Great OpEd article

This article by Arthur Laffer defines the “Healthcare Wedge,” a term that defines the differences between percieved charges and costs in the healthcare system. Another view on debate.

http://online.wsj.com/article/SB20001424052970204619004574324361508092006.html

Take a read.

Rolling into the Summer Planning Period – 5 Neccessary Questions for 2010.

Summer in healthcare is a time to prepare for a specific onset of acute problems, including asthma, heatstroke, cardiac arrest and other related illnesses. However, it is also a critical planning period for hospitals as they approach the upcoming fiscal year. Many hospitals utilize the summer/early fall as a time period to track previous year’s numbers, initiatives, fund-raising, capital expenditures, profitability and growth. Summer is “Planning Season.”

Obviously, we are in a time where “planning” is not the same process as it once was. We have passed the time of “it feels right, or other lagging indicators of growth, need or change. Furthermore, as indicated, many planning directors, and strategy directors are being let go (see this link) for fiscal reasons, or cost cutting.

So, with further pressure being placed on the healthcare industry, this seems extremely crucial to get the facts straight. I have prepared a few questions that one should ask internally in order to make maximum impact in 2010:

(1) How does the current economic trend affect my hospital’s payor mix, fiscal situation and current initiatives? Are there any ongoing projects that may need scope changes as a result? Do we need to make adjustments in these initiatives to compensate for lack of, or over spending? Question 1 revolves around success of past initiatives, and ongoing projects.

(2) In what areas can we maximize efficiencies to ensure financial conservatism and growth in 2010? Are we sure that our data is correct? Do we need to enact policies to motivate further efficiency? Question 2 revolves around performance. Anything and everything that can be done to see more patients and improve quality of care is paramount. Process Improvement.

(3) Will the government be successful in passing Healthcare Reform? If so, how does this affect my revenue cycle? Payor Mix? Service Lines? Can I be profitable in a new system? Question 3 revolves around flexibility to dynamic regulatory change, and making sure that your managed care strategy is aligned with your internal operating processes to maximize return on procedure (ROP).

(4) Cost Cutting, Employee Growth and Efficiency. What is your strategy for maximizing cost? Have you had to lay off employees? Do you need to continue with “de-emphasising” service lines, projects or employees to save costs? Is there anything that can be done to mitigate this issue?

(5) Initiative tracking, Data and Success. Are you utilizing internal or external resources to ensure financial, initiative and clinical success? Do you need consultants to help? Can swapping internal for external resources help you be more efficient? Does your strategy align with your IT systems, analyst point of view and resulting data? How can this be addressed?

If you take the tact that these questions are aimed at providing, your financial feasibility, project effectiveness and initiatives will become and remain effective. As we stated earlier, being as nimble, lean and proactive as possible will help in addressing the coming changes to the system and the market. Address these questions, and you address many of the issues for 2010.

Cheers!

Hospital Strategy and Development Officers

Here is a post on Hospital Impact that outlines a refreshing thought. The necessity for those creative, thoughtful and very savvy internal healthcare strategists. I could not agree more!

Thanks Christopher!!!

Social Media in Healthcare and Business

Is there is a place for social media in healthcare, and in business? This link discusses a little more about the issue.

As you know, I have been tasked with developing business for the newly formed Klerity group. One of the mediums which I am working on is twitter, facebook and linkedin. I will continuously post on the progress of the group, but your feedback is much appreciated.

I look forward to your comments, suggestions and questions.

CMS Pay for Performance…What is the plan for measurement???

As this article so eagerly points out, CMS and President Obama want to create a system that encourages performance based compensation for hospitals – better clinical outcomes equals better pay. This link explains more.

The suggestion is that hospitals would initially get compensated simply for reporting performance metrics, and that the system would eventually reward hospitals for reporting, and then improvement.

However, my question is simple: “Garbage in, Garbage out.” How does CMS plan on measuring a bonafide increase in performance? We all know that your measures increase and decrease naturally  – so, what is the baseline? Furthermore, are you going to use disease and infection rates? Mortality? LWBS Times in the OR? Which metrics, and who makes the decision on what constitutes performance improvement?

After all, if you ask me, one performance metric might be how many hospital employees acknowledge and inquire to how my day is going while in the waiting room. The more the better, right???

I think , having no concrete position as to what constitutes performance increase is what leads me to be skeptical. After all, how many times have you been at a presentation for “Pay for Performance” consultants, only to disagree about the final outcomes because your measurements were not equal…..

I believe the same principals apply in this instance. Decide whether pay for performance based on standard criteria, that actually indicate performance before igniting the world towards this type of meritocracy.

Again, another solid idea on the facade, but intricately more difficult to implement.

Bundled Billing – What is this all about?

In yesterday’s speech (I know, I have really been paying attention to this healthcare reform issue), President Obama touched on a myriad of different ideas in the healthcare world. Some call for process improvement, increased clinical outcomes and disease management. Some centered around preventative care for all individuals. Some centered on Health Information Technology and the idea of a mandatory Electronic Health Record. ALL of these have hefty burdens on the American Public’s checking account, and will draw on the dollar extensively.

However, I wish to put the spotlight on something mentioned that the public may not be fully versed in: Bundled Billing.

Now, the healthcare world, especially the for-profit world has been eying the idea of Bundled Billing. More specifically, the healthcare world has been debating on how to become, or remain profitable from a reimbursement system that pays by the illness, rather than the service rendered – essentially the idea behind bundled billing.

From 50,000 feet, and in brevity, the idea of bundled billing is to ease the paper, cost and time burdens already placed on Medicare and Medicaid. In the current system, the doctor, outpatient service provider, hospital and any other method of healthcare delivery service provider will bill their service separately to CMS (and the insurance company, mind you). Under the current system, the reimbursement is dolled-out in separate chunks. Bundled Billing aims to eliminate this: making one payment to the hospital, doctor or service provider indicated – thus placing a legal and ethical dilemma in the hands of the provider, rather than CMS. For instance, the provider will have to make the call on whether they pay the Outpatient Radiology Clinic for the scan, versus CMS denying the claim based on medical necessity.

As with everything in healthcare, it is far more complicated than that – raising more than the nominal concerns I just articulated (legal and ethical, JV’s, Doctors, Hospitals, etc). However, I actually commend the Obama Administration for being forward thinking: on this issue. 

Ideally, this would mean a more focused and outcome-based approach to medicine, where the patient is not excessively charged for meaningless and duplicate tests. On the face, this is incentive to practice prudent and medically necessary medicine: in theory, making the delivery system more effective and more efficient. 

However, in my view, this gives extreme leverage to the entity that controls the claim: the hospital.

Now, traditionally, the hospital has had NO leverage in this situation. They have typically assumed large risk, ethical and legal medical burden, costs associated with non-pay and charitable care, a laborious and tedious rigmarole for reporting, compliance, cost-control and delivery. How do we deal with such a switch, where the hospital controls the claim, thus the money.

My question is this, and probably unanswerable at the moment: will the “Shift of power” result in a decrease in quality doctors from the system?

President Obama suggests that doctors should take a haircut. Practice “group medicine,” and be fine with it. Let me be clear, I am not a doctor. Nor, for that matter, is anyone in my household or immediate family. The financial gains of physicians does not immediately reflect on my personal situation. However, this seems like a meaty request, as well as a monumental hurdle to the idea.

 But, I want to get back to the bundled billing question: Can hospitals be profitable utilizing this system?
Well, I think the answer is two-fold, and not that simple. First off, the hospital CAN be profitable utilizing the old-school cash and carry delivery of medicine. This is commonplace is many communities outside of the medically hungry United States. So, hospitals can be profitable in many situations.

So, the key is, HOW can a hospital be profitable utilizing bundled billing?

A) Cost Control, and utilizing a fundamentally missing element in healthcare today: BUSINESS.  Utilizing the data within the hospital to identify those procedures which are profitable, and those which are loss-leaders. Many progressive hospitals have been doing this with Primary Care Physicians for years: employing them, or at least having them available on staff to bring referrals into the system. We all realize that PCP’s rarely break even, much less make money – so, why would a hospital want to bring them in house? Simple. Employed physicians bring referrals to the hospital. It makes sense.

Take a look at Florida Hospital: The CEO will be happy to tell you, they have switched to bundled billing ahead of the suggestion, and are now focusing on other areas of expertise. Are they profitable?

B) It all comes down to data. We all know that hospitals have all sorts of data available, from various metrics, state data to reported CMS data. BUT, what do they do with it, and how do they utilize it for their internal idea formation. The traditional answer is that they rarely do ANYTHING with it. It is too much. The needed answer is that they utilize the performance metrics to increase efficiency and eliminate waste —– internally, not with EMR/EHR. Perhaps in concert, but not solely.

C) Being prepared. I think  the idea of being prepared for changes in the system is inherent in the executive mindset. However, I see the reactions of many facilities and wonder where the ideas come from. By being prepared, I really mean having a clear and precise decision-making protocol.  Let me explain decision making protocol in breif:

In my company, we offer a service line designed to address the profitability of the Surgery Suite. Recently, we were reviewing the records of a facility (in a phenomenal system, mind you) that was performing Cataract Surgery in their main OR’s in the hospital. Each procedure cost the hospital thousands of dollars. We asked the question WHY were they doing these procedures in the main OR and not in an outpatient setting, where the reimbursement was higher? They had no idea: it came down to convenience and habit. IE: a lack of decision-making protocol by the OR Director and the administration making that choice.

To relate: A proper decision-making protocol can enhance a facility’s chances of being profitable. So, being prepared to make the right decision when called to make it. Preparing, and having the appropriate knowledge of bundled billing BEFORE you have to switch is the key to being profitable. Knowing what, how and where to provide servives is the only way to survive in this system, and having the tools (manpower,knowledge and technology) to do so.

So, pardon my seemingly breif answer to the question. As with anything, more research is always better – and acknowledge the aerial view of this topic. I suggest, if more information is desired, to read “Redefining Healthcare by Porter Teisberg, as it has one of the most compelling and logical arguments for billing structure and pricing available.

The Battle Continues – Public Healthcare and the Obama Plan

This Fox News post outlines some of the key elements as Congress looks to begin debates on Sen. Kennedy’s bill.

The New York Times

This post is an amalgamation of news sources.

More:

My biggest concern is that Obama looks to reduce payments even futher. Yes, it will help incentivize hospitals to be more efficient, but it will kill those hospitals with a majority medicare/medicaid health payor mix. Furthermore, those hospitals cannot pick and choose patients and doctors like those hospitals with more fiscally favorable payor mixes. Does Obama think that urban hospitals PLAN to have a poor payor demographic?

Additionally, you cannot ask doctors to increase patient volume, increase efficiency, increase quality of care, and then ask them for support for a pay reduction.

International Healthcare and Medical Tourism

This morning, I came across an article that raised a number of great points regarding medical tourism, its attraction to those individuals who are in the gap between quality insurance and medicare/medicaid.  I believe the answer lies in metrics, and transparency of metrics. What do you think?

Find the link here.

In a time of need, inspiration:

From another healthcare blog of note, I found this video-log. I thought it was one of the more inspiring video clips that I have come across lately. Take a look:

http://www.imeem.com/bayanvictorious/video/TPufJp-G/mark-johnson-playing-for-change-by-mark-johnson-on-bill-moye/

The Economy’s Toll

A short quip to get your mind thinking:

In a recent article in “Modern Healthcare,” (http://www.modernhealthcare.com/apps/pbcs.dll/article?AID=/20090427/REG/304249947&nocache=1) the numbers were astonishing. One number in specific, troubles me to great extent: The percentage of individuals opting for catastrophic “safety net”, rather than complete coverage insurance. In my mind, this one  of many effects of the financial markets – and will have a huge effect.

However, this increase does not come without background. Example:

I am assuming that the number referenced was in patients that have this type of insurance (will they need a new category???). That being said, the co-pay for patients with safety-net insurance is undoubtedly more expensive. This begs the question: how, and if that co-pay is paid, much less collected (lets revert to on of my other posts). That being said, if hospitals are seeing drastically reduced elective procedures, different types of insurance coverage, and a reduction in reimbursement, how healthy is the trend for the general public?

I know from experience that those with catastrophic insurance tend to trade off the traditional medical coverage for the solidarity that they are covered in the event of something big. Therefore, the likelihood of having a major medical issue when they do have one is greater. So, if you see that patient, it is more likely that there is something of great importance, and great expense happening. Interesting way to reduce costs in my book….

So, lets extrapolate – increasing catastrophic insurance creates less flow, but more catastrophic cases. This will not equal less costs, just more tragedy.

Food for thought. I welcome your comments.