Will Healthcare Reform Help Curb Unnecessary Care?

The New York Times just published an article stating that many doctors feel the new bill will do little to curb the use of unnecessary testing. Patient demand and fear of litigation will continue to fuel the overuse of tests and treatments unless something happens to counteract this. Doctors make a legitimate point; "If a patient comes in demanding an MRI, there is no incentive for me to say no even if I know it is not needed". To reduce this there will have to be a change in the way patients think about healthcare, how medicine is practiced and how it is paid for.

Setting up guidelines is not the answer. A good example of this failure is CT scans. Clear guidelines for when CT is needed have been in place for years. They say among other things that CT is not indicated after most car accidents. Many patients have no real risk of brain injury after an accident, but try telling that to the injury lawyers. These guidelines have not put a dent in overuse of CTs in these situations. Again there are no incentives in place to withhold the test, only liability.

These doctors feel that there is nothing in the new law that will address this issue head on, but that conclusion may be a little hasty. The law includes pilot programs to pay doctors more for delivering better care at a lower cost. The key here is better care not less care. Eliminating the unnecessary CT is a good thing. Eliminating the necessary CT because of financial incentives to do so is a problem. But any well intentioned efforts to reduce waste will certainly be quickly labeled as rationing care. As Uwe E. Reinhardt, a well known health economist in Princeton, stated,"The minute you attack overutilization you will be called a Nazi before the day is out".

We need to get past this and support efforts to promote efficient care and reduce unnecessary tests. One section of the new bill establishes a private, nonprofit organization called the Patient-Centered Outcomes Research Institute to address this head on. They will have a $10 million budget this year which will grow significantly in coming years. The intent is to ground physician decision making in science and limit the influence of outside factors such as marketing and litigation.

This won't erradicate overutilization, but its a start.

More on this later.

Mark Brodeur

The Two Sides of Saving Under Healthcare Reform

Two recent articles caught my attention because they both talk about savings under healthcare reform but from totally different points of view. First was a report by the Center on Budget and Policy Priorities (CBPP) that the savings tauted under healthcare reform by the CBO are real. Next was a review in "Healthcare Financial News" on the latest Moody's Report saying that independent not-for-profit hospitals will be at risk under this bill. These two reports show the dichotomy that we live under in healthcare. Yes, we need to cut cost in the system overall, but taking money away from struggling community hospitals and putting them out of business is not the way to get there.

First let's talk about the good news. According to CBPP the projections of savings under healthcare reform touted by the President are indeed achievable and not "pie in the sky" as the Republicans have told us. But keep in mind that CBPP is a liberal leaning fiscal policy research group. Also keep in mind that all parties acknowledge that the new plan will initially increase costs as coverage is expanded. The savings come down the road with more efficient healthcare delivery in place to a greater percentage of the public. So much can happen between now and then to change things. So even if the actuaries got it all absolutely right, outside factors will most certainly change the assumptions used to project savings. So maybe the good news isn't really so good.

Now let's talk about the bad news. Moody's Investor Service projects that most hospitals should be able to operate relatively unscathed over the next three years because many of the key provisions of healthcare reform do not kick in until 2014. But after that all hospitals, particularly stand alone community hospitals will struggle with the reduced payments. Even though there will be some increased reimbursement from the previously uninsured patients and some add ons from Medicaid for hospitals that have hired primary care physicians, in balance hospitals will need to be extremely efficient to survive. Higher cost providers will not make it.

For those that want to know more about how to get ready for this new era of healthcare, I am presenting a free webinar on "Preparing Your Hospital for the Impact of Healthcare Reform" tomorrow, Wednesday March 31, 2010 from 1:15-2PM CDT. I will present it again in two weeks at the same time. To register, simply go to our website at compirion.com and look under Webinars.

More on this later

Mark Brodeur

Will Primary Care Really Be Promoted Under the New Healthcare Reform Bill?

I knew that the healthcare reform bill contained language to promote better access to primary care and some funding for prevention as well as health education, but I didn't know if these activities would really be significant or just lip service. It appears that as far as primary care access goes, there may be some real improvements funded in the new bill.


I have previously discussed the physician shortage, particularly for primary care. This will clearly get a lot worse with the addition of all the previously uncovered adults accessing the system for the first time. I have also discussed the financial dis-incentives for physicians to choose primary care over highly paid specialties. Massachusetts which has led the country in expanded access to care for its residents reports disturbing numbers. They say that over half of the state's internists and 40% of the family practice physicians have closed their practices to new patients because they are full. Provisions in the new law aim to start turning this around by offering bonus payments to primary care physicians and expanded community health centers.

Only 30% of our physicians practice primary care while 65 million people in this country live in areas that are designated as having a shortage of these physicians. So under the new bill there will be a 10% bonus from Medicare for primary care physicians who practice in these areas. This is a good start.

There will also be promotion of "medical homes" instead of the traditional primary care physicians office. These are designed to help extend the limited number of primary care physicians by making them leaders of a team of primary care health professionals. The team will consist of nurses, nurse practitioners, physician assistants and disease educators. They will work together providing more attention to those who need it most. This innovative approach could have a real impact on taking us from a system that reacts to disease and trauma to a system that truly works to prevent disease and manage it before acute intervention is needed.

Its way too early to say that this new bill is going to be effective, but I am encouraged that it will start moving us in the right direction.

More on this later.

Mark Brodeur

Four Preventable Risk Factors That Reduce Life Expectancy

I wanted to end the week by talking about something other than healthcare reform. There will be plenty more to talk about next week.

Imagine someone saying they would add five years on to your life if you would simply avoid a few health risks. This would get my attention. Hopefully it will get the interest of others as well. A study published this week in PLoS Medicine found four risk factors that, when combined, have a big impact on life expectancy; 4.9 years in men and 4.1 years in women. These four factors are:
1) Smoking
2) High blood pressure
3) High blood sugar
4) Obesity

No surprises here except for maybe the big impact they have on life expectancy. You don't die directly from these except high blood pressure but they are directly linked to chronic diseases that are fatal such as cardiovascular disease, cancer and diabetes. Knowing I could live in a relatively healthy state for five years longer is enough motivation for me.

Also not surprising is the fact that the study found a person's ethnicity and where they live is a predictor of their health. Asian Americans have the lowest body mass index, smoking rates and blood sugar, while white Americans have the lowest blood pressure. Black Americans have the highest blood pressure, while western Native American men and low income rural black women have the highest body mass index. Smoking rates are highest among western Native Americans.

We all know that the biggest savings in healthcare can be had if more people were healthy and didn't use healthcare services at the rate they do now. Hopefully studies like this one will motivate more of us to start or continue to live healthier lifestyles. I know I enjoy eating decadent foods and I hate working out vigorously, but I sure feel a lot better after months of working out than after a month long eating binge. Do we really need financial incentives to live healthier or is a longer life expectancy enough?

Mark Brodeur

Fallout From Healthcare Reform

The new healthcare reform legislation is generating many news stories about reaction to it which is good for someone like me who is always looking for the next hot topic in healthcare to discuss. There are a number of new developments that I would like to react to.

First of these is a report from the Washington Post that Senate Republicans found two minor violations of reconciliation rules in the House bill that will force it to be revised and re-voted on. They are already living up to their pledge to stop the bill before it starts. House Speaker Nancy Pelosi says the revisions are benign and will not alter the bill substantially. She expects no problem getting the House to again pass the amended bill. We will see. A new House vote is expected this evening.

Also Senate Republicans have been offering all kinds of amendments to the Senate bill originally passed. Most of these are intended to be difficult for Democrats to reject. If even one of them is passed, it means the Senate bill must go back to the House. So far Senate Democrats have rejected 29 such amendments. This is why a political solution to our complex healthcare situation is not the answer.

Another development from the new bill is the discovery that children with pre-existing conditions can still be denied new insurance policies. How did they let that one get through? HHS Secretary Kathleen Sebelius plans to issue new regulations to further define the intent of the new bill and close this gaping hole. It should be noted that in the meantime, children who are currently be denied insurance for this reason can seek coverage through the states' high risk insurance pools being set up.

Finally, representatives of physician-owned hospitals have weighed in strongly opposing the new bill since it puts a ban on new hospitals with this arrangement. It is interesting that they are claiming this will severely compromise rural- and inner-city patients access to care. I can't think of any physician-owned hospitals dealing with either of these populations. Perhaps we should write an amendment to the bill inviting physician-owned hospitals to open in the inner-city areas and treat the currently indigent population. After all they will now have insurance.

I am sure we will continue to see many interesting developments with passage of the reform bill. Remember the Chinese curse, "May you live in interesting times".

More on this later.

Mark Brodeur

Aligning Physicians' and Hospitals' Interests

Yesterday I discussed that the healthcare reform bill signed by the President will among other things promote bundling of payments between hospitals and physicians. This is certainly not a new concept. In the late 1990's we all thought that capitated managed care was going to rule the world. Everyone set up a PHO (Physician Hospital Organization). Most of these, like ours, went largely unused until they were abandoned altogether. Now there will be a resurgence of such arrangements.



As we work to set these up again we need to keep in mind what I addressed yesterday. To truly align with your physicians you must capture their minds as well as their pocketbooks. So before you can be effective at this you need to know what today's physician priorities are. A recent survey of physicians under 50 listed the following top three priorities:

1) Time for family and personal life
2) Flexible scheduling
3) No, or limited, call

In addition to this you can assume that they want maximum reimbursement for their specialty.

Obviously in an environment of shrinking reimbursement it is impossible to provide physicians all of this, but there are models that are working. Medicare has funded demonstration projects of bundled payments that seem to be effective. One such example is at Baptist Health System in San Antonio, Texas under the leadership of CEO Michael Zucker. This model shares the savings and allows the physicians a gainsharing opportunity. In this case the model focused on DRG 470 which is major joint replacement or reattachment of lower extremity.

The model anticipated significant benefits:

-Greater allignment with physicians
-Improved quality and efficiency
-Reduction in costs
-Increased market share
-Higher patient satisfaction

The demonstration project was set up to discount hospital and physician payments but share with both groups any savings generated over the standard reimbursement. To get physician buy in the CEO elected not to put any of the physician payment at risk when the project started. The hospital assumed all the risk at first but still let the physicians participate in the gainsharing. They were eligible for up to 25% of their Part B reimbursement. With "skin in the game" physicians came together like they never had before and allowed the hospital to negotiate with implant vendors as a group. Cost savings were immediate and substantial. This type of cooperation did not come without some angst and pain, but it came. Continuous attention to physician buy-in is key.

Overall the project has been a success:
-The hospital has increased leverage with vendors
-Physician quality measure have improved
-Gainsharing distributions were earlier than expected
-Overall physician support (despite some defections) has grown
-Managed Care Companies are looking at similar arrangements

As we continue to brace for the many changes under healthcare reform, it is good to know that there are successful models out there for what is coming.

More on this later.

Mark Brodeur

Time to Start Looking Deeper at the Impact of Healthcare Reform

As President Obama today signs the new Healthcare Reform Bill passed by the House, the Internet is still buzzing about our future because of this. Republicans are vowing to stop it before it starts and Democrats are saying it is the greatest change in healthcare since Medicare. Conservatives are saying the sky is falling and liberals are saying it is not enough but at least its a start. Whatever it is, its here and probably here to stay in some form or another. So it is time to look deeper at the ramifications of reform and prepare for our future in healthcare delivery (and payment).

Obviously the first priority is to focus on quality improvements and cost efficiencies. We are entering the era of the value provider not necessarily the large provider. I have addressed this issue in a number of previous posts. But to really thrive in the future, the strong value providers will adapt in other areas as well. So today and in upcoming posts I would like to address some of these issues.

The first area I would like to address is bundled payment. In the near future it appears that the reimbursement model for hospitals will include physician reimbursement in one bundled payment. This has some very positive implications for efficiency. No longer will we have conflicting incentives of fee for service physician payment incentivizing longer length of stay against the DRG payment to hospitals incentivizing the opposite. But this also presents challenges to hospitals to work with their physicians on income sharing arrangements like they have never done before.

Your first reaction to this might be like mine; its time to get more aggressive in employing physicians. In fact many of you are already doing this and the new docs coming out of residency largely prefer this arrangement. Of course they also want a life style with shorter work hours and less call than the previous generation. This is where the rub comes in. It is not enough just to have physicians under some level of more control as employees. You must have a relationship that aligns your incentives with theirs, and that is the challenge.

This will be compounded by the fact that the physician shortage is getting worse. According to the American Hospital Association the demand for primary care physicians is outstripping the supply and will leave us with a shortage of as many as 65,000 primary care physicians within five years. Healthcare reform will only make this number bigger as those who were previously uninsured take advantage of their new status. A similar shortage will develop with specialists partially because of the shrinking reimbursement in these areas.

So before bundled payments become the standard reimbursement arrangement, hospitals have a lot of work to do aligning themselves with their physicians. The key according to Ken Mack, a prominent healthcare consultant is to capture their minds as well as their pocketbooks. There are arrangements that are working and I will discuss some of these tomorrow.

More on this later.

Mark Brodeur

Healthcare Reform Is Here! Are We Ready?

Well it finally happened. President Obama got at least some version of the Healthcare Reform Bill he has been stumping for since he took office. It doesn't look much like the bill he started with. The public option that he held out for so long is gone and it certainly does not have the bipartisan support that he promised. In fact, according to Washington insiders the rift between the two parties is larger today than it has ever been in any one's memory.

As to whether last night's monumental House vote was a good thing or a bad thing for the healthcare industry, the answer depends on who you ask. Many CEO's are saying this will be devastating, but a few are quietly saying that this will be good for them. It sounds a lot like the sentiments of the rest of the country.


I am at the Annual Congress of the American College of Healthcare Executives in Chicago which kicked off this morning. It is the largest gathering of healthcare executives in the world; over 4,000 in attendance. It is ironic that this morning's opening keynote address which was scheduled months ago was titled "The Politics of Healthcare Reform". Talk about timing. According to Tom Dolan, CEO of ACHE, he had it all planned this way. Stuart Rothenberg, PhD was the opening speaker. Stuart is a well known political analyst and "handicapper" of politicians. He had an interesting political perspective on all this.

Stuart states that healthcare reform is not done. The current bill will probably be enacted but revisions will passed even before some of the provisions of last night's bill are scheduled to go into effect. He says the mood of the country has definitely changed. There will be a mild uptick in the President's approval for a while after last night. After all, the Democrats were under real pressure to deliver something. Having passed nothing with a Democratic President and control of both houses of Congress would have been devastating to midterm elections. As it stands though, the midterm elections will still be very brutal on the Democrats. The independent voters who have supported the Democrats for four years are now changing heart. Also, most people polled, prefer not having either party control the Presidency and both houses of Congress.

One last observation that Stuart made is that it is way too early to count President Obama out for re-election. He stated that voters tend to be fickle and opinions on the country change quickly. He reminded us that President Clinton had a very low rating at his first midterm election.

But back to the new bill, it will present a new set of challenges to healthcare providers. There will be a strong emphasis on value and the government looks like it will use the allowance approach to cut costs. That is, rather than coming up with savings they will just cut rates and leave it up to providers to figure out how to survive with a lower allowance.

More on this later.

Mark Brodeur

The Basics of the New Healthcare Reform Bill

With the political drama of President Obama's healthcare reform bill coming to a climax, it looks like there may be a new House bill, based on the Senate passed bill, by the end of the weekend. If this really happens, getting the provisions of this new bill passed through the Senate seem very likely using the budget reconciliation process. What this means for us in the industry is that the biggest piece of legislation affecting healthcare since the enactment of Medicare will become law without any bipartisan support. This doesn't seem right to me. I have been arguing that we need healthcare reform and I stand by that. But I thought that the process would come from meaningful debate and input from a lot of different sources.

Don't get me wrong. I am not holding the Democrats 100% responsible for this outcome, but they did set the take it or leave it tone when they had 61 Senators behind them. They started the bully process and were not open to real dialogue in the beginning. Then the Massachusetts vote for Senator Kennedy's vacant seat happened and the Republicans have since shown the same resistance to sit down and really discuss issues. President Obama tried to retract the unyielding rhetoric had had used earlier but it was too late. The damage had been done.

Since we are finally to the point where we may really be passing some significant healthcare reform legislation, maybe it is time to take a look at the basics of what it offers. I must confess that I don't know the details, but I doubt that anyone voting on it this weekend does either. Here are some key points:

1) It will cost $940 billion (with a b) over 10 years according to the Congression Budget Office
2) 32 million more people will be covered, but major coverage expansion won't start until 2014
3) By 2014 everyone would be required to have insurance except low income people. There will be tax credits and aid to help people afford this
4) By 2014, private insurers will have restrictions on them including denying coverage for people with medical conditions and charging higher premiums for women. There will also be lifefime caps on premiums and coverage allowed for children until age 26.
5) A pool for highrisk patients and the uninsured will be set up to cover them until 2014
6) Medicaid coverage will be expanded
7) Medicare's doughnut hole for prescription drug coverage will gradually be closed
8) Many employers will have to pay a fee if the government subsidizes their workers health coverage. But by 2014 there will be state based exchanges to provide health insurance to small businesses and individuals
9)And all of this will be paid for by increased Medicare Payroll taxes on investment income and the very wealthy

All of this sounds great but I have my doubts that this will really be implemented just like it is summarized above, particularly point 9. I have been saying for some time that the real source of income to pay for this plan will come from cutbacks in Medicare payments to physicians and hospitals. Everyone says there is waste in the system and they are right. But I don't see provisions in this plan that will really attack the waste. It looks like they will just reduce reimbursement and leave the waste cutting to us.

Let's see what happens on Sunday.

More on this later.

Mark Brodeur

Four Factors That Drive Hospital Readmissions

Hospital readmissions besides being hard on the patient are also detrimental to the hospital, both financially and on their quality scoring. Medicare is now tracking the level of each hospital's readmissions. There are a variety of factors that lead to preventable readmissions, but these usually have to do with poor outpatient management and followup after discharge. Because of our current disjointed system of care, there is often not a smooth hand off for the patient who will need monitoring and treatment at some level after discharge. Patients sometimes leave the hospital with incomplete treatment plans or medications they do not understand.

Clearly we need to do a better job of coordinating services post discharge. But what if we could do a better job in identifying those patients who were at a higher risk for readmission while they were still hospitalized? Researchers at the Ottawa Hospital Research Institute have created a score card to help determine if a patient is at high risk of readmission, or death. Their study included 1 million patients discharged from hospitals between 2004 and 2008. By looking a four factors, they could predict with 70% accuracy, those patients at high risk for readmission. These factors are:

1) Length of the patient's hospital stay
2) How sick they were upon arrival
3) The number of illnesses diagnosed during hospitalization
4) The number of Emergency Department visits during the six months prior to hospitalization

Researchers found that a combination of these factors greatly increases risk. Using this scorecard allows hospitals to identify those patient to focus on for more intense discharge management.

This discharge management can go to various levels of intensity based upon the risk factors of the patient. Those of lower risk may get by with printed discharge instructions. Some may need a followup call from the pharmacist to explain the new home meds. Some hospitals have a hot line for use by patients or their families with any questions. And finally for the highest risk patients, hospitals have them on biometric monitoring devices that send vitals and other symptoms to a transition management team. This final approach is costly but seen as worthwhile investment to prevent readmission or possibly even death.

Doing a better job of discahrge management and reducing preventable readmission makes sense. It saves money. It improves the quality of care provided by the hospital. But most of all it is better for the patient.

More on this later.

Mark Brodeur