Indiana University Health wouldn't say anything more about shelving expansion plans for Methodist Hospital other than a brief e-mail that contained this:
“Because of several external factors, such as lingering recession and healthcare reform-related uncertainties, IU Health has delayed the construction until it can fully ensure the design of the new critical-care bed tower will align with the future healthcare environment.”
The statement went on to say that “the design and timing of future construction is uncertain.” Plans had called for a critical-care bed tower to meet patient demand.
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Hundreds of hospitals and medical groups have entered into contracts with insurers (notably Medicare) to deliver savings and quality gains. In return, hospitals and doctors may get a share of whatever they save. The contracts, called accountable care organizations, are popular but experimental and not without uncertainty.
One source of confusion is how best to determine which patients are included under the contract for the purposes of tallying up the savings and measuring the quality. Get it wrong and it could skew savings and quality results.
Now, researchers at Dartmouth University have crunched Medicare data to test two basic strategies for identifying patients. One picks out patients at the start of the contract and the other at the end of each year. The results were published in Health Affairs.
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Nothing in federal law says that hospitals with tax breaks for providing a community benefit must spend money to provide free medical care or subsidize other healthcare services. The standards by which hospitals earn tax breaks are lax, and have been so for more than four decades.
Nonetheless, tax-exempt hospitals must now publicly disclose the amount they spend on such subsidies. The Internal Revenue Service required the disclosure after Congressional scrutiny of the not-for-profit hospital sector, and the first data become available last year. This week, Modern Healthcare reported the latest figures with data provided by GuideStar, a not-for-profit watchdog.
As we reported, hospital margins do not appear to determine what hospitals spend on free medical care for low-income patients (known as charity care) or the subsidized services that federal officials have deemed community benefits, according to an analysis of 2010 reporting to the Internal Revenue Service.
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Doctors with the Beth Israel Deaconess Physician Organization (a group of 900 Harvard University faculty and an equal number of independent doctors) plowed into the second year as an accountable care Pioneer with a new hospital contract, but no performance results for the last six months.
“I kind of wish we knew,” said Dr. Stuart Rosenberg, president and chief executive of the Harvard Medical Faculty Practice, one of Medicare's first and most experimental accountable care organizations (hence the name Pioneers). Pioneers began roughly one year ago (see here for an interactive graphics on their location and vital stats) and hospitals and doctors face potential bonuses or losses based on quality and cost control performance.
Those results, despite federal officials' commitment and wishes, have been slow to come. “It's been a little bit flying in the dark this first year,” he said.
Interest in accountable care has grown among policymakers and the private market and its use in Medicare continues to expand. Medicare this week said it nearly doubled accountable care organizations in its shared savings program as of Jan. 1.
But the experimental payment model is largely unproven. One early test by 10 medical groups over five years failed to reduce spending, according to the Congressional Budget Office.
Jonathan Blum, the CMS acting principal deputy administrator and director for the center for Medicare, speaking to reporters this week said it would be too soon to publicly release results for Pioneers or any of the more than 100 other Medicare accountable care organizations launched last year.
(Rosenberg said doctors also receive dated data from a private insurance contract with incentives—potential for bonuses and losses—similar to accountable care, thought the lag is not so great, a one-month delay for data that is two months old.)
The lack of data does not appear to have dampened interest in the payment model.
Hospitals for the first time this year agreed to share in the financial risk of the doctors' new pay models, Rosenberg said. Hospitals share the risk for high cost hospitalized patients under the new arrangements. The new arrangement will receive $2 million annually each form hospitals and the physicians for investment under the newly created Beth Israel Deaconess Care Organization.
But a large majority of the financial incentives under the program will be paid to primary care doctors, not hospitals. “We think they have been underinvested in and underpaid” and they have value as care coordinators in accountable care, Rosenberg said.
But if primary care doctors succeed, fewer patients may be hospitalized and hospital revenue falls.
Hospitals may benefit another way, Rosenberg said, if the accountable care organization succeeds in attracting more of the market.
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As Congress and the White House wrangle over a compromise to avert the fiscal cliff, the anxiety (for hospitals) and expectation (among experts) regarding possible Medicare cuts is clear, as my colleague Jessica Zigmond reported.
Now, new reports on state budgets suggest continued strain on Medicaid (another major insurer) despite a modest recovery under way.
State budgets have recovered slowly from the last recession. Medicaid, which is jointly financed by states and the federal government, accounts for the single largest state expense. Medicaid paid $152.5 billion to hospitals in 2010, or nearly one-fifth of spending on U.S. hospitals that year.
Even the good news about state budgets comes with a caveat. For the first time since the downturn, state revenue in the coming year will exceed revenue states collected in 2008—but only without adjustment for inflation, the National Association of State Budget Officers reported last week. (It is “a turning point,” the group said.)
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Lost revenue, not the extraordinary cost to repair damage from superstorm Sandy, could erode the A3 credit rating of NYU Langone Medical Center's hospitals, says an analyst with Moody's Investors Service.
As we reported, Moody's said it will review and may downgrade NYU hospitals' rating as a result of storm damage and disrupted operations.
Beth Wexler, a Moody's senior credit officer, said the biggest problem for the hospitals is that NYU Langone Medical Center's Tisch Hospital remains closed and without power weeks after the storm forced its emergency evacuation. She said that NYU hospitals have plenty of cash, however “it's more the revenue that is literally not coming in the door for extended periods of time.” And the longer the closure, the more opportunity for patients or referring physicians to turn elsewhere, she said.
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Critical infrastructure vulnerable to flooding—including electrical switches and fuel pumps—will be moved to higher ground at New York City-owned hospitals that remain closed by damage from superstorm Sandy, said the president of the city's health system.
But first, the hospitals must open, Alan Aviles, president and CEO of the New York City Health and Hospitals Corp., told an audience in Manhattan for the Crain's New York Business Health Tech Summit.
That will not happen until January for Coney Island Hospital and February for Bellevue, though limited emergency room and outpatient services will resume sooner.
Coney Island Hospital, which lost all power for four hours during the lethal storm, has already resumed its outpatient services. Bellevue will do so next week, Aviles said on Monday when New York City Mayor Michael Bloomberg announced plans to increase the city's capital budget by $500 million, including $300 million for the health system's Sandy repairs. The City Council approved the spending on Tuesday afternoon.
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One major credit rating agency upgraded more not-for-profit hospitals and systems than it downgraded between July and September, and deals—mergers, acquisitions and leases—were behind better credit in several cases.
Moody's upgraded 12 not-for-profit healthcare borrowers with $3.2 billion in outstanding debt last quarter compared with the seven downgraded borrowers with $957.3 million of debt, Moody's said in a new report.
Indeed, deals have been so numerous and have so influenced credit that Moody's Investors Service now says it was wrong earlier this year when it said that 2012 would likely close with more downgrades than upgrades. The year may end with an equal number of each, the report said. “We're not prognosticators here,” said Moody's associate analyst Carrie Sheffield. “We do have a negative outlook for the sector” and analysts expected to see more downgrades than upgrades, she said.
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More than three years out from the end of the Great Recession, the economy's weak and fitful recovery has continued to deliver disappointing job growth. Hospitals have reported fewer patients and more uninsured since the recession, which stripped some households of health insurance as the economy shed jobs.
But here's some news that may be welcomed by hospitals. Newly released Census Bureau figures show that an erosion in employer-sponsored insurance, which accelerated during the downturn, halted in 2011.
Unsurprisingly, the percentage of people with health insurance through an employer dropped sharply in 2009 (56.1% from 58.9% the prior year) and continued to slide in 2010 to 55.3%. But last year's 55.1% was not a significant difference from the year before, the Census Bureau said. You can read more on the Census Bureau figures in this week's Modern Healthcare.
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Diversity is a big issue in healthcare and not just with patients, caregivers and executives. It turns out there's diversity in financial incentives that are part of the accountable care organization phenomenon.
In Maryland, doctors will be paid bonuses later this year tied to quality reporting under a new shared-savings payment model. The experiment includes the state's five largest insurers and Medicaid managed care.
In Minnesota, early results of bundled payments for heart attacks did not yield savings, but similar payments for diabetes, hypertension, coronary artery disease and hip and knee replacements appear on track to share savings with providers in Illinois and Pennsylvania who have had success reducing potentially avoidable complications.
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Diversity is a big issue in healthcare and not just with patients, caregivers and executives. It turns out there's diversity in financial incentives that are part of the accountable care organization phenomenon.
In Maryland, doctors will be paid bonuses later this year tied to quality reporting under a new shared-savings payment model. The experiment includes the state's five largest insurers and Medicaid managed care.
In Minnesota, early results of bundled payments for heart attacks did not yield savings, but similar payments for diabetes, hypertension, coronary artery disease and hip and knee replacements appear on track to share savings with providers in Illinois and Pennsylvania who have had success reducing potentially avoidable complications.
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