To survive the unprecedented challenges coming with federal healthcare reform, California hospitals are upending their bedrock financial model: They are trying to keep some patients out of their beds.
Hospital executives must adapt rapidly to a new way of doing business that will link finances to maintaining patients' health and impose penalties for less efficient and lower-quality care.
It's too soon to know precisely how the changes will affect patients. But experts say more will be treated in clinics and doctors' offices than in hospitals. And when they are admitted, their hospital stays could be shorter.
"How can we change our mind-set from how many patients we have in the beds to how many patients we are keeping healthy and out of the hospital?" asked Michael Rembis, president and chief executive of Hollywood Presbyterian Medical Center. "We haven't figured out how to do that yet."
The federal reform law changes the way hospitals and doctors will be paid. Going forward, fees will be based on patient outcome rather than on how long patients stay in the hospital or how many services they receive. And hospitals will be penalized for preventable readmissions and hospital-acquired infections.
Promoting higher-quality hospital treatment is long overdue, said Anthony Wright, executive director for the consumer group Health Access. "We were inadvertently subsidizing bad care," he said.
Wright said he hopes the new incentives will lead to more coordinated treatment for patients.
In preparation for the healthcare overhaul, many hospitals are replacing paperwork with electronic record systems and working more closely with physicians to improve care and reduce the number of unnecessary tests.
"As hospitals and physicians think about how they are going to care for populations, they recognize they have to collaborate," said David O'Neill, senior program officer at the California HealthCare Foundation.
Some hospitals are going a step further and partnering with physicians to form accountable care organizations, groups that agree to offer coordinated care for Medicare patients. Under the reform law, the organizations will share the savings from lowering costs and improving care.
The California Medical Assn., a leading doctor alliance, says the new accountable care groups will succeed only if physicians still have the autonomy to make medical decisions on behalf of their patients.
"If they are dominated by the hospitals, they will fail," said Francisco Silva, the association's general counsel. "They will not reduce costs or improve efficiency.... It has to be a true partnership."
Hospitals that don't adapt may have to eliminate services or close their doors, according to the California Hospital Assn. Already, the state has fewer hospital beds per capita and shorter hospital stays than the national average.
"Everyone is scrambling on the hospital side to prepare for fewer patients," said Jim Lott, executive vice president of the Hospital Assn. of Southern California. "It does change the paradigm."
The shifts — which will occur along with ongoing cuts in Medicare and Medi-Cal — don't take effect until 2014, but already they are prompting hospitals to cut costs and stop duplicating services wherever possible.
Hollywood Presbyterian is working with nearby hospitals to identify the best and most cost-effective treatments. In addition, the hospital is trimming expenses and entering new partnerships with outpatient clinics to keep discharged patients from returning to the hospital unnecessarily.
Providence Health & Services, Southern California, which operates five hospitals, has offered voluntary buyouts and streamlined supply purchases. The hospital group also is trying to reduce the chances of medical complications and is standardizing treatment of some illnesses to improve efficiency.
The Providence hospitals couldn't afford to wait until healthcare reform takes effect in two years, said senior vice president and chief executive Michael Hunn. "The numbers are not sustainable," he said. "We have got to get our arms around waste."
The most significant moves are driven by cuts to Medicare and Medi-Cal, which in California make up more than half of hospitals' gross revenues. California also has some of the lowest Medi-Cal reimbursement rates in the country.
Because government insurance programs don't cover costs, hospitals have traditionally relied on private payers to make up their deficits. But that is becoming more difficult because insurers are under pressure to reduce rates as part of healthcare reform.
Hospitals are launching their transformation when revenue growth at some facilities is running at 20-year lows, according to Moody's Investors Service.
"They are being hit on both fronts — fewer patients and getting paid less for each patient," said Brad Spielman, vice president of healthcare ratings for Moody's.
Michael Blaszyk, chief financial officer of Dignity Health, which operates more than 40 hospitals in California, Nevada and Arizona, said healthcare reform has placed hospitals at a "fundamental crossroads."
"All hospitals have had to make choices about what services are appropriate and what services are not," he said. "You cannot continue to operate at a financial loss."
Smaller hospitals will be among the hardest hit because they are on their own in paying for administrative costs and negotiating rates with insurance companies, said Richard Scheffler, a UC Berkeley health economics professor. The ones that join larger health systems are more likely to survive, he said. "Mom-and-pop hospitals have two choices: disappear or join the party," he said.
Long Beach's Community Hospital executives knew their bottom line wasn't improving. So last year, the hospital decided to join MemorialCare Health System, which runs several hospitals in Southern California. Now the hospital is in the black and can focus on care rather than finances, said former board chairwoman Nancy Myers. "If we had not merged ... we probably would not have been able to make it," she said.
Even as hospitals rush to revamp their care, there is still uncertainty about what lies ahead, saidAllen Miller, an L.A.-based healthcare consultant. An increasing number of aging baby boomers may require more hospitalization in the years ahead, complicating efforts to reduce costly admissions.
"No matter how much we think we can decrease hospital admissions, we are still going to need the beds," he said.
Showing posts with label healthcare reform. Show all posts
Showing posts with label healthcare reform. Show all posts
Friday, March 16, 2012
HHS issues final rule on insurance exchanges
March 12, 2012 | Mary Mosquera, Contributing Editor
WASHINGTON – The Department of Health and Human Services has released its final rule on the establishment of health insurance exchanges - online marketplaces. The rule also includes provisions for qualified health plans and exchange functions in the individual market.
The final rule, which combines what originally had been separate proposed rules published in July and August 2011, encompasses the key functions of exchanges related to eligibility, enrollment and plan participation and management. The department received more than 24,781 comments on the proposed rules.
HHS seeks further comments from the public on several sections, which are issued as interim final rules, related to options for conducting eligibility determinations, the ability of a state to permit agents and brokers to assist qualified individuals, and Medicaid and Children’s Health Insurance Program.
The 644-page rule appeared March 12 in a preview section of the Federal Register. HHS will officially publish the rule on March 27.
The policies incorporated in the rule give states more flexibility to design and create their exchanges - websites - where individuals and small businesses will be able to shop for and compare health coverage. Exchanges are scheduled to go live in 2014 under the health reform law. “Exchanges will offer Americans, competition, choice and clout,” the final rule said.
The rule offers guidance about the options on how to structure exchanges in setting standards for establishing exchanges, setting up a small business health options program (SHOP), performing the basic functions of an exchange, and certifying health plans for participation in the exchange.
The rule also provides guidance for establishing a streamlined, web-based system for consumers to apply for and enroll in qualified health plans and insurance affordability programs.
Boosting competition
Insurers will have to compete for their customers’ business, said Health and Human Services Secretary Kathleen Sebelius. “More competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today,” she said in a statement.
The final rule makes sure that exchanges will coordinate with Medicaid, CHIP, and the Basic Health Program so that an applicant experiences a seamless eligibility and enrollment process regardless of where he or she submits an application.
In response to comments, the final rule provides two ways for exchanges to interact with Medicaid agencies when making eligibility determinations. Exchanges can conduct eligibility determinations for Medicaid and for advance payment of premium tax credits, or the exchange will make a preliminary eligibility assessment and then turn it over to the state Medicaid agency for final determination.
Also, a state-based exchange may determine eligibility for advance payments of the premium tax credit and cost-sharing reductions, or it could be approved ifHHS makes determinations for these functions.
HHS previously provided a total of $50 million to all states except Alaska, which refused it, to begin to plan the exchanges. Recently, 33 States and the District of Columbia have received more than $667 million in establishment grants to begin building exchanges.
The federal government will put in place an exchange for states that choose not to establish one or will not have one operational by 2014.
The health reform law also provides for a premium tax credit for eligible individuals who enroll in a qualified health plan through an exchange to reduce the cost-sharing obligation of eligible individuals.
HHS said it has worked with states, small businesses, consumers, and health insurance plans and sought public comments to come up with the rule’s provisions.
http://www.healthcareitnews.com/news/hhs-issues-final-rule-insurance-exchanges
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