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Tag: Hospitals

Is Health Industry Price Inflation Really At a Historical Low?

One hesitates to make too much of a single report, but the Altarum Institute’s July Report, “Health Care Price Growth at 20+ Year Low,” certainly commands one’s attention.  According to Altarum’s analysis, the health sector pricing trend ran at a 1.0 percent annual rate in May 2013, lowest since January of 1990.  What is striking about Altarum’s health care pricing trendline is that it has declined for the last three years in spite of an alleged economic recovery.

It also runs parallel to a subsiding utilization trend, suggesting that the health sector has been unable to offset reduced utilization with price increases.  Since the beginning of the recession, pricing has subsided from double the rate of the GDP deflator to parity, and it has closely tracked the deflator with only two deviations for more than eight years. Clearly, something more than the recession is at work here.

These trendlines confirm what this observer sees from his contacts in multiple sectors of the health industry:  a widespread and durable “top line flu”.  The growth in enterprise revenue for most health providers and manufacturers has been static (e.g. very low single digits or actually declining) over the last two years.  Most investor-owned hospitals, pharmaceutical companies, device manufacturers, and physician practices (pretty much everyone except the consultants and IT vendors) have reported both revenue stasis and earnings compression.

My economist friends point to rising consumer copayments as inhibiting price increases.  The Kaiser Family Foundation has reported almost a quadrupling of the number of covered workers in high deductible health plans (from 5 percent to 19 percent) since the end of the recession.  It is also possible that a disinflationary mindset has inhibited providers and suppliers from seeking outsized price increases to compensate for lost sales volume.  For suppliers, the marked decline of “physician preference” marketing has also hurt both sales and margins.

Hospital pricing. Performance of hospital prices will provide more fodder for those concerned about hospital consolidation pushing prices up.  On the one hand, overall hospital prices rose an annualized 1.8 percent for May 2013, fractionally higher than the consumer price index (CPI) at 1.4 percent.  However, when one strips out the “administered price” portion (Medicaid and Medicare), hospital prices to privately insured patients rose 4.8 percent annualized in May, nearly five times rate of health prices as a whole.  Altarum suggests that cost shifting might explain this significant disparity.  However, even this increase to private patients was not enough to raise overall health costs significantly.

Government payment to hospitals has trended lower for multiple reasons.   Many state Medicaid plans have cut hospital rates in the past several years to help balance state budgets.  And in addition to the ACA’s mandated reductions in hospitals’ disproportionate share payments and DRG updates, the sequester took a significant further bite out of DRG payments during the winter.

Since most hospital contracts with private insurers are multi-year, it’s difficult to argue that compensating upward revisions in private health insurance contract rates would yet be reflected in national economic statistics.  Moreover, not all hospitals are part of systems capable of exerting pricing power on private health plans.  Have-not hospitals have had their prices constrained by payer contracts, compensating for the effect of leverage by market hegemons.  We’ll have more evidence in a year to confirm or disconfirm the cost shifting/pricing power hypothesis.

There’s another indicator of a tougher hospital pricing environment.  According to the Advisory Board’s Dan Diamond, hospital employment has actually contracted in one-quarter of the monthly jobs reports from the Bureau of Labor Statistics since January 2009, including a 6000 person force reduction in May, 2013.  On balance, hospital executives would much rather raise rates than lay off staff, so the fact that the nearly unbroken decades-long expansion of hospital headcounts is faltering suggests a very difficult pricing environment for hospital services.

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Medicare’s Observation Status-and Why Attempts to Make Things Better May Make Them Worse

There are tens of thousands of policies in Medicare’s policy manual, which makes for stiff competition for the “Most Maddening” award. But my vote goes to the policy around “observation status,” which is crazy-making for patients, administrators, and physicians.

“Obs status” began life as Medicare’s way of characterizing those patients who needed a little more time after their ED stay to sort out whether they truly needed admission. In many hospitals, “obs units” sprung up to care for such patients – a few beds in a room adjacent to the ED where the patients could get another nebulizer treatment or bag of saline to see if they might be able to go home. Giving the hospital a full DRG payment for an inpatient admission seemed wrong, and yet these patients really weren’t outpatients either. The Center for Medicare & Medicaid Services’ (CMS’s) original definition of obs status spoke to the specific needs of these just-a-few-more-hours patients: a “well-defined set of specific, clinically appropriate services,” usually lasting less than 24 hours. Only in “rare and exceptional cases,” they continued, should it last more than 48 hours.

A recent article in JAMA Internal Medicine, written by a team from the University of Wisconsin, vividly illustrates how far the policy has veered from its sensible origins. Chronicling all admissions over an 18-month period, Ann Sheehy and colleagues found that observation status was anything but rare, well defined, or brief. Fully one in ten hospital stays were characterized as observation. The mean length of these stays was 33 hours; 17 percent of them were for more than 48 hours. And “well defined?” Not with 1,141 distinct observation codes.

To underscore just how arbitrary the rules regarding observation are, an investigation by the Inspector General of the U.S. Department of Health and Human Services released today found that “obs patients” and “inpatients” were clinically indistinguishable. Their major difference: which hospital they happened to be admitted to.

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More Work Is Needed on the Safety and Efficacy of Healthcare Information Technology

If one were writing about the improvement of gastronomy in America, one would probably not celebrate “over 300 billion hamburgers served.”  But that’s very much the type of success Dr. Ashish Jha is celebrating in last week’s piece on recent US healthcare IT sales. Unfortunately, the proliferation of Big Macs does not reflect superior cuisine, and healthcare IT (HIT) sales do not equate with better healthcare or with better health. Quantity does not equal quality of care.

To be sure, Dr. Jha acknowledges the challenges of rolling out HIT throughout US hospitals. And he should be strongly commended for his admission that HIT doesn’t capture care by many specialists and doesn’t save money. In addition, Dr. Jha points to the general inability of hospitals, outpatient physicians and laboratories to transfer data among themselves as a reason for HIT’s meager results.

But this is a circular argument and not an excuse. It is the vendors’ insistence on isolated proprietary systems (and the government’s acquiescence to the vendors) that created this lack of communication (non-interoperability) which so limits one of HIT’s most valuable benefits.

In our opinion, the major concern is that the blog post fails to answer the question we ask our PhD students:

So what? What is the outcome?

This entire effort is fueled by $29 billion in government subsidies and incentives, and by trillions of dollars spent and to be spent by hospitals, doctors and others [1].

So where is the evidence to back up the government’s and industry’s promises of lower mortality, improved health and lower health care costs?

Single studies tell us little. Sadly, as many as 90% of health IT studies fail the minimal criteria of the respected international literature syntheses conducted by the Cochrane Collaboration.

In other words, studies with weak methodology or sweetheart evaluation arrangements just don’t count as evidence.
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Five Potential Healthcare Applications for Google Glass

Last week I had the opportunity to test Google Glass.

It’s basically an Android smartphone (without the cellular transmitter) capable of running Android apps, built into a pair of glasses.  The small prism “screen” displays video at half HD resolution.  The sound features use bone conduction, so only the wearer can hear audio output.   It has a motion sensitive accelerometer for gestural commands.    It has a microphone to support voice commands.   The right temple is a touch pad.  It has WiFi and Bluetooth.   Battery power lasts about a day per charge.

Of course, there have been parodies of the user experience but I believe that clinicians can successfully use Google Glass to improve quality, safety, and efficiency in a manner that is less bothersome to the patients than a clinician staring at a keyboard.

Here are few examples:

1.  Meaningful Use Stage 2 for Hospitals – Electronic Medication Admission Records must include the use of “assistive technology” to ensure the right dose of the right medication is given via the right route to the right patient at the right time.   Today, many hospitals unit dose bar code every medication – a painful process.   Imagine instead that a nurse puts on a pair of glasses, walks in the room and wi-fi geolocation shows the nurse a picture of the patient in the room who should be receiving medications.  Then, pictures of the medications will be shown one at a time.  The temple touch user interface could be used to scroll through medication pictures and even indicate that they were administered.

2.  Clinical documentation – All of us are trying hard to document the clinical encounter using templates, macros, voice recognition, natural language processing and clinical documentation improvement tools.     However, our documentation models may misalign with the ways patients communicate and doctors conceptualize medical information per Ross Koppel’s excellent JAMIA article.  Maybe the best clinical documentation is real time video of the patient encounter, captured from the vantage point of the clinician’s Google Glass.   Every audio/visual cue that the clinician sees and hears will be faithfully recorded.

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As the Debate Over Obamacare Implementation Rages, a Success on the IT Front

Just a little over four years ago, President Obama, in his inaugural address, challenged us as a nation to “wield technology’s wonders to raise health care’s quality and lower its costs.”  This was an awe-inspiring, “we will go to the moon” moment for the healthcare delivery system.  But the next thought that ran through the minds of so many of us who work on health IT issues was this: how were we going to get there?

We were essentially starting from scratch.  Less than 1 in 10 hospitals had an electronic health record, and for ambulatory care physicians, the numbers weren’t much better – about 1 in 6 had an EHR.  Hospitals and physicians reported an array of challenges that were holding them back.  No nation our size with a healthcare system as complex as ours had even come close to universal EHR use.  Yet, the President was calling for this by just 2014.

And it was clear why.  The promise of EHRs was enormous and we knew that paper-based records were a disaster.  They lead to lots of errors and a lot of waste.  I have cared for patients using paper-based records and using electronic records – and I’m a much better clinician when I’m using an EHR.  In the weeks that followed Obama’s inaugural address, the U.S. Congress passed, and the President signed the Health Information Technology for Economic and Clinical Health Act, which contained a series of incentives and tools to drive adoption and “meaningful use” of EHRs. None of us knew whether the policy tools just handed to the Obama administration were going to be enough to climb the mountain to universal EHR use.  We were starting at sea level and had a long climb ahead.
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A New Trend? Hospital Successfully Sues its Patient’s Attorneys for Filing a Vexatious Malpractice Suit

Connecticut’s Appellate Court recently ruled that hospitals and doctors can successfully sue their patients’ attorneys for filing a vexatious malpractice suit. The Court also ruled that the trial judge’s decision that the patient’s suit was vexatious will often create an estoppel against the attorney. The attorney will consequently be precluded from contesting that decision. The only issue will then be the amount of damages—double or treble—that the attorney and her firm will be obligated to pay the hospital or the doctor.  See Charlotte Hungerford Hospital v. Creed — A.3d —-, 2013 WL 3378824 (Conn. App. 2013).

Whether this is going to be a trend in our medical malpractice law remains to be seen. In the meantime, I provide the details of that important decision.

Attorneys representing the family of a psychiatric patient, who committed suicide, filed a malpractice suit against a hospital and some of its doctors. They alleged that the defendants prematurely discharged the patient from the hospital’s emergency room while she was still experiencing a severe mental health crisis. Allegedly, this untreated crisis was the cause of the suicide that the patient committed four days later.

The suit was supported by an opinion letter from a registered nurse (!!). Under Connecticut law, as in many other states, the supporting opinion letter must come from “a similar health care provider.” The attorneys thus should have retained a psychiatrist, rather than a nurse, as an expert supporting the suit. Their failure to do so rendered the suit defective and the trial judge properly struck it out.

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It’s the Jobs, Stupid. No, Wait. It’s the Stupid Jobs.

The U.S. Bureau of Labor Statistics came out with its June jobs report this week and, consistent with usual trends, healthcare jobs are booming. In June 2013 there were approximately 20,000 new healthcare jobs in the U.S., ¾ of which were in the ambulatory care sector and ¼ of which were in hospitals. Healthcare jobs represented 10% of all new jobs created this month.

The June growth in healthcare jobs matches up to the average 19,000 new healthcare jobs we have seen created in each of the prior months of 2013 and the 12% job growth we have seen over the last five years. In a country where new jobs are viewed as even better than baseball, apple pie and mom herself, these new jobs should elicit a huge round of applause, or at least a stadium style wave, right?

Or should they?

Change the channel and a different set of policy makers, employers and industry experts will tell you that the only way to save our economy from ruin is to cut healthcare costs. Cutting healthcare costs means making the people who work within the system vastly more efficient, eliminating unnecessary medical care (and thus reducing the labor that goes along with it), and helping empower consumers to do things for themselves, including taking a more active role in reducing their own demand for healthcare services and, in some cases, doing at home what they might previously have used the healthcare system to do (e.g., diagnostics, home care, etc).

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Hospitals Lost Jobs Last Month. Should We Be Surprised?

An old data series got new life, when the Brookings Institution issued a report that compared health care jobs growth versus all other industries.

It’s “a truly astonishing graph,” according to Derek Thompson at The Atlantic. “I knew health care had been the most important driver of national employment over the last few years, but I had never seen the case made so starkly.”

Thompson wasn’t alone in his surprise. (Hopefully, readers of The Health Care Blog would be less astonished.) But lost within the reaction—and even mostly overlooked within the industry—is that not all health care jobs are growing, or at least not growing at the same pace.

Take a look at the following chart. It resembles the Brookings data, with one major change: The hospital employment curve has been separated from all other health care jobs growth.

 

Notice how hospital employment essentially flatlined across 2009—a hard year for the sector, which was still insulated compared to the rest of the economy. But many organizations pared back on staff and sought to cut non-essential services to survive the Great Recession.

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Can a Portable Hand Sanitizer System Reduce Hospital-Acquired Infections in America’s Hospitals?


Ignaz Semmelweiss was laughed out of his Viennese hospital when he suggested that physicians should wash their hands in between conducting an autopsy and delivering a baby.

150 years later, we know just how right he was, but hand sanitation compliance rates at hospitals still hover in the 30% to 50% range. This makes it easy for hospital-acquired infections (HAIs) such as MRSA and VRE to run rampant, a (literally) dirty, not-so-little, and not-so-secret reality for American patients.

A Healthbox-backed startup is trying to change that. SwipeSense, founded in 2012 by Northwestern University graduates Mert Iseri and Yuri Malina, is a system designed to improve sanitation practices in hospitals using portable hand sanitizers and wirelessly-collected data on their use.

The organization wants to help stem the tide of avoidable HAIs. Each year, about 100,000 Americans die from infections they contract during their time in the hospital – more than the number of Americans killed by guns, motor vehicles, and leukemiacombined. In addition to the direct human toll, HAIs cause patient length of stays to increase by 8.0 days in ICUs and 7.4 to 9.4days in acute care wards, taking up expensive capacity and preventing others from accessing needed hospital beds. They’re also expensive, causing an estimated $4.5 to $5.7 billion in excess costs.

Iseri and Malina were inspired to create SwipeSense by a project they did for Design for America, a student group created to catalyze social change using human-centered design (also founded by Iseri and Malina). It took them to Northwestern Memorial University Hospital in their college town of Evanston, Illinois, where they identified two salient issues with hand sanitation: convenience and compliance.

“It’s obvious it’s not the fault of the nurse or physician…it’s something wrong with the system,” Malina told me in an interview. Even though alcohol foam and soap dispensers are ubiquitous in American hospitals, they often aren’t at the immediate point of care: “medical staff need to sanitize four or five times per patient encounter,” Malina said, making proper sanitation an arduous, time-consuming, and unrealistic task. “Our philosophy at SwipeSense is that the right thing to do should be the easiest thing to do… We want to make something that people love.”

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How Misplaced Reimbursement Incentives Drive Healthcare Costs Up

For all of those out there anticipating the 2014 official role out of Obamacare, also known as the ACA (Affordable Care Act), here is a cautionary tale.

Many years ago, as I was growing my cardiology practice, it became evident that diagnostic services for my specialty, like stress tests, echocardiograms, etc., were done less efficiently and cost more at the local hospital, then in the office. This stimulated many groups in the 1980s and 90s to install their own “ancillary” diagnostic services. Patients loved not having to deal with the long waits and higher copay prices at the hospitals. And yes, the cardiologists did increase their revenues with these tests. However, lower costs to patients, insurance companies, Medicare, and improved patient satisfaction were just as powerful a stimulus to the explosive growth of these diagnostic tests, and later even cardiac catheterization labs, when integrated into the physicians’ offices.

As the growth in testing spiraled upward, the hospital industry saw their slice of the outpatient revenue pie nosedive. Hospital lobbyists and policy-makers cried foul and complained of greed and self-referral, which they said was spiking the rapid rise in healthcare costs.

Studies laying blame on self-referrals being the major culprit for escalating healthcare costs, have been inconclusive. However, after years of lobbying and the passage of ACA, the hospital industry finally had the weight of the Federal government on their side. It did not take long for Medicare to start dialing back the reimbursements for in-office ancillary tests and procedures, and outpatient cardiac catheterization labs were one of their main targets. Hospitals had lost millions of dollars to the burgeoning growth of these labs inside the cardiologist’s office.

Our twelve-man group had a safe and successful lab for about ten years. Then after the ACA was passed, Medicare began to cut the reimbursements for global and technical fees in this area. The cuts were so Draconian that it became impossible financially to continue the service. Never mind that we could provide the same service as the hospital more efficiently, with better patient satisfaction, and at a third of the cost.

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