The McDonald's Dilemma

Yesterday was the day that McDonald's employees, accompanied by other fast food workers, walked out to protest for higher wages in cities across the country.  Currently, they start at the minimum wage of $7.25 per hour and they are asking for $15 per hour. 

For a teenager living at home, going to school and working part time at McDonald's, minimum wage is OK.  That was the original model for fast food workers and Chick fil-A still seems to use that model, while others have expanded the pool of fast food workers.  This must be the job growth being touted by today's politicians.  What is surprising is that of the 21 million fast food workers, 88% are 20 years of age or older.  Actually, the average age of today's fast food worker is 35 years old.  Wow!  (McDonald's says it's 50%.)  Living in a large city like New York is extremely expensive and a 35-year-old supporting a child or two and a spouse can't live on minimum wage.  Now McDonald's says that very few of their employees are paid minimum wage. 

The dilemma is that McDonald's et al can't raise their prices enough to support a $15 an hour wage rate based on the product that they sell.  It just so happens that last night as I was traveling I stopped at McDonald's.  It was getting late and I had to eat something.  There were little to no options based on where we were traveling so that was the only option for eating.  When I got in line, there were three people ahead of me and about a dozen waiting for their food.  I thought that those who were waiting must be waiting for French fries or special orders, after all this is "fast food."  Not the case.  I ended up waiting a half hour for basic McDonald's food.  It was so pathetic, it was funny.  No one could believe that they were waiting this long. 

There were five employees working (with ages ranging from mid-twenties to early forties): a manager who was handling the counter, a woman handling drive thru, a woman assisting both of them and two guys preparing the food.  I felt sorry for the manager, first of all, because she shouldn't be managing anything. She was running around getting very little accomplished and the two guys in the back were arguing with her over orders, telling her pretty much to shut up and let them do their work.  Their work consisted of a prepared sandwich or its equivalent coming out every three minutes.  One woman asked how long I had been waiting and at that point, it was 25 minutes.  She asked for her money back and left.  I was dressed in a shirt and tie so I stood out in this predominantly blue collar venue, but I made a lot of new friends.  Actually, most eyes were on me for those 30 minutes and I was being watched for my reaction while I waited.  I was calm, smiled throughout the ordeal and talked, even joked, with some of those waiting.  When my food was finally handed to me by the manager, who apologized profusely, I thanked her, wished her a pleasant evening, said good-bye to my new friends and left. 

So, therein lies the problem; these are low skilled workers demanding a higher wage rate for a product with declining service delivery that customers will not pay a lot more money for.  McDonald's needs to change their approach to hiring and dramatically reduce their average age of worker or pony up to that higher wage rate.  Not an easy problem to solve, but they got themselves into this mess.

NYTimes Article - Continued

It is amazing as to the response that I have received to the NY Times article, "Lessons in Maryland for Costs at Hospitals," which appeared in yesterday's print edition.  I guess placement helped since it was on the cover above the fold of the NY Times Business Section.  Lots of people have reached out since yesterday to congratulate us on such recognition.  I also have received follow up contact from consultants on how they can take us to the next level.  Really? 

We have done a great job of getting to this point on our own, along with some help from our friends.  The Collaborative of the ten hospitals under Total Patient Revenue has been great, with each of us going to school, if you will, on each other.  We have learned so much related to best practices from each TPR hospital and have worked to incorporate them into our organizations.  That effort continues very successfully. 

I have also received a lot of compliments on the notoriety that such a positive story brings to our region.  What I have found surprising is that the local newspaper has been silent on the story.  In fact, I have had folks ask to be copied on what the local press writes about the NY Times article and the very positive aspects of such a story on our area.  But, nothing.  With the many articles that they publish off of the wire from around the country, you would think that they would pick up a story about how innovative their local health system has become and that what we have done should serve as a model for the rest of the country.  I guess we could shop the story to them, but then what would I have to complain about.

The New York Times Article

It's not every day that your health system is featured in the NY Times, actually it's not any day as it has never happened before.  About two weeks ago, Kathy Rogers, Director of Community Relations, received a call from Eduardo Porter, a reporter from the NY Times.  Eduardo was calling to interview me upon recommendation from Maryland's Secretary of Health and Mental Hygiene, Joshua Sharfstein, MD.  Dr. Sharfstein visited with us several weeks ago and was impressed with our innovative approaches to population health and he suggested to Eduardo that he call us for his story on health care delivery in Maryland.

Eduardo and I spoke on the phone and he decided to visit Cumberland to interview Dr. George Garrow, Chief Medical Officer for WMHS, and me.  George and I met with Eduardo last Thursday for over an hour providing him with a perspective on how we moved from a volume-based delivery model for health care to one of value.  George and Kathy then took Eduardo on a tour of our health system, highlighting those areas where we have dramatically changed how we deliver care to our patients.  Eduardo was especially impressed with Dawn Snyder, our Nurse Practitioner for our Congestive Heart Failure Clinic.  Dawn's photo was featured in the attached article. 

Eduardo left Cumberland and said that the article would run this week and it did.  It is tough to write on such a complicated subject, but Eduardo did a nice job.  Thank you, Dr. Sharfstein and Eduardo Porter, for recognizing the very innovative practices that have been put in place in western Maryland as we work to meet the triple aim of health care reform (better quality, reduced cost and a healthier community).

http://www.nytimes.com/2013/08/28/business/economy/lessons-in-maryland-for-costs-at-hospitals.html

Linchpin Characteristics

As I recently blogged, our leadership team at WMHS is reading Seth Godin's "Linchpin - Are You Indispensable."  So far, I have heard many positive comments about the book.  Seth Godin calls the stars in our organizations the linchpins; those who are indispensable, who pour themselves into their work.

From a blog entitled Coaching Excellence, they focused on the eight characteristics of linchpins for teams that you lead or coach.  The blog was shared with me and I found it very interesting.  The eight are as follows:

1. Linchpins connect teammates with each other.  They organize team bonding activities and they mediate when problems occur.
2. Linchpins figure out what to do next.  They are leaders who focus on what needs to be accomplished next.
3. Linchpins are not afraid to be in the limelight.  They are comfortable receiving attention, being humble and can handle criticism.
4. Linchpins aren't satisfied with being average.  They focus on producing for themselves and the team.
5. Linchpins are optimistic.  They don't dwell on the negative.  They look forward to what is ahead and they visualize success.
6. Linchpins think about failure differently.  They learn from failure.  They use it; they don't let it use them.
7. Linchpins give their gifts.  They share their talents and never stop giving.
8. Linchpins have been taught how to lead, but actually lead very naturally.  They know how and when to use their leadership skills with the team and it happens naturally.

Linchpins are an essential element to any team and they give that team much needed stability.  If you haven't read Linchpin, I highly recommend it.

Federal Ratings of Colleges and Universities

  As a college board member, I have been making sure that my fellow board members and the administration are aware that change is coming.  I have used health care as the example in that health care costs are unsustainable and the same can be said for college costs.  I have warned of greater accountability being on the horizon because I see it every day in health care.   We are responsible for the quality of care that is being provided to our patients.  We are held accountable for reducing admissions and readmissions, the use of ancillary testing, never events, a series of core measures, potentially preventable conditions and patient satisfaction.  All of which are very transparently rated, as well as rewarded or penalized.

 Last week, President Obama during his education bus tour announced his plan for improving the value of higher education.  He would like to link federal tuition subsidies to a federal rating system for colleges and universities.  These would be established rating systems created with input from the industry similar to health care.  They would not be the US News and World Report popularity-based rating systems that come out annually for colleges and universities as well as hospitals.  The critics are saying that they don't like the federal government deciding whether or not they are doing a good job.  They want the measure of a good college education left to the students and their parents.  Well, of course you do.  Why be held accountable for billions of dollars of education funds flowing to your colleges and universities?  As my mother used to say, "You can't have your cake and eat it too."  Colleges and universities lobby for more federal funding year after year but don't want any oversight over those funds.  Wake up! 

I support President Obama's concept of a rating system influenced by colleges and universities, but administered by the federal government.  What I won't support is anything comparable to the absurdity of CMS's Recovery Auditing Contracting process now in place for hospitals.   The RAC process is simply the government's way of not paying after the fact for appropriate patient care that has been delivered and incentivizing a third party to do so. The RAC process in its entirety has become a boondoggle with no relief in sight.  Can you imagine, a college providing four years, even two years of education and then have a third party auditor request the students’ records on behalf of the Department of Education?  The audit then results in a challenge and ultimately the third party auditor withholds all of the funding for that particular student's education, with the auditor getting a percentage of what the government refuses to pay.

It Was a Very Good Year

At today's Board Finance Committee, Kim Repac, our CFO, provided a report on the FY 2013 Year End Review.  Wow!  Our admissions were down 774, which under our new payment methodology is a good thing.  Our Case Mix Adjusted Length of Stay was also down to 4.09 days.  The way we use Observation Beds has improved and we saw an 8% decrease over last year.  Our regulated outpatient visits were down by 10.5%, which is also a good thing; and our ED visits were up, but ED admissions were down by 4.5%.  Our readmission rate continues to come down each year.  We saw dramatic improvement in our potentially preventable conditions producing a reward of $1.78 million out of a potential of $2 million putting WMHS in the top 10% for all Maryland hospitals.  We also saw improvements in the financial performance related to physician practices by $900,000.  Overall, we had a net income from operations of $10,861,000 or a 3.6% operating margin and a total revenue over expense of $15,151,919 or a 5% total margin.  What a difference a year makes.  Now in fairness, we cut supply and labor expenses by almost $7 million during the fiscal year, along with convincing the Cost Review Commission to revise their formula related to averted bad debt, which cost us millions during Fiscal Years 11 and 12.  They also agreed to provide us with a one-time settlement of over $2 million based on a flawed formula on Medicaid expansion.  In summary, we turned around our financial condition from a FY'12 loss of almost $2 million in total revenue to over $15 million; we dramatically improved our Quality Based Reimbursement; our patient satisfaction results improved and we reduced admissions and readmissions along with our ancillary use rates for the third consecutive year. It was a very good year and hopefully one that we can continue to repeat year after year.

Supersizing Hospitals and Health Systems

Previously, I have blogged about the proposed alliance that WMHS, Frederick Health System and Meritus Health are pursuing.  Currently, the respective boards of each system are reviewing the many document, with the intention for a decision on whether to move forward or not by the end of September.  This alliance would not be a full asset merger, but one that shares services, better addresses population health through the creation of an Accountable Care Organization and further develops each health system as a highly reliable organization from a quality and safety perspective.  

The three CEO's have been trying to best position each health system for the preservation of health care in each of our communities while there are so many changes going on around us.  The experts continue to tell us that the Affordable Care Act (ACA) is transforming the economics of health care and forcing hospitals and health systems to pursue some type of alliance or affiliation.  Quite frankly, we have little choice.  Small to medium-sized facilities will eventually go away or will be merged / acquired into larger systems.  We are trying to create a super regional system for western Maryland that will eventually reduce cost in a variety of areas, improve the delivery of care to our patients and better position each of us for population health under health care reform and the ACA.  

According to Gary Ahlquist, a senior partner with Booz and Company, "there isn't an independent hospital out there that is not thinking about this and at the top of the list is the question who do I merge with?"  The same experts keep telling us that any hospital trying to hold onto its independence will find it increasingly more difficult to compete against bigger, leaner organizations.  WMHS, Frederick and Meritus are three of the remaining 15 independent hospitals left in Maryland.  Looks like super sizing will be the way to meet the challenges of health care change while preserving care and jobs in each community.

Note: I will be taking a few days off from blogging.  I will be back sometime next week.  Have a great weekend.

It's Far Worse Than First Thought

I have previously blogged about the challenges of hiring for entry level positions at WMHS, primarily in service related jobs such has Environmental Services and Dietary.  We also have difficulty with Certified Nursing Assistants for both the hospital and the nursing home.  Recently, I heard Scott Justice, General Manager for the Rocky Gap Resort and Casino, talk about the same challenges.  My response has been that government makes it very difficult for  us due to the fact that they pay people not to work.  To quote Michael Tanner of the Cato Institute in an op-ed for the Baltimore Sun, "while poor people aren't lazy, they aren't stupid either."  Unfortunately for us, Maryland pays very well for people not to work.  Previously, I was informed by the Dept. of Social Services for Maryland that we had to pay around $14 an hour to do better than what government will pay to those on welfare.  I learned today after seeing Tanner's article referencing the Cato Institute report on the value of benefits by state that Maryland is the tenth "best" or most generous with an annual package of $35,672 or $17.15 per hour.  Add to that the various earned income and child tax credits, a single mother of two would still have to earn over $18.35 per hour to do better than welfare, according to Tanner.  Annually, that $18.35 per hour equates to $38,168 which is 94 percent of Maryland's median income.  That is crazy!  With that $38K, the recipient doesn't pay taxes, there are no child care costs, nor are there any costs associated with going to work such as clothing and transportation.  As Tanner states, "welfare recipients are simply responding to incentive systems our public policy makers have established for them."

 

Now some good news for employers like WMHS and Rocky Gap; the most important thing to remember about poverty is that the only way to escape it is to be gainfully employed.  There are many examples of entry level employees at WMHS who have gone on to obtain their college degrees and have achieved great success.  Yours truly started in health care cleaning bedpans in Central Processing, but I went to school part time for nine years at night to attain my Bachelor's Degree as well as my Master's Degree.   For a period of time right before I was married, I lived in poverty, but I used it as teachable moment that I never wanted to  be poor again.  It is obvious that to be on welfare may be advantageous for the short term, but it isn't a long term solution.  Yesterday, Congressman Delaney of the 6th District in Maryland announced that he is pledging personal monies to increase the minimum wage in Maryland to $10.  I am sure that he feels this would be a start in getting people to work over being on welfare, but it is an initiative that has repeatedly failed in Maryland.  History tells us that mandated wage increases actually hurt those in entry level positions - not help them.  As of October 1st, WMHS will adjust our entry level wage rate to $9.55 per hour.  It is short of the Delaney goal and well short of the welfare rate, but I am still hopeful that there are individuals who want something better for themselves and their families.  That entry level wage rate coupled with a generous array of benefits, an opportunity for advancement, and the potential to work with a great group of people will hopefully appeal to the right person who wants to make a difference is their life as well as the lives of others.

An Upcoming Challenge for Tax Exempt Hospitals

There is a new provision in the Affordable Care Act that establishes penalties for tax exempt hospitals related to insufficient amounts of Charity Care.  Hospitals are now required to file additional paperwork every three years with the IRS to demonstrate that we are worthy of their tax exempt status through the provision of Charity Care.  Failure to demonstrate a continuing need could result in a loss of tax exempt status.  Such hospitals would then be forced to become for-profit hospitals requiring each to pay taxes.  Some are saying the bar will be set very high for tax exempt hospitals to achieve the new IRS standards so additional tax paying entities can be created.  It is also being stated the new provision will also lead to a single payer system for health care; a rumored goal of the current administration since introducing the new law.  If hospitals fail to meet the new standards they could be fined $50,000 and become tax paying entities.  At this point, the best advice for not-for-profit hospitals is to do as much as you can related to your fulfillment of community benefit, especially Charity Care, and hope for the best. At WMHS, we have been dramatically increasing our community benefit contributions that resulted in just under $40 million in 2012.  Going forward we will also provide care through our various clinics at no charge to the patient.  This will greatly aid our health care reform initiatives, but also better satisfy our community benefit requirements in the year to come.

Despicable He

Across the various news wires today is a story about an oncologist in the Detroit area who has been charged with falsely charging Medicare $35 million for fake cancer diagnoses over the last two years.  He was arrested for providing chemotherapy to patients in remission who didn't have cancer and then billing for it.  If this is even remotely true, I can't imagine any human being who is that despicable by putting patients through such an ordeal just to make money.  The physician's attorney said that the government is basing their charges on disgruntled former and current employees and that they haven't even engaged an expert as of yet.  I realize that the government will build their case from here; however, rest assured they would not have arrested the physician without evidence beyond complaints from a few employees.  If his actions are proven to be true, this is the ultimate betrayal of his patients, his colleagues and his profession.

They Really Need to Study a Decline in Lottery Sales

In yesterday's Baltimore Business Journal, there was a headline that got my attention, "Maryland Lottery taps research firm to study sales decline."  I sure hope that they aren't going to spend a lot of money on this study because I can help them out in one word, GAMBLING, or another word, CASINOS, or another word, SLOTS.  Really, they have to study the Lottery sales decline?  Lottery sales are down 2.2% from $1.795 billion to $1.756 billion and mostly in Keno and Racetrack games.  Any idea as to what these two Lottery games are most similar to in casinos..............you guessed it, slots.  

For the same period, gambling in Maryland is up 27% over last year and at almost $830 million dollars in revenues.  Two more casinos are expected to come online, one in Baltimore across from M&T Bank Stadium and another in PG County.  I sure hope that the Maryland Lottery Commission figures that into their study.  Overall, after taking into consideration the $39 million loss from the Lottery, the $830 million for FY '13 in revenues from gambling and $3.2 billion in new taxes; the State should be very well positioned from a revenue perspective.

Push America’s Journey of Hope

Last evening, I attended a picnic hosted by the Cumberland Rotary Club.  The picnic serves two purposes:  first, the annual picnic for Rotarians and their spouses; and second, we host 35 young men from all over the country who are cycling across the US.  The young men have raised a minimum of $5500 each, which goes to Push America’s Journey of Hope.  The Journey of Hope benefits the disabled across the U.S.  In fact, they cycle around 75 to 80 miles a day and then stop and spend time working with the disabled in the many communities where they spend the night.  They started in San Francisco in June and are about to arrive in DC; the entire trip is around 65 days.  These young men, all of whom are in the late teens or early twenties, are attending some of the best colleges and universities.   They are pursuing studies in an array of areas, many with double majors.  They are charming, articulate, friendly, respectful and appreciative.  It was a wonderful way to spend the evening, hearing from each of them as to their background and how they raised their minimum of $5500 (actually, the average for group was $8000 per cyclist).  These are our leaders of tomorrow; and after spending a few hours with them, we will be in very good hands in the not too distant future.

An Opportunity to Teach

Yesterday, I had the opportunity to share the WMHS success story on health care reform with young people who are participating in Mercer’s National Intern Program.  Mercer is a national Human Resources firm that WMHS uses to perform an independent analysis of our executive compensation program. 

I was invited to speak to the group six weeks ago as an expert on health care reform (how flattering), but I didn’t quite grasp the magnitude of the invitation.  The engagement was done via conference call.  On the call were their executive leader and groups of Mercer interns from all over the country.  I had the opportunity to tell the story of our transition from a volume-based health care delivery system to one of value.  Their interest was related to a health care industry work project with which they were tasked. Their focus was the impact of health care reform on the various stakeholders, the employees, the physicians, the patients and the community.  As I told the story and briefed them on the impact on the individual stakeholders, they asked great questions.  At the end of the presentation, the interns said that they were thrilled to learn that there are very positive aspects of reform and that key stakeholders, such as employees and physicians, seem to be embracing it.

I love it when I get the opportunity to share what we are doing at WMHS related to our transformation to a value based care delivery system and it is especially rewarding to have such an engaged audience.

Energy Consumption in the US

Last week, I wrote about some of the wonderful tidbits from Anirban Basu’s presentation to the Board.  One of them was that by 2020, the US would be the leading producer of oil in the world.  Currently, we are third behind Saudi Arabia and Russia. 

Today, I saw the attached chart that depicted energy consumption in the U.S. from 1980 to the present and projected to 2035.   What is interesting is that consumption of fossil fuels (oil, coal and natural gas) will fall only six percent by 2035, while renewable energy (wood, waste, solar, geothermal, wind, nuclear and hydroelectric) will grow only slightly.  Renewable energy will provide less than 11% of the total energy demand for the U.S. by 2035.  Currently, fossil fuel consumption is about 83%.  Some of you may remember in 1977 when the U.S. Energy Department was formed under the premise to find alternate sources of energy?  In 1950, our renewable energy consumption was only slightly lower than it is today at around 10%; yet, how much has been invested in the development of renewable energy sources since 1977?  Billions and billions of dollars have been invested in finding new sources of renewable energy through direct allocations, tax incentives, grants, awards, loan guarantees and subsidies.  For 2012, the Department of Energy received $2 billion to identify new sources of renewable energy, focusing on geothermal, solar, hydroelectric and biofuels.  So, the waste of tax dollars continues on failed strategies to bolster the sources and use of renewable energy.  Like it or not, hydrocarbon energy is still a major part of our future and will continue to power our economy for years to come. 

Consumer Reports and Their Hospital Ratings for Surgery

In the September issue of Consumer Reports (CR), there is an article on Safer Surgery which lists the surgery ratings for 2,463 hospitals across the county.  So, how’d WMHS do?  Was the traditional CR circle, solid red (Good), solid white (Average) or solid black (Worse).  WMHS was solid white or average in our rating.  I guess if it were red, we would be celebrating such recognition like nine Maryland hospitals.  If it were solid black or even half black, we would be vehemently challenging the rating.  But, in our case, like nineteen other Maryland hospitals, we were average.  So, because we were average, I should put the rating in perspective. 

Consumer Reports, using Medicare claims data for 2009 through 2011, grouped the common surgical procedures into 27 different categories.  The ratings were based on two outcomes: death at the hospital after surgery and a longer length of stay in the hospital than expected.  So, what does it all mean to the consumer?

Some of the shortcomings of their ratings would include:

CR used only Medicare data.  There are a lot more patients having surgery; so, they are reporting only a portion of the data.

They say that the data is risk-adjusted; but such methodology is usually flawed.

The complexity of the patient isn’t taken into consideration in this data.

Smaller hospitals have a very limited sample size, resulting in less reliable data for them.

Socioeconomic factors aren’t taken into consideration, which routinely reflect the health of the population.

Today, there is a great deal of transparency in reporting quality and patient safety data, including WMHS, which shows our current quality data on our website.  There are so many measures that hospitals are adhering to today and they are readily available on the internet.  These measures go far beyond surgery performed on Medicare patients.  However, the CR’s article and data are very good starting points. Hospitals and health systems are fast becoming more and more transparent in our performance improvement data reporting and the sole beneficiary of such reporting is the patient.   That’s a very good thing.

There's That Brave New World of Health Care Again

An issue brief from KPMG came across my desk this week entitled, "Convergence is Coming: A Brave New World for US Health Care."  The Brave New World theme is how I opened this week's blogs as I blogged about last Friday's presentation by Anirban Basu to the WMHS Board.  The KPMG  issue brief describes the transformation of health care delivery in the US.  It describes the challenges such as less revenues, disruptive new market entrants, aggressive competition and rapidly shifting regulation.  The issue brief then gets into what health care executives need to do in dealing with these challenges.  We need to align ourselves with new partners, work more closely with the payers, focus on patient centricity, seek new delivery models, pursue collaborative operating models that are best suited for your organization and become much more engaged with data analytics. No real new news there, as we are deeply imbedded in each of these areas.   But, it's helpful to have confirmation of what you are doing in the transformation of health care delivery by the experts at KPMG's Healthcare and Life Sciences Institute.

Returning to Old Fashioned Health Care, Well Kinda

When you take a step back and look at all that we are doing to address population and community health, it is amazing as to how much we are returning to the past.  I remember as a child, my pediatrician coming to the house to provide care to me when I was sick.  We haven't gone that far, but we are getting closer.  We are now sending a lot more people into the home either in person or through technology as we transition patients from the hospital.  Our goal is to keep them as healthy as possible so they do not have to return.  We are focused on being there if patients need us, but also having alternatives available to visits to the ED or an inpatient stay.  We have a series of clinics and medical homes, new primary care practices as well as individuals reaching out to patients  post discharge to make sure that they are keeping their appointments, weighing themselves, checking their blood pressure, their glucose levels, making sure that they have their medications and the list goes on.  Soon, we will have technology that will support these same patients in their homes with the preceding information being transmitted electronically.  In the near future, we may also have nurse practitioners and possibly, physicians going into the home to improve the health status of our most vulnerable patients.  There are lots of examples in other communities of practitioners going into the home beyond Home Care to better serve those in need.  We continue to monitor these practices for their application in Western Maryland.