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Fee-for-service system extends patients’ wait times as providers seek to maximize profits


Many patients are becoming increasingly frustrated and angry because of the very long waiting times  in many hospitals and physicians’ offices, in part caused by overbooking.

Providers say they recognize the problem but don’t see it as a priority. That’s because their revenue and profit depends on keeping a steady flow of customers to ensure that  examining rooms (and waiting rooms!) are kept as full  as possible.

As an article in The New England Journal of Medicine noted:

“Physicians and practices might think they minimize the clinical consequences of long waits by prioritizing the patients they squeeze in by double-booking. For example, all else being equal, a hematology–oncology practice might schedule the patient with a known cancer faster than the one with a benign hematologic issue, or a cardiology practice might accommodate a patient with complex arrhythmia sooner than one with stable angina. This approach not only makes sense clinically; it’s also good business. Higher-acuity conditions tend to drive more tests and procedures, which translates to more services billed and more dollars collected. In fact, in busy practices that maintain a patient mix heavily weighted toward sicker patients, improving access for patients across the board could bring down the average weighted productivity and profitability.

“The painful reality is that the fee-for-service system rewards long waits and overbooking to squeeze in sicker patients. Practices maintain a higher-acuity mix, while health systems benefit from care spilling over into more costly settings. The system does not reward providers who organize care to reduce waits for all patients, even though that might keep some patients from becoming sicker. And that may be why most providers have been slow to invest in systems that might reduce waiting time.”

To read the NEJM article, please hit this link.

To read a Boston Globe article on this issue, please hit this link.

How much do Yelp reviews improve healthcare?

An article in Health Affairs looks at the growing “Yelpification” of U.S. healthcare, citing an April 2017 New York State Health Foundation (NYSHealth)-funded study,  in which the conservative Manhattan Institute explored how much Yelp ratings of hospitals in New York State correspond to objective outcomes measures across all of a hospital’s patients.

The Health Affairs piece reported: “The study found that higher Yelp ratings are correlated with better-quality hospitals and can offer consumers a useful, clear, and reliable tool that can be easily accessed. In short, for one very important measure—potentially preventable readmissions—Yelp ratings appear to have a moderately strong correlation with that measure. That is, higher Yelp scores for hospitals are associated with lower readmission rates.”

“But while this research has helped to move the needle on validating Yelp as an important asset in the tool chest of health care quality tools, there are still important questions left unanswered.

“For starters, do the disparate (and often contradictory) messages from existing rating systems have the potential to help non-savvy patients identify higher quality providers? Or do those messages just lead such patients to throw up their hands in frustration?

“Whether Yelp ratings contribute to this potential confusion or help generate greater understanding isn’t clear yet. Indeed, Yelp ratings of hospitals are in their infancy—relatively low sample size over the years and concentration in more urban areas mean that a wait-and-see approach might be best. However, the hope is that consumers’ trust of Yelp as a platform, and the open-ended, more personal nature of reviews, will over time build up into a useful metric of hospital quality.

“Both insurers and providers should also explore how user-generated reviews can help them to obtain information about patients with different needs—here, the free-form style of Yelp text reviews can be an advantage, in both understanding what patients value most and what they are most concerned about.”

To read more, please hit this link.

Using hospital-satellite emergency departments to reduce strain on hospitals


Most hospital emergency departments seem to get busier and more crowded each year, placing ever-greater strains on patients and clinicians. Ricardo Martinez, M.D., suggests that hospital-satellite emergency departments (HSEDs) can offer considerable relief.

He writes in Hospital Impact that they “provide a more distributed access model of emergency care that can be integrated into the healthcare system to relieve the strain on existing EDs and bring emergency care closer to patients.

“HSEDs are structurally separate from a hospital, but offer patients emergency services that are equal to or surpass those at hospital-based facilities. The acuity levels for patients seen in HSEDs are similar to those seen at hospital-based EDs as well (broken bones, burns, chest pain, abdominal pain, pulmonary symptoms, head traumas and concussions). In short, when it comes to treatment, there is little to no difference between the two types, but HSEDs have the ability to provide more accessible and a greater value of care.

“Having multiple HSEDs throughout local communities expands access to emergency medical care for more patients, including those who live far from a centralized hospital system. This type of medical delivery system is already implemented with decentralized imaging centers, laboratories and urgent care centers.”

To read more, please hit this link.

Higher physician spending doesn’t help hospital patients’ outcomes


A study published in JAMA Internal Medicine found that higher spending on physicians doesn’t lead to better  outcomes for patients who have been hospitalized.

The study included data from a little more than 72,000 physicians over 1,324,000 hospitalizations of Medicare beneficiaries.

The authors found that, perhaps unsurprisingly, spending variation is greater among than physicians than among hospitals.

They said the data “suggest that not only does physician spending vary substantially even within the same hospital, but also that higher-spending physicians do not reliably achieve better patient outcomes.”

The authors point out that many payment-reform and value-based care efforts are targeted to hospitals that, it is assumed, can help influence physician behavior.  They  suggest that this targeting should also directly include physicians,  to help cut  costs.

“Our findings suggest that higher-spending physicians may be able to reduce resource use without compromising patient outcomes. Policy interventions that target physicians within hospitals (e.g., physician-level pay-for-performance programs and reporting of how resource use of each physician compares with other physicians within the same hospital) should be developed and evaluated.”

“Among both hospitalists and general internists, physicians with higher spending per hospitalization had no detectable differences in 30-day mortality or readmissions compared with lower-spending physicians within the same hospital. Given larger variation in spending across physicians than across hospitals, policies that target physicians within hospitals may be more effective in reducing wasteful spending than policies focusing solely on hospitals.”

To read the JAMA piece, please hit this link.

Timothy J. Babineau, M.D.: Look at what works well in U.S. healthcare and build on that


American healthcare is expensive. Too expensive. On this, there is little debate. In 2001 the median U.S. household spent 6.4 percent of its income on healthcare; by 2016, the same household spent 15.6 percent of its income on healthcare. That bigger share of the pie leaves less for other essential purchases such as food, education and housing.

The same phenomenon exists at the national level, with spending on education, the environment and social programs getting squeezed. Recent estimates from the Centers for Medicare and Medicaid Services (CMS) have the American healthcare tab coming in at $3.6 trillion for 2016 and projected to continue to soar through 2025. Despite broad agreement that rising healthcare costs are unsustainable, the root causes of the rates of increase and the best ways to combat them remain the subject of some debate and confusion.

Numbers matter. The 80/20 rule—known to healthcare actuaries as the Pareto principle, posits that 80 percent of all medical spending is incurred by only 20 percent of the population. Whether a population is defined as a company, a county, or a country, most healthcare spending is for care of a small minority of individuals. Moreover, the bulk of that spending arises from either largely unavoidable or unpredictable single events (such as trauma or sudden-onset acute illnesses); such chronic conditions such as diabetes; complex episodes of care for such illnesss as cancer, and care delivered at the end of life.

A critical (but often overlooked) point is the fact that as much as 40 percent of spending during chronic and complex episodes is avoidable if providers and systems adhere to established standards of care. Reining in runaway healthcare spending must involve better management of high-cost episodes of chronic and complex care.

A key buzzword in today’s debate is “population health”. Confusion occurs when the term is interpreted as a strategy for controlling healthcare costs when it is applied across our entire population as opposed to the sickest 10 percent or 20 Percent. Wellness initiatives, early detection, the avoidance of emergency room visits, and disease prevention have undeniable value, and should all be pursued, but they will not (by themselves) sufficiently reduce healthcare spending by enough to make the system “affordable”.

As the Baby Boomers swell the ranks of Medicare beneficiaries, the inevitability of illness is the only certainty in an otherwise uncertain world. To be successful, programs, payment systemsand policies to curb healthcare spending must focus on improving the efficiency and effectiveness of care delivered to the sickest subset of the population. This is best accomplished within a completely integrated healthcare-delivery system.

American hospitals and healthcare systems are among the best in the world. Rather than asserting that “American healthcare is broken” and in need of rebuilding from scratch, a better strategy may be to look at what works well within our system and ask how we can build on those strengths while facing the escalating costs head on. Hospital systems are in the health care business, and we should not be reluctant to say so. No matter what wellness and prevention programs we collectively offer, inevitably a small subset of the population will still get very sick, and it is a core mission of health systems—working in close partnership with our primary and specialty providers—to take the very best and most efficient care of them when that happens.

Irrespective of what happens with the Affordable Care Act (ACA), as leaders in health care, we must redouble our efforts to eliminate unnecessary variations and wasteful spending in the clinical care we deliver to patients.

Rather than debate the actual percentage that is “wasteful spending” (now commonly referenced at around 30 percent) we would be better served by continuing the hard work of identifying and eliminating areas within our own systems where needless variations in care add cost without improving outcomes. As Lifespan, the system I lead, continues to evolve into a comprehensive, high-value, integrated healthcare system, we are doing just that.

Timothy J. Babineau, M.D., is president and chief executive of Providence-based Lifespan, a large hospital system, and a professor of surgery at the Warren Alpert Medical School of Brown University.


Hospitals should pay more attention to ancillary providers


Andrea Simon, writing in FierceHealthcare, discusses why hospitals must pay more attention to ancillary providers, which fall into these three big categories:

“Those involved in diagnostic services such as the labs, imaging, radiology, speech and hearing testing and so forth; those who deliver care or are the therapeutic providers, from occupational therapy and physical therapy to alternative medicine and speech pathology; and those offering a wide range of care-delivery services, including skilled nursing facilities, hospice, home health services, urgent care centers, retail centers and other custodial centers.

“The ancillary care industry is large and growing even larger. According to the Ancillary Care Services Web site ancillary care is currently one of the fastest-growing sectors of healthcare, representing nearly 30% of medical spending. In addition, the ACS Provider Network includes more than 33,000 healthcare providers in 32 specialty categories, along with specialty care programs that save more than 50% on costs.”


“In deciding how best to use ancillary care providers amid massive changes throughout the entire healthcare spectrum, hospitals need to select partners so they can coordinate care while still offering patients choice. In addition, they would be wise to rethink how to work with both ancillary providers and medical records systems to design better ways for information to flow across the care continuum.”

To read more, please hit this link.


Hospitals might shut out high-fee physicians

Lorna Collier, in an article in Medical Economics, writes:

“More hospitals today are competing for patients using retail strategies, such as offering flat-rate, easy-to-compare bundled pricing, finds a new PwC report. As a result, physicians with high fees may find themselves shut out of hospital contracts. And that means less patient volume and less revenue.”

To read her piece, please hit this link.

Do hospitals face same fate as big-box stores?


Empty mall in Arizona.

Becker’s Hospital Review looks at the economic future of hospitals.

Among the observations:

Failed big-box stores are “somewhat similar to hospitals and health systems. Generally, larger hospitals and health systems operate at a 0 to 10 percent margin and no more. Hospitals also have a very high cost structure, roughly half of which is composed of overhead costs that are difficult to change. The same is true of big box stores. The small margins leave big box stores and hospitals vulnerable to relatively small losses of revenues.’’

“Hospitals and health systems do not face the exact same threat from the Internet. Rather, they face a similar threat from the movement to outpatient care, changes in reimbursement levels and the loss of lots of little pieces of services to ancillary providers and alternative care settings. For example, the movement of spine procedures and joint replacements to outpatient settings and the movement of imaging, lab tests and other low-acuity services away from hospitals into urgent care and other settings may, over time, make an irreparable dent to hospital revenues. Many of these movements in isolation can be combatted. Here, like the gradual and then increased movement to e-commerce from big box stores, the combination of outward forces can be devastating’’.

Hospitals and health systems have tried to counter this threat by becoming more integrated and trying to own markets. In the ideal situation, at least theoretically, the hospital is market essential or market dominant and can retain high prices and healthy margins. Alternatively, the health system takes directly or indirectly almost the entire insurance payment and is responsible for allocating it among itself and other providers. Health systems control more of the premium dollar by owning a health plan or taking risk and payment from a plan for services. However, many systems taking that route have found the insurance business is much riskier and tougher than they anticipated. Thus, this situation does not have an easy answer.’’

“In the hospital arena like in the big box arena, we see erosion of revenue (or much smaller increases in revenues) paired with a cost structure that remains largely unchanged. As with a lot of the big box stores, the movement to reduced revenues was relatively slow and then grew stronger to a tsunami type wave. Akin to the old story of the frog boiling. On some days, we wonder if the hospital industry is positioned to undergo a similar crisis over the next 5 + years.’’

To read more, please hit this link.



Maximizing the benefits of supply-chain management


In this Becker’s Hospital Review piece, two  Cardinal Health executives answer five questions about maximizing supply-chain management.

The introduction notes:  “The supply chain can serve as a critical strategic asset to a hospital or integrated delivery network when addressing the important initiatives tied to managing costs and quality of care. Hospitals should step back from pre-existing inefficient processes and workarounds and instead focus attention on leveraging automation and technology to drive efficiencies, lower costs and improve care quality” as hospitals and health systems move toward new payment models.

To read the piece, please hit this link.


Insurers may soon lose ACA excuse for their soaring premiums



Ana Mulero, writing in Healthcare Dive, notes that “2016 was a terrible year for insurance costs. Double-digit ACA premium increases were common. Insurance and provider monopolies and near-monopolies look likely to support future increases. But as we go into 2017, it’s reasonable to ask: How long will consumers put up with this?”

After all, “{T}his comes as some payers, including the five largest ones in the U.S., have remained highly profitable. Aetna, Anthem, Cigna, Humana, and Unitedhealth, four of which have multibillion-dollar plans to merge, have collectively profited more than $65.5 billion post-ACA, Public Citizen reported in October.”

Meanwhile salaries for insurance execs continue to surge. Consider, she writes:

”{S}alaries for C-suite executives were raised by 57% last year at Health Care Service Corp. (HCSC), which operates Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma, and Texas, according to a recent analysis by Modern Healthcare. The top ten company executives saw their combined earnings increase from a total of $36.1 million in 2014 to $56.7 million in 2015.”

And,  “Hospitals and health systems may actually be the ones that have felt the squeeze the most, and they have acted in ways that are {also} pushing up costs.

“Health systems are consolidating at a rapid pace, and many of them say they have done so to have more leverage with insurance companies. This activity has in turn led to monopolies and duopolies on the provider side as well, which results in not only increased prices to consumers, but also a decrease in quality care as competition is significantly reduced.”

“Hospital prices in monopoly markets are more than 15% higher” than in non-monopoly markets,  says Deborah Feinstein, the Federal Trade Commission’s director of the Bureau of Competition.

“Requiring more transparency around payers’ operating costs and salaries of their C-suite execs could help address these issues. But with Republicans promising a repeal, the ACA may not be available as cover for high costs much longer.

“Thus, insurance companies looking for whom, or what, to blame for the increases may face an uncomfortable reality soon: For every finger they point, three fingers might point back at them.” And, we might add, at some monopolistic hospital systems, too.

To read her whole article, please hit this link.

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