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Challenges, opportunities in reimbursement change


This Becker’s Hospital Review piece looks at how shifting reimbursement regimes are both a problem and opportunity.

Becker’s reported that Barry Arbuckle, president and CEO of Fountain Valley, Calif.-based MemorialCare Health System, said:

“We need to get people to the right venue of care.”

Becker’s said he outlined “MemorialCare’s push to ambulatory, community-based centers. Often, patients of independent physician groups typically wouldn’t seek care from a hospital outpatient department; rather, they’d go to a community-based ambulatory center. As hospitals and health systems acquire these physician groups, the hospital outpatient department becomes a cash cow for hospitals where both Medicare and commercial payer rates are higher than they would be in an ambulatory setting.”

“Gregg Beeg, CFO of Oaklawn Hospital in Marshall, Mich., said reimbursement change can be especially problematic for smaller hospitals such as his, a 77-bed independent hospital, as they navigate the shift from inpatient to outpatient. ‘Insurance companies continue to want to ratchet that reimbursement down,’ he said.

“What’s more, Mr. Beeg’s hospital faces the economic uncertainty tied to the rocky state of Michigan’s finances and how employee retention poses a burden to hospitals.”

“The market pressures to open and operate in facilities outside the four walls of a traditional hospital are also affecting Toledo, Ohio-based ProMedica. Randy Oostra, president and CEO of ProMedica, said the health system is strategizing how to rationalize inpatient consolidation and moving to outpatient over a period of time.”

He told Becker’s: “The idea down the road is how do you begin to think about rationalizing, consolidating [or] maybe not doing everything at every location.” ProMedica is opening six urgent care centers, largely in response to other healthcare organizations in the market doing the same thing. “We didn’t want to just give that away,” Mr. Oostra said.

Calif. hospital to close after outpatient conversion plan fails


Saddleback Memorial, in wealthy San Clemente, Calif.,   will close May 31 because of falling inpatient volumes, in a sign of the rapidly accelerating national move to outpatient treatment for  the sort of patients who used to be expected to spend at least several days in the hospital.

Hospital officials said that there are often fewer than 10 inpatients at the hospital, and  inpatient surgeries have dropped to less than one a day.

In August 2014, MemorialCare, the parent system, announced plans to convert the 73-bed hospital into an outpatient medical campus and worked with state lawmakers to allow a satellite emergency department at the outpatient campus in San Clemente. However, the legislation failed in January.  Then the San Clemente City Council rezoned the San Clemente campus property to require hospital services.

“Without legislation to allow a satellite emergency department, and given this new restrictive rezoning that requires hospital services, the vision to convert the campus into a modern ambulatory care center cannot now be achieved,” hospital officials said.

Healthcare ‘management by process’


This HealthAffairs blog entry  by John Toussaint discusses  the ThedaCare Center for Healthcare Value‘s framework for transforming healthcare delivery through improvement-management techniques similar to the “management by process” espoused by Edwards Deming in the 1980s.

The framework has many  principles from  such big manufacturers as Toyota— now being applied to healthcare— using the “concepts of Plan-Do-Study-Act (PDSA) thinking, developing model cell areas to test new concepts, spreading new processes, and building new sets of standards for leadership and daily management.”

A “model cell” is a place, “usually a clinic or a department, where care is completely redesigned. The process change leads to new roles and responsibilities for everyone involved.”

An example: “At the Palo Alto Medical Foundation, in California, there was a need to deliver a better patient service experience while reducing cost.

“A well-known health maintenance organization (HMO) was aggressively competing with Palo Alto with better quality at a lower cost, so the organization’s leaders began model cell work in one clinic in Fremont, Calif. They eliminated doctors’ private offices, developed dyads between doctors and medical assistants, started two-minute morning huddles to understand demand for the day, and in one year, completely redesigned the entire outpatient experience. ”

Mr. Toussaint also looked at MemorialCare, in Long Beach, Calif., where a group of “specially trained facilitators teach the management team how to be successful ‘lean’ managers. This is not training in a classroom with PowerPoint slides. Instead, it is applying principles and tools to the real work; where value is created for the patient at the bedside.

“Facilitators train leaders in ‘visual management,’ which involves setting up visual management boards, identifying and posting key metrics that relate to performance of the department, and encouraging staff to post ideas for improvement. Managers are also trained to teach frontline staff to identify and solve problems, and how to map processes of care to understand which steps in the process are non-value-added to the patient.”





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