Kevin C. (Casey) NolanManaging Director, Navigant Consulting, Inc.
On my most recent travels across the country I have made two observations: the airlines’ business model is fundamentally broken and so are most hospitals’ budgeting processes. I’ll save my discussion on the airlines for another day when my wallet isn’t so empty and my knees have recovered sufficiently enough to allow me to stand upright.
As for hospitals’ budgeting processes, my observations were “book ended” by two clients who could hardly be more different. One client is a 300-bed, sole community provider on the west coast in a largely rural area about two hours driving time away from the nearest major metropolitan area and the other is a five-hospital system anchored by an academic medical center located in an inner city market in the northeast. And while these two organizations were virtually total opposites in almost every aspect, they both had a budgeting process that appeared to be completely internally focused and retrospective in nature rather than market-based and prospective. Volume estimates in their budgets were largely based on last year plus some anticipated (hoped for?) growth factor. Neither organization appeared to include any consideration regarding market factors such as use-rates, market shares, competitive initiatives, etc., in the development of their volume estimates. This, in my opinion, is the equivalent of American auto manufacturers developing their sales forecasts without considering gasoline prices or the impact of some company named Nissan. And one named Toyota. And another one named Honda. Can you say oops?!?! As a result, one of these clients had a budget that projected an increase in volume at their facility that exceeded the total volume of cases in the market. Now, I am all in favor of aggressive growth targets, but even I draw the line at achieving more than 100% market share!
I am convinced that hospitals’ budgets could be greatly enhanced by fully integrating business development, operations, human resources, and anyone else who has a relevant point of view into the budgeting process. Simply put: budgeting is a team sport. The best budgets are those that are developed collaboratively rather than sequentially. They take market dynamics into consideration in addition to internal factors. A collaborative, “outside in” approach to budgeting would, I am convinced, greatly increase the accuracy of most hospitals’ budgets, significantly decrease the “oops” factor, and foster a greater sense of teamwork and commitment on the part of those responsible for meeting budgets.
And now, let me tell you about the airlines’ fundamentally flawed business model…
Robert FrombergEditor-in-Chief
Thursday morning at HFMA's Revenue Cycle Strategies Conference, attendees were told that they needed to make a new best friend.
The opening session featured representatives of the Illinois Hospital Association, the New York State Department of Health, the Florida Hospital Association, and the Medical Information Reporting for California Project. They had a clear message for attendees: Get to know more about your quality reporting. They provided a slew of examples of present and forthcoming state and federal requirements linking quality reporting with reimbursement, not to mention health plan movement toward using quality data to determine payment. Enough to raise a CFO's blood pressure.
Kim Streit, VP of Health Care Research and Information for the Florida Hospital Association, provided this advice to financial managers:
They cautioned, however, that you may need to make more than one phone call to meet your new best friend. In most hospitals, they said, quality reporting is done by several different departments, without clear ownership of the function.
And once you've learned more about requirements and data related to quality, financial managers need to encourage organizational investment in electronic health records, a key tool to improve data capture, analysis, and reporting, the panelists agreed.
Robert FrombergEditor-in-Chief, HFMA
Yesterday afternoon, HFMA Chairman Joe Fifer revealed what CFOs are really like.
Well, it wasn't exactly Fifer who identified the characteristics. In preparation for his opening keynote speech yesterday at HFMA's Revenue Cycle Strategies Conference--the subject of which was "The Leadership Your CFO Needs"--he asked his staff to describe what a CFO does, and he shared the result with the audience. Among the responses was this gem: A CFO could be replaced by a robot that repeats, "Answer with yes, no, or a number."
Fifer's more serious point was that CFOs are pulled in many different directions and must rely on staff for an array of crucial activities--ones that if not done right can even cost a CFO his or her job.
Fifer said that today the CFO's role goes beyond the traditional responsibilities. Today, CFOs are at the center of a huge shift in how hospitals interact with all stakeholders over healthcare finance. And this shift is something that all finance staff play a role in.
Fifer encouraged the attendees to put the patient at the center of healthcare finance and to do what's right for those patients--give them information about prices that is meaningful to them and to change the pricing system so that prices are defensible. He had a long list of what is tough about pursuing those goals, but an equally long list of the actions that his organizations and others have undertaken to embrace this approach to consumerism.
At the end of his presentation, he donned the cap of his favorite baseball team--the Detroit Tigers--and headed off to the reception, where the World Series game was to be broadcast. (Too bad about the rainout; I hope the weather is better tonight.)
I recall years ago sitting in an editorial board meeting listening to a discussion of how to bring administrative and clinical leaders together. The board oversaw content of a publication for hospital leaders that consisted mostly of articles solicited from academics and provider executives. The board wanted to highlight the need for clinical and administration leaders to collaborate. To that end, the board suggested that a future issue of the publication be in two parts--one part by a hospital executive and one part by a physician leader.
It didn't take too long for the board to realize that this approach re-enforced the separation of these two groups rather than encouraged collaboration. But the fact that the first impulse was to keep the two groups separate shows how deeply entrenched the barrier between clinicians and administrators is--or at least is perceived to be.
Several months ago, HFMA held a couple of focus groups of nurse leaders to understand ways HFMA might bring together this group with financial professionals. The results suggested that the relationship between these two groups was at times, hmm, shall we say frosty. Not that there weren't a few stories of successful collaboration, but HFMA received the clear signal that if we wanted to educate nurse leaders about business issues in health care, we needed to frame the issues clearly within the context of patient care. And we might meet some resistance.
Since then, we published an article by HFMA President and CEO Dick Clarke about finance-nurse collaboration that got a very positive reaction. We've held several audio webcasts on issues of joint concern between nurses and finance, including budgeting and cost management, in collaboration with AORN (the Association of Perioperative Registered Nurses) and AONE (the American Organization of Nurse Executives). And, along with AONE, we have launched a monthly publication for nurse leaders on business issues called The Business of Caring. In addition, HFMA's Chairman Joe Fifer, with his hospital's CNO, will be speaking at the upcoming AONE annual meeting.
The response to these activities has been surprising and gratifying. Attendance at the audio webcasts has been growing steadily. And check out these comments from nurses about The Business of Caring publication:
"That new HFMA newsletter is wonderful...it is so needed right now...it's like a treasure trove of compact needed information."
"...very excited about the publication."
"...something nurse executives really need."
All of which tells me that when there seems to be some friction between two groups, that is not so much a signal to avoid conflict (keep to opposite sides of the magazine) as it is an opportunity. Not an opportunity for a group hug, perhaps, but an opportunity because the parties in conflict seem to want to explore the nature of the conflict. Conflict does have a certain inherent appeal. Any novelist will tell you: you need conflict to achieve resolution.
Scott MacStravic, Ph.D.
Managing employee health is probably the major alternative to shifting healthcare costs to employees and dealing with workers as costs rather than assets. EHM includes promoting health, reducing disease/injury risks and managing existing chronic conditions among employees, and often dependents as well. It aims to improve worker productivity, quality, customer satisfaction, and thereby overall performance of both individual workers and the organization as a whole.
It combines cost savings related to sickness care expense/insurance, disability and workers compensation expense, absenteeism and presenteeism-related loss of productivity. It can include any measurable impacts on recruitment and retention, and other labor costs, as well as the impact that healthy and engaged workers have on customer retention, sales, market success and revenue. The combination of cost reductions and revenue increases represents the ROI achievable through EHM.
One of the major challenges in EHM is the fact that improving employee health, reducing risks and managing diseases depends primarily on the levels of collaboration achieved among workers. Providers, vendors, coaches and others may help, but they add to the costs of EHM. And ultimately, it is the employee and family members whose behaviors have to be changed and maintained for the full benefits of EHM to be achieved.
Unlike direct productivity, quality and similar performance enhancement efforts unrelated to employee health, EHM success depends first on what employees do away from work. It is their home life, their daily habits, particularly relative to physical activity, diet, weight and stress management, as well as unhealthy habits such as smoking and substance abuse that make the most difference. Some inroads may be achieved at work, via sponsored fitness activities, healthy cafeteria foods, etc. but most improvements depend on the rest of workers’ time and activities.
Fortunately, the major obstacles to many EHM efforts by employees are usually time and work/life balance issues. And the more effective management of time is directly related to worker productivity, in addition to its indirect impact through health improvement efforts. Thus investments in improving worker time management can have a double effect, with synergies impacting productivity both directly and indirectly.
An ideal system to meet this dual, synergistic challenge would teach and train employees to organize the tasks and challenges they face, provide the information and reminders that will help them accomplish both, and keep focus on personal as well as work-related purposes, visions, goals, areas of focus, projects and actions. The skills and confidence that employees gain in either work or personal application of these skills can then aid in application to the other.
The determinants of EHM success are simple – 1) achieve sufficient direct (e.g. sickness care, disability and WC) cost reductions and indirect (absenteeism and presenteeism, quality, customer satisfaction, sales and revenue) effects to generate the “top line” or numerator; and 2) keep the costs of achieving these gains low enough to ensure an acceptable, even admirable financial ROI. The synergies involved in empowering employees to manage their time and efforts more efficiently and effectively will aid in both requirements.
There is yet another synergy possible. Since improving worker productivity reduces labor costs, through both direct and indirect routes, it will enable HCOs to be able to afford to offer their employees incentives for achieving both worksite productivity and personal or group health effects. Such incentives will, in turn, add to the motivation that employees have to achieve the necessary self-efficacy in time and personal health management.
Hospitals and other healthcare organizations have plenty of reasons already to empower their employees to manage their own time and efforts better. Many have no doubt already found techniques for achieving efficacy among employees that work. By applying such techniques to both work and life challenges, particularly to EHM commitments they are willing and able to make, such efficacy-building techniques can combine direct and indirect cost savings and revenue enhancement efforts far in excess of applications at the worksite alone.
Stuart ItkinCMO, Kronos
On Monday, a room full of executives from a variety of industries, including healthcare, manufacturing, and retail, heard from a panel of authorities on how to develop and implement business continuity plans. The session was part of the Kronos annual user conference--KronosWorks--held this week in Orlando. During the interactive panel discussion, which I moderated, some surprising points came up. The audience responded to a series of polling questions. Attendees agreed that developing and implementing a crisis management plan is top of mind at their organizations, and 57 percent have a plan in place. But only 21 percent of attendees were very confident in their organization’s ability to recover after a crisis situation. A more startling finding was that 44 percent of the attendees at the session stated that their organization has not proactively communicated to employees what to do if a crisis situation occurred. On a more promising note, as a result of what attendees learned from the panelists, 88 percent agreed they are likely to propose action within their organization. All of which emphasizes the point made by Randy Langford, director of physician compensation and payroll at Ochsner Health System in New Orleans, which stayed open throughout Hurricane Katrina and its aftermath: managing the workforce is the single most important element of a crisis situation.
Each night, when I say goodnight to my 6-year-old son, he gives me something to leave in front of his door. Usually, it’s a book or toy or drawing that he’s particularly enamored of that day. In the morning, he picks up the item as he leaves his room, carries it downstairs, and resumes enjoying it until something else takes his attention.
Once I asked him why he feels the need to leave an item in front of his door each night, and he replied that he believes if the item isn’t there for him to see first thing in the morning, he might forget it.
His practice fascinates me for two reasons: One reason is the idea that, no matter how important something is to him, he is concerned that he might forget it overnight. The other reason is the idea that it is possible, even crucial, to choose just one item out of the many that interest him.
I find myself thinking about how this practice might apply to work life. Do we worry that we will forget something overnight, even something critically important? Sure we do. We all have a reminder system, usually more than one. (I used to know someone who supplemented high-tech techniques with writing notes to himself on his hand, although I suppose that wouldn’t work too well overnight unless he didn’t wash his hands.) No matter how important a project, enough other things compete for our attention that reminders are critical.
More interesting to me is the notion of choosing just one thing—something that, more than anything else, we want to guarantee that we remember immediately, something that demands continuity of attention.
If you had to choose something that fit these criteria, what would it be? Something creative? Something strategic? A report you started writing yesterday that is due today? A project that will help a staff member grow?
For a hospital leader, setting priorities is a core competency. The ultimate priority is realizing the hospital’s vision and mission. Yet, what might the specific activity in pursuit of that goal look like on any given day? On one day it might be evaluating a new clinical service. On another day it might be spending time with a community group. On another day it might be taking steps to change the hospital’s capital structure. On another day it might be spending time walking through the organization listening to staff’s accomplishments and concerns.
What I take away from my son’s practice of leaving an item in front of his bedroom door is that no matter what any of us leaves in front of our bedroom door to remember the next day as part of our professional lives, the important thing is to recognize and appreciate that thing for its role in the larger purpose of our work. And for hospital leaders, that purpose is as important as any professional purpose a person could have.
There are many “Catch-22s” in personal lives as well as organization strategies. The original one from the novel of the same name involved the insurmountable obstacle that if flyers in WWII wished to avoid dangerous missions by claiming they were mentally unfit to fly, their very act of asking to be excused proved they were not crazy, and disqualified them from being excused on that ground. In other words, the only way they could get out of flying was to ask to be excused, but by asking, they made the excuse non-credible.
Proactive health investments carry with them a number of significant positive promises. They can:
But the Catch-22 in this case is that proactive health investments will inevitably decrease the population’s need, demand and expenditures for sickness care. Since sickness care is the primary, almost sole source of revenue for most providers, especially hospitals and secondary or tertiary specialty physicians, it threatens the viability of their current investments.
Moreover, any hospitals that invest in efforts that threaten the livelihood of specialists upon whose referrals they depend are likely to see further reductions in their sickness care volume and revenue. Hospitals are already feeling the impacts of specialty physician’s anger over lack of control and satisfactory relationships with hospitals as unhappy physicians invest in their own competing facilities. This may pale by comparison if hospitals make investments that reduce demand for the very services these physicians rely on for their livelihood.
So in many ways, hospitals and physicians can be damned if they do and damned if they don’t invest in the proactive health efforts already being pushed by all third party payers, as well as many health care reformers. The choices available amount to joining in an effort that promises positive returns for payers and consumers alike, while a mixed bag for providers, or waiting for other kinds of providers to serve the rapidly increasing proactive health market and suffering the resulting declines in sickness care volume and revenue with no mitigation from being part of this new market. It’s definitely a Catch-22.
Scott MacStravic, PhD
Health and Human Services Secretary Mike Leavitt has urged employers to support a “value-driven health system” (AHA News Now Oct 12, 2006 (www.ahanews.com). He apparently defines value as the relationship between quality and price, both of which he argues should be clearly measured and reported to all under “transparency” standards that federal agencies will use as the result of an executive order signed by the President in August.
But there are other definitions and measures of value, and a value-driven system would be different depending on which is used to promote and evaluate it. Only a few months ago, for example, the value of medical spending in the country was rated as “reasonable”, based on the definition of value as the years of life gained by the country for the amounts spent for the care while spending increased. [D. Cutler, et al. “The Value of Medical Spending in the United States, 1960-2000” New England Journal of Medicine 355:9 Aug 31, 2006 920-927]
If the long-accepted and commonly-used model developed by Avedis Donabedian over 25 years ago were applied, value (he labeled it “valuation”) would mean the subjective perceptions of value among health care customers, both patients and payers. [A. Donabedian The Definition of Quality and Approaches to Its Assessment Ann Arbor, MI, Health Administration Press 1980] His first three categories of quality metrics, structure, process, and outcome are more familiar because they are objective and more easily used by managers, but the “value” dimension is also important to patient and payer satisfaction.
Moreover, value as what customers think it is, representing something more like their perceived benefit for the cost, is likely to be the source of metrics that will be used in pay-for-performance systems. Since P4P is advocated by almost all health care reform gurus and organizations, this definition of value may soon become the most important, even if nobody agrees on the best definition in the abstract.
Just as “beauty is in the eye of the beholder”, so value is in the eye of the customer. This means that payers involved in P4P systems will surely have different metrics for the value they want measured, reported, and used as the basis for payment bonuses, or even total payments to healthcare providers. And patients are likely to have their own set of metrics when selecting which providers to use, particularly as their ability to choose and burden of paying for choices increases over time.
Perhaps the key implications of a shift to customer-defined value as the basis for payment will be the necessity for providers changing their minds and behaviors about being accountable for results. Physicians and hospitals alike have long resisted, and in some cases refused to be held accountable for patient care outcomes. They have a legitimate case, since they do not control, only influence even the clinical outcomes patients achieve. Patients’ own behaviors, chance developments, and other factors beyond providers’ control have always played a role in healthcare results.
If payers are going to look at outcomes, and more particularly at value when designing their payment systems – if they do so when choosing providers for networks, and publishing performance data that patients and families will use in selecting providers – providers will have no choice but to measure, and presumably manage their performance along the dimensions that payers use for such purposes.
For insurers, the value dimensions used are relatively predictable – their primary focus will be on costs. They will want reactive sickness care delivered at as low a cost as possible, given quality necessities and outcome standards. And they will want proactive health care to deliver as great a reduction in sickness care expenditures as they can bet. Other dimensions may be included, but these will most likely be the kinds of structure, process and outcomes already familiar to providers, including such things as having EMR and CPOE capabilities, adhering to HEDIS care standards, achieving high levels of patient satisfaction, for example. But the value dimension of cost savings will most likely be paramount.
With employers, the same will be largely true, except that cost savings will go beyond reductions in sickness care expenditures to include the “total economic impact” of both sickness and health care expenditures, gauged across productivity and total labor costs, as well as quality, customer satisfaction, market share and revenue effects, to the extent that these can be measured and linked to employee and dependent health. This will create a wholly new and considerable challenge for providers, who have thus far focused all but entirely on their own internal measures of quality, not value dimensions related to their customers’ performance.
And when it comes to patients, the definition and measures of value will be an even greater challenge to both measurement and management. Patients judge value in terms of the impact on their overall health and life quality that reactive sickness and proactive health care have. They apply a widely diverse set of notions about which health/life quality dimensions are affected, and how important each is, as well as a widely diverse set of perceptions about the costs involved to them, not only out-of-pocket expenditures but personal time and efforts spent, inconvenience and discomfort involved, etc.
If healthcare providers are going to really move toward a “value-driven” healthcare system, they will have to look well beyond what they have been using as “quality” measures, and even “cost” measures to improve their understanding of how their customers define and gauge value. And as the value of what they deliver increasingly affects whether they get into provider networks, win the custom of insurers, employers and patients, as well as how much they are paid for delivering their value, providers’ ability to competitively manage the value they deliver will largely determine their success and survival.
Richard L. Clarke, DHA, FHFMAPresident and CEO, HFMA
A recent ruling illustrates why it’s so critical for hospitals to foster trust in the communities they serve. Hospitals--particularly not-for-profit hospitals--are among the most important assets that any community has. Residents put enormous trust in hospitals to meet their healthcare needs and to enhance quality of life for the entire community. For those who are unable to pay for the cost of their care, community hospitals are places they can trust in times of crisis.
But health care is a complex business, and difficulties explaining that business can make trust falter.
In 2003, the Urbana, Ill., county board of review recommended that the state refuse to renew Provena Covenant Medical Center’s application for tax-exempt status, citing overly aggressive attempts to collect money from poor and uninsured patients. The Illinois Department of Revenue revoked Provena’s tax-exempt status in 2004, a decision that has cost the hospital $5 million in property taxes. This September, the department denied Provena’s appeal to regain its tax-exempt status.
Provena president and CEO William Foley called the decision “a crisis for Provena Covenant and a national crisis for non-profit hospitals.” The Illinois Hospital Association agreed, saying the decision ignores nearly 100 years of legal precedents and public policy in Illinois.
The most recent ruling in the Provena case, whether it is upheld or not, is alarming news for not-for-profit hospitals. It’s an example of why it is so important for hospitals--all hospitals, both for-profit and not-for-profit--to earn the trust of their communities and to protect that trust.
How can hospitals build trust with the communities they serve? One way is to share how hospitals are giving back to their communities each day, whether through services that generate little or no revenue, free screenings, support of healthcare clinics for the indigent, and other initiatives that improve quality of life for the entire community.
It’s not enough to present this information once a year in an annual report. Consumers need to hear about the community benefit that their hospitals provide on a regular basis. Most of all, they need to see it in action. Consider testimonials from patients, employees, and others who can describe the impact that the hospital is having on quality of life in the community. Create PowerPoint presentations on community benefit initiatives that can be shared with chambers of commerce, rotary clubs, senior citizen groups, and government entities. Develop advertisements that promote the goodwill of the organization.
The financial management of health care is the most difficult aspect to explain to stakeholders. The latest PATIENT FRIENDLY BILLING® report, Consumerism in Health Care, includes 11 action steps that hospitals can take to help patients better understand the financial aspects of health services. These action steps are more than a public-relations strategy during an era of consumer-directed care. They demonstrate commitment to enhancing the patient experience, both on the care side and on the financial side. And HFMA’s Principles and Practices Board Statement No. 15 provides standards for measuring and reporting uncompensated care.
Actions such as these require time, energy, and courage from healthcare leaders. But they are critical to demonstrate that your community’s trust is deserved.
Healthcare has long been a “hands-on” profession for individual practitioners and hospitals. It is delivered while providers and patients are in the same room, or at least the same building, and normally relies on the presence of both for there to be any care delivered. But there are growing numbers and types of exceptions to this rule, and both hospitals and physicians are taking advantage of many of them.
Telemedicine, for example, is one of the most obvious examples of remote patient care. Providers are often in different states or even countries, as words and images of patients are beamed back to providers, while enabling patients to be treated at least partly without having to travel to where patients are. And physicians are reviewing diagnostic scans and monitoring data on patients in ICUs, for example, without leaving their offices or homes.
E-mail “visits” are becoming common, with increasing numbers of insurers covering them, or providers able to charge patients via annual retainers or fees per consult. Online and phone monitoring of chronic disease or risk condition patients has been enabled by a wide range of monitoring devices that are automatically hooked to phone lines or computers for uploading to provider locations.
The growing variety of remote patient care options are simply repeating the developments in financial services, where ATMs and online banking enable customers to be served where they are and choose to be, rather than where providers are. The same is true with education, where countless universities and schools offer online courses and degree programs, where students may never need to visit a campus.
The remote “treatment” options are both more prevalent and more important in proactive health than reactive sickness care. Remote contacts can be used to prepare patients for sickness care pre-admission, via online web videos of procedures, pre-admission counseling, exchanges of information, etc. Patients can be asked questions, and advised what questions to ask providers pre-visit. Pre-admission remote contacts can reduce patient anxiety and even coach them in weight loss or nutritional preparation to reduce their risks.
After an in-person treatment experience, whether an inpatient stay, outpatient visit or extended episode of more than one, remote contacts can significantly expand and extend post-discharge instructions, guidance, and follow-ups. Monitoring of patients’ compliance with medications and behavioral instructions, as well as their progress in areas which can be measured at home can greatly improve the quality or speed of their recovery.
But the most effective and efficient use of remote contacts may be in proactive health care services, in disease or risk management or general health and fitness promotion, whether undertaken by hospitals, physicians, nurses, or other professionals in independent practice. Regardless of who pays for proactive health initiatives—employers, insurers, or patients, themselves, keeping the costs of proactive health services as low as possible is sure to be a key factor in success.
Employers and insurers will be looking primarily at their net ROI from proactive programs, and that means keeping their investment as low as possible, given the return. Remote interactions between patients and providers will almost invariably be significantly cheaper than face visits, though group visits can also reduce costs significantly, and be part of a low-cost approach. Online interactions are likely to be the most convenient for both parties, in addition to being far cheaper than phone options.
The entire range of proactive health interactions with patients – health/disease/risk assessments, goal and priority setting, action planning, implementation and progress monitoring, and evaluation of results – can be done via remote interactions, even all online, where necessary and appropriate. Face visits and even phone contacts may prove too expensive for some payers, and undermine either marketing efforts to attract clients, or proactive program viability. Providers will have to balance effectiveness and costs of different remote options, as well as remote vs. more personal options, of course, but both should be able to be mixed well.
Remote interactions, from patient visits to websites for gaining information or posting reports on their behavior and progress have proven to be close in effectiveness to face visits. Remote options are routinely used by vendors in proactive health efforts for patients whose potential for cost savings for their payer clients are too low to justify personal visits or even phone coaching. Hospitals and health care professionals cannot afford to invest more than will make them competitive in terms of the ROI they can promise and deliver to clients, nor to paying patients, where they have other options.
Remote input via online health and risk assessments, coupled with automated analysis of the input, and customization of feedback to patients has proven to be far more effective than many face-contact, but standardized proactive programs, for example. And it compares favorably in cost effectiveness with face contacts and phone coaching in many cases. Face contacts may prove more powerful in initial proactive contacts, to create a more personal relationship with patients.
Face visits with providers made for sickness reasons may be used to add to remote contacts, though when patients are sick with one problem, they may be unreceptive to counseling or even questions related to a separate proactive effort, unless closely related to their present problem and its treatment. And planned face visits with non-physician proactive team members, on a group basis perhaps, may add significant enough impact to be worth the costs.
With the exception of a few programs and providers paid by wealthy patients able to afford thousands of dollars a year in retainer or proactive health program costs, remote contacts are likely to be essential to cost-effectiveness, regardless of the payer. Employers can afford to pay the most, since they gain via productivity improvements and labor cost reductions when their employees are healthy. Providers who are not prepared to offer and deliver excellent remote interactions as part of their proactive health programs, and probably even in traditional reactive sickness care, will be at a distinct disadvantage in these increasingly competitive markets.
“Yet we cannot truly carry out these responsibilities unless the ultimate focus of our concern is the personal health of the individual human being. We dare not get so caught up in our systems and our strategies that we lose sight of his needs or compromise his interests. We can build an effective National Health Strategy only if we remember the central truth that the only way to serve our people well is to better serve each person.”--Richard Nixon, Message to Congress, February 18, 1971
I have a bad habit of dragging Richard Nixon (or worse yet, some obscure member of his administration) into conversations on every imaginable topic. I’m not generally a fan of Nixon’s policies, but find him a fascinating figure. In this case, however, I believe the quote above is relevant.
A recent report on employer health benefits from the Kaiser Family Foundation told us that the rate of premium growth has slowed, but is still twice the rate of inflation and earnings growth. These findings illustrate, according to Foundation president Drew Altman, the “slow unraveling of coverage in the employment-based system.”
With that report still in my thoughts, I next encountered a very different kind of argument for healthcare reform on HFMA Views. “The Other Side of Health Care” by MarieAnn North tells the story of the author’s Canadian uncle, who during a visit to the U.S. required hospitalization. North tells the story of struggling to get access to speak with clinicians, being asked repeatedly for insurance information, and discovering missing portions of the medical record. But this story has a twist—North was able to get up-to-date information about her uncle’s condition not through the U.S. hospital, but through phone calls to the Canadian case manager.
The irony of this situation is painful, although not as painful as what North and her uncle were going through.
Which brings me back to Richard Nixon. The 1971 Nixon health reform proposal is dated, but in surprisingly few respects. Most of the circumstances making reform necessary are still in existence. And his proposal for “a comprehensive national health insurance program…in which the public and the private sectors would join in a new partnership to provide adequate health insurance for the American people” shares qualities with the recent Massachusetts program.
Yet, what I am most struck by is the combination of big-picture reform proposal and the last lines of Nixon's message to Congress, which urge us to be mindful that the goal of broad-based health system reform is the health care of individuals.
While it's hard to put a face on the millions affected by U.S. healthcare processes and policies, Nixon's juxtaposition and the juxtaposition of the Kaiser report and the story of North's uncle help remind me that each of these people is an individual, and that's the reason reform is needed.
Now that the federal government has removed some of the stigma and restrictions associated with gainsharing, it has become a hot topic. CMS is employing a gainsharing approach of its own in at least one of its disease management demonstration projects with large physician groups and integrated health systems, offering these “partners” up to 80% of cost reductions they produce beyond a 2% minimum. [“Physician Group Practice Demonstration Bonus Methodology Specifications” Centers for Medicare & Medicaid Services Dec 20, 2004 (www.cms.hhs.gov)]
Most recently, it has offered hospitals and physicians the opportunity to share gains in cost reductions achieved through partnerships that reduce infections, standardize medical devices and supplies used in patient care. [D. Burda “The Gain Is Afoot” Modern Physician Oct 2006 p.9] Until recently, this had been explicitly prohibited by federal regulations, and now the federal government is sponsoring one of the largest gainsharing experiments yet.
But gainsharing is not without its continuing skeptics. The objection, much the same one that has been voiced relative to fee-for-service medicine, itself, involves the potential for physicians and hospitals to put their own interests ahead of those of their patients. Such “opportunism” is always present when the interests of two parties do not coincide, as is certainly the case with gainsharing based on reducing the costs of sickness care rendered to patients.
One explicit concern has been voiced with respect to the different surgical devices available for treating vaginal wall prolapse. The cheapest device can cost $2500 less than the most expensive, hence is a logical target for cost savings when gains can be shared. But some devices make OR, recovery and LOS times longer, so may not reduce the total costs of patient care at all. And some make restoration of normal function less sure in patients, so may be counter to patients’ best interests.
The executive director of the National Association for Continence voiced precisely these concerns in an article arguing that gainsharing based on reduced costs to payers can undermine the doctor-patient relationship, hence presumably, the hospital-patient relationship. She cited the risks that patients may be short-changed when providers can gain greater revenue at their expense. [N. Muller “No Gain in Gainsharing” Modern Physician Oct 2006 p. 10]
When gainsharing is based on cost savings in sickness care, this is a logical and perhaps inevitable concern. By contrast, when hospitals and physicians are engaged in proactive health care, it is neither inevitable nor necessarily a concern, and certainly not as great a one. In proactive health, cost savings are achieved by reducing the incidence and prevalence of sickness in the first place, and of the crises, complications and worsening of chronic sickness that has not been avoided.
Making sure that the costs of proactive health care is low enough to ensure cost savings to payers is not simply logical – it is essential to making such care a viable investment, for providers and payers. The costs of treating each patient should logically be adjusted, along with the methods used in managing each’s health or disease, in order to have the best chance of mutual benefit among payers, providers and patients.
The interests of patients, payers, and providers are in proactive health care, unlike reactive sickness care, entirely in alignment precisely when and because cost savings are achieved by enabling patients to become or remain healthier than they would otherwise. While the financial benefits accrue mainly to providers and payers under gainsharing arrangements that apply, patients gain better health and life quality, and may even gain financially, themselves, by saving out-of-pocket costs for sickness care, and even for tobacco, alcohol and drugs, for example.
There is no question but that any approach to reforming healthcare should consider the best interests of all parties and stakeholders involved, the chances of conflicts in these interests are far less in proactive health than in reactive sickness care. Moreover, the generosity of insurers and particularly employers is likely to be greater in proactive health, since such payers stand to have far greater financial gains to share.
MarieAnn North, MBA, FACMPEDirector, Navigant Consulting, Inc.
Recently, I took my first real vacation in four years. I left the lap top and cell phone at home, and went overseas. In reading the tour brochure (admittedly not until I was actually on the vacation), I noticed it informed me should I have a medical need, health care was free and available. I wondered what travel brochures say for people traveling to the US. Do we tell people we have excellent healthcare, but if you are uninsured and need to access it, it will likely bankrupt you?
The positive effects of vacation wore off quickly. A week after my return, my 81-year-old uncle, visiting me from Canada, fell and broke his hip. I dialed 911 for the first time in my life, and waited. It took several attempts for the ambulance to find my home.
I spent a Saturday night in the emergency department. The initial set of x-rays taken had the cardiac leads obscuring a critical part of the images, and we had to again move a patient with a broken hip to repeat the studies.
Multiple hours later, my uncle was in a hospital bed, and I started the process of dealing with coordinating care for a patient insured under the Canadian system. My phone call to Canada resulted in the insurer easily identifying my uncle and his primary care physician in the one and only database, and also resulted in clear directions for me to follow.
The 72 hours spent at my local hospital proved to be an exercise in frustration. In the countless hours I spent there, I saw the primary RN once, and never could get the attending physician to speak with me. The same insurance information was asked for countless times. Forms that needed to be faxed weren’t. Sections of the medical record weren’t forwarded and tests needed to be repeated. But I discovered something. If I wanted to know what was happening, I called Canada! For some reason the medical case worker there could update me continuously. At one point, my uncle wasn’t in his room. I went to the nurses’ desk to inquire where he might have been taken, and discovered it was possible for about a dozen people to give you that “deer in the headlights" look simultaneously. I waited an hour and a half, and then called Canada to find out what was happening (at the hospital I was calling from). They informed me my uncle had been taken for a cardiac echo and would return shortly.
I resorted to more drastic measures to seek information. I wrote a note and taped it to the chart rack in the room. The note would be obvious each time vital signs were checked. A day later, the note was still there. Time was lost when the orthopedic surgeon in Canada insisted that an 81-year-old with a hip fracture needed to have surgery as soon as possible, but the attending physician in the US insisted he was stable enough for transport. Just when I was getting desperate for information and was considering shopping for a flip chart and brightly colored markers, I received a call from Canada that an air ambulance had been arranged and was on the way.
My uncle had surgery in Canada. He ended up with a hip replacement. He is recovering well. I am trying to regain my strength to face the billing process. I’ll let you know how it goes in a year or two.
On Sep 18, it was announced that the Cleveland Clinic had selected HealthMedia, Inc. as supplier for a comprehensive health and wellness campaign for its 48,000 employees and their dependents. HealthMedia has already been working with Kaiser Permanente on health and wellness for Kaiser health plan members as part of Kaiser’s “Thrive” campaign.
After all, HCOs are employers, as well as providers, so have similar ambitions for cutting their operating costs through improving employee and dependent health. Traditionally, health and wellness efforts have focused on reducing employers’ sickness care, workers compensation and disability costs, since these are easy to measure and attribute to such efforts. And HCOs have these same costs, along with as much pressure as any other organizations to cut their costs.
But “productivity health management,” which is health/wellness and disease management efforts applied to productivity improvement as well as traditional cost reductions, is only beginning to be recognized as another way to cut costs even more. Worker absence and “presenteeism” (reduced output while at work) related to health risks and chronic diseases can be significantly more expensive for employers than sickness, disability and workers compensation expense.
In some cases, with conditions such as depression, migraine headaches, allergies and arthritis, indirect labor costs (abs/presenteeism) can amount to five or ten times as much as the more easily measured direct costs. Hence the savings to employers can often be far greater as well. The problem has long been the difficulty of measuring these indirect cost savings, since except in “piecework” industries, productivity is not routinely monitored.
But HealthMedia has become one of the first proactive health vendors to include productivity in its evaluation of savings to clients. It just announced results of this inclusion in wellness and disease management programs delivered to over 175,000 participants, across insured and employed populations. These reflect efforts aimed at obesity, smoking, stress, depression and chronic illnesses, with ROI ratios as high as $10:1. [“HealthMedia Announces Productivity Improvements from Wellness and Disease Management Programming Using the Work Productivity and Activity Impairment (WPAI) Questionnaire.” PRNewswire.com Sep 27, 2006]
It reported that its disease management program alone was responsible for a 4% improvement in productivity at six months, with cost savings of $760,000 per year for a population of 10,000 workers. These workers had an average salary of $50,000 per year, which would seem comparable to hospitals and other HCOs, and the savings were achieved with only modest participation in PHM programs. Health and wellness programs achieved comparable results.
Clearly, PHM could be a boon to HCOs, particularly if results such as HealthMedia reported can be achieved or improved upon. But there remains the question as to whether HCOs should buy PHM services from firms such as HealthMedia, or, since they are in the “healthcare” business, add such services to their service lines.
When productivity, and potentially quality, customer satisfaction, and similar cost or revenue effects are considered, the total economic impact on employers could be dramatic. Dow Chemical Co., for example, estimated that its abs/presenteeism costs from ten chronic conditions alone amounted to an added burden equal to $5989 for every one of its employees per year, as contrasted to only $1227 in direct medical care costs for these same conditions. If as little as half such an amount, or $3000 per employee per year could be saved in HCOs, that would significantly improve their bottom lines.
So why are HCOs not avidly engaged in PHM already? Why are they buying PHM services from vendors, rather than developing their own, and even marketing their own to employers in their markets? Duke University Health System is one of the few HCOs I know of that is investing in its own program, though it is looking for savings only in reduced sickness care costs, so far at least. [L. Landro “Preventive Medicine Gets More Aggressive: The ‘Health Coach’” Wall Street Journal Feb 12, 2004 (www.wsj.com)]
Instead of paying others to deliver PHM services and benefits, HCOs might gain the added competency of PHM in their set of solutions, and enjoy the full benefits of cost savings achieved, as well as the rapidly growing potential revenue and profits in PHM for fellow employers. If HCOs do not act soon on this potential, however, they are likely to find well-entrenched and proven vendors like HealthMedia have captured the best customers, and will have far more limited choices in this matter.
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.
