Arlene Weintraub, Author at �鶹Ů�� Health News

In An Age Of Consolidation, Some Community Hospitals Struggle To Remain Independent

Arlene Weintraub — Thu, 09 Sep 2010 00:30:00 +0000

This story was produced in collaboration with our partner

QUINCY, Mass. – When Claire Contos needed colon-cancer surgery recently, she could have gone to a top teaching hospital in Boston, 13 miles north of here. Instead, she chose the Quincy Medical Center.

“There’s a lot of compassion and understanding here,” says Contos, 83, who has lived in Quincy for 64 years. “I’d never have that same feeling” in Boston. Her surgeon was Dr. Thomas Fitzgerald, the son of a Quincy nurse and doctor she had known for years. “He’s devoted to his patients,” she says. “I can call him anytime, day or night.”

Contos’ affection for her local hospital, which was built 120 years ago to serve local shipbuilders and workers in nearby granite quarries, is echoed by many of Quincy’s 90,000 residents. But now, there are serious questions about whether the medical center can maintain its independence from corporate ownership or, over the long run, survive.

The 196-bed hospital – which gets more than 80 percent of its inpatient revenue from Medicare, Medicaid and another state plan – is saddled with a deficit of more than $4.5 million, hospital officials say. To try to stanch the red ink, the medical center laid off 14 nurses and technicians, shook up its management team, and brought in hospital turnaround specialist John Kastanis. as interim CEO.

Quincy Medical’s woes mirror the financial troubles facing many independent community hospitals nationwide that are not part of a health system or owned by a chain. Banks have grown reluctant to hand out loans in a lagging economy, making it difficult for hospitals to pay for capital improvements. Medicare and Medicaid reimbursement rates haven’t kept up with hospitals’ costs, administrators say. And many independent hospitals lack the clout to get higher payments from insurers and steeper discounts from suppliers because they aren’t part of larger hospital systems, says Samuel Steinberg, a hospital consultant in Daytona Beach, Fla.

The new health overhaul law could exacerbate these financial problems. For example, it will require hospitals to adopt electronic health records and track and report patient outcomes. That will put more pressure on hospital profit margins, which average 1 percent to 2 percent, Steinberg says. The law also will make further cutbacks in Medicare and Medicaid payments.

Some stand-alone hospitals, such as St. Vincent’s Hospital in New York City, have shut down. Others are joining hospital systems. St. Luke’s Hospital near Toledo, Ohio – which spent years laying off staff, freezing wages and cutting services in a bid to remain independent – just became part of local chain ProMedica Health System. “Hospitals need to become much more efficient by joining together,” says Randy Oostra, president and CEO of ProMedica, which now owns 11 hospitals.

Over the past decade, the number of independent community hospitals has declined, either because of mergers or bankruptcies, according to the American Hospital Association. From 1999 through 2008, the number of independent hospitals has fallen by 290. So far this year, 70 hospitals and long-term care centers have been targets of acquisitions – 14 of which have been independent non-profits, according to Irving Levin Associates, a Norwalk, Conn., firm that tracks merger activity in the health care industry.

But some hospitals, reluctant to give up local control, are scrambling to stay independent:

— Doylestown Hospital in Pennsylvania, which has rebuffed offers from potential buyers, is trying to expand its reach by partnering with other hospitals to provide cancer and other care. At the same time it’s keeping a sharp eye on staffing levels. “We’re conscious of our costs,” says CEO Richard Reif. “We have to be.”

— Holyoke Medical Center in Massachusetts, which is running low on cash, recently scraped together $2 million in state grants to keep going, according to CEO Hank Porten.

— Community Medical Center in Missoula, Mont., in an effort to attract new, high-paying patients, is bringing in a pediatric surgeon on a visiting basis from Seattle Children’s Hospital -the only such surgeon to set up shop in Montana. Community Medical also joined with five other local hospitals to set up a virtual purchasing system, in an effort to get price breaks on equipment and services such as air ambulances.

— Boca Raton Regional Hospital in Florida, after losing $120 million in 2008, considered – among several options – the idea of joining a hospital chain. The board of directors decided instead to bring in a consulting firm that specializes in turning around ailing facilities. Today the hospital, which says it made a small profit in fiscal 2010, remains determined to stay independent. While joining a hospital chain could help reduce some administrative costs, it would threaten its close ties with the community in terms of philanthropy and support from volunteers, says CEO Jerry Fedele. “When you combine with a big organization, you still have fundamental challenges that a merger or sale does not address, it’s not a panacea.”

Meanwhile, to save money Quincy Medical Center has frozen and cut wages; eliminated some ambulatory care services and reduced staffing in the operating room. “I had staff here on weekends when there were no cases,” says Karen Conley, chief nursing officer. “They were sitting around waiting for emergencies.”

The Massachusetts Nurses Association, a union that has 300 nurses working for Quincy, has responded angrily, saying the staff is spread so thin that patient safety could be affected. “It’s a tragedy waiting to happen,” says spokesman David Schildmeier. A hospital spokeswoman said in an e-mail that the hospital’s “highest priority is and always will be the safety and well-being of our patients.”

Reducing labor costs may be only a short-term fix. “Hospitals can cut labor, but that means cutting back on service,” consultant Steinberg says. “It’s very difficult to cut your way to success.”

Quincy officials are bracing for another round of Medicare cuts that will hit hospitals in October. Mark O’Neill, the chief financial officer, expects a 2% reduction in payments, or a potential drop in revenue of $500,000 per year.

Despite the financial strains, Quincy’s executives say they’re determined to preserve the hospital’s independence. “Health care is a local issue,” says Kastanis. “When physicians have a local hospital that they have a long-term relationship with, and they have some control as to how their patients are treated, that goes a long away in creating confidence among patients that they’ll get good care.”

When a hospital is taken over by a system, the parent company typically replaces local board members, and physicians can end up with less say. “If you have a strong parent, they make all the decisions,” says Donald Thieme, executive director of the Massachusetts Council of Community Hospitals.

Quincy Medical Center has launched a clinical affiliation with prestigious Tufts Medical Center in Boston. The deal won’t supply Quincy with cash, but it could result in Quincy getting new – and more lucrative – patients, Kastanis says. Tufts surgeons who specialize in treating breast cancer and thoracic conditions will now be offering those services at Quincy, a move that should increase the volume of high-margin services performed in the hospital. Officials hope that Tufts physicians will come in a few times a week to bolster the hospital’s orthopedics, geriatrics and neurology services, too. “It’s not going to take a lot of volume to get us back to break-even,” Kastanis says.

Still, the heavy reliance on government payers continues to cause consternation. Kastanis says commercial insurers reimburse the hospital $1.33 for every $1 spent on a patient, on average, while Medicare pays about 83 cents for every dollar spent, and Medicaid pays 80 cents for every dollar spent. Quincy is one of six hospitals suing the state over Medicaid payments.

Tucked into a middle-class neighborhood that residents call “hospital hill,” Quincy Medical Center employs 1,100 people, making it the fifth-largest employer in this historic town, where thousands of tourists flock each year to see the birthplace of two presidents – John Adams and his son, John Quincy Adams. It has added services for the growing over-55 population, and employs translators for the 6,000 Asian patients who visit the hospital each year. Many of the signs in the hospital include Chinese translations.

Quincy Mayor Thomas Koch says maintaining a hospital that’s under local control is essential. “Our people are more comfortable getting their medical services in Quincy – not Boston,” he says. He recalls talking to a man who was rushed to QMC with a heart problem. “He told me that if he had been in traffic trying to get to Boston, he wouldn’t have made it.”

Still, the hospital is running out of options. A $20 million bond offering in 2008 allowed it to replace a 1950s boiler and renovate the emergency room. Now administrators are struggling to find $150,000 to purchase a new cardiac-monitoring system for the emergency room. They can’t afford to fix the air conditioner in the cafeteria and so must rely on a noisy fan.

Tufts officials are looking for ways to help Quincy quickly, such as by providing the visiting surgeons, says Deborah Joelson, senior vice president of strategic services at Tufts. But executives at both hospitals are already thinking about how they might transform the relationship into an accountable care organization – a system of independent doctors and hospitals that work together to provide a continuum of health services, from primary care through acute hospital care. The health overhaul law encourages such linkups.

“We envision moving in that direction, but we’d like to do it without owning everything,” Joelson says.

Quincy residents, such as Lance Peterson, are hoping for the best. A printer who publishes newsletters and brochures for the medical center, Peterson has had two colonoscopies and a liver scan there. Both his parents were treated there, as was his son, who got a peanut stuck in his throat when he was 2. “It’s someplace you like to visit,” says Peterson, “if you have to.”

Andrew Villegas and Philip Galewitz contributed to this story

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Insurer Mounts Offensive And Defensive Strategies On Health Law

Arlene Weintraub — Mon, 16 Aug 2010 15:06:00 +0000

Former key Senate staff member, William Hoagland (top), and senior vice president for new products, Tom Richards (bottom), guide Cigna’s response to health overhaul. (Kevin Kennedy and George Ruhe)

HARTFORD, Conn. In the increasingly tense wrangling between the insurance industry and state regulators over the definition of what spending can qualify as medical care under the new health law, one of the loudest lobbying voices is a relatively small player: Cigna Corp.

The insurer has stayed in step with larger rivals such as Aetna and Wellpoint in an often contentious dialogue with the National Association of Insurance Commissioners (NAIC)-a network of state regulators that has been charged with advising federal officials on implementing the health-reform law. Included in that work is defining “medical loss ratio” (MLR), which will determine what proportion of the health premiums collected by insurers is used for patient care and what is considered administrative expense. The new law mandates that insurers meet tight requirements on MLR.

The NAIC, which is meeting in Seattle, is expected to present its recommendations to the Department of Health and Human Services by the end of August.

Cigna’s chief lobbyist is William Hoagland, a veteran Washington insider who had served as a top Senate staffer, including a stint as a key aide to then-Republican Majority Leader Bill Frist. Hoagland believes insurance companies should be able to count smoking-cessation programs and health coaching as medical care. He’s also in favor of including “utilization review,” the controversial process in which nurses and administrators employed by the insurer review treatment plans and then approve or deny them.

“If you’re trying to modify a health care delivery system to be more focused on prevention and wellness, those should be included,” Hoagland says.

At first glance, it might seem Cigna doesn’t need a high-powered lobbyist such as Hoagland on its side. The Philadelphia-based company, the nation’s fourth-largest insurer by membership, generates most of its $18 billion in annual revenues providing health plans to large companies that are self-insured. That means Cigna doesn’t carry the risk of insuring those companies’ employees, but instead collects fees from them to process claims and perform other day-to-day administrative tasks. Those customers who self-insure are not subject to MLR requirements.

Cigna also has a hodgepodge of non-health businesses, including disability and life insurance. That helps insulate it from the drawbacks that the industry anticipates with the health overhaul.

But for Cigna to compete with larger rivals post-reform, analysts say it will need to expand its presence far beyond the fewer than 100,000 policies in the individual and small-group market it underwrites today. That’s why few industry experts are surprised that Cigna is working just as hard as its competitors at arguing for as many line items as possible to count as medical care.

“If you’re thinking about the future, you have to be concerned about MLR,” says Daniel N. Mendelson, president at consulting company Avalere Health in Washington, D.C.

Wall Street isn’t so sure Cigna will be able to compete with the likes of Aetna, Wellpoint and UnitedHealth Group-companies with much longer track records serving individuals and small employers. “It’s hard to build up those businesses from scratch,” says Matthew Coffina, an analyst for Morningstar, who declares himself “less than enthusiastic” about Cigna’s growth prospects.

Cigna’s health reform team says they’re approaching the new law from both an offensive and defensive stance. Toward that end, its executives are scrutinizing opportunities to participate in the health exchanges and other new markets. At the same time, they’re lobbying Congress and HHS to clarify the law’s ambiguities in ways that will benefit current and future customers.

A trio of Cigna executives is leading the effort: President and CEO David Cordani; Tom Richards, senior vice president for U.S. products; and the well-connected Hoagland.

Influencing the MLR debate is their most immediate concern. The health overhaul requires insurers to spend 80 percent of the premiums they collect from individuals and small businesses to provide medical care and 85 percent of the premiums from large employers. If they do not meet those targets, they are required to pay rebates to consumers starting next year.

In its earnings report earlier this month, Cigna said its MRL has fallen this year to nearly 79 percent for the second quarter, and nearly 81 percent for the first half of the year. The company told analysts that the MLR was lower than last year because it beneficiaries used fewer services than expected, partially because of fewer flu-related claims than anticipated, and the company had higher numbers of customers using high deductible plans.

Hoagland often finds himself in a war of words over what should count as medical care. “It’s interesting to me that the groups you would think would be most supportive of the things we’re talking about-prevention, wellness, coaching and all that-are usually ones who are most reluctant to allow for those kinds of expenditures,” he says.

Hoagland says he recently disagreed with representatives from the American Heart Association on the issue. “Obviously there is controversy. Does putting up a poster that says, ‘Wash your hands’ qualify? No I don’t think so,” Hoagland says. “But should utilization review be included? I think yes.”

Mark Schoeberl, executive vice president for advocacy at the AHA, says Cigna should have to prove that any program it classifies as medical care actually improves the health of its members. “We’re far from hostile,” Schoeberl says. “We just want to make sure that everything these companies do is evidence-based and outcomes-oriented, and that the results are auditable and available for public review.” Purely administrative functions, such as utilization review, shouldn’t count as medical care, he adds.

Cigna is also arguing that companies should be able to calculate MLR nationally, rather than state-by-state. Otherwise, says Richards, Cigna could get tangled up in administrative red tape, especially with customers who have more than 100 employees and are buying different plans for far-flung subsidiaries. “If we have to go through a lot of machinations to break out expenses by state, that could actually cause us to have additional administrative expenses,” argues Richards, a 26-year veteran of Cigna. “The worst case on the MLR is that it would cause us to have additional expenses. That would be perverse.”

Richards and Hoagland have been voicing their concerns about loss ratios and other aspects of health reform though the industry association America’s Health Insurance Plans (AHIP), as well as directly to NAIC, which holds biweekly conference calls that are open to the public.

Sandy Praeger, the Kansas insurance commissioner and chair of the NAIC’s health committee, says the effort to clarify MLR requirements has generated more industry input than any other issue the organization has addressed so far. “Clearly we want to include things that truly are promoting better quality in health care delivery,” Praeger says. Services such as health coaches for people with chronic diseases are easier to justify than utilization review, she says. “Utilization review is often just a method of limiting cost.”

Cigna’s health reform team defends the company’s position on a budget smaller than its competitors. Cigna has spent $960,000 so far this year on lobbying, while Wellpoint and Aetna have spent $2.5 million and $3.2 million respectively, according to disclosures filed with the Senate Office of Public Records.

Central command for Cigna’s health reform effort is not Washington, D.C., but rather its health-plan headquarters building-a sprawling campus that’s tucked into a residential suburb of Hartford.

Every Friday morning, Richards convenes a five-person steering committee to plot the insurer’s next moves on health reform. Hoagland also attends those meetings. Richards has recruited 10 Cigna veterans-with expertise ranging from consumer-directed health plans to underwriting-to be part of his core team.

“It’s about viewing this as a strategic opportunity,” Richards says. “If you think about what I do as the senior product leader, it’s really understanding what customers want and responding to it.”

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New Health Law Will Require Industry To Disclose Payments To Physicians

Arlene Weintraub — Mon, 26 Apr 2010 00:00:00 +0000

Doctors who accept speaking fees, five-star meals and other compensation from pharmaceutical or medical device companies will soon see their names and the value of the gifts they accept revealed on the Web, under a new federal law that follows several states in drawing attention to such financial benefits.

The experience of one of those states Vermont suggests that highlighting the medical industry’s largesse may curb the payments.

This month, the attorney general of Vermont one of three states to require gift disclosures released data showing that total payments to physicians dropped 13 percent in fiscal 2009 to $2.6 million. The reporting requirement began in 2002.

Consumer advocates have complained that industry compensation can affect a doctor’s choice of drugs or treatment and that exposing the doctors will dissuade such behavior. But some consumer groups say that the new law is too narrow in its scope. And it has raised complaints among some doctors, who say the provision will unfairly stain legitimate work they do for industry.

The overall dollar value of gifts to Vermont physicians “has been going down steadily for the last three years,” says Wendy Morgan, chief of the state attorney general’s public protection division. “I think there are more health care providers who won’t accept gifts.”

Vermont lawmakers want to make sure of that. Last year they amended the law to ban most gifts outright, including food, which accounted for $800,000 of the 2009 total.

The other states with similar legislation, Massachusetts and Minnesota, have also outlawed many forms of corporate gift-giving, although they do allow doctors to accept speaking fees and most product samples. All three states allow research grants.

Yet even consumers in those three states will get more detailed information and easier access to the data under the new federal program, which is part of the health overhaul signed into law last month.

Database Will Be Available Sept. 30, 2013

The Physician Payments Sunshine Act requires companies to begin recording any physician payments that are worth more than $10 in 2012 and to report them on March 31, 2013. That includes stock options, research grants, knickknacks, consulting fees and travel to medical conferences at chi-chi hotels. The details will be posted in a searchable database starting Sept. 30, 2013.

The measure is based on a bill that was introduced more than two years ago by Sens. Charles Grassley, R-Iowa, and Herb Kohl, D-Wis. The senators believe that physicians who receive benefits from drug and device makers are more inclined to prescribe the priciest products.

“We hope this lowers health care costs and strengthens patient-doctor relationships,” says Ashley Glacel, a spokeswoman for the Senate Special Committee on Aging, which spearheaded the original bill.

It’s not just states that are reporting physicians who are compensated by life-sciences companies. A growing number of pharmaceutical companies, feeling pressured by lawmakers expressing concerns about medical conflicts of interest, are also listing physician payments on the Internet. Most recently, Pfizer released details of $35 million in payments that it made to doctors in the second half of 2009.

Some industry critics gripe that the federal law has too many loopholes. It only applies to physicians and teaching hospitals, for example. Companies won’t have to report payments they make to nurses, physician assistants, and other medical professionals who might influence which products are prescribed.

“If any marketing avenue is not regulated, companies will find a way to exploit it,” predicts Dr. Daniel Carlat, a psychiatrist and associate professor at Tufts Medical School. Carlat was once a speaker for Wyeth but quit over concerns about how to deal with a depression drug’s side effects. “I expect we’ll see a lot more nurse practitioners giving hired-gun talks,” he says.

In Vermont, corporate payouts to nurses totaled $288,000 in 2009-almost triple the amount they received the previous year.

Some physicians opposed federal and state efforts to limit physician-industry relationships because they fear it will impede innovation.

Complaints From Doctors

“The use of the term ‘sunshine’ has an implicit aura of corruption,” says Dr. Thomas Stossel, a professor of medicine at Harvard. Last year, Stossel co-founded the Association of Clinical Researchers and Educators, which promotes collaboration between physicians and industry to create better products.

Stossel has accepted speaking and consulting fees from companies such as Merck and Pfizer, and he says he’s not opposed to his name appearing in corporate disclosures. But he does believe concerns about relationships between companies and doctors have been overblown. “What’s wrong with a company buying me lunch or giving me a tote bag?” he asks.

Other physicians acknowledge that donations from industry even small ones can create conflicts of interest. “There is extensive literature suggesting that gifts can influence behavior,” says Dr. Robert Steinbrook, adjunct professor of medicine at Dartmouth Medical School.

That evidence prompted the National Academy of Science’s Institute of Medicine to issue a report last year endorsing the elimination of all physician-industry relationships that might unduly influence prescribing behavior.

While the new federal law stops short of banning gifts, it does promise to increase the public’s understanding of how companies interact with physicians. Rather than simply listing names and dollar amounts, the federal database will include explanations of what services the physicians provided in return for the payments. And drop-down menus will make it simple for patients to parse the data by name, type of gift received, and other specifics.

As a result, “the legislation will allow us to analyze the data in ways that are meaningful,” says Jerome P. Kassirer, a professor at Tufts University School of Medicine and author of “On the Take,” a book about physicians’ financial relationships with companies.
That will be especially useful for patients facing hip or knee replacements, or other procedures involving expensive medical devices, Kassirer adds. “They’ll be able to determine whether their doctors are heavily invested in the companies making the devices,” he says.

Research suggests that those details matter to some patients. Kevin P. Weinfurt, an associate professor of psychology and neuroscience at Duke University, has studied how patients participating in clinical trials react to physician disclosures. He found that patients were particularly troubled when doctors owned stock in the companies that were managing the clinical trials. “They felt somehow that this physician could do something in the trial that could make the company a lot of money, which would then make him a lot of money,” Weinfurt says.

Industry groups representing pharmaceutical and medical-device makers have supported the federal provisions on physician disclosures.

“This knowledge will give the public greater confidence in the nature of the relationships” between companies and physicians, says David Nexon, senior executive vice president of AdvaMed, a trade association of medical device makers. “We have nothing to hide.”

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