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Much of the mainstream news covered in 2008 concerned the
heated presidential primaries leading to the general election, as well as the
dramatic downturn in the U.S. economy signaled by major troubles on Wall Street.
In the health care world, significant newsworthy developments occurred that were
reported on in each edition of the Jackson & Coker Industry Report.
This month’s Special Report spotlights some of the main developments in the
health care field that affected consumers, medical providers, insurers,
educators and hospital administrators. Putting emerging trends in perspective,
the report also offers a glimpse into what may appear on the horizon as the
calendar year changes and the new presidential administration commences.
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By J&C Research Associates
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A Recap of 2008
As 2008 draws to a close, it’s instructive to focus on some of the major trends
and developments that have taken place within the health care industry over the
last year.
Our Special Report puts these matters in perspective. “Developments in Health
Care—A Look at 2008” summarizes some of the pivotal issues and advancements that
impacted health care delivery and shaped the ongoing debates as to “where health
care should be headed.” Key issues discussed in the report include: the impact
of technology on medical outcomes and efficiency; use of the Internet to enhance
doctor-patient interaction; changes in Medicare / Medicaid reimbursements;
passage of mental health parity legislation; new conflict-of-interest
regulations; and the impact of the increasing physician shortage.
Along with our slate of feature articles, this edition of the Jackson & Coker
Industry Report presents a white paper written by Jackson Healthcare CEO, Rick
Jackson, in conjunction with a research study commissioned of Oliver Wyman
Actuarial Consulting, Inc.
As a significant number of articles published in 2008 indicated, a central
concern among hospital administrators and health care executives is how to make
hospital operations more efficient and cost-effective. Mr. Jackson offers a new
approach to measuring efficiency based upon a different way of assessing
patients’ length of stay in the hospital. His insights should prove helpful to
anyone who contributes to the discussion of how to maximize favorable medical
outcomes in a fiscally responsible manner.
Starting in January, the newsletter will focus on pressing issues such as the
impact of the economic downturn on health care delivery and how Universal Health
Care might be implemented under the new presidential administration. At the
least, 2009 should be an interesting year for both consumers and providers of
health care in the United States.
Cordially,
Calvin Bruce
Managing Editor
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In a time when operational costs are increasing and revenue from
patient services is decreasing, hospitals across the nation are looking at new
ways to measure overall institutional efficiency and cost-effectiveness.
Traditionally, hospitals have focused on “average length-of-stay” (LOS) as the
primary metric for making such determination. The assumption is that reducing
one or more days a patient stays in the hospital will, in and of itself, have a
significant impact on the institution’s bottom line.
Another way of measuring organizational efficiency and
cost-effectiveness, according to health care CEO Rick Jackson, is to focus on
what he coins as the “enterprise length-of-stay” (ELOS). This new metric
establishes as a benchmark of excellence the system-wide coordination of
efficient operations across all hospital departments throughout a patient’s
visit. Furthermore, using ELOS as a measuring tool is intended to identify and
minimize the many operational “bottlenecks” and communication snafus that
typically occur in a department-centric organizational structure.
In a white paper entitled “Average Length of Stay: It’s Time for a
New Metric,” Mr. Jackson explains ELOS as “the sum of the various department
lengths-of-stay” requiring “a sophisticated hospital-wide management system.”
His article, which appeared in a HealthLeaders news bulletin, can be accessed
here.
By Rick Jackson
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Hospital Strategy in the Current Credit Crisis: 7 Must-Do Actions
Source: Trustee Magazine
Date: 11/07/2008
As a result of the capital markets crisis, hospitals and health systems across the nation are facing a host of financial hardships: reduced access to capital; declining cash, pension and endowment portfolios; difficult debt restructuring associated with exiting the auction-rate securities market; spikes in the cost of variable-rate demand bonds; and increased costs of fixed-rate debt.
Reduced capital capacity will have strategic implications for all but the strongest of hospitals and health systems. There are seven actions health care leaders should take in order to avoid a too-slow response to reduced capital capacity.
1. Reassess Capital Capacity – In particular, it’s beneficial to take a close look at debt and other factors in the hospital’s credit rating.
2. Revisit Strategic Plans – Any lower-priority initiatives may have to be cut unless sufficient cash can be raised through improved operations.
3. Use Real Estate to Create Capital Capacity – Sell properties that the hospital does not need to own and seek third-party funds for new developments.
4. Consider Divesting Non-Core Assets – Targeted non-core assets may include health plan operations, skilled nursing facilities, or hospices.
5. Evaluate Merger or Partnership Options – To better achieve their organization missions and meet community needs, it may make sense for smaller hospitals and stand-alone community hospitals to consider merger options.
6. Identify and Acquire Good-Fit Hospitals – The current economic climate presents opportunities for financially strong hospitals or health systems to acquire weaker institutions as further industry consolidation occurs.
7. Consider Risks – Investments are riskier now with tighter lending restrictions; so it’s prudent to re-examine and develop long-range plans in light of a well-established organizational risk strategy.
The strategies that work well for one hospital system may not be appropriate for another. It is incumbent upon trustees and other hospital administrators, nonetheless, to make a serious assessment as to what strategies will provide the greatest financial security for their institution during these critical economic times.
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Health Care Among Industries That ‘Seem Best Able To Endure’ Economic Downturn
Source: Medical News Today
Date: 11/04/2008
The health care industry is one industry that remains steady despite the poor economy. However, though Americans get sick and depend on care whether the economy is good or bad, there are areas within the health care industry that will be adversely affected by an economic downturn. Pharmaceuticals especially are likely to suffer. The AP/Minneapolis Star Tribune writes that prescription drugs “are more vulnerable to economic cycles because employers have shifted more of the financial burden for care to patients.”
Health care companies least affected by the poor economy are those that sell inexpensive medical products directly to hospitals because they supply necessities that carry lower costs.
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Nationwide EHR Implementation Price Tag Estimated at $150 Billion
Source: Government Health IT
Date: 07/31/2008
Implementation of networked e-health records in doctors’ offices and hospitals across the U.S. could cost around $150 billion over eight years.
The estimate comes from Robert Miller, professor of health economics at UC San Francisco, and was presented at an Institute of Medicine workshop in July 2008. Earlier estimates of the cost were generally lower than Miller’s. Miller acknowledges that his $150 billion estimate sounds like a large sum but called it “manageable” because it amounts to less than a 1% increase per year in the nation’s total health care spending.
Miller said hospitals are further along the path toward implementing clinical information systems than are doctors’ offices, partly because they get some boosts in revenues when they install EHRs. Also, large hospital organizations and hospital investors increasingly see IT as an expected cost of doing business.
Miller’s projections call for hospitals to spend $35 billion to acquire and expand EHR systems and $55 billion in new operating costs over eight years. This would bring hospitals’ IT spending closer to that of other industries.
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Will a Medical School Boom Ease the Doctor Shortage?
Source: The Detroit News
Date: 11/14/2008
In Michigan, there is currently a predicted 11.9 percent gap between supply and demand for physicians, compared to a national gap of 7.9 percent. Several universities across the state are attempting to shorten this gap by adding a medical school. Proponents of this method argue that this will increase the number of trained doctors and will ultimately help the nation increase access to health care. However, since the number of available residencies at hospitals across the country is not expected to grow, critics are saying that increasing the number of students will have a mitigating effect on any shortages. Others claim that new medical schools are more about promoting the university than addressing a physician shortage.
This trend of increasing the number of students is not restricted to new medical school programs. Many existing programs at Michigan universities are rapidly expanding the number of students they will be admitting in the next five years. With the question of effectiveness in mind, the Michigan state legislature has put all future applications for medical school charters on hold until it can decide whether or not increasing the number of trained medical students - at both existing and new programs - will be worthwhile.
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The Use of the Term Doctor in the Clinical Setting
Source: American College of Clinicians
Date: 10/28/2008
The American College of Clinicians recently released a statement on the use of the term “doctor” in hospitals and practices around the country. The College recognizes that doctor is a term that can be applied to any individual who has received an advanced doctorate degree, including non-medical practitioners such as PhDs. The College does not wish to undermine the academic achievements that these individuals have earned.
At the same time, there is substantial confusion in hospitals and other medical facilities where the term doctor is used liberally. For clarity’s sake, “doctor” should be replaced with other, more specific terminology whenever possible. For example, doctors in their residencies at hospitals should be referred to as “resident,” regardless of their possession of an MD. Other doctors should be called “physicians” around patients in order to clarify their position when giving medical advice. Additionally, all physicians should have a clearly visible name tag at all times that displays the type of medical degree as well as any specializations. The College recognizes that this is done at many hospitals across the country, although it is not a universal practice.
By using semantics in order to clarify an individual’s level of education and expertise, many potentially confusing situations will be avoided, particularly in the case of patients who could not otherwise distinguish between a practicing physician and any other employee in the hospital who has an MD.
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Autism Higher in Rainy Northwest Areas
Source: The Boston Globe
Date: 11/05/2008
Researchers at Cornell University report that children who live in the Northwest’s wettest counties are more likely to have autism. The cause for this correlation is unclear.
The researchers set out in search of a link between environmental factors and autism, a condition characterized by learning and social disabilities. They found that autism prevalence rates for school-aged children in counties in California, Oregon, and Washington in 2005 were positively related to the amount of precipitation these counties received from 1987 through 2001.
Doctors agree that there is a genetic component to autism. They also theorize that something in the environment and possibly conditions in the womb can trigger the condition.
The Cornell researchers noted that infants and toddlers are kept indoors in front of the television more in rainy climates and that may cause brain changes. Other theories are that children in these counties breathe in more harmful chemicals while indoors or suffer from vitamin D deficiencies.
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U.S. Diabetes Rate Nearly Doubles in a Decade
Source: CNN.com/health
Date: 10/30/2008
The rate of new diabetes cases in the United States nearly doubled over the past ten years.
About 1.6 million new cases of diabetes were diagnosed in 2007, leading to 23 million total cases in the U.S. About 90% of the cases are Type 2 diabetes.
The highest levels of new diabetes cases tend to be in the South. Between 2004 and 2007, the states with the highest rates of new cases were West Virginia, South Carolina, Alabama, Georgia, Texas and Tennessee, all at or above 11 diabetes cases per 1,000 residents. The states with the lowest rates were Minnesota, Wyoming and Montana.
It is not completely clear why some states have a worse incidence than others. The South has large concentrations of older people and African Americans, and Texas has a large Latino population—all groups with a higher prevalence of diabetes. West Virginia, however, has a population that is overwhelmingly white, and West Virginia is the state with the highest rate of new cases (13 per 1,000).
The reported numbers likely underestimate the problem of diabetes since only diagnosed diabetics were included in these findings. An estimated one in four diabetics has not been diagnosed.
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Integrating Disaster Preparedness and Surge Capacity in Emergency Facility Planning
Source: Journal of Ambulatory Care Management
Date: 12/01/2008
The consensus among government and health care officials is that the U.S. health care system lacks the capacity and coordination to respond to massive surges in patient care that could result from natural or man-made disasters. Emergency facilities throughout the U.S. are currently under stress to react to increasing volumes, limited inpatient capacity and staffing shortages, and many would collapse if confronted with a major increase in volume or a significant influx of high-risk patients.
As hospitals plan new or expanded emergency facilities to respond to increasing volumes, they face the planning challenge of developing rational strategy that balances the possible risk of disastrous events, the capital cost implications of responding to the events, and an institution’s strategic priorities.
The federally-funded “ER One” study was one recent effort to identify design strategies that address medical consequences of disasters for emergency facilities. Project ER One, established in 2000, focused on capability, capacity and protection. One key element that emerged from the study was that disaster planning should begin before the hospital is designed rather than after the hospital is built, which often leaves officials the option only of deciding “in which parking lot do we set up the tents.”
The process by which Tampa General Hospital (TGH) was planned exemplifies how, if planned early in the process, major surge capacity can be built into new facilities at a manageable cost. The planning and design of TGH is also notable for its consideration of environmental risks in the region and the strategic coordination that occurred between many stakeholders. One of its greatest strengths is that many of the emergency preparedness features also enable enhanced performance of the emergency department during normal operations.
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Coverage, Access and Quality: Texas, Florida Facing Physician Shortages; Hispanics Largely Affected
Source: Kaisernetwork.org
Date: 11/17/2008
Though a physician shortage is expected to hit the entire country in the next 15 or 20 years, newspapers in Florida and Texas are particularly worried because of the disproportionate number of Hispanics living in the two states.
In Texas, an additional 40,000 physicians will be needed by 2025; however, just 66 percent of Hispanic employees have employer-sponsored health plans, compared with over 80 percent of African-American and white workers. The shortage and quality concerns are even more magnified in border cities where Hispanics are the largest group of uninsured people. Any solution for the physician shortage must take into account how the Hispanic communities would be affected, sociologists argue.
Central Florida is witnessing a similar problem which is again disproportionately affecting the large number of Hispanics living in the state. Some Florida hospitals are dealing with this problem by recruiting doctors from Puerto Rico. These doctors, some argue, are a great way to help solve some of the shortages because they are both American citizens and fluent in Spanish.
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National Survey Finds Numerous Problems Facing Primary Care Doctors, Predicts Escalating Shortage Ahead
Source: physicianfoundations.org
Date: 11/18/2008
In addition to the general physician shortage that is expected to affect health care in the United States through the near future, a Physician’s Foundation survey found that current practicing doctors are getting increasingly more frustrated with the nation’s health care system.
According to the survey, 78 percent of practicing American doctors believe there is a physician shortage; yet 49 percent claim that in the next 3 years they intend to either reduce the number of patients they will see or will stop practicing medicine altogether.
The shortage, coupled with growing administrative duties and governmental interference, is causing many physicians to think twice about their practices. Sixty-three percent of physicians claim that an excess of paperwork has decreased the amount of time they spend with their patients, and 94 percent say they have increased the amount of time they spend doing paperwork in the last three years. Sixty-five percent claimed that their Medicare reimbursement does not cover the cost of care, and 82 percent said that their private practice would be unsustainable if Medicare payments were cut back. Just 17 percent of physicians claimed that their private practices were “healthy and profitable.” Forty-five percent of physicians said they would retire today if they had the financial means.
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Employment & Compensation
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Health Care Overutilization in the US
Source: JAMA
Date: 11/19/2008
In a letter to the editor of JAMA, two MDs comment on a recent argument that since American physicians earn more money than doctors in other parts of the world, reducing doctors’ salaries is a good way to save money in regards to reducing costs for the benefit of America’s healthcare crisis.
Although some have argued that American doctors make nearly twice as much as physicians in other countries, the authors of the letter comment that by factoring in physician salaries in comparison to what other citizens of the same country are making, American physicians appear to be no better off than physicians in France. Since American incomes are typically about 1.5 times higher than French incomes, and American doctors typically earn about 1.4 times as much as French physicians and specialists, American MDs are only earning a marginally higher amount of money every year than French MDs.
With this economic argument in mind, the authors argue, reducing physician compensation is not a legitimate means for dealing with any problems the American healthcare system may be currently experiencing.
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In the Program Director’s Hot Seat
Source: Today’s Hospitalist
Date: 11/01/2008
Many new hospitalist program directors jump into the role with limited management experience and very little time to prepare and adjust. In their first few months, new directors have a high number of responsibilities to attend to and the list—including setting program parameters, leading recruitment, and managing physicians’ expectations—can be overwhelming.
The first priority for some new directors has to be solving shift coverage issues, while others must address issues in marketing and community relations. The transition experiences of new directors can vary greatly as they contend with the unique needs and demands of their hospitalist programs, but the one thing that may unite them is a lack of specific training.
Doctors making the switch to director must draw on diverse resources and experiences to guide them in the new position. Some physicians draw on an extensive network of colleagues for advice, while others use their previous work experiences and observations of managers to gain an understanding of management as well as general program operations.
There are many challenges that new hospital directors will face as they grow into the new position. Many new directors cite defining programs boundaries and limitations as one of the toughest tasks. Another challenge is tied to the change in leadership. Directors may face difficulties in disturbing the status quo and implementing new rules. A third major challenge for new directors is establishing a good balance between administrative and clinical duties. Many directors complain that they are not able to devote enough time to recruiting new doctors and completing other administrative tasks.
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IMS v. Ayotte - Physician Privacy Law Upheld as Constitutional by First Circuit
Source: PharmaLive
Date: 11/18/2008
Against the wishes of two data mining companies, IMS Health, Inc. and Verispan, the First Circuit Court of Appeals has upheld a New Hampshire law preventing pharmacies from selling prescription histories for marketing and other commercial ends.
Opponents of New Hampshire House Bill 1346, a patient privacy act, claim preventing the sale of information about how physicians prescribe drugs is unconstitutional based on appeals to free speech and the commerce clause. New Hampshire’s Attorney General, Kelly Ayotte, defends the Court’s decision, saying that the law will ultimately help reduce healthcare costs and protect patient privacy.
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Historic Mental Health Parity Law Passes
Source: Physician’s News Digest
Date: 11/01/2008
By tagging the bill to the $700 billion Emergency Economic Stabilization Act, Congress finally was able to pass the Mental Health Parity and Addiction Equity Act of 2008, a bill that was 20 years in the making.
The Mental Health Parity and Addition Equity Act requires that insurance companies who provide coverage for mental health care and substance abuse treatment do so under the same terms they do for all other medical conditions. When the new law goes into effect, one year after its enactment, it will expand coverage for over 100 million Americans.
The Mental Health Parity Act of 1996 made illegal discriminatory annual and lifetime dollar limits for mental health care for companies with more than 50 employees but did not make any coverage requirements, nor did it eliminate visit limits or higher co-pays and deductibles.
The new mental health act does not mandate coverage for all mental health care. Plans that currently do not provide any mental health coverage are not required to do so under this law. Additionally, the law only applies to policies of employers with 50 or more employees and does not apply to the individual health market.
The law is not expected to cause any new burdens for physicians. It will give physicians greater flexibility and allow them to treat patients on the basis of need rather than the basis of insurance limitations.
The Congressional Budget Office estimates that the total cost for payment of the expanded coverage will present an increase of just 0.4 percent.
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AMA Sets Ethical Standard for Physician Self-Referral
Source: MedPage Today
Date: 11/11/2008
The American Medical Association recently published a new policy concerning conflict-of-interest and physician referrals. According to the new legislation, doctors are prevented from self-referring patients to medical facilities in which the physician has a financial interest, except where the physician provides full disclosure.
Existing policy has prevented physicians from entering arrangements with facilities that have an exclusivity clause or prevent doctors from referring patients to other facilities. Additional regulations dating back to 1972 have been preventing doctors from receiving money or anything of value for referring a patient to a certain facility. However, by requiring full disclosure of any financial interest that a physician may have, the AMA can ensure that medical decisions are being made on the basis of what is best for the patient, not for the doctor.
Additional AMA regulations were decided in regards to “secret shoppers,” or industry insiders who pose as patients in order to secretly observe how a physician’s office is operating. According to the AMA, secret shoppers are ethical as long as the practice is notified in advance that they may be visited.
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One in Five Hospital Admissions are for Patients with Mental Disorders, USA
Source: Medical News Today
Date: 10/31/2008
About 1.4 million hospitalizations in 2006 involved patients who were admitted for a mental illness, according to the Agency for Healthcare Research and Quality. Another 7.1 million patients admitted in 2006 had a mental disorder in addition to the physical condition for which they were admitted. In total, this represents 22% of all hospitalizations in 2006.
Slightly more than half of the hospitalizations specifically for treatment of a mental disorder involved depression or other mood disorders, such as bipolar disease. Schizophrenia and other psychotic disorders caused another 25%; while delirium, dementia, amnesia and other cognitive problems accounted for roughly 10%. The remaining hospitalizations involved anxiety disorders, adjustment disorders, attention-deficit disorder, disruptive behavior, impulse control, personality disorders, or mental disorders usually diagnosed in infancy or later childhood.
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CMS Final Rule Holds Off from Restricting Physician Self-Referral for Imaging Services
Source: DotMed News
Date: 11/05/2008
The Centers for Medicare and Medicaid Services has released its Final 2009 Changes to Payment Policies and Rates under Medicare Physician Fee Schedule, which unexpectedly contain no provisions to prevent unnecessary use of imaging services and physician self-referral of imaging services.
It had been widely believed that the final rules would include the self-referral proposals, which included a requirement for physicians and non-physician practitioners who performed imaging to register as independent diagnostic testing facilities for each practice location furnishing such services. CMS wrote that in light of the Medicare Improvements for Patients and Providers Acts of 2008 legislation, and after reviewing public comments, it would defer the implementation of the proposals while continuing to review the public comments it received.
The American College of Radiologists expressed disappointment that the CMS proposal requiring enrollment as IDTFs was not enacted.
CMS also refrained from including its proposed exception to the federal rules against self-referrals allowing certain types of incentive payments and/or shared savings programs with physicians. CMS stated that it needs additional information in order to finalize an exception that will allow the benefits of such programs for industry but without posing a risk of patient or program abuse.
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Home Sweet Medical Home
Source: Trustee Magazine
Date: 11/07/2008
The Medical Home Model is a patient-centered approach for primary care and chronic care management implemented throughout the U.S. over the last two years.
In 2007, the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association released a set of joint principles describing the patient-centered “medical home.”
The goal of the medical home is to improve quality, efficiency and satisfaction for both patients and doctors. The primary care physician, in close collaboration with the patient, leads a team of health care professionals who are responsible for providing or facilitating all of the patient’s health care needs.
The model includes open scheduling, expanded hours and a variety of ways for patients and providers to work together, including group visits, phone calls and e-mails between physician and patient, and interactive web sites. It is believed that the model has the potential to attract primary care physicians, save money, and boost quality and patient satisfaction. Practices participating in a medical home demonstration project did better financially because, among other reasons, patients came in on a timelier basis, and the practices started receiving payment for electronic visits.
Medical home proponents are trying to convince payers to experiment with ways to reimburse providers for delivering services in more patient-centered ways rather than only paying for face-to-face office visits. However, while there’s wide agreement that the medical home model can improve quality and satisfaction, some argue that simply boosting reimbursement for primary care doctors and encouraging them to do their jobs well in the traditional way is a more immediate concern and should be the focus for the short-term.
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Correctional Mental Health Research: Opportunities and Barriers
Source: Journal of Correctional Health Care
Date: 10/01/2008
In March 2007, the University of Massachusetts UMass Correctional Health program assembled a national work group to discuss correctional mental health research. During the three-hour discussion, participants focused on two overarching topics: opportunities for further correctional mental health research and barriers in research. Though they did not conduct an intensive or comprehensive review of current literature, the impressions shared by the experts of the work group indicate areas of broad consensus and can serve as a starting point for future work.
The work of the group was shaped by the perception that research in correctional mental health in general has been sparse and often based on the questionable application of inappropriate methods. The discussion of topics most in need of attention centered around five content areas: epidemiology, research methodology, functional behaviors, efficacy of interventions, and safety. Perhaps the strongest consensus of the group involved the importance of safety as an issue in need of research attention.
A wide range of barriers to correctional mental health research was identified, including funding difficulties, resistance from stakeholders, restricted access to subjects, limited information technology, ethical concerns, and institutional board review requirements. Potential strategies the group generated for overcoming the barriers included setting appropriate priorities, easing the burden of research protocols, identifying key collaborators, and facilitating the board review approval process.
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Hospice Care Evolves as Alzheimer’s, Other Ills Raise Demand
Source: U.S. News & World Report
Date: 11/04/2008
So far this year, more than 1 million American patients have begun hospice care, approaching last year’s total of 1.4 million people, which was double the tally from a decade ago.
Hospice care is covered under Medicare, Medicaid and most private insurance plans and is a swiftly growing healthcare field. Hospice care can include pain management, medications, medical supplies and equipment, and assistance with the emotional, psychological and spiritual aspects of dying. A typical hospice team will include nurses, home health aides, social workers, bereavement counselors, and clergy--as well as a hospice physician and the patient’s personal physician. Hospice care is often provided in the patient’s home, but is also provided at special hospice residences and assisted living or nursing facilities. It is only recently that hospice care, which began as a community-based movement in the 1960s, has become an established part of health care.
Medicare is paying greater attention to the field of hospice care as the demand surges. New regulations that will raise quality-of-care standards will go into effect in December 2008. In October 2008, however, CMS cut the average reimbursement hospices receive by more than 4% nationwide.
The number of hospice patients is expected to increase in years to come. Traditionally, cancer patients have been the primary group entering hospice care, followed by those in the final stages of heart disease. Dementia patients, many of whom suffer from Alzheimer’s disease, are accounting for a growing number of hospice admissions—as many as 10.1% of all hospice admissions. Alzheimer’s patients have a pressing need for hospice care due to the intense care they require during later stages of the disease. Some hospices have developed specialized programs for people with dementia to handle the high-volume of patients and the great attention the illness requires.
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Payer & Reimbursement Issues
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Medicare Drug Program Snips $6B from Year’s Tab
Source: USA Today
Date: 10/31/2008
Medicare prescription drug spending dropped by 12% to $44 billion in the fiscal year ended Sept. 30. The $6 billion in savings were driven by the widespread use of low-cost generic drugs.
The prescription drug program for seniors has cost about one-third less than originally estimated since it started in January 2006. When the program started, the Congressional Budget Office had predicted it would cost $74 billion a year by 2008. Medicare actuaries predicted even higher costs.
Besides the use of generic drugs, other reasons for the savings were fewer seniors enrolled than predicted and the so-called “donut hole” that results in a drop in coverage when drug expenses are between $2,510 and $4,050 in a year.
Seniors enrolled in the prescription drug program have seen savings, too. The monthly premium for basic drug coverage was $26.70 in 2008 — a third less than what had been forecast. The AARP regards the Medicare prescription drug program as a success.
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CMS Considers Changes to Payment Locality Structures
Source: aafp.org
Date: 11/19/2008
When the Centers for Medicare & Medicaid Services (CMS) drafted four potential alternatives to the current payment locality structure that is used to determine physician fee schedules for Medicare patients, the American Academy of Family Physicians wrote a formal complaint on behalf of rural doctors.
According to the Academy, the proposed alternatives would reevaluate the geographic practice cost indices (GPCIs) for all areas across the country; however, this methodology would ultimately benefit the urban localities at the expense of the rural ones. By ignoring the actual cost of practicing medicine in a rural setting, the Academy claims that new regulations would substantially hurt physicians who practice in rural areas, places with very high numbers of Medicare patients.
CMS may decide to review the comments from the Academy and could potentially respond sometime in 2009.
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Medicare Payment Investigation Program Could Step Up Physician Audits
Source: Medical Economics
Date: 11/21/2008
The Medicare Recovery Audit Contractor (RAC) program, currently used in a handful of American states, is expected to be used across all 50 states by January 2010. RAC, an auditing initiative sponsored by the Centers for Medicare & Medicaid Services (CMS), uses comprehensive auditing of physicians in order to determine whether Medicare payments were inappropriately high.
Advocates of expanding the program claim that in states like Florida where Medicare fraud was a serious and recurring problem prior to RAC, intervention on behalf of CMS has enabled the entire Medicare system to work more efficiently.
Nevertheless, many physicians and hospitals across the country are nervous at the added time, energy, and money that will be needed to deal with auditors. The American Academy of Family Physicians intends to monitor RAC’s investigations. Other organizations like the American Medical Association claim that CMS should focus more time and effort explaining Medicare’s complicated billing scheme rather than punishing physicians who make administrative mistakes. Though RAC has recovered about $980 million in misappropriated Medicare funds since its inception in 2005, there is substantial worry amongst many physicians across the country who fear that their practices or hospitals will be the subject of unnecessary audits.
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Do Reimbursement Delays Discourage Medicaid Participation By Physicians?
Source: Health Affairs
Date: 11/18/2008
Though traditional studies of Medicaid have focused exclusively on the value of payments as a criterion for physician participation, very little research has studied the effect of payment delays. A recent study in the Policy Journal of the Health Sphere sought to examine the relationship between physician willingness to accept new Medicaid patients and the amount of delay for Medicaid payments to be processed.
It is understood that higher Medicaid payments are the main factor in increasing physician participation. However, although the study found that there is no statistically significant link between delayed payments and increased participation, the researchers concluded that payment delays can have a negative synergistic effect on physician participation when coupled with lower payments. In most of the cases where payments arrived on time, the payments were relatively high. However, in cases where the payments were high but payments took longer to arrive, physicians were much more likely to not take new Medicaid patients.
Though payment delays appear to be a subordinate concern to higher Medicaid reimbursements, this study raises interesting questions about some other means for increasing the number of physicians across the United States who are willing to take new Medicaid patients.
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Credentialing, Licensure, Quality Management
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Sermo and FDA Collaboration Brings Real-time Physician Feedback to Medical Device Safety
Source: MarketWatch
Date: 10/22/2008
Recently, the FDA completed a six-month collaboration with Sermo, a popular “physician-only online community, in which Sermo members provided the FDA with their thoughts on medical device safety, clinical practices, and other major medical headlines. It is customary for the FDA to elicit feedback from physicians regarding adverse events and important product issues, but this has been a tedious process in the past, resulting in little physician participation.
It is hoped that engagement through Sermo, which allows physicians to interact anonymously and in real-time, will drive new levels of collaboration. Furthermore, the open engagement of the site helps build consensus on the topics discussed.
In one prominent example, the FDA asked Sermo members to comment on the presence of a toxic chemical in medical devices made of polyvinyl chloride, something the agency had warned about in 2002 but not acted on. Within days, over a thousand physicians had responded, mostly concluding that the benefits of these devices outweigh the [largely unknown] risks.
In the near future at least, the FDA will likely to continue to seek Sermo members’ feedback to “help shape public guidance on important healthcare issues.”
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Residency Education—Competency and Innovation
Source: Annals of Family Medicine
Date: 10/01/2008
In order to best prepare physicians to meet current and emerging health care needs, family medicine residency programs must educate physicians to practice evidence-based, personalized medicine efficiently and with the highest quality of care. Current policies of residency review committees, however, leave little room for flexibility and new conceptual models of training.
Doctors of the Association of Family Medicine put forth a vision for a modified structure for family medicine residency programs. Family medicine residency programs can be conceptualized to encompass three educational stages: foundation building, ambulatory competency, and enhancement tracks. The development of ambulatory competency occurs simultaneously with the foundation stage and extends beyond it. Achievement in the ambulatory stage should be marked not only by hours logged and patients seen but through the development of the ability to establish superb doctor-patient relationships, gather accurate medical histories, perform appropriate physical exams, and communicate treatment plans to patients.
As envisioned by the Association of Family Medicine’s doctors, the final stage in training educates students in specialized fields. The competency in most areas will not require a specific number of procedures to be performed, a predetermined number of patient encounters, or specific length of time in the program; rather, physicians will demonstrate mastery by proving their competency according to evidence-based principles utilizing evaluation techniques appropriate to the component being tested.
For these changes to take place, the residency review committees and the Accreditation Council for Graduate Medical Education must allow flexibility in residency content beyond that found in the foundational and ambulatory stages today. Reducing absolute requirements of time and/or numbers would allow more curricular time for flexibility and innovation.
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Improving Hospital Discharge
Source: Physician’s News Digest
Date: 11/01/2008
The hospital discharge is a moment in the care process when patients are particularly vulnerable. As many as 20-30% of adverse events following discharge are preventable, and another 30% are ameliorable, meaning their severity could be reduced if measures were instituted earlier and more effectively.
Emerging data suggests that interventions before, during and after discharge can reduce the number of post-discharge adverse events and prevent rehospitalizations.
It is widely observed that physicians often overestimate patients’ comprehension of medical instructions, including those given at discharge, and the patients’ inability to recall and/or follow the physicians’ instructions contributes greatly to adverse events. Research on care transitions suggests that approximately one in five medical patients experience an adverse event during the first several weeks after discharge. One-third of those events are associated with disability, and half of them are associated with the use of additional health services.
Major health players and smaller groups alike are instituting changes to improve hospital discharge. Popular strategies include assignment of a discharge advocate, prompt follow-up calls and home visits from physicians and pharmacists, and use of a discharge toolkit, which might include a comprehensive after-hospital care plan document.
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HR in a Box?
Source: Physicians Practice
Date: 11/01/2008
Many practices, especially small practices, do not devote the proper attention to human resources, while others spend excessive time and energy on ineffective HR practices. There are many web- and software-based solutions that can aid in the proper management of human resources, saving practices both time and money, and ultimately increasing employee retention.
An increasing number of benefit providers are offering web solutions that can make life easier for both employees and their practices. These web programs allow employees to interact directly with the provider to receive reimbursement information, locate appropriate services, and change benefit allocations when needed.
Another popular and versatile solution is the use of database software. A practice can build a database that not only tracks benefits and attendance but can also track applicants, OSHA training, and licensure requirements for staff.
Practices must hold onto records to comply with federal requirements, but electronic HR records can cut down on the amount of paper storage. Use of electronic records is especially beneficial for practices with multiple sites.
As more and more offices move towards advanced technology and paperless systems, medical professionals who are trained to use computer and Internet technology, or who demonstrate the ability to learn quickly, will be in greater demand.
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Physician Website Helps Locate NYS Doctors
Source: Hudson Valley Press Online
Date: 11/19/2008
A website run by the Medical Society of the State of New York (MSSNY) is aiding patients all around the state find doctors through a central database. The website, known as “Find A Doc,” is expected to be particularly useful for patients who are looking for doctors in specialties they have not required before.
In addition to linking up patients with doctors across the state, the website contains a large amount of information on each physician, from the MD’s full name, address and phone number to certifications by specialty boards. Additionally, Find A Doc tells web users other qualitative data on physicians such as where they went to medical school, whether they belong to any medical societies, and whether they speak any foreign languages.
On the search menu, in order to make the service as useful as possible, drop-down menus are used so that patients are not required to know the spellings of medical specializations as well as the geographic regions that are covered by the service.
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Medical Simulation Corp. Announces Partnership with University of South Florida
Source: Eurekaalert.org
Date: 11/12/2008
The University of South Florida (USF) recently announced a partnership with the Medical Simulation Corporation (MSC) in order to train doctors and other medical practitioners with the use of virtual reality and other computer simulation programs.
The simulation software is designed to mimic actual medical procedures in subjects such as cardiology, radiology, general surgery, emergency critical care, and general medicine. Since no actual patients are involved, the program is considered risk-free.
USF hopes that the new program will allow its hospital to surpass increasingly stringent safety standards. The simulations will take place in a brand-new 2,800 square foot facility where physicians around the local, regional, and national areas will be able to take advantage of the newly available technology.
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Customer Service Portals Spark Physician Interest But Not Participation
Source: Medical Marketing & Media
Date: 11/19/2008
A recent Manhattan Research report studied the prevalence of customer service portals provided by pharmaceutical companies like Merck and Pfizer. The study notes that while demand for customer service portals is up, physician usage of the portals has decreased from 2007 to 2008.
Comparing physicians’ interactions with big pharma to ordinary consumers’ relationships with companies like airlines, banks, or retail stores, the article recognizes that doctors across the country are looking for more customizable ways for making deals with pharmaceutical companies in order to offer drugs that best fit their patient base. At the same time, the report has found, service portals have been relatively static in their offerings.
The report notes that physicians’ biggest demands for service portals are for product information, guidelines for treatment, and having easy access to free samples of drugs. Physicians would also like to see the portals include e-mail customer service or live video representatives, the report notes.
Factors that are causing reduced usage of such portals include content deficiencies, minimal marketing support, and the general scarcity of portals. Physicians would be most likely to use a portal from companies like AstraZeneca, GlaxoSmithKline, and Sanofi Aventis, in addition to Merck and Pfizer.
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Presence in Virtual Worlds Could Help Health Plans Achieve Real-World Behavior Change
Source: AIS Health Business Daily
Date: 08/28/2008
The Center for Disease Control and Prevention (CDC) and several private health organizations are bringing health information to virtual communities by establishing a presence at popular online destinations for social networking, including Second Life, the biggest of virtual worlds on the Internet. The use of these social networking media is a response to changes in the way consumers are accessing and sharing health information. In these online communities, organizations see an opportunity to achieve real and sustainable behavior change by shifting the focus of health education to emphasize the user experience in addition to the message.
Participating organizations see Second Life as the perfect environment for modeling behavior, believing that when people practice healthful behaviors in a virtual world they are more likely to perform them in the real world, too.
A health organization’s Second Life site, referred to as an “island,” can involve as many as 80 participants at one time in conversations where others observe, listen and learn--thus presenting a cost-effective option for attending to consumer concerns.
The overall impact of new media on health care delivery could be profound. Currently, CIGNA is testing its Second Life venture on its employees. The CDC conducted interviews on Second Life and found that Second Life consumers want health information, seek out other residents with similar health issues to share experiences, and feel more comfortable accessing sensitive health information when they can remain anonymous. The CDC has a Second Life island as well as other ventures in the virtual world, including a partnership with Whyville to promote flu vaccination awareness among tweens.
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Physician Practice Management
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Rethinking Asset Protection
Source: Unique Opportunities
Date: 10/01/2008
Too many physicians use asset protection plans (APPs) that will not stand up if ever challenged. Generic APPs, with which most people are familiar, will not offer many benefits and may not even do the job they are expected to do. Physicians should be aware of several asset protection techniques—not commonplace asset protection plans but other approaches—that will confer significant economic benefits.
These techniques, and any other APPs, may best be evaluated on a “sliding scale” system, with the lowest endpoint being an asset that is completely vulnerable and the highest endpoint being an asset that cannot be taken by a creditor even in bankruptcy. Recommended techniques are purchase of a Qualified or Non-Qualified Retirement Plan, establishment of a Captive Insurance Company, or purchase of Cash Value Life Insurance.
Qualified retirement plans are protected against lawsuits and creditor claims. Contributions to them can be fully deducted, and funds within them grow tax-deferred. The protection offered by non-qualified retirement plans depends on the individual plan’s structure. In terms of benefits, allowable contributions can be much higher than with qualified plans (but not deductible).
A Captive Insurance Company insures various risks of the practice like any properly-licensed insurer. Though rarely created for the purpose of asset protection, companies that create their own CICs will find that they can provide great creditor protection.
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Doctors Tally the Economic Value Practices Bring to Communities
Source: American Medical News
Date: 11/10/2008
A growing number of medical organizations around the country are presenting local and national economic impacts studies that show the benefits physician practices bring to a community. Many of these studies are released in order to address the growing physician shortage and, ideally, establish partnerships with local businesses to aid in recruiting and provide financial and tax benefits to local physicians.
A study released by the Medical Society of Greater Kansas City reported that local practices not only employ 4,000 full-time and 500 part-time physicians but also create an additional 21,000 full-time and 3,200 part-time jobs. The Kansas City area practices contribute $2.7 billion in payroll and pay $202 million in taxes annually. Each year, the physician community provides more than $124 million worth of volunteer services each year and donates more than $19 million to local organizations.
On October 28, 2008, the Medical Association of Georgia released a local economic impact study estimating that private-practice physicians’ offices in the state account for more than 180,000 jobs, $10 billion in wages and nearly $20 billion in economic activity. The report predicts that the physician-practice impact will continue to grow, generating 50% more jobs by 2020.
Both studies were inspired by physician shortage projections and the need to involve the community in understanding trends in physician practices as well as the practices’ relationships to their communities.
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Five Steps to Getting a Second Opinion Online
Source: CNN.com
Date: 11/06/2008
An online second opinion (from a reputable medical practice) allows patients to seek additional medical consultation without the hassle and the costs associated with out-of-town travel.
Currently, two major, world-class hospitals offer online second opinions to patients nationwide. One, the Cleveland Clinic, charges $565 for an online second opinion and an additional $180 if a pathologist is needed. The other, the Massachusetts General-affiliated Partners Online Specialty Consultations, charges $495 for a second opinion, plus an additional $200 for a radiologist’s services and $250 for a pathologist’s. Insurance often will not pay for online consulting services.
Patients need to ensure that they ask the right questions when using online second opinion services. Since communication is done via e-mail, the communication process will be different from a traditional in-person visit and may require that patients devote greater thought to the questions they want answered. Patients should also learn who to call in case they need help interpreting the doctor’s reports. Follow-up treatment or additional consultations still may be necessary.
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