Bruce A. NelsonVice President, SearchAmerica
You might say hospitals have been “forced” to automate charity processing by recent federal government action. IRS questionnaires were recently sent to approximately 550 tax-exempt hospitals and healthcare organizations across the nation. This is because government is now looking seriously at the level of community benefits provided in exchange for tax-exempt bond financing and other benefits. The "compliance check" questionnaire includes sections on uncompensated care, billing practices, community programs, the board of directors and executive compensation. The stated goal is to increase voluntary compliance with the law. It's part of an investigation into tax-exempt entities that the IRS has conducted for the past year. Industry experts also see this action by federal regulators as a response to changes in the healthcare industry and allegations of unfair billing and aggressive collection practices by hospitals.
Lois G. Lerner, director of the exempt organizations division of the IRS, is quoted in The New York Times as saying the questionnaires could be used in deciding whether standards for nonprofit hospitals should be changed or clarified. The current standards, with little changed since 1969, rely on a vaguely defined concept of “community benefit.” While reviewing the questionnaires, Lerner said, the agency may decide to conduct formal audits of some hospitals, with a full-scale examination of their records. The IRS lists about 7,000 entities as nonprofit hospitals and healthcare organizations; in the last 10 years, it has audited 375 of them. “Our audit rates are too low,” said Mark W. Everson, the commissioner of internal revenue, also quotes in the Times. One tax lawyer, who previously worked at the IRS, was quoted as saying the survey showed that the agency saw “a need for greater monitoring of what hospitals do in return for their tax exemptions.”
The survey “piles on” at a time when nonprofit hospitals are receiving closer scrutiny from Congress and state officials. Lawmakers of both political parties say that in today’s fiercely competitive healthcare marketplace, many nonprofit hospitals operate like investor owned, profit-making institutions. Uninsured patients have filed class-action lawsuits, accusing nonprofit hospitals of overcharging them. Several states have found that nonprofit hospitals abused their state tax exemptions.
The complexity of the recent questionnaire was overwhelming to many hospitals.The IRS asked many 80 detailed questions including:
No matter what new IRS standards or other regulations may be in the offing, the IRS questionnaire is a wake-up call that hospitals need a method to prospectively ensure that their charity care practices are uniform and consistent with their published charity care policies. And that requires attention to staff training, charity care billing processes, and technology to enable those processes.
Scott MacStravic, Ph.D.
I first became involved with health care marketing in the 1970s, consulting, writing and speaking about it back then, since my first job involving its use didn’t come until 1981. Back then, my emphasis was on gauging and improving patient satisfaction. It was a relatively simple matter twenty-five years ago, since most health care organizations knew and did little or nothing about “customer” satisfaction, though devoted a lot of attention to keeping physicians happy.
Things have come a long way since then. Almost all hospitals now routinely measure patient satisfaction, along with physician and employee attitudes. Most have adopted “patient-centric” approaches of various kinds, and “patient experience management” is a major focus in hospital capital investments, operational efforts, and balanced scorecard performance evaluation. But sometimes it is far too myopic.
In a recent article, Fred Lee, author of If Disney Ran Your Hospital: 9½ Things You Would Do Differently, noted that patient experience management is much like theater, where “all the world’s a stage”, and staff in hospitals and other HCOs are like characters in a play, acting out and feeling emotions that engage their entire attention and effort, while enabling patient satisfaction to reach new heights. [F. Lee “All the World’s a Stage – Especially in the Hospital” Recruitment and Retention Monthly April 2006 (www.hcpro.com)]
I vividly recall a visit I made to the Celebration Health hospital in Celebration Florida, where this philosophy had been demonstrated. Its diagnostic imaging center included an MRI that had been “disguised” as a sand castle, with patient changing rooms that looked like cabanas in a facility decorated to look like a beach scene, complete with the fragrance of suntan lotion as well as music piped in. Patient satisfaction in that hospital is notoriously high.
But hospitals are more than “stages”, of course, and there is more than patient satisfaction by which to measure the impact that they have. By the same token, hospitals are more than “places” where people are forced to come in order to have “experiences”. They are also “things” that affect the health and lives of patients and consumers in general, often dramatically, and along a wide range of dimensions.
Hospitals may focus on patient experiences, but patients are also influenced in their attitudes and behaviors toward them by the differences hospitals and experiences make in their lives. Focusing on patient satisfaction with their brief encounters, on just what happened in the facility between admission and discharge is a necessary but wholly incomplete and insufficient basis for achieving the kinds of lasting patient loyalty and support most hospitals aspire to.
Already the focus of hospital quality improvement efforts, the clinical side of “experience management”, is extending in two directions beyond the admission-to-discharge period. Patient preparation for admission, including managing their expectations, is a key element in service, along with clinical quality. And the discharge experience is mainly aimed at preparing patients for what will happen after they leave, with follow-up care and monitoring increasingly an element that extends the experience.
But the biggest add-on is the focus on what happens to patients after and as a result of their brief encounter, whether inpatient or outpatient. Hospitals are confronting the same reality that was shown to apply to physicians, when it was learned that providers’ notions of what successful outcomes are do not correspond particularly well to what patients expect and achieve. [“Patients and Doctors Often Differ on What Constitutes Successful Surgery” Strategic Health Care Marketing 20:3 March 2003 p.12]
The more hospitals focus on the “intra-mural” patient experience, by concentrating their satisfaction efforts and measurement on just what happens between admission and discharge, the more they will miss opportunities to learn about and improve patients’ long-term assessment of their total experience and the impact made on their lives. Only by asking about and including such impact in their quality evaluation and improvement efforts can hospitals fully understand and optimize the complete patient experience.
Hospitals and their employees can gain a lot by thinking of themselves as “stages” and “role players”. I have used the “cognitive script” model, including dimensions of “costumes, scenery, props, action and lines” as a foundation for improving the patient experience. But health care involves experiences and effects that go well beyond what happens in the “theater”. Only by evaluating and managing elements of what happens before and after the “play” can hospitals really achieve the patient satisfaction, loyalty, retention, revenue and margin results they desire – only by focusing on patients’ results can they make the most of what they mean to their customers.
Robert FrombergEditor in Chief, HFMA
I just got off the plane from Orlando, but wanted to take a moment to share a few particularly poignant words expressed by Fred Lucky, Senior Vice President of the Kansas Hospital Association, after he was awarded the Frederick C. Morgan Award for Individual Achievement at the Wednesday evening Chairman's Banquet--the final event at ANI. These words capture so much of the sentiment expressed during ANI this year:
I want to leave you with some final thoughts – thoughts that I think about every day on my drive to work – We work in a noble profession, perhaps the noblest of all. I think about the daily miracles that happen in hospitals every day and I am in awe. Yet we are under constant scrutiny and criticism from business and political leaders that think we are too expensive, too costly, provide low quality, are not transparent enough, and take advantage of the uninsured. It’s enough to wear you down. Yet I think about all of those miracles, all of those babies being born in need of neonatal intensive care and having it available, all the trauma and burn centers that need the most sophisticated equipment and highly trained and skilled individuals in cities all across this country, all the Critical Access Hospitals in towns and communities that might wither up and die if they weren’t there, and of the tender and compassionate care of our hospice workers who bring dignity to the last hours of a patient’s life and I rejoice that I’m a part of it, however remotely. Most of us in this room tonight are a lot alike. We can’t provide the care and compassion for patients that I just mentioned, but we can help provide the means, we can doggedly fight for adequate funding, we can try to correct a massively flawed payment system that appears to become even more so if CMS has its way. That’s why membership in HFMA is so important. It makes my job so much easier and rewarding and I know it does yours as well. Let me end with this quote from Winston Churchill “We make a living by what we get, but we make a life by what we give.”
I want to leave you with some final thoughts – thoughts that I think about every day on my drive to work –
We work in a noble profession, perhaps the noblest of all. I think about the daily miracles that happen in hospitals every day and I am in awe. Yet we are under constant scrutiny and criticism from business and political leaders that think we are too expensive, too costly, provide low quality, are not transparent enough, and take advantage of the uninsured. It’s enough to wear you down. Yet I think about all of those miracles, all of those babies being born in need of neonatal intensive care and having it available, all the trauma and burn centers that need the most sophisticated equipment and highly trained and skilled individuals in cities all across this country, all the Critical Access Hospitals in towns and communities that might wither up and die if they weren’t there, and of the tender and compassionate care of our hospice workers who bring dignity to the last hours of a patient’s life and I rejoice that I’m a part of it, however remotely.
Most of us in this room tonight are a lot alike. We can’t provide the care and compassion for patients that I just mentioned, but we can help provide the means, we can doggedly fight for adequate funding, we can try to correct a massively flawed payment system that appears to become even more so if CMS has its way. That’s why membership in HFMA is so important. It makes my job so much easier and rewarding and I know it does yours as well.
Let me end with this quote from Winston Churchill “We make a living by what we get, but we make a life by what we give.”
This morning, Phil Taylor, Chairman of HFMA-UK, suggested that HFMA's new chairman and soccer coach, Joe Fifer, might want to join England's soccer team when he visits later this year...but that he'll have to call it football rather than soccer.
Phil also articulated some goals for healthcare financial managers in the UK that were highly relevant to those in the US: going "beyond our borders" in three ways: 1) beyond organizational borders to learn more about other parts of the business, especially clinical care; 2) beyond personal borders to achieve new goals; and 3) beyond geographic borders to learn more about health systems in other countries.
"Healthcare financial management is a tough but rewarding job," he said. "We do make a difference in all we do."
Pat Williams, senior VP of the Orlando Magic, is on stage now. He said "Everything rises and falls on leadership; it always has and it always will."
He stated the importance of vision to 1) keep you focused, 2) give you energy, and 3) help you finish--because "leadership is always about results."
And alluding to last night's NBA championship victory by the Miami Heat, Williams quotes Heat coach Pat Riley as saying, "Coaching is overrated. Leadership is not."
Robert Fromberg Editor in Chief, HFMA This morning, David Gergen echoed Joe Fifer's call for courage in leadership for healthcare leaders and others. "We need to speak truth to power," he said at the general session. He quoted Joe Fifer on the pressures from all sides felt in health care and said, "We will feel these pressures--intense, relentless pressure--for the rest of our careers." He had two key messages for a rapt audience: --The practice of leadership with courage is not only important in health care, but vital for the quality of life in our democracy. --America is drifting toward a waterfall, and we need courageous leadership to truly address healthcare costs and other looming threats, including an "out of control budget," dependence on foreign oil, climate change, and competition from China and other Asian nations.In response to questions, Gergen said that hospitals in general are seen as bureaucratic, but that people appreciate the care they receive at individual hospitals. He also praised the progress made at the VA and emphasized the importance of electronic health records in that success...and he stated that the government must help hospitals invest in this expensive technology.
Later today, I'll recount the story Gergen told about John Kennedy and one thousand Cuban cigars.
Update: 3:47 EST
Here is the story I promised earlier.
David Gergen also emphasized that humor is an important leadership quality--the ability to laugh at yourself, to see the irony in a situation. The example he gave was John Kennedy. One day, Kennedy called his press secretary, Pierre Salinger, on the phone and said, "Pierre, I need to talk to you."
"Yes, Mr. President."
"Now, I know you love a good cigar as much as I do."
"Yes, Mr. President," Salinger said, "I do."
"I'd like you to get me a good Havana cigar."
"OK, Mr. President."
"In fact, I'd like you to get me one thousand Havana cigars. And I need them by 11 o'clock tomorrow morning."
"One thousand cigars? By 11 tomorrow morning?"
"Right. I know you can do it."
The next morning, President Kennedy called Salinger. "Did you get those cigars?" the president asked.
"Yes, sir, I did."
"Good man," the president said.
Then, at noon sharp, President Kennedy went on TV and announced a trade embargo against Cuba.
A few quick impressions from the first hour of ANI...
Joe Fifer, HFMA's 2006-2007 Chairman stood center stage and told his own story of realizing he could "do the thing you think you cannot do" and be a forceful leader. A short video showed him coaching kids at soccer--something he finds the time for because "it's the right thing to do." Joe challenged HFMA members to do the right thing--to stand up and fight for their organizations and their communities.
Lesley Stahl of "60 Minutes" is onstage now. She talked about the importance of pictures in communicating, telling a funny story about how Bill Clinton's administration switched the Clinton cat, Socks, in favor of a family dog, Buddy, as the administration's front-and-center pet. Why? Stahl said that cats are traditionally a symbol of infidelity, while dogs are solid, down-to-earth, and a symbol of family.
Stahl went on to say that the growth of the internet and particularly hand-held devices may reduce the reliance on pictures and make political campaigns more focused on substance.
If you are at ANI, I hope you're having a rewarding time. If you're not here, look for a tool from ANI sent to you via email each day.
Kevin C. (Casey) NolanManaging Director, Navigant Consulting Inc.
On a recent cross country flight I was catching up on my reading and read two very interesting articles. The first article dealt with the dramatic changes that have swept the banking and financial services industry in the last decade. It chronicled the dramatic wave of consolidation in the banking industry as well as the incredible transformation driven by the “democratization of information.” One of the examples cited was the fact that today consumers can use the internet to solicit loan terms from the banks, versus ten years ago when they had no choice except to go to their local bank and apply for a loan.
The second article reported the results of a recent study by the AMA on the increasing concentration in the insurance industry. The AMA study found that in 56% of the 294 metropolitan regions examined, one health insurer controlled 50% or more of the HMO/PPO market. The AMA study went on to note that in 95% of the metropolitan regions the Herfindahl-Hirschmann Index (the HHI, a benchmark the Department of Justice uses to gauge how competitive a market is) was above 1800 (a score above 1800 is considered to be a highly concentrated, and hence uncompetitive market).
As I reflected on these two seemingly unrelated articles, the thought occurred to me that providers, like banks in the previous decade, will not be able to stop at regionalization. Success—even survival—will require them to be able to go “toe-to-toe” with insurance companies, which in the past decade have grown from fragmented, regionally-based entities to large, consolidated national organizations. After all, a few years ago there were more than 70 Blue Cross plans in this country and today there are just slightly more than 40. Provider organizations must now define their areas of interest and intent in the same terms the insurance companies serving their markets do—if the insurance companies define their market as statewide, the provider organization must do likewise, or risk losing the ability to negotiate effectively, or worse, become irrelevant. Likewise, if the insurance company in the market is one that spans multiple markets or even states, the provider organization will be forced to increase its geographic footprint in order to stay relevant. But this footprint must match up to the insurers. Geographic expansion for the sake of geographic expansion is a recipe for disaster.
So the race from local to regional system has largely been run and won. But the end of that race is not the end of the marathon, but merely the beginning of the next leg. And the insurers appear to be way ahead. So my advice to providers is, “get your running shoes on.”
How is Medicare Part D performing? Gail Wilenski--senior fellow at Project HOPE and a commissioner on the World Health Organization’s Commission on the Social Determinants of Health--has this to say in a column entitled "Implementing the Medicare Drug Benefit--the First 90 Days" in hfm magazine:
After dire warnings from those opposed to the Medicare drug plan, echoed by many in the media, an assessment of how Part D is doing seems to depend on the eyes of the beholder. A headline from The Washington Post reads “Survey Refutes Criticism of Medicare Drug Plan” (March 13, 2006), while a headline from the Christian Science Monitor reads “Confusion Remains as Drug Plan Deadline Nears” (April 12, 2006). In what may be a classic case of a “glass half-empty/glass half-full,” both sides can lay claim to some legitimacy in their views. By the end of the first quarter, some 28 to 29 million people were covered by Part D out of a total Medicare population of about 43 million. Of these, some 7.2 million had individually signed up. The rest were dual-eligibles, military retirees, retirees with employer-sponsored insurance, or individuals who had signed up for Medicare Advantage. This means that there were still about 15 million beneficiaries who could have been on Part D but were not, at least as of April, with a May 15 enrollment deadline looming in their future.
After dire warnings from those opposed to the Medicare drug plan, echoed by many in the media, an assessment of how Part D is doing seems to depend on the eyes of the beholder.
A headline from The Washington Post reads “Survey Refutes Criticism of Medicare Drug Plan” (March 13, 2006), while a headline from the Christian Science Monitor reads “Confusion Remains as Drug Plan Deadline Nears” (April 12, 2006).
In what may be a classic case of a “glass half-empty/glass half-full,” both sides can lay claim to some legitimacy in their views. By the end of the first quarter, some 28 to 29 million people were covered by Part D out of a total Medicare population of about 43 million. Of these, some 7.2 million had individually signed up. The rest were dual-eligibles, military retirees, retirees with employer-sponsored insurance, or individuals who had signed up for Medicare Advantage. This means that there were still about 15 million beneficiaries who could have been on Part D but were not, at least as of April, with a May 15 enrollment deadline looming in their future.
Click here to read the rest of her column.
Richard L. Clarke, DHA, FHFMAPresident and CEO, HFMA
Embrace consumerism? Am I crazy? Consumerism relates to high-deductible health plans that potentially increase providers’ bad debt. It relates to explaining to patients why their upfront payments are so high. And it relates to patients wanting to know what things cost. But it also relates to engaging consumers in their care—and developing more of a customer service mindset.
Perhaps I am crazy. But I believe consumerism is the last, best hope for a market solution to quality and cost challenges facing hospitals and other healthcare providers. That is the carrot. Here is the stick: if we don’t embrace consumerism, government will become much more actively involved in the financing and delivery of health services, similar to many health systems around the world.
Quality and cost concerns are well documented in the public press, academic research, and pubic policy debates. The reasons for these concerns are many and varied, but a common theme is that consumers are not fully involved in their health and medical care. In its broadest sense, therefore, consumerism is engaging the consumer in key healthcare decisions. Of course the devil is in the details, and that is where healthcare executives express concern. To engage consumers more fully, they need economic “skin” in the game. And that economic skin often takes the form of increased consumer/employee cost sharing.
So what is the impact of consumerism on providers, and how should they respond? One clear challenge is managing the impact of high-deductible health plans on collection activities. But equally challenging is designing and implementing the specific methods to achieve quality and price transparency, retail pricing approaches, needed collaborations, and training and development of staff. In other words, we need the details. Many, many details.
To lead the way in embracing consumerism in health care, and to identify leading practices that address the details of implementing consumer-directed health care, HFMA has launched a new phase of the PATIENT FRIENDLY BILLING(R) project. This month, the project will release a report that identifies key objectives, barriers, and suggested actions to help providers prepare for and embrace consumerism. The report will be sent to HFMA members and other healthcare leaders. Practical tools such as case studies, scripts, and process maps will be added the Patient Friendly Billing web site in the coming weeks and months. Highlights of this effort will be presented at HFMA’s Annual National Institute in June.
Providing consumers clear, correct, and concise financial and other information is a key tenet of the Patient Friendly Billing project. Embracing consumerism is another way to demonstrate commitment to this goal. Let’s not wait for the government to address our industry’s problems. Embracing consumerism is the right thing to do for providers and for patients.
This phase of the PATIENT FRIENDLY BILLING® project was led by HFMA with the help of the Medical Group Management Association (www.mgma.org), and input from the Coalition for Affordable, Quality Healthcare—a coalition of health plans and insurers (www.cahq.org). Twelve leading healthcare hospitals, clinics, and systems provided funding and expertise, and PricewaterhouseCoopers provided consulting and research assistance. For more information, visit www.patientfriendlybilling.org.
Forrester Research, in a recent report on the financial services industry, rated banks, insurance, brokerage and similar companies on their “customer advocacy”. [B. Doyle “Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, and Insurers” Forrester Research Business View Trends May 22, 2006 (www.forrester,com)] Forrester defines “customer advocacy” as “consumer perception that the firm does what’s best for customers, not just firm’s bottom line.”
Some of the country’s largest banks rated poorly, with scores indicating as few as 18-35% of consumers though they were customer advocates. BY contrast, the always top-rated insurance company, USAA, which offers insurance to members of the armed forces, persuaded 68% of consumers, among 5,000 who were surveyed, of its commitment to customers. Credit unions as a group were rated just behind at 67%.
Since Forrester deals with national firms and industries, while health care is almost entirely local, it is understandable that it has not reported on customer advocacy among hospitals or physician groups. But this may be an important measure of reputation or image to check on. With the recent revival of government reviews of tax exemption, scandals about hospital’s “overcharging” uninsured patients, and generally declining trust in health care providers, checking on consumers’ perceptions of customer advocacy, perhaps getting ratings of your own organization compared to competitors, may offer some useful insights.
Even more important might be probing consumer ratings of your customer advocacy to learn why they score you as they did. Certainly, probing patient satisfaction ratings to learn the reasons for them offers useful insights into how providers can improve their ratings, and the same should be true for customer advocacy. While lobbying federal, state and local governments may well be essential to protecting tax exemption, having local consumer support should help with that, as well as with marketing, public relations, and fund raising. Do you know what’s your score?
MarieAnn North, MBA, FACMPENavigant Consulting, Inc.
I have on several occasions found myself partnered with physician administrators who were failing as an executive. Without exception, these physicians were respected clinicians, extremely bright, and generally liked by patients and peers. They were well meaning and hard working, so why did they fail?
Perhaps it was that no one pointed out that the skill set that had successfully brought them to this point in their careers was diametrically opposed to the skill set necessary to take them forward! Allow me to cite several examples:
Our organizations may be better served by rewarding physicians for clinical excellence and allowing them to be physicians (do what they do best and are trained in!) rather than imposing “executive” positions on them for which not many of them are suited.
Revenue Integrity through Claims Submission and Management by MedAssets MedAssets works with providers to help reduce AR days, increase cash flow, reduce bad debt, and enhance the overall operational efficiency and accountability of the hospital's revenue cycle.
