“Tenet is misguided and in fact, wrong,” said Wayne Smith, chairman, president and CEO of Community. Community contends the observation rate is an invalid metric, and one slide noted that Tenet’s analysis excluded Universal Health Services, King of Prussia, Pa., which had an observation rate similar to Community’s.
Community notes in the slides that it has updated its Blue Book admissions criteria guide six times since its initial version was completed in 2000. Prior to the lawsuit, Community has said, it decided to adopt the more widely used InterQual admissions criteria. Moreover, Smith said, attending physicians alone make almost every admission decision at Community hospitals, “not Blue Book, not InterQual and not Pro-MED.”
The company uses software by Pro-MED Clinical Systems at most of its hospitals to collect information about emergency room operations. Only three Community hospitals have used its “check module” to help with admission decisions, and the company found that this module was little used, said Dr. Barbara Paul, senior vice president and chief medical officer of Community.
Other presenters included Andi Bosshart, vice president-corporate compliance and privacy officer; Larry Cash, executive vice president and chief financial officer; and Dr. Lynn Simon, senior vice president-quality and resource management.
Community also contends that it is near the industry average on what it says are more relevant, widely used metrics, such as emergency room admission and discharge rates, length of stay and various metrics related to one-day stays. Community’s analysis compared it not only to its investor-owned peers but large tax-exempt systems as well. The company also defended its actions at the hospitals formerly operated by Triad Hospitals, which Community acquired in 2007.
Community also reported its results for the quarter ended March 31. The company earned profits of $61.3 million, down 12.4% from the year-ago quarter, mostly because of losses at a hospital held for sale. Revenue increased nearly 9%, to $3.41 billion, because of acquisitions. Same-hospital admissions fell 3.4%, but strong outpatient volume left adjusted admissions flat. A major factor in that admissions decline is the shift of one-day stays to observation visits in the quarter. More than 75% of this shift was for non-Medicare patients, Cash said.
Dallas-based Tenet issued a statement in response to Community’s April 28 presentation: “Nothing we heard today from Community Health diminishes our confidence in our analysis or allegations. We plan to vigorously pursue our claims in court.”
Tenet was not the only party not to be convinced. CtW Investment Group, the adviser to union pension funds, said in a news release that “Community’s efforts seem more intended to obfuscate than to educate investors.” CtW wrote to Community last fall about its rate of one-day stays, and it noted in its release that Community acknowledges that emergency room admission and one-day stay rates for Medicare patients are relevant measures. CtW criticized Community for publishing data only for the company as a whole and for 2009.
Community disclosed a letter last week that CtW sent to Community shareholders that followed through on CtW’s threat to urge shareholders to vote against Cash and two directors on the audit committee in the director election at Community’s annual shareholder meeting on May 17.
Three other investor-owned companies addressed the situation last week during conference calls to discuss first-quarter results.
Gary Newsome, president and CEO of Health Management Associates, Naples, Fla., said differences in the rate of one-day stays between its hospitals are mostly dependent on variations in the service lines and geographical practice patterns. “We’re very comfortable with our processes,” he said. HMA hospitals use InterQual criteria and also use Pro-MED but like Community, the company uses it as a data-gathering tool, Newsome said.
Universal Health Systems generally has a low observation rate because it declines to code for observation status for some cases that might be eligible, said Steve Filton, senior vice president and CFO. “For the purposes of determining the appropriateness of admissions, it’s not a terribly useful statistic,” he said. More useful are the rates of one-day stays and emergency room admissions, Filton said, and on those metrics, the company is “very much within national norms.” For Medicare patients, he added, the company is on the lower end of the scale.
LifePoint Hospitals reacted several years ago to the focus the CMS put on one-day stays with the recovery audit contractor program, said Bill Carpenter, chairman and CEO of the Brentwood, Tenn., company. Private payers picked up on that focus, too, added Jeff Sherman, executive vice president and CFO. “We did a lot of education at our hospitals to make sure that we are getting patients to the right care setting,” Carpenter said. Most of its hospitals rely on InterQual criteria, although a few use the Milliman set, Sherman said.