State of the System

Each year, just as the President of the United States does a State of the Union, I do a State of the System report for WMHS.  I have attached that report which addresses a very challenging Fiscal Year 2012, our plans for FY 2013, my prediction for the next several years to come and how we are responding to very dramatic changes to the health care industry.  I hope by reading this report, you will get a better understanding of the challenges facing WMHS and our industry as a whole.

I will be taking the next two weeks off from blogging as I will be traveling.  I look forward to resuming The Ronan Report on October 1, 2012.

State of the System

A Summary of Today’s Healthcare Environment

From Barry P. Ronan, President and CEO

September 2012

 

It has become obvious that health care spending is unsustainable at a federal level given record high deficits and at a state level with balanced budget pressures.  The Western Maryland Health System has begun to ensure that we are appropriately prepared for the changes ahead.  We are moving forward to be better positioned under health care reform, placing greater emphasis on integration, accountability, and better coordination of the delivery of care.  For the last year, we have been focusing on the Triple Aim of health care reform: improving quality, reducing cost, and improving the overall health of our community.

During Fiscal Year 2012, we saw an increase in underinsured and uninsured patients, especially those whose insurance coverage has either run out or their employers are increasing their co-pays and deductibles.  This has resulted in record amounts of bad debt and charity care for the Western Maryland Health System.  During the same year, we also saw an increase in supply costs; higher costs for physician recruitment and retention; provider taxes being assessed by the state on hospitals, including the Western Maryland Health System; and a decline in overall reimbursement. 

When these changes were anticipated for FY’12 and FY’13, the Western Maryland Health System took the opportunity offered by the state in 2011 to participate in a ten-hospital demonstration project called Total Patient Revenue (TPR).  TPR provided us the opportunity to work within a global budget to increase the value of the care and services that we provide.  We focused on decreasing the volume of services, tests, and procedures provided while improving quality and efficiency in the delivery of patient care.  At our most recent System Board meeting, we were able to demonstrate that our financial situation for FY’12 would have been far worse under the previous fee-for-service payment model.

In addition to all of these changes occurring, the long-standing rate regulatory system, from which our health system benefits greatly (usually in excess of over $15 million per year) is in jeopardy of being lost in Maryland.  As a result, the Western Maryland Health System experienced only a .21 percent increase in its rates in FY 2013. 

There is also greater risk, as well as reward, through the quality-based reimbursement and potentially preventable complications programs in Maryland. Maryland hospitals that do really well related to core measures, patient satisfaction, and complications avoidance are rewarded, while those that see little to no progress are penalized.  In 2011, the impact was a $1.2 million reduction in our rates.  For fiscal year 2012, we have made considerable progress in each area (patient satisfaction; core measures; and reduced complications, such as falls, pressure ulcers, and infections).  We have improved our position, resulting in a gain of almost $300,000 in rates and a $1.5 million turnaround from last year.

All of the changes facing our industry, as well as those that the Western Maryland Health System has experienced, have had a substantial financial impact.   Our expense for bad debt and charity care increased in excess of $5 million, and there was an unbudgeted Medicaid assessment of $500,000.  Not qualifying for an anticipated Medicare drug program resulted in a $2 million loss for the health system.   The need to expand our primary care practices with physician and advanced practice professionals added cost in excess of $1.5 million.   All of these factors contributed to a double-digit million dollars’ loss from operations for FY 2012 for the health system. 

Some might say that our financial situation is related to building the new hospital, and I can assure you that is not the case.  In fact, our costs, especially for labor, would be significantly higher without the benefit of our advanced technology, the centralization of our services and the state-of-the-art automation system wide on our new hospital campus. We continue to meet all of our required payments as well as bond covenants month after month. 

The failed economy is the direct cause of our financial issues.  The federal government’s commitment to rein in Medicare spending and the state’s balanced budget requirement have impacted our revenue both directly and indirectly.

To ensure that the Western Maryland Health System does not experience a similar loss in FY 2013, the health system has engaged in a significant expense reduction/revenue enhancement initiative through the assistance of two national firms.  The health system continues to focus on expense reduction in areas of labor management and physician preference supply items, such as orthopedic and cardiac implantables, through Premier.  We also engaged the services of Grant Thornton to assist us in physician practice improvements by increasing the number of visits in each practice and clinic and improving our revenue picture for the overall physician practice enterprise.

During Fiscal Year 2013, the health system has projected an admission decrease of almost eight percent due to a change in how we deliver care; again focusing on the value of the patient experience, not the number of days in the hospital or the volume of tests or procedures received.  We have substantially improved quality and successfully reduced readmissions of patients by focusing on a more longitudinal approach to discharge planning, more individualized patient education, and increased referrals to our Care Link and Home Care programs. 

We have also reduced potentially preventable conditions system wide, improved case management of our frequent patients to our ED, opened a heart failure clinic to better treat patients in a clinic setting and prevent admissions, expanded primary care in the region, introduced observation beds to eliminate one-day patient stays, improved reconciling of patient medications, reduced the length of stay for patients, planned for the opening of a new Diabetic Medical Home program in October, and introduced the nursing home transitionist to reduce unnecessary admissions and readmissions from area nursing homes.

We will also continue our commitment to better quality, reduced cost, and doing what is right for our patients in FY’13.  Our goal is to position this health system so we are able to sustain the anticipated financial challenges ahead.  In order to get health care spending in line, we are expecting reductions in our rates of 2 to 3 percent each year over the next 5 years, resulting in a $30 million to $45 million decrease in payments.  We will also work with patients to reduce risk factors associated with poor choices, such as an unhealthy diet, smoking, excessive drinking, and a lack of exercise.  Our focus is a healthier population. 

The time is now for all of our partners to work together to meet the Triple Aim of health care reform and for WMHS to be appropriately positioned to withstand the current and future financial challenges.

Care Wastes $750 Billion Per Year

Last week, there was a story in all of the major media outlets regarding US health care wasting $750 billion per year.  That is approximately 30 cents of every health care dollar.  The culprits are needless care, outdated paperwork, fraud and other waste according to the Institute of Medicine (IOM).  The US has seen a virtual explosion of technical advancements in medicine and yet our outcomes don't reflect it. 

Now for the rest of the story.  What IOM fails to describe is a national payment system that has been driven by volume not value, at least until recently for some of us; the practice of defensive medicine due to little to no protection for physicians in many states including Maryland; outdated paperwork required by our government (in some cases paperwork that can only be completed on a typewriter, talk about byzantine) and a demonstrated lack of guidelines and requirements for the practice of medicine on the part of physician groups and associations, again, at least until recently.  Can the health care industry make a dramatic impact on such "waste?"  Of course, but it takes a village.  At WMHS, we have done some amazing things to improve quality, address over utilization, reduce readmissions, address unnecessary admissions, enhance patient education and the discharge process, case manage high utilizers of our ED and other services and the list goes on.  Our health system is now paid on a value- based payment methodology; however, many of our physicians are still paid on the fee-for-service or volume-based payment system.  We have seen a dramatic turnaround in the last year alone in addressing what the IOM calls waste and poor quality.  There has to be a more dramatic, concerted effort across government and our industry before any substantial savings can result throughout the health care industry.  However, it continues to be extremely satisfying to know that WMHS is so far ahead of the pack in this instance.

Listening to Facilitate Change

I just read an excerpt from Margaret Wheatly's book, "Turning to One Another: Simple Conversations to Restore Hope for the Future."  In it, she describes the need for our willingness to be disturbed.  She writes that we need to have our beliefs and ideas challenged by what others think.  We also have to be able to admit what we don't know although we have never been trained to do so.  Most of us have been trained to state our opinion as if it were true.  To this point, we felt that we haven't had the time or the interest to listen to those who think differently.  Unfortunately, our worlds have become exceedingly complex and it is sometimes very challenging to understand its complexity.  In this day and age, we have to listen to others and listen to what they have to say.   As you enter into a conversation, try to listen for what's new.   Usually, we listen for differences because we don't want to change.  We like our comfort zone; if we have to change, that requires energy.

In order to be successful today, we have to move beyond our comfort zone into what Ms. Wheatly calls that "very uncomfortable place of uncertainty." She continues, "of course it's scary to give up what we know, (but) great ideas and inventions miraculously appear in the space of not knowing."

As health care changes and reform continues to evolve, the last thing that we want to do is to keep struggling through it; we need to listen to what is changing and adapt to how such change can benefit our patients, our physicians and each other.

Continue to Rest in Peace Detective Zadroga

I was ready to blog about ten different items this AM, but when I entered the date and it hit me, September 11th.  Today marks the anniversary of the most horrific attack on America.  I often think about those who so tragically lost their lives, most memorably for me was NYPD Detective James Zadroga.  Detective Zadroga didn't lose his life on 9/11; he lost it five years later from a related cancer when his lungs could no longer exchange air.  He was at the World Trade Center site for hundreds of hours investigating and simultaneously subjected to toxic dust.   In less than two years after 9/11, he couldn't breathe without oxygen support.

You see he lived around the block from me growing up.  He was a little kid, I was a big kid.  His dad was a cop and so was mine.  Although he didn't lose his life on that tragic day, he eventually lost his life as a result of that tragic day.  If there is any good that came from his death, it was the Zadroga Act.  It is estimated that over 400 people have since lost their lives as a result of those same toxins, many who were heroes involved in the rescue, the search and the subsequent clean up at the WTC site.  The Zadroga Act provides for compensation to those families whose loved ones died of cancer or respiratory disease as a result of 9/11.  Today, the federal government will announce 50 additional cancers being added to the list covered under the Zadroga Act.   Continue your peaceful rest, Jimmy.

Gambling Arrests

I read the craziest thing in the Baltimore Sun over the weekend.  One hundred and twenty people have willingly signed on to be arrested for trespassing if they enter a Maryland casino.  These are individuals with a gambling addiction who see this as the only way to keep from entering a casino.  Since implementation, seven of those who agreed to be arrested have been arrested for trespassing at a casino.  The State of Maryland needs to be of greater assistance to these folks as there is only one place that they can register for the gambling exclusion program that isn't a casino.  Really? 

Relationships

Just this week, I was asked by the principal in the architectural firm used by the health system and the same firm that designed our new hospital as to why we choose him and his firm.  The answer was an easy one.  Our previous architects were with a large firm.  They had all the right answers when they were first engaged, but as time went on, we became an afterthought.  We would be anticipating a worked product and when they arrived to present it to us, it was like they drew it up on a napkin in the car on their way to Cumberland.  After a few of those interactions, they were warned and subsequently fired.  Shortly thereafter, we began the search for a new firm.  We ended up with a smaller firm in Baltimore, Hord Coplan Macht (HCM), based on how we felt that they would work with us.   It was based on fit, trust and what the perceived relationship would be like.  They had all the necessary expertise, but these guys and gals were genuine; they were sincere, seemed trustworthy at the time and have proven that time after time.  

Large national firms can talk a great game, but have proven over time that they think that they are smarter and better than smaller boutique firms--and many times smarter than the client.  When we were preparing to move forward on the new hospital, we didn't hesitate for a minute to engage HCM.  They had never designed a new state-of-the-art hospital in its entirety, but they did for us.  They brought in experienced architects who had previous new hospital experience.  Adding our relationship with HCM and the new talent, it worked fabulously.  To this day, we have a great working relationship and I gladly serve as a reference for HCM repeatedly.  I can't say enough great things about the individuals as well as the firm in general.  It continues to be a pleasure to work with these folks.

Relationships

Just this week, I was asked by the principal in the architectural firm used by the health system--and the same firm that designed our new hospital--as to why we choose him and his firm.  The answer was an easy one.  Our previous architects were with a large firm.  They had all the right answers when they were first engaged, but as time went on, we became an afterthought.  We would be anticipating a worked product and when they arrived to present it to us, it was like they drew it up on a napkin in the car on their way to Cumberland.  After a few of those interactions, they were warned and subsequently fired.  Shortly thereafter, we began the search for a new firm.  We ended up with a smaller firm in Baltimore, Hord Coplan Macht (HCM), based on how we felt that they would work with us.   It was based on fit, trust and what the perceived relationship would be like.  They had all the necessary expertise, but these guys and gals were genuine; they were sincere, seemed trustworthy at the time and have proven that time after time.  

Large national firms can talk a great game, but have proven over time that they think that they are smarter and better than smaller boutique firms--and many times smarter than the client.  When we were preparing to move forward on the new hospital, we didn't hesitate for a minute to engage HCM.  They had never designed a new state-of-the-art hospital in its entirety, but they did for us.  They brought in experienced architects who had previous new hospital experience.  Adding our relationship with HCM and the new talent, it worked fabulously.  To this day, we have a great working relationship and I gladly serve as a reference for HCM repeatedly.  I can't say enough great things about the individuals as well as the firm in general.  It continues to be a pleasure to work with these folks.

This Shouldn't Be Happening

Last week, I blogged about the National Urban League's campaign against Nike over a sneaker and said that they should be focusing on more substantial issues such as black-on-black crime.  Over the weekend, while I was in Hilton Head, an 8-year-old boy was gunned down on Saturday morning while he was playing in a neighbor's front yard with other children.  It just so happens that the yard he was playing in was owned by the father of one of his playmates who had fired shots at two other guys the night before.  The Saturday morning attackers were a father (age 38) and son (age 19) who came to retaliate against the playmate's father.  The two decided on Saturday morning to drive by and spray the neighborhood with an automatic weapon hitting and killing the 8 year old.  Killing a little kid out playing in the yard.  A third grader who loved to read and was full of life and in Hilton Head where this stuff isn't supposed to happen.  If the Urban League wants an issue to tackle, here's one neatly packaged for them to champion.

Scaring Seniors

Today, I read a quote based on the Republican and Democratic National Conventions that says it all; "rarely have so many speeches been based on such shaky foundations."   Reading and listening to the rhetoric from both sides of the aisle would be amusing if it wasn't so irresponsible.  Both parties just love to scare, especially seniors as to what Medicare is and what it isn't.  To what lengths will these groups stoop to get elected; obviously when you think that they have reached a new low, one or the other will stoop even lower than before.  Why can't they simply tell the truth as to what is in their respective plans and what isn't, instead of allowing the other party to do it for them, all the while scaring the hell out of people?  I can't wait for this Presidential election to be over.

Un-friending

For the first time, I de-friended or un-friended someone on Facebook.  As most of you should know by now, I am just right of center, politically speaking.  More and more, I see myself identifying more with the independents as the gridlock in Washington DC worsens.   So, the friend that I un-friended is still a nice guy and I do like him, but I got sick to death of the incessant far left leaning postings on Facebook, sometimes ten a day.  One or two, no problem, but it got ridiculous.  Postings from MoveOn.org, the Progressives, MSNBC and the list goes on.  Finally, I responded to one posting as it was really over the top and in return I got a barrage of attacks from his way left leaning friends so it was time to un-friend him.  Again, a nice guy, but one with a waaaaaay different political ideology.