Assignment:
Create a 1-2 paragraph summary explaining the concerns for the future of the ACA 2010 and the healthcare scene in 2017 and predictions of how healthcare may change in 2017.
2. Describe (1-2 paragraphs) some of the specific predictions and risks that are being identified for the future of healthcare in the U.S.
3. Identify (1-2 paragraphs) any issues involved with the status of insurance availability in the coming years
Philip Betbeze, March 2, 2017
Micro-Hospitals Fuel Growth Strategy at a Texas Health System
Part of CHI St. Luke's growth strategy involves combining inpatient and outpatient services into a smaller, more scalable and less capital-intensive facility model: the micro-hospital.
Health systems used to depend on high-dollar inpatient care for growth. Not anymore.
With health plans and Medicare seeking to move care to lower-acuity, and thus lower-cost, sites, and with advances in technology adding to the practicality of moving procedures out of the hospital, the outpatient environment is poised for growth, while inpatient may stagnate.
CHI St. Luke's Health, a six-hospital health system in Houston, is like many health systems that responded to HealthLeaders' recently released annual Industry survey. It is looking outside the traditional hospital environment by adding physician practices and other outpatient sites of care.
David Argueta
But part of its growth strategy involves combining inpatient and outpatient services into a smaller, more scalable and less capital-intensive facility model, the micro-hospital.
CHI St. Luke's opened its first four-bed micro-hospital, Springwoods Village Hospital, in January 2016. David Argueta, its president, calls the facility an "innovative solution to get clinically appropriate high-quality care in a low-cost environment."
Speed to Market
Argueta, who is president of CHI's Woodlands-area facilities, which includes the micro-hospital as well as the 242-bed The Woodlands Hospital and 30-bed Lakeside Hospital, says he views micro-hospitals in general as one of the ways the health system is able to grow access points in a thoughtful manner.
"It really brings value-added services together in a more cost-effective manner than a big hospital or individual clinics," he says.
What also made this micro-hospital a particularly attractive opportunity is that it allowed CHI St. Luke's to negotiate an exclusive deal within the master planned community of Springwoods, in suburban Houston, 10 miles away from The Woodlands Hospital.
"We had an opportunity that a lot of people don't, which is to grow with the community," says Argueta, who adds that the hospital is scalable. The micro-hospital features four inpatient beds, 10 ED bays, four operating suites, two endoscopy suites, imaging, labs, and pharmacy and dietary departments.
'Scaled Appropriately'
It has everything a hospital has, it's just scaled appropriately, says Kevin Harney, a principal and architect with Earl Swensson Associates, the Nashville-based architecture firm that designed Springwoods Village Hospital.
Kevin Harney
"Some owners see this concept as a way to establish their brand and identity within a community and have even planned these micro-hospitals for growth to become a larger tertiary hospital," he says.
Earl Swensson Associates sees the niche as a growth opportunity as well. Springwoods Village is its first such facility, but Harney says the niche will grow, and the firm has several other such facilities in various stages of design.
According to The Advisory Board, most micro-hospitals are between 15,000 and 50,000 square feet average eight to 10 inpatient beds and are usually within 18-20 miles of a major hospital. In that sense, Springwoods Village is smaller than most and closer to a main hospital than many.
"We chose four beds," says Argueta. "I've seen some with more, but unless you have a real need to hold patients over for observation, you really don't need more than that."
"Micro hospitals, sometimes called an 'emergency hospital,' become, in essence, a matter of creating accessible, convenient care," says Harney.
Establishing a Presence and Raising All Boats
In theory, a micro hospital establishes a presence in a growing market, capturing market share for a larger hospital system. Patient stays in these facilities are short, usually 24 to 48 hours, and patients who need longer lengths of stay or more specialized care can be transferred to a larger hospital within the system.
"A lot of the patients we see are outpatient surgical-type patients who may come through the ER and we may need to hold them overnight for surgery in the morning," says Argueta. "If they need higher level care, we're 10 miles away from the Woodlands Hospital."
CHI St. Luke's is bringing another micro-hospital online over the course of this year. That facility was received as part of an acquisition, and two others are in various states of planning.
Executive leaders serve across the local campuses as does Argueta.
"Springwoods Village complements the services we offer at our larger hospitals," he says, adding that the service area is experiencing annual growth of around 14% in surgeries and imaging, and the Springwoods Village option has helped eliminate wait times in imaging, and has allowed more time for surgeries.
"It's raised all boats for our North Houston campus," says Argueta. "Twenty-five years ago we were three access points in north Houston. Now we're at over 40 access points: 37 clinics and three hospitals."
INNOVATION, STRATEGIC PARTNERSHIPS, COMMUNITY HOSPITALS
Through clinical research, strategic partnerships, early adoption of innovations and highly-specialized clinical programs, one Silicon Valley hospital is changing its role. Check out this live HealthLeaders Media webcast, Redefining What it Means to be a Community Hospital: Innovation at El Camino Hospital on March 17.
Philip Betbeze is the senior leadership editor at HealthLeaders Media.
Top 2017 challenges healthcare executives face
December 08, 2016
By Karen Appold
Working as a managed care executive in today's healthcare environment is a demanding role. According to Managed Healthcare Executive's 2016 State of the Industry Survey, challenges abound. Government requirements and mandates, such as implementing value-based reimbursement, are difficult to meet. Meanwhile, employing new technologies, such as electronic health records and data analytics, is no easy task. Pharmaceutical costs continue to rise dramatically, burdening the entire system.
The survey findings, based on 160 responses, show the biggest challenges that executives at health systems, health plans, pharmacy benefit organizations, and more anticipate next year. Here's a closer look at the survey results, and what industry experts say organizations can do to overcome them.
Challenge #1: Complying with new government requirements and mandates
When asked about the biggest challenge healthcare organizations face, a whopping 36.3% of survey respondents cited complying with new government mandates and requirements. Among these regulations, is the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which industry experts predict will be one of the biggest hurdles.
Miro "Its payment methodologies are complex; it will require a large investment in time and resources to sort through it," says Lauri Miro, MBA, RN, vice president, consulting services, Halley Consulting Group. "As MACRA combines elements of programs, including the Physician Quality Reporting System, the value modifier (or value-based payment modifier), and meaningful use into one program, healthcare providers and payers who have invested in earlier program infrastructure are left wondering what will come next. While changes are meant to address previous program deficiencies, the chaos created by frequent changes can make both providers and payers hesitant to invest in infrastructure changes needed to make timely transitions."
For health plans, Gregory Scott, vice chairman and U.S. health plans leader, Deloitte LLP, views requirements associated with Medicare Advantage as a top concern. "Medicare Advantage comes with challenging and fluctuating operational and compliance requirements, and with unavoidable financial uncertainty-given the complexity and annual surprises surrounding CMS payment rates," he says.
Furthermore, healthcare executives are struggling with lower reimbursement rates for services rendered under Obamacare plans. "The exchanges often have high deductibles, leaving patients to shoulder more of the upfront costs of care," Miro says. "When patients can't afford to pay their deductibles, providers are often not paid for services and patients may not seek preventive care that could avoid future disease escalation."
Due to the unpredictability of populations served under the Affordable Care Act (ACA), current actuarial models are less reliable to accurately predict premium revenues, utilization levels, plan expenses, and expected profits and losses, Miro says.
Experts' recommendations
A recent Deloitte survey found that more than half of U.S. physicians lack a basic understanding of MACRA. "Clearly, many healthcare systems have MACRA-related work to do, ranging from basic awareness education to detailed financial analysis to refreshed, MACRA-informed enterprise and marketing strategies," Scott says.
His recommendations regarding Medicare Advantage are to develop improved capabilities in operations, finance, sales and marketing, provider collaboration, medical management, and compliance. "However, a significant number of health plans simply don't have the technology platforms and capabilities to meet existing and future CMS requirements in compliant, profitable, and predictable ways," he maintains. "Plans should invest in new technologies, which will result in strategic and financial benefits over the long run."
In the ACA marketplaces, Scott says, "We anticipate-and frankly need-additional federal actions and program changes to sustain their viability. Health plans would welcome certain new rules and requirements (for example, around risk adjustment and special enrollment periods) that would improve ACA marketplaces."
Miro says healthcare executives could lobby the government to allow slightly higher premiums while subsidizing deductibles for those who can't pay for government-sponsored plans, which would add a new level of support to ACA programs. "Allowing plans that cover higher-risk patients to have a higher subsidized premium would help insurance companies to make a profit when participating in the exchanges," she says. "By subsidizing deductibles, patients would be encouraged to get preventive services that could ultimately hold down their costs while healthcare providers would be paid for services rendered."
Challenge #2: Implementing value-based reimbursement
Placing second among survey respondents' biggest challenges is implementing value-based reimbursement, at 25.0%. Most participants, 68.6%, said they either had not yet started initiatives or had only started a few initiatives related to shifting toward value-based care.
Tuttle "The biggest challenge in implementing value-based reimbursement is managing change within clinical and financial environments," says Henry Tuttle, CEO, Health Center Partners of Southern California. "Organizations need time to anticipate, strategize, and create new systems in order to be ready for implementation. Moreover, it can be difficult to get organizational leadership on the same page regarding investing in new processes and technologies."
Once understood, organizations must become fluent in their total cost of care. "It's impossible to determine savings and value without understanding this important, and sometimes elusive dollar amount," Tuttle says. "Reimbursement based on value requires understanding the full continuum of expenses, developing one cost structure, and having the flexibility to control care within a fixed-care environment. Hot spotting within critical high-risk, high-cost areas is always a good place to start, such as discharge planning, transitions of care, assigned but not seen patients, or those on medication-assisted treatment or with behavioral health integration challenges. When working across multiple systems, it is important to incentivize partners to first understand costs, and then align these incentives across systems to give partners reasons to collaborate and control costs. Without proper motivation, it can be difficult to understand cost drivers accurately across the care continuum."
Welter Another challenge associated with the movement toward value is pacing. "While many providers are still largely paid on fee-for-service methodologies, healthcare executives know that they must transform their organizations clinically and technologically to better manage the health of a defined population," says Terri Welter, MS, principal, ECG Management Consultants. "Most health systems are participating in value-based reimbursement arrangements such as Medicare accountable care organizations or shared savings, or even shared-risk contracts with a commercial health plan, but they are challenged to establish specific strategies and plans to move more patients and subsequent revenue into these arrangements within an uncertain timeline."
As health organizations move into value-based payment environments, seamless teamwork across the organization will have to replace a world of silos. "That means that leadership teams will have to work more closely than ever in confronting the challenges of population health management, data analytics, acquiring and implementing the right technologies, and entering into new types of risk-based contracts," says Peter Kerr, managing director, FTI Consulting. "As a result, senior executives will have to develop expertise in areas of healthcare that they may previously have considered beyond their bailiwick, and work comfortably with others on new terrain."
Kerr Further, as they move into a value-based environment, health plans and health systems will have to confront the challenges posed by a more consumer-driven system in which they demand greater transparency, better communication, and more information about value.
Payers will also have to develop capabilities to explain products, network design, and quality and outcomes measures in ways that are clear and compelling to consumers. "This will be no small task for an industry that has not historically been oriented to the individual market," Kerr says. "For health systems, one immediate challenge will be developing greater capabilities in explaining consolidation and acquisitions."
Healthcare executives can better deal with challenges from implementing value-based reimbursement by understanding their patient population and demographics. "They should have a complete understanding of the value-based contracts being offered, including contract lengths and quality metrics that are being tracked," says Rebecca Altman, managing director and leader of the Population Health Strategy practice at Berkeley Research Group. "It's also important for executives to take a look at care management activities and ensure that they are correctly sized and scaled around the appropriate patients, which will help in the long run. They should also work to fully optimize the electronic health record (EHR), which can offer insights into patients' utilization patterns. Hardwiring into the EHR's standardized processes and evidence-based clinical pathways will help to reduce the cost of certain routine procedures (e.g., total joints, coronary artery bypass grafting, chronic conditions)."
Once an organization has a value-based contract in place, continuous performance improvement and accountability must be in place, Altman says. Physician leaders, front-line staff, and other team members should be actively engaged to ensure the contract's success. This ultimately comes down to how the health system incentivizes staff to meet their contracted quality outcomes.
Moreover, to effectively implement value-based care, organizations that traditionally operated as competitors must become collaborators. "It is no longer feasible for systems to operate in isolation, particularly when it comes to providing data on common patients," Tuttle says. "Both human and digitally-run systems must talk to one another."
Challenge #3: Technology acquisitions, investments, and implementations
Technology acquisitions, investments, and implementations ranked as the third greatest challenge, as cited by 19.4% of survey participants.
Organizations that lack a chief information officer who is tasked with leading technology initiatives may experience the most hardship in this area, Tuttle says. "Organizations are often at the mercy of software vendors when they do not have in-house expertise to assess their needs," he says. "It's hard to recognize good software from bad software prior to implementation, especially since healthcare IT providers have honed the appropriate marketing messages to position their products as population health management solutions, aggregators, and supporters of value-based care."
Another challenge is the actual implementation of technology. "Projects can take months to fully implement and require the project team to answer questions about how the software will work and where it will gather and disseminate data without fully understanding the implications of the decisions made," Tuttle says. "It's likely that no single software system will meet all existing needs; rather, organizations need a suite of interoperable clinical care and business intelligence products to ensure data integrity and the successful transmission of data to various stakeholders."
One of the reasons the Health Resources and Services Administration (HRSA) continues to provide technology funding for health centers is because it understands that this is not a one-time investment or static issue, says Tuttle. Recently, HRSA provided $87 million in grants to health centers for delivery system improvements through technology. "Even though health centers have been investing in technology solutions since the mid-2000s, it is clear that continual attention is necessary in order to improve patient outcomes and coordinate systems," Tuttle says.
Optimizing an EHR is another challenge. Because EHR vendors used proprietary technology to create their software, programs from different vendors don't talk to each other, depleting optimization of the data stored within the systems. A recent mandate from the Obama administration requires different EHRs to interface with one another across organizations. "This can be challenging, especially in light of HIPAA compliance, patients not wanting to share their personal information, and recent data security issues," Altman says. "Further, clinicians may not have had sufficient training to use an EHR."
Finally, hospital data teams and analysts struggle to get meaningful data out of EHRs, says Altman, whose statement lines up with the survey's results, as 49.3% of respondents reported that their organizations are not doing well with using big data to improve healthcare quality and reduce healthcare costs.
In fact, only 11.9% of participants said using big data is making a big impact while 38.8% report coming a long way but still have a lot of work to do. Often, health systems and hospitals have to engage outside vendors to slice the data into meaningful and actionable data with which to make clinical decisions," she says.
Experience using technology to manage population health and health disparities is relatively mixed in healthcare, says Tuttle. "Learning from others who have had success with employing technologies and engaging in partnerships will allow leaders to see where overlap occurs, identify commonalities, and outline what differentiates them from their healthcare colleagues," he says. "It's then up to executives and organizations to identify a value proposition that takes advantage of the things they have learned and provide a better experience for patients, successful business practices for the organization, and a healthier community."
In addition, with so many parties interested in big data and predictive modeling, it makes sense to determine what degree of analysis should rest with each part of the delivery system. Partners would benefit from talking to each other about the modeling they are doing or plan to do. "It is best to determine who benefits from the information provided by a given solution, and therefore who should purchase and maintain it," Tuttle says. For example, predictive modeling for major cardiac events is likely best performed by health plans or large healthcare systems rather than primary care physicians.
Altman advises employing resources to find a vendor that can educate and create optimal solutions. "Begin building analytic teams that can study populations covered by value-based contracts," she says. "The team should contain analysts, clinicians, and finance administrators. Also, leverage state or local disease registries, as well as health information exchanges, as those can be valuable resources."
Challenge #4: Addressing rising pharmaceutical costs
Among the survey respondents, 10.6% cited addressing increasing pharmaceutical costs as their top challenge.
According to Zachary Hafner, partner, consulting division, Advisory Board, rising costs in pharmaceutical drug spend are driven by several factors:
Unit cost inflation,
The mix of drugs in the market (skewing increasingly toward high-cost biologics, cancer treatments, and other specialty drugs),
Benefit designs that allow for consumption if a drug is available vs. if the drug is effective (in an era when more drugs are coming to market for a broadening range of issues), and
The complex system that rewards providers, pharmacy benefit managers, and pharmacies for volume.
Hafner "Despite the fact that healthcare executives' enterprises influence a tremendous amount of total spending, they have little ability to impact factors driving drug cost increases," Hafner says. "Even the largest payers and health systems are small relative to pharmaceutical players from a negotiating power standpoint-which is based on volume. Given that pharmaceuticals today account for about 20% of total healthcare spend, the extreme trend of inflation in pharmaceuticals translates to a total healthcare cost growth trend well in excess of the consumer price index."
Working together, payers and providers can leverage benefit design, data, and delivery to build more robust medical management programs geared toward pharmacy-to review and align on formulary, to perform better pharmaceutical reconciliation for complex and chronic patients, and to drive efficiency as it relates to sites of care for drug administration, Hafner says.
Altman would recommend working with local retail pharmacies that can provide generic drugs, especially for high-risk patients. "If a patient can take a generic drug, put them on the most cost-effective one," Altman says. "Promote those relationships with clinical teams and patients."
Currently there is a Senate bill (#1048) awaiting approval that addresses transparency and cost control of pharmaceutical drug prices. "Until this bill passes, the United States will remain the only country that does not regulate pharmacy pricing. Thus, when insurance companies don't cover rising costs, the cost is put on the patient," Altman says. "Health systems often see patients with frequent visits to the emergency room or with several readmissions because the patients cannot afford or obtain their prescriptions. Those increased numbers of visits and readmissions ultimately penalize the health system, making it difficult for some health systems to reduce readmissions or utilization."
Miro is a proponent of lobbying. "Lobbying efforts to allow Medicare and Medicaid the ability to negotiate with pharmaceutical providers might be a good starting point," she says. "People in the United States pay more than those living in Canada, Mexico, and the European Union on average for any given drug," she says. "If the United States paid the average of the prices paid by those three countries for medications, we could reap huge savings. What's more, the United States pays for most pharmaceutical research while other countries enjoy far lower drug costs."
Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.
Three reimbursement changes to watch in 2017
December 06, 2016
By Aine Cryts
By far, the biggest change Health Partners' Donna Zimmerman sees in terms of reimbursement in 2017 is the increased momentum behind bundled payments for orthopedic care.
Zimmerman "Hospitals need to be prepared for more of this," says Zimmerman, who is senior vice president of government and community relations at the Bloomington, Minnesota-based nonprofit healthcare provider and payer. That's because employers are increasingly interested in bundled payments for orthopedic and other types of procedures, and they're often offering incentives related to bundled episodes of care in benefit plans, she says.
Offering a bundled payment option for a joint replacement, in particular, is getting more common. Even with physical therapy that lasts a few months, these are "fairly discrete episodes of care," says Zimmerman, who adds that bundled payments are particularly attractive to employers and payers since they allow them to manage the total cost of care.
As a result, provider organizations will need to continue to focus on improving their quality scores, since this is one of the primary ways to distinguish their facilities from competing hospitals. In addition to the total cost of care, Zimmerman highlights that payers will be keeping tabs on providers' complication rates and will adjust the prices they're willing to pay providers for bundles of care as a result.
Here's more on how bundled payments will evolve in 2017, and two other reimbursement changes to watch.
Bundled payments
Eric Fontana, a managing director with the Advisory Board Company, agrees with Zimmerman that the move toward episode payments will be a theme in 2017. "Effectively, we're going to start to see [CMS'] comprehensive joint replacement program begin to [introduce] downside risk. This is obviously taking place for the first time in a mandatory bundled payment program."
The comprehensive joint replacement program launched April 1, 2016, and hospitals are held financially responsible for the quality and cost of the surgical procedure, which starts when the patient is admitted and ends 90 days after their discharge from the hospital.
Fontana also points to the full roll out of CMS' coronary artery bypass grafting (CABG) and acute myocardial infarction (AMI) bundles that are being kicked off in July 2017 in 98 metropolitan areas across the country.
Even non-participating providers are going to be paying attention to how the CABG and AMI bundled payment programs roll out, because the expectation is that these will ultimately roll out nationally, he says.
"The whole point of [bundled payment] programs is to drive increased scrutiny on the disposition of the payment, and making sure ... that the destination of discharge is the most clinically appropriate," says Fontana. For example, providers will need to look more critically at whether they need to discharge a patient to a skilled nursing facility if a home-health provider can deliver all of that patient's clinical care.
For participants and non-participants in the new bundled care programs, data analysis is really key, he says. "This insight will enable providers to determine their highest cost drivers-whether that's with skilled nursing facilities or home health-and then use that as a starting point to determine what resources are used in these bundles of care."
Still, one key difference between participants and non-participants, says Fontana, is that participants will receive data on their performance from CMS on a quarterly basis. Nonparticipants will need to develop their own analyses to understand the resources their patients are using in these episodes of care. He expects that any aggregated data and learnings provided by CMS will be "gobbled up" by providers.
Two-midnight rule
CMS recently dropped inpatient pay cuts associated with the "two-midnight rule." The rule stated that inpatient admissions would generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supported that reasonable expectation. It also stated that Medicare Part A payment was generally not appropriate for hospital stays expected to last less than two midnights.
In fiscal 2014, in response to rising Medicare Part A costs associated with the "two-midnight rule," CMS initiated a .2% payment reduction for inpatient services. In fiscal 2017, hospitals will see a temporary increase of 0.6% in payments from CMS. This is CMS' attempt to address the reductions of the last three years.
The two-midnight rule had a huge impact on providers because when patients were admitted to the hospital as "observation admissions," the documentation required to shift a patient to inpatient status (when deemed necessary by the provider) was unwieldy, says Linde Wilson, managing director of healthcare deal strategy at PwC. For example, a patient would show up at the hospital with chest pain, and that patient would automatically become an observation admission. If the patient was there for two days, and the doctor needed the patient to stay for one more day, it was difficult to justify an inpatient bed that the patient would then have to leave because of the two-midnight rule.
Since October 1, 2016, when CMS stopped imposing an inpatient payment cut to hospitals under the two-midnight rule, observations have increased significantly, says Wilson.
Site-neutral payments
Fontana points to "rumblings" from the federal government's Medicare Payment Advisory Commission, the Congressional Budget Office, and the Office of the Inspector General at HHS about site-neutral payments that would seek payment equalization across sites of care. "A lot of the attention there has been on hospitals that have purchased off-campus [practices] and then converted them to provider-based departments. Then the hospitals could bill for the additional facility fees," he says.
In its proposed rule, which it made available in July, CMS chose to interpret section 603 of the Bipartisan Budget Act of 2015 not by equalizing outpatient payment rates but by basing reimbursements on the Physician Fee Schedule, says Fontana. Still, this rule is only in a proposed state right now, and he expects CMS to receive a great deal of commentary before the rule is finalized for the 2017 calendar year.
Fontana notes that the current proposal focuses on a subset of hospitals-those with more than 250 beds, among other criteria. If the rule goes into effect as proposed, the result could be a $500 million reduction in payments, according to CMS estimates.
Aine Cryts is a writer based in Boston.