Hospitals in Transition
By Birritteri, Anthony | |
Proquest LLC |
In this next installment of
All of this is happening while
New Jersey Business would like to thank the
Participants in this discussion are:
Dr.
Q: What is the overall health of
Ryan: This is a very competitive region because we are sandwiched between
The
Brennan: We sit between two of the most expensive cities in the country and with that, the labor costs are significant. As we look at how to compete with those two markets and try to provide the best quality care, it becomes a balancing act. A year or two from now, I think you will see a number of hospitals closing. You will also see the development of very large systems that can compete with the
Additionally, we are densely populated, with 8.9 million people, and very diverse. The diversity is a positive thing, but from a medical standpoint, it presents different issues. It's everything from patients who suffer from sickle cell anemia, to patients who have genetic issues from Mediterranean areas. Trying to deal with all of this makes it a little more difficult than if you are in
Hirsch: If you look at operating margins nationally,
Q: So hospital profit margins are just above 3 percent in
Ryan: That is an early trend and it's too soon to tell. We still lag behind the rest of the country by 3 percent, and we think this is because we have competition from ambulatory surgery centers. We also have the nation's most rigorous charity care mandate. We still want to provide care to people regardless of their ability to pay, but [charity care] is at a cost [to us] because we do not get dollar-for-dollar reimbursement. It is an annual budget debate we have with the state.
Q: So what is being done to make hospitals profitable and how does the Affordable Care Act impact all of this?
Jones: Nationally, healthcare is in transition.
Brennan: In terms of revenues, the whole system is being turned upside down. We are going from hospitals getting paid to make somebody well, to keeping everybody well. It is the transition from fee-for-service to being paid for taking care of a population. That is going to be the equation to make us profitable.
Wise: Given the early stages of the Affordable Care Act impacting the way in which healthcare is being purchased, I think there is a transformation taking place in the value of an inpatient bed versus population health. Hospitals are transforming themselves to reduce unnecessary beds and replacing them with healthcare resources beyond the institution. That would be preventive medicine, primary care, medical homes, wellness initiatives, homecare, even increasing hospice care.
Brennan: A lot of this depends upon how we collaborate with insurance companies. If you are going to take care of a population, you need to start focusing on how you get involved in the premium. Our system,
Q: Are you talking about accountable care organizations?
Hirsch: We are entering a new business model. Accountable care organizations are a part of that. There are also collaborations with physicians. Doctors historically had patients in the hospital. They would get a fee while hospitals tried to reduce lengths of stay. Now we have a gain sharing pilot program approved by
Wise:
Q: The past relationship between insurers and hospitals was sometimes antagonistic at times. Has it become friendlier now?
Brennan: It had been a contractual relationship in which they tried to get the best deals and hospitals tried to get the best deals. It wasn't as focused on the patient as it is now. It has turned more into a partnership or collaboration. There is more discussion about what is good for the patient, which ultimately will be better for the patient.
Q: Does anyone feel that this is about time and what should have been in place at the very beginning?
Wise: Absolutely. I think that the competition and success insurance companies now have will be based upon the collaboration they have with healthcare providers. They may not have been concerned as much in the past, but I think they now see they are in as much competition themselves, for us as partners, as we are with them.
Jones: Another important factor in that equation is that patients now need to be more engaged. Going back, the insurer worked with the employer who bought that insurance. You had a contract with the hospital and the doctor to provide that service ... the patient wasn't engaged very much. Today and going forward, in order to keep people well, it is important that patients and their families be engaged.
Q: Will it be easy to get patients involved in monitoring their own health?
Brennan: It depends on the generation. The older population relied on the physicians to just basically tell them what to do. It was a very paternal relationship. The younger generation, those in their mid-20s to 30s, can get anything they want on a mobile app. They are much more engaged in doing that themselves. So the answer will be different depending on the generation you are looking at.
Q: With the Affordable Care Act, do you expect more or fewer emergency room visits?
Ryan: I think the jury is still out to some extent. However, if
Hirsch: I think it depends on the area and how that will play out. For instance, we are in
Q: Do you expect more or fewer charity care visits?
Ryan: Over time, there should be less charity care patients, but I caution that we will never see charity care go away.
Wise: There is also the issue of, "Do hospitals need to have all the same resources hospital by hospital?" Obviously, hospitals that are most convenient to the population are the ones that are going to be used most often. So if a hospital system assesses its community's health status, it would make better decisions about where to invest dollars, rather than compete for resources that aren't needed at some considerable expense.
Q: I also read the Affordable Care Act would narrow healthcare networks, meaning less hospitals in any given exchange. Is that true?
Jones: It is very possible that there will be narrow networks. If you look across the country, and in the
Q: How is the transition to electronic medical records working as a cost saving measure?
Hirsch: I don't know if any one of us around this table would say we have seen a cost savings from a lot of the systems we have implemented. But if you look at electronic health records as being a vehicle to managing outcomes, quality and resources, then - theoretically - there should be a proven value to help reduce the cost of healthcare.
Wise: We recently introduced an open chart structure for all of our physicians in their offices where they are sharing information and creating one chart for the patient who may be seen by half a dozen different specialists. They are able to determine whether the patient is behaving the way he or she should: taking medications and avoiding behaviors that caused their illness or disease; and making sure there is a follow up - in a timely basis - so that they are being treated effectively. I think that will eventually reduce the excessive and expensive utilization of institutional care because the patient is being directed to follow a regimen. That monitoring was not in place, so I think it may benefit in the long run.
Jones: We have seen electronic records helping with patient safety and quality, as well. In our systems we have "hard stops" that ask a question: "This was done yesterday, are you sure you want to do it again?" Or there may be a contra indication, and its asks, "Are you sure you want to do this?" So we see it as a way of avoiding medical errors.
Q: Related to quality, the ACA is fining hospitals that do not reduce their readmission rates. How do you feel about that?
Brennan: I think it's good and I think we have to look at it and develop best practices for it. But again, there are a lot of social determinants that affect healthcare. It depends on the population of an area. If you are living in an area that has a lot of primary care services and folks who are insured, I think that is different from an urban hospital where you see lot of uninsured or underinsured patients.
Ryan: If you are discharging a homeless patient, he or she will probably be back in the hospital within 30 days. The fine is 1 percent of a hospital's
Q: On top of everything we talked about, there is a doctor shortage. How will hospitals cope with that?
Brennen: The answer again lies in using everyone to their maximum capability. Nurse practitioners, for example, are going to be playing a bigger role. Certainly, there are shortages in certain areas. There are areas that have the right amount of [physicians]. It goes down to the community level and how you are deploying the different types of providers.
Hirsch: Patients will possibly use places like
Jones: We have great teaching hospitals in
Q: The state is having a hard time retaining medical school graduates. What can be done to keep these physicians here?
Brennan: The malpractice liability issues are still of significance here. You then have a
Wise: I'm not sure whether the loss of physicians graduating from
Q: Why is the state seeing an influx of for-profit hospitals?
Ryan: As mentioned, we have hospitals in distress. In the past 10 years, we have had some hospitals come out of bankruptcies through being purchased by for-profit organizations.
Additionally, it is a very disruptive time in healthcare with lots of changes. Whenever you have disruption, you often see for-profits entering the field. We still are highly regulated, but in the early '90s we did away with the rate setting system where state government told the payers, "Here is what you are going to pay
Hirsch: If you look at other sectors, like nursing homes or continuing care retirement communities, you'll find that we have had for-profit organizations in
Jones: I have been to for-profit and non-profit hospitals around the country and [in both cases] I have seen doctors and nurses trying to take care of patients and serve their communities. There is nothing wrong with the concept. As long as [for-profits] play under the same ground rules with transparency, with community benefit, with common reporting ... it will be a good thing for our industry. We all believe that competition is healthy. You only succeed by serving the customer. That is how for-profit and non-profit companies work.
Wise: Perhaps the real answer is for-profits think they can make money here.
Q: What will the state's hospital industry look like 20 years from now?
Jones: We will be much more in the health business than in the hospital business. It will be much more retail, more local, you're smartphone will be used for lots of health transactions for monitoring your health. It will be much more ambulatory, and much more driven by the consumer rather than the hospital being the center of the [healthcare] universe.
Wise: I think consumers will carry membership cards of the organizations that they are a part of ... that represents their partnership with an organization that best fits their healthcare needs. That membership will represent an investment that they, and the payer, are making in a health enterprise system that is more aligned with a community.
There will be a growing community of health campuses that will have the wellness and preventive care and the medical home partnerships people need. People will be using these aspects of their neighborhood health resources as one would use a country club.
Ryan: Our hospital system will remain intact, but the facilities themselves may have fewer beds for all the reasons we talked about. I think hospitals will remain the big economic engines they are and provide care for their communities while improving population health. We are going to see more consolidations in the short term, and there will be a shift to more outpatient care, more care in the physician offices and more use in physicians extenders.
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