Safety Net CEO: AHCA Passage Rests on Backs of Poorest, Sickest

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The CEO of Grady Health System says the bill’s passage by the Senate would cut $50 to 60 million from the health system’s annual revenues and many who gained insurance through Obamacare will lose it.

The recent passage by the U.S. House of Representatives of the American Health Care Act, will affect all hospitals to some degree, but none more than safety net hospitals, which treat a large percentage of poor patients.

Why? Because a much larger percentage of their revenue depends on reimbursement from Medicaid, which expanded under the ACA, but is targeted for the majority of cuts under the AHCA.

John Haupert is not just CEO of Grady Health System, the $917 million (operating revenue) Atlanta safety-net health system. He’s also the board chair of America’s Essential Hospitals, the 275-member safety net hospital association.

In the wake of the House’s passage of the AHCA, and in anticipation of the Senate’s upcoming consideration of the Republican bid for repeal and replacement of the Affordable Care Act, HealthLeaders spoke with Haupert about his thoughts on the bill (or its Senate version) and the effects it could have on hospitals and health systems like Grady.

Following is a lightly edited transcript of that conversation.

Research shows aggressive treatment of sepsis can save lives

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Minutes matter when it comes to treating sepsis, the killer condition that most Americans probably have never heard of, and new research shows it’s time they learn.

Sepsis is the body’s out-of-control reaction to an infection. By the time patients realize they’re in trouble, their organs could be shutting down.

New York became the first state to require that hospitals follow aggressive steps when they suspect sepsis is brewing. Researchers examined patients treated there in the past two years and reported Sunday that faster care really is better.

Every additional hour it takes to give antibiotics and perform other key steps increases the odds of death by 4 percent, according to the study reported at an American Thoracic Society meeting and in the New England Journal of Medicine.

That’s not just news for doctors or for other states considering similar rules. Patients also have to reach the hospital in time.

“Know when to ask for help,” said Dr. Christopher Seymour, a critical care specialist at the University of Pittsburgh School of Medicine who led the study. “If they’re not aware of sepsis or know they need help, we can’t save lives.”

The U.S. Centers for Disease Control and Prevention last year began a major campaign to teach people that while sepsis starts with vague symptoms, it’s a medical emergency.

To make sure the doctor doesn’t overlook the possibility, “Ask, ‘Could this be sepsis?'” advised the CDC’s Dr. Lauren Epstein.


Once misleadingly called blood poisoning or a bloodstream infection, sepsis occurs when the body goes into overdrive while fighting an infection, injuring its own tissue. The cascade of inflammation and other damage can lead to shock, amputations, organ failure or death.

It strikes more than 1.5 million people in the United States a year and kills more than 250,000.

Even a minor infection can be the trigger. A recent CDC study found nearly 80 percent of sepsis cases began outside of the hospital, not in patients already hospitalized because they were super-sick or recovering from surgery.



In addition to symptoms of infection, worrisome signs can include shivering, a fever or feeling very cold; clammy or sweaty skin; confusion or disorientation; a rapid heartbeat or pulse; confusion or disorientation; shortness of breath; or simply extreme pain or discomfort.

If you think you have an infection that’s getting worse, seek care immediately, Epstein said.



Doctors have long known that rapidly treating sepsis is important. But there’s been debate over how fast. New York mandated in 2013 that hospitals follow “protocols,” or checklists, of certain steps within three hours, including performing a blood test for infection, checking blood levels of a sepsis marker called lactate, and beginning antibiotics.

Do the steps make a difference? Seymour’s team examined records of nearly 50,000 patients treated at New York hospitals over two years. About 8 in 10 hospitals met the three-hour deadline; some got them done in about an hour. Having those three main steps performed faster was better — a finding that families could use in asking what care a loved one is receiving for suspected sepsis.



Sepsis is most common among people 65 and older, babies, and people with chronic health problems.

But even healthy people can get sepsis, even from minor infections. New York’s rules, known as “Rory’s Regulations,” were enacted after the death of a healthy 12-year-old, Rory Staunton, whose sepsis stemmed from an infected scrape and was initially dismissed by one hospital as a virus.



Illinois last year enacted a similar sepsis mandate. Hospitals in other states, including Ohio and Wisconsin, have formed sepsis care collaborations. Nationally, hospitals are supposed to report to Medicare certain sepsis care steps. In New York, Rory’s parents set up a foundation to push for standard sepsis care in all states.

“Every family or loved one who goes into a hospital, no matter what state, needs to know it’s not the luck of the draw” whether they’ll receive evidence-based care, said Rory’s father, Ciaran Staunton.

Recipe for Successful Health System M&A: Ensure Focus on Execution of Transaction Does Not Undermine Key Long-Term Strategic Imperatives

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The evolving U.S. healthcare landscape, perhaps more now than ever before, requires that health system executives possess varied and deep skill sets. Not only must executives navigate the changing political and macroeconomic landscape, including the repeal-and-replace uncertainty, but in execution of their well-intentioned strategic transactions, health system leaders must remain focused on the original strategic imperatives and objectives to help ensure long-term, sustainable success. Of 140 surveyed participants, 61% believe their organization’s merger, acquisition or partnership activity will increase within the next three years.

Commonly, a decision is made to move forward on an appropriate strategic transaction and then senior leadership assigns a multidisciplinary deal team to consummate such. The majority (74%) of surveyed participants cite both financial/operational and clinical/care delivery equally as the primary objective when deciding to transact. Prior to commencement, successful healthcare organizations will have gone through a lengthy strategic planning process, developed a list of strategic imperatives and had such approved by their board of trustees. Some of these strategic imperatives may include: the Triple Aim, relevance/attractiveness with employers and payers, alignment of incentives, ability to manage the resulting organization as a system versus a loose federation, and the stickiness and sustainability of the resulting system.

A breakdown in the deal consummation process that results in the strategic imperatives not maintaining primacy but being subordinated or ignored may result in a nice press release or closing ceremony but when measured by the test of time, the transaction may not deliver expected and necessary sustaining strategic benefits. This is exacerbated in complex M&A transactions and strategic partnerships. Such complex transactions cannot be managed in a manner similar to important but more routine operational or capital initiatives (e.g., construction of a new bed tower or implementation of a staff reduction initiative) facing healthcare organizations. Senior leadership must help ensure that the strategic benefits of a transaction do not become deemphasized due to deal fatigue, completion of task bias, arbitrary deadlines, and other pressures that work against the deal team obtaining optimal outcomes.

Healthcare leaders must help ensure that the strategic imperatives are effective guardrails of the deal team’s efforts and not lost in the difficult and dynamic transaction negotiation and consummation process. A successful approach focuses less on arbitrary timelines or goals and embraces an accountability process that monitors the deal progress and documentation to help ensure a true north heading. Effective leaders must remain laser-focused on the strategic imperatives and not allow completion and execution of the deal to subordinate the foundation of the original strategic mandate.

Risk adjustment cannot solve all selection issues—network contracting edition

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In our Hamilton Project paper, Nicholas Bagley, Amitabh Chandra, and I explain why a health insurance market in which plans compete on cost effectiveness won’t work. (Click through, download the PDF, and read Box 2 on page 9, titled “Why Health Plans Cannot Differentiate on Coverage.”)

The recent NBER paper by Mark Shepard makes the same argument we made, but to illustrate problems in hospital markets with heterogeneous preferences for costly, star hospitals. Some key quotes from Mark’s paper:

But even excellent risk adjustment is unlikely to offset costs arising from preferences for using star (or other expensive) providers. These preferences create residual cost variation that can lead to a breakdown of risk adjustment (Glazer and McGuire 2000). Second, the two channels may have different cost and welfare implications. While sickness makes individuals costly in any plan, preferences for a star hospital only make enrollees costly if a plan covers that star hospital. Stated differently, preferences affect how much an individual’s costs increase when their plan adds coverage of the star hospital. […]

My results suggest that consumer preferences for high-cost treatment options – star hospitals in my study, but the same idea could apply to any expensive provider, drug, or treatment – can naturally lead to adverse selection, and specifically selection on moral hazard. […]

In the current system, consumers get access to star hospitals based on their plan choice, after which use of these providers is highly subsidized by the insurer. This setup leads to higher costs (moral hazard) and selection on moral hazard. Policies that reduce this moral hazard – e.g., higher “tiered” copays for expensive hospitals or incentives for doctors to refer patients more efficiently – may also mitigate the adverse selection. Differential plan prices for different groups may also improve the efficiency of consumer sorting across plans.

Mark’s paper is also noteworthy because it is one of the few to address consequences of network contracting. This is a hard area to study because plans’ hospitals and physician networks are not easily observed. Other good work in this area has been done by my colleagues at the Leonard Davis Institute.