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QFRC11120000_SeeingDiff_4C_HealthcareFinance(9.625x12.875).indd 1 8/15/12 4:36 PM SEPTEMBER Use of generics Healthcare venture 2012 saved $1T in capitalists show INDUSTRY NEWS 3 10 years new restraint I TextMassachusetts passes bill to INDUSTRY NEWS 3 SOLUTIONS & SERVICES 32 I Textcontrol cost of healthcare I TextGenerics save $1T in 10 years I Medicare gets political COMMENTARY 00 COMMENTARY 10 I Text I TextFDA scandal may damage agency I TextSaving money through contracts I Real estate can grow proﬁ ts HOSPITALS & IDNs 00 HOSPITALS & IDNs 13 I Text I TextGoing green to lower costs I TextDSH cuts rattle urban hospitals I Energy costs big bucks COMMUNITY CARE 00 COMMUNITY CARE 26 I Text I TextGetting ready to Go Direct I TextPilot program rewards physician groups for controlling spending PAYERS 00 PAYERS 28 I Text I TextAurora signs two new partners I TextIntegrating behavioral and primary care ISOLUTIONS Shifting acquisition & SERVICES targets 00 SOLUTIONSI Text & SERVICES 32 Valuing customer I Text I I TextDevice industry faces threats I mHealth builds relationships TRENDS 00 I VC investors show restraint service in healthcare

I learn about developing a culture that PRODUCTText TECHNOLOGY 34 Disney Institute inspires would support everyone working at IPRODUCT Stafﬁ ng tools TECHNOLOGY rein in costs 00 a culture that supports the hospital and everyone using hospital services. Arkansas Children’s I Text staff and patients JOB SPOT 35 was ahead of a trend recently taking By Stephanie Bouchard, Managing Editor IJOB Nurse SPOT burnout linked to HAIs 00 hold in the healthcare industry: valu- UST OVER A decade ago, ing customer service. TRENDSI Text 36 members of Arkansas Chil- “We didn’t adopt Disney,” said dren’s Hospital’s manage- David Berry, senior vice president I Capital ﬁ nds post-acute venues J ment decided to go to Disney and chief operating officer at the PHOTO BY KELLEY COOPER World. It wasn’t a fun-and-games trip, hospital. “What we have is not an Following in Disney’s footsteps, Arkansas Children’s Hospital designed its although fun was had. They went to DISNEY SEE PAGE 4 facilities to offer staff and visitors places for relaxing and fun.

www.HealthcareFinanceNews.com MedTech Media/Vol. 7 No. 7 ICD-10 interval Smart CFOs stay focused

By René Letourneau, Editor HEN THE CENTERS for Medi- care & Medicaid announced a one-year delay for ICD-10 COURTESY SHUTTERSTOCK W implementation in Febru- ary 2012 – pushing the date back to Oct. 1, 2014 – some industry groups cheered, others Anti-fraud efforts united jeered. What did CFOs do? The smart ones HHS announces unprecedented public-private partnership to fight fraud kept their focus and pushed forward with their implementation plans and schedules. By Chris Anderson, Senior Editor “This new partnership will allow those on the The trouble is there may not be enough WASHINGTON – In late July the U.S. Department front lines of industry anti-fraud efforts to share smart ones. of Health and Human Services announced an their insights more easily with investigators, “We’re seeing a lot of (CFOs) put their unprecedented partnership between the federal prosecutors, policymakers and other stakehold- head in the sand,” said Mike Koehler, a government, state ofﬁ cials, private health insurer ers,” said Attorney General Eric Holder at a July director in the risk practice of solutions organizations and a number of other anti-fraud 26 press announcement of the new partnership. ICD-10 SEE PAGE 34 groups focused on preventing healthcare fraud. FRAUD SEE PAGE 31 The effort, which is still in its formative stages, SolutionS SerieS furthers the administration’s emphasis on snufﬁ ng out healthcare fraud in what it promises will be Special a coordinated effort that will share information and best practices. The focus will be on markets pull-out that are known hot spots for healthcare fraud in section order to detect and stop scams that cut across PAGE 17 both public and private payers. Despite the delay, ICD-10 looms on the horizon. Health organizations would be wise to recalibrate their compass, but more or less stay on course. SEEING THE DIFFERENCE IS ONE THING. UNDERSTANDING IT IS ANOTHER.

One pill makes sure you sleep. The other makes sure you don’t.

How do we know? We’re not doctors. But we are dedicated to understanding every inch of the healthcare business.

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QFRC11120000_SeeingDiff_4C_HealthcareFinance(9.625x12.875).indd 1 8/15/12 4:36 PM September 2012 Healthcare Finance News www.healthcarefinancenews.com Industry News 3 Public Policy | Capital | Financial Markets | Pricing Industry News online Massachusetts passes on the record By Chris Anderson, Senior Editor featured slideshow health cost control bill Medicare 20 must-follow The bill may save the state ICD-10 tweeters more than $200B caught in It can be difficult to navigate through By Martha Bebinger, Contributing Writer all the information Twitter puts out every BOSTON – The Massachusetts Legislature election second of every day – and there’s a lot passed the next phase of its ongoing attempt of it. With such big changes happening constantly in the healthcare world – to reform the healthcare system: sweeping cost crosshairs especially with the impending ICD-10 control legislation. Gov. Deval Patrick, a Demo- transition – it’s important to be able to crat, hailed the lawmakers’ work saying, “This ust when it seemed the find pertinent information in a timely is more than a good bill, a great bill.” presidential political debate fashion. To help you do that, we’ve The historic bill, which could become a surrounding healthcare would assembled a list of some of the best model for other states, aims to save $200 bil- simply be ICD-10 tweeters currently out there. J lion over the next 15 years by linking health- whether to repeal http://bit.ly/icd10-tweeters care cost increases to the growth of the state’s or preserve the economy. The bill passed the House by a vote Affordable Care of 132-20 and passed the Senate unanimously. Act, Mitt Romney (Patrick signed it into law in August). brought Paul Ryan Featured blog “This is a commonwealth that has shown into the mix as his the nation how to extend coverage to every- pick for VP. Ready for a one,” Patrick said, “and we’re going to crack From the Repub- the code now on cost control.” lican standpoint, this was supposed to substantive debate kaiser see page 8 Deval Patrick be an election – needed to be an elec- on Medicare? tion – about the economy and jobs, Paul Ryan, Mitt areas where President Obama is clearly Romney’s newly vulnerable. But a funny thing happened minted VP running on the way to the economy discussion: mate, is known for Mitt Romney decided to bring forward his controversial Ryan, the architect of a highly contro- views on Medicare. versial plan to revamp Medicare. David Williams “I think Gov. Romney chose Ryan discusses how the Paul Ryan despite his Medicare plan and not Medicare debate because of it,” said Robert Blendon, could become even more contentious as the election heats up. a professor of health policy and political analysis with the Harvard School of http://bit.ly/debate-medicare Public Health. “Since the major issue in the election is the economy, if you had a choice you wouldn’t want to spend all of most popular the time talking about Medicare.” If that is the case, it appears the 7 ways lean healthcare Romney campaign may have made a 1 management reduces cost major miscalculation. Less than a week COURT E SY SHUTT RSTOCK after the official announcement of Ryan State budgets in crisis: Eighty percent of all U.S. prescriptions are filled with generic drugs, according to industry experts. 2 The role of healthcare spending as Romney’s pick for the underside of AHRQ funding eliminated in House the ticket, a tracking poll conducted by subcommittee vote the Kaiser Family Foundation showed 3 Use of generic drugs saved 73 percent of respondents saying Medi- Goals of mHealth: care was “very important” or “extremely 4 Better relationships and ROI $1T over past decade important” in determining their votes. Solo practice physicians: The choice of Ryan seems to have 5 ‘I’m not dead!’ Off-brand alternatives “The remarkable findings demonstrated been one to solidify the Republican healthcarefinancenews.com/popular in this report are a testament not only to the base. An energized base has always been are a major boon generic industry’s tremendous accomplish- important in presidential elections, By René Letourneau, Editor ments over the past decade, but to the even but especially this year, as polls have WASHINGTON – The use of generic prescrip- greater achievements that are still to come,” shown the portion of undecided voters Connect with us tion drugs has risen to a current rate of $1 said Ralph G. Neas, president and CEO of is around 6 percent, or about half the billion every other day, saving the U.S. health- GPhA, in a statement. number who were undecided in 2008. Follow us on Twitter: twitter.com/hfnewstweet care system more than $1 trillion over the last According to the study, savings from gener- Ryan’s 2011 tough love budget proposal Join our LinkedIn Group: 10 years (2002-2011), according to a report ics in 2011 increased 22 percent over the won fans among all Republicans, espe- healthcarefinancenews.com/linkedin released Aug. 2 by the Generic Pharmaceuti- prior year. The report also found that in 2011, cially the far right and those affiliated Healthcare Finance News on Facebook: healthcarefinancenews.com/facebook cal Association (GPhA). nearly 80 percent of the 4 billion prescrip- with the tea party. His no-nonsense, no Visit healthcarefinancenews.com on an iPhone, The Generic Drug Savings study was conduct- tions written in the U.S. were dispensed using new taxes fiscal approach was sure to BlackBerry, Palm or Android and get news ed for GPhA by the IMS Institute for Healthcare generic medicines, while accounting for only headlines optimized for your mobile device. play well with this branch of the party, Informatics, a division of IMS Health. generics see page 6 anderson see page 6 4 Industry News www.healthcarefinancenews.com Healthcare Finance News September 2012

disney for children, an outdoor garden for patients Continued from page 1 and their families that features a secluded area Arkansas Children’s Hospital hyped up on Dis- just for employees – that supports its mission ney, but what we did (we) developed our culture of “giving care, love and hope.” based on those principles that Disney taught.” While Arkansas Children’s hasn’t done a Those principles are leadership excellence, formal return on investment analysis of the people management (selection, training and “considerable” amount it spent to get DI train- engagement), quality service, brand loyalty and ing, Berry said the training was “worth every creativity/innovation, said Pat Jordan, the cus- nickel,” considering the changes the hospital tom solutions manager for the Disney Institute, has seen since it began using the DI experience the business consulting arm of the Walt Dis- to shape its culture. ney Company. DI launched Building a Culture Some of the outcomes the hospital has seen of Healthcare Excellence, a program geared since beginning its customer service program toward helping healthcare companies align include improvements in patient and employee their culture around improving the patient, or satisfaction scores and being named as one of customer, experience, last year, but has had a Fortune magazine’s 100 Best Companies to long history of working with healthcare compa- Work For four times: in 2008, 2009, 2010 and nies, including Siemens Healthcare, Humana 2011. and Florida Hospital for Children. “It would be very difficult to tie what we P HOTO BY K E LL Y COO PE R Arkansas Children’s Hospital’s playground was designed to support its mission of “giving care, love and hope.” “No matter what your business, making cus- learned at the Disney Institute into anything tomers feel special or cared for will make all specific here,” Berry said. “But we know that the difference,” Jordan said. our staff understand care, love and hope. We Arkansas Children’s took that message to know that our staff understand the behavioral heart and began rolling out a customer ser- standards and the service standards, and we vice program that continues to this day. The know that people like to work here.” hospital has adopted service and behavioral Whether a healthcare company decides to standards that shape how employees treat pay for customer service training or not, they

COURT E SY O F DI S NE Y IN ST I TUT each other and patients. It also has incorpo- can’t ignore the importance of customer ser- Disney Institute facilitators use the theme parks to show how their customer service principles are applied. rated facility design – creating a playground vice, said Vaughn Kauffman, principal with H152halfpage:Layout 1 8/15/12 10:12 PM Page 1 the Health Industries Advisory at Pricewa- terhouseCoopers (PwC) – especially with the Affordable Care Act tying patient satisfaction to dollars. Healthcare Education Associates and In July, PwC released an analysis looking RISE Proudly Present Two Cutting-Edge at consumer expectations in relation to their Quality Improvement Events healthcare experiences. It examined data from its Customer Experience Radar, a national survey of 6,000 consumers across close to a dozen industries, including banking, hospital- ity, retail and healthcare. AAcchhiieevviinngg EExxcceelllleennccee “In many respects the consumer expectations in healthcare is tracking closely with in HEDIS Measures and other industries, particularly when it comes in HEDIS Measures and to transparency, convenience, speed of responsiveness – (these) are areas that other Quality Management industries have invested a lot of time and Quality Management money improving,” said Kauffman. “I think it’s an important lesson learned for healthcare && organizations whether they be the insurance companies, the providers or the big drug companies, to understand the customer wants and MMeeddiiccaarree needs, and applying those learnings to their product strategy and their service strategy.” While Kauffman believes that customer ser- RReeaaddmmiissssiioonnss && vice training is invaluable to healthcare companies, one of the simplest things companies can do to improve patient/customer experience TTrraannssiittiioonnss ooff CCaarree and build trust, he said, is to engage patients/ customers through tailored feedback forums To Register: Call 866-676-7689 or visit us at www.healthcare-conferences.com like social media, blogs and text messaging – tools that are not nearly as costly as engaging Mention HMP123 and save 10% off the standard rate a consultant for training or going to the Disney Institute, but result in big rewards. n GE Capital Healthcare Financial Services LIKE A BANK: WE MAKE HEALTHCARE LOANS UNLIKE A BANK: WE INCLUDE A GENEROUS DOSE OF HEALTHCARE EXPERTISE

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actively being promoted patent expiries,” he said. “This is a very big deal.” ations, pharmacy, at supply contracting firm generics by managed care plans. The lower cost associated with generics has Novation, says the savings achieved through Continued from page 3 “Eighty percent of U.S. benefits that extend beyond the individual the use of generics is a major boon with no 27 percent of the total drug spending. prescriptions are dis- patient, said Kleinrock, because it often makes clinical drawbacks. “The biggest thing driving the use of gener- pensed generically, and it financially possible for patients with chronic “The primary impact of generic drugs is the ics is the quality of the medicines that have 94 percent of the time illnesses to stay on their medication when they cost savings achieved through lower prices,” he lost patent protection,” said Michael Klein- when generics can be may not have been able to afford the brand name said. “There is little impact because the generic rock, research director at the IMS Institute for used, they are,” he said. version. The consistent use of maintenance drugs drug is clinically the same as the branded drug.” Healthcare Informatics. “When you have really The recent patent aids in improving a patient’s prognosis and drives Kleinrock agrees. good drugs that were used by millions of people, expiration of several down the use of healthcare services, he said. “There has been a long history of anxiety, I and then a generic comes to market, the system blockbuster brand name Michael Kleinrock “I can’t put too much emphasis on this point,” would call it, around whether generics are real- in the U.S. is very much to transfer the prescrip- drugs such as Lipitor and Plavix will push gener- said Kleinrock. “When a patient has a chronic ly safe and similar to brands,” he said. “Based tion from the brand to generic very quickly.” ic savings to new levels, according to Kleinrock. condition and doesn’t stay on their medicine, this on everything we’ve seen and can measure, Kleinrock notes that many consumers are “This year and next year are going to be the can really drive up costs in the whole system.” the vast majority of generics are absolutely as watching for generic options, which are also two biggest years ever in terms of savings from Mark Laffoon, senior director sourcing oper- scientifically identical as possible.”n anderson November 13-14, 2012 Continued from page 3 Hotel Sax Chicago nd which has long been tepid, at best, in 2 Annual Chicago, IL their support of Romney. He doesn’t just want their votes. He needs them. Further, if you anticipate the election will be about the budget and the economy, who better to have campaigning Where States and Plans Connect at your side than the Chairman of Paul Ryan the House Bud- More than 25 State Officials and Health Plan Executives Share Experiences and Results get Committee? Sounds like a good plan, right? Until you consider the senior vote. “By selecting congressman Ryan, there are a lot advantageous things not dealing with Medicare about him: young, leader of the conservative wing of the party, from the Midwest. But

Gregory A. Franklin Jon Kingsdale Jonathan Seib, JD, MPA Norman Thurston Lindsey Tucker Kevin Yang when you picked him, you get this one California Technology Commonwealth Health State of Washington State of Utah Department of Vermont Maryland Health issue and what’s difficult for Gov. Rom- Agency Insurance Connector (Governor’s Office) Health Access Benefit Exchange ney is this is a group that is already Authority leaning to vote Republican,” Blendon said. “This is his group and they are high Visit the website www.HIXcongress.com turnout voters. There are only a small Register using discount code XP1710HFN number of things that might affect this group, a percentage of them, to change H155halfpage:Layout 1 8/20/12 7:52 PM Page 1 their vote and those things are changing Social Security and Medicare.” It wouldn’t be unexpected, therefore, for Democrats to bring up the Ryan Healthcare Education Associates and the Bonus! Medicare plan as often as they can. Risk Adjustment Initiative & Society for Special risk adjustment While Romney spent much of the week Education Proudly Present after tapping Ryan trying to minimize workshop! the damage by saying it is not his plan for Medicare, he’s likely saddled with it for the rest of the election. And that’s bad news. According Health Insurance to polls from June 2011, after Ryan unveiled his premium subsidy, privatiza- tion plan for Medicare, a CNN poll found 58 percent of people opposed the idea The only conference Exchanges and, even worse, 74 percent of seniors in the industry that opposed it. focuses on actual Practical Implementation, Marketing and Risk Adjustment Strategies There is still time for Romney to turn implementation the tide around. But if Medicare even strategies Risk Adjustment Network Strategy shares time on the front burner with the economy as a top issue in the 2012 cam- Federally Facilitated Exchanges, State-Based Exchanges, Private Exchanges paign between now and election day, it could very likely cost him the election. November And that would be a cruel irony. After all, it was the strong negative 29-30, 2012 sentiment toward Obamacare that allowed Republicans to take over the The NEW Tropicana, EReinXsuranCce, RHisk AAdjustmNent &G Risk ECorriSdors house in the 2010 election – with the Las Vegas senior vote favoring Republicans by a whopping 21 percent margin. Medicaid Expansion Now Romney’s selection of Ryan To Register: Call 866-676-7689 or visit us at www.healthcare-conferences.com could give back a healthy portion of that Mention HMP123 and save 10% off the standard rate Demographics Product Development Operations senior advantage and could ultimately Pricing lead to his downfall in November. n ------$375,000,000 $86,000,000 $173,000,000 Senior Secured Credit Facilities Senior Secured Credit Facilities Senior Secured Credit Facilities Joint Lead Arranger and Joint Lead Arranger and Joint Lead Arranger Joint Bookrunner Syndication Agent Administrative Agent July 2012 May 2012 May 2012

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will have to cut their rate of cost growth about taxpayers Foundation, says he thinks the kaIser in half. so, instead of going up 6 to 8 percent healthcare industry will embrace the bill’s COnTinUed fROm page 3 per year, costs would only be allowed to rise 3.6 spending goals, even though they are what he house Majority Leader Ron Mariano calls the percent per year. considers aggressive. law a bold step, “and one that i think is going to be “no other state has tried to tie healthcare costs “But on the other hand the legislation does a challenge for everyone involved in the system.” to the state’s economy,” said Massachusetts Asso- not include triggers or punishments if the tar- (the) legislation is a follow up to the Massa- ciation of health Plans President Lora Pellegrini. gets aren’t met,” he said. chusetts health overhaul signed into law by then “this is going to be really revolutionary and very A new state board could require hospitals Gov. Mitt Romney in 2006. that law, like 2010’s important and i’m sure the nation’s watching.” that don’t meet the new goals to produce a federal health law, focuses mainly on insurance the Massachusetts hospital Association plan to do so, but there are not penalties for coverage. the new legislation is a recognition praised the bill. “we have great hopes and expec- failing to hit the goal. that coverage is just part of the equation; the tations that the bill will be successful and we are while some are relieved that the Legislature In august, Massachusetts Gov. Deval Patrick underlying healthcare costs that drive up insur- committed to working with the state to ensure is setting “soft targets,” others are not. signed into law a bill that aims to control the ance premiums must also be addressed. that success,” the association said in a statement. “Our biggest concern is whether there are state’s healthcare costs. under the new law, hospitals and doctors Michael widmer, with the Massachusetts enough teeth to keep overall costs under control,” said t he Rev. Burns stanfi eld, president of the Greater Boston interfaith Organiza- tion. he’s worried the state won’t enforce new healthcare spending goals, and he says the legislation doesn’t do enough to close the gap between brand name hospitals that can demand high prices and small community hospitals with little market clout. the bill does raise money for small community hospitals through a new surcharge on insurers. Mariano says this will help the community hospitals compete.

December 3-5, 2012 Affordability, Individual Responsibility, “No other state Chicago, Illinois Product Innovation, Technology. has tried to tie Change Is Happening. Are You Ready? healthcare costs to the state’s economy. As you focus on your plan’s operations, you understand This is going to be that change seems to be the only constant. From federal regulations on Exchanges to Medicaid, the 3Rs, and really revolutionary the Presidential election, determining what’s next is and very important challenging. Register for the Fall Forum to be ready with and I’m sure the actionable next steps. nation’s watching.”

Educational tracks: – Lora Pellegrini

n ConsuMER EngAgEMEnt stRAtEgIEs to DRIvE sustAInAblE ConsuMER bEHAvIoR CHAngE “if we’re serious about providing low-cost alternative care, and quality care, we have to n lEvERAgIng DAtA, InFoRMAtIon, AnAly tICs to stREAMlInE shore up our community hospitals,” he said. oPERAtIonAl AnD ADMInIstRAtIvE PRoCEssEs “the community hospitals that are struggling now are going to be our low-cost alternatives n nEw tECHnologIEs tRAnsFoRMIng HEAltH CARE in most of the major cities.” n AltERnAtIvE CARE DElIvERy AnD PAyMEnt MoDEls tHAt the surcharge, which will be passed onto consumers in the form of somewhat higher pre- PRoMotE vAluE, EFFICIEnCy, AnD QuAlIty oF CARE miums, will fund a prevention trust fund that public health advocates worked hard to include. n InnovAtIvE HEAltH InsuRAnCE PlAn stRAtEgIEs, it will also fund a program that will help small MoDEls AnD PRoDuCt oPPoRtunItIEs In A providers buy into electronic health records. Post-REFoRM EnvIRonMEnt Overall, legislative leaders are proud of the bill, says house lead negotiator steve walsh. n buIlDIng youR CoMPlIAnCE CAPAbIlItIEs “ultimately, it’s going to create an environment where patients will get better care for lower costs and we’re predicting it’s going to save upwards of $200 billion over the next 15 years,” walsh said. this likely won’t be the state’s last effort on healthcare cost reform, but is one that the nation is, again, watching. n

rEgistEr now. Early rEgistration This story is part of a reporting partnership that Ends octobEr 31, 2012 includes WBUR, NPR and Kaiser Health News and was reprinted from kaiserhealthnews.org visit www.ahip.org/conferences/FallForum2012 now. with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially www.ahip.org/ independent news service, is a program of the conferences/FallForum2012 Kaiser Family Foundation, a nonpartisan Content and Design AHIP—All Rights Reserved: © AHIP 2012 healthcare policy research organization unafﬁ liated with Kaiser Permanente. The Hartford’s Business Insurance

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71582_mm_hlth_care_hfn.indd 1 8/13/12 2:19 PM 10 Commentary www.healthcarefinancenews.com Healthcare Finance News September 2012 FDA ethics, effectiveness called into question s a full-time consumer and The internal scuffles between Smith and allegations raised a ‘substantial likelihood’ of part-time conspiracy theorist, his fellow scientists and their FDA bosses serious problems and required a full review. www.HealthcareFinanceNews.com I’ve often wondered how mean- are the stuff John Grisham novels are made That has triggered an investigation by Kath- ingful an FDA approval really of. The whistleblowers claim that a dozen leen Sebelius, the secretary of health and is. How much trust can I place devices were approved human services.” Ain their endorsement of the products I buy or pushed ahead in the Score one for the conspiracy theorist. and the foods I eat? approval process despite Even if when all is said and done, we learn 71 Pineland Drive, Suite 203 My suspicious nature went into overdrive in their safety concerns. that FDA management has been wrongfully New Gloucester, ME 04260 T (207) 688-6270 F (207) 688-6273 July when the FDA made headlines in a scan- The FDA accuses the accused, I will still find it difficult, as an dal that charged that the agency had used scientists of being moti- average consumer, to place my full confidence Jack Beaudoin, Managing Director electronic surveillance software to monitor vated by money. with the agency. [email protected] the computer activities of some of its own The dust is yet to set- I’ve heard with my own ears FDA Commis- Danielle Hartley, SVP, Publisher scientists. Agency officials claim the spyware tle on this complicated sioner Margaret Hamburg, MD, complain that [email protected] was used to verify that confidential informa- situation that promises René the agency is scrambling to keep pace with EDITORIAL tion was not being improperly transmitted via to be messy and ugly for letourneau the demands of the job and that we all could Richard Pizzi, Editorial Director the computers. The scientists charge it was quite some time. Smith pay the price. [email protected] a retaliatory tactic against them for blowing and several others have been fired. The FDA’s Speaking at a NEHI conference in Boston in René Letourneau, Editor the whistle on the FDA for what they saw as image has been tarnished in the court of pub- April, Hamburg said, “One of the things that [email protected] improper review processes. lic opinion. Accusations are flying. Lawsuits has been such a struggle is that the agency has Chris Anderson, Senior Editor [email protected] At particular issue were imaging devices are pending. been unbelievably stretched for resources… Stephanie Bouchard, Managing Editor for detecting breast and colon cancers, which And, while we don’t know who is on the The same people that are doing the reviews [email protected] Robert Smith, MD, FDA scientist, believed did side of right or wrong, the situation does draw are developing the guidances and going out Kelsey Brimmer, Associate Editor not function as the manufacturers claimed attention to the inherent conflict of interest into the communities. They are being asked to [email protected] and presented potential harm to patients, that exists here. If, as Smith and his colleagues do too many things at once. They burn out; we Genevieve Beaudoin, Editorial Assistant and resulted in a substantial waste of money charge, the FDA is reluctant to fully review all have rapid turnover. It’s a terrible downward [email protected] for the government programs and insurance the documentation and push for more informa- spiral that will serve no one.” ADVERTISING/LEAD GEN/MARKETING companies footing much of the bill. tion when necessary because it doesn’t want This may not be fodder for a conspiracy SOUTHEAST Smith’s concerns reportedly fell on deaf to ruffle the feathers of the device and phar- theorist, but it is not much of a confidence Cathleen Martindale [email protected] ears. According to an article by Eric Lich- maceutical companies from which it derives booster either. T (727) 376-2900 tblau and Scott Shane published in The revenue, it calls into question the reliability Over the upcoming months (years?), I will NORTHEAST New York Times on July 30, “When Dr. of the approval process. watch with interest as the FDA drama contin- Vincent Biunno Smith and other medical reviewers began Credence is given to this concern by Lich- ues to unfold. I’ll do my best to keep an open [email protected] demanding that manufacturers provide them tblau and Shane’s article, which states: “The mind and take the finger pointing with a grain T (201) 666-2118 NEW ENGLAND with more clinical data about the safety of Office ofS pecial Counsel, which investigates of salt. But, I know that I will also feel a twinge Regina Dexter their products, FDA managers deemed the whistle-blower grievances, found in a con- of doubt the next time I see a product bragging [email protected] requests excessive.” fidential review this spring that Dr. Smith’s on its label about its FDA approval. n T (603) 204-0709 MID-ATLANTIC Mike Coon [email protected] T (814) 449-5409 Optimizing the contract management process MIDWEST Steven Loerch parties is more effective [email protected] any think of the contract management group as T (847) 498-4520 and efficient, reducing WEST playing an administrative role within any organiza- wasted time and redun- Gordon Hunt tion. However, a structured and efficient contract dant work. As a result, [email protected] approval times, payment T (949) 366-3192 cycle times and negotiat- RECRUITMENT/SHOWCASE management process can serve as the backbone to EAST/SOUTHEAST ing cycle times can all be M Allison Pilitsis other processes such as business development and financial manage- significantly reduced. [email protected] ment. An effective contract management process is now essential Increased revenue: T (207) 688-6270 x219 WEST/MIDWEST Monica With a successful process to building an organization’s corporate strategy and ultimate vision. in place and cycle times Maryrose Whittaker Rodriguez [email protected] Organizations that have a successful process in place have a clear reduced, more time can T (207) 688-6270 x245 now be focused on negotiating better contracts PRODUCTION/TRAFFIC competitive advantage over others that do not. and identifying opportunities. In addition, with Karen Diekmann, Production Manager a seamless contract management process, all [email protected] The Issues The Opportunities functional groups involved in the process are AUDIENCE DEVELOPMENT Sixty to 80 percent of transactions within an An organization must take a step back and more aware of the necessary tasks due to bet- Dan Dinsmore, VP, Audience, Media & Production organization are governed by contracts, and fully analyze its current situation and deter- ter communication. For example, accounts [email protected] these contracts inform and drive an organiza- mine where it wants to be. An organization receivable can be notified when to invoice Elizabeth Clancy tion’s daily business and must list out the dimensions that are most all services rendered and collect penalties Audience Development Manager have a large impact on important such as risk management, compli- and charges where applicable, and on a more [email protected] their bottom line. Man- ance, continuous improvement and strategy in timely basis. READER SERVICES aging contracts manually, order to define the gap between current and Reduced revenue leakage: In an inefficient CUSTOMER SERVICE and in an ad hoc manner, optimal stages. and manual environment, typically, 15 per- T (800) 869-6882 Option#5 results in higher risks Once the organization has an idea of its cur- cent of rebate submissions processed have F (866) 658-6156 [email protected] and costs. rent situation in comparison to its ideal situ- some degree of error associated with them. REPRINTS: The YGS Group Many organizations ation, steps can be taken to realize benefits. For example, when dealing with a mid-sized T (800) 290-5460 x100 wish to move from an pharmaceutical company whose rebates equal [email protected] ad hoc stage to a more The Benefits $344 million, there is a potential exposure of LIST RENTALS: Information Reﬁ nery Laszlo T (800) 529-9020 x25, mature stage of con- Fabriczi When an organization implements a continu- $51.6 million that could be in error. If even 10 tract management but ously improved and successful contract man- percent of this exposure is realized and goes dfoster@inforeﬁ nery.com

may not realize the current challenges and agement process, the changes will impact the undetected, this would result in $5.16 million 2011 JESSE NEAL inefficiencies that must be overcome to suc- effectiveness and competitiveness of the orga- of annual revenue leakage. AWARD WINNER cessfully implement a continuously-improved nization as a whole. Results will be seen from Reduced costs: With a process in place, contract management process. Disconnected such benefits as: organizations can reduce costs in several procedures and time-consuming processes can Streamlined processes: With one stream- ways. An appropriate contract manage- result in poor visibility, compliance risks and lined process that involves the several func- ment process includes the use of a single missed opportunities for analytics. tional groups, communication between all process see page 11 September 2012 Healthcare Finance News www.healthcarefinancenews.com Commentary 11

Tapping into real estate 2012 Newsmaker and facility management Marie Freire, PhD President The Foundation for the National Institutes of Health enhances profitability Bethesda, Md. Q: What will be your first priority in your ealthcare organizations that have maximized new role as president of the Foundation for the National Institutes of Health? A: One of my first priorities will be to enhance the value of revenue cycle management can find additional interaction between the Foundation for the National Institutes of Health (FNIH) and the ways to reduce costs and enhance efficiencies by looking at National Institutes of Health. Enriching this H relationship will increase our effectiveness one of the biggest items on the balance sheet: real estate. Efficiencies and impact. I am also looking forward to working closely with the FNIH staff and Board of Directors; they are a remarkable and dedicated group of people that will help FNIH build in facility operations can improve profitability and enhance patient upon its programmatic initiatives and many successes. care, the core mission of the provider. Q: What is the biggest healthcare challenge currently facing the nation? A: There are many healthcare challenges. As a society, we must ensure that we have the Real estate and facilities offer tremendous oppor- to the hospital. Further, if the building is owned by human, financial and technical resources necessary to prevent and treat disease and tunity for untapped cost savings that drive bottom- the hospital and occupied by independent physicians, disability. Critical to facing our healthcare challenges is the need for a public that is line profitability. In many cases, the cost savings are there’s an opportunity to monetize it, adding to cash educated about the importance of understanding the basic biology of disease so that we can treat the root cause of the problem, not simply its symptoms. recurring, compared to one-time reductions to the reserves. annual run rate. Q: How can the nation best improve the quality of healthcare while simulta- Because hospitals operate with Track and document neously controlling costs? an average three percent bottom- all operational costs A: By supporting and promoting broad innovation. By this I mean innovation in basic, line profit margin, real estate In many hospital operations, capital expenditures translational and clinical research, in novel information and communications infrastructure, strategies that reduce costs by often are evaluated in program terms, such as a new in training and, of course, in financing mechanisms, among others. For example, FNIH has a ground-breaking phase II breast cancer trial, I-SPY2, which uses specific genetic signatures, $10 million annually provide the facility or major addition, and individually instead of known as biomarkers, in tumors of patients. These biomarkers help identify individuals equivalent of $330 million in addi- collectively. Also critical, especially when evaluated who are most likely to benefit from testing of a new breast cancer drug. I-SPY2 can also tional revenue. Moreover, these over time, are expenses generated by a new facility’s test multiple new drugs in significantly less time and with fewer trial participants than financial gains can accrue with- day-to-day operations. traditional clinical trials, which dramatically lowers development costs. Another example out being detrimental to patient Senior decision makers often forego capital expendi- of innovative strategies that will improve quality and care is the NIH Medical Research service or employee morale, Sydney tures that would pay for themselves within a few years Scholars Program supported by FNIH. The year-long, highly competitive research fellowship which are frequent side effects Scarborough by lowering current operational expenses – particularly trains medical, dental and veterinary students to transform their own clinical observations of staff reductions. when facility managers can’t provide accurate data on into research hypotheses which will drive improvement in patient care. Cost savings can result from a range of facility strate- current costs and payback periods. Operational costs Interviewed by René Letourneau, Editor. gies, from energy management to optimization of space may not stand out individually as line items, but they utilization to technology-enabled solutions that improve can add up to millions of dollars annually. efficiency. A sophisticated, integrated approach that It likely would prove beneficial for hospitals to estab- includes project management, capital solutions and lish reliable metrics and reporting systems in areas such identify the gaps with the greatest tracking and documenting operational costs is the best as energy and water, maintenance labor and equipment process opportunity. As a result, an orga- tack to take. repair and replacement. Facility-related expenses such Continued from page 10 nization can establish priorities, as cleaning, food preparation and waste disposal can repository, therefore reducing and implement a process improve- Think beyond the hospital “box” also present opportunities for cost reduction whether material/service costs. A more ment program to realize and sus- Healthcare executives who focus cost reduction strat- performed by internal staff or vendors. efficient process reduces maintain substantial benefits. Once the egies on flagship hospital facilities should expand tenance costs, which in turn can new enhanced platform is estab- that scope to include their entire portfolio. The best Consider leasing when possible reduce administrative costs. lished, a continuous improvement prospects for savings might exist outside of the main Hospital executives may find it financially beneficial Compliance: Contract manage- program can be implemented hospital facility. to take a hard look at their owned portfolio for oppor- ment processes provide a sys- along with sophisticated analyti- Hospital executives can look for savings opportunities tunities to monetize properties that could be leased tematic approach for improving cal tools to result in differentiat- at all owned and leased property: ambulatory care units, without impacting quality of care and improving contract compliance, including ing company performance. n physician and medical clinics and administrative offices. regulatory compliance matters. In properties they compliance with both internal Every square foot of owned or leased space contributes own – like multi-tenant office buildings – healthcare and regulatory guidelines. Laszlo Fabriczi is vice president to occupancy costs, and every site holds potential oppor- systems can avoid excess operating expenses and Taking a structured approach of contracting and pricing tunities to save money. capital costs. to reviewing the organization- solutions at Alliance Life Hospitals that have adopted an effective lease-ori- wide contact management pro- Services. Monica Rodriguez is a Match the space cost ented space strategy have reduced their overall occu- cess against best practices can consultant with the firm. to the value it provides pancy costs by eliminating the initial investment cost Aligning the function performed in a given space with and future capital costs that are the responsibility of its return on investment is prudent for healthcare orga- the landlord. Ultimately, this creates more flexibility in nizations. As healthcare systems merge, expand or oth- future occupancy. Comparisons can be made between the Corrections erwise reconfigure, high-priced space is too often filled cost of capital – including the total cost of capital (debt Healthcare Finance News is published by MedTech Publishing Company, LLC, with low-return functions. For example, administrative + equity) – and the effective rental rate. which is solely responsible for its editorial content. Editors are expected to departments may be housed in expensive quarters in the For new space initiatives, executives should con- meet the highest professional standards for accuracy, objectivity, fairness core hospital. Such office space can usually be secured sider leasing a build-to-suit facility from a third-party and independence. Errors of fact are corrected as soon as the error is estab- outside of the main facility at a lower cost per square developer. An organization can acquire needed space lished and corrections are published in the medium in which the error appeared. foot, freeing higher value hospital space for better mis- with minimum capital outlay and also mitigate the Inquiries or disputes about the factual accuracy of the record should be sion-related purposes. financial risk of design underestimates and con- directed to the editor. With the potential for increased demand for inpatient struction overruns. The recent sluggish economy has space from healthcare reform and the aging population, increased availability and competition among qualified letters hospital facilities will be required for revenue-generating developers willing to build-to-suit and retain owner- Healthcare Finance News welcomes letters on articles and issues of services, not cost centers like back-office services, IT, ship responsibility, freeing the healthcare provider of interest to the industry. Please limit your letters to 250 words and include administration and others. the responsibility. n your name, job title and organization, if applicable, as well as your home- Another area of evaluation is the use of medical town and state. The editorial staff reserves the right to edit letters for office buildings. The right mix of physicians in the Sydney Scarborough is a managing director at financial right locations can drive revenues through referrals and professional services firm Jones Lang LaSalle. clarity and brevity. MedeAnalytics-HCFN-PAIad-0812.indd 1 8/9/12 4:02 PM September 2012 Healthcare Finance News www.healthcarefinancenews.com Hospitals and IDNs 13 Revenue Cycle | Patient Accounts | Real Estate | IT | Business Management hospitals & idns Briefs Going green = lower costs Safety-nets National campaign approximately 500 hospitals with must change business more than $20 billion in purchas- According to a study released by The Com- urges healthcare ing power, worked with Health monwealth Fund and published in the Care Without Harm (HCWH), August issue of Health Affairs, safety-net facilities to improve the Center for Health Design and hospitals that currently rely on politically- Practice Greenhealth to create negotiated funding will face significant sustainability HHI as a guide for hospitals to financial reversals if they fail to change By Kelsey Brimmer, Associate Editor improve sustainability. their business practices before the Afford- WASHINGTON – During a White Among those at the forum were able Care Act (ACA), deficit reduction pro- House Council on Environmen- representatives from nationwide grams and a weak economy force cutbacks tal Quality (CEQ) conversation healthcare group purchasing in subsidies. The study shows that some in July, leaders in healthcare organizations (GPOs). They dis- safety-net hospitals survived – and possibly and policy discussed the Health- cussed the critical role of the even thrived – before the recent recession ier Hospitals Initiative (HHI) to healthcare supply chain in intro- of 2008-2009. Researchers found that reduce the environmental foot- ducing these environmentally- those hospitals directly governed by elected print of hospitals, lower costs and sustainable designs. officials and in highly-competitive markets improve overall patient health by “It’s true that the supply chain were more profitable than other safety-net way of including sustainability is an important part of green- hospitals because they obtained subsidies efforts and initiatives into their ing the healthcare system,” said from state and local governments. business models. Healthcare Supply Chain Asso- HHI is a national campaign to ciation (HSCA) President Curtis Texas hospital saves implement a new approach to Rooney. “What people choose to $50,000 in revenue improving environmental health buy matters and if you can get due to optimized billing and sustainability in the health- green products you can really S ystem C ourtesy of Gunderson L utheran H ealth This past spring, Memorial Medical Center care sector. Eleven of the largest move the market.” Gundersen Lutheran Health System in LaCrosse, Wis., was one of the reaped a $50,000 revenue increase in just U.S. health systems, comprising green see page 15 first health systems to sign up for all six of HHI’s challenges. three months by optimizing the organization’s billing processes. Memorial Medical Center ED in Port Lavaca, Texas, contracted T-System to use their RevCycle+ consulting services to conduct a thorough review of Urban and safety-net documentation from physicians to evaluate DSH the quality of their documentation. Once the organization’s coding process was analyzed hospitals will face difficult and physicians and coders were properly cuts trained, the ED saw a $50,000 increase in revenue between February and May 2012. reimbursement challenges Mayo Clinic, Executive Vice President and Chief rattle Dartmouth-Hitchcock announce collaboration Financial OfficerRick Langfelder urban The Mayo Clinic and Dartmouth-Hitchcock (D-H) in New Hampshire announced a for- at Lutheran Medical Center, a mal collaboration with the goal of improving 462-bed hospital located in Brooklyn, hospital health and healthcare quality at both institutions while lowering overall costs. Under the N.Y., spoke recently with Healthcare new agreement, D-H will become a member Finance News Associate Editor Kelsey execs of the Mayo Clinic Care Network. In addition to their collaboration, Mayo and D-H are dis- Brimmer regarding the most pressing Safety-nets still hope for cussing a number of future joint projects. financial issues that many hospitals quality improvements Safety-nets and non-safety- nets provide quality care located in urban areas of the U.S. have By Kelsey Brimmer, Associate Editor A recent Yale study of the care quality been facing over the last few years and hile most health- received at safety-net hospitals in metropoli- care organizations tan areas of the U.S. found that the quality what is to come for them. Rick Langfelder are anxious to see what at these facilities is nearly the same com- W changes to the system pared to non-safety-net hospitals in the same healthcare reform will bring, executives areas. Even though safety-net hospitals have Q: What would you say are some Services] is going to decrease Medicaid and at urban and safety-net hospitals are most historically faced greater financial strains, of the top financial challenges Medicare Disproportionate Share Hospital concerned about the looming Medicare their performances related to outcomes for for your hospital, as well as other (DSH) payments, which is a huge problem for and Medicaid Disproportionate Share acute myocardial infarction, heart failure and hospitals in urban areas? us. Medicaid DSH payments were originally Hospital (DSH) payment cuts and the pneumonia were effectively identical to non- A: We rely on Medicaid and Medicare for intended to serve those hospitals that serve challenges these cuts will bring. safety-net hospitals in the same urban metro 80 percent of our payments – 50 percent is a large number of medically indigent. We are “While DSH cuts aren’t exclusively areas, according to the study, which was pub- Medicaid and 30 percent is Medicare. The a safety-net institute that serves a vulnerable affecting urban hospitals, they are lished in the August issue of Health Affairs. biggest problem that’s looming is the fact medically-indigent population. We can’t cost much more targeted at them because that [the Centers for Medicare & Medicaid Q&A see page 16 urban see page 14 14 Hospitals and IDNs www.healthcarefinancenews.com Healthcare Finance News September 2012

relied on for a while.” urban According to Kugler, Continued from page 13 Medicare DSH payments urban hospitals tend to treat more Medicare will decrease by 25 per- and Medicaid patients than other hospitals,” cent by fiscal year 2014, said Ellen Kugler, executive director of the while Medicaid DSH National Association of Urban Hospitals. payments will decrease “There will be even fewer resources to provide by $14.1 billion between care to hopefully more insured people under 2014 and 2020. healthcare reform, so hospitals will have to John Bluford, presi- do it more efficiently and effectively and in dent and CEO of Truman Ellen Kugler a more integrated way. However, the concern Medical Centers in Kansas City, Mo., agrees comes that particularly in 2014 these same that DSH cuts will have a significant impact Truman Medical Center Lakewood, located in Kansas City, Mo., is bracing itself to face significant hospitals will have to do it with significantly on many of his urban safety-net institutions, DSH payment cuts in the next few years. fewer resources – the same resources they’ve but also sites Medicaid expansion uncertainty as a major concern. “Depending on which state, there’s a lot of uncertainty on what your fate may be,” he said. Legal Notice Kugler added that she’s worried the formu- las written in the Affordable Care Act (ACA) will not work any longer for the states that fail to expand their Medicaid programs. “In light of the Supreme Court decision, I am even If You Purchased Municipal Derivative Transactions more concerned about the DSH cuts because in the states where the Medicaid expansion from January 1, 1992 to August 18, 2011 won’t happen, clearly the benefits of the ACA won’t materialize. In the You Could Get a Payment for a Class Action Settlement. states where there will be expansions, there’s A proposed Settlement has been reached with Wachovia • Exclude yourself from the Settlement. If you do still likely going to be Bank, now called Wells Fargo, defendants in a class not want to remain in the Settlement Class, you must additional losses to some action lawsuit that alleges price-fixing in the sale of exclude yourself. You must send a written request of the safety-net funds.” municipal derivatives transactions by Wells Fargo and for exclusion by first-class mail, postmarked no Caroline Steinberg, other companies. The case, In re Municipal Derivatives later than October 19, 2012 to the Settlement vice president of trends Antitrust Litigation, MDL No. 1950, No. 08-02516, Administrator. If you exclude yourself, you cannot John Bluford and analysis at the is pending in the United States District Court for the participate in the Settlement, but you retain your right American Hospital Association, has other finan- Southern District of New York. to sue Wells Fargo on your own for the claims in this cial concerns regarding urban hospitals as well, lawsuit. including technology and workforce solutions. Who Is Included in the Settlement? “Hospitals of course are always facing the • Object or Comment on the Settlement. If you This Settlement includes all state, local and municipal high costs of keeping pace with technology. remain in the Settlement Class and want to object to government entities, independent government agencies There’s always a struggle to attract and retain or comment on the Wells Fargo Settlement or any part and private entities that purchased: employees. We expect over the long term for of it, you must file an objection with the Court and (1) Municipal derivative transactions through there to be a significant shortage of caregivers, deliver a copy to Class Counsel and Wells Fargo no negotiation, competitive bidding or auction, which will drive up wages,” she said. “We also later than October 9, 2012. directly from any Alleged Provider Defendant or see that hospitals are spending more money to Co-Conspirator or brokered by any Alleged Broker comply with quality reporting, and there is a lot When Will the Court Decide of auditing of proper payments. Hospitals are Defendant or Co-Conspirator, Whether to Approve the Settlement? (2) Any time from January 1, 1992 through August 18, spending a lot of money for recovery audit con- The Court has scheduled a hearing on December 14, 2011 in the United States and its territories or for tractors and responding to their initiatives.” 2012, at 2:00 p.m. at the United States District Court delivery in the United States and its territories. Steinberg added that for the Southern District of New York, United States despite so many finan- The Defendants and Co-Conspirators are listed in the Courthouse, 500 Pearl Street, New York, NY 10007, cial uncertainties for detailed notice available on the Settlement website. to consider whether to finally approve the Wells Fargo urban hospitals, there Settlement as fair, reasonable and adequate, whether to are a number of great What Does the Settlement Provide? approve Class Counsel’s request for reimbursement of opportunities coming Wells Fargo will pay $37 million as follows: $20 litigation expenses, and to consider any objections. up for them as well. million has already been paid into an escrow account “There’s going to be a and the remaining $17 million will be paid later. This The Court has appointed the law firms of Hausfeld LLP; continued growth in the Settlement is only a partial settlement of the lawsuit Boies, Schiller & Flexner LLP; and Susman Godfrey number of seniors and a because it only affects the claims against Wells Fargo. L.L.P. to serve as Class Counsel and represent all Class need for programs that Caroline Steinberg The lawsuit is continuing against other Defendants. Members. If you want to be represented by your own attract seniors and meet their needs. Those Morgan Stanley has already settled. Wells Fargo will lawyer, you may hire one at your own expense. You or hospitals that develop the right programs will cooperate with the Class Representatives in the litigation your lawyer may ask to appear and speak at the hearing be able to attract that population. I guess while that will continue against the other Defendants. but are not required to. If you want to be heard by the there are a lot of expenses with it there’s also Court, you must file a written notice of your intention a lot of opportunity to improve care,” she What Do I Do Now? to appear with the Court and deliver a copy to the Class said. “There’s also a lot of opportunity in • Remain in the Settlement. To remain in the Counsel and Wells Fargo no later than October 9, quality improvements and those can be help- Settlement Class and participate in the Settlement, 2012. The Court may change the time and date of the ful for driving down costs when it comes to you do not have to do anything now. If the Court hearing. Any change will be posted on the Settlement value-based purchasing. There’s opportunity approves the Settlement, you give up the right to sue website. to improve qualities and improve payments at Wells Fargo for the claims in this lawsuit and you are the same time.” eligible to receive a payment. Claim forms are not Get More Information Bluford believes there are many opportuni- available now. Register on the Settlement website to For more information on this lawsuit, your rights, or to ties as well. “There are great opportunities for receive a claim form when it becomes available. If obtain a list of defendants, call or visit the Settlement urban hospitals. We have a step up on popula- you remain in the Settlement Class, you still have the website listed below or write to Municipal Derivatives tion management. We have an advantage and right to exclude yourself from any other Settlements Settlement, c/o Rust Consulting, Inc., PO Box 2500, experience in being community-centric and reached in this lawsuit. Faribault, MN 55021-9500. oftentimes we have historical relationships with public health departments,” he said. “So all of that bodes well with regards to our abil- For more information: 1-877-310-0512 www.MunicipalDerivativesSettlement.com ity to outreach and make a difference in the health of our communities.” n September 2012 Healthcare Finance News www.healthcarefinancenews.com Hospitals and IDNs 15

pitals operate,” she said. “Hospitals goals,” said Messervy. green are frequently the largest water user “These challenges can not only “These challenges can not only Continued from page 13 and a high user of energy in general.” save a hospital money but also Rooney noted that last year John Messervy, director of capi- save a hospital money but also improve the facility and move the HSCA endorsed the Practice tal and facility planning at Partners improve the facility and move community forward,” said Gunder- Greenhealth “Standardized Envi- HealthCare in Massachusetts and sen Lutheran Health System CEO ronmental Questions for Medical the chair of the HHI steering com- the community forward.” Jeff Thompson. The health system Products,” which has been used to mittee who also was at the White – Jeff Thompson was the first to sign up for all six guide the identification, selection House discussion, said there are a of HHI’s challenges. “This is not and procurement of environmen- number of cost-free ways for hospi- waste, safer chemicals and smarter ronmental footprint of healthcare only good for the community, but tally preferable medical products. tals to get involved with the HHI. purchasing. HHI is asking hospitals and do it in a way that it improves you can really save money. Our $2 The tool is a significant part of According to Messervy, HHI has that want to be a part of this to sign the safety of patients and employees, million investment saves us $1 mil- Practice Greenhealth’s “Green- identified six challenge areas for up for at least one of the challenge improves environmental attributes lion a year. That’s financially very ing the Supply Chain Initiative,” hospitals: engaging leadership, areas free of charge. and saves money at the same time. sound and it’s a great example for which the organization launched healthier foods, leaner energy, less “We are trying to reduce the envi- They are not mutually-exclusive the community.” n in 2011 to provide a common set of tools for purchasers, suppliers and manufacturers to ensure that environmentally-preferable products are available, cost competitive and of comparable quality.

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“We are trying to reduce the environmental footprint of healthcare and do it in a way that it improves the COST safety of patients and employees, improves SAVINGS environmental attributes and saves money at AND VALUE, BY DESIGN. the same time.” Healthcare as we know it has changed. Maximizing efﬁ ciency and improving – John Messervy quality, while balancing cost savings with value, is more important than ever. We are ARAMARK Healthcare Technologies. As North America’s largest independent “It’s primarily important to make provider of biomedical and diagnostic imaging equipment services, we offer an sure the patient gets the right and safest product, but this initiative unbiased, evidence-based approach to healthcare technology management. can also save money by aggregating the purchasing. It creates the abil- We understand that your equipment maintenance needs are complex. With our ity for the prices to be driven down proprietary technology management system, we aggregate standardized performance so that these environmentally-pre- data in real time, powering our evidence-based clinical equipment maintenance and ferred products can be affordable,” Rooney said. management services to drive smarter, better informed decisions. And our stability, Terri Scannel, director of cor- scale and infrastructure allow us to create customized service delivery plans and porate citizenship and sustain- coverage options for providers across the healthcare continuum. ability for Veterans Health Admin- istration, who attended the White WE ARE ARAMARK HEALTHCARE TECHNOLOGIES. WE LIVE TECHNOLOGYLIFE.™ House discussion in July, believes it’s vitally important for hospitals to get involved with initiatives like the HHI. “On the basis that hospitals aramarkhealthcaretechnologies.com • 1.800.825.1786 represent the largest sector of the economy, we have a great opportunity to influence our impact on the environment through the way hos- 16 Hospitals and IDNs www.healthcarefinancenews.com Healthcare Finance News September 2012 Large hospitals consume a lot of energy q&a Continued from page 13 Despite conservation vey (CBECS). from 4.3 percent in 2003. 24 hours a day, have thousands of shift because we have a low com- The CBECS shows that the “We didn’t see any surprises in employees, patients and visitors, mercial payer mix. Medicaid DSH efforts, they still have major fuels – electricity, natu- the data released, which is good and they use sophisticated energy- payments also take into account the big operation needs ral gas, fuel oil and district heat and bad,” said Alan Swenson, ener- intensive activities and machinery. number of uninsured – this allowed – consumed by large hospitals gy analyst at the EIA. “Bad that no Many hospitals are actively try- safety nets to survive. By Kelsey Brimmer, Associate Editor (greater than 200,000 square major changes were found in energy ing to reduce energy consumption, I think the ACA does a lot of good WASHINGTON – Large hospitals are feet) totaled 458 trillion British use but good in that we believe it EIA noted in its report on the sur- things, like making sure a lot of peo- big consumers of energy. Just how thermal units (Btu) – 5.5 percent shows our data is accurate.” vey. Most of these energy-intensive ple have insurance and companies much is the subject of new results of the total delivered energy by the Swenson pointed out that hos- buildings had energy management can’t have annual limits. However, from the U.S. Energy Information commercial sector in 2007. Total pitals consume large amounts of and conservation plans in place, the DSH cuts are projected to be Administration’s (EIA) Commercial delivered energy to the 3,040 large energy because of how they are and used technology and products dramatic and that will put safety Emdeon HITN-HFN July August 2012 Ad_Layout 1 6/26/12 11:04 AM Page 1 Buildings Energy Consumption Sur- hospitals in the U.S. in 2007 is up run and operated – they are open to save energy. n nets in jeopardy.

Q: Any possible solutions to this reimbursement problem that you can think of? A: For our hospital, I think this is the one biggest issue. For other issues, sometimes changes can be made to fix the problem, but we are who we are and we can’t change our payer mix. We have a lot of low-income folks that need access to care. We tend to be a very pro- 1. active community hospital and we can’t change who comes to us. This is why reducing DSH payments is so problematic to us. One thing poli- ticians should realize is that they could reduce expenses by targeting 2. DSH dollars to true safety nets.

Q: If Medicaid and Medicare reimbursement cuts are your biggest issue, what are some other financial problems 3. you’ve been facing? Manage Electronic Claims & Payments A: I think the next one down is the whole push here to take risks, and create programs where patients must have better outcomes and fewer readmissions. The idea is great but doing that is very dif- CAN YOU ficult. We have special programs Help Eliminate Fraud, Waste & Abuse for health issues, such as diabetes NAME and asthma. The programs rely on patients following a diet and ONE MORE? strict medication schedules, and it’s more difficult for a family with You probably know us as the company who does, little support or income to do these well, the first thing that’s written up there. But, what sorts of things when they’re just struggling to make ends meet. It’s about the second? We’re even much more than much more difficult for safety nets that. We’ve added so many new services lately that to take this risk and have savings you probably don’t know all the ways we can from many patients when there may be homelessness or substance help you. We provide more than a hundred solutions abuse. It becomes difficult for us to to simplify the revenue and payment cycle and change their behavior or lifestyles the exchange of health information, saving companies even though we are working on it. However, because it’s something we like yours loads of time and money. can work on, we are doing that. It’s How well do you know Emdeon? Here’s a little a difficult hill for us to climb up. challenge: add one more to the list. Q: What are some areas of opportunities for urban and safety-net hospitals? GET TO KNOW EMDEON BETTER AT: A: One opportunity is that hopefully through the awareness of primary care and increased access to healthcare, more patients come to their doctor or nurse – instead of the ED when it’s often too late or much more expensive to treat. There are opportunities for us to see patients sooner and preventively, rather than later on when they are often very ill. Increased access is a good thing for the neighborhood and for the hospitals. n or call us now at 888.394.0931 emdeon.com/savemore ICD-10 supplement for Healthcare IT News and Healthcare Finance News n September 2012

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www.healthcarefinancenews.com/ICD-10 Solutions Series

Despite the delay, ICD-10 looms on the horizon. Health organizations would be wise to recalibrate their compass, but more or less stay on course. ICD-10 means big data But how ready are we to “None of the healthcare glean knowledge from executives gave their thousands of granular codes? organization an A [in By Mike Miliard accountable care, value-based pur- s has been widely chasing – “really depend on more handling the data deluge]. noted – and even accurate data,” said Sue Bowman, poked fun at – ICD- director, coding policy and compli- 10 offers no short- ance at American Health Information This contrasts markedly age of specificity. Management Association (AHIMA). Indeed, its “We’re not going to get anywhere with with other industries.” codesA cover all the bases in detail- those things if we don’t improve the ing injuries derived from mishaps with output data that we’re using, which – Neil de Crescenzo, senior vice vehicles (dune buggies, spacecrafts, is where ICD-10 comes in.” president and general manager, land yachts), painful encounters with But at this moment in time – more misused sporting equipment (field than two years out from the ICD- Oracle Health Sciences. hockey sticks, tennis racquets, golf 10 deadline – health organizations clubs) and unfortunate run-ins with are having a hard time dealing with And while 87 percent reported So with the (big) caveat that the ness intelligence (BI) and analytics members of the animal kingdom (liz- all the information they’re gathering deploying software to help them majority of health organizations are tools in place to do the trend-spotting ards, sea lions, macaws). currently. leverage all that information to make still a way off from being ICD-10 that will make the arduous ICD-10 There’s even a code to denote Big data may be a big buzzword, better strategic decisions, many fewer compliant, and that many are finding switchover worthwhile? Will the IT be “bizarre personal appearance.” but it’s also creating big headaches reported being satisfied so far with it a tough row to hoe – fewer than robust enough? Will the personnel be Those 68,000 codes make for a for many providers. A July report their “data deluge” preparedness: 40 62 percent said they’ll “definitely” be in place? How long after 2014 can lot of very discrete data points to sponsored by Oracle, “From Overload percent of health organizations gave ready by Oct. 1, 2014, according to we expect some of those initiatives sift through. Ultimately, of course, to Impact: An Industry Scorecard on themselves a D or an F. one recent survey – how confident to bear fruit? How much of a learning that should be a good thing. More Big Data Business Challenges,” found “None of the healthcare executives can we be that mining the huge troves curve will there be? granular data means more targeted that fully 100 percent of health orga- gave their organization an A,” said Neil of hyper-specific data made possible “I think it depends,” Bowman said. insight to improve care quality and nizations are collecting and manag- de Crescenzo, senior vice president by ICD-10 will lead to better, smarter “There’s a small group of forward- spur efficiency. ing more business information today and general manager, Oracle Health care anytime soon? thinking healthcare institutions out All the big, transformative initia- than two years ago – an 85 percent Sciences. “This contrasts markedly Once the new codes are opera- there that are already looking at some tives in healthcare – meaningful use, increase, on average. with other industries.” tional, will providers have the busi- big data see page 7 This is how we help strengthen and grow your physician network.

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To find out how to grow your physician network with athenahealth, visit www.athenahealth.com/HITN. Or call 888.402.6945. september 2012 www.healthcareitnews.com/ICD-10 ICD-10 s3 progress check: Where CMS, VA stand with ICD-10 Agencies insist they are on track to be ready for “We spent the the new codes come compliance day. Here’s a majority of our time look at what each has accomplished thus far. early on developing By Mary Mosquera requirements for rivaTe healThCare OrGaniZaTiOns are software changes not the only groups laboring on converting and working with to iCd-10. Federal agencies including the the Information and P Centers for Medicare and Medicaid services Technology offi ce (CMs) and the department of veterans affairs (va) to make upgrades also have to meet the mandate. and changes.” – marCia iNsley, va’s The va has been working to update the medi- walks and risk adjustment methods for convert- cal codes without disrupting day-to-day opera- ing clinical quality measure specifi cations that direCtor of HealtH tions and, what’s more, is using the transition use iCd-9 codes to iCd-10, randolph said. iNformatioN goverNaNCe to reach out and streamline communications Clinical quality measures are used in CMs across its veterans benefits administration, quality reporting and pay-for-performance pro- to outside vendors for help. an analysis found will help the rest of the staff as we move forward.” veterans health administration and national grams for health settings including hospitals, that more than 31 signifi cant medical software regardless of the delay and the fi nal dead- Cemetery association departments, said Marcia physician offi ces and nursing homes. applications required changes, ranging from line, both agencies insist they are aiming to insley, director of health information governance Test plans, test cases and test data have minor to major revisions. meet the 2013 timeframe. “For us it will not at the va. CMs, for its part, has completed been constructed for end-to-end testing of Transition teams had to spend time updating make a lot of difference,” insley said. “we about 45 percent of its internal implementation claims data. encounter forms – the records or documents learned some lessons going through the pro- activities, according to Carlene randolph, CMs “draft measure specifi cations for incorpo- that collect data on patient visits to doctors’ cess, but we’re well prepared to move for- iCd-10 project management lead. rating iCd-10 are under review and are at 60 offi ces or other clinical sites that become part ward.” randolph added that CMs, in 2013, percent completion,” she said. of a patient’s record. plans to verify iCd-10 codes and conduct intra- iNside Cms additionally, iterative testing to analyze and “we spent the majority of our time early and inter-system testing as it advances to fi nal like other health organizations, CMs has refi ne general equivalent mappings are 90 per- on developing requirements for software implementation in October 2013. n worked to stay on track with established mile- cent completed in some measure sets. changes and working with the information stones and timelines for the gargantuan task, at the same time, CMs is defi ning measures and Technology offi ce to make upgrades and which it believes will improve health data and, and updating data dictionaries under both code changes,” insley said. in turn, patient care. systems, with 50 percent completion for some The offi ce of va’s information and Technology Status “CMs is resolved to minimize any adverse measure sets, randolph added. has been offering technical fi xes to hasten the effects on the industry caused by a delayed Other agency activities include converting transition. in late april, for instance, it awarded implementation and to improve the public con- system editing that use iCd-9 codes so that the harris healthcare Corp., of Melbourne, Fla., fi dence in the overall transition,” randolph said. same edits can be applied to incoming services a $2 million contract to develop a search tool update: The leap to iCd-10 is which use iCd-10 codes. CMs is making sure designed to locate the most appropriate iCd-10 an iterative process in that all Medicare fee-for-service claims have a codes in encounter forms, which include large order for the agency to valid diagnosis coded so when the changes amounts of data such as demographics, patient tackle all the technical become effective, the system will recognize that reminders and diagnostic data. PQrS changes. This approach a valid iCd-10 code is on the claim. “we are creating a search capability in the includes defining end- encounter forms that allows them to more The Physician Quality Reporting to-end testing of system at tHe va quickly and more accurately fi nd the right diag- Systems (PQRS), a voluntary changes; decision-mak- The va took the mandate seriously and set nosis for the procedure code,” said don Mestas, reporting program in which phy- ing focused on solutions; out to create ways to get workers organized to vice president of federal healthcare solutions for and then further testing update iCd codes. harris Corp. “That will save time and costs and sicians receive incentives for those results with the Carlene randolph “we’ve been at this for a while. it’s going well, reduce errors as well. The iCd-10 standard is successfully reporting on claims- incremental method. but it’s a signifi cant undertaking,” insley said. 155,000 codes versus 24,000 codes. so there based quality measures, modifi ed CMs has found that this tactical approach “we knew it was coming, so a lot of thought is concern about the additional time to get it its design modules to support allows for the chance to collaborate, obtain went into this process.” right. and that’s why the capabilities we are feedback about the developed solution and The veterans health administration, collabo- offering can make a difference.” ICD-9 and ICD-10 dual-coding. then repeat the modify-test-discover cycle, rating with the va’s Offi ce of information and such a search tool can also help the va as That means, as of June, PQRS has: she added. Technology, has been designing programs that well as partnering healthcare facilities to more iCd-10 transition activities have involved its can facilitate changing the thousands of codes easily send and receive iCd-10 codes, thereby n Expanded all ICD-10 columns to core businesses for Medicare Fee for service, needed to fulfi ll the mandate, focusing on both improving workfl ow. support the increased code Medicare advantage and the states’ Medicaid programs and technology updates. n Created quality reference data operations, and their contractors and iT orga- “we established an offi ce of program manage- keep moviNg forward nizations. The activities include associated ment within the veterans health administration insley said the transition is moving at an orderly architecture ICD-10 test data systems for quality measures, risk adjustment, for iCd-10 about two years ago along with our rate with training procedures in place to ensure n Verifi ed changes to all electronic Medicare and Medicaid program integrity, counterparts in the Offi ce of information and all staff members can work in an iCd-10 envi- health record (EHR) rules patient assessment, as well as research and Technology, who would work it from an iT per- ronment. demonstration. spective,” insley explained. “we’re now training the medical records staff n Modifi ed existing quality data For example, agency quality measures staff The va developed much of the software it – the health information management team,” she reporting architecture EHR test cases have developed transition work plans, cross- uses in-house, insley added, so it cannot look added. “several have completed their training and S4 icd-10 www.healthcarefinancenews.com/ICD-10 september 2012 Attracting, onboarding and keeping coders in a talent dearth Jim Gibson, principal at Gibson Consultants, It takes more than an executive recruitment firm in the healthcare Coding skills must be kept current in “an industry. “It’s a big process getting a healthcare money to hire, train and organization functioning in an ICD-10 environ- industry that changes quickly, and education ment. Take it seriously, get started, get a plan is key for the coder to continue to provide the retain ICD-10 coders. in place and consider it a top priority. It’s not best value for the physician. … Once the codes a single departmental effort. It challenges the These other factors entire organization so management has to are learned, coders must find ways to work embrace it.” continuously with the new codes so that the matter, too. What can make a difference and convince a coder to throw his lot in with a physician practice education is not lost.” By Government Health IT staff or a hospital is offering flexibility to make life – Rhonda Buckholtz, vice president of ICD- edical coders provide easier and more fulfilling for a prospective hire. 10 training and education with AAPC highly skilled and essen- “A key attraction is flexibility, the ability to tial services, and, as such, work at home, or anything that lets the work- is don’t wait until the last minute to prepare for Beyond attracting and onboarding, employ- are in great demand by er balance the work requirements with the the increased workload, new hires and new ers need to keep their coders happy enough to healthcare providers. And requirements of home life,” Gibson added. workflows that ICD-10 will bring. Start planning stick around. AHIMA’s DeVault suggested begin- Mwith the looming ICD-10 requirements on the “While in the past workers pretty much had now to have a system – and the necessary per- ning with the realization that medical coders play horizon, providers need to think harder than ever to be on-site at the hospital or at the doctor’s sonnel – in place when the time comes. an important part in provider success, and plan of ways to not only attract talent, but also help office, new technologies now make it easy to “This is a big change, and there are a lot from there. new employees become productive quickly and, work remotely.” of naysayers about it. But once they get the “High-quality coders can impact the finan- ultimately, retain those highly-trained people at Benefits and lifestyle considerations take hang of it, they’ll say, ‘It’s not so bad,’” DeVault cial health of their organization,” DeVault said. least long enough to make the investment finan- an equally important role, said Kathy DeVault, explained. “In coding, we already do changes “But I don’t think they are as highly respected cially worthwhile. director of professional practice resources at when we get updates to ICD-9. The big change for their skills as they could be, or paid at the is moving to ICD-10 PCS. It’s better and makes appropriate level.” more sense.” And be positive, so staff will get behind the “High-quality coders can impact the What’s more, coders are also well aware process, DeVault added. “Keep moving forward financial health of their organization. that the industry is rapidly changing, so pro- and show staff they can achieve a successful viding continuing education to help them keep implementation of ICD-10.” But I don’t think they are as highly abreast is also an important recruiting, and No easy task, of course, with changing dead- respected for their skills as they could be, retention, tool. lines, the imminent ICD-10 expertise shortage, Indeed, coding skills must be kept current “in and an industry questioning the code sets value. or paid at the appropriate level.” an industry that changes quickly, and educa- The result: Many organizations are reluctant to – Kathy DeVault, AHIMA director of tion is key for the coder to continue to provide even begin the transition, let alone start hiring professional practice resources the best value for the physician,” said Rhonda ICD-10 professionals. Buckholtz, vice president of ICD-10 training “Surveys indicate that most healthcare orga- and education with the American Academy of nizations are behind schedule with respect to That’s exactly where workforce, telecommut- American Health Information Management Professional Coders (AAPC). ICD-10, even with the delay,” Gibson said. ing and coding trends are intersecting. Association (AHIMA). That includes “the intan- “Start with anatomy and pathophysiol- “There will be organizations that drag their feet. Put simply: The imminent dirge of ICD-10 gible benefits along with salary. If you’re hir- ogy courses that are geared toward ICD-10,” It’s a foolish bet.” coders means that hiring and keeping coders ing, make sure you provide health insurance, Buckholtz said. “This is a great way for coders Essentially, coders want to know that their will be about more than money, said several a 401(k).” to begin to understand the complexities found employer will provide a good place to work, with experts in the field, although a competitive sal- Once the hire is made, at the very least, within the new coding systems, and will make a decent wage, and support a healthy lifestyle. ary always helps. healthcare payers and providers should be learning and retaining the code set training more “Money always helps,” Gibson said, “but non- “There is a shortage of people who are pro- talking about organizational guidelines so new effective. Once the codes are learned, coders monetary issues and the advantages of flexible, ficient at this, so it will be hard to find these coders can hit the ground running. That’s a tall must find ways to work continuously with the open-minded employers outweigh a few more newbies and then get them up to speed,” said order, and the message from healthcare experts new codes so that the education is not lost.” dollars.” n ICD-10 considerations for small and mid-size physician practices How much will ICD-10 actually cost medium practice, and $2.7 million In light of such a formidable finan- other vendors who can provide the per large practice. cial obstacle, Tennant said physician functionality within their software to physician practices to implement? And does Robert Tennant, senior policy practices should keep their check- handle the new codes,” Tennant advisor at the Medical Group books closed. “Especially for the suggested. that cost make the ACO model attractive? Management Association (MGMA), smaller practices, I would say don’t Juliet Santos, senior director By Frank Irving two administrative staff; a medium described those figures as “conser- spend any money right now.” of HIMSS’ Business-Centered n what has now become practice comprises 10 providers, vative,” noting that “the numbers Instead, practices should stay Systems and Medical Banking something of a de facto one full-time coder and six admin- would be much higher in today’s abreast of regulatory developments Project, agreed that small practices consensus on the matter, istrative staff; and a large practice economy.” – particularly the compliance date have been resistant to diving in on Nachimson Advisors esti- boasts 100 providers assisted by “That’s an enormous cost,” he – so that they can prepare an imple- the ICD-10 transition. mated in a 2008 report the 10 full-time coders and 54 medical added. “And no one is going to pay mentation plan. “Really, any update for the small Icost impacts of ICD-10. records staff. for it but the physicians themselves. And that means asking your ven- provider group – whether it’s getting The firm divided practices into The results: Researchers calculat- Small practices frankly don’t have dors where they stand on ICD-10 new equipment or implementing three categories: small, being those ed the total cost impact as $83,290 the infrastructure or the resources upgrades. “If the answer is, ‘We new software – is a major concern,” comprised of three physicians and per small practice, $285,195 per for this type of migration.” don’t know,’ it’s time to look at icd-10 see page 5 september 2012 www.healthcareitnews.com/ICD-10 icd-10 S5 icd-10 Continued from page 4 6 questions Santos said. “Their margins are to ask IT pretty narrow these days.” Nonetheless, Santos pointed out that making the ICD-10 vendors about ICD-10 conversion would eventually be Physician practices should discuss ICD- 1. Will/when will you be upgrading your soft- 5. Will you be providing staff training? If so, beneficial because the practice 10 issues with their practice management ware to accommodate the new ICD-10 codes? when? would get paid more accurately 2. Will you be upgrading our version of the 6. Will the upgrades be covered under the software vendor – and do so in a letter so for the level of care provided. software? general maintenance agreement, or will we “ICD-9 has limited capability to they have documentation of the vendor’s 3. When will you be providing the upgrade? incur a separate cost? If so, what is that cost, capture the total patient picture,” responses. Here are half-a-dozen ques- 4. Will the upgrade require new hardware, such and is it based on a per-user or per-physician she explained. “With some proce- tions to start with: as a faster processor or more hard disk space? basis? n dures and diagnoses, the current payment doesn’t reflect the level of severity of the patient. ICD-10 gives them the ability to report completely or more accurately what the patient is experiencing.” ICD-10 can provide small and medium practices better business intelligence, Santos said, so that they can determine exact How To Score A Perfect 10.

“Especially for the smaller practices, I would say don’t spend any money right now.” – Robert Tennant, MGMA senior policy advisor revenues – and whether they may actually be losing money with certain services and procedures. Finally, Santos noted that the Introducing 10Smart,™ present may be a good time for small practices to consider join- SSI’s ICD-10 Solution ing an accountable care organization (ACO). Your enterprise’s financial performance is dependent upon a flawless conversion to ICD-10, “A hospital may be able to no matter when the actual deadline arrives. Featuring three proven product sets, our holistic shoulder the financial respon- solution will reduce the degree of difficulty and let you score big, knowing your systems sibility for a practice that joins are ready to perform when the pressure is on. an ACO. Right now, ICD-10 is SSI to the Power of 10. Learn more at going to be one of the deciding www.10SmartSolution.com or call 1.800.881.2739. factors in who can stand alone 10 Smart™ Solution and who might need to consider ™ Leverage SSI’s fully-integrated, workflow-driven, ICD-10-ready RCM solution. joining an ACO. If you are con- • ClaimSmart Suite ™ sidering joining an ACO later, ask • A/Rchitect yourself, ‘What are the reasons - Analytics Suite: Baseline operational performance for your entire revenue cycle. I can’t or shouldn’t join now?’” - ICD-10 Assessment Tool: Prioritize ICD-10 conversion efforts using historical data and latest mappings. - Claims Management: Optimize tracking and workflow, while preparing for increased ICD-10 complexity. Santos concluded. “Think about - Contract Administration: Model current and proposed ICD-10-based contracts and track payment accuracy. the potential of getting fully integrated and not having to take on • ClearView ICD-10 Test newly coded claims against ICD-10 edits to ensure compliance. those financial responsibilities on your own.” n © 2012 SSI. All rights reserved. A/Rchitect and its components are products of MedWorth, a wholly owned subsidiary of SSI. S6 icd-10 www.healthcarefinancenews.com/ICD-10 september 2012 How to keep training and testing on course with the shifting deadline The moving target of compliance day means health entities have to plan even more carefully to meet the mandate on time. By Kelsey Brimmer he ICD-10 implementation “Now may be the date still up in the air as of pub- time to learn all of this lication time – with a proposed background information. T deadline of Oct. 1, 2014 – has It’s a little too early for many healthcare organizations wondering learning the code sets – what the most efficient ways are to keep it would be like learning planning and training for these big changes a language and on an appropriate pace. not speaking it for a long time.” While it’s too early to begin train- may be the time to learn all of this ing coders for all of the new code background information. It’s a little too – Betty Johnson sets, many experts are saying it’s early for learning the code sets – it never too soon to begin preparing for would be like learning a language and implementation at your organization not speaking it for a long time.” by assessing current systems, intro- It’s recommended that training ducing some of the new guidelines to for ICD-10 codes begin three to six staff, and giving coders some of the months before the implementation in-depth education they may have not deadline, according to Johnson and received in the past. other timelines. “Coders should be concentrat- Dwan Thomas-Flowers, co-chair ing on upgrading current scales and of the Healthcare Information and medical terminology. There are some Management Systems Society coders that kind of stumbled into (HIMSS) ICD-10 Task Force, agreed the field maybe 20 years ago and that while it’s too early to begin teach- “There’s also additional time to look at advocates that organizations begin care entities use the extra time to because they were not necessarily ing codes, it’s important to “use the the financial impact of the implemen- preparations as soon as possible so focus on documentation, identify coders, they may not have had all additional time to teach and test.” tation. How is this going to impact “you aren’t waiting and worried about gaps in their systems and correct of the background information and “Testing for systems failures will customer service on the back end?” fitting all the training in,” said Lynne those to be ready for ICD-10. correct terminology that goes into help further highlight risks in advance Whereas many healthcare orga- Thomas Gordon, CEO at AHIMA. “I think one of the areas we can coding, “ said Betty Johnson, ICD- of the implementation date. The extra nizations may choose to hold off on “There are so many pieces from a play a leadership role in all of this is in 10 director for development and time will give healthcare organizations ICD-10 training for the time being, coding perspective and introducing clinical documentation,” Gordon said. training at the American Academy of the opportunity to create more robust the American Health Information all the new guidelines.” “Do we have all the information we Professional Coders (AAPC). “Now test plans,” Thomas-Flowers said. Management Association (AHIMA) Gordon recommended that health- need? Begin training the doctors on how to give better information. Don’t delay is our message.” Johnson added that with a pos- “The way things are being run sible extra year of time to prepare for ICD-10, it makes sense to begin now may not be the best way. assessing an organization’s internal processes soon. “The way things are being run now Instead of thinking, ‘Well, we’ve may not be the best way. Instead of thinking, ‘Well, we’ve always run it this always run it this way,’ think in way,’ think in terms of: ‘Why are we doing certain things this way?’ Adjust terms of: ‘Why are we doing the workflow, and make it better,” Gordon explained. “Assessing soft- certain things this way?’ Adjust ware and hardware and taking the time to do a good assessment and know what your needs are so you the workflow, and make it better.” don’t over buy or under buy is important. We can take advantage of the – Lynne Thomas Gordon, CEO of AHIMA time to make sure we aren’t spending money unnecessarily.” n september 2012 www.healthcareitnews.com/ICD-10 icd-10 S7 big Data Continued from page 1 “We anticipate that there will be a lot of of that, and how they can use ICD-10 data to their advantage, so they may be up to speed investment made around business intelligence. earlier rather than later.” The larger group however, is “really just bur- Many health systems that currently have one ied in trying to get the implementation done, and so they’re not necessarily looking at how or more BI tools are looking to expand that in the data is going to help them in the future,” she added. “They’re just desperately trying different areas. [ICD-10] might be an area that to get all the changes made in their systems and their reporting functions to actually imple- providers want to get more into.” ment ICD-10.” That’s when it comes to providers, at least. – Joe Van De Graaff, BI analyst at KLAS “Payers are ahead on this,” Bowman continued. “And I think we’ll see that payers are “able to take advantage of the new data that’s system, “They’re going to have to start looking as AHIMA’s annual ICD-10 summit, “a move- using the data to refine their payment meth- coming in.” at optimization: being able to leverage tools ment in presentations away from ‘Here’s the odologies and disease management programs Van De Graaff noted that more than half like business intelligence to improve the quality basics of what you have to do to implement,’ and risk profiling for their member populations of providers polled for a recent KLAS report of patient care – which obviously these codes and toward more presentations on how to use – much earlier than providers figure out how on a “tidal wave” of big data were looking to are meant to do.” analytics, how to move forward and look at they can benefit from the better data.” either invest in a new BI solution (33 percent) Whether these facilities have the staff to do your data trending.” Joe Van De Graaff and Graham Triggs are or replace an existing one (19 percent) in the that is another question. In a recent interview “I think there will be a bit of a learning curve KLAS analysts who specialize in BI/analytics next three years. with Healthcare IT News, HIMSS Analytics for most organizations,” Bowman said. “But and ICD-10, respectively. “We anticipate, based on what we’ve executive vice president John Hoyt noted I think within, oh, three or four years after ICD-10 “will certainly impact the delivery of heard from providers, that there will be a lot that health IT is “more competitive than any ICD-10 implementation we may see 70 to care for the better,” Triggs said, empowering of investment made around business intel- other market right now.” Organizations large 80 percent of organizations actively involved providers to “look at past history, for example, ligence. Many health systems that currently and small are “struggling to find the people” in that kind of [BI] initiative. And then maybe in a much more specific way, and hopefully have one or more BI tools are looking to necessary to meet the many mandates. eight years after implementation, the rest of enabling them to make much more intelligent expand that in different areas,” Van De Graaff One of the “near-term trends” Hoyt sees is the organizations will catch up.” and quick decisions.” said. ICD-10 “might be an area that providers the need not just for more staff to get up and The impetus is there. With the “movement That said, “The deadline is not for another want to get more into.” running on implementations such as ICD-10, toward ACOs and meaningful use and value- two years,” and the “vast majority” of provid- No question, “The ramifications of ICD-10 but then, beyond that, to “analyze [data] for based purchasing and payment reform, peo- ers say they’re still in the early stages of their are going to go beyond 2014 for the next sev- quality improvement.” As such, he said, the ple are going to be looking at some of that preparedness. “Quite frankly,” Triggs added, eral years,” Triggs added. For that to happen, need for positions related to “clinical transfor- predictive modeling and analytics,” Bowman “it’s going to be interesting to see how pre- analytics will have to be brought to bear on all mation and informatics” might be on the rise. explained, “and ICD-10 is going to be seen pared they are when that deadline hits” – and this newly-detailed data. Once providers have The good news is that AHIMA’s Bowman as just a great resource for providing the then how rapidly providers are going to be gotten up and running with the new coding said she’s started to see, at conferences such improved data to do that.” n

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© 3M 2012. All rights reserved. 3M is a trademark of 3M Company. 25 HIMSS Business Insider n September 2012 www.himss.org Business Insider Designing the Healthcare Financial Network of the Future n volume 3 n number 9 New EFT/ERA interim rules win over critics he U.S. Department of Health Every time you automate, you improve very problem Tennant noted about the Battle of the Platforms and Human Services rolled out the efficiency.” difficulty of reconciling payments with By John Casillas, Senior Vice President, T its first set of operating rules But there were many in the industry remittance advice. InstaMed has been HIMSS Business Centered Systems last year designed to help the health- who felt the first set of rules, finalized doing this for some time, he noted, and ith new operating rules for payments and remit- care industry increase the use of elec- just a couple of weeks before the newest it has proven itself to be valuable to tances now being adopted by the federal govern- tronic means for passing payments set were proposed, didn’t do enough to both payers and providers alike. W ment, some of the smoke has cleared around the and remittance advice and clear the waters. But the new- “We are happy that the rest of pathway for processing some $2.5 trillion in payments in the in early August rolled out est interim rules have won the market will have this as standard US healthcare marketplace alone. “Efficiency platforms” are another set of interim rules over some who were critics. and adopt it,” Marvin continued. emerging for transaction processing that that should build on that Bill Marvin, president “Furthermore, let’s remember why we fuel reimbursement data – the lifeblood foundation. and CEO of healthcare pay- did this in the first place: we are reduc- for the healthcare provider – into real Robert Tennant, senior ment network InstaMed was ing costs for healthcare providers and time business intelligence programs. policy advisor at the Medical pleased the interim rules healthcare payers. If we are going to New bank-clearinghouse partnerships Group Management included changes to the infor- reduce the costs, we need to have the could revolutionize payment processing Association noted that under mation that is required to be focus. And this delivers that focus. and in the process, push us forward to current methods, it can often Bill Marvin sent along with the payments. With the interim rules now open a new ecosystem of players. This “battle be very hard for providers to “I’m very pleased with for comment, Marvin and others have of the platforms” will redefine financial match payments with claims, a vital step the new rules,” Marvin said. “Prior to now turned their attention to other networks in healthcare, increasing what is John Casillas that is key to improving administrative this there was still some ambiguity and issues that may affect or slow adoption expected from banks and financial institutions. What are the key efficiency. options that were laid out. Where we of the greater use of EFT and ERA in areas to look at now and how will this help healthcare providers? “You get sent a paper check. Three are now is we have a clear focus and the industry, notably security issues. First, healthcare providers can expect payment automation weeks later you get the remittance clear guidance and it is what is needed But writing industry-specific rules may to shorten revenue cycle. Look at the comprehensive ROI advice. You’ve got to match them up, to have focus.” not be necessary, Marvin said. “This an when reviewing medical banking services. Do you gain opera- figure out if you got paid the right In particular, Marvin pointed to the area where HHS doesn’t need to re-write tional advantage by expediting reconciliation, posting or denial amount, do the reconciliation and go rule that now would require trace num- anything, they just need to reference other management automation? What is your new strategy to move to the bank,” Tennant noted. “A lot of bers be included in electronic trans- regulations that are in place that deal with electronic data into a productive work process? Reviewing new those things you’ll be able to automate. missions, as they would help solve the payments and banks accounts.” n platforms or brokering a meeting with the provider’s banking and clearinghouse partners will help in finding productive ways to utilize increased electronic remittance data. Q&A with Priscilla Holland, Senior Director of Healthcare, NACHA Second, banks that have held back to fuel a new innovation platform in healthcare can now “unleash”. Now is the time to act. So much is now on your side – from meaningful use Improving the EFT/ERA process guidance that speeds electronic healthcare records adoption to operating rules, to the growing need for point of service payment In March of this year NACHA was named along with CAQH CORE to write in healthcare. It is vital to understand the impact of HIPAA new rules to help govern and guide the healthcare industry in adopting and HITECH on payment processing for healthcare. HIMSS, electronic methods for the use of electronic funds transfers (EFT) and EHNAC, WEDI and NACHA-The Electronic Payments Association co-published a guide that is available in the HIMSS electronic remittance advice (ERA) to help improve administration Medical Banking Project website that will shed light on this efficiency. On August 10, HHS published these interim rules. Priscilla issue. For banks that are managing healthcare payments and Holland, senior director of Healthcare & Industry Verticals was intimately remittance information, understanding this is vital as inappro- involved in the rule writing process and recently took time to detail what priate use of the data could lead to fines and/or imprisonment. Third, a new focal point in healthcare will center around Priscilla Holland she sees as the important new rules that were recommended. improving the consumer payment experience – the topic of our next HIMSS G7 assembly. Those in healthcare and banking Q: Given the very tight time provider approximately two hours to association rule addresses one of who miss this point will miss the boat entirely. With so much frame to develop these rules enroll in each of the health plans for the biggest barriers out there from a inefficiency in healthcare there are a number of battle lines…yet what did NACHA and CAQH the insurance that they accept. What provider perspective in terms of how this one will be primary. This is where all the investment in medi- CORE determine were the key we were looking at was how to reduce do they tie a payment to the remit- cal banking convergence and tools for online banking, mobile areas to focus on in order to the time it takes for a provider to enroll tance advice, or the payer informa- banking, kiosks and other systems will meet. It comes at a time make sure they were addressed in EFT and ERA. tion, as easily as possible. And how when healthcare needs it most – to streamline the point of service by the August 1 deadline? do they ensure the provider gets the transaction process and to contextualize the experience within Holland: NACHA and CAQH Q: And that resulted in information they need to tie those a “health-wealth” portal that can markedly improve consumer CORE had done some interviews of the standardization of the two together? So the EFT and ERA mind share. To learn more, make sure to come to the Summit the industry prior to the development enrollment form? re-association rule state that the for Healthcare Information and Financial Technology at the of the operating rules, and prior to our A: Correct. Both for EFT and ERA health plans must tell their providers HIMSS Annual Conference in New Orleans in March 2013. n submitting our request to be authors, we identified a maximum set of infor- to contact their financial institution and identified some key areas that mation that can be contained on an to request this information. It also For more information on HIMSS Business-Centered initiatives, please were barriers to providers’ acceptance enrollment form. So if I’m a provider requires the provider to contact the contact John Casillas, senior vice president, Business-Centered of EFT and ERA. So the rules we pro- and I know that on every form I am financial institution to request this Systems, at [email protected], or Juliet Santos, senior director, posed and worked with the industry going to need a specific set of infor- specific information. The rule also Business-Centered Systems, at [email protected]. to develop were specifically targeted at mation, once I gather this informa- identifies three key pieces of data a some of those barriers. tion once, it is just a matter of filling provider needs from their financial out the forms. institution to do the association of Business-centered STAFF Senior Vice President Q: So what kind of barriers the payment to the electronic remit- John Casillas were you able to address? Q: What other areas did you tance advice that will make it easier Senior Director Holland: The enrollment barrier address that you felt needed for providers to connect a payment Juliet A. Santos, MSN, CCRN, FNP-BC for both EFT and ERA was a huge immediate attention? they have received with the specific PUBLICATIONS STAFF senior Manager, Publications challenge. HHS states that it takes a Holland: The EFT and ERA re- service they billed for. n Nancy Vitucci 26 Community Care www.healthcarefinancenews.com Healthcare Finance News September 2012 Physician Practices | Clinics | Long-Term Care | Home Care community care

Briefs Long-term care providers Copay offset card effectiveness study launched get ready to Go Direct Alliances Life Sciences Consulting Group, a either direct deposit or a debit card program management and technology consultancy, The industry gears up for the has launched a study that will examine the established for the purpose to receive their payments electronically beginning next year. effectiveness of copay offset cards and transition to direct deposit assess the attitudes and experiences of The federal government estimates that the By Stephanie Bouchard, Managing Editor patients, pharmacists, physicians and pay- conversion to electronic payments will save ers. Interviews and online surveys will take n the U.S. Department of Trea- taxpayers $1 billion over 10 years. place through October with a final report sury’s Go Direct campaign website Nursing homes and other long-term care expected in November. Visit www.alscg.com/ is a countdown clock. It isn’t count- facilities that frequently handle the federal ing down to the end of the Mayan benefits payments of their residents are gear- company/events/copay for more information. O calendar. And although some older adults may ing up for the transition and the Treasury Leading Age Washington view the clock as ticking down to the end of the Department is working with the long-term care merges with world as they know it, the Treasury Department industry to make things as smooth as possible. Washington association and leaders of the long-term care industry say “(We’re) making a huge effort to get our LeadingAge Washington and Washing- the deadline it’s counting down to will begin a skilled nursing facilities ready and to help ton Adult Day Services Association have new era of increased efficiency and cost savings. the beneficiaries,” said Elise Smith, JD, senior merged effective Aug. 1, 2012. The merger The countdown clock marks the amount vice president, finance policy and legal affairs, was described in a press release issued of time left between now and March 1, 2013, American Health Care Association, a member ARTM E NT by the organizations as strengthening and when everyone receiving federal benefits, such group representing long-term care providers. deepening member networking and part- as Social Security or Veterans Administration “There are pitfalls. I’m not going to kid you. nership opportunities, enhancing business payments, will get their payments via direct This thing has been to some extent more com- opportunities and strengthening the posi- deposit rather than by paper check. plicated than we thought, but we’re not losing New federal benefits enrollees since May 1, a minute,” she said. “Not a minute, and neither tion of the merged organization at the state D EP COURT E SY OF TR ASURY government level. LeadingAge, formerly 2011 have already been enrolled in electronic is Treasury.” The Treasury Department’s countdown clock Aging Services of Washington, is a state payments, but older enrollees who haven’t The complications are mostly in the opera- on the Go Direct campaign website marks how association representing 159 nonprofit and already opted in to electronic payment – the tional steps facilities will have to do, said much time is left for beneficiaries of federal benefits mission-driven organizations dedicated to paper check hold outs – will have to chose deposit see page 27 payments to switch to direct deposit. supporting older and disabled adults. Wash- ington Adult Day Services Association is a coalition of adult day centers in Washington. Oncology medical home Global payment pilot yields savings model of care developed The Community Oncology Alliance, a non- Analysis of the Mass. pared to a reasonably constructed control tion of the care industry into something more profit dedicated to community cancer care, group,” said Bruce Landon, MD, an author of sustainable. announced that the Oncology Medical Home project also shows changes the study. “In the years prior to the AQC, the growth Steering Committee has approved a list of 16 in doctor behavior These results indicate spending shifts in of healthcare spending had consistently quality, value and outcome measures to eval- the areas of price and quantity, he said. “More exceeded general inflation,” explained Song. uate and reward quality, cost efficiency and By Kate Spies, Contributing Writer importantly, we’re seeing this in the context So though the AQC model requires upfront outcomes in the oncology medical home care BOSTON – In 2009, Blue Cross Blue Shield of of maintained or improved quality. All the costs in order to be palatable to physicians it’s model. This initial list adheres to National Massachusetts (BCBS) launched the Alterna- quality metrics that we’re looking at in the generating viable movement forward. Comprehensive Cancer Network guidelines. tive Quality Contract (AQC), a global payment contract are either as good or better than they Participating physicians have recognized reimbursement pilot program that were beforehand.” this as well, though this movement doesn’t NCQA offers case rewards participating physician The savings are perhaps more come without some apprehension. management accreditation groups for controlling spending weighty as symptoms of what’s to “It is stressful,” said Thomas Lee, MD, who The National Committee for Quality Assur- and improving quality of care. come than they are for their fis- is the network president for Partners Health- ance is now offering a case management A Commonwealth Fund-spon- cal value, said Zirui Song, PhD, a care System. “It does require a re-orientation accreditation program. The new program is sored analysis of the first two years student at Harvard Medical School from trying to do an excellent job with the designed for case management programs in of the five-year pilot has found that and fellow at the National Bureau patient in front of you, trying to ‘produce’ vis- provider, payer and community-based orga- such programs may be effective at of Economic Research in Cam- its and operations and test in an excellent and nizations and focuses on how organizations controlling healthcare spending bridge, Mass., who was the lead efficient way, from managing care over time deliver case management services, empha- and improving quality. author of the study. and managing a population.” sizes care coordination, patient-centeredness Over the course of its first two Richard Parker “Perhaps the most meaning- Partners Healthcare System enrolled in and quality of care, assesses quality during years, the global payment pilot has achieved ful result from the study is behavior change the AQC on January 1 of this year. Its first- patient transitions between care settings and an average savings of 2.8 percent – 1.9 percent by physicians in response to the contract’s year savings are expected to hover close to can be used to align case management goals in the first year and 3.3 percent in the second, incentives,” he said. That finding is two-fold, $80 million. Lee predicts these savings will and approaches across a variety of organiza- found the project evaluators. he said. He and his study colleagues found be generated by the reduction of unit costs, tions. When NCQA announced the new pro- The Commonwealth Fund is supporting AQC participants reduced their increase in which a global budget demands. gram, the organization noted that health plans a multiyear study of the model. Evaluators total spending by their patients and improved At Lee’s organization, acquisition of the or accountable care organizations currently are contrasting the spending and savings of their quality of care for chronic diseases, adult AQC has demanded teamwork and trust. accredited by NCQA and patient-centered AQC groups and nonparticipant organizations preventive care and pediatric care relative to “We’re having a lot of evening meetings, a lot medical homes that are NCQA-recognized throughout the state. Eleven physician groups providers not in the AQC. of 7 a.m. meetings,” he said, “but in the long are automatically eligible for credit when they comprising 1,600 primary care physicians and Landon and Song agree that the AQC is an run we know that this is the right thing to do.” work with organizations that achieve NCQA 3,200 specialists are participating. appropriate step towards necessary change Global payment is not perfect and it has case management accreditation. “We do see that there are cost savings com- because it shifts the fee-for-service founda- payment see page 27 September 2012 Healthcare Finance News www.healthcarefinancenews.com Community Care 27 deposit to stay, and we might as well learn “It’s helped guide the healthcare that turning around the delivery Continued from page 26 payment to work with them.” delivery system here in Massa- system is more like turning an air- Dianne De La Mare, AHCA’s vice Continued from page 26 Indeed, the AQC heralds the chusetts towards improved incen- craft carrier than it is like turning president of legal affairs. generated some trepidation, said beginning of Massachusetts’ path tives for containing spending and a speedboat.” To smooth the transition, AHCA Richard Parker, MD, medical direc- to complete payment reform, said improving quality,” said Song. “But The act of this turning, though, is and the Treasury Department are tor of the Beth Israel Deaconess Song. As the study indicates, sav- literally much remains to be seen in powerful in itself. “There’s a broad teaming up to offer AHCA members Physician Organization (BIDPO), ings have been realized in the con- the years ahead.” realization, even among physicians, a webinar in September and a ses- another of the groups participat- tract’s first two years, but as physi- Landon expects these AQC- that what’s going on now is unsus- sion during AHCA’s October conven- ing in the pilot. However, he said, cian behavior continues to change, induced changes to accumulate tainable,” said Landon, “and that tion that will give providers a walk- physicians generally recognize the and global models grow increasingly over time. “… (T)hey’re probably there’s another shoe that’s going to through of what they need to do to perversity of fee-for-service and more palatable to transitioning going to accelerate as we have more drop at some point. The AQC really manage the switch to electronic most believe now “that global pay- groups, there’s potential for greater, experience,” he said. “What I think presents a powerful opportunity for payments. Those steps also will be ment methodologies really are here long-run success. (everyone) needs to understand is physicians.” n posted on the AHCA website. “(Paper) check payments going to nursing facilities have long been a problem without a real convenient solution,” said Walt Henderson, program director of Go Direct, the Treasury Department’s campaign to educate folks on the transition to electronic benefits payments. Real results resonate. Direct deposit saves money for taxpayers, he said, is more secure than paper checks, which can be lost, misplaced or stolen, and is more efficient and cost effective for facilities. “(Direct deposit is) a win- IN THE REVENUE CYCLE win – for the government for reducing the number of check payments, but it IN THE BOTTOM LINE hopefully (also) improves the internal processes at all of these nursing facili- IN THE BOARD ROOM ties,” he said. Many of the long-term care facilities that the Go Direct call centers have heard from so far are field- ing questions from mostly Walt Henderson smaller facilities that are primarily concerned with how they reconcile the payments and how they credit the payments to the correct resident, said Matt Helfrich, a program analyst from the Treasury Department. To get the word out and to educate long-term care facilities, the Trea- Every improvement in days, dollars, and effi ciency sury Department has been reaching out directly to long-term care facili- impacts your hospital’s fi nancial performance. ties across the country and providing resources through its Go Direct campaign website and call centers. At Optum™, we utilize proven technology, services, and consulting to help our clients make these Around the same time it does the improvements, and we can help you do the same. The results speak for themselves: webinar with AHCA, the department will begin posting on the Go Direct website a series of scenarios that detail possible situations facilities may encounter Client Results Time frame Optum solution during the transition, said Helfrich. The folks at the Go Direct call Pennsylvania 21% increase in coder productivity 16 months Optum Computer-Assisted integrated health Coding centers also are available to answer 8% increase in CMI delivery system questions and even help facilities fig- $22 million in systemwide annual net impact ure out who at their financial institutions they need to talk to in order to Mid-Atlantic Increased cash collections by $155 million One year Optum eFR® Platform enterprise set up the proper processes, he said. hospital system Standardized CBO operations workfl ow tool While officials at the Treasury Eliminated 11 A/R days Department and in the long-term care industry expect the transition Florida health Improved DNFB rate by 63% Four months Optum Revenue Cycle to electronic payments to largely go care system Increased cash receipts by 28% Managed Services smoothly, they also know there will be some initial discomfort. “We’re so heavily regulated that nobody goes out there and welcomes yet more regulation, more operational complexity,” Smith said, “but my See how our proven solutions can deliver results that will belief (and providers’ beliefs) about help strengthen your revenue cycle, improve your margins, this is that once they’re through it, it and impact the bottom line. Visit optuminsight.com/results. will work beautifully.” n

FPS Ad HFN Tab Page.indd 1 2/20/12 1:54 PM 28 Payers www.healthcarefinancenews.com Healthcare Finance News September 2012 Managed Care | Insurers | Medicare & Medicaid | Claims payers Briefs Accountable to itself Three-in-ten docs won’t see Medicaid patients Aurora Health Care ACO With as many as 30 million people expected to gain health insurance through the health signs on Aetna, regional Blue insurance exchanges and expanded Medic- By Chris Anderson, Senior Editor aid programs in 2014, a new survey notes MILWAUKEE – Fifteen years in the making, that more than 30 percent of doctors said Aurora Health Care recently signed on two they didn’t accept new Medicaid patients in of Wisconsin’s largest health plans – Aetna 2011. The study, published last month in the and Anthem Blue Cross and Blue Shield – to journal Health Affairs, highlights the growing its new Aurora Accountable Care Network, concern that despite having a higher percent- which offers a price guarantee to employers age of the population insured in 2014, the and promises average savings of 10 percent healthcare system as it exists today may not based on past claims expenses. have the capacity to effectively handle the According to Aurora officials, the price newly insured. The study does note, however, guarantee, which may be the first of its kind a correlation between higher Medicaid reim- anywhere, is available to employers who sign bursement rates and the number of doctors on with one of the carriers for a minimum of willing to take on new Medicaid patients. three years. The guarantee will differ for each employer group based on its past three years Humana goes multimedia of claims, the type of care and how much care for diabetes care was delivered. Aurora will then use data it has Humana, and dLife Healthcare Solutions have derived from caring for its own workforce of partnered to offer its diabetic Medicare Advan- more than 48,000 people to predict how much tage members a new multimedia self-care it can save each group. and education program based on the suc- “We apply our own intelligence based on The Aurora Accountable Care Network is based on the successful delivery of an integrated care model cess of a 2011 pilot project. Humana’s pilot aurora see page 29 to Aurora’s own 48,000 employees, which has kept healthcare cost growth significantly below national averages. program began with 18,000 members receiving dLife Healthcare Solutions’ “My Diabetes Path,” an engagement program using mail, print workbooks, email and online content to help diabetics improve self-management. Pro- gram users had a 7 percent improvement in LDL screenings and a 9 percent improvement Shifting in blood sugar screenings, with similar gains in eye exams and kidney disease monitoring. SGR repeal could cost $376B acquisition A report last month from the Congressional Budget Office estimates a 27 percent payment cut to physicians in 2013. The various alternative policies to offset the cut would targets cost between $15.3 billion and $376.6 bil- While integrating behavioral counseling with other healthcare services is lion over the 2013-2022 period. According not new, finding ways to create an effective integrated payment model to fund Payers look for different M&A investments to CBO’s analysis, restructuring or replacing the services has been elusive. the SGR are the most expensive options, recent report from industry consulting firm ranging from $254.2 billion to $376.6 bil- Accenture entitled, “Healthcare M&A rethink: Why lion over the 2013-2022 period. are payers on the hunt for providers?” shows there Paying from one pot A has been a dramatic shift Multiple line insurers lose University of Colorado Denver and in the kinds of acquisitions completed money in Medicaid market Colorado partnership the New York-based Collaborative by healthcare payers in the wake of A new report from CMS shows that health aims to integrate Family Healthcare Association. healthcare reform. insurers that offer commercial and Medicare The integration of primary care In the pre-reform period of 2004 plans operate at a loss for their Medicaid payments for behavioral, and behavioral health is nothing to 2009, the vast majority of acquisi- plans, while those that specialize in Medicaid physical health new, noted Benjamin Miller, PsyD, tions by health insurance companies only operate at a profit. One significant fac- board president the Collaborative – 83 percent – were focused on either tor was the variance between Medicaid-dom- By Stephanie Bouchard, Managing Editor Family Healthcare Association expanding the geographic footprint or inant plans’ and its commercial multi-line GRAND JUNCTION, CO – Health- and an assistant professor and the adding new members (or both). Post peers’ medical expenses. On average, the care leaders in the city of more director of the Office of Integrated reform, the pendulum has swung in Medicaid-dominant plans paid less in medi- than 58,000 are demonstrating Healthcare Research and Policy at another direction. Since the end of cal expenses than the other plans. Among their initiative via a partnership the University of Colorado Denver. 2009, the focus has shifted from mem- Jill Dailey the possible reasons for this difference was aimed at making an integrated pay- However, organizations that inte- ber and geographic growth (only 39 percent of transactions) to the likelihood that the Medicaid-dominant ment model for behavioral health grate the two care models often acquisitions that add new capabilities. plans offered utilization and case manage- and primary care financially viable. find themselves unable to sustain Jill Dailey, senior payer executive at Accenture, has a front row ment services, the plans may have enrolled Collaborating on the project are themselves financially over time. seat on these trends and recently talked to Healthcare Finance healthier members, restricted access to the Colorado Beacon Community, “Part of the reason we have that News Senior Editor Chris Anderson to further explain this move- costly providers and negotiated lower con- Rocky Mountain Health Plans, the problem,” Miller said, “is that you ment in the market. tracted rates with providers in the network. Colorado Health Foundation, the behavioral see page 30 targets see page 30 September 2012 Healthcare Finance News www.healthcarefinancenews.com Payers 29

ate a bit differently, as a narrow net- consin and it sounds like that’s a ity to deliver quality care at costs the results have been even more aurora work product for the group market. huge trade-off. However, when you that are growing slower than the impressive: costs rose only 1.5 per- Continued from page 28 “From an employer’s layer on top of that they national average. cent a year between 2008 and 2010 our 15 years of experience with our perspective, they are will still have access to Itself an employer of more than in sharp contrast to a 9 percent employees,” said Rick Klein, execu- going to need to make a our entire national net- 48,000, Aurora has successfully increase nationally. tive vice president of growth, mar- decision, a classic cost- work outside of Wisconsin reduced healthcare spending for To achieve this success, members keting and development for Aurora benefit decision,” said through Blue Card, I think its own employees over the past in the Aurora network will have Health Care. “We look at the inte- Schreiber. “On the cost it is a decision a number 10 years and in 2010 recorded a access to care managers to help grated value that Aurora brings, and side they can save money. of employers will make reduction of 2.4 percent compared schedule appointments, as well as we put a guarantee on that, under- On the benefit side we and their employees will to national averages. Between follow up with patients who have standing that if we provide all the feel their employees and be accepting of.” 2001 and 2010 costs for the Auro- complex or chronic conditions. The care, we can be more efficient than families will have a much For both insurers, ra employee health plan rose 6.2 overall network comprises 15 hospi- the general market.” better experience, but Rick Klein there is security in know- percent per year on average, well tals and 160 clinics staffed by more According to Larry Schreiber, they will need to sacrifice access to ing that its new products are tied to below the national average that rose than 1,500 physicians in eastern Wis- president of Anthem Blue Cross the balance of the systems in Wis- a provider that has proven its abil- 10.7 percent a year. More recently, consin and northern Illinois. n and Blue Shield, the insurer will roll out its Blue Priority plan based on Aurora’s ACO model as a pilot beginning Nov. 1. He noted that while the healthcare provider has a broad and comprehensive integrat- How much will you lose ed network in eastern Wisconsin, employers would need to choose whether they would want to limit to take-backs this year?

Officials with the new Aurora Accountable Care Network are so confident in its ability to deliver healthcare savings, they offer a three-year price guarantee their in-state employees to Aurora You earned it. facilities in order to participate in Now stop losing it. the plan. “At least 60 percent of the popula- As hard as you work to submit clean and compliant From medical necessity to chargemaster management tion of Wisconsin is covered by their claims, your e orts to receive reimbursement don’t end to audits and denials, our range of software footprint, so they are positioned to there. Payors can still deny all or parts of a claim. Even solutions helps one in four U.S. hospitals optimize have a profoundly positive impact worse, when you undergo a RAC audit by your region’s reimbursement, increase operational e ciency, and on the state of public health in Wis- Medicare Recovery Auditor, you can be asked to give back reduce compliance risk. consin if they are successful in this reimbursement you received as far back as three years ago. Go to craneware.com/takebacks to download a endeavor,” Schreiber said. free white paper on RAC best practices Plan design for both Aetna and Enter Craneware’s Audit & Revenue Recovery solutions: Anthem will both have many of the designed to empower you to manage payor denials and usual incentives and cost- and risk- retain more cash from RAC and other auditors – ensuring sharing arrangements between the that you collect and retain all the revenue to which you are payers and Aurora based on cost legitimately entitled. savings and predetermined quality measures. Aetna will offer two tiers of plans that will carry lower co-payments for members who use the Aurora system. Craneware Revenue Integrity Solutions®. Focused on Integrity™ “We believe the products will provide a welcome alternative to current offerings in the market today, particularly because of the care Revenue Cycle Supply Chain Audit & Revenue Recovery Access Management & model,” said Sherry Sanderford, Strategic Pricing Aetna spokesperson. “Members who Chargemaster Toolkit® Pharmacy ChargeLink® InSight Denials® Patient Charge Estimator® Join the Movement at seek care from tier 1 – the Aurora Physician Revenue Toolkit® Supplies ChargeLink® InSight Audit™ stoptheleakage.com Accountable Care Network – will Bill Analyzer InSight Payment Variance Pricing Analyzer™ have lower copays, deductibles and Analyzer™ InSight Medical Necessity® coinsurance than those who seek care outside that network.” Anthem’s Blue Priority will oper- 30 Payers www.healthcarefinancenews.com Healthcare Finance News September 2012

treatment and medication regimens. make conservative bets about what the value behavioral health pilot is much more than behavioral In order to address the financial conundrum of the interventions are going to be. Everyone just trying to solve a financial problem. Their Continued from page 28 that has bedeviled so many organizations, the involved in the pilot will try to hit targets that ultimate goal is to create a solution that is rep- have two pots of money to take care of health- partners are launching a three-year, multisite are transparent to all participants. licable across the country and that will change care. You’ve got a mental health pot of money and pilot. They will select up to six practices that “… (E)ssentially what we’re doing is the “rules” of healthcare. you’ve got a physical health pot of money. When have already integrated primary care and behav- accountable care with multiple parties and a “We are literally in this to change the game,” you talk about integration you have to integrate ioral health, said Patrick Gordon, Colorado Bea- community governance structure,” Gordon said. Miller said, who is the project’s principal at multiple levels to make it successful. One of con Consortium’s program director and direc- “The difference is that most people talk about investigator. “This literally goes to the heart of those levels is financial.” tor of government programs at Rocky Mountain accountable care, they say A-C-O – accountable healthcare. We believe that by doing this – by Figuring out how to make the financial side Health Plans. care organization. … For us to be successful we integrating care and by figuring out the finan- of the behavioral health equation mesh within In the “actuarial exercise” of the pilot, got to drop the ‘O’ off the end of that because cial barriers to integrating care – we cannot an integrated health system that pays for overall Rocky Mountain will use a model that reval- when you limit to one organization, even if you only help achieve the ‘Triple Aim’ but we can health and well-being of the member is gaining ues the impact of intervention on trends at achieve a great deal of integration, it’s still lim- also change the way that our community is actu- steam, in light of the understanding that mental the micro-level. The model will calculate a ited in space and time.” ally expecting care and that’s something totally health issues often interfere with adherence to projected impact on the total spend then will Gordon and Miller say the primary care- different.” n

Legal Notice targets Continued from page 28 Q: Why are healthcare payers looking to acquire companies with new capabilities instead If You Purchased Municipal Derivative Transactions of the traditional acquisitions, which focused on new members? from January 1, 1992 to August 18, 2011 A: One is that in order to make some of the changes that are brought about by ACA, it requires companies across You Could Get a Payment for a Class Action Settlement. the healthcare continuum to make certain investments. The payer premium tax that is scheduled to go into effect A proposed Settlement has been reached with JPMorgan on the Settlement website to receive a claim form when it in 2014 can have a significant impact Chase & Co., J.P. Morgan Securities, Inc. (n/k/a J.P. Morgan becomes available. If you remain in the Settlement Class, on earnings and so the opportunity to Securities LLC) and Bear Stearns & Co. (n/k/a J.P. Morgan you still have the right to exclude yourself from any other Securities LLC) (collectively, “JPMorgan”), defendants in settlements with other defendants reached in this lawsuit. replace those earnings via acquisition a class action lawsuit that alleges price-fixing in the sale of • Exclude yourself from the Settlement. If you do not is important. (Another component) municipal derivatives transactions by JPMorgan and other want to remain in the Settlement Class, you must exclude involves competitiveness. The lines in companies. The case, In re Municipal Derivatives Antitrust yourself. You must send a written request for exclusion the industry are blurring in many cases Litigation, MDL No. 1950, No. 08-02516, is pending in the by first-class mail, postmarked no later than October between payers and providers or other United States District Court for the Southern District of New 19, 2012 to the Settlement Administrator. The detailed segments of the healthcare continuum. York. notice available on the Settlement website describes the So the opportunity to differentiate your information you are required to include in your request for company suggests that it would be help- Who Is Included in the Settlement? exclusion. If you exclude yourself, you cannot participate ful to look for these new capabilities. This Settlement includes all state, local and municipal in the Settlement, but you retain your right to sue JPMorgan government entities, independent government agencies, quasi- on your own for the claims in this lawsuit. Q: Is interest in acquiring government, non-profit and private entities that purchased: • Object or Comment on the Settlement. If you remain in provider groups dominant, or is (1) Municipal derivative transactions through negotiation, the Settlement Class and want to object to or comment on it more technology companies? competitive bidding or auction, from any Alleged Provider the JPMorgan Settlement or any part of it, you must file A: It depends. Some payers have been very Defendant or Co-Conspirator or brokered by any Alleged an objection with the Court and deliver a copy to Class public with wanting to have a much bigger Broker Defendant or Co-Conspirator, Counsel and JPMorgan no later than October 9, 2012. lens on health IT and we see that in some (2) Any time from January 1, 1992 through August 18, 2011 of the acquisitions they have made. But in in the United States and its territories or for delivery in the When Will the Court Decide addition to health IT, we do see everything United States and its territories. Whether to Approve the Settlement? from a hospital system acquisition, like The Court has scheduled a hearing on December 14, 2012, at Highmark’s West Penn Allegheny acqui- The Defendants and Co-Conspirators are listed in the detailed 2:00 p.m. at the United States District Court for the Southern sition, to those more focused on growing notice available on the Settlement website. District of New York, United States Courthouse, 500 Pearl the clinic space, like Humana’s acquisition Street, New York, NY 10007, to consider whether to finally about a year and a half ago of Concentra. What Does the Settlement Provide? approve the JPMorgan Settlement as fair, reasonable and JPMorgan agreed to a settlement amount of $44.575 million adequate, whether to approve Class Counsel’s request for Q: What themes do you anticipate to be paid as follows: $24 million has already been paid reimbursement of litigation expenses, and to consider any for the types of acquisitions payers into an escrow account and up to $20.575 million will be objections. will undertake in the next three to paid later. This Settlement is only a partial settlement of the five years? lawsuit because it only affects the claims against JPMorgan. The Court has appointed the law firms of Hausfeld LLP; A: I think the senior population will be The lawsuit is continuing against other Defendants. Morgan Boies, Schiller & Flexner LLP; and Susman Godfrey L.L.P. important – serving the Medicare popu- Stanley and Wells Fargo have already settled. JPMorgan to serve as Class Counsel and represent all Class Members. lation, or those that are eligible for both will provide reasonable cooperation, including discovery If you want to be represented by your own lawyer, you may Medicare and Medicaid programs. Things cooperation, to Class Plaintiffs’ Counsel in the litigation that hire one at your own expense. You or your lawyer may ask to like looking at Medicaid pure plays and will continue against the other Defendants. appear and speak at the hearing but are not required to. If you how those could be combined with Medi- want to be heard by the Court, you must file a written notice care capabilities is important in serving What Do I Do Now? of your intention to appear with the Court and deliver a copy the dual eligibles. For those that have • Remain in the Settlement. To remain in the Settlement to the Class Counsel and JPMorgan no later than October 9, decided to play in Medicare, I do see Class and participate in the Settlement, you do not have 2012. The Court may change the time and date of the hearing. more activity there. That population will to do anything now. If the Court approves the Settlement, Any change will be posted on the Settlement website. only continue to grow. I think being able you give up the right to sue JPMorgan for the claims to serve the populations that have dif- Get More Information and issues in this case. The Settlement Agreement, ferent health risks, beyond the 65 to 75 specifically Paragraph 1(ee), which is available at For more information on this lawsuit, your rights, or to obtain zone with the older segment, has some www.MunicipalDerivativesSettlement.com, describes in a list of defendants, call or visit the Settlement website listed challenges. For those that have decided more detail the legal claims that you give up if you stay below or write to Municipal Derivatives Settlement, c/o Rust to play in Medicare, we have seen acqui- in the Class. Claim forms are not available now. Register Consulting, Inc., PO Box 2500, Faribault, MN 55021-9500. sitions that have built out capability. So far it has been smaller plays to help the companies learn and fill in a specific For more information: 1-877-310-0512 www.MunicipalDerivativesSettlement.com capability or get into a geography to expand the footprint. n September 2012 Healthcare Finance News www.healthcarefinancenews.com Payers 31

help in is finding a common format fraud for the data the different payers are Continued from page 1 using in order to share their infor- “(This effort) will need “It will help law enforcement mation and effectively determine officials utilize cutting-edge tech- patterns of fraud from one payer to private industry support and nologies to more effectively identify the next. and prevent suspicious activities, “Without this type of collabora- knowledgeable people to work and to safeguard precious taxpayer tion we won’t aggressively solve the resources.” problem of fraud, waste and abuse on it, as well as some regulatory According to industry observers, in the healthcare industry,” Lucia the partnership between public said. “But it will need private indus- changes to allow this data to be and private stakeholders, includ- try support and knowledgeable peo- shared to make it work.” ing many of the country’s largest ple to work on it, as well as some private health insurers, the Blue regulatory changes to allow this – Bill Lucia Cross Blue Shield Association and data to be shared to make it work.” n America’s Health Insurance Plans (AHIP), was both a long time coming and a necessary measure to continue the fight against healthcare fraud. “This is not only important for the insurance industry, but it is also important for government, for consumers, for medical providers, for everybody who is involved in healthcare,” said Dennis Jay, executive director of the Washington-based Coalition Against Insurance Fraud. “Our advocacy of such a group goes back many years where we saw the government combatting insurance fraud, the private sector combatting insurance fraud and they both were acting like they were dealing with their own set of crooks when they were dealing with many of the same characters. We felt that if they teamed up, they might be more successful in detecting the scams and detecting them earlier.” The effort is especially important now, Jay noted, because those looking to defraud healthcare payers are more organized and sophisticated than they have ever been. At the Blue Cross and Blue Shield Association, the partnership should aid its own efforts, which last year resulted in the recovery of more than $295 million dollars and the conviction of 197 people. Lisa Joldersma, managing director for policy and regulation at BCBSA said creating a national effort to combat fraud is an effective way to “roll up” the fraud fighting capabilities of its member companies, other private insurers as well as what the federal government has learned from its own fight against fraud. “One area being worked on by the partnership right now would be for all of the partners to identify what are the common characteristics of a fraud scheme,” said Joldersma. “And that could be what are the codes, billing patterns and those sorts of things. If you share those, then everyone can go and check.” The cooperation between fraud organizations and public and private payers may require the additional participation of service providers to the industry, noted Bill Lucia, president and CEO of Irving, Texas-based HMS, which works with CMS and 35 states to improve payment integrity and root out fraud, waste and abuse. One area where Lucia thinks the partnership members will need 32 Solutions & Services www.healthcarefinancenews.com Healthcare Finance News September 2012 Vendors | Accounting Services | Legal Services | New Products Solutions & Services

Briefs U.S. biomedical device industry faces challenges

Cardiac device growth rate New tax, global competition to reach 9 percent by 2015 top list of concerns The cardiac medical device market is projected to reach a compound annual By René Letourneau, Editor growth rate of an estimated 9 percent by lobal competition and the 2015 in the U.S., according to a recent impending medical device tax, set report from research and consultancy to begin Jan. 1, 2013, are creating firm RNCOS. An aging population and the challenges for the U.S. biomedical demand for innovative treatment options G device industry, according to a new study by are consistently boosting the cardiac tax advisory firm WTP Advisors. medical device market, making it one of According to the study, “The U.S. Medical the most prominent healthcare segments Device Industry in 2012: Challenges at Home in the country. RNCOS officials have esti- and Abroad,” which appeared in the August mated that the country has approximately issue of the biomedical industry journal 80 million persons living with cardiovas- MD+DI, U.S. companies have dominated the cular diseases, and the total direct cost roughly $350 billion global device industry over associated with the disease is an esti- the last 50 years, but now face threats to their mated $314 billion. prosperity.

Yair Holtzman, director and global life sci- COURTESY SHUTTERSTOCK TriZetto buys ClaimLogic ences practice leader at WTP Advisors, said The U.S. biomedical device industry is being threatened by increasing global competition and a new TriZetto Group’s Gateway EDI subsidiary competition from countries such as China tax set to begin Jan. 1, 2013. announced in late July that it increased and India present a major obstacle to U.S. as leaders in this industry within seven to 10 local markets could have more impact on the its customer base of healthcare provid- companies. years,” he said. next generation of products while U.S. patients ers by 50 percent with the acquisition of “A group of about six to eight countries have “We are witnessing a shift with research might not even see some of these inventions, 10-year-old revenue cycle management emerged as key players in the medical device and development centers moving to China and as some of these innovations might remain in and electronic transaction processing space and are well poised to overtake the U.S. India,” said Holtzman. “The customers in the biomedical see page 33 systems company ClaimLogic. The deal marks TriZetto’s continued expansion into the provider market and in one fell swoop increased by 60,000 to more than 180,000 the number of providers who now use its products and services. The acquisi- mHealth aims for better Restraint tion of ClaimLogic helps TriZetto reach a different segment of the provider market: large hospital systems and larger physician relationships and ROI replacing groups, where TriZetto’s base has been smaller physician practices. Programs must change exuberance Health IT VC hits $293M in Q2 behaviors to be successful A recent report from global consulting By Eric Wicklund, Contributing Editor for venture firm Mercom Capital Group shows the BOSTON – The burgeoning mHealth field offers healthcare IT sector was a hive of activ- healthcare a wealth of opportunities to engage ity in Q2 of this fiscal year. Total venture with patients and provide a satisfactory return capitalists capital funding in the HIT sector reached on investment. But if mobile medical apps are $293 million in 28 deals, according to the going to stand any chance of survival – with ‘Tempered approach’ “Healthcare IT Funding and M&A” report, physicians as well as consumers – they’ll have in which researchers note that this sort takes hold to be able to integrate. of level isn’t totally unexpected for the HIT They’ll need to integrate with other devices By Larry McClain, Contributing Writer sector. Based on VC funding levels, deal and healthcare platforms, with electronic NASHVILLE, TN – In a panel discussion totals and merger and acquisition activity, medical records and personal health records, co-sponsored by the Nashville Capital the sector is experiencing its highest levels to give physicians meaningful data with which Network and Nashville Health Care of economic bustle since 2010. to improve clinical outcomes. And they’ll Council on Aug. 9, investment gurus New products need to integrate with the consumer’s “plea- almost ran from the phrase “venture to add $100B to pharma sure points,” providing compelling reasons to capital.” New products will add $100 billion to the use them that go beyond those “not-so-sexy” “We prefer to call our company an global pharmaceutical market by 2016, health benefits. innovation fund because venture capi- according to market research firm Kal- That was the general theme of several ses- tal has such a bad connotation,” said orama Information. In its report, “Pharma- sions at the mHealth World Congress held in Duncan Dashiff, co-founder of Epiphany ceutical Products of the Future: 50-Com- Boston in late July. Health Ventures in Nashville. “There’s pany Biopharma and Traditional Pipeline To Victor Strecher, PhD, professor and direc- plenty of angel and early-stage funding Analysis to 2016,” Kalorama said there tor for innovation and social entrepreneurship in healthcare, but a real need for more COURTESY BETSY CARON are an estimated 724 projects in develop- at the University of Michigan School of Public growth capital.” Victor J. Strecher, PhD, professor and director ment from the top 50 pharma companies Health, mobile health programs will only suc- “There’s still a lot of froth in health- ceed if they tap into behavior change. Personal for innovation and social entrepreneurship at the care VC, which can lead to some which have the potential to augment the University of Michigan School of Public Health, total pharmaceutical market. decisions, he pointed out, are the leading cause gave a keynote address at the mHealth World unwise moves,” added Rob Coppedge, mhealth see page 33 Congress in Boston in late July. venture see page 33 September 2012 Healthcare Finance News www.healthcarefinancenews.com Solutions & Services 33

biomedical mhealth Continued from page 32 Continued from page 32 the local markets.” of death in the United States, so affecting how “Over the next decade China and those decisions are made can have an impact. India could dictate standards, needs Unfortunately, he added, only about 40 per- and benchmarks in the medical device cent of physicians believe mHealth tools can industry,” he added. affect behavioral change. Another threat to U.S. companies “I think we need better behavioral scien- is the 2.3 percent excise tax on medi- tists,” he concluded. cal device sales, which is part of the Others believe social media and gaming hold Affordable Care Act recently upheld by the keys to mHealth success. Mobile devices the Supreme Court. The tax applies to are the “digital fireplace,” said Douglas Gold- medical device products intended for stein, an eFuturist and newly hired executive human use, but exempts eyeglasses, con- for mHealth developer Diversinet. As such, tact lenses and hearing aids, as well as he said, they offer the opportunity to “go to devices that are purchased by the gen- where people are,” connect with their social eral public for retail or individual use. circles and reach them when they’re having “The medical device excise tax could the most fun. put more strain on the U.S. innovation The issue then lies with positioning them ecosystem for medical technology and where they’ll be noticed, used and retained.

affect the willingness of investors to “The battle going forward is point-of-pres- COURTESY BETSY CARON back start-up companies seeking to ence on the handset,” he said. VGo Communications, a Nashua, N.H.-based developer of robotic telepresence solutions for healthcare, commercialize new technologies,” said One example of successful mHealth pro- showed off its VGo robot, used for remote patient monitoring at the mHealth World Congress. Holtzman. grams cited during the sessions came from ing, easy and social,” said Dan Brostek, head have to prove why it’s done. Blue Shield of California, which was involved of member and consumer engagement for “The world of mHealth is finally breaking “It’s an international in a wellness program in 2008, when the payer Aetna, which has developed a CarePass plat- barriers we’ve had toward adoption,” added marketplace with launched its Wellvolution program, said Nazli form and launched apps through iTriage and James Albert, vice president and chief infor- Ghamarifard, MPH, the insurer’s senior well- MindBloom. mation officer at Plymouth, Mass.-based Jor- international ness program manager. Four years later, she “Bringing in that social network is an dan Health Systems, which has launched an competitors. said, the organization has added two more extremely important part of it,” added ambitious mobile communications platform programs – Shape Up Shield, a social media- Nick Martin, vice president of innovation for its employees. Companies have fueled fitness challenge, and The Daily Chal- and research and development at United Richard Katz, director of the cardiology divi- to adjust to remain lenge, a 360-degree well-being program offered Healthcare, whose mobile offerings include sion at George Washington University Medical through MeYouHealth – and is seeing 80 per- Health4Me and Optumize4Me. Center, said mHealth tools offer physicians the competitive with cent employee participation. In addition, she For physicians, mHealth may turn out to opportunity to restore the lines of communi- people based in said, the program is seeing decreases in smok- be a necessity as well as an attraction. Paolo cation with patients that may have been lost ing and hypertension and an ROI (in financial Machado, chief executive officer and founder through the years. foreign nations.” and productivity returns) of $3 for every $1 of Health Innovation Partners, pointed out that “We are building relationships that have – Steve Ferguson spent in healthcare costs. the public and payers are going to be demand- been fractured,” he said. “The advantage of They key, say the experts, is keeping con- ing accountability from the physician com- this technology is that we can improve and Steve Ferguson, chairman of the sumers interested. munity. “We tend, in healthcare, to do things redesign” these relationships. n board of Cook Group, parent of medical “People want healthy living to be fun, engag- because we can,” he said. Now they’re going to device firm Cook Medical, believes the tax will have a “tremendous impact on companies in this country,” adding that some companies have put plans to build ville-based Hospital Corporation of Ameri- new plants on hold. ca’s Health Insight Capital pilots prospective “The industry is having to work to products and services in its hospitals before adjust to the rules. It’s an international investing in a company. marketplace with international com- “We have a lot of healthcare experience petitors. Companies have to adjust to in Nashville and the scars to prove it,” remain competitive with people based quipped Joseph Howell III, HCA’s senior in foreign nations,” he said. vice president who oversees early-stage “I’m hopeful (lawmakers) will recon- investing. “That’s why we’re taking the sider what they did. I’m hopeful they will cautious approach, investing $1 to $5 mil- correct the mistake,” he added. lion in three to five companies a year. We’re Not all industry analysts believe the looking for companies that are a good fit situation is so dire. for where healthcare is heading, helping “The new excise tax is not helpful, and us improve outcomes and provide faster we do think it comes out of R&D that throughput.” many device com- Despite the new restraint in VC circles, panies increased there are still plenty of funding opportuni- in 2011,” said ties for promising healthcare companies. Bruce Carlson, According to a new study, Nashville alone publisher of sank nearly $1 billion into early-stage healthcare mar- healthcare funding in the last decade. ket research firm COURTESY SHUTTERSTOCK “At Sandbox, we provide a variety of Cautious investors are taking a slower, more thoughtful approach to financing healthcare deals. Kalorama Infor- ways for young companies to succeed,” mation. “The Thomas Hawes, MD, managing director of said Hawes. “In addition to accelerator tax will reduce venture Sandbox Industries in Chicago. “It’s a shame programs, we have collaborative investment operating profit, Bruce Carlson Continued from page 32 because everyone involved will most likely vehicles. If the company is truly exceptional, which will hurt companies when they vice president of Cambia Health Solutions waste five years of their lives trying to make we can find the resources to nurture their go to expand. That being said, I don’t in Portland, Ore. “Healthcare venture cap- it work.” innovations and add value.” think any significant American device ital has underperformed in recent years, Dashiff added that there’s now a more The panelists agreed that some cities company would close because of it.” mainly because too many entrepreneurs tempered approach to investing in health- continue to lead the way in smart VC fund- “Long term, the taxes go to pay for have been funded and there are too many care technology. “What’s desperately needed ing. “It’s hard to match the expertise you more patients who, the theory goes, managers.” is innovation in business models to support find in a handful of cities like Chicago, would then spend more on healthcare Some of the panelists cited deals that the use of that technology,” he said. “We Atlanta, Boston, Salt Lake City and Nash- thus more devices,” added Carlson. “But went well past froth to folly. “I can think of need to think of healthcare technology as a ville,” said Hawes. “They have all the right you can excuse the device industry of a one company with zero revenue that recently conduit for service innovation.” ingredients: healthcare experience, capital bit of glass-half-empty thinking here.” n got $100 million in venture capital,” said In an effort to avoid untested ideas, Nash- and proven management.” n 34 Product Technology www.healthcarefinancenews.com Healthcare Finance News September 2012 product TECHNOLOGY Workforce Management The right staffing tools rein in costs, ensure quality see how staff is matching up, both in terms of Proper labor levels patient volume and care needs. improve revenue “The customer can really start refining their staffing techniques to find exactly the staff “It’s a journey, and it’s By Greg Reid, Contributing Writer they need,” Reese said. “They can better define lways a key element of health- their workload and match staff appropriately not easy to get a handle care, appropriate nurse staffing is to really rein in labor costs.” becoming even more important as Not to mention meet their regulatory obliga- on these issues.” A the industry payment model shifts tions. Such staffing tools are critical in Cali- – Kathye Habig Nippert from reward for high volume toward one that fornia, where state law requires hospitals to emphasizes efficiency and quality of care. maintain a nurse-to-patient ratio of 1:5. “Now, nursing has a significant “We admit 78 percent of the management, agency strategic sourcing and chaos appropriately.” impact on revenue,” said Susan people we see in the (emergency workforce optimization. The Kronos suite is also useful when mak- Reese, chief nursing officer at department). That’s our front door,” Not that there are any truly simple solutions. ing large-scale labor management improve- Kronos, a workforce management said Kathy Wojno, chief nursing offi- In retail or manufacturing, for example, man- ments, said Kathye Habig Nippert, vice presi- software firm based in Chelms- cer at Hollywood Presbyterian Medi- agers can look back at data from a period that dent of workforce management at Cincinnati- ford, Mass. “If nursing does a good cal Center, a 434-bed facility in Los is traditionally busy or slow and staff accord- based Catholic Health Partners. CHP is Ohio’s job and the patient has a good Angeles. “If I’m not within the ratio, ingly. Hospitals rarely have that luxury. second-largest healthcare system with 29,000 outcome, potentially the revenue I have to close the ED.” “In a hospital setting, workforce manage- employees and 24 acute care facilities. Over stream increases.” For the past seven years, HPMC ment at the point of service is very chaotic,” the past four years, CHP has realized $13.5 Long gone are the days of sched- has used MedAssets’ Workforce said Kathy Baker, the director of nursing man- million in savings using Kronos tools to stan- uling 25 nurses on a unit whether Susan Reese Solutions to manage its combined agement, emergency department and trans- dardize measures such as tracking work hours or not they were truly needed. Today, health- staff and agency nursing pool of 600. MedAs- port services at Virginia Commonwealth Uni- and activities, refining vendor management care managers are turning to tools such as the sets’ WFX tool allows HPMC to match nurses versity Medical Center in Richmond. VCU’s and developing highly-detailed reports. Kronos for Healthcare suite and MedAssets’ to patients who most need specific nursing medical-surgical unit, for example, serves “It’s a journey, and it’s not easy to get a Workforce Solutions to better manage staffing, expertise. The tool simplifies both long-term on average 595 patients on a given day. One handle on these issues,” Habig Nippert said. scheduling and labor analytics needs. scheduled needs, such as staff vacation, as well recent day, Baker said, that number spiked The tools “provide more clarity to the data With the Kronos Opti-Link program, for as rapid-response situations, such as covering to 655. “Kronos helps you get organized in a and help you organize it. It’s key to getting example, staff on the floor enters patient data for those who call in sick. In addition, Work- systematic way that improves the probability your data refined and finding opportunities into the system, and within hours managers force Solutions provides support with vendor that you’ll manage the real-time, day-to-day to address.” n

costs associated with ICD-10 implementa- icd-10 tion, and play a lead role in helping each area “The fact is, if you are Continued from page 1 of the practice with its integration needs.” firm Crowe Horwath. “We’re seeing tremen- Duchek suggests a timeframe reality check accountable for the funding or dous failure on an organizational level.” for organizations that have taken their eyes operational implementation, According to Koehler, it’s imperative for off the ball. healthcare provider organizations to have “To help focus your leadership on ICD-10 the ball is in your court. a steering committee and for that steering preparation, consider sharing this informa- Slowing or stopping transition committee to keep the CFO and senior execu- tion: It’s been six months since the announce- tives focused on ICD-10. ment of the proposal for a year-long delay to efforts is short sighted and “We are telling the compliance deadline,” she said. “If your could be a fatal error.” clients they need to practice has put your ICD-10 implementa- have the five pillars,” tion on hold, you’ve already lost six months – Holly Louie he said, referring to a of crucial preparation time.” committee that is com- Holly Louie, chair of the Healthcare Bill- time gives you a rare opportunity to position ommended Duchek. “Your practice should prised of an executive ing & Management Association’s ICD-10/5010 for success.” begin making those process changes now, so leader, a represen- committee, believes it is incumbent upon the Koehler and Duchek both believe an you are working at your most efficient level tative from revenue smart CFO to keep moving forward with ICD- insightful CFO can use the ICD-10 implemen- possible before ICD-10 hits.” cycle, from the clinical 10 plans. tation process to improve their organizations. For those providers that don’t stay focused side, from IT and from “The fact is, if you are accountable for the “The CFO, if he or she is shrewd, is going on developing a solid plan for ICD-10, Koehler Dawn Duchek coding/quality control. funding or operational implementation, the to sit back and try to figure out how they can offers a doomsday prediction. “You have got to have a steering commit- ball is in your court. Slowing or stopping tran- turn ICD-10 into a big win,” said Koehler. “We’ve talked to a lot of CFOs who are now tee,” he emphasized. sition efforts is short sighted and could be a “They are going to have a better relation- saying ‘this is complicated. This is a huge Dawn Duchek, industry initiatives coordi- fatal error,” she said. ship with payers. They should improve their operational change. This is a house-wide nator at Gateway EDI, agrees. “If you were sure you would be ready by relationship with physicians. And they can initiative,’” said Koehler. “What’s going to “One way to keep leadership focused on October 2013, you are in a great position. also change some of the operational gotchas.” happen is the ones who were asleep at the ICD-10 is to establish a steering committee Don’t slow down or divert resources; move “As you’re identifying ways to prepare for switch are going to have this pass them by. made up of key stakeholders from each area ahead with completing that process and plan your ICD-10 implementation, take the oppor- We see some institutions that are not going of the practice,” she said. “This committee for mitigation,” she added. “If you are behind tunity to note other processes that could be to be around. They are just not going to have can report to executives on impacts, risks and the curve or not out of the gate, the extra improved to save time and resources,” rec- the wherewithal.” n September 2012 Healthcare Finance News www.healthcarefinancenews.com Job Spot 35 Job Spot Study shows nurse burnout linked to increased HAIs Improving workplace According to lead author Jeannie Cimiotti, more than a third of the culture could improve nurses in the study said they had quality of care an emotional exhaustion score of 27 or greater on the Maslach Burnout By Kelsey Brimmer, Associate Editor Inventory-Human Services Survey, NEW YORK - According to a recent which is the equivalent of being study published in the August issue “burned out.” of the American Journal of Infec- “HAIs are a major problem. We tion Control, nurse burnout has been have to step back and realize there linked to higher rates of healthcare- are several factors that could con- associated infections (HAIs), which tribute to these infections. There’s therefore costs hospitals millions of been a decade or more of research additional dollars each year. on staffing related to infections

“Hospitals must be adequately staffed, and you can increase the workload as long as you have the Courte s y Shutter to c k environment to support them.” A recent study showed a high prevalence of nurse burnout, which the authors claim is connected to HAI rates. – Jeannie Cimiotti if that’s always appreciated by hos- and payers don’t want to pay for environment to support them.” pital administrators,” said Marcia them and CMS is not going to Patrick agrees. “We have seen a Researchers from the Center but never a real explanation as to Patrick, an Association for Profes- pay for them anymore. That puts number of changes that have gone for Health Outcomes and Policy why this might be occurring,” said sionals in Infection Control and the hospital at a loss when they to change the corporate culture of Research at the University of Penn- Cimiotti. “We are the first to sug- Epidemiology (APIC) board mem- are already suffering in this hospitals to one of quality… I think sylvania School of Nursing looked at gest that perhaps it’s burnout. The ber and infection prevention con- economic climate,” said Cimiotti. most hospitals are really working on data from more than 7,000 registered concept of burnout itself – it’s a sultant. “Quality pays and this study “Hospitals must be adequately the quality piece, improving their nurses at 161 hospitals in Pennsyl- multifactorial syndrome. Disorgani- demonstrates this very clearly.” staffed, and you can increase the corporate culture and increasing vania to study the effect of nurse zational factors play into it.” Using the per-patient average workload as long as you have the patient satisfaction,” she said. n staffing and burnout on catheter- Cimiotti noted that when there costs associated with CAUTIs ($749 associated urinary tract infections are understaffing problems and a to $832 each) and SSIs ($11,087 (CAUTIs) and surgical site infections lack of teamwork and support, it to $29,443 each), the researchers “I think most hospitals are (SSIs). All of the data used for the leads to increased stress. “The pro- estimate that if nurse burnout rates really working on the quality study was previously collected from viders detach from the environment, could be reduced to 10 percent from piece, improving their the Pennsylvania Health Care Cost both emotionally and cognitively, an average of 30 percent, Pennsylva- Containment Council, the American and that’s when these errors often nia hospitals could prevent an esti- corporate culture and Hospital Association Annual Survey occur,” she said. mated 4,160 infections annually with increasing patient satisfaction.” and a 2006 study of hospitals and “This study links quality of care an associated savings of $41 million. – Marcia Patrick nurses in the state. with cost of care, and I’m not sure “Infections cost a lot of money

Content piece produced in partnership with and Guiding the Enterprise to ICD-10: A Strategic Approach

Learn ICD-10 planning and implementation strategies from your peers to help shape your critical next steps! Guiding the Enterprise to ICD-10: Access this roundtable report featuring executive insight from three A Strategic Approach Featuring discussions from the Beacon Partners Roundtable, Boston, MA respected health systems across the country. , May 2012. mong the numerous initiatives affecti A as the most far-reaching to impact theirng healthcareb organizations, the transition 1, 2013, to the proposed date of October usiness. The proposed delay of ICD-10from f ICD-9 to ICD-10 arguably ranks grasp the implications of this massive co 1, 2014, has created even mor rom the original date of October nversion. e confusion for an industry that is still tryin g to Beacon Partners, one of the largest h in May 2012 comprising leaders fromealthcare management consulting firms in N Healthcare Consulting Principal at M respected health systems acr orth America, convened a roundtable cGladrey, the fifth largest accountingoss the countryfirm i and moderated by Dan He the challenges and opportunities they face ad, or assess their progress to date, learning in implementing ICD-10. As healthcaren the pro U.S. The four panelists discussed and models can help shape their critical what their peers are doing in terms of plan viders either begin their initiatives next steps. ning and implementation strategies Download the report at www.HealthcareITNews.com/ICD10Strategy

71 Pineland Drive, Suite 203, New Gloucester, ME 04260 207.688.6270 • www.medtechmedia.com 36 Trends www.healthcarefinancenews.com Healthcare Finance News September 2012 trends Capital flows to post-acute venues

Investors look outside hospital “There is a lot of ER business that campus for opportunities can be diverted to urgent care. But it comes down to the right setting for the By John Andrews, Contributing Editor right type of care you’re providing.” ealthcare ventures outside the hospital – Scott Perricelli walls appear to be the favored target of investors Urgent care eyed diverted to urgent care,” he said. “But it comes looking for new opportunities, financial special- Scott Perricelli, partner at Philadelphia-based down to the right setting for the right type of LLR Partners, is fixated on alternate site prop- care you’re providing.” ists say. Driving that interest is a vision of com- erties as the wave of the future. In his view, H it is imperative that services be moved away The acuity factor munity-based care sites through accountable care organiza- from the acute care setting in order to rein in The ACO movement is creating a new health- tions, healthcare reform, evolving private pay models and an escalating healthcare costs. care environment that includes a changing “The percentage of GDP our economy profile of patients. As hospitals increasingly industry-wide initiative to bring down costs. spends on healthcare is unsustainable,” he discharge patients into post-acute care sites, said. “There are a lot of opportunities for it is causing an evolution in the long-term The healthcare landscape is Yet the mainframe hospital hasn’t companies that provide better care at cheaper care and senior living sectors, said Bob changing and post-acute care is been abandoned just yet, he added. costs and we are focused on those areas.” Kramer, president of the National Invest- emerging as the dominant venue for Instead, it is getting a makeover Urgent care centers, along with outpatient ment Center for the Seniors Housing & Care services. For investors in new proj- designed to attract a more discrimi- surgery, dialysis and post-surgical rehabili- Industry. ects that means facilities outside nating clientele. tation are demonstrating cost effectiveness “The reality is that the skilled nursing the traditional hospital campus, “We’re seeing a movement toward and represent a new care model for the unit of today is the old med/surg unit of the said Bob DeLuca, managing partner building new private rooms with a industry. hospital 10 years ago,” he said. “Likewise, in charge of Chadds Ford, Pa.-based hotel atmosphere,” he said. “We just invested in a chain of urgent care the assisted living building of today is the IMA Consulting’s finance practice. Hospitals are also focusing on clinics,” said Perricelli. “What they can do in skilled nursing building of 10 years ago, “On a grand scale everything is being recognized as a Center of a visit for $100 costs $1,000 in the ER. Their with residents being older and frailer. Some migrating to post-acute care,” he Bob DeLuca Excellence, DeLuca said, earning core services are enabling our healthcare would also say that the independent living said. “They are smaller projects and while them a federal government-endorsed reputa- system to become better, more efficient and model of today is the assisted living model you may not be able to do everything, you can tion for high-quality clinical, research, technol- cost effective.” of 10 years ago.” do it in stages and prioritize what the most ogy and operations. Suitable for minor injuries and illnesses, With real estate investment trusts, private mission critical projects are.” “Centers of Excellence are a hot trend,” he urgent care centers can handle these cases equity firms and regional banks all actively Bariatric surgery and sleep therapy centers said. “It gives hospitals a marketing advantage without the infrastructure and overhead of a investing in the marketplace, their prefer- are two post-acute ventures that have attract- and makes them more attractive to insurers large hospital, said Perricelli. ences are leaning toward higher acuity pri- ed a lot of investor interest, DeLuca said. and patients in a competitive environment.” “There is a lot of ER business that can be vate pay services, Kramer said – especially assisted living with memory care. High acuity specialty services for ventilation, stroke and bariatric patients also have a lot of potential, he said, though “you must have enough mass to support it.” Doug Korey, managing director for Shrews- bury, N.J.-based Con- temporary Healthcare Doug Korey Capital acknowledges that “there is a remarkable interest among a number of operators, lenders and investors for stand-alone memory The format of the summit was extremely care facilities. For a number of these groups, this is the new generation of specialty senior productive and very beneficial. housing facilities.” However, Korey cautions that a similar enthusiasm for the then-new assisted living Executive VP and Chief Financial Officer, Knapp Medical Center model in the mid-1990s led to overbuilding and market saturation that caused economic depression in the seniors housing marketplace by the turn of the century. “That potential exists for this type of facility as well,” he said. Although the need-driven services of skilled nursing have traditionally been attractive, reimbursement cuts from Medicare and Med- October 21-23, 2012 icaid have dampened some enthusiasm for The Westin Stonebriar, Dallas, TX that sector, Kramer said. For skilled nursing www.nhcfosummit.com operators to boost their image with investors, he suggested that they partner with a hospital as part of an ACO. n B:10.875” T:10.625” B:14.125” T:13.875”

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PLANNER market snapshot quoted David Berry ��Arkansas Children’s Hospital...... 1 September Eric Holder ��U.S. Attorney General...... 1 12-14 – Healthcare Billing & Mike Koehler ��Crowe Horwath...... 1 Management Fall Annual Deval Patrick ��Massachusetts Governor...... 3 Conference, National Harbor, Md. Ralph G. Neas ��GPhA...... 3 Robert Blendon ��Harvard School of Public Health...3 26-27 – Medicaid Business in Focus: S&P Healthcare Pat Jordan ��Disney Institute...... 4 CFO Forum, Arlington, Va. Vaughn Kauffman ��PwC...... 4 Michael Kleinrock ��IMS Inst. for HI...... 6 October Mark Laffoon ��Novation...... 6 4-6 – Collaborative Family Healthcare Economic Index Lora Pellegrini ��MAHP...... 8 Association Conference, Austin, Texas. Michael Widmer ��Mass. Taxpayers Foundation...... 8 10-12 – National HIPAA Summit Rev. Burns Stanfield ��Greater Boston Interfaith Org...... 8 12-month moving average Steve Walsh ��Massachusetts House of Reps...... 8 West, San Francisco. Mary Freire ��Foundation for the NIH...... 11 21-24 – MGMA Annual Conference, Index 1-Year Change (%) Curtis Rooney ��HSCA...... 13 San Antonio. Rick Langfelder ��Lutheran Medical Center...... 13 Ellen Kugler ��NAUH...... 14 ■■ S&P Healthcare Economic Composite Index...... 5.78% John Bluford ��Truman Medical Centers...... 14 Caroline Steinberg ��American Hospital Association....14 ■■ S&P Healthcare Economic Commercial Index...... 8.09% Terri Scannel ��Veterans Health Initiative...... 15 John Messervy ��Partners Healthcare...... 15 ■■ S&P Healthcare Economic Medicare Index...... 2.27% Jeff Thompson ��Lutheran Health System...... 15 Alan Swenson ��EIA...... 16 ■■ S&P Healthcare Economic Hospital Index...... 5.22% Elise Smith ��American Health Care Assoc...... 26 Bruce Landon ��Commonwealth Fund...... 26 ■■ S&P Healthcare Economic Hospital Medicare Index...... 1.96% Zirui Song ��NBER...... 26 Thomas Lee ��Partners Healthcare System...... 26 ■■ S&P Healthcare Economic Hospital Commercial Index...... 7.81% Walt Henderson ��Go Direct...... 27 Richard Parker ��BIDPO...... 27 Benjamin Miller ��CFHA...... 28 Source: Standard & Poor’s. Data through July 2012. Jill Dailey ��Accenture...... 28 Rick Klein ��Aurora Health Care...... 29 Larry Schreiber ��Anthem BCBS...... 29 Sherry Sanderford ��Aetna...... 29 Patrick Gordon ��Colorado Beacon Consortium.....30 Dennis Jay ��CAIF...... 31 November OnTheMove Lisa Joldersma ��BCBSA...... 31 5-6 – National Comparative Bill Lucia ��HMS...... 31 Effectiveness Summit, Washington, D.C. William D. Petasnick, who recently retired as the president and CEO of Yair Holtzman ��WTP Advisors...... 32 Victor Strecher ��UMSPH...... 32 12-13 – American Health Care Froedtert Health System, is joining the board of directors of healthcare real Duncan Dashiff ��Epiphany Health Ventures...... 32 Congress, Anaheim, Calif. Rob Coppedge ��Cambia Health Solutions...... 32 13-14 – Health Insurance Exchange estate leader, Erdman Company. PwC US announced that Gary M. Jacobs Steve Ferguson ��Cook Group...... 33 Congress, Chicago. has joined the firm’s Health Industries Advisory practice as a Bruce Carlson ��Kalorma Information...... 33 Douglas Goldstein ��Diversinet...... 33 December managing director based in Washington, D.C. Ed Jones has Dan Brostek ��Aetna...... 33 3-5 – mHealth Summit, Washington, D.C. Nick Martin ��United Healthcare...... 33 been named president and CEO of HealthTrust and Supply James Albert ��Jordan Health Systems...... 33 12-13 – The Privacy and Security Chain Solutions. UHC has named Dan O’Brien vice president Richard Katz ��GWU Medical Center...... 33 Forum, Boston. Thomas Hawes ��Sandbox Industries...... 33 of finance. Acadia Healthcare Company, Inc. has announced Joseph Howell III ��HCA...... 33 Susan Reese ��Kronos...... 34 the planned departure of Jack Polson, executive vice president Barb Kathy Wojno ��HPMC...... 34 and CFO of the company. David Ebel and David Kiehn have Jacobsmeyer Kathy Baker ��VCU Medical Center...... 34 AD INDEX Kathye Habig Nippert ��Catholic Health Partners...... 34 joined Warbird’s Healthcare CFO Consulting Network. The Blue Cross and Dawn Duchek ��Gateway EDI ...... 34 3M Health Information Systems...... S7, S8 Holly Louie ��HBMA...... 34 Aetna Health Insurance Company...... 37 Blue Shield of Minnesota board of trustees announced that Kenneth Burdick Jeannie Cimiotti ��UPenn School of Nursing...... 35 AHIP...... 8 has left the organization as president and CEO. South Nassau Communities Marcia Patrick ��APIC...... 35 Aramark Healthcare...... 15 Bob DeLuca ��IMA Consulting...... 36 Athenahealth...... S2 Hospital announced that Richard J. Murphy has been select- Scott Perricelli ��LLR Partners...... 36 Beacon Partners...... 35 Bob Kramer ��SHCI...... 36 Craneware...... 29 ed as the hospital’s next president and CEO. He succeeds Doug Korey ��Contemporary Healthcare Cap....36 Edifecs...... S7 Joseph A. Quagliata, who will be retiring at the end of 2012. Emdeon Business Services...... 16 Fifth Third Bank...... 2 Maria Freire has been elected president of the Foundation for GE Capital...... 5 Healthcare Education Associates...... 4 the National Institutes of Health (FNIH). Arthur A. Gonzalez, HEALTHCARE FINANCE NEWS (ISSN 1932-7021) is published HIE Summit...... 6 Brett Furst has been appointed CEO of Denver Health. Brett Furst has monthly, except in January and July, by MedTech Media, 71 Healthtrust Purchasing Group...... 40 Pineland Drive, Suite 203, New Gloucester, ME 04260. HIMSS Business Insider...... 25 been appointed CEO of ArborMetrix,Inc. HealthSouth has announced the Phone: 207-688-6270; FAX: 207-688-6273. Qualified IIR USA...... 6 subscribers receive HEALTHCARE FINANCE NEWS free of Intellicentrics...... 39 promotion of Barb Jacobsmeyer to president of the central region following charge. Non-qualified subscribers in the U.S. are charged JP Morgan/Kinsella...... 30 $72/year. Canadian subscriptions $96/year. Foreign marcus evans...... 36 the recent retirement of current regional president Terry Maxhimer. Dorothy subscriptions $150/year, includes airmail delivery. Single MedeAnalytics...... 12 Puhy has been named executive vice president and chief operating officer copy, $8. Periodicals Postage Paid at New Gloucester, ME Optum...... S7 and additional mailing offices. POSTMASTER: Please send Optum...... 27 of the Dana-Farber Cancer Institute. Karen Bird will succeed Puhy as chief address changes to HEALTHCARE FINANCE NEWS, P.O. Box QuadraMed Corporation...... S7 47707, Minneapolis, MN 55447. ©2012 by MedTech Regions Bank...... 7 financial officer and assistant treasurer. Wayne Lindstrom has been named Media. All rights reserved. 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Guiding the Enterprise to ICD-10: A Strategic Approach

Featuring discussions from the Beacon Partners Roundtable, Boston, MA, May 2012.

mong the numerous initiatives affecting healthcare organizations, the transition from ICD-9 to ICD-10 arguably ranks A as the most far-reaching to impact their business. The proposed delay of ICD-10 from the original date of October 1, 2013, to the proposed date of October 1, 2014, has created even more confusion for an industry that is still trying to grasp the implications of this massive conversion.

Beacon Partners, one of the largest healthcare management consulting firms in North America, convened a roundtable in May 2012 comprising leaders from respected health systems across the country and moderated by Dan Head, Healthcare Consulting Principal at McGladrey, the fifth largest accounting firm in the U.S. The four panelists discussed the challenges and opportunities they face in implementing ICD-10. As healthcare providers either begin their initiatives or assess their progress to date, learning what their peers are doing in terms of planning and implementation strategies and models can help shape their critical next steps.

Special four page insert in July/August 2012 Healthcare Finance News print edition. Understanding the Scope and Taking Ownership HIMSS, WEDI ICD-10 A number of surveys released earlier in the year shed light on the state Survey Results of ICD-10 readiness. The surveys reﬂ ect the various stages of planning and implementation among healthcare organizations, and the roundtable According to the Health Information panelists’ experiences validate that distinction. One theme was and Management Systems Society’s universal among all four, and no doubt, across the industry: Establishing (HIMSS) 2012 Leadership Survey, momentum was a challenge. If organizations aren’t overwhelmed by the which was conducted in December size and scope of the conversion, it’s because they don’t fully understand 2011 and January 2012, nearly 90 the impact. “People didn’t have the proper context of just how broad percent of the 302 respondents it was going to be throughout the organization. Now we realize it’s indicated they expect to complete going to touch every piece of operations and it’s going to really affect their ICD-10 conversion by the the organization,” said Craig Williams, COO of Tufts Medical Center previously designated October 2013 Physicians Organization, a world-class academic medical center based in deadline. Boston.

Nearly half of the 2,118 provider Tufts Medical Center: Assessing the revenue risk respondents to the February 2012 Originally begun in its case management area, the project is Workgroup for Electronic Data currently being led out of fi nance. “We were trying to do an internal Interchange (WEDI) ICD-10 readiness assessment, but we weren’t getting all the information we needed survey indicated they did not know from that project,” Williams said. Tufts recently hired an internal when they would complete their consultant who had ICD-10 experience to manage it, and he in turn impact assessment. Although a put together a multi-disciplinary group and partnered with a small IT third of providers expected to begin vendor and coding fi rm. The medical center hired an outside fi rm to external testing in 2013, another half conduct gap assessment. responded that they did not know when testing would occur. Kettering Health Network: Planning an enterprise-wide project Kettering, a comprehensive non-profi t healthcare network in Dayton, Ohio, also started out slowly, with the implementation of Epic’s electronic medical record (EMR) system putting the ICD-10 project on the backburner, according to Christina Turner, Vice President of Quality for Kettering Medical Center and Chief Quality Offi cer for Kettering Health Network. The IT department limited the scope of the project to an IT upgrade and coder training. Turner was pulled in to be the executive sponsor when the senior vice president of operations realized how far reaching the conversion would be. “We needed somebody who reached across the entire organization because we didn’t want it to be seen as an isolated HIM [health information management], IT or fi nance project, but a project that, if we don’t do this correctly, impacts our ability to capture our case mix, identify our complications, understand how it affects our mortality and all of the publicly reported data,” she said. Kettering contracted out project management to Beacon Partners, which conducted a gap analysis that identifi ed, among other things, key stakeholders for its ICD-10 steering committee.

Memorial Hermann Healthcare System: Governance from the start Memorial Hermann, the largest not-for-profi t healthcare system in Texas serving “We didn’t want [ICD- greater Houston through 12 hospitals, a network of doctors and numerous 10] to be seen as an specialties, approached ICD-10 in a more structured fashion with the existence isolated HIM, IT or ﬁ nance of its Project Management Offi ce staffed by project management professionals. project...” “Anything coming down the pike will always be put around a project,” said Stacey Christina Turner McIntosh, Manager of HIM Technology. The healthcare system reached out to Vice President of Quality physicians and presented a global overview of the project’s scope in June 2010 Kettering Medical Center; and formed a steering committee in the fall. During its assessment, Memorial Chief Quality Ofﬁ cer Kettering Health Network Hermann realized that various directors did not believe their departments would

Visit http://www.healthcareitnews.com/ICD10Strategy to download the complete article. be impacted, which informed the steering committee’s next steps. “After talking to potential consultants who indicated implementing ICD-10 for a system of our size would cost $14 million up to $40 million, Memorial Hermann chose a hybrid approach - doing the project internally and using the AHIMA assessment checklist to start, and bringing in Beacon Partners to provide oversight and outsourcing the fi nancial analytics,” McIntosh said.

ICD-10 as a Strategy: Transformative Opportunities It’s diffi cult for healthcare organizations to see ICD-10 as anything but a mandated “We do think ICD-10 at exercise. Forward-thinking healthcare organizations, however, are looking at this project some level will start to help not as a conversion but as a transformation. Furthermore, they are building a strategy us better describe the kind that approaches ICD-10 not just as a coding project but as a foundation that will enable of care we provide and align outcomes and prove them to participate in other critical national healthcare initiatives such as meaningful our quality.” use, value-based purchasing, payment reform, quality reporting and accountable care organizations. Craig Williams COO Tufts Medical Center: Better alignment and higher quality outcomes Tufts Medical Center Physicians Organization Williams noted that Tufts started thinking about ICD-10 from a strategic view when the project transitioned to its internal consultant and his team. As a smaller- scale medical center operating in a competitive market in the Boston area, Tufts is positioning itself to payers as providing unmatched high quality, low-cost care with a breadth of services. “We do think ICD-10 at some level will start to help us better describe the kind of care we provide and align outcomes and prove our quality,” Williams said.

Kettering Health Network: Project synergy to optimize resources Constrained by limited fi nancial and human resources, Kettering started looking for synergies across all its health IT initiatives – executing well on one deliverable that will benefi t three or four different projects. “We’ve been very intentional in trying to map those things where there are intersections or overlaps in the projects to optimize the resources that we have,” Turner explained. Chris Kalish, Executive Consultant and ICD-10 Practice Leader for Beacon Partners who conducted Kettering’s ICD-10 gap analysis, added that communication is especially critical in a large health system to avoid physician practices and hospitals duplicating efforts or creating a different solution for the same problem within the project.

Memorial Hermann Healthcare System: Improvements reinforced by ICD-10 While accuracy and specifi city of a healthcare provider’s documentation will be required for ICD-10, documentation timeliness will also be an issue for Memorial Hermann, given that its 12 facilities have separate by-laws, rules and regulations. The health system is going to use its ICD-10 project to develop enterprise- “Communication is wide documentation standards and timelines for standardization, and transition especially critical in a large from paper-based to digital documents. “We have signifi cant things we can do health system to avoid now because of the ICD-10 project to get the impetus behind those projects,” physician practices and McIntosh said. Given the universal scenario of limited resources spread across hospitals duplicating efforts multiple health IT initiatives, Dan Head of McGladrey emphasized the importance or creating a different of fi nding ways to use the ICD-10 project to a health system’s advantage. solution for the same problem within the project.” Turning the Delay into an Advantage Chris Kalish While various professional organizations have taken sides in support of or opposition to Executive Consultant the proposed compliance date delay, the roundtable panelists agreed that overall the ICD-10 Practice Leader extra year will be benefi cial for their organizations. Beacon Partners

Visit http://www.healthcareitnews.com/ICD10Strategy to download the complete article. Memorial Hermann Healthcare System: “It hasn’t affected our sense of urgency” Memorial Hermann’s original intent was to conduct dual coding internally and test with a couple of payers in October 2012, which will enable them to be fully compliant by July 1, 2013. “We’re still working toward that plan,” McIntosh said. “We don’t want to lose that momentum. It hasn’t affected our sense of urgency.” The delay will enable the steering committee to fi ne-tune its physician engagement piece, documentation training and presentation on the importance of ICD-10. “Being able to test and design collaborative events around the payers and the physicians are the two biggest pieces that we’re going to have some “We don’t want to lose gains,” she said. “It buys us time to do a stellar implementation instead of just a that momentum. [The good implementation.” proposed delay] hasn’t affected our sense of Kettering Health Network: Refocus education efforts urgency.” Being a year behind Memorial Hermann’s ICD-10 implementation schedule, Kettering anticipated just meeting the original compliance date. The delay will Stacey McIntosh HIM Technology Manager enable Turner’s team to build in dual coding and testing, as well as refocus its Memorial Hermann education efforts – and not “just ﬂ ip a switch and hope it works,” Turner said. Healthcare System

Tufts Medical Center: “An opportunity to professionalize the project” By having more time, Tufts has been able to generate greater internal exposure, which has translated into more informed staff, knowledge of what is working well and existing gaps, and a heightened sense of urgency within the organization. “The delay really gives us the opportunity to professionalize the project,” Williams said.

Moving forward, all three panelists point to having more time to continue driving home the value proposition for moving to ICD-10. While there are federal fi nancial incentives for adopting an EMR, there is no immediate or tangible ROI from an ICD-10 conversion project. “We try to take it back to the whole value proposition of our commitment to being a high-quality, low-cost leader: How does it [ICD-10] better defi ne the quality [of care] we give? How does it impact our costs?” Turner said of Kettering’s efforts.

Tufts Medical Center: “The more we can identify that we’re different, the better the results” Williams anticipates that data derived from ICD-10 will validate Tufts as a provider of high-quality, low-cost services, thereby elevating it above the competition. “The more we can identify that we’re different and that’s why we get these results, [the better],” he said. Ultimately, underlying the value proposition is taking on ICD-10 not as an exercise in conversion and compliance but as a transformation of their business and opportunities to improve processes that enable them to deliver cost-effective and higher quality care.

To access the complete article, “Guiding the Enterprise to ICD-10: A Strategic Approach,” that includes an expanded discussion of these issues and other topics, such as risk mitigation, change management, physician engagement and metrics, please visit http://www.healthcareitnews.com/ICD10Strategy to download the complete article.

About Beacon Partners As one of the largest healthcare management consulting fi rms, Beacon Partners is chosen by organizations in the healthcare community to provide advisory services to improve overall operational, clinical and fi nancial performance. Our strategic approach and depth of industry expertise positions us to help organizations navigate the challenges in healthcare and optimize their potential to deliver the highest possible level of patient care. For more information, please visit http://www.beaconpartners.com.