Real help in setting up an ACO

I highly recommend this video, which contains the most comprehensive advice for those wanting to set up an Accountable Care Organization. (If you cannot see the video, click here.)

Ostrich-like to the extreme

Seen today while on a bike ride in Sherborn, MA. I don't know how long this person plans to remain this way, but it is an odd way to celebrate Halloween.

Sad News on the Soccer Pitch

A fellow referee, about my age, sent an email entitled "Sad News." Of course, when I saw the subject line, I got worried that my friend might have a serious medical problem. Here's the text:

Don't worry - sad for me, funny for you.

I reffed some games at the grade 5/6 intramural jamboree the other day. While waiting for the horn to signal the kickoff, White team asks me who gets the kickoff. I told girls from each team that whoever guessed closest to my age would get the kickoff (taking off my hat in the interests of full disclosure). After several seconds I asked the Orange player closest to me for her guess. She whispers "67." As I was about to toss the ball to the White team for the kickoff, the closest White player says "72."

I told them both they were lucky I wasn't packing my red cards today.

Best to all,

Jeff

So that's how the rates are set

The Wall Street Journal published a very important article this week. Written by Anna Wilde Mathews and Tom McGinty, it is entitled, "Secrets of the System: Physician Panel Prescribes the Fees Paid by Medicare.

Here's the lede:

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

By coincidence, one of our doctors had just explained this to me a few days earlier. After reading the article, he jokingly and then seriously commented:

The only thing missing from the description is the cigars. Actually they make it sound more shady than truly exists. The recommendations from this committee are made to Pro-PAC (Prospective Payment Assessment Committee), who then set the Medicare fee structure.

Procedures have always won out over E&M time.

Another doctor friend put it this way: I think that it is the core of much evil.

Why the harsh reaction? Well, it is inherent in this statement: "Procedures have always won out over E&M time." Evaluation and management (E&M) services refer to visits and consultations furnished by physicians. You might want to think about this as "old-fashioned doctoring." The MD talks, listens, probes, and uses his or her cognitive skills to figure out what's wrong with you and what might be done about.

It contrast, procedures are things that are done to you mechanically, like surgery or other invasive techniques.

Both are important to medical care. But which is more important? One can certainly make a case that a primary care doctor's, nephrologist's, or neurologist's E&M can make a significant difference in the course of treatment of a patient. Indeed, those doctors' diagnostic skills can often obviate the risk, cost, and disruption of interventional procedures. This is not to say that people who perform procedures are not also important: Indeed their abilities are essential and determinative in many cases. However, the process described in the article results in greater values being ascribed to the procedures than to the cognitive services. And greater value translates into higher payment rates.

It may be that the committee's skewed membership leads to this result. It might be, too, that there is some historical basis for a payment system of this sort. Whatever the reason, it is clearly time to undo the bias.

The future for health care in the United States will be based in great measure on employing cognitive skills to bring about prevention, chronic disease management, and overuse of the medical system. The payment system should reflect that high value.

Unfortunately, this is viewed as a zero sum game. Under Washington rules, if cognitive specialists are paid more, proceduralists must be paid less so that the presumed overall level of appropriations will be held constant. But that is the static case, one that assumes the same number of procedures will be carried out. In the dynamic case, paying cognitive specialists better so they can spend more time with patients will reduce the need for procedures and thereby reduce overall health care expenditures, even if the proceduralists are not taken down a notch.

Transparency arises in the South

Novant Health is a not-for-profit health care organization serving more than five million residents from Virginia to South Carolina. Their team recently decided to dramatically expand the degree of transparency they provide with regard to clinical outcomes.

Paul Wiles, Novant's President, said to me: "We are delighted that you are willing to let your readers know of our efforts to enhance the field with respect to transparency of clinical information."

If you go to this website and click through the various categories, you will see an honest and open exposition of how they are doing on central line infections, ventilator associated pneumonia, and other important items. They mean it when they say that they are "committed to providing clear, accurate and honest information about the quality of care we offer to all of our patients."

Here's the VAP chart, which is illustrative, too, of the presentation of quite recent data. Why wait two years for national numbers based on administrative data when virtually every hospital collects real-time data on actual clinical outcomes?


Paul continued, "Our latest quarter is now posted. We had some improvements, some the same and unfortunately some declines in our performance. With our results in the public domain we have a real incentive to make our results better."

This view is consistent with what I have said before:

Transparency's major societal and strategic imperative is to provide creative tension within hospitals so that they hold themselves accountable. This accountability is what will drive doctors, nurses, and administrators to seek constant improvements in the quality and safety of patient care.

Congratulations to everyone at Novant for making this commitment. Do I detect a movement? Will the Boston hospitals join in?

Kevin's thoughts about online MD ratings

Kevin Pho, MD, has a thoughtful article in USA Today about online ratings of doctors. Here are a few excerpts:

There are some good reasons consumers should be wary of the information they find online about doctors.

Most publicly available information on individual physicians — such as disciplinary actions, the number of malpractice payments, or years of experience — had little correlation with whether they adhered to the recommended medical guidelines. In other words, there's no easy way to research how well a doctor manages conditions such as heart disease or diabetes. That kind of relevant performance data are hidden from the public.

Objective performance data, such as how often doctors appropriately screen patients for cancer, or how many of their patients meet blood pressure or cholesterol targets, are often not revealed. They need to be made publicly available.

Mungerson Lecture

I was honored to present the 2010 Mungerson Lecture at Advocate Illinois Masonic Medical Center today. The lecture is named for Gerald Mungerson, an inspiring leader and a passionate advocate for the health and wellness of the communities he served. This included Boston, where, prior to going to Chicago, he served with distinction as General Director of what is today is part of the Brigham and Women’s Hospital. (You see his son, Andy, and wife, Cynthia, in the accompanying picture.)

As explained to me by Susan Nordstrom Lopez, President, "Each year we select the Mungerson lecturer on the basis of his or her dedication to health care and record in improving a health institution, practice or community. Like Jerry, the Mungerson Lecture balances clinical rigor with the critical need to involve lay people in understanding, supporting and improving health care."

I was asked to expand on a topic covered on this blog, "On Purpose," with a particular emphasis on the role of quality, safety, transparency, process improvement, and patient involvement in the new health care environment. Of course, this was a bit like preaching to the choir, as Advocate Illinois Masonic Medical Center does an excellent job on these fronts. Their commitment to transparency is exemplified in these posters on the various floors of the hospital, where staff, patient, and visitors can see progress on a variety of indicators and metrics.

An unpersuasive approach

It is election season, and both challengers and incumbents need to raise lots of money to compete for our votes. But there is a right way and wrong way to do it.

Several weeks ago, I received a telephone call from an incumbent in the Congress. I prefer not to mention his or her name, or whether s/he was from the House or Senate, or from which party. The person was from another state and had been in a position to influence the level of appropriations received by the National Institutes of Health.

S/he called my office asking for a campaign donation and said, "You have a large amount of NIH-funded grants. I've done a lot for you. I'm in a tough election, and I am hoping you will return the favor by contributing to my campaign." Before this phone call, we had never talked to one another.

I am grateful for the support given to NIH research by many Congresspeople. The intramural and external research carried out under NIH auspices is expanding our knowledge of disease, diagnostics, and therapies. The whole county and the world benefit from the actions of Congress in this arena.

But it just didn't feel right to receive a campaign solicitation in the context delivered by this candidate. The personalization -- "I've done a lot for you" -- suggested that there should be a quid pro quo. This is clearly at variance with the NIH grant application and approval process, which is based on scientific evaluations by peer reviewers.

It also suggested that there was some kind of unwritten contract between this legislator and me, one to which I was an unknowing party. No one likes to be told that they owe someone in this fashion. I found it unpersuasive, and offensive.

Doctors supporting doctors

A couple of years ago, I wrote a post entitled "The Shame of Malpractice Lawsuits," in which I tried to evince some sympathy for how doctors feel when they are sued. I wrote about a friend, saying:

Even though she knew that she had done nothing wrong, my friend's main emotional response to the lawsuit was that she was ashamed. She did not want anyone to know about the case -- whether colleagues in the hospital or social friends. . . . As I talked to other doctors, I learned that this was a common reaction to such lawsuits. Another friend talked of the scars left from a case 20 years ago. He was found not to be at fault, but he could still vividly recall the weeks of shame he felt while the case proceeded.

There was a large response from readers but, in my mind, they sometimes missed the point. The post was simply to express empathy for the suffering felt by doctors who are accused of mistreating their patients.

Today, I learned about an approach being taken and Brigham and Women's Hospital that is meant to help address this in a simple and elegant fashion. There is a group of a dozen BWH doctors who have faced malpractice lawsuits during their career. When they learn that a fellow member of the staff has been served with a lawsuit, they simply write the person a letter saying that s/he should feel welcome to contact any of them to talk about how they feel. The idea is just to let the accused person know that there are others who have gone through the process who are there to help. Of course, they are careful never to talk about the merits of the case or other matters that would jeopardize its legal standing.

I think this is an excellent and thoughtful idea that could easily be copied by others and am pleased to share it for that purpose.

Soccer net bags a turkey vulture

Now really, how can you print a story like this and not include a picture?

The Unseen Sea

A friend from the Bay Area sent a link from NPR containing this video. I found the second half particularly engaging, as the fog laps up against the hills like the ocean against the shore. Here's an excerpt from the link:

Simon Christen lives in Oakland and has been pointing his camera across the bay at San Francisco for the past year, taking time-lapse photos of the city. "About halfway through the project, the fog became the main subject," he writes in an e-mail, "and I tried to find locations to highlight it."

The Unseen Sea from Simon Christen on Vimeo.

Good food

Here's a story on WBUR radio about a friendly competition among health care chefs in the Boston area. It took place at the 90th anniversary celebration of the Massachusetts Health Council last week.

Listen to the show to get the name of the winning chef. I'll provide a hint by saying that you would have to be above a certain age to be eligible for his meals.

Research matters

With all the attention on clinical matters, it is easy to forget that a substantial portion of the role of academic medical centers is related to research. Here at BIDMC, over 1600 people are involved in research. These include principal investigators, other research faculty, fellows, technicians, and students. We have about 400 thousand square feet of research space under management, some owned by us and other leased.

The chart above shows our research activity in dollar terms over time, compared to the trend in NIH funding during the same period. In contrast to the highly competitive aspects of clinical care in the Boston market, there is a good amount of cooperation on the research front. Many projects are multi-institutional in nature.

One such program is the Dana Farber/Harvard Cancer Center, which brings together researchers from Dana Farber Cancer Institute, MGH, Brigham and Women's Hospital, Children's Hospital, BIDMC, Harvard Medical School, and the Harvard School of Public Health. Among other things, this program facilitates the availability of clinical trials of new cancer therapies to patients in the member hospitals.

Of course, we are properly expected to administer these trials in a way totally consistent with all rules and regulations. We recently concluded that we were not doing so with regard to some issues of documentation and reporting. Although there has been no indication that these mistakes had any impact on patients, we temporarily suspended enrollment until we can remedy the problems. As noted in this Boston Globe story by Liz Kowalczyk, we

. . . expect most of the trials to open to new patients within weeks — a half dozen already have — once investigators and support staff have completed additional training on compliance with trial rules and proper documentation of progress and results.

Fortunately, too, during this period, new patients will still have access to trials because of the multi-institutional aspect of the research program.

Hospital officials said about 25 cancer patients a month typically enroll in trials, and most who need access to experimental treatments before a trial reopens would be referred to another Harvard hospital that is part of the cancer center.

It just costs too much

Stuart Altman and I were invited to share the podium as lunchtime speakers today at the New England-Israel Business Council's 2010 Life Sciences Summit. The Summit is designed to foster relationships between the life science industry, research, healthcare and the investment community in New England and their counterparts in Israel.

We had not really coordinated our talks beforehand, but we ended up with similar themes. Stuart starting out by reminiscing about one of his first jobs, when he was warned that if the then-current 7.5% of GDP represented by health care spending increased to 8.0%, a disaster would be befall the country. Of course, it is now over 17%. He explored the trends that have led to this and suggested that the higher prices of US medical services accounts for a significant portion of this result.

He concluded by advocating for a change in the current fee-for-service pricing regime and for implementation of the Accountable Care Organizations envisioned in the recently passed US health care bill. Turning then to specific concerns of the audience, Stuart suggested that there will be pressure to limit the use of drugs that are not cost-effective and that the pharma and device industry will be incented to produce products that enhance quality and improve efficiency.

My talk centered on topics familiar to readers here. I touched on the marketing-driven success of certain products whose clinical efficacy has yet to be found superior, and yet whose costs inflate the overall health care budget. I challenged those firms in the audience to focus on innovation that has the potential to reduce the cost of health care delivery.

Tactical update on SEIU

It's been a while since I have provided an update on SEIU's corporate campaign against BIDMC and on its attempts to organize the health care workers in this city. For those who were away on Labor Day, you might have missed this interview by Bob Oakes on WBUR with the local head of the union. The blog post to which Mr. Oakes refers is this one.

What is striking about the interview is to compare the broad agenda set forth with actual actions by SEIU. Whereas the past several years have been characterized by spending hundreds of thousands of dollars disparaging BIDMC; there has been virtually no activity with regard to the other hospitals mentioned, those in the Partners Healthcare System.

There has been a theory circulating around town that this tactical decision to avoid MGH and Brigham and Women's Hospital might have its origins in the personal relationship between the former head of the SEIU and the Chief Operating Officer of PHS, who served as an Deputy Secretary of Labor under President Clinton. Will SEIU's reluctance to take on the PHS hospitals be put aside now that Mr. Stern has left the SEIU and the COO is leaving Partners?

The secret of quality is love

A friend forwarded this link to a wonderful interview between Bob Wachter and Peter Pronovost, and appended the following note:

Check out the quote below; wow! (Bold mine)

'.......that to some extent Donabedian had it right when he was interviewed on his deathbed and asked what the secret of quality is. He said the secret of quality is love. Because if it's not in your heart and if you don't truly believe that this is the right thing to do, and there's a humbleness that I'm human, we're never going to make progress on infections.'

Man bites dog! Four candidates agree!

Gubernatorial politics in Massachusetts is pretty competitive, so it is something to note when all four candidates agree on something. The Greater Boston Interfaith Organization gave the four competitors such a forum last night. They all agreed that they were in opposition to two pending ballot questions, one which would repeal the state's affordable housing law and one which would roll back the state's sales tax.

Here's their signed statement:

Misdirection?

Is there a subtle, but important bit of misdirection going on in the description of the new role of Caritas Christi as it moves to for-profit status under ownership by Cerberus Capital Management? Such may be evident in this piece by Martha Biebinger on WBUR.

As you read or listen to this story, you might think that the firm is attempting to take on Partners Healthcare System. That is highly unlikely, for several reasons.

First, the Caritas community hospitals are not in areas served by PHS community hospitals. Their targets of opportunity, as I have noted here, are the physician practices and the independent community hospitals in those regions.

Second, the Cerberus system will need access to high level tertiary and quaternary care for those patients who need more advanced treatment than that available in the community. While St. Elizabeth's Hospital can handle some of those patients, it lacks a number of the really high-end clinical services (e.g., solid organ transplant.) It would be too expensive to create these services at St. E's.

What factors will come into play in seeking the affiliation for high acuity cases? Reputation and price. Inclusion of one or both of the two flagship PHS hospitals would have marketing value to the Cerberus accountable care organization. But what to do about the fact that the PHS hospitals and doctors have the highest rates in the region? Answer: Because of its overall financial position, PHS has the ability to shift costs to offer discounts to secure these referrals.

That misdirection may be in the works is prompted by two parts of the story:

First, a quote from the Caritas CEO:

Hospitals that compete with Caritas say that with an infusion of cash the chain could buy up local physician practices and refer all their patients to the nearest Caritas hospital. There is also speculation about which failing hospitals Caritas may buy to expand its network and market power. De la Torre shrugs at the suggestions. “We’re not looking to do it; obviously if a hospital in need is there and it works out, fine. . .

Next, a quote from a PHS official:

“The more competition in the marketplace, it’s better for the patients and better for the consumers, so that has been our general philosophy over the last few years,” says Partners Chief Operating Officer Tom Glynn.

Both of these are so obviously at variance with prior behavior that the only question remaining is whether the quotes have been coordinated.

If so, this hopeful thought by an insurance company executive may be wishful thinking:

“If there’s real competition between two high-quality systems, there’s a better chance of holding down the costs.”

Go back to the chart in Attorney's General's report on payment disparities. You will note that the Caritas hospitals get paid more than their community-based competitors. And, of course, likewise for the PHS doctors and hospitals.

Are we instead witnessing the creation of a new duopoly, where the chance of holding down costs over time is illusory?

Deserving of those medals

Riding my bike today on a windy but beautiful fall day, I passed this familiar statue by Rich Muno of Johnny Kelley and Johnny Kelley, Boston's "Marathon Man." He is depicted at age 27, when he first ran the race, and at age 84, when he finished his 58th marathon. He won in 1935 and 1945, finished second seven times, and finished in the top ten eighteen times.

The statue is in my neighborhood, but I had never before noticed the medals around the Johnnys' necks!

A Night of Mischief

Looking for something to do on Halloween? Our Future Leaders Group has organized this "Night of Mischief" at W Boston on October 30. Tickets are available here.

It sounds devilish. Consider yourself warned.

Hospitalists as extensivists

I had heard something about this, but couldn't find it. A colleague here finally tracked it down. The story is about Caremore, a California based organization. Hospitalists generally are internal medicine doctors based in the hospital; but here they care for frail elderly members at high risk of hospital admission or readmission in skilled nursing facilities and in outpatient settings both before and after a hospital stay. Here's an article on the AHRQ Innovations Exchange website.

An excerpt:

A Medicare Advantage plan expanded the role of its employed hospitalists, using them to continue following and caring for recently discharged members until their condition stabilizes, as well as other members at high risk of a hospital admission. Known as "extensivists" and supported by sophisticated information technology (IT) systems, these physicians generally split their time between the hospital, where they round on a small group of members each day, and an outpatient clinic, where they see recently discharged members and other members at high risk of an admission. Once or twice a week, these physicians also see members in SNFs.

The results:

The program reduced readmission rates and has led to low LOS (lengths of stay) and to below-average inpatient utilization in a high-acuity population.

Is this worth considering more broadly? What are the conditions for success? I welcome your thoughts.

Enid gives a gift on her birthday

Enid Shapiro was trained as a social worker, worked for years in that profession at the Beth Israel and BIDMC, and tonight she celebrated her 85th birthday by announcing a generous gift to our hospital. You see her here with daughters Amy and Laura and son Robert, but at the party she was surrounded by dozens of others, an extended "family" of people whose lives she has influenced.

Jane Matlaw, our head of community relations, reminisced and explained about the gift:

Thank you all for coming to this amazing birthday party honoring someone who is known and loved by so many . . . here in Boston, in many cities across the US, all over Israel and in many other parts of the world as well.

I met Enid Shapiro in 1977 when we were both on the board of what was then Area II Home Care in Roxbury. We became instant friends in addition to being social work colleagues. Enid was a force -- so smart, so outspoken and such an advocate for those who could not advocate for themselves. In the 33 years since I met her none of that has changed, and she certainly has not slowed down. I, like many others have learned so much from Enid.

While we were on the board of Area II Enid was diagnosed with breast cancer. Her attitude and strength and her faith in her medical providers at BIH (some of whom are here today) were extraordinary. Enid dealt with the news, went through the treatments and barely missed a beat. She took my breath away. In fact, she is the only woman whom I have met who liked her wigs so much that she decided to keep wearing them into and beyond her second breast cancer diagnosis in 1995 and still looks stunning in them to this day!

Enid has worked on many important social justice issues, and served on many boards and committees. From genetic privacy to the needs of elders; from Muslim/Jewish relations in Boston to Arab/Jewish relations in Israel; from helping organizations that she is passionate about including Keshet, NASW, Hadassah, JCRC, Kit Clark Senior Services, The Abraham Fund, Temple Sinai, The Brookline Literacy Project, Hebrew College, the Boston Opera Company and many, many more.

And, in her 85 years, she has more institutional memory and knows more of the history of many, many issues and who was involved in them than just about anyone I know. She even outlasted a few governors on the Governor’s Advisory Council on Aging.

But the bottom line is always about the people -- bringing people together to help understand different points of view, to help shape policy, to support a worthy cause or to take action together for the greater good.

And dayenu, all of this would and could have been enough in one heck of a productive life. But a few months ago Enid began thinking about doing even more, and in a big way. She told me that in appreciation of all of the extraordinary care she has received at BIDMC over the years, she wanted to make a gift, but she did not know exactly where it should go. It did not take long to figure out how to marry three loves of her life together: BIDMC, social work and Israel. So starting with a generous donation from Enid and the money that you have all contributed in honor of her 85th birthday, we are able to launch The Enid Shapiro Endowed Fund for Social Work Exchange. This fund will create a social work exchange program between social workers at BIDMC and Rambam hospital in Haifa, our sister city in Israel. We are truly indebted to Enid for this generous and meaningful gift which will, in the spirit of Enid, promote the understanding of many cultures in Boston and in Haifa.

On behalf of BIDMC, I thank you for this generous gift that will continue to open the eyes and improve on the skills of social workers across the globe to bring the best of care to all of the patients they will touch.

On AA#109

I have noted, from time to time, how remarkable it is that the economists’ Law of Comparative Advantage comes into play. For example, you look at a label and find that your bottle of apple juice has constituent juices from around the world. But sometimes the reach of this law just hits you and you say, “It can’t be so.”

The latest example occurred for me en route to Boston after my visit to The Health Foundation in London. I had just read an article in The Economist about China’s trade surplus vis-a-vis the United States. A meal was served and I saw that my 100% polyester cloth napkin -- approximately one foot square, plain white with a machine-hemmed edge -- was manufactured in China (see label above).

I admit to being an unabashed patriot when it comes to buying American. In my personal purchases, I look for opportunities to find products comparable to the imports and am willing to pay extra to help save jobs for our citizens.

I know, however, that airlines have to be less sentimental, especially given their scanty profit margins. American Airlines flies all over the world and presumably has the ability to get the best price on a bulk purchase of cloth napkins, and it apparently found that deal in China.

But I have to wonder. Is there no textile manufacturer anywhere in the United States who could have met the quantity, quality, and price requirements of this buyer for this simple product? As there are two parts to this transaction, two questions arise: How hard did AA look? How hard did the US manufacturers try?

In contrast, the olive oil salad dressing for my meal, appropriately, came from Italy. When it comes to food, the Italians always have a comparative advantage.

But, OMG, the small tubes of Colgate toothpaste in the airline’s vanity kit were from Thailand!

Visiting The Health Foundation in the UK

Please meet my new friend Alanna Rodrigues, who greets you as you enter The Health Foundation in London. The Foundation is an independent charity working to continuously improve the quality of health care in the UK. Its purpose:

We want the UK to have a healthcare system of the highest possible quality -- safe, effective, person-centered, timely, efficient and equitable. We believe that in order to achieve this, health services need to continually improve the way they work.

I was a guest this week to join a group discussion about a new case study prepared by the foundation summarizing the evolution and implementation of BIDMC's quality and safety and process improvement programs. The group comprised leaders from a variety of health care institutions throughout the UK. We engaged in a detailed discussion of BIDMC's experience and how it might or might not be applicable in other settings. There was particular interest in our approach to transparency of clinical outcomes and how that transparency helps an organization hold itself accountable to the high standards of patient care it has adopted.

The discussion group was chaired by Martin Marshall, the Foundation's Clinical Director and Director of Research & Development. He is seen here, with Olu Orugun, Clinical Director of the North Cumbria University Hospitals NHS Trust, and Harriet Hunter, Head of Improvement and Innovation at the Scottish Health Department. Olu and Harriet are also part of a group called "Generation Q," a select group of people from the four UK countries who spend 18 months in intense training and group activities to learn the latest in process improvement philosophy and practice. Participation in the program is fully funded by The Health Foundation after a very competitive application process.

The Foundation is also expanding its web activities. Here you meet Bobbie Lakhera, communications assistant, and Tara Champness, web editor, who are engaged in those activities. The case study will be on the organization's website in early November. We all hope you find it helpful in your own settings. In the meantime, you can peruse the Foundation's blog, authored by a variety of staff members, here.

A new wave in Massachusetts

Several days ago, the Attorney General released her report on the issues surrounding the acquisition of the Caritas Christi hospital system by a private equity firm, Cerberus Capital Management. In a very thorough review, the AG found that the acquisition was in the public interest, providing that a certain number of conditions were applied to it and to the operation of the system in its new for-profit manifestation.

Several days later, the Boston Globe editorial page opined that the AG had imposed insufficient conditions on the transaction.

While the Globe editorial writers might be justified in some of their sentiments, they are incorrect in their overall conclusion. There are limits as to what the AG could have ordered in this case. As a matter of business and finance, she went as far as she could go, assuming that she wanted the transaction to proceed. And given the financial realities of the situation at Caritas Christi and the likely benefits of the acquisition, she had good reason to want the transaction to proceed.

Now, however, comes the fun part -- for those who define “fun” as watching a sector turned topsy-turvy. For that is what is likely to happen.

What has changed? Well, we now have a new entrant in the Massachusetts health care marketplace, one whose rules of engagement and incentives are quite different from the non-profits that have operated in the state for decades.

For one thing, Cerberus has cash to invest. The only other hospital system that has cash is Partners Healthcare System. But Partners is already under review from government antitrust officials. It is severely constrained with regard to acquisitions and other expansion of its hospital and physician network.

Partners, too, has to recognize a new reality with regard to future revenue streams. Its ability to use its market power to demand disproportionately higher reimbursement rates from the commercial insurers has been dramatically eroded by public reports, hearings, and legislation that have presented and will lead to greater disclosure and transparency of payment rates. While PHS can benefit for a couple more years from previously signed contracts, the likelihood of receiving equally generous ones in the future is diminished. The general trend in the state will be towards a greater equalization of payments. Meanwhile, too, payments from Medicare and Medicaid will no longer rise at historic rates. Also, NIH funding of research following the expiration of the federal stimulus program will level off. Thus, in planning for the future, PHS will have to harbor its resources more carefully.

For another thing, Cerberus is likely a short-term player in the market. It now has explicit recognition and approval from the AG of a business strategy that consists of flipping its Massachusetts investments in a few years. Whether through an IPO or sale to another private equity firm or leveraged buyout by its senior management group, the business model of private equity is to get in and get out quickly, providing a return to its investors within a time frame promised to them when they chose to invest.

So, Cerberus has an interest in burnishing the profile of its Massachusetts portfolio to get ready for that future set of transactions. How would you use your cash to do that?

The likely answer is to expand the reach of the system so that it can have a higher likelihood of a greater market share. While insurance payment rates may become more equalized over the coming years and no longer reward the previous form of market power, the new health care environment of Accountable Care Organizations and global payments will reward those systems who cover more patient lives. There are two ways to cover more lives: (1) have more primary care practices in your network and (2) have more community hospitals in your network.

The loci of such activities are likely to be those communities served by both a Caritas hospital and another hospital. Even before the Cerberus transaction achieved the latest level of state approval, both paths were being foreshadowed by Caritas management. Over the coming months, we can expect Cerberus to use its cash resources to purchase community-based primary care practices in the hope of shifting volume to the Caritas hospital in each community and away from the other one. There is no way the independent non-profit, often cash-strapped, hospital in town will be able to afford to offer its current physician groups the attractive purchase options Cerberus will be able to pay.

We can also expect Cerberus selectively to use its cash to acquire the other hospital in town. That, of course, will be easier if that hospital has suffered, or fears to suffer, losses from the exodus of key physician groups. Whether its goal is to reduce costs by consolidating services between the two hospitals or close down the other to enhance the Caritas facility, Cerberus will find itself with a larger portion of the community’s patient base.

Note that this strategy does not require major expansion of a Cerberus-owned tertiary base, which would be a very expensive proposition. Tertiary hospitals in the ACO world will lose their Ptolemaic hold on the health care system. They will provide service to ACOs and will have to compete for the privilege of doing so.

As long as Cerberus adopts this approach in a careful way that does not run afoul of anti-trust concerns or other legal prohibitions, its plan can be carried out in compliance with the Attorney General’s conditions and, indeed, in a manner consistent with sound business practice. What makes the situation so different from the prior environment is that no other player in the Massachusetts market has had the resources and incentives to adopt this business strategy.

First bend in the health care cost curve

Recent trends in radiology imaging portend a dramatic and rapid reduction in this segment of a hospital's business plan. Even before capitated (or global) payments have come into full play, there has been a large reduction in the number of some types of imaging studies in hospitals.

Our Chief of Radiology summarizes our experience -- common to other hospitals as well -- and provides some of the reasons.

The biggest hit has been in CT, the modality we are most dependent on for revenue. We are about 10% down in CT cases from last year, due to a combination of patient and physician fears about radiation exposure, more prudent ordering of studies by physicians, leakage out of the medical center, and the introduction of physician incentive programs (to minimize the amount of imaging) by some insurers.

Also, and very surprising, we have not seen an upswing in ultrasound or MRI to match the CT volume drop. We have, however, seen an increase in the number of patients arriving with their scans on CD ROMS having been imaged at other lower priced vendors. We don't bill for these interpretations even though we are frequently asked to reinterpret the studies for our clinicians, and BIDMC is paying to store these images on our PACS systems.

By the way, this occurred while our overall patient volume increased during the same period.

The result of these trends will be to reduce the number of radiologists working in hospitals, and there will also probably result in a reduction of salaries for this physician specialty.

How St. Thomas got flamboyant

My friend Sonya, who lives in St. Thomas, Virgin Islands, told me this story about someone who might be distant relative of mine and hers, too -- Jack Monsanto -- and Ariel Melchior, Sr., founder of the VI Daily News (photo at right).

It is about flamboyant trees. These are native to Africa, but it is now taken for granted that you can find them all over the hills of the interior of St. Thomas. Such was not always the case.

Decades ago, there were several of the trees that had been planted in the settled part of the island along the coast. In 1947, Melchior offered 10 cents a pound for kids to collect the seeds, and they brought them to him in droves. Some reportedly had rocks in their bags to make some extra money! Jack had an air taxi business with a Piper Cub, and Ariel hired him to fly over the island, scattering the seeds as they flew.

Addendum from my sister, our family geneologist:

Jack (actually Jacob) was our 3rd cousin twice removed; our great-great-great-grandmother Rebecca Mendez Monsanto was the sister of Jack's great-grandfather Jacob Mendez Monsanto.

See this entry:

The Mendes Monsanto family has had its roots in St.Thomas since 1792. Jacob Alfred Theodore Mendes Monsanto was born January 1918 to Jacob Alfred Mendes Monsanto and Adelaide Alice Boschulte. Due to the Great Depression, he was not able to complete High School and is largely self educated.

Wor.Bro.Jack Monsanto has worked for the West Indian Company, served in the Merchant Marine in WWII and is a licensed Captain, has been Harbor Pilot, owned a dry cleaning plant, is a licensed airplane pilot and owned VIP Airways one of the first airlines in the Caribbean, served as Commissioner of Public Safety and Executive Director of the Virgin Islands Port Authority.

It was his vision and leadership that led to the development of the modern airport that we now enjoy on St.Thomas. He is active in Rotary, Freemasonry, Friends of Denmark, enjoys traveling and surfing cyberspace.

Cyberspace!

Dear Coach

Dear Coach,

I was refereeing your team's game yesterday afternoon in the Natick Columbus Day soccer tournament. (This was eleven-year-old boys.) You didn't like one of the calls I made, the one awarding a penalty kick to the other team. You demonstrated this, first, by throwing your clipboard energetically on the ground and yelling. Even after the kick was taken -- and missed -- you loudly yelled out to me across the field in complaint.

As the game proceeded, you proceeded, in word and deed, to let your team know how often you disagreed with my calls.

Here's what I noticed on the field. Your little boys, in their own way, followed your lead. And why wouldn't they, in that you had modeled the behavior so clearly? Every time they felt aggrieved by a call, or by the lack of a call, they would mutter to themselves or sometimes to me. While they did this, they would stop playing, giving the other team an advantage.

So, dear coach, you succeeded in weakening the resolve and effectiveness of your own team. Plus, you taught the boys a really bad lesson about sportsmanship and politeness.

Another lesson, by the way, is that the referee is always right, even if s/he has made a mistake: A player never wins in the long run by dissenting. If children are to be effective players as they grow older, it is best to learn that lesson, too.

These are small children who have come to kick a piece of leather around a field, build skills, and have fun. You are supposed to set an example for their behavior. Please try harder today when you come back for the second day of the tournament.

P.S. I was also embarrassed by the fact that you live and coach in my home town.

She Fedex'd it!

@adrane askes on Twitter: "What's the going rate for a first tooth lost?"

Reminded me about our daughter, Sarah, now 27:

When she lost one of her last teeth, I had forgotten to slip the money under her pillow. It was morning, and I feared waking her up if I tried to do it. So I took a Fed Ex cardboard envelope and left it leaning against her bedroom door with a dollar in it, addressing it to her from the Tooth Fairy.

When she awoke, she found it and said with wonder: "She Fedex'd it!"

Thanks again, MWPC!

When you are in this kind of CEO position, you are often invited to receive awards. If you look at it cynically, you could think that an award is offered because the sponsoring organization hopes that lots of people will want to be seen by you at a fund-raising dinner to benefit the awarding organization.

But I have always viewed these matters in a less cynical manner because the awardees chosen ultimately reflect back upon the organization and what it stands for. So, the organizations are selective in whom they honor. Therefore, it is a lovely thing to be recognized, especially if the sponsoring organization is one you highly value. I was recently reorganizing my shelves and had a chance to look over several that I have received over the last few years.

My absolute favorite is the "Good Guy Award" from the Massachusetts Women's Political Caucus, both for what it means and for what it supports. I look forward each year to MWPC's selection of "Good Guys." Here is a summary from the website:

The Massachusetts Women’s Political Caucus introduced the Good Guys Awards in 2002 to honor men who demonstrate an ongoing commitment and partnership in achieving equality for women. These awards recognize that our goals of attaining parity in politics and equality in American society can only be reached through the concerted efforts of men and women in all areas of professional life. The money raised at the Good Guys Awards is used to fund the programs of the Massachusetts Women’s Political Caucus Education Fund.

When I received this award back in 2005, my speech mainly consisted of individually recognizing the dozens of professional women in the audience from the public and private sectors who had been my mentors, advisers, and supporters during a multi-decade career at the state Energy Policy Office, Department of Public Utilities, MA Water Resources Authority, and BIDMC. While I may have been helpful to many of them, I truly owed them much more than I gave them. So the event was more a chance for me to say "thank you" than to be honored. In that respect, too, it was a special day for me.

The cath lab goes Lean

I had a chance yesterday to get a presentation on the use of Lean process improvement techniques and philosophy in our catheterization lab. This is a very busy place where diagnostic and interventional cardiologists string catheters through people's blood vessels to evaluate the extent of cardiovascular disease, open up blockages, and extend lives.

Tech Kenny Lee and nurse Eric Harrington, along with Kimberly Eng from our Business Transformation group, led me through the analysis that has been done of the current state and the proposed future state. There will be dramatic improvements in the quality of people's work day as a result. In addition, staff and patient safety in and around radiation-rich areas will be enhanced. There have already been substantial improvements in inventory control, too, leading to major cost reductions. The renovations of the space and continued reorganization of supplies and equipment designed during the Lean process will take place in the coming weeks.

Here's a video tour. If you cannot see the video, click here.

Let us go forth, then, together

We held a "Latino Achievement Award Celebration" today to recognize the contributions and accomplishments of this large ethnic and cultural group in our community. The three people recognized were Ines de la Cruz, Dr. Leonor Fernandez, and Dr. Alvaro Pascual-Leone (seen here).

Each of the awardees gave a lovely talk to the audience, but I wanted to share Leonor's with you. She is a doctor in Healthcare Associates, our hospital-based primary care service. I include much of the text below, but I urge you also to watch the video below to get a better sense of the quiet power of her delivery.

I salute the true commitment to egalitarian quality health care at BIDMC evidenced in the many large and small decisions made daily by Russ, Paul, Jim, Tom, Mark, Louise, and many others here.

It is as a result of many of those decisions that I can spend a morning in HCA seeing, for example, a Columbian post-doc student with the flu; an elderly Iranian woman with heart failure; an intelligent Salvadoran woman with little formal education, who proudly tells me that her daughter is about to start college. I may see a wealthy middle aged Irish American man whose liver is failing due to hepatitis C, and a fit African American young lawyer with hypertension.

Without missing a beat, our team will triage them and treat them with equal respect and dignity. An interpreter will arrive on time to help us. If admitted, they will go to the same floors and be cared for by a dedicated and skilled group of nurses, hospitalists, social workers, techs, and food workers. They will be evaluated by a spectacular team of medical residents.

As one of my favorite poets, Jane Kenyon, has said, “It could be otherwise”.

Our ability to give intelligent, appropriate, and compassionate care will be tested, however. It will be tested by competing demands: by the complexity of therapy, by reimbursement structures, and by the pressures to do ever more in less time.

Our appreciation of cultural diversity and our commitment to egalitarian care is what will guide us. It must be our compass as we navigate the challenges of building systems and personnel that will enable each of us to give our best effort. Systems that support and ensure, for example, that we routinely speak to a patient –whether inpatient or outpatient—in a language they understand. Without continued attention to quality where the rubber meets the road, our best intentions run the risk of getting dropped, submerged into irrelevance by the more immediate pressures of our daily work.

I am proud to be a Latina, even if it is hard to define precisely what that means. Latin-America is a diverse continent, with a complex history flavored by the many cultures that emerged from sometimes violent collisions and from creative synergies. Cultures built on the legacy of Spanish Colonial times, the echoes of many ancient civilizations. Economies built on slavery and hard work, arrivals of newer immigrants, and the ever present influence of the powerful neighbour to the North. Latin American culture encompasses so many peoples, races and climates that it is as challenging to define it succinctly as it is to define a "U.S. culture".

And yet the word Latino retains meaning. I am honored and moved by the special affection and the warm words I feel and receive from Latinos in the cafeteria, from my patients, or from my colleagues here Alvaro and Ines. There is a recognition, an almost instant bond. It comes from a real love for the Spanish language, a sense of nostalgia or “saudade” (as the Brazilians would say) for a certain way of expressing affection, and perhaps from a shared sense of “otherness”—an implicit awareness of the daily struggle that so many face through language barriers, stereotype, or economic hardship. We may not each face all those barriers, but we bear witness to them, and we feel kinship.

The US is an incredibly inclusive and creative country. When I travel I find myself even more appreciative of the ability the U.S. has had to integrate so many peoples. But the US retains an ambivalence towards immigrants and towards other languages. These fears predictably raise their heads with every economic downturn—from Phoenix, Arizona, to Boston.

On the day after Sept 11, the French newspaper Le Monde published the headline, “We are all Americans”. The worldwide feeling of solidarity, of people standing with us, was palpable and deeply moving. That spirit of solidarity, that capacity to say, “I care about you--I respect you and stand by you,” is alive and well here at BIDMC. Through this award, we too say: “We are ALL Americans. We are all Latinos”.

Let us go forth, then, together.

If you can't see the video, click here.

Where are the efficiencies?

The head of the Massachusetts Association of Health Plans often asserts that the underlying rise in medical costs is the main contributor to rising health insurance premiums in the state. As often noted here, such costs are important and cannot be ignored.

However, she seems to have overlooked a really interesting chart in a government report. Look here, on page A-10.


Golly, we see an average annual increase in the administrative costs of Massachusetts insurers of 9.3%. How can this be the case? In other financial services industries, unit costs of transactions have gone down, not up. What is it about health care that suggests the opposite should be the case?

Bonuses to deserving workers

Several weeks ago, in recognition of better-than-expected financial results, we partially repaid our staff who had given up raises and benefits during last year's hard times with a one-time bonus. These thousands of people had made sacrifices last year to save the jobs of their fellow workers and to offer special protection to the lower wage workers in our hospital, sacrifices that received national recognition. (See here and here for examples.)

Now, one gubernatorial candidate is criticizing us for this action. (Full disclosure: I am supporting another candidate.) If this one would have inquired, he could have received a copy of the email that we sent out to several thousand of our people. Perhaps, then, he would not have been so critical.

Here's the email, dated September 8. Following the email, I present representative responses from several of the staff members. You be the judge.

Dear BIDMC,

Last year, in a terrific outpouring of mutual support, thousands of you gave up salary increases and benefits to help save the jobs of hundreds of people and to offer special protection to people in our lower wage categories. This action received national acclaim, as the country recognized the sense of community and family here at our hospital.

Over the past several months, as our finances improved, I followed your collective guidance, gradually restoring salary increases, 401(k) matches, and earned time accruals. Back in July, we discussed things with our Board of Directors, and they agreed that, if finances allowed, we should do something more to help make up for some of what was taken away from you.

Things have worked out along those lines, so I am now pleased to send you this note. As a result of very tight expense management and strong patient volumes, we are running ahead of our expected budget for this fiscal year, which ends September 30. Just as we shared the sacrifices last year, we want to share with you this year’s strong financial performance. To thank you for your past sacrifices and to make up a small portion of them, we will be distributing a special one-time bonus to you.

Here's how it will work. The bonus for full-time staff working 30 or more hours per week will be $500; for part-time staff working 20 to 29 hours per week, it will be $250; and for those working 8 to 19 hours per week, it will be $150. To be eligible, since this is meant to thank those who sacrificed last year, you need to have been working here since January 1. This bonus does not apply to students, temporary employees, employees on leaves of absence, or employees who are not in good standing. Like all income, the bonus is taxable, so taxes will be withheld.

The bonus will show up in your paycheck on September 23 (but only if you are still working here on that day.) You don't need to do anything special to make this happen. You have already done something special.

That’s the good news. We work in fiscal years here, so the results from one twelve-month period do not necessarily give a signal as to what will happen in the next year. The bad news is that we expect FY 2011 to be particularly hard financially for all hospitals, including BIDMC. Given what we already know about planned cuts in Medicare and Medicaid, we cannot plan on our strong results from this year to continue next year. Meanwhile our costs (everything from clinical supplies to food to parking to health insurance) will increase. We will all have to continue to manage through those realities.

But for today, we simply want to recognize that our financial results this year are better than we had planned, and to share that with you.

With my thanks, that of all of the Vice Presidents in our senior management team, and of our Board of Directors,

Paul

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Thank you so much Paul! It is nice to know our sacrifices were not taken for granted. Thank you again for your kindness!

My husband lost his job almost 2 years ago...Every little bit helps...Thanks...

Thank you so very much Paul! It is so needed by so many at this time, it will be greatly appreciated by many I am sure. Your outstanding generosity with the help and guidance of the board is very charitable and will not be forgotten.

Thank you very much. You have no idea how much this helps me.

Thank you so much, Mr. Levy and Board of Directors. A very nice surprise.

Thank you very much Paul…what a wonderful gesture. It is a privilege to work at this great organization!!! I'm so glad that we were able to get through some rough times.

You can not imagine what this email did for the moral of our staff in radiology @ Lexington and Chelsea. We appreciate all that you have done to salvage jobs, while keeping constant communication. Thank you again.

This is very generous and thoughtful. I appreciate it and I know so many others will. Everyone can certainly use a little extra cash these days.

Management and staff of Mail & Motor Services would like to say thank you to all involved, Much appreciated.

Thank you for making my day & reminding why BIDMC is a great place to work!

Thank you for this wonderful email, you just made my daughter's day as well. Now she can enroll in Driver's Ed.

WOW!!! I have a daughter at Brandeis, this will help pay for her books...

I cannot tell you how much this seemingly benign gesture means to me. From the bottom of my heart, thank you. Given that me and my paycheck just started at BC yesterday (omg, what was I thinking.....), this is greatly appreciated.

I was utterly transformed

I was utterly transformed by the power of the patient’s . . . perspective on what mattered most in care and I could see that this was a strength that we were denying ourselves as executive leadership.

This quote is from Pat Sodomka, who died early this year, and is retold in this post by Ted Eytan. More here, too, from Jim Conway.

Ted asks:

It’s possible for any hospital to enjoy the breakthrough performance that MCG has through the lessons learned from Pat’s legacy. I’m looking forward to it. . . . [W]ho wants to join?

We're trying, Ted. Stay tuned.

When exuberance fades

Two recent articles attracted my attention. Will the current low interest rate environment lead investors to vehicles that take new types of implicit risk to generate returns in a yield-hungry marketplace?

The first was in Bloomberg Businessweek and was about university endowment funds that had been put in high-risk, high-return portfolios. Some of those schools have had to issue large amounts of taxable debt to fund their working capital (i.e., to meet payrolls). An excerpt:

The loans and interest are the continuing price the colleges are paying for embracing the endowment investing model pioneered by Yale’s David Swensen. The approach produced market-beating profits by loading up on real estate, private equity and hedge funds. During the worst collapse of credit since the Great Depression, the reliance on hard-to-sell assets left them short on cash both to meet investment commitments and run their campuses.

“They thought they were terribly clever and they took those risks and now they are paying for them,” said Andrew Hacker, professor emeritus of political science at the City University of New York’s Queens College.

The second was a New York Times article about the techniques used by private equity firms under certain market conditions. Some excerpts:

As deal activity has picked up, some private equity firms are turning to transactions whose merits have come under some criticism from their investor base.

Among them are so-called secondary buyouts, which involves passing a company from one private equity firm to another. There have been a flurry of these transactions this year, amounting to a record 25 percent of the value of all private equity deals....

These deals hold great appeal in the private equity ecosystem, allowing sellers to book profits and buyers to deploy their billions of dollars of unused capital.

Investment banks, meanwhile, earn big fees on these deals by advising and lending money to finance the transactions.

Secondary buyouts also tend to be more expedient than the traditional route of an initial public offering, with its regulatory hassles and the vagaries of the market, or selling to a publicly traded company whose shareholders may object.

But secondary buyouts have a mixed reputation among private equity investors. The world’s largest private equity firms share the same investor base: American public pension funds and foreign countries’ investment vehicles, or sovereign wealth funds. In some instances, these investors are selling a company through one private equity firm and buying it — at a higher price — through another firm.

...Mr. Dear, Calpers’s chief investment officer, said he had mixed emotions about the Vertafore deal and other similar ones in his portfolio.

“We still have exposure to the company but at a higher valuation,” Mr. Dear said. “To me this isn’t a sign of strength in the private equity business, but more a sign that firms must commit their capital before their investment period runs out.”

Joint Commission report

Representatives from the Joint Commission visited us last week for their periodic survey. I post below today's email from me to our staff. As noted, the actual report is available for all to see. We view that as an essential way to make sure all people here can benefit from this appraisal of our clinical quality.

Beyond the report and the email below, I want to mention an important item for your consideration. Many readers here will recall our dedication to transparency about a wrong-side surgery event several years ago. With full staff participation, we then devised a new pre-surgical protocol.

During this survey, this protocol was viewed in actual surgical settings by one of the surveyors, who said, "That is the finest time-out I’ve ever seen." The JC surveyors said they would recommend it as a "best practice" to be shared with other hospitals throughout the country.

I view this as yet another validation of the use of transparency to help obtain process improvement.

Here's the email:

Dear BIDMC,

As many of you know, we recently had a visit from the Joint Commission, the organization that accredits all of the hospitals in America. The surveyors from the Joint Commission spent several days here in intense review of our physical facilities, our information systems, and -- most importantly -- our actual delivery of care to patients.

As is the current practice, this was an unannounced visit, with the surveyors showing up on a Monday morning with just a few hours notice. The people who came were excellent, thoughtful, and comprehensive. There were six surveyors who spent a total of 24 surveyors days with us. In all, they talked with almost 300 of our staff members and visited 49 unique sites on and off campus.

They found some things that needed improvement, but they also had many compliments for the hospital in general and for many, many of you in particular.

My favorite quotes from them during the week were, “The team is impressive – it’s a privilege to be a witness to the care being provided;” and "They are completely committed to what they do -- inspirational."

Consistent with our practice, we want you to have the advantage of their work product, so we have posted it on our website. Please read it.

With gratitude and appreciation,

Paul

Unwaivering support

Massachusetts last week received notice of federal approval of a Medicaid waiver that will provide $335 million for the state's safety net (aka, disproportionate share) hospitals. This is good news for the state in general and specifically for Boston Medical Center, Cambridge Health Alliance, and others who have seen a dramatic reduction in state support following the implementation of the MA health reform legislation.

I refer my readers to an excellent give-and-take on this issue here at the Heritage Foundation site. Josh Archambault claims such funds are a kind of unwarranted bailout given other options available to the state, but then Dennis Keefe, the CEO of CHA, provides a thoughtful rebuttal.

But the two writers talk past each other a bit. Here's Josh:

One, in order to make budget numbers work in a period of economic freefall, Governor Deval Patrick refused to make payment to BMC for Medicaid services already rendered. So the federal money possibly on its way to BMC could be another special deal to paper over Massachusetts’ budget woes.

Second, the budget gaps these hospitals face are reason for even more concern because of the President’s recently passed national health plan.

And here's Dennis:

You begin your piece by saying we are “turning to the feds” for a bailout to close our budget gaps. That simply isn’t true. We simply want and expect to be paid for providing important services for people who desperately need health care and have no place to turn.

It’s simple math; the greater the amount of care an organization provides to populations served by these programs, the greater the financial shortfall, and the greater concomitant need for additional revenue support.

Gentlemen, you are both correct. CHA, BMC and other hospitals absolutely deserve extra governmental help to help pay for indigent care because the new reimbursement system that was put in place by Chapter 58 and subsequent state budget actions systematically underpays them.

But the need for such funds is likely to expand nationwide under the new national law as poor people gain access to insurance plans that do not fully compensate hospitals. The difference at the national level is that the US Government cannot tap a higher level of government for the funds, the way Massachusetts can. Those funds will have to be generated by tax increases or reductions in appropriations. We are already seeing actions to reduce reimbursements from Medicare. That is a form of taxation on hospitals and doctors that is invisible to the public and the one that will be favored by the body politic.

The President promised access, choice, and lower costs in his health care bill. Only two out of three were possible. We will have access. The government will be reluctant to reduce choice. Lower costs -- but only for the federal government -- will be achieved by reducing appropriations.

False promises

At a speech last night, Lynn Nicholas, head of the MA Hospital Association, summarized the up's and down's associated with the Massachusetts 2006 universal health care access legislation. She was kind enough to send me her slides.

There are clearly some significant results from Chapter 58, as outlined in the slide above. Near universal access to insurance has been achieved; a significant percentage of those are being covered by their employers; the individual mandate is successful; the public approves of the program; there has been a reduction in disparate care to minority communities; and the net cost to the state has been relatively modest, when viewed as a percentage of the $30 billion or so state budget.

But there is a problem in that the state promised to raise Medicaid rates to a level more closely approximating the cost of providing service. This did happen for a couple of years, but then things starting to go in the wrong direction.


The result is that Medicaid payments as a percent of the cost of service have been consistently falling.


This is clearly an unsustainable situation. When the state doesn't pay its fair share, either service is not delivered or hospitals face financial problems, or costs are transferred to employers and workers who are covered by commercial insurance.

Worth reading for sure

Jim Conway reports about the release at today's NAHQ* Annual Meeting of a white paper entitled Respectful Management of Serious Clinical Adverse Events. The authors are Jim, Frank Federico, Kevin Stewart, and Mark J. Campbell.

Here's an introductory paragraph:

Every day, clinical adverse events occur within our health care system, causing physical and psychological harm to one or more patients, their families, staff (including medical staff ), the community, and the organization. In the crisis that often emerges, what differentiates organizations, positively or negatively, is their culture of safety; the role of the board of trustees and executive leadership; advanced planning for such an event; the balanced prioritization of the needs of the patient, family, staff, and organization; and how actions immediately and over time bring empathy, support, resolution, learning, and improvement. The risks of not responding to these adverse events in a timely and effective manner are significant, and include loss of trust, absence of healing, no learning and improvement, the sending of mixed messages about what is really important to the organization, increased likelihood of regulatory action or lawsuits, and challenges by the media.

Jim offers this comment:

Through the efforts and work of so many, the White Paper is strong. Early response to the content in presentations suggests it can have a significant impact. Ongoing interactions with leaders underscore the need. With its release along with continued learning and improvement, we can achieve a goal we all share in common: In the aftermath of an adverse events, patients, family members, staff and members of the community would say “we were treated with respect and there was learning and improvement."

Lucian Leape provides an early review:

Thank you for this great work. It is evident that it is destined to be THE reference document for organizations everywhere. It is just what is needed. The right balance of theory, explanation, and practical advice. You should be very proud, and we are all very grateful.

Other colleagues have said:

It is extremely well done and is a major resource for the field.

Congratulations to you and your team on this incredible document. Your efforts in pulling this information together should be commended. On behalf of patients, families, health care workers and health care organizations, please keep up your great work and momentum!

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* National Association of Healthcare Quality