Novant Health sees operating income drop 32.3%

http://www.beckershospitalreview.com/finance/novant-health-sees-operating-income-drop-32-3.html

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Winston-Salem, N.C.-based Novant Health saw operating income drop 32.3 percent year-over-year in the second quarter of fiscal year 2017 to $39.7 million, according to unaudited financial documents.

The health system recorded a 2.2 percent year-over-year increase in operating revenue in the second quarter of this year, to $1.11 billion. However, the system saw operating expenses increase 5 percent year-over-year to $994 million.

Including expenses, Novant saw net income drop 2.8 percent year-over-year for the second quarter ended June 30 to $83.9 million.

Becker’s Hospital Review reached out to Novant Health for further explanation of its second quarter financial performance. The system did not provide any additional information.

Exposure Draft: U.S. Not-For-Profit Hospitals andHealth Systems Rating Criteria

https://www.fitchratings.com/site/re/895646

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Fitch Ratings has proposed rating criteria changes for nonprofit hospitals and health systems.

Here are five things to know.

1. Fitch said the proposed criteria changes include introduction of revenue defensibility, operating risk and financial profile rating factors as well as individual assessments for each of those factors.

2. Other proposed criteria changes from Fitch include “financial profile alignment with business profile in rating assessment; forward looking consideration of the impact of existing or needed capital investments that may increase financial leverage; and introduction of FAST, an issuer specific scenario analysis tool measuring investment portfolio stress linked to asset allocation, stress on revenue and cost growth rates.”

3. The overall goal with the proposed criteria changes is “to communicate Fitch’s credit ratings more clearly and better express the characteristics that affect a credit’s relative resilience in changing economic conditions,” said Fitch Senior Director Kevin Holloran.

He added, “Fitch believes that this will facilitate a more forward-looking approach to ratings and will better highlight differences among credits within the same rating category.”

4. The agency said it anticipates “fewer than 15 percent of ratings will be affected, with a roughly equal mix of upgrades and downgrades” as a result of the proposed criteria changes.

5. Fitch is accepting comments on the proposed criteria changes via email until Oct. 20. The full Fitch report on the proposed criteria changes is available here.

Anthem Now Requiring Pre-approval for Hospital MRIs, CT Scans

http://www.healthleadersmedia.com/finance/anthem-now-requiring-pre-approval-hospital-mris-ct-scans?spMailingID=11861186&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1240498373&spReportId=MTI0MDQ5ODM3MwS2

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The insurer no longer allows outpatient imaging in hospitals. Hospitals may feel the financial loss.

In a bid to cut costs, Anthem is now informing consumers that it must pre-approve any hospital-based MRIs and CT-scans, and that approval won’t come easily.

The insurer’s new policy forbids hospital imaging services on an outpatient basis and requires proof that inpatient imaging is medically necessary.

The Anthem change in policy is likely to be a financial blow to hospitals, which have seen outpatient imaging as a profit center in recent years.

Anthem announced recently that outpatient MRIs and CT scans must be performed at lower-priced facilities, citing its commitment to the Institute for Healthcare Improvement (IHI) Triple Aim Initiative, which calls for improving the patient experience, improving population health, and reducing costs.

The insurer says clinical research has shown the safety of imaging services in free-standing facilities, so the additional cost of a hospital setting is unnecessary.

“Anthem’s primary concern is to provide access to quality and safe healthcare for our members. We are also committed to reducing overall medical cost where possible when the safety of the member is not put at risk,” the company says.

Anthem notes that imaging costs can vary widely without any effect on quality of care, with scans costing as little as $350 and as much as $2,000.

The company also notified providers of the change in policy, explaining that physicians must obtain pre-certification approval for inpatient hospital imaging. Anthem told consumers that it will provide assistance in finding imaging facilities other than hospitals.

The change in policy could reduce a member’s out-of-pocket costs, Anthem notes.

“If the member has a benefit plan where he or she pays a percentage of the cost, it is possible that his or her percentage of out-of-pocket cost may be reduced,” Anthem says. “This is because the cost to undergo a CT or MRI scan administered in a freestanding imaging facility may be less than what a hospital-based facility would charge. If the member has a facility copay, there may not be a reduction in a member’s out of pocket cost.”

However, the policy still stands even if using a freestanding facility would not reduce the consumer’s out-of-pocket cost, the insurer explains. The approval or denial of the site of service is based only on medical necessity.

In the unlikely event that the physician ignores the policy and the patient receives imaging services in a hospital outpatient setting, the hospital would be responsible for the cost, Anthem says. The patient would not be held responsible unless he or she signed a statement acknowledging the deviation from Anthem policy and agreed to be financially responsible.

University Hospital boss talks changes after nurse arrest, says ‘this will not happen again’

http://www.sltrib.com/news/health/2017/09/04/live-university-hospital-officials-discuss-arrest-of-nurse-who-refused-to-draw-blood/

University Hospital boss talks changes after nurse arrest, says ‘this will not happen again’

Administrators at University Hospital said Monday they have already changed policies so nurses, like the one who was arrested earlier this summer for refusing to draw a patient’s blood, no longer interact with police.

At a news conference Monday, Gordon Crabtree, the interim chief executive officer of University Hospital, said the nurse, Alex Wubbels, upheld hospital policy and patient privacy despite her July 26 arrest.

“Her actions are nothing less than exemplary,” Crabtree said. ”She handled the situation with utmost courage and integrity.”

The Labor Day news conference occurred on the same day Wubbels spoke on the ”TODAY Show.” She said while the discussions she’s had with the Salt Lake City Police Department have been progressive, she released the police body camera video Thursday because she felt University Hospital and the campus police force had not appropriately responded to the episode.

Crabtree took time Monday to praise Wubbels and to describe changes that have been implemented. Crabtree also said the University of Utah’s attorneys are considering whether to take action against Salt Lake City police and Jeff Payne, the detective who arrested Wubbels. Crabtree didn’t elaborate.

“His actions were out of line,” Crabtree said of Payne. “There’s absolutely no tolerance for that kind of behavior in our hospital.”

On July 26, Payne wanted Wubbels to draw the blood of 43-year-old William Gray, who was unconscious after being involved in a fiery crash earlier in the day in Logan. Wubbels refused, citing hospital policy against drawing the blood of someone without that person’s consent or without a warrant for arrest.

Thursday, bodycam video was released of Payne shouting at Wubbels and handcuffing and arresting her on suspicion of obstruction of justice. Police released her after about 20 minutes.

The video went viral and was picked up by many national news outlets. It drew nationwide criticism last week.

Payne has been placed on leave pending an internal investigation by Salt Lake City police and the city’s Civilian Review Board. Salt Lake County’s Unified Police Department has opened a criminal investigation at the request of District Attorney Sim Gill.

Crabtree said the hospital staffers are doing everything in their power to support Wubbels in the aftermath of the arrest.

“We have a traumatized nurse and a traumatized team,” Crabtree said referring to the burn unit.

Wubbels returned to the burn unit about a week-and-a-half after the arrest, said Margaret Pearce, chief of nursing. But her schedule is flexible so that she can take as much time as she needs.

“Alex took the time she needed,” Pearce said. “We’ve been playing it by ear with her.”

Nurses will no longer interact with police, Pearce said. That will be left to hospital administrators.

“We have to make sure this never, ever happens again,” Pearce said. “I was appalled at the events of July 26. She was advocating for the rights of her patient. She did this beautifully.”

The new policy, which was implemented in mid-August, will require police to interact with the hospital supervisor. It also will prevent law enforcement officials from entering the emergency room, burn unit or other patient areas in the hospital.

Crabtree and Pearce said the new policy began to be developed within hours of Wubbels’ arrest.

“As the CEO of this hospital, I take this very seriously,” Crabtree said. “We must stand together and make sure this is what it should be, a place for healing and a place for safety.”

Wubbels and her attorney, Karra Porter, said they released the video because police were not taking the event seriously. Porter has said her client does not necessarily want to file a lawsuit, but wants changes from both the Salt Lake City police force and police and security forces at the University of Utah.

University of Utah Police Chief Dale Brophy took an apologetic tone when he said he didn’t understand the gravity of the incident until he saw the body camera video.

“My reaction changed after viewing the video,” he said. “She shouldn’t have been hauled off in handcuffs.”

Apparently following protocol, two university police or security officers stood by during the arrest. Brophy said all of his officers will get training in de-escalation techniques. It remains unclear, however, whether university police will engage Salt Lake City officers differently in the future.

Nonetheless, Crabtree said that when it comes to University Hospital and its new policy, such an incident cannot take place again.

 

Paladin to buy 2 Tenet hospitals for $170M

http://www.beckershospitalreview.com/hospital-transactions-and-valuation/paladin-to-buy-2-tenet-hospitals-for-170m.html

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Dallas-based Tenet Healthcare will sell its two Philadelphia hospitals to El Segundo, Calif.-based Paladin Healthcare for $170 million, to help lighten its debt burden of $15 billion.

The sale will transfer ownership of Hahnemann University Hospital, St. Christopher’s Hospital for Children and other related operations in Philadelphia to American Academic Health System, a new company formed by Paladin Healthcare.

“Paladin shares [Tenet’s] commitment to providing compassionate, exemplary care and service, and we believe that entrusting the stewardship of these institutions to its affiliate AAHS will benefit the patients, employees, physicians and community for years to come,” said Mike Halter, CEO for Tenet’s Philadelphia division and CEO of Hahnemann University Hospital.

The transaction is expected to be completed in early 2018. It will need regulatory approval.

The decision to sell the two hospitals comes a day after Tenet announced it would replace longtime CEO Trevor Fetter and “refresh” the composition of its board of directors.

Detective, nurse altercation could spur review of hospital policies

http://www.modernhealthcare.com/article/20170904/NEWS/170909968/detective-nurse-altercation-could-spur-review-of-hospital-policies

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In a case that’s gone viral, a Salt Lake City nurse endured a police detective’s rough treatment, handcuffing, and threat of arrest to uphold her hospital’s policy of not allowing police to draw blood from a patient without an arrest, a search warrant, or the patient’s consent.

The incident is likely to spur hospital administrators to evaluate their policies surrounding police access to patients, said Jennifer Mensik, a nursing instructor at Arizona State University and vice president of continuing education for OnCourse Learning.

“I hear nurses all the time say it’s a lot easier not to argue with law enforcement and just draw blood,” Mensik said. “They don’t realize they are putting themselves at risk.”

The incident, captured by police officers’ body cameras, involved Alex Wubbels, a burn unit nurse at University of Utah Medical Center, refusing to let Salt Lake City Police Detective Jeff Payne draw blood from an unconscious patient who was severely burned in a car crash. During the encounter, Wubbels consulted via speakerphone with her supervisor, Brad Wiggins, who stated the hospital’s policy bars blood draws in such situations.

The U.S. Supreme Court ruled last year that police must obtain a warrant to test the blood of motorists suspected of drunken driving. In the Salt Lake City case, the patient, a reserve police officer, reportedly was driving a truck when his vehicle was struck head-on by a man in a pickup truck who was trying to evade police. He was not a suspect in any crime.

Mensik said police requests to draw blood from patients without an arrest, a warrant, or consent are common around the country. Nurses and emergency department staff often go along because they are busy or don’t know their hospital’s policy.

During the July 26 encounter, Wubbels, who’s worked at the hospital since 2009, calmly told Payne he couldn’t proceed with the blood draw. After Wiggins, the burn unit manager, said over the speakerphone that Payne was making a mistake by threatening a nurse, Payne is seen trying to swat the phone out of Wubbels’ hand, grabbing her by the arms, pulling her arms behind her back and handcuffing her.

“Help,” she screamed. “Help me. Stop. You’re assaulting me. Stop. I’ve done nothing wrong. This is crazy.”

Payne then strapped her into the front seat of his car. Another officer arrived and told her she obstructed justice.

“I’m also obligated to my patients,” she replied. “It’s not up to me.”

Wubbels was released without being arrested after hospital COO Dan Lundergan contacted police officials.

Wubbels and her attorney held a news conference last Thursday to describe the incident and play the 19-minute video taken from the officers’ body cams.

Salt Lake City Mayor Jackie Biskupski and Police Chief Mike Brown apologized on Friday for the conduct of Payne, who, along with another officer on the scene, reportedly has been placed on administrative leave. The police department, the district attorney, and the sheriff are conducting a criminal investigation into any misconduct that may have been committed by police during the incident.

Biskupski noted that Wubbles was “simply doing her job.”

“I just feel betrayed, I feel angry, I feel a lot of things,” Wubbles said during her press briefing. “And I’m still confused.”

Following the July 26 incident, the University of Utah Medical Center worked with the Salt Lake City police department to craft an agreement on how to handle police requests for blood draws and medical information from patients, said hospital spokeswoman Kathy Wilets.

Now, law enforcement personnel register at the hospital’s front desk and make their requests through hospital administrators rather than asking front-line providers directly.

Wilets called Wubbles a “rock star” for the way she stuck to hospital policy in that tense encounter with police. “We’re grateful to her. She put the needs of patients first and set a great example for everyone.”

When ‘gigging’ healthcare, providers must balance risk with cost

http://www.healthcaredive.com/news/when-gigging-healthcare-providers-must-balance-risk-with-cost/448756/

An explosion of innovative tech is disrupting the care-delivery model, aiming for both cost savings and better outcomes. Uber’s partnership with MedStar Health to reduce patient no-shows, a huge cost-sink, and the expansive potential of drones to fill healthcare infrastructure gaps in remote areas are just two examples of ways in which healthcare providers are setting out to provide better care at lower cost.

Cost-saving innovations have also begun to extend to the healthcare employment model — something notably risky when it comes to compliance. One program offers a solution to staffing issues that connects freelance nurses with open positions using an entirely digital platform in an attempt to modernize the business. Others have opted for more ad hoc hiring processes for IT and transcription talent.

Either way, the “gig economy” has reached healthcare — and it looks like it’s here to stay.

What does gig work in the healthcare space look like right now?

Healthcare providers have to manage an employee population with vastly different skill sets. But even in the diverse healthcare workplace, where special rules run rampant, some general guidance still applies.

Typically, the more specialized and trained the worker, the less likely they can be hired on as an independent contractor, Matt Stevenson, partner at Mercer, told HR Dive. And right now, most gig workers are on the lower end of the skill scale — especially in healthcare.

“Because of the way healthcare has been restructured, there’s been an explosion of employment at the low end,” Stevenson said. Increased calls for low-acuity care, like physical therapy and daily caregiving, have heralded the growth of contracted work. Convenience for both patient and provider also plays a part. Telehealth (while not specifically contract work, usually) allows doctors to sign up for specific hours to treat patients via phone or video, while digitization lets those doctors keep all records securely online. It brings a flexibility few office jobs can compete with.

Another bonus: cost.

“Incentives are changing,” Stevenson said. “You are now paying for results instead of the hospital getting paid more for you being in the hospital longer.”

As providers seek better outcomes for a lower price, contract work plays a pivotal role in improving care but keeping barriers low for patients. Caregivers can visit homes and encourage patient compliance, such as taking medicine and completing physical therapy, and hospitals can hire those workers on a job-to-job basis, which is cheaper overall.

Providers must keep liability in mind when hiring out independent gig work, however. Hospitals in need of on-demand talent often retain nursing agencies that take on liability, employee background checks and other major risk issues in exchange for hefty fees. Independent workers tend to be cheaper, but come with much higher risk.

Managing liability and questions of quality

Classification is a perpetual headache for employers in many industries. Simply calling someone an independent contractor doesn’t cut it, Shanna Wall, labor law attorney at ComplyRight, said. Nationally, employers have to satisfy a slew of tests under regulations from the IRS, the U.S. Department of Labor and individual states meant to protect workers from exploitation. Courts have been in on the action, too.

Most tests balance on one key question: How much independence does an individual worker have? More specifically, does an employer focus on a result alone or the job itself? Is the worker using their own equipment and deciding their own hours, or is an employer dictating that? The more control an employer has, the riskier independent contractor classification can be.

But that’s not all. Medical personnel have to deal with strict laws on private health information, such as the Health Insurance Portability and Accountability Act (HIPAA). Contractors must be trained on what those and other rules require.

“How do you ensure the quality of care provided by the gig person is okay?” Stevenson said. “How do you keep costs down but ensure quality? You may pay $15 an hour, but that is low for healthcare.”

Worse, if something goes wrong, the provider is on the hook. By giving jobs to outside workers, providers risk losing strict control over the quality of care and, in the long term, their brand. Employers already struggle to gather data on full-time employees. Gathering data on the success of gig workers is even tougher, since the very nature of the relationship is fairly low-touch.

That’s partly why the agency model has lasted for so long, as they take on most of those risks and give hospitals the ability to up- or downsize when needed. But the costs are real.

In the future: Outsourcing some jobs but not all

For that reason, employers may want to consider their needs on a sliding scale of risk versus efficiency. Joint employer cases are still working their way through the courts. Uncertainty remains the rule of the day. “It’s always best practice to err on the side of an abundance of caution,” Wall said.

As far as the future goes, that uncertainty renders predictions suspect. Digitization has encouraged the contracting out of some support services, including diagnostic work such as radiology. As long as a radiologist has an internet connection, they can read a scan and send their analysis from anywhere.

Innovation continues in the on-demand non-emergency medical transportation space, too. Circulation, a Boston-based provider of medical transportation, recently raised $10.5 million in a funding round that included participation from leading names in healthcare such as the Boston Children’s Hospital, Humana and NextGen Venture Partners. Experts believe that ride-share partnerships could save billions of dollars usually spent by Medicaid.

But as more employers focus on ways to engage employees, contract workers will largely remain outside those efforts, Stevenson said. Gig workers usually seek independence for a reason, be it the flexibility of hours or ability to set their own pay. They prefer autonomy, and don’t want to be bogged down in HR processes.

“If I really cared about engagement, I would bring them in-house,” Stevenson said.  But as long as demand is high, treatment of contract workers will have to remain top notch to keep a steady flow of candidates in the pipeline.

The influx of independent work has enabled unprecedented flexibility for workers and access to talent for employers. But above all, employers must be wary of the risks to truly enjoy the perks of independent contracting.

“You think you are safe from compliance because they are gig workers, but really, it’s the opposite,” Wall said.

Wanted: Leaders for tomorrow’s emergency room

http://www.healthcaredive.com/news/wanted-leaders-for-tomorrows-emergency-room/448757/

A conversation with Bill Haylon, CEO of Leaders For Today

Economic anxieties need not correlate with a high unemployment rate. Take it from business leaders across multiple U.S. industries: Their biggest challenge is not a lack of job openings for thousands of qualified candidates — it’s a lack of candidates for thousands of openings.

HR professionals are used to hearing about skill shortages in manufacturingand other blue-collar work, but perhaps more understated are gaps in the STEM fields.

Careers in nursing and medicine, which often require years of additional, specialized education are hard to fill. Physician assistant openings were one of the most in-demand fields near the end of 2016, according to the American Staffing Association. But hospitals aren’t just struggling to find people to staff operating rooms. They face a much bigger challenge in a lack of leadership skills.

HR Dive/Healthcare Dive spoke with staffing firm Leaders For Today’s CEO Bill Haylon about the root of leadership gaps in healthcare, and how hospital HR departments can confront the problem. Our conversation has been lightly edited for length and clarity.

HR Dive: When hospitals come to a healthcare staffing firm like Leaders For Today, what are they asking for?

Bill Haylon: What we’re really doing is helping them find people who have particular sets of skills. We provide staffing on an interim basis. A hospital or healthcare system comes to us and says, “we really need somebody who can fix and lead our case management department,” “we need somebody who’s got certain technical skills and leadership skills.” We’re not actually training individuals, we’re finding people who fill those slots.

We’re going out and finding people, who they can either hire full time or on an interim basis. We’ll look for, on average, a little more than six spots, and we’ll start from a pool of people that we have that we’ve worked with before.

We’re not really doing training, but training is one of the problems in the healthcare world.

HR Dive: When you look for potential staffers, what kind of skills do they have? What stands out the most to the healthcare systems you work with?

Haylon: There are certain skills that go across all positions, and there are certain skills that are specific to a position because we can hire for. For example, we have a team that focuses on OR people, while others focus on case management, hospital finance, physician management, practice management, etc.

Across the board, what we focus on is, first and foremost, trying to find people who have been steady with or who have stayed with an organization for some period of time and developed within that. In other words, we try and stay away from what we call “jumpers” — people that have a job for a year, two years, and then try and go on their next role.

Unfortunately, that’s counter to what occurs in the industry. People in the hospital industry jump all the time.

We try and get some stability in their job, because we believe they learn more that way [when it comes to] both the technical skills and leadership skills. Of course, you look for the basic things: education, undergraduate work, master’s degree and other certifications.

You’re trying to vet the person along, so a lot of time you’re talking about different situations, different experiences, how they’ve handled them in the past or how they might handle them in the future. It could be a difficult position to deal with, a union situation, a quality situation, a safety situation. And you try to understand what their thought-making process is.

HR Dive: What skills are hardest to come by in the medical world, given that a lot of industries are seeing skills shortages?

Haylon: There’s an enormous shortage of talent within the hospital industry in all key levels. It was going on before Obamacare, and now with Obamacare and more people being covered, each organization is seeing a big uptick in the number of patients they see. It’s really gotten to be a very critical moment.

The most difficult job category is the O.R., the second hardest is case management and the third hardest is physician practice management.

From a skill set perspective, it’s leadership. Most of those in leadership positions are people who were nurses or doctors. When you go to school, you do not learn about financial statements, management skills or leadership. You’re learning how to suture, avoid infections and open up rib cages.

You take a person who has been a staff nurse for [a certain number] of years, and they decide they want to go into a leadership role. Because there’s a shortage of people, they are put in those spots well before they’re ready. They don’t have any training; hospitals do not train people for career development or leadership, and so you’re just kind of winging it. You get people who are very quickly over their head in their positions.

HR Dive: What can hospitals change about the way they operate to help develop those skills, or is that simply not possible given their bandwidth?

Haylon: They make it harder than it is. The reality is that hospitals consolidate, so they’re parts of bigger systems. You have a director in the O.R. who could be managing 440 people. That’s a lot of people. This was the case for one hospital we worked with, and the person running that OR had been a staff nurse and morphed to this role. But her [previous] role had been running a small hospital where she had 30 people, and now she’s up to 440 people, and it’s over her head.

So the reality is that they need to start thinking about different skill sets, and the obvious one is an MBA. When you’re the director of a 440-person O.R., you’re not seeing patients anymore. You’re doing hiring and scheduling. You’re developing quality programs and safety programs. You’re trying to get the surgeons on board. You’re never seeing a patient; that’s a different set of skills.

You don’t need to be clinical, you need to be a manager and a leader. It could be an MBA, it could be a master’s in health. But you need more than clinical training.

So what hospitals do [by recruiting for a certain skillset] is totally reactive as opposed to being proactive and developing people.

HR Dive: Do you see a shift in terms of the skills that physicians and other professionals are being taught in school?

Haylon: You’re being taught technical skills, clinical skills, whatever your specialty is. You go to medical school, do your residency, maybe followed by a fellowship, and it’s all technical skills. Physicians [are also] getting way more specialized than they used to be.

Typically the people who have jobs [in healthcare leadership] have gone and gotten additional training and education on their own.

Physicians and nurses are not trained in school to run big organizations. Plus, they’re doing research, and they’ve got to handle anybody that comes into the OR and the ER. It’s hard enough to get training for it, and it’s beyond belief if you don’t have training.

HR Dive: What else should hospital systems be mindful of when looking for leadership in the medical workforce?

Haylon: When you look at survey data from across the hospital industry, you see that people are staying in positions for incredibly short periods of time. Forty percent of people right now in key positions in hospitals have been in their position two years or less. Another 40% expect to leave in the next two years. What happens is that hospitals have a hole, and they need better leaders, so they poach from somebody else.

So the director of a surgical department will be a manager at a small hospital, then become a manager at a bigger hospital, then a manager at a bigger hospital, then a director at a small hospital, then a director at a bigger hospital, and finally a director at a bigger hospital. They just keep poaching from each other.

The problem is it’s the same people who are circling through. The people you’re hiring never had the time to put in place good, quality programs, [including] safety programs and productivity programs, because they’re not there long enough. They can’t make it stick in just two years; these are very complicated things.

And so that’s the result of what you’re talking about. The lack of training and development shows itself in this poaching and job hopping in the hospital world. It is like no industry you have ever seen before.

In other industries, an enormous amount of resources are put into training, so people stay in those industries and move up. You take up greater responsibilities, but they invest a lot in you as a developing person. The hospitals invest almost nothing. It’s up to the individual to go and figure it out on your own. Get your MBA, take this class, get a certification from the hospital association. But you’re not developing your own people.

Other organizations develop their own people because they want to be the best at what they do — they want to differentiate themselves. The only way they can do that is to develop their own people. Because hospitals don’t do that, there really is no differentiation, and hence, they struggle.

So this lack of training and the lack of development ends up creating an industry where everybody knows they’re going to jump all the time. You’ve got hospitals that have hired their sixth CEO in seven years. So the question is: If you’re a patient and you have knowledge of this, would you want to go to that hospital?

If you have that sort of instability at the top spot, then it’s going to trickle all the way down. Healthcare is complicated; it takes a while to figure out orders in place that are going to work. If they have quality problems, or safety problems, you can’t fix them that quickly. You’ve got to have someone who understands the lay of the land and can make a difference.

Why One California County Went Surgery Shopping

http://khn.org/news/why-one-california-county-went-surgery-shopping/

Retiree Leslie Robinson-Stone and her husband enjoyed a weeklong, all-expenses-paid trip to a luxury resort — all thanks to the county she worked for.

The couple also received more than a thousand dollars in spending money and a personal concierge, who attended to their every need. For Santa Barbara County, it was money well spent: Sending Robinson-Stone 250 miles away for knee replacement surgery near San Diego saved the government $30,000.

“The only difference between our two hospitals is one is expensive and the other is exorbitant,” said Andreas Pyper, assistant director of human resources for Santa Barbara County, referring to the local options.

Frustration with sky-high hospital bills and a lack of local competition is common to many employers and consumers across the country after years of industry consolidation. Fed up with wildly different price tags for routine operations, some private employers are steering patients they insure to top-performing providers who offer bargain prices. Santa Barbara County, with about 4,000 employees, is among a handful of public entities to join them.

The county has saved nearly 50 percent on four surgery cases since starting its out-of-town program last year, officials said. The program is voluntary for covered employees.

At a Scripps Health hospital in the San Diego area, the county paid $61,600 for a spinal fusion surgery that would have cost more than twice as much locally. It avoided two other operations altogether after patients went outside the area for second opinions.

Typically, employers are seeking deals through “bundled payments” — in which one fixed price covers tests, physician fees and hospital charges. And if complications arise, providers are on the hook financially. Medicare began experimenting with this method during the Obama administration.

Santa Barbara County is among about 400 employers on the West Coast working with Carrum Health, a South San Francisco start-up that negotiates bundled prices and chooses surgeons based on data on complications and readmissions.

“Not all surgeons are equal. We don’t want to give Scripps a blank check. That defeats the whole purpose,” said Sachin Jain, Carrum’s chief executive.

Santa Barbara officials try to persuade workers and their family members to participate in its program by waiving copays and deductibles. The county pays about $2,700 in travel costs and still comes out way ahead.

“If that doesn’t speak to the inefficiencies in our health care system, I don’t know what does,” Pyper said. “It’s almost like buying a Toyota Corolla for $50,000 and then going to San Diego to buy the same Corolla for $16,000. How long would the more expensive Toyota dealership last?”

Even as more employers and insurers embrace bundled payments, the Trump administration is applying the brakes. In August, Medicare officials proposed cancelingmandatory bundled payments for certain surgeries and scaling back the program for knee and hip replacements. Health and Human Services Secretary Tom Price, when he was still a member of Congress, accused Medicare of overstepping federal authority and interfering in the doctor-patient relationship. Hospital trade groups have voiced similar objections.

That leaves some health-policy experts dismayed.

“These bundled payments put pressure on medical providers … and the savings are astonishing,” said Bob Kocher, a former health official in the Obama administration and now a partner in the venture capital firm Venrock.

Santa Barbara County officials said they had no choice after seeing their medical costs soar by 15 percent in each of the past two years. Like many local governments, it has an older workforce prone to chronic illness, blocked arteries and bum knees.

But health costs run higher than the state average in this scenic coastal county of about 450,000 people, according to data from Oakland-based Integrated Healthcare Association. By one measure, the average health insurance premium in the individual market runs $660 a month in Santa Barbara, 27 percent higher than in Los Angeles.

Still, Maya Barraza, the county’s manager for employee benefits and rewards, knew the program would be a hard sell to workers. “You don’t want to be away from your family and what’s familiar,” she said.

Cottage Health, the county’s largest health system, says it wants to keep patients in town for treatment and follow-up care.

Established in 1891, it’s grown from a single hospital to more than 500 beds across three hospitals, and annual revenue hit $746 million last year.

Valet attendants greet visitors at two entrances outside the group’s white, Spanish-style hospital in the city of Santa Barbara. In the main lobby, the names of wealthy donors are splashed across one wall, including billionaire investor and Donald Trump confidant Thomas Barrack.

“We are continually looking at reducing costs and improving quality,” said Cottage Health spokeswoman Maria Zate. “Cottage Health has some of the top surgeons in California.”

Sixty miles north in Santa Maria, the state’s largest hospital chain, Dignity Health, offers another option: Marian Regional Medical Center.

Both Cottage and Dignity hospitals in Santa Barbara County have quality scores of fair to excellent for joint replacements, spinal procedures and coronary bypass surgeries, according to three years of Medicare data analyzed by research firm Mpirica Health.

Dignity Health didn’t respond to requests for comment.

Carrum tries to help employers like Santa Barbara County find more affordable options. It has struck bundled price deals for various procedures with Scripps hospitals in the San Diego area, Stanford Health Care in the Bay Area and Swedish Medical Center in Seattle, part of the Providence Health chain.

Several other companies, such as Health Design Plus, are also assisting employers, insurers and patients with the logistics of surgery shopping. Boeing and other large employers are the most aggressive at pursuing bundled pricing and sending workers across the country for care.

Since 2014, more than 2,000 joint replacement and spinal surgeries have been performed for fixed prices through the Pacific Business Group on Health’s “centers of excellence” program, which includes employers such as JetBlue and Lowe’s. It added gastric bypass and other bariatric surgeries last year, and the employer group is working on bundled prices for cancer treatment.

Some companies have gone so far as to send patients overseas for cheaper care, but most employers favor a more regional approach, experts say. Workers still rely on local physicians for follow-up care.

Municipalities, school districts and other public employers have been slower to adopt some of these strategies, perhaps to avoid the political risk of antagonizing local providers, some researchers suggest.

For some hospitals, there are advantages in offering deep discounts: They get patients they otherwise would never see and are paid in full right after the patient is discharged, avoiding the onerous billing and collections process.

They also have the financial capacity to offer such sharply reduced prices.

Michael Bark, assistant vice president of payer relations at Scripps Health, said most hospitals significantly mark up their commercial rates for orthopedic procedures and cardiac surgeries to compensate for lower government reimbursements.

Robinson-Stone, a Santa Barbara County retiree, sits on her front step at her home in Lompoc, Calif. Her former employer sent her 250 miles away for knee replacement surgery at a hospital near San Diego and saved $30,000. (Heidi de Marco/California Healthline)

“There are immense profit margins built into those cases,” Bark said.

Robinson-Stone, a former county sheriff’s deputy and a computer support specialist, was initially wary of traveling for her surgery. But the 62-year-old Lompoc resident had ongoing pain that kept her from biking, walking her dogs and tending to her fruit trees. Medication and cortisone shots didn’t work, and she had no ties to local surgeons. So she signed up online and was given a choice of six orthopedic surgeons at Scripps Green Hospital in La Jolla.

In June 2016, she and her husband, Frank Stone, checked in at the Estancia La Jolla Hotel and Spa.

Robinson-Stone met the surgeon on a Wednesday, had the operation the next day and returned to her hotel room by Saturday. She continued physical therapy at the hotel and returned to the hospital a few days later to have the staples removed.

She was back on her bike within two months and eventually lost about 20 pounds.

“I just celebrated one year from surgery,” she said, “and I’m a happy camper.”