Driving Physicians Away

I had an interesting visit yesterday from a WMHS Advisory Board member.  At WMHS, we encourage our Advisory Board members to seek us out to offer their perspective on the health system, especially about how we are being viewed in the community.  His concern was that we are driving physicians out of the Health System and, subsequently, the community.  He gave some examples of physicians who have left or recently announced that they are leaving.  I was able to explain the reasons why each left the organization and their stated reasons were not related to the health system, except for one.  We tried to keep that physician in the community, but we were unsuccessful.  So, in that case one could say that physician felt that he was being driven out.  Also, in each case, we have been able to successfully recruit replacements for each of the departing physicians. 

The board member then asked questions regarding what we are "now" requiring physicians to do in order to admit patients, perform surgeries, order tests, etc.,  implying that our requirements are extremely onerous and unnecessary.  I explained that hospitals are held accountable for compliance with over 122,000 federal regulations.  In addition, each payor has its own set of requirements to which we must comply in order to get paid.  And on top of that, there are state laws and regulations for which we are responsible.  This is why Peter Drucker, the management guru, says that health care is the most difficult industry to manage. 

The board member also said that the new payment methodology, Total Patient Revenue, is not being embraced by the physicians.  That gave me the opportunity to explain that TPR will be the only way in which all hospitals across the US, as well as physicians, will be paid in the next few years.  WMHS was able to participate in a demonstration project and get the opportunity to learn how to apply a value- based payment methodology over the more costly volume-based methodology. 

Pay for Performance

Last evening, we had an excellent meeting with the President's Clinical Quality Council.  The single agenda item was creating a pay for performance methodology for physicians who partner with WMHS to improve the care of patients enrolled in our Congestive Heart Failure (CHF) Clinic, our Center for Diabetes Management and our soon-to-be on line Chronic Obstructive Pulmonary Disease (COPD) Clinic.

In fiscal year 2012, WMHS treated 2,207 patients with a primary and secondary diagnosis of CHF for a total cost of $28.8 million.  Of those 2,207 patients, 300 had three or more inpatient stays accounting for nearly 30% of that almost $29 million.  For that same period, we treated 11,400 with either a primary or secondary diagnosis for Diabetes with nearly $50 million in costs.  Four hundred of those patients had three or more inpatient stays, accounting for more than 30% of the cost.  Lastly, we treated 3,603 patients with COPD; costing us $33 million in cost during FY'12.  Three hundred of those patients had three or more inpatient stays and accounted for 37% of the cost. 

Of these three groups of patients, 1036 have been identified as frequent users (great than 3 hospitalizations in a year).  From that group, 578 patients have at least two and some with three of these conditions.  Our goal is to better manage these patients jointly between the Health System's care coordination initiatives and the participating primary care physicians.  We are anticipating saving millions of dollars and the pay-for-performance (P4P) program  will allow us to share some of that savings with the physicians since in many cases their incentives for payment and ours are misaligned.  Primary care physicians are still paid on a volume basis, while WMHS is paid on a value basis. 

Focusing on patients with chronic conditions such as Diabetes, CHF and COPD has it challenges, but the reward for the patient, the physician and the health system could be monumental. The Council decided to move forward with the P4P program as quickly as possible since there is so much at stake.

A Day of Celebration

Today was one of those days when you stand in awe of the people who surround you. This is the day that we hosted a reception to recognize 315 WMHS employees who are celebrating milestone anniversaries with us this year.  What is truly remarkable is that 17 of these individuals were honored for 40 years of service.  They represented every aspect of the organization--some are long-time nurses; others work in diagnostic areas.  Members of this distinguished group provide valuable support services.  And others are part of the teams in the non-traditional areas that are helping us meet the challenge of healthcare change. 

It takes a special kind of person to pursue a career in healthcare--and these individuals are truly to be admired for their commitment to helping others.

Congratulations to all those who were recognized today and the entire team at WMHS as we celebrate National Hospital Week and National Nursing Home Week.

What a Difference a Year Makes

Last year at this time, we were struggling financially for a variety of reasons.  Changing the way in which we were doing business (shifting from volume to value), a bad debt / charity care formula that was penalizing WMHS, and increased revenues and savings projections that never materialized were some of the contributing factors to our losses, just to name a few.  Experiencing losses that resulted in a year-end operating loss of $6.5 million was humbling for many of us, but we vowed not to repeat it this fiscal year. 

As a result of better budgeting, negotiating a better bad debt / charity care formula, savings of over $8 million through eliminating over 100 positions and supply costs reductions, WMHS is in a position this year, through March, that has resulted in a dramatic financial turnaround.  Recognizing that we are facing considerable challenges going forward through modernization of the Maryland waiver, continuing to change how we do business, declining revenues from every payor with increasing the recipients of care, increased regulations, the ever increasing bad debt and charity care requirements, recruitment challenges for attracting new physicians and employed staff, increasing requirements for information technology and the list goes on, WMHS has to be good stewards of the results of our YTD financial benefit.  It is also important to appreciate how we got to where we are today, financially.  So, on Thursday of this week, we will be awarding a bonus to our hourly staff, exempt staff, supervisors, managers and directors to say thank you for your efforts in this turnaround.  We have asked a lot of our employees this fiscal year; by awarding a bonus, it is one way to say thank you and to recognize each employee during National Hospital Week and National Nursing Home Week.  Thank you all for job so very well done!

Just What Is Culture

We hear about the culture of an organization and, quite honestly, I am not sure that most of us understand what it truly is.  It's actually how we do things. It's how we behave, how we think, how we feel, how we act and what we believe.  It's our values, our attitudes and our practices.  It's the driver of an organization's success.  It's the collective capacity of its people to create value according to Lou Gerstner, the former CEO of IBM. 

Strategy must be aligned with culture.  As we embarked on changing how we do business at WMHS-- moving from a volume-based approach to patient care to one of value based--we had to change the culture of the organization.  It was challenging and it took over two years and we are still working on it.  When an organization makes a change as we did under Total Patient Revenue, we had to improve performance and that can only be achieved through culture (how we act) and strategy (what we act upon).  Most importantly, we did it.  We aren't fully there, but we have made great progress and that is a tribute to both our employed staff and our medical staff.  Happy Hospital Week to all of our employees.

Wellness Ambassadors

Earlier this week, I had the pleasure of serving as host to five area high school students who served as Wellness Ambassadors for WMHS this past year.  A Wellness Ambassador is a high school student who is passionate about health and wellness and created an initiative to advance that passion.  The program required that each student facilitate at least one wellness initiative during the school year.  The initiatives were well done as each involved the community as well as the individual schools.   We are so fortunate to have the best and the brightest serving as the wellness ambassadors.  Congratulations to Joni Miller, Rebecca Smith, Urvashi Dayalan, Marisa Steiner and Nathan Bussard on a job extremely well done. 

To reward each wellness ambassador, WMHS gave each a $500 scholarship to reward them for their wonderful initiatives.  It is my intention to expand the Wellness Ambassador program in an effort to continue to address our wellness and population health initiatives at WMHS.  We are now off to a great start thanks to the students and Carey Moffat and Nancy Forlifer of Community Wellness at WMHS.

I Couldn't Have Said Better Myself

In today's Baltimore Sun there is an article, "Hospital Rates Vary Significantly, Medicare Data Show."  I thought to myself that CMS keeps releasing this data and it doesn't tell an accurate story. CMS says that they are trying to elevate the conversation as to why there is no much variation in the cost of care.  The actual Secretary of Health and Human Services is quoted as saying the rates vary in ways that can't really be explained.  The rates vary because of teaching / non teaching, wage rates, cost of living, severity of the patients, rural / urban; these are rates that in Maryland's case are set by the  Health Services Cost Review Commission.  In other states, they use formulas established by CMS.   This morning, I then received the attached blog from Paul Levy, who responds to the Secretary so eloquently.  In the Sun article, CMS also says that they are looking at the Maryland system which prevents hospitals from raising their rates artificially. Good idea and while you are at it, listen to the Maryland hospitals as we try to modernize the waiver.  The devil is in the details and, so far, there are few specifics in the current application.

Useless noise from CMS

What on earth did CMS have in mind when it released the FY2011 chargemasters for America's hospitals?  Well, according to one report:

The public release of the data is part of an effort by Medicare to increase transparency in the health system. 

“Historically, the mission of our agency has been to pay claims,” said Deputy Medicare Administrator Jonathan Blum. “We’ll continue to pay claims, but our mission has also shifted to be a trusted source in the marketplace for information. We want to provide more clarity and transparency on charge data.”

CMS explains:

Hospitals determine what they will charge for items and services provided to patients and these charges are the amount the hospital bills for an item or service.

This is a case where the release of bad data is worse than having no data at all.

A hospital's chargemaster is an archaic fiction, a way previously used to allocate the joint and common costs of the hospital to particular services.  It does not serve as the basis for how much a hospital is paid by Medicare.  It does not serve as the basis for how much a hospital is paid by Medicaid.  It does not serve as the basis for how much a hospital is paid by private insurers.

Further because of federal and state prohibitions against balance billing of patients (i.e., the difference between the amount paid by an insurer and the amount of the charge), it also provides no basis to consumers that means anything at all.

But it sure creates a stir to be able to say: "For joint replacements, which are the most common hospital procedure for Medicare patients, prices ranged from a low of $5,304 in Ada, Okla., to $223,373 in Monterey, Calif. The average charge across the 427,207 Medicare patients’ joint replacements was $52,063."

For the record, Medicare pays hospitals based on a formula that takes into account the difference in overall wages and prices in different parts of the country.  There are also adjustments for rural hospitals.  There are also adjustments for academic centers to pay for residency training. The chargemaster employed by a hospital is not a consideration in the establishment of these federally determined rates.

Likewise, Medicaid rates are based on a state-determined formula.

Likewise, private insurance companies often base their hospital and physician rates off the Medicare formula, or have their own approach (often not even related to the hospital's actual costs).  Very, very few have rates based on "a percentage of charges."

I don't know what CMS really hoped to accomplish in the way of transparency by publishing out-of-date, irrelevant data.  But such behavior is consistent with CMS publishing out-of-date, irrelevant clinical outcome data.

Transparency, CMS style.

CMS says that the recent release of information is "part of the Obama administration’s work to make our health care system more affordable and accountable."  Oh, wait, this is the same president who had a photo-op with a robotic surgery company that has made its fortune by marketing high cost clinical equipment that lacks clinical evidence to support its relative efficacy.  This is the same president who compared hospital readmissions to going to an auto mechanic and having to bring your car back for re-repair, who doesn't seem to understand the unintended consequences of poorly design federal payment penalty strategies.

Meanwhile, CMS fails to take action to solve the well established and recognized problems in its own rate structure that encourage the medical arms race.  Even Mr. Obama's former adviser wonders why the agency won't or can't solve that kind of problem.

When Brent James advises doctors "Don't wait for Washington," he knows of what he speaks.  Improvement in the health care system will not come from confused and politically conflicted federal officials.  The challenge is whether it will come from the health care professions, or whether we will start heading down an inexorably declining slope towards higher costs, poorer quality, and (quiet) rationing of services.