Aug

Accrediting Indian hospitals

Posted by Joe Paduda on Wednesday, August 2nd, 2006 | Comments

Assuaging concerns about quality, treatment standards, and outcomes is one of the biggest challenges facing off-shore medical facilities eager to extract a fraction of US health care dollars. That and figuring out how to make a Mumbai hospital look and feel like the one just down the street from the medical tourist’s neighborhood.
Into this business opportunity (the former, not the latter) has stepped an Australian certification body, the Australian Council on Healthcare Standards. Working with two Indian groups, the Quality Council of India (QCI) and the National Accreditation Board for Hospitals and Healthcare Providers (NABH), the Aussies will help revise national credentialing and standards for Indian health care facilities.
The standards are likely to closely parallel those developed by another body, the ISQua, The International Society for Quality in Health Care. ISQua includes board members from URAC, JCAHO, and accrediting organizations from other countries, and is operational in 70 nations.
As healthcare goes global, and American companies and individuals seek to reduce expenses while assuring quality, expect that we’ll hear more about health plans that include first-dollar coverage for services rendered at ISQua certified facilities.
What does this mean for you?
The world is getting smaller, flatter (thanks Tom Friedman) and more competitive, and providers who ignore competition from overseas do so at their peril.

Jul

United Healthcare – the fine print that’s not there

Posted by Joe Paduda on Friday, July 14th, 2006 | Comments

A colleague working in the managed care industry purchased a HSA plan through United Healthcare/Golden Rule. This colleague, a highly experienced and very knowledgeable industry veteran with extensive expertise in assessing physician outcomes and inpatient and outpatient hospital costs and quality, and several years’ experience in provider network development and operation, was confident in his/her ability to effectively reduce costs while obtaining care for the family.
Not so.

Continue reading United Healthcare – the fine print that’s not there

Jul

How many docs is too many docs?

Posted by Joe Paduda on Wednesday, July 12th, 2006 | Comments

Kevin at Kevin MD posted a quick piece on the contention by researchers at Dartmouth College that there are too many providers, and he struck a nerve or three. And one appears to be the sciatic, for the amount of pain it has created amongst Kevin’s readers.
The study, which was published in my-favorite-journal Health Affairs, contends that there are presently enough physicians in the US to provide all of us with adequate care. Moreover, the lead researcher opines that spending additional money to increase the number of physicians will divert funds from more critical needs.
If you agree w the study’s results, it looks like we will soon have too many docs. And the more docs we have, the more procedures are performed, and the more bills generated. I’m also dubious about a return on that investment, as the health status of the average American will likely remain unchanged..

Jul

More docs does not equal better rankings

Posted by Joe Paduda on Tuesday, July 11th, 2006 | Comments

Dartmouth’s study on the number of physicians required to treat Americans includes an observation which bears directly on the USNews report on the nation’s best hospitals. One of the top ten, the Mayo Clinic,needs one-third as many physicians to treat patients in the last six months of life as an unranked facility, New York University Medical Center (also a teaching institution).
That being the case, it is clear that being the best does not require having a lot of docs. And that has significant implications for the type and volume of procedures performed and the cost of care.

Jul

Is rating the “best” hospitals “good”?

Posted by Joe Paduda on Sunday, July 9th, 2006 | Comments

US News’ annual rankings of the nation’s “best” hospitals by specialty is out, and hospital execs and PR staff around the country are either studiously ignoring the release or aggressively trumpeting their selection. Expect to see more billboards, especially around Baltimore, where Johns Hopkins got the top rank, Rochester MN (Mayo Clinic), Florida and Ohio (Cleveland Clinic).
There are several good things about this highly public presentation of “quality”. First, it gets people’s attention. Second, it gets hospital execs’ attention. Third, it provides a somewhat objective review of providers’ quality. Any time the industry is forced to focus on quality, however defined, that is a good thing. While we can, and I will, argue that one set of criteria is flawed, or another is somehow unfair or biased, in the larger scheme the attention paid to “quality” is just as, if not more, important than the actual criteria used. I’m sure I’ll get some heated email on this, but the point is we do not pay enough attention to “quality”, so any device, however cumbersome, that increases focus on quality is good.

Continue reading Is rating the “best” hospitals “good”?

Jun

Surgical implants – who’s paying?

Posted by Joe Paduda on Thursday, June 29th, 2006 | Comments

Physicians choose surgical implants and devices, hospitals order and pay for them, patients get whatever the docs choose, device manufacturers make lots of profits, and payers foot the bill. A process that is seemingly designed to completely avoid any price sensitivity, and the results to date have shown that there is remarkably little concern about cost on the part of the doc or patient, and at least to date, little ability to reduce costs on the part of the hospital, or payer.
A column in today’s New York Times describes the results of an analysis performed by investment firm Sanford Bernstein (registration required) which compared the costs of surgical implants (artificial hips, knees, etc) at 100 hospitals. Many of these institutions thought they were getting preferential pricing, but the results of the study show that their costs may have been substantially higher than other hospitals’.
The net of the article is that the days of price opacity in surgical implants is likely coming to an end; the research, combined with inquiries by regulators and the US Justice Dept. will shine a blinding light on the arcane world of implant pricing, likely bringing to an end the annual 8% price increases.
There is a subtlety missed in the article, which pertains to the small but important role of the workers comp payer. Sources indicate that a substantial portion of surgical implants are covered by workers comp, a portion much greater than the miniscule overall market share of comp (about 2% of all medical dollars are spent on comp, but figures indicate over a third of surgical implants are paid for under workers comp).
In comp, specifically in DRG states like New York, the cost of the implant is added to the DRG cost, which can increase the cost of the care by 50-70%. Therefore, the wounded parties in comp are not the hospitals (who typically price these procedures on a bundled basis in the group health and Medicare worlds and thereby absorb the cost) but the WC insurers.
What does this mean for you?
More light shining on the murky world of medical costs and procedures is always welcome; be sure to make sure you understand how the bundling and unbundling applies to your contracts and reimbursement.

Jun

How does physician income drop while costs increase?

Posted by Joe Paduda on Thursday, June 22nd, 2006 | Comments

Everyone’s losing in America’s health care mess. Premiums for family coverage are doubling every ten years, and will hit $20,000 per family per year before 2015. While insurance costs are going up, physicians are actually making less. Physician income decreased 7% (registration required) in real terms from 1997 to 2003. Specialist earnings dropped the least (2%), while primary care docs saw a 10% decline. And Medicare reimbursement rates will likely decline in nominal terms in the near future.
The data, from a study by the Center for the Study of Health System Change, seem at odds with the daily torrent of reports on exploding health care costs. If health care costs and insurance costs are rising, how could docs be making less?
There is good news buried in CSHC’s report – the amount of time physicians spend actually treating patients has increased significantly, while the time devoted to administrative tasks has declined.
It appears the answer lies in declining reimbursement rates. These hard-working docs are spending plenty of time (over 45 hours a week) with patients, but their reimbursement rates have not kept pace with inflation. For example, Medicare has increased fees by 13% during the study period, while the underlying inflation was 21%. And, private payers’ reimbursement declined from 143% of Medicare’s rate in 1997 to 123% in 2003.
So, clearly physician income is not a driver of medical inflation. One driver appears to be the increased volume of tests performed; utilization in this area was up at a 6% annual rate over the study period.
But the real driver appears to be higher utilization of physician services (more docs doing more stuff), and, slightly less important, a significant increase in hospital and facility costs.
Oh, and drug costs continue to rocket skyward…
What does this mean for you?
Higher costs, lower incomes = unhappy consumers and providers does not = change…yet.

Jun

Ohio’s BWC to cut payments to hospitals

Posted by Joe Paduda on Monday, June 19th, 2006 | Comments

Ohio’s Bureau of Workers Compensation will no longer be subsidizing indigent care at the state’s hospitals. The recent announcement that BWC is cutting reimbursement for inpatient care to Medicare plus 15% is one of the positive outcomes of the Hydra-headed scandal at Ohio’s Bureau of Workers Compensation.
And it appears likely that BWC will next cut payments for outpatient services, which make up a much larger slice of the medical expense pie.
Ohio joins several other states, including Pennsylvania. Connecticut, Rhode Island, California, and Maryland, all of which base workers comp reimbursement on Medicare costs plus a percentage.
Notably, the press has been somewhat neutral in its coverage of the change, with a recent editorial allowing that the reduction will simply result in cost-shifting to other payers. That is an inevitable result; however there is no logical, ethical, or legal requirement that the state’s employers pay for the inefficiencies or hospitals or society’s failure to provide insurance for all citizens.
Work comp has been a very profitable line of business for the state’s hospitals, generating over a half-billion dollars over a seven year period. That figure covers both inpatient and outpatient care, with outpatient significantly larger.
What does this mean for you?
On a micro level, lower costs for workers comp in Ohio; on a macro level another push for universal coverage.

Jun

More reimbursement nastiness

Posted by Joe Paduda on Monday, June 12th, 2006 | Comments

Reimbursement policy has long been one of the more misused means of managing the cost and quality of care. Providers and payers have long fought over risk withholds, capitation, per diems, case rates, and their kin, all in an effort to maximize, or minimize, payout.
By fighting over these issues, the parties are getting no closer to a resolution, and are doing themselves no favors. Instead of this no-win battle, providers and payers should be focusing on the real problem – the un- and under-insured.
But first, the detail on this squabble. The latest trend comes out of California, where Wellpoint has decided to pay docs less for performing colonoscopies in hospitals than in their offices or ambulatory centers. The cut in reimbursement for hospital-based procedures is about 20%, while the increase for non-hospital-based services is 5%.
Readers will no doubt be shocked to hear the hospitals are crying foul, using patient safety as the instrument to bludgeon Wellpoint. Unfortunately, this dispute breaks no new ground in the care v cost dialogue, with CA Hospital Association president Duane Dauner saying “Health plans shouldn’t force doctors to make patient-care decisions based upon money.”
The response from Wellpoint was predictable; “It’s really litigation over dollars, not patient safety,” WellPoint spokesman Robert Alaniz said”, noting that hospital-based colonoscopies could cost “up to ten times” more than non-hospital services.
Without data on actual quality outcomes and specific cost differentials (something a little more specific than “up to ten times more expensive”), it’s hard to cut thru the sound bites. That said, I’m having a tough time with Dauner’s statement that health plans should not ask docs to factor in cost when considering patient care decisions. That’s the attitude that has gotten us to where we are – runaway costs are due in large part to the “buyer’s” ( the physician exerts the most control over the buying decision ) complete lack of concern over costs.
There is a separate issue here; hospitals continue to rely on overpayments by private insurers such as Wellpoint to pay for the underpayments of Medicaid and nonpayments by the uninsured.
If providers and payers addressed the underlying disease state (access) instead of fighting over the symptoms (payment differentials) they might actually have some chance of getting to a solution. Instead, they insult, degrade, and denigrate each other, eliminating any chance for constructive dialogue.
When do the adults take over?

Jun

Ohio hospitals’ misguided complaints

Posted by Joe Paduda on Wednesday, June 7th, 2006 | Comments

Hospitals in Ohio are complaining that proposed cuts in reimbursement by the Bureau of Workers Compensation are unfair, even though the proposed reimbursement level is Medicare +15%. According to one spokeswoman for the hospitals, “There is a misconception that a broken arm costs the same in Columbus, Ohio, as it does in Los Angeles, Calif.,” said Tiffany Himmelreich, spokeswoman for the Ohio Hospital Association, which has 170 member institutions.
Well, talk about a non sequitur. No one is claiming that hospitals in LA have the same costs as hospitals in Columbus. What Ms. Himmelreich is missing is that the proposal would pay the hospital their costs plus a 15% margin. And, with Medicare hospital reimbursement generally accepted as satisfactory, I have a tough time following the Hospital Association’s argument that the cuts are unfair.
Here’s why. Ms. Himmelreich went on to say “”For instance, a hospital with a high level of uninsured patients might charge more than a hospital with a lower level of uninsured.” Since when is it the responsibility of BWC, or Ohio employers, to cover the costs of the uninsured?
I’m as vocal as anyone about the problems of the uninsured, the drag they place on our economy, and the desperate need for our elected officials to get out of their golf carts and fix the problem.
But shifting costs to workers comp payers is not the solution. It hides the problem, and in the long term the Hospital Association’s complaints will do them more harm then good.
Workers compensation premiums are a significant cost of doing business. The BWC is well within its rights to refuse to subsidize a problem that is societal. In fact, between 1997 and 2004, Ohio’s employers overpaid hospitals over half a billion dollars. Think about what that money could have done if it was invested in employee training, new technology, alternative energy sources…
BWC and the Ohio Hospital Association should be working together on the uninsured issue, not fighting.
What does this mean for you?
A reminder to look deeper into issues, because there is a lot of common ground among payers and providers.

Category: Providers