues to take a high-pro- involving illness and disease. file role, led by first lady Michelle Obama, in attempting to budge The American Cancer Society last month released its annual another seemingly intractable public-health crisis: obesity. report on progress made against one of the most dreaded On top of all the health problems directly linked to obesity diagnoses we can face. And slowly but steadily we’re winning DAVID in America, and the economic toll associated with them, there this fight. According to the organization’s report Cancer Sta- MAY are other more indirect costs that are quickly mounting as well. tistics, 2010, death rates dropped 21% for men and 12.3% for Assistant Managing As Modern Healthcare reporter Shawn Rhea explained in her women from 1991 to 2006, which means that some 770,000 Editor/Features Aug. 2 special report (p. 26), the supply-chain costs tied to obe- deaths from cancer were prevented. sity are adding up, and much of the cost isn’t reimbursed. Screening procedures enabling early detection of cancers are among While specific estimates of the total tab are elusive, one source said the the reasons cited for the gains as well as improved treatments. Here, it’s added costs of special products such as oversized wheelchairs and other our oncologists and the rest of the provider team doing what they do medical devices redesigned specifically for the morbidly obese have led to best—saving lives. “significantly more” expense for providers. Smoking cessation is another reason cited for the decline in cancer We applaud the entrepreneurial spirit behind the companies that have rates, and the latest data from the Centers for Disease Control and Preven- rushed to deliver the vital supply of these jumbo products, but just from tion also represent good news, showing that adult Americans have been a public-health perspective it would be nice if this lucrative market didn’t steadily kicking the habit. Since 1965, the percentage of adult cigarette need to exist. smokers has dropped by more than half, from 42% to 20% in 2007. Maybe one day it won’t.

OTHER VOICES “When the solution to a lethal problem is inexpensive and easy to imple- “The National Health Service is the third rail of British politics. Britons cher- ment, there’s no reason why that problem should persist. Yet even though ish the historic achievement of bringing decent medical care within every- most so-called surgical-site infections are preventable, they are still the one’s reach, while complaining regularly about the bureaucratic rigidity— second most common kind of hospital-based infection. Doctors and hos- and bristling at any suggestion of change. Now the new coalition govern- pitals must take the basic steps needed to stamp them out. ... Severe ment is proposing a sweeping round of reforms intended to eliminate lay- cases cost the U.S. healthcare system an estimated $17 billion. And ers of bureaucracy and deliver better, more personalized care by giving pri- according to a new study of over 360,000 general surgery patients from mary-care doctors more power over treatment decisions and referrals to across the country, septic shock is 10 times more frequent a post-opera- specialists. That makes sense. ... Thoughtful debate will be needed as tive complication than heart attacks—and ends up killing 10 times as these proposals are fashioned into detailed legislation—more thoughtful, many people. ... There are national guidelines aimed at preventing surgi- we can only hope, than the recent highly politicized debates here over cal-site infections, and studies have shown that they work. The guidelines healthcare reform. ... The coalition has wisely shielded the National Health include relatively simple measures. ... By monitoring every patient for four Service from the excessive austerity cuts it has prescribed for every other basic criteria—elevated heart rate, higher temperature, higher respiratory government department. ... Giving doctors more power over referrals and rate and higher white blood cell count—the Houston-based authors of the introducing for-profit healthcare management companies will introduce study reduced the mortality rate from infection in their intensive-care unit some American features to the British system. That will bring potential by more than half. That’s a lot more people who got to go home. Not risks as well as potential benefits. Experience in the United States—where every death from septic shock is avoidable, but no more lives should be patients’ interests are too often shortchanged—shows that strong regulatory lost simply because someone wasn’t watching closely.” safeguards will be needed to make these reforms work.” —Boston Globe —New York Times

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Opinions Commentary >> Alan Aviles Financial failure not an option NYC safety net hospitals can lead the way on reform but need some help

early 15 years ago the New York an integrated healthcare delivery system such as City Health and Hospitals Corp., HHC could receive a single monthly payment to the city’s vast public hospital sys- cover all healthcare services needed by Medicaid tem, was routinely criticized as patients, and perhaps by residual uninsured grosslyN inefficient and on the verge of being patients. Unlike traditional Medicaid fee-for-ser- dismantled for delivering what many consid- vice payments, global capitation encourages ered substandard care. Much of the criticism investment in primary and preventive care and was justified. leads to more cost-effective care that improves While the effort to “break up” and privatize the long-term health of patients, including those the system was ultimately thwarted, it served with chronic diseases, who account for a large as a much-needed wake-up call for the portion of most states’ Medicaid expenses and nation’s largest public hospital system to focus are at higher risk of hospitalization. on greater efficiency and far-reaching quality This promising payment model would improvements. build on the extensive investments in primary HHC has made remarkable strides since and preventive care HHC has already made— those difficult days. Quality and operational investments that are reducing formerly persis- improvements made since that nadir have trans- tent health disparities among New Yorkers. formed the system into a nationally renowned However, initial global capitation rates must organization delivering effective, efficient and be set at a level that will also support the invest- patient-centered care. Indeed, our public hospi- ment necessary for a more robust care man- tals now outscore the majority of New York agement and care coordination infrastructure, City’s private hospitals on a host of publicly an infrastructure that can ultimately pay for reported quality and patient-satisfaction mea- itself under the capitated reimbursement sures. In 2008, HHC received the National Were HHC to flounder, model by reducing emergency department vis- Quality Forum and the Joint Commission’s its and hospitalizations. John M. Eisenberg Award for Innovation in there would be no way As the next best thing to truly universal health Patient Safety and Quality—an honor that would to fill the gap, and not coverage—there will always be uninsured have been highly unlikely just a few years earlier. patients in need of a safety net, including large But despite how far we’ve come, the road just for poor patients. numbers of undocumented immigrants—the ahead is fraught with peril, and the timing could system is now uniquely positioned to benefit not be more ironic. Even with national health- cannot be overstated. Were it to flounder and from federal healthcare reform by serving as a care reform a reality, and its potential to vastly fail, there would be no way to fill the healthcare proving ground for payment reform that aligns reduce the number of uninsured Americans on gap left behind, and the poor would not be the with long-term value for our healthcare dollar. the horizon, HHC is in serious jeopardy once only group to suffer. New York City’s remain- After a long and unparalleled period of sta- again. The system faces a projected $1 billion ing private, not-for-profit hospitals, many of ble senior management, along with consis- budget deficit that could severely destabilize our whose emergency departments are already tently strong support from Mayor Michael infrastructure and compromise access to care. strained, would simply be overwhelmed. Bloomberg, New York City’s critically impor- How did we again arrive at the door of fiscal Consider the breadth and scope of HHC’s tant public hospitals are ready to help define crisis? Like many hospital systems, HHC strug- reach. We serve 1.3 million patients annually, how healthcare is delivered more effectively gled with soaring costs for providing care, including 450,000 without health insurance. and efficiently in the post-healthcare reform shrinking reimbursements and the swelling The system accounts for 5 million outpatient world. As the largest healthcare safety net in ranks of the uninsured long before the recession visits, 225,000 hospital admissions, 25% of all America’s largest city, we ask only that gov- took hold. Specifically, over the past three years, New York City births, 70% of its involuntary ernment at all levels give us the opportunity the system’s annualized state Medicaid reim- psychiatric admissions, 30% of its trauma ser- and resources to show that it can be done.<< bursement has been slashed by $250 million, vices and 1 million emergency visits. with another $50 million in cuts approved this To protect and strengthen HHC over the year. Further, federal supplemental Medicaid long term, we must secure a reimbursement Alan Aviles is funding for public hospitals is expected to decline methodology that supports our focus and by hundreds of millions of dollars, and the num- core mission of keeping patients and commu- president and CEO ber of uninsured that HHC treats has skyrocket- nities healthy through robust primary and ed by an additional 60,000 patients. And low preventive care. Fortunately, the new federal of the New York Medicaid reimbursement rates for comprehen- health reform law offers hope. sive primary-care services—a staple of the sys- The Patient Protection and Affordable Care City Health and tem’s safety net—generate enormous losses. Act empowers the CMS to support global capita- The importance of a fiscally stable HHC tion reimbursement pilot programs under which Hospitals Corp.

August 9, 2010 • Modern Healthcare 25 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Opinions Letters

All about allocation rewarded with a bonus for improvements in where do consumers go? Back to what’s left of erhaps the resilience of stand-alone hos- patient health. the private market? Back to my first question P pitals shouldn’t come as such a surprise Another step toward an improved reim- about competition. (“The few, the proud ...” July 26, p. 6). bursement system would be to reduce frag- 3. Politicians, as well as many Americans, For many months now, financial advisers, mentation and redundancy of services by fail to understand the difference between rating agencies and others with a vested inter- appointing a primary-care provider as the “having insurance,” i.e., a card in one’s wallet, est in seeing the number of mergers rise, have coordinator of care for each patient, with and having “access to healthcare” i.e., ability been trying to stampede stand-alone hospitals responsibility for making sure that the patient to see a doctor. into the arms of larger hospitals and health receives the right care at the right time. There has never been any instance in systems by arguing that size equates to fatter Summa, with its hospital, health plan and the history of economics where price con- margins and better sustainability. physician components, has been voluntarily trols have not resulted in reduced supply. There is plenty of evidence in other indus- moving toward an accountable culture that In the case of healthcare, supply refers to tries that this is a weak argument. The 2.3% provides the right care at the right time for the doctors. This proposed public option, median operating margin and improvement years. We are evaluating our business model as well as the current Medicare and Med- in days cash on hand for solo hospitals in 2009 to ensure we will be able to provide better ser- icaid programs, are effectively imple- suggests it’s a weak argument in healthcare as vices and support to patients as changes in menting price controls. well. There are often good strategic arguments provider reimbursement unfold in the Here are a couple of obvious results. for a merger. But big isn’t always better. And months ahead. First, doctors will—and do—refuse public large enterprises invariably have more mouths We are eager to work with Dr. Berwick and option/Medicare/Medicaid patients for the to feed. Capital access isn’t the issue; capital his staff and our peers across the country to simple reason that they lose money on allocation is the issue. develop a sustainable cure for physician reim- these patients. This reduces access bursement—one that to healthcare. Dan Beckham delivers real savings This is not rocket science nor is there any President while improving health credible dispute to this economic reality. Eco- Beckham Co. outcomes for our nomic history has shown time and time again Bluffton, S.C. patients. Unless we act that the best way to allocate resources—in quickly, the lame-duck this case healthcare—and to increase the Congress will just slap resources to be allocated (doctors and hospi- Beyond the Band-Aid another Band-Aid on tals) is to enable individuals to make deci- s Donald Berwick begins his tenure as the Medicare physician sions that best suit their needs, not a distant A CMS administrator, finding a cure for reimbursement issue bureaucrat. This is the fundamental differ- the festering sore that is the Medicare reim- in November. Deveny ence between a managed socialist economy bursement system for physicians should be a and a free-market economy. top priority. T. Clifford Deveny In June, Congress slapped yet another System vice president of physician alignment Ryan Hovey Band-Aid (the 10th since 2003) on the prob- President of Summa Physicians Minneapolis lem by averting for six months a planned 21% Summa Health System reduction in physician fees. This issue contin- Akron, Ohio ues to be a significant challenge for the … no difference provider community. A great number of doc- edicaid and Medicare are huge pub- tors are contemplating not serving Medicare Public option query … M lic option plans that run side by side patients in the near future—potentially an hree questions for those who may find with nongovernment, manage-care organi- issue in communities such as Akron, Ohio, T this attractive (“Key House leaders restart zations. It has been doing so for many with large numbers of residents who are push for public option,” Modern years. This provides more choices for peo- 65 and older. Healthcare.com, July 22): ple. I don’t see how a public option plan The essential flaw in the reimbursement 1. How is this increased competition? for the commercial population would be system is the fee-for-service model. Medicare This scheme is clearly set up to drive pri- any different. reimburses physicians at a set rate for each vate competition out of the market, the service. Though limiting the reimbursement result being only the government option Fred M. Volkman for each service, Medicare places no limit on left standing. There are already reports of Physician the number of services provided—and few insurers potentially going out of business Mount Pleasant, S.C. controls on quality of care. As a result, because of the medical-loss-ratio require- Medicare often pays for ineffective and redun- ments. How does fewer plans to choose dant treatments, leading to patients not from increase competition? What do you think? receiving optimal care and possibly being 2. Will consumers be able to appeal rescis- Write us with your comments. readmitted to the hospital within 30 days. sions and claims denials in the public option? To send us a letter electronically, go to At Summa Health System, we support Even if consumers can do this with the public modernhealthcare.com/letters. By fax, it’s Medicare’s efforts to change the way physi- option, who is going to check HHS’ power? 312-280-3183; or through the mail it’s cians are paid. Instead of being paid per pro- And if there are fewer private choices in the Modern Healthcare, Letters to the Editor, cedure, healthcare providers should be paid market, and if HHS denies the consumer’s 360 N. Michigan Ave., Chicago, Ill. 60601. based on the quality of care provided and request in the name of the “public good,”

26 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

* HFMA staff and volunteers determined that this product has met specific criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guaranty the use of this product. Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Special Report >> Melanie Evans The new underinsured

that will regulate the costs for low-income While health reform is expected to add households and offset some of the financial burden with subsidies, according to the Congres- 31 million to the ranks of the insured, sional Budget Office. For hospitals, which have seen more insured low-income families—and providers— patients who struggle to pay medical bills, the push to expand insurance could bring with it newly underinsured people who are more may still face significant financial risk likely than the insured to skip tests and medications and less likely to seek follow-up care or ealth reform is expected to the amount households spend on care each see a specialist. expand insurance to mil- year, does much to expand protection for con- Michael Miller, policy director for Com- lions without it and offer sumers from policies that left patients struggling munity Catalyst, a patient advocacy not-for- households more protec- to afford care, policy experts say. But, they say, profit based in Boston, says the law includes tion from the financial dis- for low-income, chronically ill people, the law provisions that give consumers greater access tress of medical bills. But may not do enough, and upcoming regulations to affordable insurance, but does not com- Hthe law also leaves some newly insured vulnera- on benefits could significantly affect how much pletely achieve what many consider afford- ble to expenses that will add stress to already patients spend. able coverage for low-income patients— strapped household budgets, health policy An estimated 24 million of the 31 million healthcare costs less than 5% of income for experts say. people expected to gain insurance under health those with incomes below 200% of the federal The law, which bans insurers from excluding reform will do so through insurance poverty level, or $21,660 based on 2010 those already diagnosed with an illness and caps exchanges—set to begin operations in 2014— guidelines, and 10% of income for all others. “We didn’t get there,” he says.

A big bite out of the underinsured Miller stresses that the law represents a huge advance from the status quo. Out-of-pocket spending is capped and the limits are more restrictive for plans sold to low-income households within the exchanges, he notes. “In that way, the law takes a big bite out of the under- insurance problem,” Miller says. And under the law, insurers will be banned from setting a limit on the amount policies pay in a year or over a lifetime. January Angeles, a policy analyst with the Center on Budget and Policy Priorities, a non- partisan policy not-for-profit based in Washing- ton, says the expansion of coverage alone will

St. Elizabeth Health Center in Youngstown, Ohio, is part of Catholic Healthcare Partners. Uncertainty over health reform’s effects on revenue has affected the system’s planning, according to its CFO.

28 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

offer protection for some previously without benefits while subsidies will substantially reduce the cost of benefits for those with low incomes. Of the 24 million expected to find insurance through an exchange, it is estimated that 19 million will be eligible for subsidies to pay for premiums or additional costs paid out of household budgets, known as out-of-pocket costs, such as deductibles, copayments or coinsurance. Angeles says the law sought to take into account that low-income households must grapple with less discretionary income while at the same time fixed, necessary costs such as rent represent a bigger chunk of income. Low- and moderate-income consumers inside the exchanges—or those earning below 400%, or $43,320 for 2010, of the federal poverty guideline but too much to enroll in Medicaid—qualify for subsidies that increase as income declines, she says. The subsidies St. Francis Hospital in Beech Grove, Ind., is part of Sisters of St. Francis Health Services. include premium credits for those below 400% Based on one projection, the health system expects a $300 million drop in revenue over of the federal poverty level and the law offers the next 10 years because of changes under the reform law. further cost-sharing credits for households earning less than 250%, or $27,075 for 2010, of 200% of poverty, he says. they did not fill a prescription because of costs federal poverty. Miller stressed that health reform made “very in the prior year; 30% did not seek a test, treat- Policymakers sought to limit patients’ substantial” progress, but says what remains to ment or follow-up care recommended by a financial risk by using the premium credits to be done is “also significant.” doctor for the same reason. Forty-five percent limit the percentage of household income that reported difficulties with medical bills. will be spent on medical care, based on one of Less medical care, more debt Out-of-pocket spending grew faster than four plans—the second least costly option of The underinsured are more likely to put off paychecks in the years leading up to the Great the four plans—to be offered through the medical care and struggle to pay bills than those Recession and left a rising number of house- exchange, Angeles says. having higher levels of coverage, Common- holds to spend more than 10% of their incomes For those most financially vulnerable (at wealth Fund researchers reported in the journal on medical costs, an amount health policy 133% to 150% of poverty level, or $14,512 to Health Affairs online in June 2008. Four out of experts describe as a high financial burden. $16,245 a year for 2010), the law would limit pre- 10 underinsured households told researchers Income in 2006 was unchanged from 2004, miums as a share of income to 3% to 4%, accord- but out-of-pocket spending—largely premi- ing to an outline of the law’s exchange provisions ums—rose 8.5% during the same period, after by the Center on Budget and Policy Priorities. A MOVING TARGET adjusting for inflation, research published Households with paychecks between 300% online in May 2010 by Health Affairs shows, and 400% of the federal threshold for poverty The health reform law using data from the Agency for Healthcare (from $32,490 to $43,320 in 2010 for an indi- seeks to limit spending on Research and Quality. vidual) would see the share of income spent By 2006, nearly one in five households on medical costs capped at 9.5%. (House- premiums as a percentage of (19.1%) grappled with a high financial burden holds’ medical costs increase should they opt household income, but those from medical expenses, up from 16.4% in 2004, for two more comprehensive options within percentages are expected to even as “the nation’s economy was relatively the exchange, Angeles says.) climb as premium growth strong and unemployment was relatively low,” But these protections have limits, and for outpaces income growth wrote Peter Cunningham, the senior fellow at some with chronic conditions who need regu- the Center for Studying Health System Change lar medical care, the law could create a new (For 2014) Premium as who conducted the research for the Health wave of underinsured. percentage of Affairs study. “Most people are mostly healthy most of the Poverty level income Hospitals have responded to households’ time,” Miller says, and for many newly insured, 133%-150% 3%-4% growing share of medical bills with heightened premiums represent the most significant finan- 150%-200% 4%-6.3% efforts to collect payments from patients, cial burden. But those whose conditions require including efforts to collect bills before or when more medical care could see healthcare spend- 200%-250% 6.3%-8.1% patients arrive and use of increasingly sophisti- ing more significantly erode household income. 250%-300% 8.1%-9.5% cated credit-analysis tools to determine which The law caps the maximum amount low- 300%-350% 9.5% patients are able and likely to pay bills. income households must pay, but among the 350%-400% 9.5% However, the households that will be newly poorest, the amount exceeds 5% of income, insured through the exchanges could be at risk which the Commonwealth Fund defines as Source: Center for Studying Health System Change for financial distress despite the subsidy relief, underinsured among those with incomes below MODERN HEALTHCARE GRAPHIC policy analysts say.

August 9, 2010 • Modern Healthcare 29 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Special Report

The Center on Budget and Policy Priorities, in more aggressive about reducing healthcare The Massachusetts Division of Health Care a July research paper, says that the income pro- costs” for reform to succeed. Finance & Policy reported that one in five resi- tection from subsidies may begin to erode dents surveyed between March 2009 and June shortly after taking effect in 2014 because income Mitigation strategy 2009 say they did not seek care because of is not projected to keep pace with rising premi- James Gravell, senior vice president and chief healthcare costs, and another 15% reported dif- ums. Starting in 2015, income is projected to financial officer at Catholic Healthcare Partners, ficulty paying medical bills during the prior year. climb more slowly than premiums says the Cincinnati-based system has Kirkpatrick says financial barriers to patient while subsidies will increase at the rate started to estimate the financial access could jeopardize efforts to reform health- of the average premium. In 2018, the impact of reform’s payment and cov- care payments and curb healthcare spending— premium subsidy will increase with erage changes, but does not yet have such as accountable care organizations—which inflation, a rate projected to be more enough information to so do for the are designed to pay hospitals based on cost con- sluggish than premium growth. law’s expansion of private insurance. trol and quality outcomes. How much patients pay out of Gravell says the system is “waiting for Sisters of St. Francis Health Services, pocket will also be determined by more clarity.” The uncertainty over Mishawaka, Ind., expects to see revenue drop by which care gets covered by insurance, what will happen to revenue has $300 million during the next decade as newly says Sabrina Corlette, a research pro- affected the 32-hospital system’s plan- insured patients fail to offset lost direct financial fessor at Georgetown University’s Marion: Insurance ning, postponing some capital aid to hospitals with high numbers of uninsured Health Policy Institute in Washing- exchanges are reform’s expenses and heightening focus on patients and reductions from Medicare, accord- ton. The reform law requires insurers “biggest wild card.” improved operations, he says. “The ing to one estimate, says Jennifer Marion, senior to include essential benefits, such as answer isn’t go borrow more money.” vice president of finance and CFO. hospitalization, prescription drugs and preven- In Massachusetts, where the state mandated Marion says not one of the Sisters of St. Fran- tive and wellness services, but leaves further insurance coverage in 2007, unpaid hospital cis’ 10 Indiana and Illinois hospitals stands to details to the HHS secretary. Corlette says that bills, or bad debt, remained flat through 2009, gain, using a calculator created by the American how regulations ultimately put limits on visits or says Joe Kirkpatrick, senior vice president of Hospital Association to create a rough estimate. services will determine patients’ financial risks. healthcare finance for the Massachusetts Hospi- The system would lose $300 million in rev- Corlette says she believes the subsidies should tal Association, though hospitals report more enue should those newly insured through the be raised, but lawmakers must also “get a lot difficulty collecting deductibles and coinsurance. insurance exchanges have plans that pay hospitals roughly as much as Medicare, which is not as much as employer-sponsored private insurance, she says. Insurers are expected to curb hospital rates as regulators pressure insurers to hold down premium increases, Marion says. It’s unclear what insurers will pay, Marion says, who describes the exchanges as reform’s “biggest wild card.” She does expect to write off bills for out-of-pocket costs from the newly insured through exchanges, though to what degree she says she is uncertain. The Sisters of St. Francis typically collects 3% to 5% of outstanding bills from those without insurance and 40% to 60% from insured patients with copayments, coinsurance or deductibles, she says. (Its charity-care policy Fragmented Service to Continuum of Care provides financial aid to low-income insured; patients may also pay off debt on payment plans How Will You Bridge the Gaps? at no interest, Marion says.) Established efforts to improve quality and Post-acute payment bundling will drive an inevitable shift to reduce costs will help position the system, more integrated healthcare delivery. How prepared are you? which reported operating income of $115 million on revenue of $2.3 billion in fiscal 2009, for RehabCare is a leading provider of management and staffing expected revenue losses under health reform, services for all pieces of the post-acute continuum. Marion says. Executives are pushing to improve Our continuum capabilities ensure the seamless transition of patients operations to earn a profit on Medicare’s rates, to the right level of care with the best possible outcomes. which are lower than commercial rates, as a tar- We have the expertise and the proven solutions to help you plan today get for greater efficiency and lower costs. The for the care delivery model of tomorrow. system last year hired a consultant for a nonla- bor cost-control initiative, she says. Let us help you plan your post-acute strategy Health reform is “going to have a negative through our customized business models. impact,” Marion says, “but there are things that 800.677.1202, ext. 2202 www.rehabcare.com we have done and are doing to mitigate that negative impact.” <<

30 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints By The Numbers

HOSPITAL CEO TURNOVER BY STATE Ranked by highest turnover percentages in 2009 for states with 30 or more hospitals

CEO CEO Rank State Turnover Rank State Turnover 1 Arkansas 32% 21 Missouri 17%

2 New Mexico 32 22 Texas 17

3 Oregon 31 23 Alabama 15

4 South Carolina 26 24 Florida 15

5 Arizona 25 25 Michigan 15

6 North Dakota 23 26 Oklahoma 15

7 California 22 27 Virginia 15

8 Georgia 20 28 Wisconsin 15

9 Montana 20 29 Kansas 14

10 Nebraska 20 30 Massachusetts 14

11 Ohio 20 31 New Jersey 14

12 Tennessee 20 32 South Dakota 14

13 Washington 20 33 West Virginia 14

14 Minnesota 19 34 Colorado 13

15 Mississippi 19 35 Indiana 13

16 North Carolina 19 36 Iowa 12

17 Pennsylvania 19 37 New York 12

18 Illinois 17 38 Idaho 11

19 Kentucky 17 39 Maryland 11

20 Louisiana 17 40 Maine 10

Note: CEO turnover percentages have been adjusted. Based on a survey of 300 hospitals, the turnover was reduced by 13.04% because of incorrect reporting of retained CEOs and to the appointment of interim or acting CEOs. The overall CEO turnover was 18% nationwide. Source: American College of Healthcare Executives, Division of Research, Feb. 19, 2010

American College of Healthcare Executives, 1 N. Franklin St., Suite 1700, Chicago, IL 60606, 312-424-2800, ache.org Information in this chart subsequently may be revised at the discretion of the editor. For more information, contact Special Projects/Research Editor Rebecca Mielcarski at 312-397-5511 or [email protected]. For more charts, lists, rankings and survey results, visit modernhealthcare.com/section/lists.

August 9, 2010 • Modern Healthcare 31 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints

Information Edge Joseph Conn caused some delays, according to the states. >> “We’ve done some initial scanning of the states,” Buenning says. “We’re hearing feedback they’re trying to be ready, but they’re definitely Halfway home lagging. They have some challenges.” Buenning says the CMS is working with the states to provide guidance and resources if nec- Just a few bumps on the road to new data standards essary to see that they get the help they need. The 5010 standards, like the Version 4010 n January 2009, HHS published a final accredited in 1979 by the American National group in current use, provide uniform messag- rule outlining the steps the healthcare Standards Institute to develop a uniform frame- ing capabilities for healthcare transactions such industry must take to update the elec- work for electronic data interchange. ASC X12 as checking the eligibility of a patient for insur- tronic data transmissions standards used has produced more than 300 EDI standards for ance benefits, the submission and payment of byI the financial systems of hospitals, physician government and multiple industries, including claims and any inquiries and responses regard- offices, claims clearinghouses and payers. healthcare. ing the status of claims in process. The 34-page final rule called for a 36-month Denise Buenning is a senior adviser and team The new 5010 standards provide a much rollout period for the new data exchange stan- leader at the Office of E-Health Standards and needed upgrade—the first full version change in dards and urged all affected healthcare organiza- Services at the CMS for the conversion to 5010. transactions standards in more than a decade. tions to immediately begin taking steps toward The CMS is “right on target” to make the They reflect many of the hundreds of industry conversion to the new standards by Jan. 1, 2012. switch to Version 5010 in its own Medicare fee- requests during the interregnum for improve- So, how is it going thus far? Fairly well, for-service program, Buenning says. ments to 4010 standards that aim to provide according to a majority—but not all—of the “They expect to be testing externally in Janu- users with clearer instructions, reduce ambiguity industry experts contacted for this story. ary next year,” he says. “All systems are go.” And among common data elements used in different At this point, a little past halfway between the elsewhere in the industry, “all the feedback transactions, and eliminate redundant and issuance of the rule and its final compliance we’re getting, nobody has stepped up and said unnecessary data elements, according to an deadline, providers, clearinghouses and health we’re having an issue on this.” American Medical Association primer. plans as well as the CMS are moving ahead with If there is one dicey area in the changeover to Some of the lesser changes in Version 5010 modifications to their information technology 5010, according to Buenning, it may be with are merely for good housekeeping, for example, systems to accommodate the transition from state Medicaid programs. standardizing the location of information in the current family of transaction standards, In comments during rulemaking, some states what were called implementation guidelines in known as ASC X12 Version 4010, to the new said that they needed to present funding requests the 4010 standards, but are called technical standards, ASC X12 Version 5010. for the conversion to their state legislatures, but reports in the 5010 standards. The 5010 standards bear the name of the to do so, they needed a final rule in hand. A pro- But the crucial change made in the 5010 stan- Accredited Standards Committee X12, which is posed rule on 5010, issued by HHS in August dard is that it accommodates the switch from a U.S. standards development organization 2008, wasn’t good enough, they said. That’s the International Classification of Diseases Ver- sion 9 family of clinical codes to the far more robust and detailed ICD-10 codes. The deadline MAKING THE SWITCH for the U.S. launch of ICD-10 is Oct. 1, 2013, set in a separate HHS rule. The timeline for conversion from the ASC X12 In 2000, HHS published the transactions rule Version 4010 data standards to Version 5010 for the Health Insurance Portability and Accountability Act of 1996, adopting nine ASC Date/deadline Required action X12 transaction standards for healthcare. HHS has designated ASC X12 as a standards develop- January 2009 HHS publishes the final rule on conversion from Version 4010 to Version 5010. ment organization to continue to manage EDI standards under HIPAA. March 2009 Effective date of the final rule. January 2009 Begin Level I compliance preparations (gap No meaningful use, yet analysis, design, development). Vendors will not be required to demonstrate January 2010 Begin Level I compliance testing (internal testing, Version 5010 capabilities when they submit their sending and receiving data in-house) using Version electronic health-record systems for certification 5010 standards. as eligible for federal subsidy payments under December 2010 Achieve Level I compliance: Organization is fully Stage I of meaningful-use criteria pursuant to able to send and receive data using Version 5010 the American Recovery and Reinvestment Act, standards in-house. commonly known as the stimulus law. January 2011 Begin Level II compliance testing (external testing) A proposed rule for the first round of mean- using Version 5010 standards with business ingful-use criteria under the stimulus law was partners. issued by HHS in December 2009. It called for January 2012 Achieve Level II compliance: Organization can send testing an IT system’s claims and eligibility func- and receive data using Version 5010 with business tions, but those requirements were dropped in a partners. simplified final rule HHS issued on July 13. Still, certification criteria for administra- Source: HHS MODERN HEALTHCARE GRAPHIC tive claims handling are expected to reap-

32 Modern Healthcare • August 9, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints pear in Stage II of meaningful use testing in 2012, according to several experts contacted for this story. HHS took its first stab at writing regulations for the switch to Version 5010 in a proposed rule published in August 2008. It suggested an initial compliance deadline of April, 1, 2010. HHS received feedback from more than 100 public commenters to the proposed rule, “virtually all” of whom, HHS says, complained that it would be impossible to comply in the time frame suggested. As a result, HHS pushed back the compliance deadline in the final rule to Jan. 1, 2012. The 5010 final rule also cites a September 2007 letter from the National Committee on Vital and Health Statistics to then HHS Secre- tary Mike Leavitt recommending that HHS adopt two levels of compliance for the Version Kadlec’s plans for IT upgrades mean the hospital will be pushing the conversion deadline. 5010 transition, noting that “the timing of standards implementation is critical to success.’’ In On the other hand, Robert Tennant, a senior Deborah Meisner, vice president of regula- response, HHS rulemakers stated that “our policy adviser to the Medical Group Manage- tory compliance at Emdeon—a claims clearing- expectations” are that affected organizations ment Association, says his organization is house and provider of IT services to health will measure their compliance against the advising members to take the compliance plans—says company programmers have been NCVHS-recommended Level I and Level II deadline seriously. busy developing in-house “translators” to con- compliance guidelines (See timeline, p. 32). “Some people are just assuming this compli- vert 5010 transactions to a format conducive to ance date will be kicked down the road, and a being sorted, analyzed and edited. Meisner says No ‘Plan B’ lot of us don’t think that,” Tennant says. One Emdeon also is meeting weekly with IT systems “We anticipate that, since there was support indicator, he says, is that in previous rule roll- vendors that have been “knocking on our door” for a phased-in schedule, health plans and clear- outs, Medicare wasn’t ready. This time might to test and make sure their systems will be in inghouses will make every effort to be fully be different. sync. “Before they distribute that (system) to compliant” by the Jan. 1, 2012, and will have “For the first time, they have announced that their 1,000 providers, they want to make sure tested their systems and taken steps to “mitigate Medicare will be able to test claims a year in they’re got that working right,” Meisner says. any barriers long before the deadline.” advance, by Jan 1, 2011,” Tennant says. David Roach, vice president of information The HHS rulemakers say they’re serious that “They’re signaling they’re putting the systems at Kadlec Regional Medical the deadline is firm. resources into their system. So, Center, Richland, Wash., will be “While we have authorized contingency plans because of that, I don’t want our guys walking a tight wire next year in the in the past, we do not intend to do so in this case, to be thinking they can push this off.” run-up to the Version 5010 compli- as such an action would likely adversely impact Dan Rode is vice president of pol- ance deadline. ICD-10 implementation activities,” according to icy and government relations at the Roach says he will have to hold the rule. “HIPAA gives us authority to invoke American Health Information Man- off 5010 testing until the third civil money penalties against covered entities agement Association, which cam- quarter of 2011 because 201-bed who do not comply with the standards, and we paigned for adoption of the ICD-10 Kadlec will be installing a new have been encouraged by industry to use our coding system, and by implication, financial system and a new EHR authority on a wider scale.” Version 5010 of the data transmis- Meisner: IT vendors system, the latter to help the hospi- Not everyone is optimistic about meeting the sion standards. have been “knocking tal meet meaningful-use require- compliance deadline nor are they all fearful of Rode says the key difference with on our door.” ments and qualify for IT subsidy federal penalties. Version 5010 is flexibility, owing to payments under the stimulus law. Vinson Hudson is president of Jewson what he described as an unlocked “identifier.” Roach says he’s confident his current financial Enterprises, a health IT market consultancy “In 4010, they froze the identifier to say system could be upgraded in time, but Kadlec based in Austin, Texas, that specializes in physi- ICD-9 CM,” Rode says. “You couldn’t add leaders chose instead to go with one integrated cian office practices. other codes.” With the 5010 identifier, “it says, financial and EHR system from the same ven- “I’ve talked to the vendors and several group the next code you read is an ICD-10 CM code; dor. “We’ll just make it by a couple of months.” practices, and they don’t see how it’s going to the next code you read is an ICD-9 code.” “The board has asked me to get our fair share happen,” Hudson says, adding that HIPAA fines If in the future Medicare, Medicaid and pri- of our stimulus money, which comes to $8 mil- are unlikely. “They can’t penalize the whole vate plans switch to a payment system based on lion, so I’ll take the risk for $8 million,” Roach nation. I know it’s not going to be that bad, but outcomes, “we’ll have that flexibility without says. “I don’t think we’re the only one out there it’s going to be a significant number of people.” changing the whole system,” Rode says. in this position.” <<

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ON THE MOVE ...

HOSPITALS, SYSTEMS 1994. He will step down at the end of a newly created role—medical director Judy Schanel was the year. Ruscitto was named St. of its Center for Learning and promoted to president of Joseph’s executive VP in 2009 and Innovation. Mieres, 50, was previously Moses Cone Memorial joined the hospital in 2001 as senior VP the director of nuclear cardiology for the Hospital and executive for strategic, development and New York University Langone Medical VP of its parent, Moses government affairs. St. Joseph’s declined Center, according to the Cone Health System, to release Ruscitto’s age. … Samantha system. Mieres will act both in Greensboro, Collier, 43, a former executive at as a liaison on diversity N.C., effective Aug. 9. Schanel HealthGrades, was named VP and for North Shore-LIJ with Schanel replaces Tom system chief quality officer for St. Luke’s government and other Gettinger, who left the system in May to Health System, Boise, Idaho. The healthcare organizations, become COO of WakeMed, Raleigh, N.C. appointment to the newly created the system said in a Schanel joined the Moses Cone system position is effective Sept. 13. Collier news release. She will in 2002 and became vice president and previously served as CMO and executive Mieres also provide strategy and service line administrator at the Moses VP at HealthGrades, Golden, Colo. Collier leadership within the Cone hospital in 2005. Schanel’s age worked for HealthGrades for eight years, Great Neck, N.Y.-based health system was not provided by deadline. … St. according to a news release from St. and will develop programs in diversity, Joseph’s Hospital Health Center, Luke’s. During that time, she also cultural competency and healthcare Syracuse, N.Y., named Kathryn Howe continued her private practice as a literacy for doctors, nurses and other Ruscitto to succeed Theodore Pasinski hospitalist in Denver. … North Shore- professionals and create a task force to as president and CEO, effective Jan. 1, Long Island Jewish Health System promote healthcare careers among 2011. Pasinski, 57, who joined the named Jennifer Mieres as its first chief underrepresented, culturally diverse hospital in 1974, was named CEO in diversity and inclusion officer and—also community members, the system said.

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34 Modern Healthcare • August 9, 2010 ClassifiedSingle UseMarketplace Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints EXECUTIVE RECRUITMENT Regional Healthcare Operations Executive Chief Executive Officers Growth-oriented healthcare system, seeks experienced, creative operations execu- Alliant Management Services, based in Louisville, KY, manages 20 tive for multi location region. This Senior Vice President position will interact hospitals in a four state region. We are currently recruiting Chief extensively with facility CEO’s in the field to provide leadership and direction for Executive Officers. all aspects of operations in a rapidly changing environment with a priority on Positions are available in South Central KY. Work experience should clinical excellence, strategy development and execution, bottom-line results and include progressive job advancement. Experience in dealing with cost control while maintaining accreditation, licensing and quality patient care Boards’ of Directors, Medical Staffs, and negotiation of third party standards. The SVP will assist in recruiting and training facility CEO’s. The SVP insurance contracts is highly desirable. Attractive base salaries and shall work with the Regional Healthcare Financial Officer and the system CEO in benefit plans are available. the development and implementation of strategic plans and will be a valuable Please send your resume to [email protected] resource in connection with corporate planning and growth opportunities to include potential new services and other development activities. • Bachelor’s degree in healthcare administration or related filed required: HOSPITAL CEO MBA preferred. Brim Healthcare seeks an experienced healthcare executive for the position of Chief Executive Officer at Ripon Medical Center in Ripon, Wisconsin. Ripon Medical Center • Financial expertise in hospital fiscal management, a minimum of 10 years is proud of its high quality health care facility, professional staff, and state-of-the-art experience as hospital CEO and in a multi-hospital setting required. medical technology. Today Ripon is a 25-bed critical access hospital accredited Interested candidates should submit resume to [email protected] by the Joint Commission on Accreditation of Health Care Organizations, serving a population of more than 25,000 from Ripon, Green Lake, Princeton, Markesan, Brandon, Montello and other area communities. For more hospital information, visit MARKETPLACE their website at ¬www.riponmedicalcenter.com. Qualified candidates must have at least five years of hospital CEO experience, Post your Classified ad CONSULTING exemplary communication, presentation and interpersonal skills, plus a demonstra- in the next issue of Managed Care Consulting ble dedication to customer service. Replacement hospital or major construction management experience is required. Bachelor’s degree in business or healthcare Over 20 years of experience in managed administration is needed; Master’s degree is preferred, as is Diplomate or Fellow care with payors and health care status in ACHE. providers in contracting, renegotiations, Ripon Medical Center is part of the Brim family of hospitals. Brim Healthcare is Publishing: Aug. 23 revenue enhancement, and direct employ- committed to providing effective management solutions to community hospitals. Deadline: Aug. 12 er relationships. Reasonable rates and If you believe in Brim’s values of quality, respect, initiative, integrity, customer contracts based on your specific needs Send your ad copy to: service, and commitment, and passionately pursue and inspire excellence in the usually at half the cost of hiring. delivery of community-based healthcare, then please contact us. [email protected] References and client affidavits available For further information or to express an interest in or call 212.210.0194 upon request. this position, please send resumes to: for more information. [email protected] Brim Healthcare, Inc. • 105 Westwood Place, Suite 300 Brentwood, TN 37027 VIEW MORE CLASSIFIED ADS ATTN: Human Resource • AX: [email protected] www.modernhealthcare.com/classified Equal Opportunity Employer

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ASIDES & Outliers INSIDES (With) honey, I shrunk the wound Hyperbaric oxygen therapy, biosynthetic dressings, negative pressure wound therapy … and honey? Yes. It turns out that modern medical science has something to learn from the ancient Egyptians, who found that certain types of honey con- tain anti-bacterial agents that can help in wound healing. Andy Griffith is back on television in an ad to ease the fears of But before you go and swap that tube of Neosporin in your medicine seniors and tout the importance of Medicare. cabinet for a plastic honey bear bottle, keep in mind that we’re talking about a specific type of the sweet stuff. (Outliers advises against Kathleen Sebelius, a group of five Republican senators said the com- squeezing honey onto your infected finger after you’re done mercial “had a clear political motivation,” and they called for the CMS putting it in your cafe con miel.) to pull the ad and reimburse the Treasury. Wound-care centers around the world, including Brooks Jackson, director of FactCheck.org, also took issue with the the Carondelet St. Mary’s Hospital Wound ad, he said, because the reform law will lead to cuts in Medicare Healing Center, have begun using a new prod- Advantage plans. “Would the sheriff of Mayberry mislead you about uct called Medihoney, made by a company Medicare? Alas, yes,” he wrote in a blog posting. called Derma Sciences, in Princeton, N.J. For now, Griffith is keeping quiet and has declined to comment on The product, which passed muster with the hubbub. the U.S. Food and Drug Administration, consists of wound dressings treated with a ... or he could get a gig at the White House “medical-grade honey” produced by special Late last month, a three-minute, 20-second infomercial of Barack bees in Australia and New Zealand. Called lep- Obama explaining how to navigate the healthcare.gov website tospermum honey, it contains concentrated doses www.healthcare.gov/news/blog/potus_explores_healthcare_dotgov.html of anti-bacterial agents that help keep a wound moist was posted and, predictably, Internet coverage of the video was fol- while killing bacteria. lowed by pages of rabid comments from the president’s opponents and However, to reiterate: This is medicinal honey we’re supporters who had very little to do with content of the video. talking about. Although most types of honey start out Jon Stewart, host of Comedy Central’s “The Daily Show,” is known with at least some medical properties, they can be destroyed in the for his satirical swipes at conservative pundits and politicians. But on process of harvesting and stuffing it into plastic bears. And Outliers will this topic, he went after the president. not pay your medical bills if you show up at the doctor’s office with an “Shouldn’t Wilford Brimley be doing this? Or Robert Wagner? Or infected wound dripping with dinner-table-grade honey. the late Art Linkletter?” Stewart asks. “Doesn’t anybody else work at the White House, dude?” Should Andy Griffith nip it in the bud? ... Stewart offers his theory for why Obama made the video. The CMS is banking on the power of nostalgia, hoping that soft-focus “At this point, he trusts no one else at the White House,” Stewart memories of Aunt Bee, Opie and the rest of the Mayberry gang will says. “He’s like the sole proprietor of a one-man movie theater.” help to ease seniors’ fears and convince them of the benefits of upcom- After doing his imitation of the president as an old man taking tickets ing health reforms. The government released a 30-second public ser- and selling popcorn, Stewart goes on to show how a few glitches appear vice ad on July 30—the 45th anniversary of Medicare—featuring Andy in the Obama video. These included popup messages from Vice Presi- Griffith, the 84-year-old star best known for his roles as the town sher- dent Joe Biden who says he’s thinking about relieving his boredom by iff on The Andy Griffith Show and a clever Southern lawyer on Matlock, making prank phone calls to John McCain and then sends the presi- one of Outliers’ old favorites. dent a video of a dog riding a tractor. The ad, which will run on cable TV stations, shows Griffith in a OK, it was a little silly, but Outliers thinks it would be nice if all tele- sunny room, intermittently addressing the camera directly and petting vision programs discussing healthcare rose to this level of intelligence. a yellow Labrador retriever. “1965, a lot of good things came out that year, like Medicare,” he says, in his trademark drawl. “This year, like always, we’ll have our guaranteed benefits, and with the new healthcare Quotable law, more good things are coming.” The TV spot is only one of the ways that the government is trying to “It’s shocking that even relatives don’t know if their parents are alive or combat misinformation and educate older adults about improvements dead. … These cases were typical examples of thinning relationship among included in the Patient Protection and Affordable Care Act, such as the families and neighbors in Japan today.” “doughnut hole” rebate checks and preventive-care screenings, the —Chiba University professor Yoshinori Hiroi, an expert on public CMS said in a news release. welfare, during an interview about how many Japanese centenarians But Republicans cried foul at using taxpayer dollars to create what are unaccounted for because of poor recordkeeping and follow-up by they say is a pro-health reform ad. In an Aug. 3 letter to HHS Secretary family members.

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