1 Hour, 5 Minutes
Fawn Lopez, publisher, Modern Healthcare
Gary Zegiestowsky, chief executive officer, Informatics Corp. of America, or ICA
David Burda, editor, Modern Healthcare
Steven Sonenreich, president and CEO, Mount Sinai Medical Center
Rick Schooler, vice president and chief information officer, Orlando Regional Healthcare
George Hickman, senior vice president and CIO, Albany Medical Center
Fawn Lopez: Good morning. Can you hear me? Yes, no? Is it OK now? Good morning. Welcome to trend watch. My name is Fawn Lopez, publisher of Modern Healthcare. On behalf of the entire staff at Modern Healthcare, I would like to welcome and thank you for getting out of bed so early to be with us this morning. And we hope that you will find the time well-spent.
I’d like to also take this opportunity to welcome and thank our distinguished panel of guests. Today’s participants, Dave Burda, our editor, will be formally introducing our guests when he takes the podium. For those of you have attended this breakfast before, similar to past TrendWatch sessions, Dave Burda will be our moderator. There will be a 40 minute, so to speak, panel discussion followed by about 15 minutes Q&A session. There will be two mics on the floor, so please raise your hand when you have a question and someone will come to you.
For your information, there will be a transcript and a pod cast of this event posted on ModernHealthcare.com shortly after the session of the show. And we would also appreciate your comments and suggestions for future TrendWatch, so please fill out a survey form and copies of the survey are placed at your tables.
Last, but not least, I’d like to express our appreciation to ICA for their participation as this year’s exclusive sponsor. ICA is Infomatics Corporation of America; it’s a clinical- and solutions-oriented healthcare information technology company co-founded by Vanderbilt (University) and it’s based in Nashville, Tenn. The company’s primary focus is to make it easier for providers to aggregate, access, communicate, and act on clinical information on a daily basis.
Representing the company this morning is CEO Gary Zegiestowsky, please join me in welcoming Gary to the podium to make a few remarks. Thank you.
[00:02:45.03] Gary Zegiestowsky: Good morning. Glad to be here. And I did tell Fawn she could just say Gary Z and don’t—not struggle with that. The last is Zegiestowsky, most don’t get it on the first try, but we are glad to be here this morning and really appreciate the opportunity to sponsor this event. Very happy to see the outstanding panel that Modern Healthcare has pulled together for us this morning as well as the collection of thought leaders that are out there in the audience, and I think one thing that we’ve seen is just the value of Modern Healthcare as a key contributor in the industry in terms of the value that they can deliver. I think that everybody out there will probably agree with that, especially given that you’re all here at 6:45 on the Monday [unclear]. So, glad to be there. And what I want to do is just give you a very quick snapshot of ICA; I think Fawn did a nice intro, but basically to tell you a little bit about who we are and introduce us.
We are a newer company, we were formed really at the end of 2005, and it was co-founded with the [unclear] with one purpose, and that was very simple. It was to take the technology and solutions that they developed by the practicing physicians there out to the market in order to provide tools to help physicians more effectively use information to deliver better care. So very simply, it’s that.
And I think what we look at is really three dimensions of how do you actually accomplish that. And the first is [unclear] around the patient. It’s just a base understanding that patients go to multiple places for treatment today, and there’s a need to have a complete view of that patient. So to direct that first challenge is one of understanding: How do you pull all that information together effectively? And it’s aggregating, so that word that we use of aggregation, but it’s interesting not only that you need a complete view, but you have to understand the diversity of what you’re dealing with in terms of both content and format of data out there. So, pulling all that together is not an easy task.
Having the second dimension, is once you have that complete patient view and information is really focusing on the provider, and very simply, the providers need easy access to the information they need to make the right decisions.
And as we look at that second piece, the way we approach trying to solve that is really looking at making all of that easy to fit into how physicians practice across treatment settings, because patients span those treatment settings and not only providing access, but making it easy to find what they need. So, it’s the search capability, say give me what I need, when I need it, and just when I need to make those right decisions, and then provide the tools for me to take action on that at the point of care.
[00:05:19.26] And then finally is if you take one step further, you’ve got the patient, you’ve got your physicians, you’ve got a community. And it’s really looking at that broader community around a common understanding of the patient as well as: How do you coordinate care for specific segments of the population? And I think when we look at that challenge, we approach it around starting with very simply, how do I have complete information on the patients across the spectrum of a community, but how do I provide providers with what they need to accomplish that?
And, I think especially when you look at something like this certain chronic disease state such as diabetes, it’s very simple. You provide some key clinical metrics that let you track and communicate that information, that not only allows you to take action on it, but truly understand what you can do to make a difference in the lives of those patients. And it’s about coordinating care across those treatment settings, but at the same time, providing some common basis for that care with the incorporation of evidence and some common standards that let you provide that continuity across providers.
So, it’s very simple, what we’re trying to do is really improve the way care is delivered. We do believe technology is an enabler. I think if I look out there today, I’m not sure that I’d see a solution or one vendor per se that could truly solve all of that. And I think that’s probably evidenced well by the fact that there’s (800) or 900 exhibiting this year. So, we’re one part of that, and I think what we’re trying to do is really pull together the whole ability of aligning patients, providers, and communities to improve care at the end of the day. So, I wanted to just tell you a quick snapshot of us. Again, we appreciate being here, and glad to be part of the breakfast, and I think I will now turn it over to Dave to take it from there. [Applause]
[00:07:10.15] David Burda: Thank you, Gary Z. I’m Dave B. We’re running a little late, so I’m going to hop right into the five things that will occupy the editorial staff of Modern Healthcare in 2008 and keep our staff of 28 editors and reporters very busy. And as a tradition with this breakfast, none of this has been rehearsed. Our panelists don’t know what I’m going to say; I don’t know what I’m going to say, and so if you’re into spontaneity and uncomfortable silence, you’re in the right place. If you don’t like that, stop drinking coffee right now, because you’ll really get nervous.
No. 1 on our list of things that we’ll be tracking this year is the mandated use of information technology. Not pandering to the crowd here, but this is very good news for IT vendors. The government, the federal government, is considering mandating and requiring the use of certain types of information technology as a condition of participating in the Medicare and Medicaid programs. In November, (the American Health Information Community) recommended to HHS (Secretary) Mike Leavitt that he’d push for federal legislation requiring physicians to use e-prescribing systems, and if they don’t, they can’t participate in the Medicare program.
In December, Leavitt lobbied Congress to get that into Medicare, under the Medicare bill. Congress passed the bill, but stripped out a lot of the provisions that didn’t directly affect payment. But we do expect that provision to pop up again in 2008. And one of the reasons that will be a hot topic is the insurance lobby is pushing heavily for e-prescribing, and if you want to know why they’re doing that, you can read the cover story of our May, excuse me, our Feb. 18 issue, and the headline of that was “Drug Money.” So there’s a little hint there about why they’re interested in that topic.
Private insurers are also pushing the mandated use of information technology as a condition of a—signing contracts with a healthcare providers. One of the first examples we’ve seen of this happened just the other day, on Feb. 14. Blue Cross and Blue Shield of Massachusetts announced that it would require all their hospitals and physicians that participate in their quality bonus program to use CPOE starting in 2012. And if they’re going to, you know, all it takes is one insurer to do that and everybody else will follow.
So what does that mean for IT vendors? Well, it would be the same thing, you know, if the federal government required healthcare executives to buy a subscription to Modern Healthcare, it’s just great business. So it will mean a windfall for IT providers and vendors in 2008 as some of those mandates come through.
No. 2 on our list of things we’ll be watching this year are healthcare providers not billing for medical errors. As many of you know, Medicare announced that starting Oct. 1 of this year, we’ll stop paying hospitals for eight types of medical mistakes. And as Medicare goes, so go private health insurers. And hospitals are trying to get the jump on insurers, do the right things for patients. Maybe up the stakes on their staff to avoid mistakes and grab some positive publicity by announcing that they’re not going to bill patients for certain mistakes.
Our latest count has hospitals in six states agreeing not to bill patients, bill patients or insurers for medical mistakes. Those six are Colorado, Massachusetts, Michigan, Minnesota, Oregon, or do you say Oregon? I’m not sure. And Vermont. We expect hospitals in other states to follow suit. I mean, who wants to be the last hospital that says it’s OK to bill even if we cut off the wrong leg. So, I think you’re going to see an acceleration of that, and maybe by the end of 2008, hospitals across the country will have all agreed to that.
So what does that mean for IT vendors? Well, I think systems that help hospitals clearly identify medical errors before they happen will be in demand as never before. And systems that you know, once a medical error does happen, somehow link that system up with the finance department to stop the bill from going out before you know the patient is notified that there was a mistake. So, expect a lot of coverage of that in Modern Healthcare in 2008.
[00:11:49.06] Third on our list, changes in Medicare reimbursement, especially for hospitals. Now, in addition to the not paying Medicare’s, not paying for [unclear] medical conditions, that’s just one of a number of changes that hospitals will be facing in 2008.
Topping that list is a new DRG system. It actually took effect on Oct. 1, 2007; there’s a two-year phase-in period and what that did, increased the number of DRGs from 538 to 745 to more accurately measure the severity of patients’ condition to more accurately gauge how much Medicare should pay for that case.
Another major change that we expect to see this year, Medicare has proposed a pay-for-performance system, which it politely calls value-based purchasing. That would incorporate clinical performance and outcome reporting into the formula they use to calculate Medicare payments to hospitals. CMS submitted that proposal to Congress, I think in November, that we expect Congress to give serious consideration to in 2008.
Third on the list of changes in the reimbursement system, Medicare will start posting hospital patient-satisfaction results on its Hospital Compare Web site starting next month. Hospitals had to start reporting those results to the government in July through the HCAHPs program if they want to get their full Medicare payment update in fiscal 2008, which is [unclear] on Oct. 1 as well.
So what do those changes mean for our IT providers or IT vendors? Again, plenty. The new DRG system will demand sophisticated coding systems to accurately gauge, you know, patient severity. And CMS already, based on what happened on the first DRG system came about in ‘83, they believed that hospitals will gain the system and somehow artificially inflate the severity of a patient’s illness to get more money. And they have already incorporated into their new systems something called a behavioral offset. So they’ve already predetermined that hospitals are going to cheat, so what that means for you is that you have to be extra, extra accurate if you want to get your full payment. So, coding systems that do that will be in demand.
The pay-for-performance system that’s been proposed, it will put an enormous pressure on hospitals to install systems that track, measure and record clinical outcomes. And the patient-satisfaction surveys that are demanded by the HCAHPS program will also require better ways to serve a patient and report that information to the government.
Fourth on our list: We’re picking up a renewed interest in hospital joint operating agreements. Now many markets across the country, hospital consolidation has reached a point where if there’s just one more deal in that market, it will launch an antitrust investigation or an antitrust complaint from the Federal Trade Commission or Justice Department. But the pressure on hospitals to find partners still hasn’t subsided. That pressure is coming from a need to reduce costs, the need to increase leverage of managed-care plans, and the need to share clinical information among themselves. So they’re looking for other ways that they can get together short of merging.
Now we have no statistics on this, but, you know, we have examples, you know. In the news business, if it happens once, it’s news; twice, it’s a trend. So we have two examples, so it’s an official trend. St. Mary’s, St. Mary Mercy Hospital in Livonia, Mich., and St. Joseph Mercy Health System in Ann Arbor formed a joint operating agreement earlier this month to share information, coordinate their activities. And two systems in Milwaukee, Columbia St. Mary’s and Froedtert & Community Health formed a JOA in January that they oversee a combined hospital. And in this model what they do is create a common parent organization. They stay separate legal entities but they have a common parent that coordinates their activities.
Now, those hospitals that don’t want to actually do a formal JOA are forming loose alliances and again, no statistics, but two examples. So, it’s a trend. Earlier this month, the Moses Cone Health System and Wake Forest University Medical Center formed something called a healthcare alliance to quote, unquote, work together, and we’ll see what the details are there. And then last year, three systems in Maine, Eastern Maine Healthcare, MaineHealth, and MaineGeneral Health, I guess in Maine you have to have the word Maine in your hospital system to exist there, created an alliance to purchase supplies and coordinate technology investment.
Now, I used to be the magazine’s legal reporter. We used to call that price-fixing and illegal market allocations. So, we’ll see what happens in Maine. So what does this mean for IT providers and vendors? You know, in one word, it’s operability. Interoperability, which is something that you’re going to hear plenty of this week. So the hospitals are going to work together probably will keep their existing IT systems, but they’re going to need a way for those systems to talk to each other if these hospitals are going to share financial and clinical information to make their JOAs and different alliances fulfill their promise.
And fifth on our list of things that we’ll be watching this year is hospital layoffs. And hospitals across the country will be facing increased financial pressures this year. It’s been quite a good run; just throw out some numbers for you. In 2006, latest figures from the AHA, American Hospital Association, hospitals set a record for both net revenue and net profit. Revenue was $587.1 billion, net profit was $35.2 billion. When the 2007 figures come out later this fall, we expect much of the same for 2007, but all good things must come to an end.
President Bush’s fiscal 2009 budget proposals calls for $64 billion in cuts in hospital reimbursement, as, you know, everybody knows, everybody in this room knows the poor market conditions are raising the cost of borrowing money, reducing investment income, and many healthcare systems and that’s actually the cover story in today’s Modern Healthcare. And, tonight, well, it’ll actually be tomorrow at 12:01 a.m. (ET), on the 26th, the government’s going to release its latest report on healthcare spending. Now, I’m not going to be up at 12:01, if I am, I’m not thinking about national healthcare spending. If you guys are up at 12:01, you can go to the Health Affairs Web site, or, if you want to be sleeping at 12:01, I have a copy of the report.
Their report will say that national healthcare expenditures will hit $4.3 trillion in 2017, or double what they are now. That will represent 19.5% of the gross domestic product, compared with 16% now. And those figures will put enormous pressure on the government, employers and other payers to better control healthcare costs and they’re going to come after healthcare providers with their payment rates.
And we’re starting to see a few cracks. And usually the first crack you see is people being laid off. Again, no statistics on this, but a couple of examples: Earlier this month, Empire Health Services, a two-hospital system in Washington State eliminated 130 full-time equivalent positions. Last week a small hospital in Nashville called Middle Tennessee Medical Center said it would lay off 36 people, or 3% of its workforce. Again, it’s not much to go on, but I think it’s a real red flag. We haven’t seen layoff stories in the past three, four years. And when you see two in a short amount of time like that, it is a red flag.
[00:19:54.13] So what does that mean for IT providers and vendors? You know, hospitals will be under financial duress. So what they’re going to be looking for are any type of system that would automate a function that was previously done by a human being, because they’re going to be looking to cut FTEs. So, only time will tell if we’re right about any of this; actually we’ll write about it and wind up making it true, and that’s how things kind of work. But, now without further delay, I’d like to call up our panelists to the podium and ask them whether they agree with any of that, disagree with any of that, have their own suggestions on what will happen in 2008, and then take your questions. So.
First, I’d like to have Rick Schooler, vice president and CIO at Orlando Regional Healthcare join us. Rick, please come up. Thank you. [Applause]
Also, Steven Sonenreich, president and CEO, Mount Sinai Medical Center in Miami Beach. [Applause]
Now, Alan Levine, who was, who used to run the North Broward hospital system here in Florida, he called on Friday. He recently resigned that system spot to take over the health department in Louisiana, and he called on Friday and said he couldn’t make it because the governor there needed to see him Monday morning. So. I have a funny feeling Alan will be back in Florida sooner than we think. So we’ll see.
And I didn’t see Andy Crowder, did Andy make it? OK. Well, since this is a spontaneous event, what I’m going to do, I brought up a list of attendees here. Aren’t you scared now? And what I’ll do first, is ask for a CIO volunteer to join us up front, and I have the names here, and I could go down and do that. But, I will, I have a watch here, I’m going to wait 30 seconds for a CIO to join us up here and respond to some of that. So ready, go. [Laughter]
[00:22:13.13] Male voice: Come on, buddy, where are you?
[00:22:16.17] David Burda: All right. It happens to be the--he’s making the sign of the cross, that’s great, the, actually George Hickman, from Albany Medical Center, you’re the national CIO of the year. Very good.
[00:22:39.01] George Hickman: Go easy on me.
[00:22:39.16] David Burda: All right. I hope George has paid attention there. All right, Steve, why don’t we—where are you? Steve, there you are. Why don’t we start with you and come on up and tell us if you agree with any of that, or disagree with any of that, please--
[00:22:54.28] Steve Sonenreich: Good morning everybody, and it’s a pleasure to be here with all of you. It kind of makes me wonder when you accept one of these opportunities why the only person other than yourself who made it to the panel is somebody who lives in Orlando. Yeah, but that being said, it is a pleasure to be here with all of you, and, responding to Dave Burda’s predictions for the future or focus for the future on behalf of Modern Healthcare, is actually very interesting for me to hear, because we get a sense of where many people in the industry who do travel around the country are getting focus. And so, you know, the two items that I thought were most interesting were talking about joint operating arrangement and also talking about layoffs.
And, both of those point to a great deal of challenge that exists in our industry on a going-forward basis. And so when people are deciding to marry their organizations, obviously they’re looking for leverage in the marketplace vis a vis the managed-care organizations. How do you get more price in order to be able to pay for all of the infrastructure, which we provide day in and day out. And layoffs, also, is indicative of an industry that’s challenged by a very large, uninsured population, and a rapidly growing working uninsured population. In Miami Dade County, Miami Beach, and I’m sure in many areas which you all come from, actually what’s growing faster is the number of working uninsured.
And so with that, we have your focus, which is information technology, and to me, information technology and our commitment to electronic medical records and having state-of-the-art technology in our institution, is all about patient safety. Patient safety is what drives it all, it’s why we’re here, it’s what all of our missions have their roots with. And so, when you think about making this enormous financial commitment, and most people, I’m sure all of you know, but I will tell you that most lay people and board members think that technology does in fact replace people, and actually, it does not.
And when I look at our commitment to electronic medical records over the next five years, it’s not only a very substantial capital expense, but it’s a very substantial operational expense, and operational expense translates to actually engaging and employing more people and also individuals who are very well professionally trained, and so, you know, there’s a very interesting dilemma in our country. And that is everyone feels that healthcare is a right, it’s an entitlement, it’s not a benefit, we hear that over and over again with the presidential campaign. But at the end of the day somebody needs to pay for that. And part of paying for that is not only a mandate or mandating technology, but also being able to provide the reimbursement so that all hospitals are able to support that kind of commitment.
Joint operating agreements and arrangements are really not, it’s not dating, and it’s not even being engaged. It’s about organizations that are in difficulty and find out that they need to merge or be acquired in order to go forward.
When organizations are laying off people, it’s because they’re having difficulty meeting their missions, and there are circumstances in their environment which cause them to reduce their workforce. And so it’s very interesting, these competing interests that we all have. We all want the best for our communities. We want to make sure that everybody does have access to healthcare, regardless of their financial situation.
But we need to fund this, and in order to fund this, we need to make sure that all hospitals have the ability to do well. When you look around the country and you look at, you know, some of the profitability figures which Dave mentioned, you’ll see that the most profitable organizations are in the best areas of the country when it comes to being in environments where most people are insured or are employed. And it’s unfortunate, I think, that we have really a bifurcated healthcare system in many ways here, where there are many organizations that are very much challenged in terms of their own mission.
And usually you’ll find those organizations in areas of the country where there is great economic challenge, and so if you believe that all Americans and everyone who lives in this country deserves access to healthcare, it needs to be a situation in our country where regardless of where your hospital is located, that you have appropriate reimbursement so that whether you serve rich people or you serve people who are poor or less fortunate, or people whose employers have decided that they can no longer afford health insurance for their employees, that those people also have access to high-quality, safe healthcare with the best computer systems, the best doctors, the best technology for the entire community.
So, it’s an interesting time of challenge. I know we’re hearing more and more about this with the presidential campaign. It will be interesting, I guess, four, five years from now to look back and see where did end up. Thank you very much.
[00:29:27.06] David Burda: Rick, we’re going to give George a few more minutes to study; would you care to take a crack at any of that, please?
[00:29:31.15] Rick Schooler: There’s certainly one big advantage to having this in your hometown, that is it’s convenient. But there’s also a big disadvantage in that you have to behave, because in a room like this, there’s always someone who knows you. And I’m looking around the room, and there’s three or four people around the room that know me well. So, I can’t misbehave and I can’t tell any lies. So, as a CIO, you find yourself time to time wanting to do one or both of those, believe me.
I think I want to be additive in terms of what I say, you know, from Steve’s comments. Our industry and our nation is going to go through something that I think all of us would understand when we say that we’re facing a cultural change. Within the doors of our institutions, be they inpatient, outpatient, whatever integrated health system, standalone county hospital, you name it, this stuff just doesn’t happen on its own. And when I say this stuff, I’m getting at the notion of using information technology to really radically change an organization, or change the way you do things.
Many of us in the room have been engaged in large-scale IT operations and implementations, and we know the perils and the challenges that come with that. It’s very expensive, it takes a lot of people a lot of time, it takes a lot of really smart people—and I’m not talking about technology, folks, I’m talking about people who know how to take a work flow and a process and change it to where it becomes more efficient and streamlined. And as we endeavor to do this throughout the industry, we’re going to have a lot of successes, we’re going to have a lot of challenges, and we will not get there without the intent and the will to do it.
[00:31:34.22] I was at a (conference)the other day, the cluster meeting, and I asked a CFO who was giving a talk: What does it take now to keep the doors open in terms of margin? Well, 3%. So I thought, well, 3%. OK, I’m in a pretty progressive organization. We’re—we like to look at ourselves as a leading organization in many ways. We don’t like to look at ourselves as a leader in the indigent market, but we seem to be. Like, with many of you in that category, 3% to keep the doors open, well, where do we get the money to fund all this IT. Because, in case you haven’t noticed, it’s really expensive.
So, it’s going to be a struggle. Whether we look at, you know, the actual process of getting it done or access to capital or getting the right people to do the work, this is no easy thing. A lot of other industries have been automating for many years, and they go about it in a way that healthcare is going to learn, because you just can’t spend this much money or keep spending this money and not get the value from it. And without the engagement and the will to implement and redesign and change the way we do things, the way we think, it won’t happen.
You know, layoffs and things of that nature are very common, obviously, in for-profit business. It happens every day; it happens all the time. Layoffs in healthcare, you know, it’s much more of an emotional, much more of a community type of a event, and it gets a lot of people’s attention. So we’re going to continue to struggle as healthcare systems and standalone hospitals to make the margins. And, you know, as Steve and others have mentioned, the reimbursement side of this equation is only going to get tougher. So it really puts it on one side of the scale, and that’s in operations: that’s in efficiency, that’s in streamlining, that’s in getting the same job done, requiring fewer resources and fewer dollars. So, a mandate for IT?
Uwe Reinhardt was speaking to the CHIME (College of Healthcare Information Management Executives) forum yesterday, and, you know, if you’ve heard him speak a few times, I’m sure most of you have, he’s really big on this notion of a mandate, because he believes it’s going to take a significant rule, if you will, to cause a lot of the adoption and a lot of the investment to occur.
Because we have misaligned financial incentives, and that’s a whole topic for a whole morning, but I think everyone understands that if you’re going to have interoperable systems, whether you’re looking at it inside of a hospital or if you’re looking at a physician practice and you want the two to talk, you know, we talk a lot about interoperability, we talk about interfaces. We talk about integration, again—it’s tough, it’s expensive and it’s technically, in many cases, a challenge. Well, there’s just not enough incentive for people to just want to jump up and go invest the dollars to do that.
So, we’re going to have to have a cultural change within our organizations that has started; they’ll have to continue. We’re going to have to have a new recognition that IT is not only an enablers, but it is a, it’s a transformation of culture, and in order to make it do what it can do for us as an industry and as a nation, we’re going to have to take a different approach to this. It’s very comforting to me as a CIO to hear Steve as a CEO talk about how they got the message, and he gets it, and he understands what this can do and what the end game is.
If you look at a lot of the things that are going to pay for performance, if you’re looking at core measures, if you’re looking at, you know, the HCAHPs. Whatever you’re looking at in terms of the industry requiring more information out of organizations, it’s going to require the infrastructure to capture the data. I mean, it’s just that simple.
And I will leave you with this one note, that with all of the investments that we make as health systems and as providers, and all the money we dump into IT, there is an end game. And this is sort of the gospel that I’m preaching at our place, and that end game is information and data-mining.
Other industries have been doing this for years. And they know that in order to get the information out that we need to run our organizations day to day as well as provide the public information on our quality. You have to have that kind of information available to basically slice and dice and to mine through. And the vast majority of our organizations in healthcare do not have that information. The first step is to automate the operations. Automate the data capture.
But the end game in a lot of this is getting to the point where we actually can mine massive amounts of information, and that’s really what folks are expecting out of us, and if we’re going to manage to do those expectations, we’re going to have to not only have this infrastructure in place, but also be very smart about using that information as knowledge workers, very similar to other industries. So. I want to yield some time to my colleague George “Buddy” Hickman, and it’s nice seeing you all today.
[00:36:49.09] David Burda: All right. Are you ready, George?
[00:36:50.15] George Hickman: I’m ready.
[00:36:50.15] David Burda: All right.
[00:36:54.00] George Hickman: David, thank you for the opportunity. You know, if I’d known this was going to happen while the questions were being posed to the back, I would have pulled out my BlackBerry and looked for something clever to say from the Governor of Massachusetts’ Web site. I think that idea was already taken. Oh, oh. Too many Democrats in the room. Hostile audience.
Speaking of Massachusetts’ image, when you talk about the mandated use, it’s certainly what we saw just a couple of weeks ago coming out of Massachusetts with the expectation from Blue Cross Blue Shield that fundamentals around EHR adoption would occur by the year 2012 for their provider base. Now, that’s notable. In fact, it’s one that as soon as it hit the press, I carried it into our executive staff meeting. We had a big dialogue about whether or not that is a sign of things to come regionally amongst providers. We certainly know that the payer market is looking to create incentives in the northeast. And I think, really, if things are going to change in our industry, because we’ve been talking about the electronic health record now, for what, a couple of decades? It may take that kind of energy.
We’ve also been watching the FDA and the fact that it’s involvement seems to be more remarkable than in the past. There are, or, there is a proposed regulation right now posted in the federal register, that would somewhat alter the definition of a medical device. And, as you watch this kind of thing occur, you kind of wonder where that’s going as well, because of the blur or convergence of technologies, whether the IT or biomedical engineering, I mean these things are coming together at a very rapid rate. And, we might find that the FDA seeing its need to be involved and for the regulation of what’s occurring there.
I’d say another watch item is that of health and human services talking about the potential mandate or move from ICD-9 to ICD-10. Now this conversation has been going on for a couple of years, but it seems to be stoking finally. Now, imagine, we’re about a decade behind in the U.S. in the sense of the coding or classifications scheme that we use. ICD-10, which has been in use in other countries for a while, provides I would say much higher order clinical meaningfulness to codification to what’s happening in the record.
Well, what that implies is that, you know, over the last 10 years as we keep finding out, there’s other diseases and other interventions and so on. We have our own ways of coping with that, with coding systems. A mandate would catch us up to the current state, I think, yet, at the same time, imagine the impact on the industry, whereby we would be, I guess, thrashing through all of those (health information management) coding applications and changes that will have to occur there to be able to provide the information to the payers.
In fact, they’re talking about the mandate coming at the payers first, because that would push it backwards to the providers. And so that also includes the expectations around the electronic data set kind of things that we saw when we went through HIPAA transaction set changes and so on. So this is certainly one to keep an eye on.
You know, I think the other thing that’s going to be of impact, David, to your list, is whatever happens with the federal election. At this point, we might be down to I guess three candidates, one on one side, two on the other. And, we probably have some very different, although it’s not clear, some different views of what is to occur from a healthcare standpoint. It seems to me that McCain is talking about kind of letting the market sort some things out, certainly seems to be of the ilk of the Newt Gingrich Center for (Health) Transformation and believes in the HIT transformation cause. And you might see some alignment there.
On the Democratic side, there is, I guess, some keen difference in the sense that Sen. Clinton speaks in very plain terms about the kinds of investments that would be seen in healthcare and speaks of mandates. And we’re not hearing quite the same message yet from Obama.
So, I think seeing how this sorts its way through, nothing quite happens in quite the way people project it’s going to happen in our federal system, given the checks and balances, but at least the coming in agendas might operate very differently, and that is something to keep an eye on, because in this business, we’re consistently reacting to the influence of the environment.
Finally, on quality reporting. I save for it for last because it’s probably becoming one of the most talked about and most challenging of things to care for. You know, I work in an organization with an overall case-mix index of over two. It probably is the region that we reside in, and it’s the fact that we’re a trauma-referral center for a region that otherwise requires patients to travel down to New York City or to Boston or whatever, and that, as best we can tell from [unclear] that probably puts us in the top 10 in terms of discrete numbers of overall case-mix index. So, we worry a lot about what it means to be a top-end player without kind of a diversity in our blend, our DRG mix, as might be necessary to make the numbers balance over time.
The idea of nonpayment for medical errors caused us to do something different with our quality-reporting activities this past year. We’ve had a committee going on for a little while now, as many other providers have. We’ve been watching all of the various core measures and you know, things that are published by Health Grades and other such folks and seeing how we line up to that. I think one of the key challenges in the market is I guess the inertia involved in the reporting, because the reporting that gets published is usually a year, 2 years old. Something like that. So, it might be misleading if you’ve seen upward trends more recently in certain things.
But we did something rather depressing at the end of the year. Once we walked through all the measures, we decided that our 2008 agenda was going to be to pull out the measures where we needed to see performance improvement and make those the agenda for 2008.
So our quality reporting committee now in meeting every two weeks, I mean, we sit there and look at kind of the stark reality of where we are, we listen to physicians come in and talk about what is going in within a given service and so on, but it’s all about the challenges, not about the victories. But we figure we needed to do that in order to see the kind of improvements that we wanted to see.
One note, though, and this is an oddity sitting also over on a Web committee, and just looking at the, what goes on on our Web site and the kind of volume, the kind of hits that the Web sites get, and all that sort of thing. We’re still seeing, you know, high-end human resources where people looking for jobs and so on, those kinds of hits are the most prevalent by a long stretch, if you look at a Web site.
And while we have a quality presence on our Web site, it actually is the lowest area of the Web site accessed in terms of the consumer. And we’re surprised by that. We’re still trying to figure out what that means in our market, and we’re wondering if other providers have the same experience, so we’ve been polling that to see what that might mean. Simply something to explore into.
All of this is about lots and lots of sophisticated systems that probably cost lots of money to put in place, and at the same time, we’re competing for capital, and you kind of wonder why we do it, and I guess I’ll just close by paraphrasing something said by Uwe Reinhardt yesterday morning at the CHIME meeting. He, if I paraphrase him, I’ll just say that perhaps healthcare provider executives are amongst the last of the true romantics, because here we are trying to do noble work. Thank you.
[00:45:46.17] David Burda: What a great extemporaneous presentation, George; thank you. We have a few minutes left for questions, and I have a few, but this is your breakfast, so let’s open it up. Anybody have any questions for our guests here?
All right. Well, I’ll start it. Yep? Yep, right here.
[00:46:12.28] Audience Member: Debra Cohn with DAX Systems Consulting. What are the CEO and CIOs doing, given, now, starting with the ultimate change that will occur with ICD-10? There are ways that you can start prepping for that, but, what are you doing in your organizations to begin thinking about that? Because it will be massive.
[00:46:40.06] David Burda: Rick, you want to try that one first?
[00:46:43.10] Rick Schooler: Having our HIM director in the audience, so if you want to get some real details, talk to Juana (Colon) after we’re done today.
We recognize this is something that is, it’s inevitable, it’s real, many of us believe it should have already happened. But it is a monumental effort; it’s going to touch on a significant amount of resources, significant amount of systems. We actually, in a planning sense, at the executive level planning sense, we really, it’s one of those things we know is coming, but it’s not really on our operational radar yet. And I know in the HIM areas, there’s a lot of prep work and planning and thought leadership involved, but we’re not active in a formal sense in terms of allocating the spend yet to make the conversion, but we know it’s just around the corner.
[00:47:39.13] David Burda: George, anything?
[00:47:40.19] George Hickman: I’d like to say we’re not doing enough, Debra. You know what our change of agenda is like, and you know, frankly, I think we’re moving things in the organization at this point, as fast as the organization can tolerate change, relative to all the various technologies that are being posed, and you know that change management is really, you know, a matter of people absorption, assimilation of what is happening in the environment. So, we’re working on the things that we’re working on today and we simply have that one placed on the watch list, and have had a conversation about it. But we have not begun to actively engage in beginning prep.
[00:48:20.09] David Burda: Do we have a question back here?
[00:48:22.14] Audience Member: Good morning. Nick Bonvino. I’m a former CIO of a very large hospital company, and when we looked at the marketplace for hospitals over my tenure, we had about 18 hospitals that were acquired, were divested. And, the state of the industry as prosperous as it is right now, you’ve got about a third of the hospitals that are doing OK, about a third that are just hanging on, and the other third that are pretty financially distressed. So given that context and the forecast of reduced reimbursement, and this whole notion of mandates, I guess I’d ask the panel to what other recommendations they see, and George, particularly, since you’re in the state of New York, the transformation that’s going on there, substantial healthcare transformation, and a plan to improve efficiency through this whole RHIO (regional health information organization) and connecting at the point of care. So, if you could comment on that.
[00:49:18.24] George Hickman: You want me to comment specifically on the state of New York and what’s going on with RHIOs exchanges or—?
[00:49:29.07] Audience Member: [off mic]
[00:49:31.05] George Hickman: All right. Wow. This is a big one. I think, you know, I think what we’re trying to do, from a national level first, is a very big thing. The idea of interconnecting organizations for shared data exchanges is between hospitals, payers, the physician office providers, even public health entities and others, is quite remarkable. And, still requires yet, maybe I’ll paraphrase something I said last year, I think it’s, to some degree, we’re trying to you know run across this superhighway in a way that is running ahead of pavement being laid. You know, I think David Brailer probably had this point very correct, that it would be a decade to take us through this kind of transformation.
And so, while we are in New York State, for instance, heavily investing in and seeing exchanges develop around the state, in particular some exchanges for the sake of even hooking into the end prototype, the challenges that we find on the ground are still very much the challenges of I think you used the word interoperability? The standards aren’t there just yet. And running ahead of the standards makes for hard work, because we then still end up going in and doing a lot of custom things to make all this stuff fit together. And the question is, when we’re all done with it, how well will it fit together? And that we’ll find out.
Again, I think the idea is the right idea; it’s a big idea. I think early adoption is something that we should walk through and understand that it’s a learning experience and not the end of the game. And that’s the way I think some of us are trying to approach it in New York State.
[00:51:34.04] Steven Sonenreich: I worked for the proprietary side, I was a CEO of a for-profit hospital for five and a half years, and many people ask me what that was like and what the advantages are, and the two major advantages that I saw of being a for-profit chain is IT being able to spread the expense over a large base of organizations, and pricing leverage in the marketplace with regard to negotiating contracts and rates with managed-care organizations.
And so to your very point, I think healthcare is really more haves than have nots; those who have insurance and those who do not. Those who are doing well and those who are not. And so when you look at going back to, you know, joint operating arrangements and everything else, I believe that in order to be successful going forward, you need to be part of a large system. And, basically have that base in order to spread a growing expense. And so, when you look at the growth of joint operating arrangements, I think you’re going to see more of that, but I think you’re going to see more acquisitions, not only on the part of for-profits, but I think you’re going to see more acquisitions by not-for-profits acquiring hospitals that are in distressed positions.
And if you look at Miami Dade County, or actually South Florida, over the last five, well, actually probably over the last nearly 10 years, almost all, at least 90% of the acquisitions, have been not-for-profit hospitals buying for-profit institutions. So, there is a consolidation that will continue over the next several years. And I think it will be much more not-for-profits acquiring more for-profits, and not-for-profits hopefully also acquiring distressed not-for-profits, because when I look at Grady (Memorial) Hospital in Atlanta, which is such an important community organization, and to see an organization like that in such a distressed position, it tells me that there’s something very wrong with our healthcare system.
[00:53:57.12] David Burda: Now watch for that story in Modern Healthcare. That was a good tip, Steve, thanks. Any other questions from the—right over here.
[00:54:07.11] Audience Member: My name is John Moore from Chilmark Research up in Boston. And the question I have was, or is, you’re talking a lot about what’s happening in hospitals and talking about patients. I was wondering, kind of, as the consumer is taking on more responsibility for their health, and you reflected on it, I forget your name, the CIO from Albany, but you know, your Web site and whether or not people are going there for that, but how are you responding to the consumer going to retail clinics, going to the Web to gather information, looking to schedule appointments with their physician through your Web site? What things are you doing from both the CEO perspective and the CIO perspective to make that happen?
[00:54:55.06] David Burda: Rick, why don’t you start with that. How do patients use your Web site? Apply for jobs or pick a doctor?
[00:54:59.06] Rick Schooler: The standard that you would expect for any organization with a Web site, information about the company, job postings, so on and so forth. I did a survey recently of several of my colleagues with regard as to who is actually doing preregistration or appointment check in, and so forth, as well as bill payment online. And I was astounded to see the low number of responses. So, to echo Buddy’s response to the former question, you know, not enough, I can assure you that.
But I’m just not real sure, you know. I think consumers in our market in this area, you know, by and large are not used to interacting with their healthcare provider online, and it’s a change that, if we were out in San Francisco, they might be a very different demographic, but we’re just trying to keep pace with what we believe is leading edge to the degree that we can afford to be there, but at the same time, trying to understand you know exactly what our consumer wants from us and what we need to put in front of them.
But I will say that from an online interaction standpoint, we’re not as far as where I’d like us to be, and I don’t think the industry overall is either. But, we don’t have a lot of people—it’s very, it’s kind of odd. A lot of people aren’t asking or demanding or wanting to know why we don’t do this, do that. But we’re going to step out into and take a few leadership steps in a direction that we believe we need to go, and that’s really just to stay with what we believe is commonplace across the industry.
[00:56:41.22] David Burda: Steve, do you want to talk about retail clinic growth in your market; has that affected you in—?
[00:56:47.01] Steven Sonenreich: We’ve seen it at the very initial stages right now, and I was telling Fawn that just last month we opened up our own free-standing emergency department about 14 miles away from our institution, and it has been extraordinarily well-received, and we’ve actually been very successful only after four weeks. Because, I think people do want to find different ways to access healthcare, and certainly I think that if you’re able to do something that’s more than just a walk-in center or more than going to see an allied health professional in a large pharmacy operation, you could be very successful.
But, I do think that we’re going to see more and more free-standing emergency departments around the country both to take some of the load off of the hub if you will, but also to try to do something that’s a different way, but also a very safe way, to provide healthcare to people who are having difficulty accessing healthcare in physician offices.
[00:58:09.15] David Burda: Is there a quirk in Florida CON law that allows free, I’ve never heard of a free-standing ER.
[00:58:17.17] Steven Sonenreich: Actually, there’s only five in the state of Florida, and it’s questionable. We just got in kind of under the gun or under the deadline, I should say, and there’s a lot of question right now whether there’ll be anymore without changes in regulations.
[00:58:34.11] David Burda: Very good. OK, we’re nearing the finish here, anymore questions--yes?
[00:58:41.11] Audience Member: Good morning, Gary Anthony with First Consulting Group. You talked about joint operating agreements as a hospital-to-hospital relationship, but I wondered with all the pressures, the financial and quality-reporting pressures, how’s it going to change the hospital physician relationships and what do you see occurring there in the next 12 to 18 months?
[00:59:05.02] Steven Sonenreich: I think that joint operating arrangements, you know, ultimately end up being mergers. You know, there’s just no other way around it, because there’s no way to be a little pregnant unless you really do need to become fully integrated in order to be legal and in order to do all the things that need to be done. I think that I would hope that when institutions become stronger financially, and that’s what the driving force is, that they’re able to not only meet the challenge of their mission, but to enhance their mission, and all hospital missions are based in high-quality patient care, and you know, so the stronger you are, the better you should be able to interact with medical staffs and the needs that the physician communities have.
I think when you look at the statistics, you’ll find that most marriages that end in divorce, or many of them, have a financial problem associated with it. And so when there are financial problems, there are problems that occur throughout an organization as well. So, if organizations are stronger financially because they become part of a larger system, then they should be better in terms of what they do, serving their employees and their medical staff and their communities.
[01:00:28.11] David Burda: Very good. Well, please join me in thanking such a great panel here and for their comments, and I’d like to invite Fawn Lopez back up to the stage.
[01:00:41.03] Fawn Lopez: Thank you again, for your comments and for being with us this morning. And, also, thanks again to ICA and Gary Z. for their sponsorship this morning. Please fill out the survey form and also if you have additional thoughts or suggestions that you’d like to give us—you’re—feel free to contact Dave or myself. Our contact information is in, it’s listed in the magazine. And, also, today’s issue, each issue, you can pick up a copy of this week’s issue at your table. Again, thank you very much for your attention, for your time, and we hope that you have a very successful trade show this week. Thank you.