After months of debate, healthcare reform is here. The new legislation promises to end the current healthcare system as we know it.
So how will it affect America’s hospitals?
While there is much angst and uncertainty about the reform measures, hospitals won’t see the full impact until individual insurance mandates take effect and the newly insured begin seeking care. Many of these and other provisions won’t kick in until 2014. The average American, on the other hand, will start seeing some of the reform changes immediately.
“There are 1,300 areas where the bill directs CMS (the Centers for Medicare and Medicaid) to take action,” says Glenn Fosdick, president and CEO of The Nebraska Medical Center. “Until we know how CMS is going to enforce these measures, we will not understand the depth and significance of the bill.”
Despite the uncertainties that lay ahead in the healthcare environment, forward-thinking hospitals are preparing for change now.
“Good organizations will find ways to do things differently and become better providers of care,” says Fosdick. “Hospitals can either run from change, or they can adapt to it and embrace it.”
The Nebraska Medical Center has chosen to do the latter. “Our number one priority is to be prepared,” says Fosdick.
Fosdick says there are a number of provisions that present an obvious impact on hospitals. These include a reduction in Medicare and Medicaid reimbursement, pressure on insurance companies to reduce rates and premiums, penalization for 30-day readmissions and fee reductions for doctors.
“As a whole, it’s going to require us to have better control of our costs and to continuously examine ways to reduce costs whenever possible,” says Fosdick. These are two areas that have been priorities at The Nebraska Medical Center for some years and will continue to receive even greater attention as we look to the future. Over the last several years, the hospital has built a solid foundation for growth and stability by focusing on financial responsibility, healthcare leadership and a culture committed to quality and continuous product improvement.
The hospital’s efforts have been paying off. Despite the ailing economy, The Nebraska Medical Center has experienced the highest patient census in its history and has captured the distinguished position of being the most preferred hospital in the Omaha metropolitan area. The hospital has also recorded its highest market share ever at 27.6 percent. While some local hospitals have resorted to layoffs and reductions in nursing staff in response to the declining economy, The Nebraska Medical Center continues to outpace its local competitors and maintain its position as the region’s leader in tertiary medicine.
There are several areas that the current healthcare reform did not address that Fosdick believes could help reduce healthcare costs. One of these is medical malpractice. Placing a cap on medical malpractice suits could help reduce the impact of lawsuits and allow doctors to practice good medicine rather than defensive medicine, he says.
“While malpractice costs account for just 1 to 2 percent of healthcare costs, approximately 10 percent of our healthcare costs can be attributed to defensive medicine,” says Fosdick. “Sometimes doctors are forced to do tests and procedures purely to be on the safe side to avoid vulnerability to a lawsuit.”
End-of-life care is another issue that will continue to have an increasing impact on healthcare delivery and costs. “We spend more on healthcare in the last six months of life than in a person’s entire life,” says Fosdick. “Patients and families are faced with many difficult decisions in the final stages of their lives. Programs like palliative care medicine and hospice can help address these medical care issues in a more focused and compassionate manner with the patient’s goals and wishes in mind.”
Fosdick also believes that preventive medicine is not receiving enough attention under the current healthcare reform. “Many of the problems we are dealing with today in healthcare such as obesity, diabetes and heart disease relate to our own personal responsibility,” says Fosdick. “We can have all of the preventive tests in the world, but they are no good if we don’t use them.”
While the healthcare reform package is not perfect, it was needed to get a handle on spiraling healthcare costs, notes Fosdick. “Healthcare has become very complicated and there is no easy solution,” he says. “We will never be able to achieve complete agreement on both sides as to what is the right or wrong thing to do. But this is at least a good start.”
Building on The Nebraska Medical Center’s past success, Fosdick has carved out the following roadmap to prepare the hospital for a strong future. Some of the hospital’s primary initiatives include:
- Costs per case:
Reduce costs in ways that make the hospital more efficient and does not create a competitive disadvantage while also increasing patient volume.
Commit to improving quality in ways that can be measured. “How we provide care is going to be measured more by CMS and insurance companies as we move forward, so we need to keep looking at ways in which we can measure and improve quality,” says Fosdick.
The Nebraska Medical Center has created an environment where quality is embraced by the entire organization and is fully embedded into the culture. “Employees are a critical component of improving quality and we have built-in processes that allow them to be a part of the solution,” says Fosdick. This includes the continued utilization of the Six Sigma/Lean Manufacturing Program initiated over eight years ago.
- Readmission rates:
Improve communication with discharged patients and their primary care physician to reduce the number of 30-day readmissions.
- Physician involvement:
Work collaboratively with physicians to enhance hospital/physician alignment. “We are both on the same team,” says Fosdick. “When you have a good relationship with your doctors, lines of communication and dialogue open up and you are more likely to find ways to collaborate rather than compete.”
- Regional growth:
Increase the number of regional patients referred to The Nebraska Medical Center. The hospital has been working closely with referring hospitals to determine how the hospital can better meet their needs. As a result of these efforts, regional patient growth has grown to more than 5 percent in 2010 compared to an average growth of 1.9 percent in years past. These efforts will continue to increase as the hospital moves forward.
Engage in joint ventures and partnerships to provide additional revenue sources and valuable relationships. The Nebraska Medical Center has engaged in a number of partnerships, including those with The Bellevue Medical Center and Nebraska Orthopaedic Hospital. “Working collectively, we can become more efficient and competitive by finding ways to avoid duplication of services,” says Fosdick.
Working toward this goal, The Nebraska Medical Center recently entered into a partnership with Methodist Health System to form the Accountable Care Alliance. An accountable care organization is an integrated healthcare delivery system that relies on a network of primary care physicians, specialists and hospitals that are held responsible for the quality and cost of healthcare to a defined patient population. The goal of this partnership is to reduce costs to patients and to improve quality and efficiency of patient care across the two health systems. “This alliance provides us a model to reduce costs, break down barriers and provide the best care for our patients,” says Fosdick.
- Adapting to change:
Embrace change as an opportunity. “We need to have an open mind and look at ways to do things differently,” says Fosdick. “We’re in a changing environment so we need to stop thinking like a hospital and view challenges as opportunities.”
- Customer service:
Continue to provide to consumers safe, quality care and superior customer service. “Despite changes in the healthcare system, what won’t change is the fact that patients will continue to go where they have a good experience,” says Fosdick. “That’s why we have not and will not lower our standards. Today’s consumer expects quality. We will stay committed to providing the same superior customer service even in tough times.”
Attract and retain the best employees. “Organizations only work well when their employees are happy and they have the tools they need to do their jobs effectively,” says Fosdick. “Difficult times should not negatively affect the work environment.” A recent annual employee Workforce Engagement survey indicated that over 90 percent of employees were very happy at The Nebraska Medical Center.
“As we move forward, providing healthcare is not going to get easier,” says Fosdick. “But the initiatives and efforts we have put forth to date are why we are in a good position today. Much of our success is due to the commitment of the people who work here.
“There is a great deal of confusion about what healthcare reform really means and even less clarity about its impact. But good organizations will figure out how to benefit from these changes and that’s what we intend to do.”