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INTERIM LEADERSHIP | EXECUTIVE SEARCH | CONSULTING SOLUTIONS Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Editorial EDITORS David Burda editor 312-649-5439 / [email protected] Neil McLaughlin managing editor 312-649-5343 / [email protected] AUGUST 16, 2010 Paul Barr news editor 312-649-5230 / [email protected] David May assistant managing editor/features COVER STORY 312-649-5451 / [email protected] With more government involvement comes more Keith Horist assistant managing editor/graphics 312-649-5467 / [email protected] government attention. That’s the lesson about executive ONLINE pay healthcare CEOs could learn as the reform law and Pat Shrader online editor its ramifications settle into place. “It’s important for the 312-649-5418 / [email protected] people who are scraping together the dollars to pay Christine LaFave Grace webmaster/copy editor 312-649-5225 / [email protected] their health insurance premiums to know what luxurious REPORTERS lives these CEOs are leading. They’re living in a parallel Gregg Blesch, Chicago universe,” says U.S. Rep. Jan Schakowsky, left. Page 6 312-397-7585 / [email protected] Joe Carlson, Chicago On the cover: Flanked by WellPoint’s Angela Braly, left, and the NAIC’s Terri Vaughan 312-649-5314 / [email protected] at an early March meeting with HHS Secretary Kathleen Sebelius at the White House, Hemsley answered questions about health insurers’ business practices. Joseph Conn, Chicago 312-649-5395 / [email protected] Front cover photo by Reuters/Landov Matthew DoBias, Washington 202-662-7207 / [email protected] Melanie Evans, New York LATE NEWS 212-210-0209 / [email protected] ONE-MONTH RECORD / Consumer prices for hospital services in July took the Vince Galloro, Chicago 312-649-5299 / [email protected] biggest one-month drop since records began in 1997. Page 4 Jennifer Lubell, Washington 202-662-7215 / [email protected] Maureen McKinney, Chicago THE WEEK IN HEALTHCARE 312-649-5287 / [email protected] 8. POLICY: States’ latest Medicaid boost is 10. SYSTEMS: CHA’s latest 10-year plan Shawn Rhea, New York probably their last encourages cooperation 212-210-0471 / [email protected] 12. ACCESS: California law takes aim at Andis Robeznieks, Chicago 8. POLICY: Drop in Medicare rate 312-649-5374 / [email protected] exacerbates credit outlook for not-for-profits emergency department overcrowding Rebecca Vesely, San Francisco READ Melanie Evans’ “Of Interest” finance blog at 16. PUBLIC HEALTH: Tallying the lessons 415-538-0204 / [email protected] modernhealthcare.com/blogs/of-interest learned from the H1N1 pandemic Jessica Zigmond, Chicago 312-280-3130 / [email protected] COPY DESK OPINIONS/EDITORIALS Julie A. Johnson copy desk chief 20. EDITORIAL: Take those reform studies 21. COMMENTARY: “Consistent 312-649-5236 / [email protected] with a few grains of salt assignment” model helps boost quality Douglas Backstrom copy editor 312-649-5344 / [email protected] James Tehrani copy editor FEATURES 312-649-5237 / [email protected] 24. SPECIAL FEATURE: Base salaries GRAPHICS stagnant, but incentives boost pay Eric Semelroth assistant graphics editor LISTEN To a podcast on compensation trends at 312-649-5346 / [email protected] modernhealthcare.com/podcasts EDITORIAL SUPPORT 30. PATIENT SAFETY: Helping patients make Rebecca Mielcarski special projects/research editor the transition from hospital to home 312-397-5511 / [email protected] Julia Gray editorial assistant/copy editor 34. BY THE NUMBERS: The most prescribed They’re not wasting time, they’re getting 312-280-3173 / [email protected] pharmaceuticals in 2009 ready for medical school, p. 36. Modern Healthcare editorial offices at: 360 N. Michigan Ave., Chicago, Ill. 60601-3806; 711 Third Ave., New York, N.Y. 10017-4036; 5 Third MODERN HEALTHCARE (ISSN 0160-7480). Vol. 40 No. 33 is published weekly by Crain Communications Inc., (except combined issues the last two weeks of St., Suite 1111, San Francisco, Calif. 94103-3212; 814 National December), 360 N. Michigan Ave., Chicago, Ill. 60601-3806. Periodicals postage is paid at Chicago, Ill., and additional mailing offices. U.S. subscription price: $159 per year, $252 for two years; foreign subscriptions: add $54 per year. Canadian subscriptions add $91 for one year (includes GST). Sales Agreement No. Press Building, Washington, D.C. 20045-1801. Member of Business 0293547. GST #136760444. Printed in U.S.A. Title® at U.S. Patent Office. © Entire contents copyright 2010, by Crain Communications Inc. Use of editorial Publications Audit of Circulation. content without permission is strictly prohibited. All rights reserved. POSTMASTER: Send address changes to MODERN HEALTHCARE, Circulation Department, 1155 Gratiot Ave., Detroit, Mich. 48207-2912.
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2 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Webcast
Making a case for IT: How two healthcare organizations used information technology to improve patient care FEATURED SPEAKERS
Wednesday • August 25, 2010 8am pacific | 10am central | 11am eastern REGISTER NOW – COMPLIMENTARY
The American Recovery and Reinvestment Act of 2009 is offering billions Thomas Deas Jr. Board member & former president of dollars in subsidies to healthcare providers to stimulate the use of IT. But North Texas Specialty Physicians (1st-Place Winner of IT Case Study Contest) plenty of organizations are already innovators in their use of IT to improve overall operations and improve delivery of care.
Modern Healthcare’s second annual IT Case Study Contest recently profiled five such organizations. Attend this webcast to learn more from two of the winners, including: Mike Restuccia Vice President & CIO • How IT is being used to improve care and delivery University of Pennsylvania Health System • Strategies for seeking funding under the federal stimulus law (2nd-PlaceWinner of IT Case Study Contest) • How IT is working as a driver toward financial efficiencies
Register Now at ModernHealthcare.com/Webcast8 Joseph Conn Reporter For more information on Modern Healthcare’s webcasts, visit Modern Healthcare (Moderator) ModernHealthcare.com/webinars or email [email protected].
BROUGHT TO YOU BY: SPONSORED BY: Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Late News Hospital prices for consumers specifically from the provision of health perform at least 40 hours a week of insurance coverage” in the health reform supervised patient care,” the AHA writes. In see biggest drop since ’97 law can be excluded from insurers’ revenue March, the IRS agreed to return payroll Consumer prices for hospital services fell calculations. However, the National taxes to institutions and students that filed 0.5% in July, the largest one-month drop Association of Insurance Commissioners, claims for refunds before April 2008, the since the U.S. Bureau of Labor Statistics which plans to issue recommendations on end of a three-year window following the began publishing comparable data in 1997. the medical-loss ratio provision, seems to 2005 rule change (March 8, p. 16). Last month’s decline is the first since differ on interpretation. One NAIC committee August 2005, when the Consumer Price already recommended that all federal taxes Sun Healthcare readies public Index for hospital services dropped 0.2%. be excluded in revenue calculations except offering of 26.7 million shares The figures are seasonally adjusted. Last for investment income taxes, said Brian month’s decline compares with a 0.7% Webb, manager of health policy and The rehabilitation and medical staffing increase a year ago and a 0.6% increase in legislation for the NAIC. company Sun Healthcare Group, Irvine, June. For the 12-month period ended in July, Calif., announced plans for a public offering the hospital Consumer Price Index rose Catholic Health East names of 26.7 million shares, with the net 6.9% compared with 7.1% a year ago. The proceeds expected to total between physician CPI increased 0.4% in July Welch to executive VP post $195 million and $225 million, according to compared with an increase of 0.2% a year Catholic Health East named H. Ray Welch Jr. a news release from the company. The ago and an increase of 0.5% in June. For to the job of executive vice president of offering, which is being underwritten by the 12-month period ended last month, ministry operations. Welch, 62, president financiers who have 30-day options to consumer prices for physician services rose and CEO of the Catholic system’s four- purchase an additional 4 million shares, will 3.3% compared with 3.4% a year ago. hospital subsidiary Mercy Health System of be used to pay down a portion of an existing Southeastern credit facility by the publicly traded company. Congress tries to clarify which Pennsylvania, based in Sun Healthcare’s subsidiaries include Conshohocken, will nursing-center operator SunBridge taxes to be excluded from revenue begin his new position Healthcare Corp., rehab provider SunDance The Democratic chairmen of six on Sept. 7, according Rehabilitation, medical staffing firm congressional panels sent a letter to HHS to a news release from CareerStaff Unlimited and hospice provider clarifying the intent of a section of the health the system. Catholic SolAmor Hospice. The company had reform law that outlines which federal taxes Health East, Newtown $42 million in earnings before interest, can be excluded from health insurers’ Square, Pa., owns 23 taxes, depreciation and amortization on revenue calculations. These revenue hospitals in nine $475 million in revenue in the quarter calculations are important because insurers states, and Welch will Welch ended June 30. Richard Matros, Sun’s CEO have to meet standards starting next year help develop the and chairman, is the eighth-highest paid on how they spend member premiums. system’s regional strategies and ambulatory CEO on Modern Healthcare’s ranking of Under the law, health insurers must spend development and oversee its mid-Atlantic healthcare for-profit specialty-care providers at least 85% of subscriber premiums on operations, the release said. (See related story and chart, p. 6). medical costs in group coverage plans, and at least 80% of premiums on medical costs AHA, AAMC briefs support Froedtert buying doc practices, for individual plans. While regulations on medical-loss ratios are still forthcoming from challenge of resident FICA case clinics from ProHealth Care HHS, the six chairmen said the law’s intent The American Hospital Association and the ProHealth Care, a two-hospital system is that only federal taxes and fees “derived Association of American Medical Colleges based in Waukesha, Wis., reached a filed friend-of-the-court briefs in support of a preliminary agreement to sell 51 physician lawsuit to be heard by the U.S. Supreme practices, several clinics and a partial Court challenging the Internal Revenue ownership stake in an ambulatory surgery Why buy an Service’s stance that medical residents center to Milwaukee’s Froedtert & asset tracking aren’t students when it comes to exempting Community Health. Financial details of the them from payroll taxes. The court agreed transaction between the two not-for-profit system that only June 1 to review a lawsuit brought by the Wisconsin healthcare providers were not Mayo Clinic, which argues that the IRS released. A news release said the parties tracks assets? diverged from the intent of Congress in the were still finalizing the purchase Federal Insurance Contributions Act, or FICA, agreement. In addition, Froedtert will with a rule change in 2005 that bars acquire ProHealth’s partial ownership medical residents from qualifying for the stake in the ambulatory surgery center on exemption. More than $700 million a year is the campus of Community Memorial collected from residents and their Hospital, Menomonee Falls, Wis., which is sponsoring institutions “simply because one of three acute-care hospitals in the residents, in addition to the lectures, Froedtert integrated system. The center is 800.331.3603 conferences and other types of more formal now jointly owned by ProHealth, Froedtert www.teletracking.com/RFinfo classroom education that they receive, and Aurora Health Care.
4 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints
Smarter business for a Smarter Planet: Where does a hospital go when it needs a checkup? Healthcare organizations today are under tremendous pressure to reduce costs, create efficiencies and improve patient care. But with data growing exponentially, how can they gain the insights they need to drive better performance? The answer lies in better use of information. IBM Cognos® solutions can help you navigate your existing systems and embed intelligence into your decision-making process. By connecting disparate data—operational, financial, clinical—and leveraging performance management tools such as scorecards and dashboards, organizations can analyze service lines, collaborate on care processes and make better decisions faster. For example, IBM Cognos solutions helped one provider reduce the reporting time of critical success metrics from weeks to seconds, and improve patient care by alerting physicians to potential gaps in treatment. Smarter healthcare needs smarter software, systems and services. Let’s build a smarter planet. ibm.com/cognoshealthcare
IBM, the IBM logo, ibm.com, Smarter Planet and the planet icon are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at www.ibm.com/legal/copytrade.shtml. © International Business Machines Corporation 2009. Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Cover Story >> Vince Galloro Subsidized then scrutinized
than a dozen banks and GM. Reform will bring billions of dollars to In 2010, Congress approved and Presi- dent Barack Obama signed into law two the industry, but it could also deliver measures that are collectively known as healthcare reform. Reform means billions more federal dollars will be injected into added examination of executive pay healthcare. And, just like with TARP, there’s plenty of outrage stemming from both the ank and auto executives have shareholder in General Motors Co. policy itself and executive pay in the affected found out that one of the con- It didn’t take long for the federal govern- industry—in healthcare’s case, particularly sequences of more federal sup- ment to decide that, if it was going to pay for insurers. port is more federal scrutiny of the piper for bailouts, it was going to call Last spring, federal lawmakers sponsoring a their pay. Are healthcare CEOs the tune on executive compensation for the bill to grant HHS more authority to oversee in line for the same lesson? recipients. Getting tough on executive insurance rates also ripped the compensation BIn 2008, the federal government made compensation also was a response to voter of health insurance CEOs. A study of unprecedented forays into the financial ser- anger about exorbitant pay for bailout 342 CEOs in the Standard & Poor’s 500 index vices industry. Congress approved and Presi- recipients. The Treasury Department found CEOs of healthcare companies, broadly dent George W. Bush signed the $700 billion appointed a pay czar in June 2009 to over- defined, were the top compensated CEOs in Troubled Asset Relief Program. In 2009, the see executive compensation at companies 2009 (See chart, p. 14). federal government became the majority receiving TARP money, including more Just last week, Health Care for America Now, a lobby group with heavy union backing that supported healthcare reform, issued a report totting up executive compensation for 10 insurers from 2000 to 2009, with totals of Thiry’s total $842.9 million for exercised stock options and compensation was $944.1 million for all other compensation. nearly $29 million, Nine of the insurers highlighted by Health but a spokesman Care for America Now are part of Modern said the company’s Healthcare’s eighth annual survey of health- share price has care services CEO pay. The survey covers the increased 1,300% compensation of the CEOs of 10 companies in since Thiry joined three sectors: hospitals, insurers and specialty- DaVita care providers.
Top of the tables Stephen Hemsley, president and CEO of UnitedHealth Group, took the top spot in this year’s survey, with $106 million in total compensation, including stock option exer- cises that netted him $98.6 million. Last year’s top earner—Wayne Smith, chairman, president and CEO of Community Health Systems—led hospital executives again with $20.8 million in total compensation, but
See COVER STORY on p. 14
6 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints COMPENSATION LEADERS
Fiscal 2009 figures, ranked by total dollar compensation Percentage Exercised change Annual stock Total in stock CEO Company compensation* options compensation price** Acute-care hospitals Wayne Smith Community Health Systems $17,532,990 $3,268,650 $20,801,640 144.2% Bill Carpenter LifePoint Hospitals 6,407,629 4,265,996 10,673,625 42.4 Richard Bracken HCA 8,891,875 0 8,891,875 NA Alan Miller Universal Health Services 7,323,314 0 7,323,314 63.2 Trevor Fetter Tenet Healthcare Corp. 6,795,750 0 6,795,750 368.7 Gary Newsome Health Management Associates 4,306,064 0 4,306,064 306.1 Samuel Lee Prospect Medical Holdings 3,750,008 0 3,750,008 72.0 Charles Martin Jr. Vanguard Health Systems 2,530,952 0 2,530,952 NA David White Iasis Healthcare 2,435,128 0 2,435,128 NA Ken Westbrook Integrated Healthcare Holdings 665,602 0 665,602 233.3
Insurers Stephen Hemsley UnitedHealth Group $7,459,610 $98,578,350 $106,037,960 14.7% H. Edward Hanway Cigna Corp. 17,048,794 950,026 17,998,820 110.0 Michael McCallister Humana 3,115,978 11,015,385 14,131,363 17.7 Ronald Williams Aetna 8,170,272 5,419,064 13,589,336 11.4 Allen Wise Coventry Health Care 10,202,289 0 10,202,289 63.2 Angela Braly WellPoint 9,134,510 1,027,231 10,161,741 38.4 Michael Neidorff Centene Corp. 6,077,900 14,600 6,092,500 7.4 James Carlson Amerigroup Corp. 3,053,954 1,679,242 4,733,196 (8.7) Jay Gellert Health Net 3,643,342 0 3,643,342 113.9 Heath Schiesser WellCare Health Plans 2,500,958 0 2,500,958 185.8
Specialty-care providers Kent Thiry DaVita $3,815,982 $25,159,265 $28,975,247 18.5% John Byrnes Lincare Holdings 16,002,353 5,528,345 21,530,698 37.9 Joey Jacobs Psychiatric Solutions 6,967,003 425,062 7,392,065 (24.1) Jay Grinney HealthSouth Corp. 4,908,661 0 4,908,661 71.3 Paul Diaz Kindred Healthcare 4,322,783 454,491 4,777,274 41.8 Ronald Malone Gentiva Health Services 2,151,116 2,174,875 4,325,991 22.3 Rene Lerer Magellan Health Services 3,751,953 95,196 3,847,149 7.3 Richard Matros Sun Healthcare 2,169,209 0 2,169,209 3.6 O. Edwin French MedCath Corp. 2,133,203 0 2,133,203 7.7 Timothy O’Toole Vitas Healthcare Corp.*** 2,058,949 0 2,058,949 21.6
*Includes salary, bonus, restricted stock grants, changes in pension and deferred compensation plans as reported in proxy statements. **Adjusted for dividends and stock splits for each company’s fiscal year. NA=Not applicable. ***Subsidiary of Chemed Corp.
Sources: Commodity Systems, Securities and Exchange Commission filings, Thomson Reuters
August 16, 2010 • Modern Healthcare 7 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints
in The Week Healthcare POLICY >> Matthew DoBias high at a time when state revenue growth remains weak. Almost all of the states are likely to continue to see budget gaps heading into their fiscal Another Medicaid boost ... 2011, the report adds. “It’s really critical,” Kohler said of the funding. “States are in a ter- … but states shouldn’t plan on getting any more rible financial bind right now.” State governors were left in a holding pat- tate officials got a reprieve from the fed- cuts and restrictions to care. tern after passage of the legislation took eral government last week after Con- Ann Kohler, director of the National Asso- decidedly longer than expected. In New gress cleared legislation that extends a ciation of State Medicaid Directors, warned, York, state officials had budgeted for an higher share of the Medicaid matching however, that more needs to be done. “It will additional $800 million in Medicaid dollars, rate.S But after a lengthy battle on Capitol Hill, fill in some of the deficits that states are fac- but had to craft an alternative plan just in few expect to see any more extensions. ing right now,” she said. “Without it, states case it wouldn’t come. That would have The enhanced payments, courtesy of a probably would have made some pretty dra- resulted in deep payment cuts to healthcare broad economic stimulus package conian cuts.” providers and schools. passed in 2009 but set to expire at Even so, the six-month exten- Laura Appel, vice president of federal policy year-end, instead will extend sion likely won’t be enough to and advocacy for the Michigan Health & Hos- through June 2011. backfill money that states have lost pital Association, said that added money Starting at a rate equal to about a after a prolonged economic slump. helps, but does little to improve the already 6.2% bump in pay, the bonus pay- “This will not fill their entire slim margins that providers work under. ments will be phased out over two deficits,” Kohler said. When the original enhanced Medicaid pay- quarters next year, first down to In a report released by the Kaiser ments rolled in to Michigan, Appel said they 3.2% and then to 1.2%. Commission on Medicaid and the were able to fund a growth in caseload and For cash-starved states, which Uninsured, researchers found that utilization—but just barely. had already come to depend on the Appel: “I think it’s even as the overall economy slowly The state received about $1 billion in addi- federal bump, the enhanced fund- realistic to assume that begins to recover, Medicaid case- tional funds in fiscal 2010, but even so, with the ing could help them stave off job this is it for a while.” load and spending growth remain sluggish economy the program was operating
POLICY >> Melanie Evans slowly than in prior years—or not at all. Medicare may make further rate cuts, he said. “We’re not anticipating we’re going to see Negative forecast much in the way of increases,” from Medicare, said Steven Glass, chief financial Medicare drop exacerbates not-for-profit outlook officer for the Cleveland Clinic. Glass said that leaves the system’s 11 hospitals to ospitals facing Medicare Service said in a report last week, is “an grapple with stagnant Medicare payment payment cuts totaling unambiguous credit negative for not-for- rates as the economy continues to struggle $440 million this fall have begun profit hospitals and a key driver to our and operating costs rise. “Certainly, we are scouring budgets for cuts of maintaining a negative outlook for the experiencing inflation,” he said. Htheir own. But they may not find enough industry.” It’s also the first time in more than Hospitals and health systems say the there to satisfy one major ratings agency that a decade that Medicare similarly reduced October drop in Medicare rates has them says not-for-profit hospitals’ outlook hospital rates, said Moody’s, citing the 1997 looking to make up lost revenue with efforts to remains bleak. Balanced Budget Act, which strained hospital curb expenses or increase payments elsewhere. Starting in October, the beginning of the finances and weakened credit ratings. To maintain its margin, Glass said the federal fiscal year, Medicare will pay hospitals Mark Pascaris, a vice president and senior Cleveland Clinic regularly evaluates its costs less for hospitalized patients than it did in analyst for Moody’s healthcare team, said the and capital spending, and Medicare’s 2010. The scheduled 0.4% reduction to stress on revenue is expected to continue after reductions will increase the pressure on inpatient payments, Moody’s Investors 2011 and Medicare rates will grow more operating performance.
8 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints BY THE NUMBERS The most expensive mistakes ($ in millions) study of avoidable medical errors in $3,858 $3,676 2008 concluded the mistakes cost A the U.S. economy $19.5 billion. The researchers analyzed administrative $1,133 $1,123 $960 claims data and considered the costs such as treatment and missed workdays Pressure Postoperative Device Post-laminectomy Hemorrhage- attributed to 1.5 million medical errors. ulcer infection complication syndrome complicating Source: Society of Actuaries procedure
with 8% less funding. “For a while, it meant tak- Michigan, where 1 in 6 residents rely on Medic- recess session Aug. 10, when the House passed a ing care of more people with the same money,” aid and more than 1.15 million uninsured resi- $26.1 billion package of state aid that includes she said. “But then it meant taking care of more dents were unable to pay for their care. “I don’t roughly $16.1 billion in Medicaid assistance and and more people with 8% less.” know what our state government is thinking, another $10 billion more for education. Appel said that from the association’s stand- but I don’t think we’re thinking that anything As an aside—and a way to help pay for the point, they don’t expect to see any more bonus more is going to come,” she said. “I think it’s bill—the package also includes a measure that dollars flowing through to their state. And that realistic to assume that this is it for a while.” makes some inhalation medications, infusion could mean a tough time in the coming years in Passage of the measure came during a rare and injectable drugs subject to the average- manufacturer-price benchmark if they’re not dispensed through a retail pharmacy. The Senate had passed the bill just before AP PHOTO it exited for the month, effectively forcing the House to break into its scheduled August recess to return and clear the mea- sure for President Barack Obama’s quick signature. With lawmakers eager to return to their home districts for election cam- paigning, the House passed the measure on a 247-161 vote. “It’s about nurses and healthcare providers to keep our country strong in terms of the health and well-being of the American peo- ple,” House Speaker Nancy Pelosi (D-Calif.) said, referring to the legislation. “It’s about the stability of state budgets.” Two Republicans voted for the measure, which will send states about half of what The bill, signed by Obama Aug. 10, was part of a $26.1 billion state aid package. Obama had sought. <<
Executives at the 610-bed Robert Wood results will grow more difficult to achieve. additional cuts from a 2007 law that calls for Johnson University Hospital project that lower SSM Health Care, which owns 14 hospitals in Medicare to offset payments deemed Medicare rates through 2014—when Medicaid four states, expects to see Medicare revenue excessive after the CMS reworked its hospital expansion and newly created insurance drop by $1.8 million its next fiscal year, Dixie billing in 2008. The 0.4% reduction is exchanges are expected to increase coverage— Platt, senior vice president of mission and expected to save Medicare $440 million. will squeeze 0.5 percentage points annually external affairs for the Catholic system, said in a Medicare’s rate drop may be a key reason from operating margins, said Paul Storiale, the written statement. The St. Louis-based system why analysts say the not-for-profit hospital New Brunswick, N.J., hospital’s chief financial has not completed its 2011 budget, sector’s outlook is negative, but it’s officer. The hospital reported an operating and “we expect to overcome the not the only one, the Moody’s report margin in 2009 of 3.7%. reduction through cost management said. Other initiatives to prevent The hospital has not yet completed its 2011 and process improvement,” Platt overuse of medical services, waste budget, when Medicare’s rate cut will reduce said. The SSM fiscal year begins and fraud are expected to reduce revenue by $5 million, he said. However, Jan. 1, three months after the start of Medicare spending to providers, executives have scaled back capital spending the federal fiscal year. including hospitals, by another plans and will move more slowly to replace The 0.4% reduction comes as a $500 million, Moody’s said. The technology, he said. result of lower Medicare payments economy remains weak. The safety Storiale, also the hospital’s senior vice included in the Patient Protection net insurer Medicaid is expected to president of finance, said ongoing efforts to and Affordable Care Act—which Glass: “We’re not reduce hospital payments. Rate reduce hospital expenses and increase revenue are expected to save the government anticipating ... much in negotiations with insurers will likely have already tackled the easiest options and $150 billion over a decade—and the way of increases.” grow more difficult. <<
August 16, 2010 • Modern Healthcare 9 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare
SYSTEMS >> Joe Carlson ing, a steering committee coalesced in 1986 and issued the forward-looking report, A New Vision for a New Century. The report urged Catholic hospitals to merge together into health systems Seeking Catholic cohesion for strength and stability in the face of a wave of for-profit hospital activity and financial pres- CHA report stresses cooperation over consolidation sures. Today the three largest not-for-profit hos- pital owners in the country are all Catholic— acing a future of challenges on seem- and mounting financial challenges that would Catholic Health Initiatives, Denver, has 78 hos- ingly every front, Catholic hospitals test even seasoned Catholic healthcare leaders. pitals today; Ascension Health, St. Louis, has and health systems are working to Witness Boston, where the archdiocese has 77 hospitals; and Catholic Healthcare West, San collaborate as an industry to develop signed an agreement with a secular private Francisco, has 41, according to Modern Health- Ftheir own leaders for tomorrow while provid- equity group to sell its six-hospital system, Cari- care’s most recent systems survey (June 7, p. 18). ing patient-centered care that reaches far tas Christi Health Care, in an $830 million deal This time around, the Vision 2020 steering beyond the confines of acute care. that would allow the new owners to remove the committee saw another set of steep challenges The nation’s roughly 600 Catholic hospitals, hospitals’ Catholic identity for an additional facing the industry and urged a different tack: which treat one in every six U.S. inpatients, $25 million. Or go to New York City, which saw instead of further corporate consolidation, the want to maintain financial viability while not its last Catholic hospital forced to close earlier committee wants Catholic hospitals to find compromising the faith-based legacy this year because of financial pressures. ways to cooperate with each other in sharing that has driven them to seek out “Once they’re gone, they’ll never best practices, pilot demonstration programs, pockets of poor and vulnerable resi- return,” said R.T. Neary, chairman and a Catholic leadership registry. dents who need access to healthcare. of the Coalition to Save Catholic “In local communities across the country Their 10-year plan for Catholic Health Care, a group opposed to which are fortunate to have more than one healthcare was recently laid out in a the Caritas Christi sale. “We want Catholic health ministry, efforts should be 46-page report that was a year in the to ensure that Catholic healthcare made to offer services that complement one making. The Vision 2020 report on will continue. We are convinced another and to work together to provide ser- the national direction of Catholic that if it ends in the Boston area, vices that meet the needs of the vulnerable healthcare in the U.S. was published that’s the end of it. It would simply populations in that market,” the report says. by the Catholic Health Association in Persichilli: “That’s be too difficult to start up again.” Mirroring the buzz in other healthcare a landscape of changing patient what a vision is; it’s a The last time Catholic hospitals provider circles, the report’s authors urge demographics, growing lay leadership hope for the future.” foresaw a set of challenges this daunt- Catholic hospitals to embrace the notion that
POLICY >> Jennifer Lubell require more resources from hospitals and more digging on behalf of the RAC program auditors. The addition of these reviews adds Recipe for necessity “another complicated burden to the RAC process,” said Karen Schmidt, director of Providers wary of delays from new RAC reviews medical records for 777-bed Henry Ford Hospital in Detroit. Hospital clinicians are ealthcare experts are questioning claims and one type of durable medical already pressed for time, and the medical whether outside auditors for the equipment claim for medical necessity necessity review adds a clerical component, Medicare program are prepared reviews. As of now, “All of the RAC regions where “the hospital will have to coordinate to take on a new type of advanced have some medical necessity reviews with a physician or caregiver in preparing an Haudit that addresses a touchy and personal approved,” a CMS spokeswoman said. appeal” in the event the hospital wants to subject: the necessity of a patient’s care. Medical necessity reviews are likely to begin challenge the review, she said. The CMS said it approved the in the next couple of weeks. What concerns the American Hospital first “medical necessity review” RACs previously had mainly Association and others in the industry is that audits for the Recovery Audit been conducting automated audits, RAC auditors may lack the necessary clinical Contractor program, opening the which are less-complex reviews and Medicare knowledge to determine whether door to more potential problems that involve running data queries prior hospital care was reasonable, given the for providers, who fear added delays and seeking immediate claims experiences of hospitals during the RAC and increased rejection of denials, and complex reviews, program’s three-year demonstration project. reimbursements. RAC third-party which ask for medical records and The AHA “continues to have concerns about auditors hired by the CMS get to the coding of a specific claim. RACs being paid on a contingency basis to do keep 9% to 12.5% of provider Medical necessity reviews, medical necessity reviews,” which caused more payments they identify as improper. Schmidt: Hospital- though, delve into the problems during the demonstration project So far, the agency has approved physician coordination appropriateness of medical care than any other type of audit, said Don May, the 18 types of inpatient hospital necessary for appeals. given to a patient, meaning they’ll AHA’s vice president of policy.
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patients should receive support and care in the most appropriate environment possible— even when that’s outside the hospital. That means cooperating with other organiza- tions to make sure that patients have access to solid primary care outside the hospital, particu- larly in areas with growing pockets of vulnerable residents. Advances in technology will allow more providers to deliver care in the home, a trend that Catholic hospitals ought to embrace, it says. Judith Persichilli, who this year became pres- ident and CEO of 23-hospital Catholic Health East, based in Newtown Square, Pa., said she was heartened to see that the report reflects many of the priorities already in place at CHE and in Catholic systems and hospitals across the coun- try. “We’re all trying to do the same thing. That’s what a vision is; it’s a hope for the future,” Per- sichilli said. “This, rightfully so, is more of a An elder-care consultant from St. Peter’s Health Care Services, Albany, N.Y., visits with a visionary report, in that it’s expansive yet reach- patient in his apartment. Delivering more care at home is a goal of the CHA’s Vision 2020. able. So it will apply differently in different envi- ronments. It won’t all look the same.” torical commitment and work of the Catholic the Vision 2020 project for the association. CHE hospitals are already implementing community already,” said Colleen Scanlon, a “Consistent with our respect for dignity programs to follow discharged inpatients back senior vice president with Catholic Health Ini- and life, this all fits together. … It’s not all into the home for regular monitoring to tiatives and chair of the Vision 2020 steering about hospitals or nursing homes or institu- reduce readmission rates, Persichilli said, and committee. “We see it as a way to catalyze and tional care. New and advancing technologies one hospital has what she called a “micro- improve” efforts that are already under way. will allow care, when appropriate, to be deliv- accountable care organization” to increase Paying attention to their preferences will be a ered in the home,” Bauer said. “It’s looking at efficiency and care delivery—both of which fit job for hospitals and providers all along the con- what are the needs of the individual are and within Vision 2020’s goals, she said. tinuum of care, said Elaine Bauer, vice president providing the services in ways that best help “In some ways the vision builds on the his- of strategic initiatives for CHA and facilitator of that individual.” <<
Although the CMS has tried to make conducting these reviews—but at the same necessity determinations, Martin said. improvements to the RAC program since the time, hospitals shouldn’t necessarily assume Guidelines exist in the private sector, but demonstration, such as appointing medical that, Corrato said. none are applicable to all types of care. officers to each of the four permanent RAC For that reason, hospitals need to be on There’s also no guarantee that all of the contractors, it is unclear what the officers’ guard—and prepared—once these reviews information relevant to a review will be fully scope of knowledge is, and whether other start rolling out, Corrato said. available to the RACs in making these medical staff will be employed to provide Hospitals have to ensure that every day medical necessity decisions, he said. Hospitals expert advice, May said. they’re complying with the medical necessity aren’t the custodians of people’s medical “For example, if the RAC is doing a specific review process, that patients are being histories, or the clinical information pertinent review of a type of cancer care, will they have an admitted to the right status, whether for medical necessity determinations, he said. oncologist doing the review” or a doctor with inpatient or observation, he said. Doing so As an example, a patient may go to a no expertise in this area, he said. will make them better prepared for the RAC physician’s office and get tests done to decide According to the demonstration data, appeals process, something they were not whether they need an implantable cardiac providers won almost two-thirds of prepared to deal with during the device—but the result of that may not be appeals filed. “That speaks frankly demonstration, he said. included in the medical chart maintained by to the fact that RACs were not A number of potential the hospital. That means a RAC audit of prepared to conduct medical audits roadblocks face these types of medical necessity for that particular patient in line with clinical and regulatory reviews, said Bo Martin, director of may not be accurate based on the fact that the guidance provided by the CMS,” healthcare disputes compliance and information is incomplete, he said. said Robert Corrato, president and investigations practice at Navigant The RAC program has been implemented CEO of Executive Health Consulting, Chicago. He provides in all 50 states and currently conducts Resources, Newtown Square, Pa., consulting services to hospitals and audits only in fee-for-service Medicare, which offers medical necessity other healthcare providers in although provisions in the new health compliance services. The hope for Corrato: RACs not response to RAC audits. reform law call for an expansion of the RAC the permanent program is that the “prepared to conduct First off, there are no clear-cut program to Medicare Parts C and D and RACs will be more adept in medical audits.” standards for arriving at medical Medicaid by Dec. 31. <<
August 16, 2010 • Modern Healthcare 11 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare
ACCESS >> Maureen McKinney results seen at 676-bed LAC/University of Southern California Medical Center, Los Ange- les, which uses the National Emergency Depart- ment Overcrowding Score system on which the Crowd control California bill is based. Another strategy mentioned in the video was Proposed bill could help ease overflowing EDs the one developed by Peter Viccellio, vice chair and clinical director of the department of emer- alifornia is at the center of a national hospitals to evaluate crowding levels in their gency medicine at 542-bed Stony Brook (N.Y) effort to ease emergency department emergency departments every four to eight University Medical Center. In 2001, frustrated overcrowding. hours using a scoring system with variables by overcrowding and “admitted patients, The state Legislature is one vote such as the total number of patients in the ED stacked in the ED waiting for beds,” Viccellio Caway from sending the governor a bill that and most recent wait times. It would also made a phone call, he explained. Although, like would require hospitals to use scoring assess- mandate implementation of a full-capacity many clinicians, he believed it was against the ments and set hospitalwide protocols to protocol that would determine what specific rules to move patients elsewhere in the hospital, address the problem. actions hospitals would take to improve he called the state health department and found The proposed legislation comes at a time throughput at each stage of crowding. out he was wrong, Viccellio said. when emergency departments across the One of the biggest drivers of overcrowding, “We got the health department to write let- country are struggling to manage a growing in California and elsewhere, is boarding, ters telling hospitals that moving patients to other floors is allowable in times of high capac- ity,” Viccellio said. “If we become overcrowded and we have 20 patients to distribute, we try to put two on each of 10 floors so the burden is shared. It’s pretty obvious and I find it rather odd that it took so long to figure it out.” The approach has led to shorter lengths of stay, quicker admissions and safer care, Viccel- lio said. Perhaps more importantly, it has encouraged the entire hospital to view ED overcrowding as an institutionwide problem that needs to be addressed by everyone. Another more proactive solution, he added, is to smooth surgical scheduling and redistribute work throughout the work week, making beds Overcrowded emergency departments in California will soon have protocols to follow to available more regularly. help ease overflowing if proposed legislation passes. “The 800-pound gorilla in the room is that hospitals continue to look at their business number of ever-sicker patients and are trying according to Adam Landman, a physician like it is a 9-to-5 event, and that’s where these to do it with diminished ED capacity. Accord- associate in the department of emergency traffic jams come from,” Viccellio said. ing to an August report from the Centers for medicine at Brigham and Women’s Hospital, For now, the future of California’s overcrowd- Disease Control and Prevention’s National Boston. Boarders are patients who have been ing bill is uncertain. Despite support from the Center for Health Statistics, the number of admitted to the hospital but remain in the CMA and CAL/ACEP, the state’s public health emergency department visits in 2007 skyrock- emergency department because of a lack of department opposes the bill, contending that the eted to nearly 117 million—up 23% from just inpatient beds, and they stay in the ED using scoring system would saddle beleaguered emer- under 95 million in 1997. Another recent resources, space and clinician attention, and gency departments with yet another task. study published in the Journal of the American making it impossible to see new patients and The California Hospital Association is neu- Medical Association found similar increases keep traffic moving, Landman said. tral on the bill, said Debby Rogers, CHA’s vice and a jump in median ED wait times to 33 He predicts boarding will only get worse as president of quality and emergency services, minutes in 2007 from 22 minutes in 1997. millions more people gain coverage as a result and is currently pilot testing its own modified And California’s emergency rooms are deep of healthcare reform. “It will get very critical scoring scale with a group of 26 hospitals. Los in the crisis, said Assemblyman Ted Lieu, who without action,” he said. Angeles County’s department of health services introduced the bill. “We’re dead last in terms A few years ago, while a resident in the emer- is also neutral, according to Carol Meyer, chief of emergency department overcrowding,” said gency department at Olive View-UCLA Medical of operations, despite the fact that county-run Lieu, adding that overflowing emergency Center, Sylmar, Calif., Landman collaborated USC Medical Center has used the scoring sys- rooms can lead to increased patient morbidity with several colleagues to produce “Boarder tem effectively. and mortality. Patrol,” a short educational video advocating Whatever the fate of the bill, one thing is for Supported by both the California Medical some possible solutions to the problem. sure, said Viccellio: Something must be done Association and the California Chapter of the CAL/ACEP distributed the video to state law- and quickly. “The failure to act in a serious American College of Emergency Physicians, makers, and it was also uploaded to YouTube way has clearly been horrible for patients and or CAL/ACEP, the bill, if passed and signed and Facebook, where it still can be seen, Land- I find it inexcusable because the solutions into law, would require all general acute-care man said. In the video, he highlights the positive require minimal resources.” <<
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TOP 25 Clinical Informaticists NOMINATIONS WANTED Deadline August 20, 2010
Modern Healthcare is seeking nominations for its first annual listing of the Top 25 Clinical Informaticists in Healthcare. This new awards and honors program recognizes medical professionals who excel at using patient-care data to improve the clinical and financial performance of their health- care organizations.
Entry Criteria: • Have you successfully used patient-care data to improve your organization’s clinical and financial performance?
• Have you demonstrated a willingness to share expertise with others in the field of clinical informatics?
• Have you assumed a leadership position in clinical infor- matics outside of your own organization or company?
Deadline: August 20, 2010
For more information visit: ModernHealthcare.com/clinicalinformatics Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare
COVER STORY from p. 6 ing its mortality rate from more than 20% in reports. By their responses to the magazine’s 2000 to 16.5% in 2010, Thurman wrote. 34th annual Hospital Systems Survey (June 7, was fourth overall. Kent Thiry, chairman DaVita’s proxy statement indicated that p. 18), Ardent Health Services, Nashville; and CEO of dialysis provider DaVita, led Thiry moved his residence from Northern Capella Healthcare, Franklin, Tenn.; and specialty-care executives with nearly $29 mil- California to the Denver area in November Prime Healthcare Services, Ontario, Calif.; lion in total compensation. 2009 as DaVita has moved its headquarters had sufficient revenue to make the list, but UnitedHealth Group did not respond to from El Segundo, Calif., to Lakewood, Colo. none of those privately held companies several requests for interviews with either In the past, DaVita paid for Thiry’s use of a reports its executive compensation publicly. Hemsley or with Douglas Leatherdale, the fractional-share plane or chartered jet to The list includes two newcomers. Allen chairman of the company’s compensation travel between his former residence and the Wise replaced Dale Wolf at the helm of Coventry Health Care in January 2009. Prospect Medical Holdings, Los Angeles, with SLOWING THE GRAVY TRAIN its deal to boost its stake in one hospital to a majority interest, increased its net revenue Despite a modest drop in median total CEO from acute-care hospitals above that of Sun- compensation last year, healthcare CEOs still topped Link Health Systems, Atlanta, so Prospect’s the list when compared with other industries. chairman and CEO, Sam Lee, replaces Sun- Change Link CEO Robert Thornton Jr. Prospect also 2009 Compensation in millions from 2008 has an independent physician association Healthcare $10.5 (0.3%) division, but only acute-care revenue was included in considering it for the survey. Basic materials, energy $8.8 (16.7%) The specialty-care portion of the list con- Consumer goods $8.7 (10.8%) tains the same 10 companies and executives as last year’s survey. Conglomerates $8 (2.3%) Next year will see more turnover on the list. Services $7.7 9.8% Alec Cunningham replaced Heath Schiesser as CEO of WellCare Health Plans on Dec. 28, Utilities $7.7 5.6% 2009. David Cordani took over Cigna Corp. as Industrial goods $6.6 (4.8%) president and CEO on Jan. 1, replacing H. Edward Hanway. Technology $6.1 (16%) Financial services $6 (10.8%) No end in sight to scrutiny Whether they are veterans of the list or new (7.9%) All S&P companies $7.5 to it, corporate healthcare CEOs are bound to continue to feel the heat of scrutiny from the Source: Equilar MODERN HEALTHCARE GRAPHIC public and politicians. U.S. Rep. Jan Schakowsky (D-Ill.) committee and former CEO of the St. Paul El Segundo headquarters near Los Angeles— co-sponsored a bill with Sen. Dianne Fein- Cos. Likewise, Community Health Systems, a total of $221,784 in 2009. Thiry and the stein (D-Calif.) to allow rate review for Franklin, Tenn., declined a request to inter- board agreed that it was important for him to insurers before healthcare reform kicks in view either Smith or its compensation com- make his residence in the Denver area to more fully in 2014. In introducing the bill, mittee chairman, H. Mitchell Watson Jr., a encourage other executives and employees to Schakowsky singled out the pay of Angela former IBM executive. A spokeswoman said do so, Thurman wrote. With more than Braly, chairwoman, president and CEO of the company’s proxy statement 2,000 locations in the U.S., Thiry is insurer WellPoint, because the company covers all that it has to say on on the road for 150 days a year in was raising its premiums by 39%, but Smith’s compensation. any case, Thurman added. Schakowsky said Braly’s compensation was DaVita also declined requests to far from the most egregious. For now, interview Thiry or John Nehra, a New blood Schakowsky said she prefers rate regulation special partner with private equity The companies chosen are the to a law that sets compensation. firm New Enterprise Associates and 10 largest by net revenue in each “It’s out of that pot of money that they DaVita’s compensation committee sector that also make periodic make their profits that enable them to pay chairman. DaVita spokesman James reports to the U.S. Securities and their CEOs their very high salaries,” “Skip” Thurman agreed to respond Exchange Commission. Those Schakowsky said. “It’s certainly something to questions with written responses. Smith’s total reports include an annual proxy that Congress needs to monitor, and it’s In the decade since Thiry joined compensation topped statement, either filed as a stand- something that the media ought to expose. It’s DaVita, Thurman wrote, the com- $20 million. alone document or as part of the important for the people who are scraping pany’s share price has increased by annual 10-K filing that details exec- together the dollars to pay their health insur- 1,300%, outperforming 98% of the companies utive compensation. ance premiums to know what luxurious lives in the Standard & Poor’s 500 index in that Three hospital companies that could have these CEOs are leading. They’re living in a time. The company also has improved its clin- made the top 10 list by net revenue could not parallel universe.” ical outcomes for 10 consecutive years, reduc- be considered because they do not file SEC The heat could be turned up as a result of
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stock options granted in 2009, when the stock market was down, said Ed Lawler, director of the Center for Effective Organiza- Purchasing Power Survey now open tions at the University of Southern Califor- odern Healthcare is conducting its $1 billion in U.S. annual revenue. nia. Equilar, an executive compensation Mthird annual Healthcare To participate in this survey, please research firm, found that 87.5% of options Purchasing Power Survey. This survey visit modernhealthcare.com/surveys granted in 2009 were already “in the is intended for any company that and download a copy of the money”—the current share price exceeded provides healthcare benefits to its questionnaire. Completed surveys are the option grant price—at the end of fiscal employees and has a minimum of due Sept. 20 by 5 p.m. CT. 2009. Equilar studied 342 CEOs of S&P 500 companies who were in their jobs in both 2008 and 2009. “Those lucky enough to get stock options near the bottom of the market are poised to benefit greatly,” Lawler said. “That might once again stimulate some discussion or action in Congress.” RELIABILITY HAS A NEW NAME. Michael Faulkender, an assistant professor of finance at the University of Maryland, noted that government’s role in financial ser- vices is unique compared with other sectors of the economy. The decision to extend federal protection for bank depositors, made during the Great Depression, puts the government in the role of backstopping the entire financial system, Faulkender said. Moreover, as the financial crisis in 2008 showed, even those financial institutions that don’t take insured deposits expose the government to risk from bailouts—the too-big-to-fail risk, he said. In healthcare, regulators could be con- cerned about the market concentration among insurers in some markets, Faulkender For years you’ve known us as BremnerDuke, one of the leading healthcare said, which is a version of the too-big-to-fail real estate companies in the United States. Today we enter a new era as risk. The overall level of federal spending on Duke Realty. healthcare raises the separate, more philo- sophical and partisan issue of how much one We still have the same great people who focus on your facilities to enable wants to see government try to fix the imper- you to better focus on your patients. We still understand the importance fections of market-driven outcomes, Faulk- of providing hospitals and physician groups with comprehensive healthcare ender said. Some of those attempts have con- planning, development and compliance-driven, hospital-grade facility sequences that might be contrary to the inten- management services. tion of policymakers and inefficient economi- cally, he said. You can rely on us to bring the passion, expertise, flexibility, integrity and Overall, the research suggests that the struc- ture of pay, rather than its level, is what is long-range vision you are looking for in a healthcare real estate partner. We’ll important, Faulkender said. Pay must be simply do it now with a new name. structured to align incentives for executives with the interests of shareholders, but without To learn more, visit dukerealty.com/healthcare or call 888-816-8605. encouraging overly risky decisions that cost billions rather than millions. RELIABLE. ANSWERS. “The amount that CEOs get paid relative to the sizes of their organizations—it’s a tiny, tiny percentage of the overall organiza- tion,” Faulkender said. “Therefore, while dukerealty.com/healthcare $50 million is absolutely a lot of money, when you’re talking about a firm that’s worth a couple hundred billion dollars, it’s a rounding error.” << —with Rebecca Vesely and Jessica Zigmond
August 16, 2010 • Modern Healthcare 15 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints This Week on ModernHealthcare.com The Week in Healthcare PUBLIC HEALTH >> Jessica Zigmond
PODCAST Post-pandemic Experts say H1N1 preparedness paid off
fter the World Health Organization not seek medical care and only a small number declared the H1N1 flu pandemic of those who do seek care are actually tested for over last week, public health and hos- the disease. The Atlanta-based agency estimates pital advocates evaluated the lessons that between April 2009—when the virus was theyA learned from the deadly outbreak to help first detected in the U.S.—and April 2010, there C.J. Bolster them manage future public health disasters. were between 43 million and 83 million cases Managing Director Healthcare Practice In a little more than a year’s time, the deadly detected with a “midpoint” of 61 million peo- Hay Group pandemic—the first the WHO had declared ple; between 195,000 and 403,000 H1N1- MODERNHEALTHCARE.COM/PODCASTS since 1968—spread to more than 200 countries related hospitalizations, with a midpoint of and claimed more than 18,400 lives. At a virtual 274,000 hospitalizations; and between 8,870 news conference on Aug. 10, and 18,300 deaths with a WHO Director-General midpoint of 12,470 lives lost. Margaret Chan said the As the nation’s hospitals AP PHOTO REPORTER’S NOTEBOOK H1N1 virus has “largely run and public health infrastruc- its course,” and the world is ture were tested by the pan- now in a post-pandemic demic, experts cited two rea- period. In this phase, local- sons why the U.S. healthcare ized outbreaks may show sig- system didn’t buckle under nificant levels of transmis- the pressure: emergency- sion, which means the virus preparedness funding from wasn’t completely eradicated. the Bush administration Based on experience from (April 6, 2009, p. 6) that previous pandemics, the formed a foundation to Shawn Rhea WHO said it expects the manage the outbreak and Reporter H1N1 strain to take on the the fact that the strain did Modern Healthcare behavior of seasonal flu and WHO’s Chan said the outbreak not become more severe. MODERNHEALTHCARE.COM/ continue to circulate for years. has “largely run its course.” Roslyne Schulman, direc- REPORTERSNOTEBOOK In the U.S., HHS spent tor for policy development at $5 billion on the H1N1 flu pandemic. That the American Hospital Association, said the includes about $1.16 billion of existing funds for funding provided the “seed money” for hospi- vaccine development, including clinical studies tals to purchase supplies and equipment and and manufacturing of the H1N1 bulk antigen (a also build relationships with state health WEBCAST molecule recognized by the immune system) departments. She also said the pandemic and adjuvant (the agent used in a vaccine to emphasized the importance of timely and sci- Lessons from the Top: enhance the recipient’s immune response), ence-based federal guidelines for hospitals. See how hospitals reached the pinnacle according to HHS’ Office of the Assistant Secre- The pandemic also showed that the nation’s of clinical and financial performance tary for Preparedness and Response. public health system can’t “turn on a dime,” so MODERNHEALTHCARE.COM/WEBINARS The figure also includes $3.9 billion that HHS additional funding, workforce development, put toward supplemental funding for vaccine and an engaged community—including state For more web-exclusive production, distribution and administration; and local legal authorities—are needed to sus- domestic and international surveillance; com- tain a viable public health infrastructure, said news, data, video, webcasts and more munications and community mitigation; labo- Jack Herrmann, senior adviser for public health visit ModernHealthcare.com today. ratory support for virus detection; preparation preparedness and response at the National Asso- of the H1N1 vaccine for use in vials and syringes; ciation of County and City Health Officials. STAY IN TOUCH and the purchase of ancillary supplies to admin- “The greatest lesson we learned was that the ister the vaccine. An additional $1.5 billion was money that was put into—and has been—for provided to states and hospitals for preparedness the last nine years for both public health pre- activities and for vaccination campaign planning paredness and the pandemic certainly paid and implementation, the office said. off,” Herrmann said. “Was it without chal- The human cost of the disease was much lenges? Certainly not,” he said, adding that, ® greater, and is more difficult to quantify. considering all of those who were vaccinated, According to the Centers for Disease Control “We believe that from a public health perspec- and Prevention, many people with the flu do tive, it was successful.” <<
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LEGAL >> Rebecca Vesely believe they were buying health insurance. More than 1,000 consumers in California alone have complained to the Managed Health Care Department about these scams FTC whacks scammers since 2004. Most said that they thought they were purchasing health insurance but instead Fake discount plans targeted by feds and states incurred high medical bills as claims went unpaid. In response, the state has ordered 18 he continued economic downturn, and the cease-and-desist order. unlicensed discount health plans to cease high uninsured rate and confusion In similar cases across the country, compa- operations or become licensed. To date, only over requirements in the new fed- nies allegedly engaged in deceptive marketing one medical and two dental discount health eral health reform law are fueling practices, disguising the schemes as health plans have become licensed. healthT insurance scams that can leave con- insurance and pitching consumers “Consumers must have assur- sumers deep in debt, according to federal on empty promises via telemar- ances that the discounts offered by and state law enforcement officials. keters. The Consumer Health Ben- these plans are real, and that the In response, the Federal Trade Commission, efits Association in New York cards will be accepted within the working with officials in 24 states, last week allegedly told consumers it worked medical community,” said Cindy announced a crackdown on fake medical dis- closely with major insurers and Ehnes, director of California’s man- count plans, which promise cut-rate medical would save them up to 85% on aged-care department. services but fail to deliver. A total of 54 lawsuits medical expenses, according to the Providers have been calling on law and regulatory actions have been filed. FTC. Last month, the Minnesota enforcement officials for years to deal In California, the FTC has filed a lawsuit attorney general won a consent with the problem as they watch against Health Care One, Phoenix, and affili- judgment barring the company Ehnes: Consumers patients fall prey to scams. Earlier ates, and a federal judge appointed a receiver from doing business in that state need assurances that this year, the California Medical on Aug. 8 to assume company operations. and ordering $500,000 in fines. discount plans are real. Association urged the state man- The action follows a February cease-and- “Victims don’t know they’ve aged-care department to scrap regu- desist order from the California Managed been ripped off until after they’ve tried to use lations for discount medical plans and prohibit Health Care Department, which regulates the service and pay their bill,” said David them from operating in the state altogether. HMOs in the state. Vladeck, director of the FTC’s Bureau of Con- “Discount health plans are a nightmare for Health Care One allegedly implied in pro- sumer Protection, in a written statement. patients and doctors,” said Andrew LaMar, motional materials that it was affiliated with the In a third case, a U.S. District Court in Ten- spokesman for the California Medical Associa- federal government and claimed that enrollees nessee last week froze the assets of United tion. “Doctors get caught in the middle, when would save on healthcare costs from a network States Benefits and put the company in tem- patients discover their so-called discount plan of 900,000 providers. Members paid monthly porary receivership. The FTC and the state provides no benefit or coverage and no discount. fees and then had trouble disenrolling, a privi- attorney general said the private firm sold But it’s not the fault of the doctor or the patient. lege for which they ultimately were charged a memberships to a “benefits association” with It’s the product of scam artists who don’t want “processing fee” of $95, according to the FTC little or no value, when consumers were led to to play by the rules for health insurance.” <<
■ A Midwest-South regional Gold Award MH captures 11 ASBPE awards for Organization Profile (“A fresh approach,” Nov. 2, 2009). odern Healthcare has been honored wraps,” Feb. 9, 16 and 23, 2009). ■ A Midwest-South regional Gold Award Mwith 11 prestigious print editorial ■ A national Bronze Award for News for Original Research (“Let the spending awards from the American Society of Section (The Week in Healthcare, Nov. begin …”, April 6, 2009). Business Publication Editors. The ASBPE 23, 2009). ■ A Midwest-South regional Silver Award Awards of Excellence recognize the work ■ A national Bronze Award for Overall for Feature Series (“Productivity and commitment of business publication Headline Writing (Sept. 21 and 28, matters,” April 27, 2009; May 25, editors to editorial excellence. 2009). 2009; June 22, 2009). In a print-only editorial competition ■ A Midwest-South regional Gold Award ■ A Midwest-South regional Silver that attracted more than 1,300 entries, for Feature Series (“Safety crusaders,” Award for News Analysis/Investigative Modern Healthcare received four Sept. 7, 2009; Nov. 2, 2009). (“A stimulating conversation,” national and seven regional ASBPE ■ A Midwest-South regional Gold Award Feb. 23, 2009). Awards of Excellence this year: for News Analysis/Investigative (“Making We appreciate the recognition and ■ A national Gold Award for Special them pay,” Oct. 12, 2009). accept them on behalf of our readers, Supplement (“Happy patients: What they ■ A Midwest-South regional Gold who have made Modern Healthcare the mean to you,” June 1, 2009). Award for Opening Spread/Computer- leading healthcare business publication ■ A national Silver Award for Generated (“Under closer inspection,” in the industry. Government Coverage (“Still under March 30, 2009). —David Burda, editor
August 16, 2010 • Modern Healthcare 17 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints The Week in Healthcare
PHYSICIANS >> Jennifer Lubell sure board is also interested in data inter- change utilities that would enable physicians to submit Physician Reporting Quality Ini- tiative and health IT meaningful-use mea- Docs contemplate meaning sures to the boards in the same format used by the CMS in an effort to avoid redundant Industry pushes meaningful use through incentives data submissions. Representatives of licensure organiza- lmost everyone in the healthcare training of its employed physicians and inde- tions stress that the new health IT tools industry, it seems, wants physicians pendent community physicians. would not be required of doctors to stay to get on the meaningful-use band- Physicians will also be feeling the pressure certified. But some doctors are wary of this wagon. The question is whether to be IT savvy in order to maintain their pro- pairing of maintenance of certification and mostA physicians are ready to jump onboard. fessional certification. The American Board of meaningful use. Payers as well as provider and licensure Medical Specialties said that it would incorpo- “I don’t believe achieving meaningful use organizations recently made a giant push to rate tools to promote meaningful use of health equates to maintenance of certification,” said encourage physicians to adopt elec- IT into its maintenance-of-certifi- Michael Migliori, an ophthalmologist in tronic health records, announcing cation program. Providence, R.I. Maintenance of certification several health information technol- More than 750,000 U.S. physi- is a measurement of clinical knowledge, ogy initiatives at a forum held cians are certified by an ABMS whereas meaningful use is a clerical designa- recently in Washington. member board, “so it’s readily tion, he said. “This is a team sport,” said David apparent” that building meaningful “I understand the clinical importance of Blumenthal, national coordinator use of health IT into certification electronic medical records both in terms of for health IT, during the forum, maintenance will benefit patients, patient safety and quality, but we are not at the which was sponsored by Health ABMS President and CEO Kevin point where EMR and health information Affairs and Brandeis University’s Weiss, said in a written statement. exchange are ready for universal implementa- Health Industry Forum. To advance Migliori: “They Additionally, the merging of these tion,” Migliori said. “They should not be the CMS’ new meaningful-use regu- should not be linked two tools “will help to facilitate linked at this time.” lations, “it’s clear that the sustain- at this time.” physicians’ knowledge, skill and use The intent of these initiatives is laudable, ability of this effort … has to come of health IT, and in turn can but “the devil is in the details” on how this from the private sector,” Blumenthal said. improve physician performance and patient will all play out in the long run, said Lori UnitedHealth Group, for example, is outcomes,” he said. Heim, president of the American Academy of deploying on a national scale its performance- In particular, the ABMS wants to develop Family Physicians. It’s unknown at this point based contracting program, which provides new knowledge self-assessment modules whether the ABMS’ new health IT provisions outcomes-based financial incentives to physi- that among other things would evaluate a to maintain certification “will remain simply cians who use EHRs in ways that meet mean- physician’s knowledge of health IT for a tool or a requirement,” she said. ingful-use criteria. And ThedaCare, a system incorporating evidence-based medicine into “We certainly support health IT adoption, of three hospitals based in Appleton, Wis., their practice, decision support and data but it has to work within physician practices” plans to train all of its physicians on the mean- acquisition, and analysis and reporting related and not be imposed upon family physicians, ingful use of health IT through extensive to correct use of the technology. The licen- she said. <<
Per editorial policy, award sponsors are Spirit award nominees sought not involved in the judging or determination of award recipients. Each ominations for Modern Healthcare’s performance improvement. of the five winners will receive a cash N18th annual Spirit of Excellence ■ Community Spirit Award, which prize of $5,000, and each of the five Awards are now open. The awards, recognizes community education, support honorable mentions will receive a co-sponsored by Sodexo Health Care and outreach. $1,500 cash prize, courtesy of Sodexo. Services, honor organizations and ■ Team Spirit Award, which recognizes The nomination form can be found in individuals that go beyond what’s employee recruitment and retention. the Awards and Honors section of our expected in serving their patients ■ CARES Spirit Award, which recognizes a website, ModernHealthcare.com. and communities. team or group of individuals whose The submission deadline is Oct. 8. All Five awards are given as part of the collective actions, attitudes and behaviors awardees will be contacted prior to the program: personify: compassion, accountability, Dec. 13 issue of Modern Healthcare, ■ Service Spirit Award, which recognizes respect, enthusiasm and service. which will announce and profile all 10 of excellence in service, and patient and Modern Healthcare with the assistance the recipients in a special section. resident satisfaction. of an outside panel of judges will For more information, please contact ■ Quality Spirit Award, which recognize winners and honorable Editor David Burda at 312-649-5439 or recognizes quality, safety and mentions in each of the five categories. [email protected].
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360 N. Michigan Avenue | Chicago, IL 60601 | 888.812.1581 | ModernHealthcare.com Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Opinions Editorials Reform the reform studies Everyone with a calculator has a reform law cost projection
he Patient Protection and Affordable Care Act, aka health government or the private sector—with healthy (or healthcare) skepti- reform, ought to be renamed the Number Crunchers and cism. Here’s a good example of why: According to mid-1990s reports Report Writers Full Employment Act of 2010. from the Congressional Budget Office and the Medicare trustees, Scarcely a day goes by without a new study of the legisla- Medicare went bankrupt around 2001. As we can see, things change. Ttion, often by a special interest group with a stake in promoting or The cacophony of cost projections brings to mind a 2008 New Eng- scuttling the measure. Depending on the source, these reports show land Journal of Medicine article. In it, scholars David Blumenthal and the act will return us to the Garden of Eden, do nothing, precipitate James Morone recounted how President Lyndon B. Johnson handled the end of civilization as we know it or conjure up combina- adverse cost projections for the Medicare program he was tions of all three. trying to enact: He ignored or suppressed them. He feared In the past week, we have seen one study predicting that estimates of a huge price tag would scare lawmakers and reform will squeeze some insurers to the edge of bankruptcy citizens away from something he believed to be good for and another suggesting that insurers will gain enough mar- the country. ket clout to squeeze everybody else. To read more about the The lesson? “The expansion of healthcare to large popula- latter, see our “Of Interest” finance blog (“Who saves when tions is expensive, and presidents may need to quiet their insurers win?”) at modernhealthcare.com/blogs/of-interest. inner economists,” the authors wrote. “Johnson decided, in Well, if no one else benefits from this law, at least it will effect, to expand coverage now and worry about how to provide serious economic stimulus for think tanks, econo- afford it later.” mists, political operatives and just about anybody with a cal- NEIL Decades later, the Bush administration took a similar culator and a willingness to make a prediction. MCLAUGHLIN approach when it tried to put a lid on cost projections for the Meanwhile, the reports keep rolling in. Two recent ones Managing Editor Medicare Part D drug benefit program. from the Medicare trust fund trustees and the CMS project None of this should excuse deceiving Congress and the that the health reform law will extend Medicare’s solvency longer than public. But you can understand why policymakers who are actually try- previously predicted (Aug. 9, p. 12). The CMS report said reform ing to accomplish something (an increasingly rare breed) often grow would save Medicare $7.8 billion through 2011 and $418 billion over intolerant of dueling calculators. Caught in a blizzard of contradictory 10 years. The trustees’ report projected that the trust fund would predictions, it’s hard to get anything done. remain healthy until 2029, 12 years longer than previously forecast. We will see what this health reform law brings. In the meantime, a Republicans, of course, immediately attacked the studies. Critics, close relative of the law exists in the real world instead of the imagina- political or otherwise, contended the reports made overly optimistic tion of wonks. Look to Massachusetts for a glimpse of things to come. assumptions and overestimated the willingness of Congress to rein in And no matter what, we can be sure that wonks will follow a varia- spending on physician reimbursement. tion of the traditional advice to Chicago citizens: Vote early and often. News consumers should regard all these reports—whether from In this case, it will be predict early and often.
OTHER VOICES “Last year, the trustees estimated that one part of Medicare would be insolvent alarmingly soon—2017. But then came the new healthcare law, sold to Americans as a way to reduce costs and shore up Medicare. The trustees released a new report last week that said—ta-da!—Medicare had 12 more years to live. … Democrats weren’t straight with Americans about the costs of healthcare reform before the law passed. ... And they’re still fuzzing over facts.” —Chicago Tribune
“It’s the time of year when the trustees of Medicare and Social Security release their annual reports on the programs’ financial health. That means Americans are likely to be bathed in a fog of political rhetoric that makes it hard to sort out fact from fiction. Here’s the bottom line: The recently passed healthcare reform bill is promising to have a positive effect on Medicare, assuming Republican opponents don’t succeed in killing the reform in court or otherwise undermining its main provisions. … Medicare is a thorny problem. ... More worrisome ... is the hyperpartisan atmosphere in Washington.” —New York Times
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Opinions Commentary >> Mary Jane Koren Predictable scheduling Nursing homes can boost quality, bottom line with ‘consistent assignment’
n aide notices an untouched cup of Mrs. Jones might notice a slightly pink patch coffee sitting on the bedside table of skin, the first sign of a developing bedsore. near an elderly resident I will call That nurse could immediately begin treat- Mrs. Jones. ment to prevent the skin from breaking down. AThis break in the routine troubles the nurs- If that pro-active approach works, the nursing ing home aide, who has been caring for Mrs. home can end up with a better bottom line Jones for three years. She knows, for example, because once a bedsore forms and becomes that this resident loves her morning coffee. So advanced, it can cost $19,000 to treat. In many she offers to bring her a hot cup. cases, not all of that expense can be passed on, But Mrs. Jones just shakes her head and and the extra cost ends up hurting the facility’s says she doesn’t feel up to it. bottom line. As it turns out, Mrs. Jones is in the early Nursing homes that rely on short-term stage of a heart attack and the untouched cof- employees or temporary staffing might not fee, as insignificant as it seems, has alerted the invest in competitive salaries, benefits and other nurse that something is wrong. She pages the factors that keep staff satisfied and on the job for doctor and Mrs. Jones gets prompt—and pos- the long run. The turnover rate for many nurs- sibly life-saving—medical care. ing homes exceeds 50% per year. In contrast, Similar situations play out again and again some nursing homes have made changes that in nursing homes that assign an aide or a keep turnover rates in the single digits. High nurse to regularly care for an elderly, frail res- turnover can lead to demoralized employees, ident. The practice is called “consistent assign- Although there are startup and in many cases, quality problems. ment,” and it is one key target identified by For example, if Mrs. Jones saw a string of Advancing Excellence in America’s Nursing costs, nursing homes with different aides every day, they might not know Homes, a 3-year-old national campaign consistent assignment save on her history, her medication requirements, her aimed at improving the quality of nursing health risks, her name or what she enjoys. home care. turnover and treatment costs. Higher turnover means higher costs for To date, 42% of the nation’s nursing homes finding and training new aides and nurses— have joined the campaign, which is the largest tation in a resident. For example, people with replacing a single aide can cost $3,000. voluntary effort of its kind in the industry. But Alzheimer’s disease can become agitated The revolving door of staffers also leads to administrators of all 16,000 nursing homes in when they are in pain or can’t ask for some- low job satisfaction for the workers left the U.S. should sign up today and pledge to thing they need. A regular caregiver knows behind. But the real cost of this poor manage- make quality care a top priority. what to do to calm an upset resident quickly, ment style is a human one: nursing home res- Nursing homes that join the campaign set get them back on schedule—and prevent a idents such as Mrs. Jones can’t develop a bond quality targets, and they can monitor their situation that might otherwise be handled with the temporary worker of the day. The performance. The campaign works to help with physical restraints. temp might not know Mrs. Jones at all and nursing homes improve by giving them Nursing home residents always rate rela- will probably dismiss her refusal to enjoy her important tools to measure their progress tionships with caregivers as extremely impor- cup of coffee as nothing significant. and achieve goals. The campaign offers free tant to them. Therefore, nursing homes that In the end, nursing homes that adopt con- webinars, best-practice guidelines and addi- adopt consistent assignments often gain a sistent assignment reduce staff turnover and tional resources to help staff feel more satis- competitive edge in a tough market—one that work to improve other quality measures fied with their work and provide better care that’s filled with other options. gain something priceless: They’ll have a facility to residents. Consumers today have choices when they that fosters strong relationships between care- Data collected over the course of the cam- need long-term care. Many go to assisted-liv- givers and residents, and offers the highest paign shows that nursing homes can make ing facilities or will comparison shop before standard of care. << significant strides in improving quality out- they pick a nursing facility. The CMS collects comes: They’ve decreased the use of physical data on nursing home outcome measures, and restraints, improved pain treatment and increasingly consumers will check the publicly Mary Jane Koren is a shown a reduction in the development of available ratings before choosing a facility. physician, geriatrician pressure ulcers. Those are all indicators of a Nursing homes that begin using consistent and chair of the higher standard of care. They’re often found assignments might have to change the way Advancing Excellence in in facilities with low staff turnover and homes they manage staffers but, after the initial start- America’s Nursing Homes that rely on consistent assignment. up, they often find the new way is a better way: Campaign, as well as a For example, a decrease in the use of phys- They often catch medical problems in the vice president at the ical restraints might be related to a caregiver early, treatable stages. Commonwealth Fund, who has come to recognize the causes of agi- For example, a nurse who’s assigned to New York.
August 16, 2010 • Modern Healthcare 21 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Opinions Letters
Don’t make that leap be tracking the experiences of acute-care comorbidity complication, or CC, at that time. hanks so much for the great article by Mau- patients served in psychiatric hospitals. When the CMS required more specific ter- T reen McKinney on quality initiatives in Policymakers should not make the leap that minology for decompensated CHF to serve as behavioral health and renal care (“Quest for different payment systems define the acuity or a major CC in MS-DRGs, its impact was not quality expands,” p. 10) in your Aug. 2 issue. The intensity of the service delivered. calculated into the relative weights. article did a terrific job of explaining ongoing ■ The CMS introduced the term efforts to improve quality. However, the “post- Mark Covall “encephalopathy” as a major CC in 2008 acute” category did highlight one issue that I President and CEO which, if documented previously, may not wanted to bring to the attention of policymakers. National Association of Psychiatric have been within the first nine ICD-9-CM Health Systems diagnoses processed by Medicare, given that it Washington was not a CC in version 24 CMS-DRGs. ■ The Acute Kidney Injury Network rede- fined acute kidney injury, or AKI, in 2007, Better approach amending the change of the creatinine from r. Mark Stoler, in his “Attack of the 0.5 milligrams per deciliter to 0.3 milligrams D pods” commentary (Aug. 2, p. 24), has per deciliter. For this reason, more providers painted a fairly stark picture of physician embraced this new definition and, as expected, office laboratories as marginal endeavors, documented AKI with greater frequency. working in a “Wild West-like,” poorly regu- ■ The documentation and coding adjustment lated environment to perform substandard was applied to all hospitals equally, not to those work, all for the benefit of entrepreneurial with inordinate increases in CC and major CC physicians who have no interest in quality rates. Those that were aggressive in their clini- patient care. While some laboratories of this cal documentation improvement efforts were nature may exist, we would argue that when rewarded, given that their rise in the case mix true professionals work together, a quality ser- index was likely more than 2.9%; those that vice can be provided in the physician office had little need for clinical documentation laboratory environment. improvement saw their stable revenue fall. It is our opinion that organizations such as Sadly, when the CMS’ methodology for cal- the American Society for Clinical Pathology culating the documentation and coding adjust- and College of American Pathologists do a dis- ment was discussed in 2007 and 2008, the hospi- service when they tar all physician office labo- tal industry did not have a convincing alterna- Technically, you’re correct that inpatient ratories. Interprofessional squabbles do not tive. I believe that they can, provided that they psychiatric hospitals are paid under a different promote “best case” results. A better approach utilize current ICD-9-CM databases that process payment system (the inpatient psychiatric would be to work with the physician office lab- more than nine diagnoses codes and advocate prospective payment system) than acute-care oratories to study what makes a laboratory of credible algorithms that clearly make their point. hospitals. However, inpatient psychiatric hos- this nature produce quality outcomes. pitals are not post-acute settings. They deliver James S. Kennedy acute-care services to individuals with psychi- Lester J. Raff Managing director of corporate finance atric and substance-use conditions by serving Laboratory medical director FTI Healthcare the most critically ill at a crisis point. UroPartners Brentwood, Tenn. The hospital-based inpatient psychiatric President services core measures that are now part of the Pathology Associates of Northern Illinois Joint Commission accreditation process will No surprises here Richard Harris he use of international graduates isn’t just Managing partner T an issue for general surgery (“Report UroPartners notes U.S. dependence on international grad- Westchester, Ill. uates to provide general surgeons,” Modern Healthcare.com, July 11). Declining reim- bursement, the high costs of a medical educa- Flawed logic tion, the med-mal crisis, uncertainties of do not blame hospitals for being angry with compensation under health reform, 21%- I the CMS and their 2.9% documentation plus threatened reduction in Medicare Part B and coding adjustment (“How sick are we?” reimbursement and immigration laws that 100 top hospitals supplement, Aug. 9, p. 8). make it easier for unskilled laborers than The CMS’ methodology for its calculation physicians to enter the U.S. legally. Any sur- was flawed for the following reasons: prise we are facing a shortage of physicians? ■ The CMS built in the lack of need for speci- ficity of “acute systolic” or “acute diastolic” Hal Teitelbaum heart failure in version 24 CMS DRGs, given Managing partner and CEO that the term “decompensated CHF,” or con- Crystal Run Healthcare gestive heart failure, was sufficient to serve as a Middletown, N.Y.
22 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints From the C-Suite >> Kevin Shrake Curiosity can pay Right questions can help find new revenue sources
key trait of effective executives is to exact match between the hospital entry and ask the right questions of your team. what is in the state database, it appears that cer- I have a recent example related to tain patients are not eligible for Medicaid when revenue cycle where taking a “deeper in fact they are already qualified. This can result dive”A into the operations proved beneficial. in a loss of revenue as people are channeled into I knew that my facility, 260-bed St. Eliza- the self-pay or charity-care categories. beth’s Hospital in Belleville, Ill., needed a rev- Even though our team thought we had this enue-cycle initiative to improve margin, and covered, using dedicated software to conduct the finance team informed me that there was a retrospective “payer search” resulted in an a plan in place. Revenue cycle additional $30,000 of new rev- is a broad category, so asking enue for our facility. This sup- more specific questions to ported a second systemwide identify exactly what we were initiative, resulting in addi- doing proved beneficial. tional revenue for our health- We were doing a good job care system. with coding, as evidenced by Even if you have a revenue- a recent 10% increase in case- cycle program in place, don’t mix index as our coders assume that every opportunity learned more comprehensive is being addressed. Ask your methods to accurately docu- team specific questions about ment the work that had been code pairing, transfer DRGs, performed. We were also payer search, cash acceleration doing a good job reviewing programs and point-of-care the accuracy of how our payments from testing. Also, make sure that your team has commercial payers matched our contractual the appropriate education available to them agreements. This was being accomplished to do their job well. Changes in revenue- via a contract management software pro- cycle concepts occur frequently, which gram that could make those assessments makes a continuous educational process faster and more accurately than through essential. A successful program also puts the manual analysis. right technology in the hands of your people However, there were other key elements of to support their activities. Software pro- a comprehensive program that we were not grams specifically designed to assist well- pursuing, so we were leaving money on the trained employees in managing revenue table. One of those was a transfer DRG analy- cycle is a powerful combination. sis. When it is identified that a patient is being It should be noted that having an effective transferred from an acute-care hospital to revenue-cycle program is not contradictory to another facility, such as a nursing home or having a “compliance-focused culture” in extended-care facility, the total DRG payment your organization. To the contrary, having is reduced. There are programs available to systems in place that ensure the accuracy of retrospectively verify that transfers occurred. documentation, billing and collection proce- This allows many hospitals to recoup revenue dures supports an organizationwide philoso- for transfers that did not occur. Not only is phy of compliance. there an opportunity to ensure that DRG pay- Healthcare reform will continue to place ments are not erroneously reduced moving significant challenges on the ability of hospi- forward, but you can do a retrospective analy- tals to achieve a sustainable margin. Programs sis and rebill those accounts that should have to enhance your revenue cycle are key ele- been paid at the full DRG rate. ments of margin development. Successful At St. Elizabeth’s, this opportunity was CEOs ask the right questions and hold their nearly $100,000. That gain led to a decision to team accountable for the answers. << implement a systemwide analysis across all 13 hospitals operated by Hospital Sisters Health Kevin Shrake was president and CEO of St. Eliz- System, Springfield, Ill. abeth’s Hospital, Belleville, Ill., from January A second opportunity related to using tech- 2008 to March 2010 and is now executive vice nology again to “scrub” the databases was used president and chief operating officer of MD to identify Medicaid patients. If there is not an Resources, Fresno, Calif.
August 16, 2010 • Modern Healthcare 23 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Special Feature >> Joe Carlson FALLING FLAT Survey shows base salaries remain stagnant for a second year, but incentives help boost overall pay for some execs; others see cuts
ospitals have long been Observers offer numerous explanations for threshold in the annual survey. Previously, called the most complex the apparent contradiction between height- only CEOs of health systems with revenue of businesses on Earth, and ened demand for strong CEO leadership and more than $1 billion were earning seven-fig- the job of running them pay practices at the top, but the most com- ure average compensation. Yet on the other is about to get much mon one offered was the recession. That is, hand, CEOs of free-standing hospitals not in more difficult. top executives have found it difficult to systems took an overall 1.4% cut in total com- HSo that means salaries are rising to attract earn—or accept—the kinds of pay raises they pensation in the same year, the survey found. nimble, complexity-minded leaders who can saw during the high-flying years in the 2000s “A lot of folks are continuing to perform balance sophisticated hospital operations and now that so many hospitals have frozen well and are seeing good, solid incentive pay- the financial wizardry required to manage salaries or even laid off workers. ments. And you’ve got some folks who are large, cash-intensive businesses with uncer- That reluctance has only been starting to feel the pain and their tain payment sources. Right? magnified by another growing incentives are not as high. That’s Wrong. Executive salaries at all levels of trend—increased public scrutiny, starting to show,” says C.J. Bolster, hospital and health system management both in tax records and by elected managing director of the healthcare showed only modest growth in 2010 for the officials. In New Hampshire, Attor- practice for Hay Group, Atlanta. second year running, according to the Modern ney General Michael Delaney is The Sullivan Cotter figures are Healthcare 30th annual Executive Compensa- reviewing CEO pay practices at the based on surveys of 4,700 execu- tion Survey. Average base salaries across all state’s not-for-profit hospitals, while tives at 850 organizations that sub- executive positions increased 2.8% in 2010. in Massachusetts, Attorney General mitted data on executive pay in Looking at a single job title—CEO of health Martha Coakley announced last fall 2009 and 2010. The total compen- systems—median total compensation increased that her office was expanding Stine: “Public scrutiny sation figures only reflect bonuses by 2.6% in 2010 according to the annual report enforcement efforts for CEO pay at matters, as our world and incentive payments that were produced by compensation firm Sullivan, Cot- tax-exempt hospitals and insurers. becomes flatter.” actually made in the most recently ter and Associates. That same group saw just a Today anyone with an Internet completed fiscal year; compensa- 0.2% increase in 2009, but received a 9.7% connection can learn their local hospital tion that was promised but not yet paid was boost in 2008. CEO’s salary and all of his or her perks not included. through greatly enhanced federal tax dis- closures that first started becoming public Winners and losers last year. Experts say the 2010 data show a wider split “Public scrutiny matters, as our world between winners and losers than previous becomes flatter and more transparent,” says years, as the considerable differences in hospi- Dennis Stine, who serves on the board of tal performance showed up in executive directors and helps set executive pay and incentive payments for factors such as financial strategy at the board level for Irving, improving operating performance, increasing In an exclusive interview, Modern Texas-based Christus Health, which owns or patient-satisfaction scores, expanding physi- Healthcare reporter Joe Carlson talks leases 18 hospitals in the U.S., and is the cian alignment, cutting bad debt, and height- with C.J. Bolster, majority stockholder in a company that oper- ening community-benefit activities. managing director of the ates seven hospitals in Mexico. More hospitals are also using longer-term healthcare practice for On average, base salaries across all job cate- incentive plans in which the goals span several Hay Group in Atlanta. gories in the survey increased by 2.8%, while years, as a way to spread out payments and dis- Bolster discusses some total compensation increased by 5.5%. Those courage turnover. of the issues driving figures, however, mask a diverse set of dynam- “Some hospital systems and some hospitals current trends in Bolster ics in play between job types and even among can perform even in a down economy, and executive compensation the various types of hospitals and systems. they should be rewarded for that,” Stine says. at healthcare organizations. On one hand, the average health system “What I’ve seen is that base salaries have been To listen to the interview, visit CEO took home more than $1 million in total pretty static, and the incentive plan may be modernhealthcare.com/podcasts compensation in 2010, marking the first time riched up.” that job title has broken the seven-figure Judging by the figures in the latest survey,
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EXECUTIVE COMPENSATION BY ORGANIZATION SIZE
Breakdowns for key titles by organization revenue ($ in thousands)
Median Average Base Total cash compensation Total cash compensation Title (number surveyed) Percentage Percentage Percentage Hospital executives 2010 2009 change 2010 2009 change 2010 2009 change Hospitals with net revenue less than $250 million President and CEO, $397.8 $383.9 3.6% $425.0 $390.0 9.0% $421.6 $413.2 2.0% free-standing hospital (53) President and CEO, 295.8 289.3 2.3 391.1 361.8 8.1 391.3 366.2 6.9 system hospital (228) Chief operating officer, 225.7 225.3 0.2 232.5 231.0 0.6 237.2 231.8 2.3 free-standing hospital (28) Chief operating officer, 174.2 171.6 1.5 220.9 206.3 7.1 228.6 213.5 7.1 system hospital (137) Chief financial officer, 239.0 235.0 1.7 244.7 238.4 2.6 257.9 248.1 4.0 free-standing hospital (49) Chief financial officer, 181.0 178.6 1.3 231.6 215.5 7.5 231.8 212.6 9.0 system hospital (180)
Hospitals with net revenue more than $250 million President and CEO, $612.5 $612.0 0.1% $721.2 $678.1 6.4% $761.3 $748.0 1.8% free-standing hospital (55) President and CEO, 388.3 386.9 0.4 509.3 500.8 1.7 525.6 500.7 5.0 system hospital (96) Chief operating officer, 370.0 343.8 7.6 399.0 388.8 2.6 453.9 429.4 5.7 free-standing hospital (43) Chief operating officer, 250.8 245.1 2.3 295.5 282.0 4.8 307.1 293.6 4.6 system hospital (83) Chief financial officer, 348.4 347.0 0.4 382.8 384.2 (0.4) 417.6 403.8 3.4 free-standing hospital (52) Chief financial officer, 239.2 236.4 1.2 297.8 277.6 7.3 299.7 287.8 4.2 system hospital (82)
Systems with net revenue less than $1 billion President and CEO (82) $600.1 $580.4 3.4% $647.4 $671.2 (3.5%) $703.4 $702.0 0.2% Chief operating officer (49) 350.2 340.0 3.0 375.5 365.3 2.8 408.6 393.0 4.0 Chief medical officer (51) 334.9 335.7 (0.2) 375.0 357.7 4.8 381.8 378.9 0.8 Chief financial officer (84) 323.6 317.5 1.9 351.4 344.3 2.0 367.8 356.0 3.3
Systems with net revenue more than $1 billion President and CEO (83) $917.4 $900.0 1.9% $1,222.9 $1,143.7 6.9% $1,308.4 $1,210.2 8.1% Chief operating officer (50) 612.7 580.4 5.6 752.8 697.2 8.0 806.0 760.8 5.9 Chief medical officer (59) 463.5 448.5 3.3 549.4 514.9 6.7 584.0 552.8 5.7 Chief financial officer (78) 488.0 467.3 4.4 599.3 561.9 6.7 661.5 626.8 5.5
Source: Sullivan, Cotter and Associates Note: All figures are rounded.
August 16, 2010 • Modern Healthcare 25 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Special Feature that is exactly what happened in many hospitals. In contrast to the figures for executives at sys- tion, including incentives, than in base pay; CEOs of hospitals that belong to health sys- tem-owned hospitals, CEOs at stand-alone hos- officials at system hospitals received lower tems received median increases of 0.9% in pitals experienced opposite pay trends. Top base pay increases but larger incentives. their base pay in 2010, yet they took home executives at stand-alone facilities received 3.5% However, overall, the top executives at free- 6.6% more in total compensation than the median base pay raises, but actually saw a 1.4% standing hospitals still tended to take home year before because of incentive pay. Chief decline in total compensation from the prior more money in total. Stand-alone CEOs operating officers at system hospitals received year. Executives said the differences appeared to earned median total compensation of 0.8% base-pay increases, and yet received be based on lower overall performance at stand- $544,000 vs. $423,100 for CEOs at system- 6.9% increases in total compensation. alone hospitals. COOs at free-standing hospitals owned hospitals. COOs, CFOs and CMOs all “Some organizations I think had better per- saw 1.7% base pay increases, but only 0.9% showed the same pattern of lower pay at sys- formance, and perhaps that could be related to growth in total compensation. tem hospitals, as in years past. how well they planned for the economics of Similar disparities between system and Meanwhile, the trend of incentive pay dri- what changed … managing costs better or nonsystem executives were also reported for ving higher increases in total compensation anticipating a decrease in patient volume,” chief medical officers and chief financial offi- was largely not seen within the C-suites of inte- says Tom Pavlik, a managing principal with cers, with the officials at stand-alones getting grated hospital systems, where executives Sullivan Cotter. lower percentage increases in total compensa- struggled to hit enough benchmarks to keep
EXECUTIVE COMPENSATION—HEALTHCARE SYSTEMS
($ in thousands)
Median Average Base Total cash compensation Total cash compensation Title (number surveyed) Percentage Percentage Percentage Top corporate executives 2010 2009 change 2010 2009 change 2010 2009 change President and CEO (165) $765.6 $746.3 2.6% $877.0 $855.0 2.6% $1,007.7 $957.6 5.2% Chief operating officer (99) 452.9 440.0 2.9 540.6 545.3 (0.9) 615.4 578.8 6.3 Chief medical officer (110) 400.0 386.5 3.5 447.7 435.0 2.9 490.7 471.4 4.1 Chief network/system 348.8 348.8 0.0 399.2 399.2 0.0 432.5 398.8 8.4 development officer (11) Chief financial officer (162) 393.8 390.9 0.7 445.6 442.0 0.8 509.7 486.4 4.8 Chief information officer (135) 285.3 276.8 3.1 326.6 310.4 5.2 355.8 333.8 6.6 Chief privacy officer (6) 128.5 126.0 2.0 142.4 133.8 6.4 150.7 151.8 (0.8)
Corporate department executives Medical informatics (25) $259.0 $258.0 0.4% $291.0 $278.2 4.6% $302.8 $300.2 0.9% Patient care (38) 229.3 214.5 6.9 258.6 239.4 8.0 262.7 250.6 4.9 Nursing services (61) 230.0 219.9 4.6 255.0 233.0 9.4 271.2 258.4 4.9 Managed care (53) 243.0 237.7 2.2 271.1 270.4 0.3 306.4 301.3 1.7 Human resources (149) 262.0 254.1 3.1 290.8 283.5 2.6 318.4 304.1 4.7 Professional services (17) 191.1 193.9 (1.4) 215.7 224.6 (4.0) 236.5 237.6 (0.4) Support services (10) 187.0 181.7 2.9 216.1 205.3 5.3 214.0 222.3 (3.8) Ambulatory care (35) 233.0 233.0 0.0 241.3 266.5 (9.5) 285.2 284.5 0.2 Facilities (63) 201.5 200.0 0.8 217.7 220.2 (1.1) 231.0 238.0 (3.0) Property management/ 188.3 188.5 (0.1) 200.4 201.4 (0.5) 239.9 223.6 7.3 real estate (20) Legal services (123) 302.5 299.0 1.2 335.0 325.6 2.9 373.7 356.0 5.0 Government relations (46) 205.6 208.6 (1.5) 233.7 229.9 1.7 271.6 259.6 4.6 Public affairs (32) 175.0 171.5 2.1 199.8 199.1 0.4 220.3 208.2 5.8 Communications executive (24) 196.6 193.3 1.7 213.2 196.6 8.5 239.8 234.7 2.2 Note: Data are from a constant sample. All figures rounded. Source: Sullivan, Cotter and Associates
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their incentive pay comparable to earlier years. base pay rose by 3.4%. Their median total many of them are difficult to ascribe much System CEOs received 2.6% increases in compensation dropped to $647,400 from meaning to because sample sizes were smaller. total compensation—a percentage that was $671,200 the year before. The largest single swinger on the list was the identical to their median rise in base pay. category of ambulatory-care executives at System CFOs had the same dynamic, with Some bigger gains health systems, whose total compensation 0.7% growth in base pay and a 0.8% rise in In contrast, one of the largest percentage dropped by 9.5%. But only 35 such executives total compensation. increases in pay went to CEOs of smaller stand- responded to the survey. System COOs received 2.9% base pay alone hospitals (those with less than $250 mil- However the largest percentage gainer on increases but then showed a 0.9% decrease in lion in revenue), where the top executives the list, nursing executives at the health sys- total compensation. received 9% median increases in total compen- tem level, showed a 9.4% gain in median total One of the largest percentage drops in sation. Including the 3.6% raise in base pay, compensation based on 61 responses—a gain median pay on the list went to CEOs of that group’s median total earnings rose to that observers say is not only actual, but logi- smaller health systems (those with less than $425,000 from $390,000 the year before. cal. On the hospital-based side, nursing exec- $1 billion in revenue), where the top execu- Several other job categories showed simi- utives saw a 6.6% increase in total compensa- tives overall took a 3.5% decrease in total larly large swings in pay, both positive and tion, based on 178 responses. Hospital nurse compensation in 2010, even though their negative, but Sullivan Cotter officials say executives earned a median $218,700 in 2010,
($ in thousands)
Median Average Base Total cash compensation Total cash compensation Title (number surveyed) Corporate department Percentage Percentage Percentage executives 2010 2009 change 2010 2009 change 2010 2009 change Marketing (56) $180.1 $174.2 3.4 % $205.2 $194.2 5.7% $239.2 $224.3 6.7% Fund development (70) 200.8 200.0 0.4 222.9 218.0 2.3 257.3 245.2 4.9 Product/service line (12) 221.2 212.3 4.2 227.5 237.9 (4.4) 264.8 259.0 2.2 Planning (48) 223.2 214.1 4.2 250.0 250.0 0.0 279.3 276.4 1.0 Clinical research (19) 269.1 260.0 3.5 311.1 317.0 (1.9) 344.2 342.0 0.7 Quality management (M.D.) (16) 320.5 309.5 3.6 350.2 342.1 2.4 359.9 332.7 8.2 Quality management 170.2 165.5 2.8 195.6 196.8 (0.6) 218.9 208.2 5.2 (non-M.D.) (43) Risk management (31) 182.0 189.8 (4.1) 203.2 218.7 (7.1) 236.0 234.8 0.5 Reimbursement (20) 191.0 191.0 0.0 198.4 197.0 0.7 233.6 226.2 3.3 Corporate audit (20) 203.6 195.5 4.1 224.4 215.5 4.1 255.9 238.3 7.4 Community health (16) 170.4 175.6 (3.0) 204.2 198.3 3.0 215.2 228.7 (5.9) Mission services (24) 172.0 169.8 1.3 193.2 194.2 (0.5) 243.3 242.0 0.6 Supply chain management (41) 200.0 200.0 0.0 229.1 228.8 0.1 249.1 238.4 4.5 Materials management (36) 164.4 166.0 (0.9) 172.0 170.1 1.1 191.8 185.5 3.4 Purchasing (12) 155.0 149.5 3.7 176.9 166.1 6.5 194.9 183.8 6.0 Business development (27) 275.6 260.0 6.0 300.0 292.7 2.5 342.8 330.2 3.8 Long-term care (19) 178.5 170.4 4.8 199.9 201.1 (0.6) 211.7 199.7 6.0 Home health (31) 170.0 163.6 3.9 183.4 188.5 (2.7) 198.0 196.1 1.0 Behavioral health (13) 185.0 176.8 4.6 192.8 212.8 (9.4) 246.4 232.2 6.1 Pharmacy (19) 193.8 183.3 5.7 200.7 198.4 1.2 219.8 205.0 7.2 2nd level ffnance executive (47) 239.7 234.3 2.3 267.4 265.0 0.9 277.2 274.9 0.8 2nd level information 184.2 180.0 2.4 207.8 197.6 5.2 212.2 205.1 3.5 services executive (20)
August 16, 2010 • Modern Healthcare 27 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Special Feature up from $205,100 the previous year. utives can also be hard to find, which affects tions receiving more attention—and compen- Observers say the salaries for nursing exec- their salaries. sation—is information technology executives. utives were not surprising given all the focus “They are being asked to do more, and Take a look at the tax filings of your average in recent years on quality and the patient-ser- there is a dearth of talent,” Nelson says. “They healthcare system. Chances are that the sys- vice aspect of healthcare, which nurses have a are, now more than ever, equal members of tem’s health IT vendor is listed as one of the five large influence on. Jim Nelson, who became a the executive team, and in some cases they’re highest-compensated vendors for the organiza- managing principal with Sullivan Cotter earlier just catching up” on the salary scale. tion. In many cases, it’s the highest. Naturally, this year, says high-performing nursing exec- Similarly, another category of executive posi- experts say, CEOs want someone with an office
EXECUTIVE COMPENSATION—HOSPITALS
Selected titles ($ in thousands) Median Average Base Total cash compensation Total cash compensation Title (number surveyed) Percentage Percentage Percentage Hospital executives 2010 2009 change 2010 2009 change 2010 2009 change President and CEO, $490.7 $474.0 3.5% $544.0 $551.7 (1.4%) $595.8 $584.8 1.9% free-standing hospital (107) President and CEO, 319.4 316.6 0.9 423.1 397.0 6.6 430.9 406.1 6.1 system hospital (324) Chief operating officer, 305.5 300.4 1.7 318.9 315.9 0.9 369.6 352.5 4.9 free-standing hospital (70) Chief operating officer, 192.2 190.7 0.8 242.1 226.4 6.9 256.4 243.7 5.2 system hospital (220) Chief medical officer, 323.0 323.0 0.0 342.6 349.8 (2.1) 378.7 370.8 2.1 free-standing hospital (65) Chief medical officer, 284.8 280.0 1.7 331.9 308.0 7.8 334.3 321.3 4.0 system hospital (89) Chief financial officer, 290.4 281.9 3.0 309.1 301.6 2.5 339.3 328.9 3.1 free-standing hospital (100) Chief financial officer, 196.7 193.1 1.9 246.1 230.0 7.0 251.3 236.1 6.4 system hospital (262) Chief information officer (70) 198.5 195.8 1.4 208.3 208.0 0.1 234.5 226.7 3.4 Chief compliance officer (15) 157.2 152.5 3.1 157.2 152.5 3.1 188.3 180.2 4.5 Patient-care services (108) 188.6 185.2 1.8 211.5 201.7 4.9 221.3 220.1 0.6 Nursing services (178) 185.8 183.0 1.5 218.7 205.1 6.6 224.5 212.2 5.8 Managed care (17) 180.6 180.4 0.1 195.0 187.7 3.9 200.3 188.0 6.5 Human resources (170) 180.0 178.0 1.1 196.2 196.3 (0.1) 214.6 208.5 2.9 Professional services (75) 170.9 170.2 0.4 192.0 189.4 1.4 196.7 196.9 (0.1) Support services executive (32) 159.6 153.3 4.1 162.5 169.4 (4.0) 176.5 180.0 (2.0) Ambulatory services (30) 199.3 191.0 4.4 219.0 205.5 6.6 236.2 231.4 2.1 Facilities and engineering (47) 183.0 183.0 0.0 202.2 187.4 7.9 209.8 204.3 2.7 Legal services (42) 248.8 238.3 4.4 271.5 258.1 5.2 296.2 286.4 3.4 Public affairs (22) 149.5 145.0 3.1 163.3 159.7 2.3 201.2 191.6 5.0 Marketing (42) 151.7 152.0 (0.2) 173.5 165.3 5.0 181.1 175.8 3.0 Fund development (101) 161.3 160.6 0.4 175.8 174.0 1.0 207.7 200.6 3.5 Planning (36) 189.3 189.3 0.0 214.7 211.2 1.7 221.2 213.0 3.9 Quality management (M.D.) (13) 270.0 263.3 2.5 317.6 300.8 5.6 320.4 294.9 8.7 Quality management 146.8 145.2 1.1 157.4 149.5 5.3 166.1 159.3 4.3 (non-M.D.) (30) Note: Data are from a constant sample. All figures rounded. Source: Sullivan, Cotter and Associates
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near theirs to make sure that investment is pay- health record in place, the last thing I would “This year so far that idea of being part of a ing off and being managed well. want is to lose that person midstream,” family and therefore having the same kinds of The problem is, like nurses, executive- Reddy says. things happen to you is not happening, and as level health IT managers tend to be scarce, But while the systems placed a premium you can guess, those are relatively intense con- which is why health systems are willing to on health IT talent, the hospitals themselves versations,” Bolster says. pay them more to stick around. were not following suit. Hospital Experts say they’ve already seen other signs Chief information officers at CIOs saw median total compensa- of a thaw in executive salaries this year, as per- health systems received median tion increases of just 0.1%, and formance has turned out better than boards total compensation increases of total pay of $208,300. had expected. 5.2%, which put their total pay at Going forward, experts say it’s But what of the “lost” income from years $326,600 for 2010, up from tough to predict where executive in which pay was slowed, frozen or even $310,400 in the previous year. compensation is headed in the next reduced for a year or more? “Is that trend “The CIOs of these organiza- year or two, but already this year going to be baked in? Or over time … will tions, who have been through consultants say they’ve seen signs they in fact catch up to the rest of the mar- some of the early installations, are that the picture is going more in the ket?” Nelson says. “No one can predict what in high demand,” says Kevin Reddy: Chief direction where the executives will happen … but I believe that those Reddy, a vice president at execu- information officers would like to see it. freezes or decreases, unless they’re desig- tive search firm Furst Group, “are in high demand.” For example at academic medical nated as temporary, are going to be baked in Rockford, Ill. centers, many executives saw their going forward.” << Twenty-five systems paid medical infor- salaries frozen last year along with the rest of matics executives median compensation the staff at their affiliated universities or med- of $291,000, an increase in total compensa- ical schools, as higher education endowments What do you think? tion of 4.6%, and 11 systems reported having took a hit in the marketplace. Bolster, of Hay Write us with your comments. a C-suite-level chief network/system devel- Group, says executives at university-affiliated To send us a letter electronically, opment officer with median total compensa- hospitals are arguing this year that their salaries go to modernhealthcare.com/letters; tion of $399,200. should be treated differently because they have by fax, 312-280-3183. “If I was thinking of putting an electronic completely different business models.
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August 16, 2010 • Modern Healthcare 29 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints
Patient Safety >> Maureen McKinney
and payers to turn to solutions that incorpo- Coaching with care rate the use of one person—a coach or advo- cate—who establishes personal relationships, Patient advocates help guide post-hospital care in promotes self-care and guides patients through the thorny period following dis- an effort to improve outcomes, reduce readmissions charge from a hospital. “I’ve had patients who’ve been pre- uring the course of an average empower patients and their families to take a scribed generic and trade versions of med- workday, Becky Cline sifts more active role in their care, thereby reduc- ications and are taking both of them, and through plastic shopping bags full ing the rate of hospital readmissions. I’ve had diabetic patients who don’t even of medication bottles, reviews While preventable rehospitalizations have know how to test their blood sugar,” says Dlengthy post-discharge plans, coordinates fol- been a long-standing problem, providers are Cline, who has worked as a coach for three low-up appointments, and acts out various now scrambling to find ways to effectively years. “There’s a lot of confusion so it’s very role-playing scenarios with patients in order address them, particularly after the passage important that patients receive help in an to educate them on the red flags of their of the Patient Protection and Affordable environment where they feel comfortable chronic diseases. Care Act of 2010, which includes a payment asking questions and making decisions for Cline is a registered nurse and a transition penalty in two years for hospitals with the themselves.” Physician Health Partners’ approach is based on the Care Transitions Intervention model. Developed 12 years ago by Eric Coleman, a geriatrician and professor of medicine, and his colleagues at the University of Colorado at Denver, CTI is a four-week program aimed at promoting self-management among high-risk patients. The intervention is based on four components, or “pillars”: medication manage- ment; follow-up care with a primary-care physician or specialist; use of a paper-based personal health record; and education about the warning signs that a condition is worsening and what to do when they arise.
Models of behavior “Coaches don’t fix problems,” Coleman explains. “They model behavior on scenarios such as medication confusion, conflicting advice, follow-up care and what symptoms mean. Adults don’t learn by reading brochures. They learn by rehearsal, practice and role-playing.” Coleman’s model has pretty tight guide- Brian Jack of Boston University’s School of Medicine leads Project Re-Engineered lines. Coaches visit high-risk patients in the Discharge. The program uses a variety of patient-education tools, including a hospital to establish a rapport, meet with computerized “coach” named Louise, who gives post-discharge instructions to patients. patients in their homes—ideally within 72 hours of discharge—and then follow up with coach, employed by Physician Health Part- highest rates of readmissions. them three times by phone. The result, he ners, a management-services organization The startling statistics related to rehospi- says, is a relatively short, low-cost, low-inten- based in Denver, and she is charged with pro- talizations are nothing new: one out of every sity intervention that can be deployed in a viding a critical bridge between the hospital five Medicare patients discharged from the wide range of settings. As of July, 309 sites in and the home. hospital is readmitted within 30 days, and 38 states had implemented the model. She works with roughly 25 patients at a nearly 75% of those readmissions are pre- Training is made available to interested sites, time, all of whom are in various stages of the ventable. And the problem is a serious, costly Coleman says, and the scope and price tag vary transition program and all of whom have one one, totaling more than $17 billion in addi- depending on the size of the organization and or more of three chronic conditions: diabetes, tional Medicare spending each year, accord- the number of coaches they want to use. congestive heart failure or chronic obstructive ing to a widely publicized study published in In a 2006 article in the Archives of Internal pulmonary disease. She meets with patients the April 2, 2009 issue of the New England Medicine, Coleman and several other briefly in the hospital before they are dis- Journal of Medicine. researchers presented the results of a ran- charged, comes to their homes for an hour- The prospect of reduced payments, which domized controlled trial testing the Care long, in-person visit and follows up with peri- are set to take effect in October 2012, has Transitions Intervention model. They found odic phone calls. The end goal, Cline says, is to prompted increasing numbers of hospitals lower rehospitalization rates at 30, 90 and
30 Modern Healthcare • August 16, 2010 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints
180 days among patients who had received coaching by advanced-practice nurses. For instance, the intervention group’s rehospital- ization rate at 30 days was 8.3% compared with 12% in the control group. And at 180 days, the intervention group’s readmission rate was 25.8% compared with 30.7% in the control group. “We were able to demonstrate that, six months down the road, there was a statisti- cally significant difference between those that got it and those that didn’t,” Coleman says. “That investment in self-care and education does pay dividends.” The average cost of a coach, including salary, benefits, cell phone and mileage costs, is somewhere around $75,000 or $80,000, Coleman says. But the net savings, given a standard panel of about 24 to 28 patients per coach at any given time, is roughly $300,000 per year per coach. “And that’s based on a very conservative analysis,” he adds. While Physician Health Partners has one way of implementing the intervention—the Transition coach Kathryn Bottinelli, left, of Centura Health in Denver, assists patients company represents primary-care physicians with their post-discharge care routines, such as medication management. and works with payers to deliver care more efficiently and control costs—other entities, tomized, community-specific approaches to case managers, who then had time to per- including home health agencies, not-for- reducing readmissions. One of the 14 regions form coaching duties. And although they profit organizations and hospitals, have also selected was Lansing, Mich., and its surround- have used a range of deployment strategies, made it work for them. ing communities, says Donna Beebe, senior they have seen readmissions plummet by project manager of the care transitions team at about 50% among patients who received Adapting the model MPRO, a quality improvement organization coaching, says Diane Smith, MPRO’s direc- Facing cash-strapped budgets, some sites based in Farmington Hills, Mich. tor of care transitions. have implemented the Care Transitions MPRO, which leads Michigan’s participa- Coleman says he strongly urges people to Intervention program, but with adaptations. tion in the pilot, chose to implement the CTI maintain fidelity to the model whenever St. Joseph Health System-Humboldt County and received on-site training from Coleman possible, but he also acknowledges that the (Calif.) has successfully rolled out Coleman’s and his team, Beebe says. intervention has worked well with both model at their two hospitals in Eureka and Sixteen local providers eventually got nursing and social work students. He did, Fortuna using senior-level nursing onboard, including acute- however, warn against using lay students as coaches. care hospitals, critical- volunteers as coaches because of “From our perspective, it gave access hospitals, skilled- their lack of formal training in the students the opportunity to nursing facilities and clinical care or counseling. gain valuable experience and it also home health agencies. But made it easier for us to get started none felt they could Part of healthcare reform right away,” says Sharon Hunter, employ additional nurses, As Coleman’s model and others coordinator of St. Joseph’s care Beebe says. like it began to make measurable transitions program. “The students “What we discovered dents in rehospitalization rates, get a better understanding of med- is that none of the Sen. Michael Bennet (D-Colo.) ications and disease processes, but Coleman: “Coaches providers were in a Cline: “There’s a lot took notice. Bennet crafted a bill more importantly, they learn a don’t fix problems. They financial position to of confusion” among called the Medicare Care Transi- much more holistic approach to model behavior.” dedicate resources to some patients. tions Program Act of 2009, using patient care.” hire a coach,” Beebe components of the Care Transi- Readmission rates among patients who says. “One facility used therapists, and tions Intervention as well as some of the have received the intervention hover around another lengthened the hospital visit and approaches used by Rocky Mountain Health 8.2%, far lower than the national rate of 20%, relied more on follow-up calls.” Plans, a not-for-profit health benefits Hunter says. Other sites used social work students from provider based in Grand Junction, Colo. Other providers have been even more cre- nearby Michigan State University who In lieu of formal coaching, Rocky Moun- ative. In April 2009, the CMS chose 14 com- received some specific training, she adds. In tain incorporates its care transitions pro- munities to participate in its care transitions some cases those students acted as coaches gram into its coordinated care within the project, a pilot program created to test cus- and at other sites, the students filled in for hospital and case management following
August 16, 2010 • Modern Healthcare 31 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Patient Safety discharge, says Sandy Dowd, director of Model, a comprehensive, high-intensity inter- approaches, including some that use virtual, case management. The level of follow-up is vention that targets older adults with two or nonhuman coaches. Project Re-Engineered based on patients’ illness acuity, and more risk factors for hospital readmission. Discharge is a program at the Boston Univer- includes phone calls, health literacy assess- Naylor’s model uses nurses with master’s sity School of Medicine that stresses patient ments and referrals, she says. degrees who act as “transitional care nurses.” education before discharge from the hospital. According to a Dartmouth Atlas Project Nurses support patients through regular Led by Brian Jack, associate professor and vice report released in 2006, the Grand Junction home visits and telephone calls, and they also chair for academic affairs in the university’s region achieved some of the department of family medicine, lowest Medicare costs in the Project RED uses several tools country and was also one of including an electronic “coach” the most efficient regions for named Louise for providing end-of-life hospital use. post-discharge instruction. Introduced by Bennet in Created in collaboration with May 2009, the bill proposed Tim Bickmore, a professor of the creation of a national net- computer science at Northeast- work of transition coaches that ern University in Boston, Louise would be managed by com- is an animated character dis- munity-based organizations, played on a touch screen thus removing some of the mounted on a cart near the care coordination burden patient’s bed. from providers. Louise, or the “virtual dis- Included in the health charge advocate,” as she is also reform law was the Commu- known, talks to patients and nity-based Care Transitions reviews orders, and they Program, a provision modeled respond using the touch screen. after Bennet’s bill. The pro- The Louise system also tests gram allots $500 million over competency by asking questions five years, beginning Jan. 1, While a variety of transition-coaching programs exist, one common such as, “What medications do 2011, for community-based goal is the reduction of preventable hospital readmissions, which one you take?” organizations to target high- study estimates add $17 billion to Medicare costs annually. “Our data show that twice as risk Medicare beneficiaries many people prefer Louise to a with histories of multiple chronic diseases accompany them on doctor’s appointments. clinician because she’s not in a hurry and she and past hospitalizations. According to the Unlike other programs that measure success will go over instructions again and again,” text of the provision, organizations chosen to with 30-day readmission rates, Naylor says her Jack says. participate in the program will provide med- goal is to stop the downward trajectory that For Mary Shankle, an 87-year-old woman ication management, self-management sup- many patients are on and reduce rehospital- living in Temple, Texas, the impact of the port and help arranging follow-up care. Pri- izations in the long term. home visits and phone calls she received from ority will be given to organizations that target “In our most recent trial, we’ve been able to her transition coach could not be more pro- small, rural and medically under- demonstrate that if you make this found. Shankle suffered from various chronic served communities. investment, you’ll see improve- conditions including hypertension and had Interested applicants will also ments in satisfaction, cost savings been in and out of the hospital several times. have to demonstrate that they are and reduced hospitalization After her last hospitalization in September actively involved in collaborations through 12 months,” Naylor says. 2009, she was paired with Jamie Jones, a tran- within the community, Coleman Naylor also responded to argu- sition coach employed by Scott & White says. “The idea is that you can’t ments that her approach is too Healthcare, based in Temple, which uses come to the dance by yourself,” he expensive, citing research that Coleman’s CTI model. says. “You have to create and shows $5,000 in mean savings per Jones worked to help Shankle learn to man- show partnerships.” Medicare beneficiary. age her care and reach her goal of remaining And there are plenty of other Naylor: You’ll see “Investing in this kind of inter- in her home and living independently. Nearly interventions that would fit within improvements in cost vention gets these people and a year later, Shankle has stayed out of the hos- the parameters of the provision, savings, satisfaction. their families in a position to deal pital and has learned to spot signs of trouble. says Mary Naylor, a professor of with their chronic health prob- “My life is better now at 87 because my gerontology in the school of nursing at the lems in a very different way,” she says. “I health is better,” Shankle says. “I’m feeling University of Pennsylvania at Philadelphia. don’t think it’s too intensive; I think it good; my blood pressure is down. I’m eating Two decades ago, Naylor and her col- matches their needs.” good food and I’m active. It’s amazing, this leagues began work on the Transitional Care Other sites have employed different knowledge, it has kept me on my feet.” <<
Need more patient safety news? Read the Patient Safety section at modernhealthcare.com/patientsafety
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“In this day and age, you can’t afford not to use Antimicrobial Copper”
Pia Norup Medical Doctor
Antimicrobial Copper is the most effective** touch surface material. No other material comes close.
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** Michels et al, Lett Appl Microbiol, 49 (2009) 191-195 demonstrated that Antimicrobial Copper outperforms two commercially available silver-containing coatings under typical indoor conditions. Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints By The Numbers
MOST PRESCRIBED PHARMACEUTICALS Ranked by total number of prescriptions, 2009 (numbers in thousands)
Prescriptions Percentage Rank/Product Manufacturer(s) 2009 2008 change 1 Hydrocodone/acetaminophen Watson Pharmaceuticals and 111,397 111,501 (0.1%) Mallinckrodt
2 Levothyroxine sodium Mylan Pharmaceuticals and 61,822 57,119 8.2 Lannett Co.
3 Lipitor Pfizer 51,459 58,364 (11.8)
4 Simvastatin Teva Pharmaceuticals and 46,461 35,858 29.6 Lupin Pharmaceuticals
5 Lisinopril Lupin Pharmaceuticals 35,701 30,878 15.6
6 Amoxicillin Teva Pharmaceuticals 33,793 35,565 (5.0)
7 Nexium AstraZeneca 30,433 30,762 (1.1)
8 Plavix Bristol-Myers Squibb/Sanofi-Aventis 29,699 28,897 2.8
9 Metoprolol tartrate Mylan Pharmaceuticals 28,846 18,598 55.1
10 Singulair Merck & Co. 28,495 29,005 (1.8)
11 Lexapro Forest Laboratories 27,968 30,097 (7.1)
12 Synthroid Abbott Laboratories 25,974 27,307 (4.9)
13 ProAir HFA Teva Specialty Pharmaceuticals 24,895 16,614 49.8
14 Amlodipine besylate Mylan Pharmaceuticals 24,037 23,741 1.2
15 Azithromycin Greenstone 23,854 22,964 3.9
16 Metformin hydrochloride Teva Pharmaceuticals 22,877 16,645 37.4
17 Metoprolol succinate Par Pharmaceutical Cos. 21,841 10,420 109.6
18 Hydrochlorothiazid Teva Pharmaceuticals 21,699 24,583 (11.7)
19 Crestor AstraZeneca 21,646 17,622 22.8
20 Furosemide Mylan Pharmaceuticals 20,932 21,100 (0.8)
Source: IMS Health
For more information about this ranking, contact: IMS Health, 901 Main Ave., Suite 612, Norwalk, CT 06851; 203-845-5200; imshealth.com Information in this chart subsequently may be revised at the discretion of the editor. For more information, contact Special Projects/Research Editor Rebecca Mielcarski at 312-397-5511 or [email protected]. For more charts, lists, rankings and survey results, visit modernhealthcare.com/section/lists.
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August 16, 2010 • Modern Healthcare 35 Single Use Only. Contact Modern Healthcare for reprint rights | http://www.modernhealthcare.com/reprints Docs do so-so at the polls Citing the almost $5.2 million spent by candidates in Tennessee’s 8th ASIDES Congressional District GOP primary, the Center for Responsive Politics & called it the most expensive congressional primary election in the nation, and it resulted in otolaryngologist Ronald Kirkland narrowly beating radi- Outliers INSIDES ologist George Flinn (who spent nearly $3 million of his own money) 17,635 votes to 17,309 on Aug. 5. Unfortunately for both doctors, farmer Stephen Fincher was also running, and he received 35,016 votes. Tennessee’s 8th District aside, overall physi- Let the games begin, cians who weren’t incumbents seeking con- gressional seats have had so-so results in the medical students say recent round of voting. Video game enthusiasts may be lining up for “Madden NFL 11,” but in In Democratic primaries, Ami Bera ran upcoming years, they might be just as eager to play interactive games uncontested in California’s 3rd District; about patient care. That’s according to researchers from the University Loraine Goodwin received 52.6% of the votes of Michigan at Ann Arbor and the University of Wisconsin at Madison, in a two-person primary in California’s 19th who surveyed more than 200 medical students and found, perhaps not District; Wynne LeGrow was unopposed in surprisingly, that nearly all of them were open to some form of digital Virginia’s 4th District; and Brent Staton lost to medical school curriculum. LeGrow was one doc a lawyer and finished third out of four candi- That’s because the millennial generation—which most medical stu- who won his race. dates in Tennessee’s 3rd District. dents belong to—can’t get enough technology, the authors say. They And in Republican primaries, Patrick were raised with the Internet, they spend endless hours on Facebook Bertroche finished fifth out of seven candidates in Iowa’s 3rd District; Larry Bucshon finished first in an eight-person race in Indiana’s 8th Dis- trict; Blake Curd finished last in a three-person race in South Dakota’s only congressional district; Mike Fallon was unopposed in Colorado’s 1st District; Joe Heck received almost 69% of the vote and trounced his oppo- nent in Nevada’s 3rd District; Deborah Honeycutt received just under a third of the votes and lost in a runoff election for Georgia’s 13th District; Mariannette Miller-Meeks beat two other opponents in Iowa’s 3rd Dis- trict; and Mike Vasovski finished last in a six-person field in South Caroli- na’s 3rd District. While that’s nowhere near a complete tally, it comes to a score of Docs: 7, other professions: 6. Osteopathic physicians (Betroche, Heck and Vasovski) are 1 for 3. Physicians are also 3 for 3 in races for states’ 3rd District seats, and while Outliers has no idea what that means, we were compelled to point that out. Ripped-off nursing students may get payback Nursing students who paid real tuition to a fake nursing school may get their money back in a $500,000 settlement deal announced by the Cal- ifornia attorney general. Just having fun or getting ready for a medical career? Medical RN Learning Center of Los Angeles billed itself as a fast-track school students, especially male ones, say they’d like video games worked where students could get a bachelor’s degree in nursing in less than two into their curriculum. years. Most of the 300 students were Filipino-Americans and already working in healthcare. Students paid $20,000 each in tuition. The fake and other social networking sites, and their daily texting rates can creep school held classes in anatomy and other basic sciences, with the promise toward the triple digits. the degree would: “Advance your education. Increase your earnings. “They read less and are more comfortable in image-rich environ- Secure your financial future.” It even conducted graduation ceremonies. ments than with text,” the authors say in the study. “Their clear prefer- Instead of fulfilling dreams, school operators gave hundreds of aspiring ence is for active, first-person, experiential learning and a level of inter- nurses nightmares. Because the school was not accredited, none of the activity that is absent in traditional lectures, but vibrantly present in coursework can be transferred to legitimate schools for course credits. new media technologies.” Perhaps even less surprising is the dramatic role gender played in partic- ipants’ responses. Males were far more likely than females to play video games and role-playing games. And although almost all of the respondents say they are open to a more technologically enhanced education—particu- Have an idea for an Outlier? larly for gaining skills in doctor-patient communication—many female E-mail us at respondents balked at the idea of incorporating games into course work. [email protected] According to researchers, that disparity might stem from the fact that video games are designed with males in mind, and are tailored to their cognitive strengths and “neural sex differences.” For instance, For more news from the quirky side they say, while women are apt at tasks like identifying an object that has of healthcare, visit been moved, men are better at navigating through a maze. Outliers modernhealthcare.com/section/outliers thinks these researchers have never been on a long car trip.
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