ORs of Tomorrow Can Yield Pay-offs Today

The operating room (OR) of the future is closer than many facilities think. While the level of sophistication in equipment and technology depends upon a facility’s budget and ability to retrofit to accommodate exciting new developments in OR modalities, facilities should be aware of the changing dynamics of OR design and planning.

The challenges of efficient and effective surgical planning are numerous, according to Charles Martin, AIA, and Lynne Shira, RN, BSN, both principals with the Seattle architecture firm NBBJ, who were part of the Designing High-Performance ORs, a day-long symposium presented by STERIS Corporation last October. Martin and Shira explain that owners/operators of medical facilities must find a way to juggle their increasing equipment needs, technology demands and compatibility issues. They see an upward trend among healthcare facilities in the overall demand for additional space to grow their surgical service lines, including new ORs, procedure rooms and the requisite spaces needed to support these new rooms. Today’s facilities require much greater flexibility in the infrastructure and its operational capacity to accommodate more integrated systems both in and out of the OR. Not only can this flexibility create an environment to better foster staff recruitment and retention, Martin and Shira say, but it can improve the patient experience.

The size of ORs has been increasing over time, with the OR of yesterday being about 400 to 500 square feet, with a total department space of about 2,000 square feet. The OR of today and tomorrow is now an average of 600 to 800 square feet, with a total departmental space between 3,200 and 4,500 square feet. The reason for this expansion can differ greatly from facility to facility, but many institutions are creating hybrid ORs that encompass and integrate surgical and interventional services, imaging and clinical services. This kind of OR can accommodate multiple care-delivery models and new technologies, as well as support clinical and administrative uses.

Fred Bentley, practice manager for syndicated research at the Advisory Board Co., says that ORs have been invaded by numerous “space-eating” technologies, such as PACS, C-arms, endoscopic towers, robotics and inter-operative MRIs. The space around the operating table has become increasingly cramped; an OR of 300 cubic feet frequently must accommodate about 115 cubic feet of surgical and anesthesia personnel and about 150 cubic feet of equipment, leaving just about 35 cubic feet of free space. It can be a struggle for facilities to balance comfort and efficiency, Bentley adds, that an OR of less than 400 square feet is now considered to be an anachronism because of its cramped, inflexible space; the 500-square-foot OR is now a tight fit; and an OR with more than 800 square feet is probably an over-indulgence and has the potential for too much dead space. The sweet spot, Bentley says, is an OR of about 600 to 650 square feet, which has enough space to accommodate equipment, but facilitates enough unimpeded circulation throughout the room. To cope with smaller ORs that cannot be immediately retrofitted, some facilities are opting to move some bulkier pieces of equipment out of the OR, such as a mobile C-arm that can stored in a corridor alcove or an adjacent equipment closet, or using utility booms to get equipment lifted off of the floor. Other facilities are opting for more streamlined integrated interventional suites that come turn-key from manufacturers such as STERIS.

A hybrid OR is quickly becoming a favorite option for some facilities wishing to make better use of their OR space. Neurological surgeon Jeffrey Yablon, MD, of the Lake Norman Regional Medical Center in Mooresville, N.C., defines a hybrid OR as “an actual operating room located within the surgical suite that accommodates uncompromised interventional, open and minimally invasive surgery within a given specialty.” Yablon says that a number of trends are driving the hybrid OR craze, especially recent technological advancements and specialists’ desire to expand their sphere of expertise amidst competing services. Another driver is the limited space with which many facilities must contend; Yablon says a hybrid OR can be used for several services or procedures and will provide maximum utilization of space. Yablon also cites increased competition for procedural services, with cardiothoracic moving into interventional cardiology, interventional radiology moving into vascular surgery and interventional cardiology moving into interventional radiology. Another factor is tighter reimbursement; Yablon says a hybrid OR’s flexibility will allow for this space to be fully used with a continual stream of reimbursement dollars. He adds that increased readiness and flexibility results in fewer complications and better outcomes, which ultimately achieves lower costs and higher profit margins.

Hybrid ORs are a win-win situation for surgeons, Yablon says, because they allow for improved patient care because of integrated technologies, and because they provide room flexibility and improved workflow. Nursing staff members like these ORs because they improve staff productivity, workflow and ergonomics, as well as improve room utilization and reduce scheduling challenges. And administrators like them because they help to retain surgeons and nurses as well as optimize capital monies. Yablon adds that hybrid ORs are not without their challenges – including costs, simultaneous competition for the room’s unique resources among surgeons and the need for continual future upgrades – but says the advantages frequently outweigh the challenges.

One healthcare system that has moved boldly into the OR of the future by embracing cutting-edge technology is the Carondelet Health Network in Tucson, Ariz., whose hybrid ORs boast the BrainSUITE iCT, a dual-room intraoperative large-bore, multi-slice CT with sliding-gantry from BrainLAB. Neurosurgeon Eric Sipos, MD, FACS, medical director of the Carondelet Neurological Institute, says the advantages of a two-room CT scanner system include the minimized disruption of the familiar surgical workflow with a maximized CT scanning range providing the widest range of patient positioning. The surgical table position for scanning can be stored prior to draping to avoid collisions with scanner, and once positioned for surgery, the patient is not moved, especially outside of the sterile air field; the anesthesia is fixed and constant throughout the surgical and imaging procedures. With a sliding gantry moving between two ORs, there might be the opportunity for cross-contamination, but Sipos emphasizes that the preservation of the sterile environment is achieved and the patient in the adjacent OR is not compromised in any way. Carl Colombi, technical consultant with the Integrated OR Solutions (iORS) Division of BrainLAB, says the BrainSUITE fully integrated intraoperative CT surgical operating room can facilitate surgical planning and navigation, as well as achieve data management and coordinated equipment integration.

While this level of technology might be reserved for the larger health systems, ASCs shouldn’t count themselves out of the technology game nor assume they cannot replicate a hybrid OR set-up. “Over the years, we have seen more and more surgical cases migrate to the outpatient environment, primarily due to the advances in anesthetic agents and minimally invasive technologies,” Shira says. “Our previous thinking that an outpatient surgery is for ‘minor’ surgical procedures simply doesn’t hold true any longer. The equipment and technology required for minimally invasive work demands a surgical footprint and boom configurations that are not unlike the inpatient environment. ASCs that want to plan for this technology in the future need to remember this as they are planning.” Shira continues, “Recognizing that ASCs are held to a different building standard than hospitals, there should still be planning for proper air exchanges, good surgical traffic patterns with non-restricted, semi-restricted and restricted zones understood with the design. And of course, there can be no compromise on safety protocols and cleaning protocols regardless of the location of the surgical environment.”

Martin and Shira emphasize that the numerous rapid advances in imaging technology are dictating some OR planning and design elements, and note that many imaging interventions are transitioning from diagnostic to therapeutic, thus blurring the boundaries between imaging and surgery. The goal of many facilities is to integrate these departments into a single service with common support in terms of supplies, equipment and staff. If designed correctly, this concept also can eliminate the all-too-common duplication of pre- and post-operative functions, as well as eliminate the duplication of space, equipment and supply storage. Martin and Shira add that integration of staff with similar skill sets can greatly improve operational efficiencies. The integration concept also can apply to universal procedure rooms that specialists can share, as well as universal prep and recovery areas that can accommodate varying patient volumes throughout the day, as well as minimize patient transfers and reduce the number of supply-distribution points.

While we have seen how the physicality of the OR is evolving for the future, it’s important to note that healthcare professionals are following suit. Bentley points to the trend of surgeons and interventionalists becoming one and the same in the future; in the past, these two groups have performed distinct classes of procedures, while in the present, some surgeons are learning select interventional techniques. In the OR of the future, it may be no surprise to see surgeons familiar with nearly all major interventional procedures and perform them frequently; there may also be the rise of the multi-purpose proceduralist. Bentley says these proceduralists can be co-located on the same floor of a facility, or they can even be housed in the same suite, functioning in what Bentley calls a “multi-purpose sandbox” to accommodate all kinds of disciplines.

No next-generation OR can be planned and executed without buy-in from all stakeholders during the project planning and management process, including surgeons and clinical personnel, administration, the architect, the engineer, the IT department and key vendors, according to collaborators Chris Kantorak, technical consulting manager with BrainLAB, Inc., Brian Hartman, project design manager with STERIS Corporation, and Paul Niehaus, project manager with Philips Healthcare. They say that advanced OR suites require space for technology, personnel and ancillary equipment, and that design input from all user groups must be obtained to ensure an optimal environment for all. More specifically in terms of roles among stakeholders, the architect is responsible for evaluating trends such as fixed-based imaging versus mobile imaging, and OR integration; providing for the expansion to a larger OR footprint ; and understanding the changes in sterility needs when going from an imaging suite to a flexible hybrid OR suite, for example. They must also design into the OR future flexibility, such as empty conduits for information/video routing, blank structural plates and positions to accommodate new equipment in the future. To this end, the equipment manufacturer can help plan for the support of new technologies as they are added. In turn, the vendor plays a key role by helping to maximize functionality and the placement of multiple technologies, offering design expertise with proper sequencing of design needs, and planning for both existing and future technologies or evolving clinical procedures.

Medical homes in practice

Healthcare is notorious for trying out solutions that seem to work in theory, only to watch them collapse in practice. Like throwing spaghetti at the wall, players from all segments have experimented, looking for new ideas that might stick.

The most recent concept that is showing real sticking power is the patient-centered medical home.

Since 2006, more than 30 states have initiated projects to apply the medical-home concept to Medicaid and Children’s Health Insurance Programs. Reduced costs, better support for chronic care and improved population health are the impetus behind the local efforts, which comprehensively hold the potential to effect system change, piece by piece.

Although no two projects are identical, all reflect core principles of aligning reimbursement, supporting primary-care practices, measuring results and scaling the model beyond an initial pilot phase. Early results have shown promise, which is inspiring more payers and providers to adopt the model.

The general arrangement of a team of clinicians providing a home base of individualized, coordinated care and prevention emerged through the American Academy of Pediatrics in the 1960s for specific pediatric populations. It wasn’t until recent years—as the industry began to focus more on healthcare value—that the medical-home idea was identified as a potential formula for improvement of service delivery within broader primary care practice.

In 2007, four major physician groups defined a set of joint principles to describe a patient-centered medical home, which was soon followed by the creation of the Patient-Centered Primary Care Collaborative (PCPCC), which represents employers, plans, providers and other organizations that endorse the principles. The National Committee for Quality Assurance (NCQA) is currently in the process of updating standards for its medical-home recognition program, which were initially released in January 2008.

Policymakers and the healthcare industry continue to assess the local projects, anxious to determine their financial worth and their promise for large-scale implementation.

MANAGED HEALTHCARE EXECUTIVE recently brought together a roundtable of executive thought leaders to discuss the issues related to patient-centered medical homes. The panel includes:

• Paul Grundy, MD, chairman of the Patient-Centered Primary Care Collaborative and director of healthcare technology and strategic initiatives at IBM;
• Lori Heim, MD, president, American Academy of Family Physicians;
• Len Nichols, economist, New America Foundation;
• Jerry Salkowe, MD, vice president of clinical quality improvement, MVP Healthcare; and
• C. Edwin Webb, PharmD, associate executive director, American College of Clinical Pharmacy

MHE: What do you see as the long term potential of applying the medical-home model in the next five to 10 years?

Grundy: The early pilots’ results are—well, first of all, they’re early—but I think they’re quite impressive. The PCPCC presented data from 10 of those pilots to the White House a few months ago, and what we’re seeing is better integrated, coordinated care.

When you have comprehensive, accountable, accessible, integrated, coordinated care, that results in lower downstream costs. We’re seeing hospitalizations dropping by 20%. We’re seeing hospitalization readmissions dropping by 40%. We’re seeing emergency room utilization dropping by 12% when patients have access to more robust, integrated primary care—which is better upstream care. That bodes well for the future, in which we really need to look at value creation.

Salkowe: The enthusiasm is growing by leaps and bounds outside of the pilots, so physicians who have been either ignoring or sitting back and watching what the earlier doctors did aren’t sitting back and watching anymore. They’re getting very engaged and very interested in pursuing [NCQA recognition] and many of the features in medical homes now, even if they’re not an active part of an organized pilot.

Heim: I see the medical home being integral when you look forward to whether or not it’s an ACO [accountable care organization] or just more generally talking about value-based design. As hospitals and big health organizations begin to look at this, how they integrate with the small practice is going to be one of the biggest challenges.

If you look at the North Carolina Community Care project, that was community based. It showed incredible cost savings and increases in quality, but that was another way to virtually link a bunch of community based practices, which is going to be one of the models we’ll have to accept because large health organizations are not going to be in all communities. But yet, the hospitals and the communities are still going to have to figure out a way to control the costs. And the other critical component then is getting the IT linked up.

MHE: Some say medical homes will not solve the problem of fragmented care. Primary care will continued to be siloed apart from subspecialists. Do you foresee that?

Heim: If people are saying that medical homes will further fragment care, I don’t think they understand the model because it’s the opposite that’s true. The basic tenet of the medical home is the personal physician is the coordinator of the care, and there’s integration of the patient’s needs, not only when they walk into the office, but by taking advantage of knowing your population and doing population management, using IT and tools and a team approach to coordinate that care.

Without something like the ACOs and aligning incentives, we have a mismatch in terms of how much the subspecialists and the other members of the team are brought into integrating that care. I definitely would say it’s not going to go in the opposite direction.

Webb: I’m not sure we could fragment healthcare any worse than it is right now, particularly across professions and disciplines. One of the things that is exciting to the pharmacist community is the potential for the medical home model to integrate across professional care concerns—again, assuming that we can find mechanisms to realign payment incentives, also understanding it’s obviously not possible to have a pharmacist in every three- or four-person medical practice in the United States.

Community Care in North Carolina has done an excellent job of integrating pharmacists’ services as part of the team in a virtual environment across several small- and medium-size practices. The only way we can integrate health professionals into a team is with the medical home because the current payment methodology and our cottage-based industry of silos just isn’t doing the job anymore.

Grundy: From the standpoint of the patient, the patient wants to see the specialist or the person who focuses on a certain part of the body as part of their medical home team. When they need a hip replaced, they have more than a hip. They have a whole bunch of other parts that somehow interconnect, and there has to be medication management adjudication, for example. There have to be linkages and integration, and that’s not happening now at all.

There are places in the United States where it will cost $177,000 for the last six months of life and other places where it costs $17,000. When you look at the places where it costs us seven times as much, what you’ll find is seven specialists doing seven different things—none of it linked, none of it coordinated, none of it integrated, and some of it, by the way, toxic to what the other providers are doing.

I just happened to be in New Mexico at Presbyterian Hospital recently and in Dallas and Tulsa where they’re doing a fantastic job of actually integrating the specialists into the medical home, where everybody’s practicing at the top of their license. In Tulsa, the primary care docs will email the specialists and integrate and pay for an email consult, which the specialists love, and the primary care docs love, but most importantly, the patients love it because it keeps them from wasting half a day [at a medical appointment] when the primary care doc’s doing a good job.

I would agree that whoever asks that question doesn’t understand the model.

Salkowe: There is one aspect of this we need to be conscious of. There are individuals who have one major chronic illness, and 90% of their care is being provided by a specialist: a gastroenterologist, rheumatologists or an oncologist, for example. And health plans are expected to and allow such a specialist to function as a PCP, even though we know that the focus of that care is on specialty needs, and there may be gaps in preventive health needs or other unrelated health conditions. That’s an important reality.

Now, I think we all agree that in a well managed medical home, care that specialist is providing is enhanced because of the improved communication coordination with other physicians that invariably are involved, whether it’s preventive services or hypertension or something else. There is a bit of hesitancy on the part of some of the specialists because of the scenario and uncertainty of whether a PCP should be treating everything. What happens when I have a patient where I really need to be out in front in terms of making decisions?

Heim: There are certainly many patients that I have had over the years, when the oncologist is functioning as the patient-centered medical home. I have no problem with that. From the standpoint of being recognized as a patient-centered medical home, that’s different than a subspecialist who then begins to assume the majority of the care and becomes the director. The problem is that oftentimes they’re handling maybe 70% of what’s currently going on in that patient’s life. However much of the other stuff gets either ignored or sidelined.

So if a rheumatologist becomes the patient-centered medical home, then in order to make sure that they are truly functioning in the whole aspect of managing that patient, they need to fulfill some sort of recognition program. In order for this model to work, you have to realign the payment. That would not be a major barrier if the payment were going to switch from the patient’s PCP to a subspecialist as the designated patient-centered medical home and have the payment model then switch over to that of a patient-centered medical home. That’s not a problem so long as they are then willing to take on the requirement to manage or coordinate the entire care of the patient.

MHE: What is the best strategy for reimbursement in medical home models?

Salkowe: The model that most programs seem to circle around is one that preserves perhaps 60% of the compensation as traditional fee-for-service reimbursement with the other 40% divided between process measures, care management activities and outcomes. The numbers that I’m generally seeing are 30% for the care management piece and 10% for the outcomes piece, although from the early projects where the outcomes just haven’t been measured yet, it may focus solely on care management.

That seems to get us to the dollars that are needed for support, the additional resources the practices need, whether it’s trained staff or new systems, and also to include the extra remuneration that’s needed to really engage the primary care physicians and the work around this new model.

Nichols: I like the structure that Jerry just described, and it makes a whole lot of sense, especially in transition, which is what we’re going to be in probably for three to 10 years—with a fee-for-service base but with a lot of incentives packed around care management and outcomes. Those proportions may very well change over time and may be different in different parts of the country.

The most creative thing we can do in the pilots that we hope come out of healthcare reform is to work out different kinds of shared-savings models. What’s an average cost for a diabetic? You think about the number of diabetics and different comorbidities and you can work out an expected expenditure over the year, including, in my view, expected hospitalizations and utilizations of specialists.

Then instead of holding a primary care team or even a formal medical home at risk, you could have them share in the savings that they might achieve if they hit the targets to achieve savings. Then you really do align incentives. A 2.0 model might include some incentives back to the patient so they too can see a real monetary gain in participating, because after all, health is a participation sport. You want the patients very much engaged. It’s unambiguously true we have to find a way to leverage our rather short supply of primary care professionals, in particular as we think about expanding coverage and access to care in the next five years.

Heim: One of the concerns that I’ve had with shared savings is it being time-limited. If you look at the efficiencies you will gain over time, eventually those efficiencies are going to diminish. Have you thought about making sure that the shared savings don’t become the major component of the blended payment model?

For example, I was in the Air Force for 25 years and after I had a stable population and managed them, I had already found disease and managed it and achieved significant cost savings and decreasing utilization. But then we reached a steady state, relatively. Were you saying, Len, that would be something on top of a designated funding stream for the blended payments?

Nichols: Well, Lori, remember I used the word ‘transition,’ and you are talking about a steady state and a longrun. I would agree that the ideal would be we will get to a place where all patients, especially those with chronic illnesses, are managed optimally and there are no savings to be reached out of the system. I think we all know we are a very long way from there.

What I’m talking about is a mechanism that can enable us to turbo-charge the transition. Ultimately I think you’re right. You would want to go to a more blended payment at the end, but I don’t see how you get from here to there fast without a shared savings component.

It enables you to reach beyond the primary care team to enable the hospital and the specialist and the pharmacist and everybody else to participate. That has a greater potential for aligning interests quicker in a way that is much more likely to be transformative. And yes, once we’ve reached the level of efficiency you reached with your patients in the Air Force, it’ll be a different world. But we’re a long way from there.

Webb: The blended payment model approach that PCPCC has recommended has one other interprofessional political advantage, and that is it defuses some of the potential battles at the feeding trough of fee-for-service. If all members of the team are participating in a blended payment approach, that brings revenue into the medical home based on those performance parameters, then the physician-directed leadership of the practice can then pick and choose among the various members of the team who are needed to be involved in the care of a particular patient at a particular time. There’s not that kind of competition for the fee-for-service dollars among the providers blended into a payment model that rewards team performance rather than individual fee-for-service performance.

As a profession that’s been fighting for years and years to have its non-dispensing services recognized under Medicare Part B—pharmacists have been fighting that battle for 10 or 15 years—this may be a very good thing in terms of an approach that blends all of the qualities that have been mentioned already because that really is what will generate patient-centric care among all the team members.

Grundy: I think there’s another constituency that we need to include in the considerations around shared savings. There’s also the reality that our employers are not competitive in a world market, and in many ways that’s because of healthcare costs. We have large numbers of individuals who can’t afford insurance so some of the savings really needs to come back to those who are actually paying for the healthcare…which will allow them to be more competitive with other parts of the world where healthcare may be more heavily subsidized by the government.

Nichols: That’s right and trust me, they can get their share of the same things, too. I definitely would concur in the short run, the best thing we could do is incentivize clinicians to work together across the traditional silos. Then I’m pretty sure the employers and plans will figure out how to get their piece of that.

MHE: Are behavioral health professionals increasingly being included as part of the medical home?

Grundy: I was in Albuquerque at Presbyterian, and they had a very integrated behavioral health model and a very integrated pharmacy model. The combination was really magic. We were seeing medication-management education and behavior-management education that was enhancing care and amplifying and cadencing the message that the primary care provider was delivering—on ’steroids.’ I mean, it was really impressive.

I was in Dubuque, Iowa, with a primary care provider who was seeing an 84-year-old nun. The issue with her was medication management and care coordination. Once the relationship part of it was established with the primary care provider, it migrated over to a nurse care coordinator working with the pharmacist who was working with a behavioralist with a team approach to care for the next year. I saw that mapped out for the nun, and it had gone over well enough to the point that she really began to understand it and give feedback.

MHE: With all these easily accessible services, what about the potential for increased utilization?

Webb: Particularly with regard to the use of medications, the some of the evidence from the model in North Carolina does indicate that in some cases, the medication-use costs go up. But with a concomitant reduction in consumption of some of the other more expensive services, particularly emergency department business and things like that, the increased utilization of some things may well be a very good thing and what the patient may benefit from most. You have to look at utilization across the entire spectrum of service consumption rather than just in the silos.

Grundy: From the perspective of the buyer of care, we really do want to see increased utilization of appropriate medication, and we want our patients to be healthy and productive. For us, the cost of the care is just the tip of the iceberg. We also have the whole issue of productivity. So it’s really a matter of appropriate utilization addressing both under- and overutilization of services. It’s a win-win for the pharmaceutical companies because increased utilization means they sell more medication, also a win for us because we want our folks healthy and productive. The best way to do that is for them to take their medication and comply with wellness instructions and other things.

Heim: Look at some of the data that came out of the Kaiser Foundation surveying patients. Twelve percent of the patients said the doctor had to redo a test or procedure because they didn’t have the earlier test results. So those are the low hanging fruit. We can decrease unnecessary procedures just from that standpoint alone.

MHE: How do we measure the success of medical homes? How can we quantify whether they’re doing any good?

Grundy: The state of Vermont’s early studies indicate a 7% reduction in overall costs. That’s a real bending of the curve. That’s data, right? We’re seeing improved outcomes in terms of indicators of compliance with diabetic management and asthma management. I was just at a physician’s practice in Florida where he used to have on average of one patient a month hospitalized for asthma. In the past 19 months, he’s only had one asthma hospitalization, and that’s data, right? We’re beginning to see pretty robust data and would love comments from other folks on that.

Nichols: I think another aspect of measuring success has to do with the experience of care both from the patient and the physician perspective. For this to be sustainable, patients need to recognize that this is something different, and it’s something different that they really like. It may not be an easy sell for some patients who’ve just been accustomed to picking a specialist out of the yellow pages or calling a friend to see who to go to next.

From the provider’s side, there are two big issues around the experience. There’s a lot of work up front [in creating a medical-home model] so it’s important that physicians see this as being something very positive, something that they advocate to their colleagues. But perhaps even more importantly is one of the underlying driving factors, which is the critical state of primary care in this country and the need to convince more and more of the upcoming graduates from medical school to pursue primary care as a field. The more convincing stories there are about the positive experience that these models are bringing to practice, the more likely we’ll succeed from that perspective.

MHE: What cautions do you have for the industry regarding medical homes?

Heim: Coming from the TransforMED demonstration project that AAFP did, we learned you have to provide enough resources to pull this off. It has to be adequately financed, and the transformation process can be stressful. So provide strong leadership to enable that to occur. The other problem that we’ve seen is that many of the projects have too short a timeline. They’re looking for a quick return on investment in less than two years, and two years is probably the bare minimum.

Nichols: Payers have to have a realistic timeline, and I do think five years is a much better frame. It’s easy for a think-tank guy to say, but I just think that’s the reality. The clinicians will tell you the same thing because of the up-front investment.

I would also hasten to emphasize my favorite phrase from Ronald Reagan: ‘Trust but verify.’ The people who claim that these models don’t work are stuck in defending the status quo, fee-for-service, unaccountable model. They’re just afraid of change, that’s part of it, but they don’t want to move to a world in which they’re going to be held accountable and things are going to be measured.

Not every patient is going to go to some quantitative provider comparison on a Web site, but enough will as we evolve as a society. Look at the number of people using smart phones. And now we’re going to move to a world in which if you can’t show that your treatment modalities and your health plan are achieving outcomes as good as [top-rated] systems and medical homes and health plans, you’re going to be at a competitive disadvantage.

Just look at the companies that…are in many ways poised for the new world because they’ve invested in information systems and information management, and selected forward-thinking and better organized providers. The other plans are really going to have to step up and participate in that ‘trust but verify’ competition or risk very serious competitive problems.

Grundy: That is not an easy transition for the providers to make. We learned in working with MVP Healthcare and others that we need to help pay for the process of this transformation. We’re dealing with oftentimes small groups of providers that are trying to survive on either a -1% margin or a 1% margin. We need to instill a bit of hope in them. If we’re reaping the benefit of that, we as the buyers have to begin to pay for the process of this transformation.

Heim: What we hear most from people who are practicing in a patient-centered medical home is that they feel like they’re back to practicing medicine the way they were trained to. They’re back to taking care of their friends, their patients and their communities, and that is incredibly rewarding for them.

Salkowe: I think just one area that we need to be careful with is the enthusiasm around this topic and the eagerness to move forward.

There’s been a tendency to slip outside of the structured pilots and just throw money at the medical home by financially recognizing providers solely based on recognition rather than how well they’re coordinating and managing the care of their patients.

The practice transformation that’s required goes well beyond whatever any individual recognition can possibly measure. In the pilots, for the most part, there’s been a structure that’s enabled practices to learn from each other and to share and develop communitywide resources. It’s going to take some time for resources to be well enough established in a community that all physicians in the community might be able to readily become a part of this.

We just need to be careful that we don’t get ahead of that infrastructure development and make sure we’ve figured out how to do this right before it becomes a standard for everybody.

Heim: Jerry, are you talking about concern whether or not the NCQA recognition program now truly recognizes those things that are of value?

Salkowe: No. I think it does recognize those things that are of value. It’s necessary, but I don’t think it’s sufficient. Over time we’ll come up with additional measures that will help, but testing itself never really tells the whole story, particularly in something like this, which isn’t just about what an individual practice does. It’s really about what’s happening in a community and how that practice interfaces with the community. Unless you have the right infrastructure in place, a practice might pass the test and really still not be able to deliver on the promise.

Webb: One of the challenges that we face is being flexible enough to recognize that how you construct these teams virtually in small communities and small practices is going to take a lot more creativity. It’s a lot more difficult to do than in those settings where you have large physician groups or managed care organizations or hospital-based teams where that functionality has been existent for a long time.

Particularly from the pharmacy side, we’re looking to create models that integrate pharmacists into the team in a very creative and constructive way. For the small medical practices, the best way to do that remains to be defined… With IT and with virtual framework, it’s entirely possible to do this even if we can’t all be physically present in this mythical place called the medical home.

Squeeze out waste

Understandably, the painstaking scrutiny of healthcare costs has reached a fever pitch. While administration is a relatively small percentage of the overall costs in the system, the pressure is on payers to trim as much waste from their operations as possible.

Administrative costs—or any outlays that are not specifically tied to medical care—are a political hot button. Insurers defend what they spend on tasks such as case management and disease management as well as investments in technology as necessary spending that results in net savings and improved health. Some critics of the insurance industry characterize administrative costs as nothing more than profits and executive compensation and seek legislation to control how premium dollars are spent.

In fact, 15 states have implemented laws dictating minimum medical loss ratios (MLRs), ranging from 50% to 80%. In 2008, California Governor Arnold Schwarzenegger vetoed a bill that would have forced insurers to maintain an MLR of 85%.

According to America’s Health Insurance Plans, in a 2008 study conducted by PricewaterhouseCoopers (PwC), 87 cents of every premium dollar goes to healthcare and medical services, and just 3 cents goes toward profits.

PASSING THE BLAME

Governments are taking some steps that could eventually result in lower healthcare costs, such as smoking bans in public places and removing soda and sugary snacks from school vending machines. On Jan. 1, 2010, California became the first state to ban the use of trans fats in restaurants and bakeries. New York City adopted a similar ban several years ago.

Nonetheless, it was inevitable that scrutiny would intensify on payers and their efforts to reduce costs and minimize wasted resources in the system, and now that it has, they’re possibly receiving more blame than is fair.

“When people look at waste in claims processing, for example, they assume [all of the money is being wasted] by insurers, when a lot of it is wasted by providers,” says Mark Merlis, a health policy consultant who has written several papers on the topic of healthcare waste. “But in fairness to providers, they have to comply with many different insurers’ administrative processes, so we should be doing as much as we can to promote uniform transactions.”

Merlis says the more uniformity that can be achieved among payers, the more money the system overall is going to save. Market complexity makes it difficult to identify who is “committing” the waste. Furthermore, cutting waste from one area might simply shift costs to another. For example, in an attempt to fight losses from fraud, payers could investigate more claims in detail, but that will delay payments to providers, damaging relations and potentially resulting in legal action under prompt payment laws.

TECHNOLOGY TO THE RESCUE

The siloed yet sprawling nature of the U.S. healthcare system—payers, physicians, pharmaceutical companies, hospitals, government agencies and consumers—means that waste elimination isn’t as easy as making an individual organization operate more efficiently.

Some Americans, including some physicians, believe a shift to a single payer system would simplify healthcare administration, but the large majority is firmly opposed to such a change. As Merlis points out in his paper, “Simplifying Administration of Health Insurance” (January 2009), complexity is not just a byproduct of the insurance system—it is what insurers are selling.

“The value-added of the managed care industry consists of the very features that make insurance complicated: different coverage rules and formularies, authorization requirements and careful scrutiny of claims, and so on,” he writes. “The variations are what differentiate one plan from another, and competition and uniformity may be conflicting goals.”

Still, that doesn’t mean plans can’t improve their internal operations and their relationships with other healthcare stakeholders. There are also high hopes that technology can eliminate some waste in the system, and at least one project is proving that to be true.

In 2008, Blue Shield of California (BSC) created its Partnership in Operational Excellence and Transparency (POET) transactions-tracking tool to improve payment accuracy and dispute resolution, speed claims turnaround, and increase operational transparency. The program is available online for 90 of the hospitals Blue Shield of California contracts with across the state.

“POET has been enhancing our working relationships with network hospitals by providing opportunities for data-driven discussions that directly improve operational efficiencies,” says Juan Davila, the plan’s senior vice president for network management. “Using key claims performance indicators and transparent claims data, we work jointly with our facilities to target and prioritize impactful process improvements.”

Davila says the claims-processing related improvements have been impressive, and the benefits of improved relations with network providers are even more so.

“We wanted to show that we were really trying to get at the root of the problem,” he says. “We paid for the system up-front, and we were increasing our transparency to them, as opposed to trying to cover up our errors. We genuinely wanted to develop a more collaborative relationship with our network hospitals, and that’s changed the way we think of each other in a very positive way.”

The hospital association of Southern California recently approached BSC to help the association with another large-scale project.

“I have been in this business for 20 years and have never gotten a phone call like that before,” Davila says.

Within administrative functions, such as those BSC is addressing, it’s hard to know exactly what is waste. A 2008 study by PwC’s Health Research Institute, “The Price of Excess: Identifying Waste in Healthcare Spending,” points out that “inefficiency” and “waste” are not interchangeable terms; the former is merely one component of the latter.

Authors define waste as costs that could have been avoided without a negative impact on quality, which is similar to the definition used by the Institute of Medicine and the authors of another watershed study conducted by Thomson Reuters in October 2009: expenses that don’t add value.

WHERE TO FIND WASTE

The PwC research estimates that slightly more than half of all healthcare spending ($1.2 trillion of the annual $2.2 trillion spent) is wasteful and breaks it into three categories:

• Behavioral waste, which accounts for $303 billion to $493 billion each year;
• Clinical waste, accounting for $312 billion annually; and
• Operational waste, which consumes $126 billion to $315 billion.

The study further breaks the operational waste segment down into four subsets:

• Claims processing, which accounts for $21 billion to $210 billion in waste;
• Inefficient use of technology ($81 billion to $88 billion);
• Staff turnover ($21 billion); and
• Paper prescriptions ($4 billion).

The research by New York-based Thomson Reuters Healthcare Analytics (October 2009) is slightly less pessimistic, estimating that each year, between $600 billion and $850 billion of healthcare spending is wasted.

The study, “Where Can $700 Billion in Waste Be Cut Annually from the U.S. Healthcare System?” identifies six primary culprits:

• Unnecessary care (40% of waste), accounting for $250 billion to $325 billion;
• Fraud (19%), $125 billion to $175 billion;
• Administrative inefficiency (17%), $100 billion to $150 billion;
• Healthcare provider errors (12%), $75 billion to $100 billion;
• Preventable conditions (6%), $25 billion to $50 billion; and
• Lack of care coordination (6%), $25 billion to $50 billion.

Those figures are so staggering that the system can’t expect to “cut” its way out of them, according to Bob Kelley, Thomson Reuters’ vice president of healthcare analytics and author of the report.

“Simple external controls on cost and utilization will not work, and any effort to control costs by eliminating waste must be careful to consider possible unintended impact on access to appropriate and necessary care,” he says. “We should expect that any change to the system of care that improves its performance will require a realignment of the types and levels of professional and facility resources and the relationships among these resources.”

The best solutions will effect positive changes and recognize that the healthcare market dynamic is much different from other product or service markets. Most consumers believe that their access to all potentially useful services is a right.

“We need to shift the public’s perception and expectation [of quality] away from ‘more services is better’ to ‘the care that will most likely result in the outcomes that are best for me,’” he says. “Simultaneously, we must begin to reward physicians for providing this type of care, and recognize and pay for the required time and effort.”

CONSUMER BAD HABITS

Shifting public perception is critical, because for many Americans, “waste in healthcare” brings to mind images of bloated, lethargic mega-plans with outdated technologies and overpaid, fat-cat executives. Although the U.S. Centers for Disease Control and Prevention estimate that fully half of the nation’s deaths each year are the result of bad and avoidable habits, most Americans, rather than look in the mirror, latch onto headlines about excessive health plan profits and executive bonuses.

When consumers learned that former UnitedHealth Group CEO William McGuire received more than $124 million in total compensation in 2005, it’s understandable that many of them reacted with indignation. While the public’s sensitivity to what they perceive as excessive income is at an all-time high, salaries and bonuses paid to health plan executives are a very small number in a very large sum, according to Dan Munro, principal with The DMM Group.

“If you added up all of the executive bonuses and salaries for the entire healthcare industry, it would just be a drop in the bucket compared to the other costs,” he says. “Healthcare is nothing at all like Wall Street, where firms are racing to pay back their Troubled Asset Relief Program funds because they want to go back to handing out those huge bonuses again.”

Merlis agrees, saying executive compensation “might look ugly when you see how much money certain people are being paid, but it’s really not a driver of healthcare expenses.”

It’s clear that politicians are doing what they can to foster greater use of technology in healthcare, particularly with federal funding included in the stimulus package to spur greater adoption of electronic medical records, which are not yet widely adopted.

“The government is trying to encourage the meaningful use of electronic health records,” Munro says. “For the first time, the government is mandating that EHR applications engage the consumer. If you tell most EHR vendors that you’re going to develop a patient-focused system, they’ll laugh at you. They have always been provider-focused, because that’s where the money is.”

An EHR system can cost millions of dollars, so small providers are less likely to adopt them simply because of the cost. The government has realized that use of health IT won’t progress if it doesn’t engage the consumer, Munro says.

THE OPPORTUNITIES ARE REAL

To further explore IT’s opportunities to improve healthcare, Kelley and Thomson Reuters are working on a follow-up whitepaper highlighting specific initiatives that have been successful in eliminating waste, or that show the potential to do so.

“There are certainly high expectations for the contributions of IT to both improved quality and reduced waste,” he says. “Many of these initiatives are either directly related to new or enhanced IT applications or require IT system support to enable new relationships between providers, or between providers and patients.”

Examples of the first type include electronic medical records, health information exchanges, and clinical registries. Examples of the second type include patient-centered medical homes and bundled or episode-based payment systems.

“I think that these opportunities are real, but changes in the systems of care and the relationships among providers and patients will be required if the great potential for these solutions is to be ultimately realized,” he says.

According to Davila, BSC’s POET program is improving efficiencies at the larger system level.

“Historically, when we would show up to renegotiate a contract, the hospital representative would say, ‘My people are telling me that you don’t pay your claims right, you don’t handle appeals well, and you owe us X million dollars. Before we recontract, I need you to fix that.’ The result, inevitably, was a lot of negative energy.”

To solve the problem, BSC worked with a third-party vendor to develop a system that enables participating hospitals to review 24 months of processed claims information and performance metrics on the POET Hospital Dashboard, an online performance analytics portal specifically designed for those hospitals.

Those facilities routinely receive quarterly claim summary reports that provide information on key indicators such as cycle time; submission type; denial volume and reasons for denial; appeal volume, outcomes, and reasons; and claim volume for patients with Bluecard, a national program that allows any Blue member to receive care from another Blue company when traveling or living outside of their usual service area.

“It’s all right there in black and white for everyone to see,” Davila says. “One national hospital system was upset because they thought we weren’t paying as quickly as we should, until POET revealed the problem: We were paying the claim in 12 days, but it was taking them 25 days to get the claim to us. The system showed them exactly where the process was broken so they could fix it.”

PHYSICIANS’ WEIGH THEIR COSTS

The need for such transparency is significant, according to research from the American Medical Assn. Its second annual National Insurer Report Card study attempts to diagnose the strengths and weaknesses of the claims processing systems used by eight of the nation’s largest health insurers. Five of the eight plans showed improvements in the median amount of time necessary to respond to providers’ claims, but the report estimates that providers still divert as much as 14% of their revenue to ensure they are receiving accurate payments.

Physicians reported spending three hours weekly interacting with plans in 2006, according to a Web Exclusive produced by Health Affairs in May 2009. When time is converted to dollars, the cost to practices is estimated at $23 billion to $31 billion annually, or 6.9% of all U.S. expenditures for physician and clinical services. Further, 45.9% of physicians surveyed for the report said the cost of dealing with health plans had “increased a lot.”

The report goes on to note that administrative cost cannot be reduced to zero dollars and that interactions that cost money also can produce benefit, such as prior authorization, which can reduce inappropriate use.

OR Technology: A Glimpse Into The Future

As we move into 2010, a new wave of technology awaits us. Highly-developed health information technology (HIT)-driven systems and equipment are becoming the standard in many operating rooms (ORs), whether they are in a single-specialty ambulatory surgery centers (ASCs) or advanced surgical hospitals. It is important to stay up-to-date on these new technologies which not only reduce medical errors, but improve patient comfort and post discharge follow-up. The following case studies highlight this trend.

Enhancing Communication, Collaboration and Education: An Olympus Case Study

Three years after adopting integrated ENDOALPHA ORs, Penn State Hershey Medical Center is ready for more. As the only teaching hospital in central Pennsylvania, Penn State Milton S. Hershey Medical Center is one of the area’s largest healthcare providers. The hospital is equipped with 23 surgical suites and its department of surgery performs more than 19,000 procedures annually.

Staying Ahead of the Technology Curve

As industry trends move toward minimally invasive techniques, the hospital was quick to understand the benefits of integrated surgical suites as a way to stay competitive with the specialized technology demands of increasingly sophisticated procedures. “Several years ago, we realized we had a need for advanced, integrated technologies in our OR as we anticipated the convergence of laparoscopic and flexible endoscopic instrumentation,” says Randy Haluck, MD, professor of surgery and division chief for minimally invasive surgery and bariatrics. “We also recognized the need for a sophisticated system relative to data acquisition, storage, and transfer.”

Penn State Hershey began the process of integration in 2005, building three new Olympus ENDOALPHA surgical suites in 2006 and then converting two existing ORs to ENDOALPHAs the following year. The hospital anticipates completion of four more integrated ORs, for a total of 27 surgical rooms with one-third of them set up as state-of-the-art ENDOALPHAs this year.

Taking a Comprehensive Approach

True systems integration goes beyond the equipment and operating platform. It also takes into account the ergonomic design, workflow and technology optimization of each surgical suite. This means designing rooms with ceiling-mounted booms for holding imaging equipment and monitors off the floor, allowing for more efficient post-procedure clean-up and ergonomic positioning of monitors during the procedure. It means integrated equipment (scopes, imaging platforms, monitors, video and accessories) that work together and can be easily interchanged during a procedure. And it means a cohesive information management system for patient and procedural data, images, and audio that can be captured, stored, and retrieved from both inside and outside the sterile field. “We needed to have multiple surgical services using the same operating room, between general surgery, urology and minimally invasive GYN surgery,” says Gerald Harkins, MD, medical director for minimally invasive GYN surgery. “We’re all able to function in the ENDOALPHA laparoscopic suites, and it’s been a fantastic platform for that utilization.”

Experiencing the Installation Process

Olympus offers turnkey solutions, working with customers from start to finish on the design, construction and set-up of integrated operating and intervention rooms. “The flexibility of Olympus’ ENDOALPHA system means it can be easily customized to create a right-sized solution unique to each facility,” says David Alexander, Penn State Hershey’s Olympus integration consultant. “We were able to incorporate their legacy equipment along with their pre-existing video-conferencing system and streaming video package into their ENDOALPHA ORs to create one seamless solution. Hershey proved to be very knowledgeable, so it was a highly collaborative effort.”

Taking Centralized Control

The nerve center for each ENDOALPHA OR is a centralized control panel. With audio, video, data and images all controlled via a single touch screen, clinicians have the power to connect, communicate and collaborate with others outside the procedure room. Clinicians can also control surgical and room lighting, in-room observation cameras and all information and imaging systems without ever leaving the sterile field. To further enhance efficiency, the ENDOALPHA system provides preset capabilities so that monitors, lighting and all equipment can be custom-tailored to surgeon preferences and made available at the press of a button.

Communication, Collaboration, and Education

Penn State Hershey Medical Center’s custom-placed displays ensure all team members have the perfect view of live images. They regularly create video networks for sharing, collaboration and education from within and outside the hospital. “There’s no question that the Olympus system has dramatically changed how we teach in the OR,” says Peter Dillon, MD, chairman of Penn State Hershey’s surgery department and surgical director of perioperative services. “We’re now able to broadcast these procedures to first- and second-year medical students, exciting them about the wonders of surgery at a much earlier stage in their training. So it really has changed dramatically and in a very exciting fashion how we teach.” Haluck adds that it also gives the Penn State Hershey team a better way to collaborate with other physicians and share information with patients. “We can educate other physicians and record images for colleagues or bring them in when needed to confer and/or assist on a procedure. We are also able to show patients what their surgery was about and why they were having problems. That’s a great benefit to us, and certainly patients appreciate it as well.”

Interventional Radiology Breaks New Ground: A Skytron Case Study

Philips and Skytron have teamed up to help fully realize the promise of a hybrid angiography suite by implementing new cardiovascular solutions with the latest Allura Xper FD technology from Philips and state-of-the-art surgical lighting and boom technology from Skytron.

For more than a decade, Barry T. Katzen, MD, medical director of Baptist Cardiac and Vascular Institute (BCVI) in Miami, has pioneered the integration of surgical and interventional procedures. Katzen and his team continue to show that surgical procedures in an angiographic environment can be accomplished with the same degree of efficiency as in an OR.

“The specialties of interventional radiology and vascular surgery bring more to each other when we work together,” Katzen says. “Procedures that help drive this relationship include aneurysms of the thoracic aorta and abdominal aorta. Having an environment where we can use a surgical option allows us to think out of the box for individualized patient solutions.”

In 2008, Philips Healthcare and Skytron entered into a collaborative agreement to provide comprehensive, integrated solutions for the cardiovascular environment. Katzen seized the opportunity to refine the surroundings. Based on a well-coordinated plan from Philips and Skytron, a room at BCVI underwent a significant upgrade to enhance hybrid functionality.

“One of the great advantages of the new room design is it’s so spacious that we can all function effectively without being in each other’s way. Information can be transferred to the head of the bed — to the anesthesiologist — down to where we’re working very easily,” says James F. Benenati, MD, medical director of the peripheral vascular laboratory.

A Room That Works

BCVI’s surgical team appreciates the changes made. Katzen believes the upgrade has created a better environment for all involved. A recent experience demonstrated how the teams successfully combined surgical access with an interventional solution. A patient presented with critical narrowing of an artery to the brain and chest, and a narrowing of that same artery in the neck. “It was a very complex situation,” recalls Katzen, “but we combined our skills. The surgeons removed the plaque in the neck with an endarterectomy and we used that same access to go down and stent the chest.”

Installation With Minimal Impact

“We’re a busy lab and taking a room down for a period of time is always an inconvenience,” says Katzen. “The one thing everybody remarked upon was how fast this upgrade was accomplished.” In two and a half weeks, Philips and Skytron, working closely with the implementation team at BCVI, completed the staging and upgrade. The new room reflected the input of interventional radiologists, surgeons and anesthesiologists, with each group helping to define the clinical specifications to make it a multi-disciplinary environment.

OR Technology Update: A Steris Case Study

The epitome of surgical technology today is one OR in which surgeons can perform image-guided, catheter-based interventional procedures; minimally invasive endoscopic procedures; extremely precise robotic surgery; or full open surgery, depending on the case load or discoveries made in surgery. In this type of hybrid OR, integrated imaging, computerized patient information and live video routing technologies instantly display test results and critical real-time information on high-definition monitors in the sterile field. This allows surgeons and staff to ascertain the most timely and accurate diagnosis and treatment for the patient. It also helps them achieve the most flexible and effective uses of the room and optimize scheduling and utilization.

These are also the types of rooms in which medical leaders and pioneers train residents and other clinicians, develop new minimally invasive procedures, such as natural orifice trans-luminal endoscopic surgery (NOTES) and trans-catheter heart valve replacement and master new surgical devices.

These highly advanced rooms can incorporate advanced communications, connectivity, LED surgical lighting and high-definition visualization such as intra-operative fluoroscopy, intra-operative computerized tomography, magnetic resonance imaging, image-guided navigation, 3D software extrapolations of the imaging, robotics and many other technologies. Each of these tools are important in today’s hybrid OR, but when integrated correctly they form a seamless whole that is greater than the sum of its parts.

To accomplish this synergy, STERIS collaborates with leading manufacturers to design and install customized, integrated HD360°™ Hybrid ORs for healthcare facilities. STERIS project design managers configure STERIS’s open infrastructure Harmony® Lighting and Visualization systems, equipment management systems and advanced integration technologies with interoperative imaging, robotics, endoscopic and video technologies and more. The result is a suite that enables fully informed staff, highly efficient procedures, extremely flexible room use, successful surgeon recruitment, medical education, ongoing surgical innovation, leading edge robotic surgery, telemedicine, and new possibilities yet to be imagined.

OR Technology Update: A Berchtold Case Study

Problem

Before hybrid ORs existed, imaging and communications capabilities were not an option during cardiovascular and neurosurgery operations, resulting in patients getting diagnosed and treated in two different visits. Separate procedures and imaging consultation can be costlier for patients and surgeons, can result in additional stress, more down time and longer hospital stays for the patient, and are not conducive to emergencies that sometimes arise during surgery.

Solution

Combine minimally invasive and interventional surgical technologies with medical imaging and communications equipment in one operating room: the hybrid OR.

A growing trend involving endovascular procedures during cardiovascular and neurological surgeries requires equipment to accommodate open and closed procedures in the same room, even at the same time, although this is not necessarily planned from the start. The new hybrid OR model provides the surgeon flexibility in performing a variety of interventional, imaging and surgical services in one setting, eliminating the need to transfer the patient.

For example, two of the most popular hybrid ORs are for cardiovascular and neurosurgical procedures:

» Neurosurgical hybrid ORs can include magnetic resonance imaging (MRI); computed tomography (CT) and angiography equipment within a neurosurgical operating room.

»Cardiovascular hybrid ORs often features: Fixed ceiling- or floor-mounted C-arms, ultrasound and endoscopy equipment, coupled with cardiac catheter laboratories.

Because a hybrid OR is specifically designed for endovascular procedures, careful planning from the beginning can help to ensure all rooms are equipped with necessary tools. Some tips to consider while creating a specially designed hybrid OR include:

»Identify factors that are important to the hospital team, such as, should all equipment hanging from the ceiling (surgical arms, flat panel arms, etc.) be able to cover the whole patient in all orientations?

»Think as far ahead as you possibly can to “future proof” the room, reducing the need to renovate the OR moving forward. For example, what is the most extreme type of procedure the team might do in the OR? Then outfit the room in preparation for the procedure.

»Involve the end user at the very start of the project to give a real world perspective for offering scenarios, as well as discussing needs and concerns. This can include nurses, surgical technicians and staff, as well as anesthesiologists.

»Consult with the vendor providing lights, booms and imaging equipment to accommodate all of their needs. For example, many imaging companies have different requirements for ceiling heights.

Hybrid therapies enable hospitals and clinicians to provide less invasive care that is safe and cost-effective for the patient. Careful planning can lead to an effective hybrid operating room design that offers the following benefits:

» Cost-effective operations for patients and surgeons, with better outcomes.

» Reduced stress, faster recovery and reduced hospital stays for the patient.

»Safer procedures, especially in the case of an emergency.

New Bair Paws® Gown Brings “Flex Appeal” to Patient Warming: An Arizant Case Study

The recent Centers for Medicare and Medicaid Services (CMS) adoption of the SCIP-Infection-10 normothermia quality measure has made it more important than ever to simplify the process of warming every surgical patient. Arizant Healthcare’s latest innovation in forced-air warming, the Bair Paws Flex gown, does just that by incorporating a surgical warming product — Bair Hugger blankets — into a comfortable patient gown that warms before, during and after surgery.

While clinical versatility is a key benefit of the Bair Paws Flex gown, so is the practical economic approach of standardizing multiple warming capabilities into one gown that can accommodate most perioperative warming needs. While helping to improve outcomes and boosting patient satisfaction, the Bair Paws Flex gown may save facilities money by supplanting multiple OR warming blankets and the warmed cotton blankets and gowns often used to comfort patients.

Just One Gown Warms From Start to Finish

Before surgery, patients appreciate the Flex gown for its controllable warmth; they can simply dial the temperature of the air flowing through the gown to a level that’s comfortable. The surgical warming products built into the gown are unknown to the patient because they are deployed only by surgical staff.

In the operating room, the same Bair Paws Flex gown offers clinicians the ease and convenience of having multiple patient warming options available during surgery. Seamlessly integrated into the gown are: a head drape, adhesive tape to isolate the surgical field, and deployable arm extensions to transition into a Bair Hugger upper body blanket with tie strips. A second insert in the lower portion of the gown may be used to prewarm before surgery and then warm again as a lower body blanket once in the OR. The gown’s design allows upper or lower body warming for any surgical positioning — supine, prone or lateral.

After the procedure is over, the upper body blanket arm extensions, head drape and surgical tape strip perforate off, returning the garment to a standard warming gown for post-operative use through the lower warming blanket insert.

The Bair Paws Flex gown is comfortable for patients, convenient for clinicians and warms from pre-op to the OR to PACU. Best of all, it’s also economical. One gown handles almost all your warming needs, including contributing to quality goals like SCIP-10 and improved patient satisfaction. It incorporates a highly effective surgical warming device directly into a soft, comfortable hospital gown that does something positive for patients and hospital staff. It’s not just a gown. The Bair Paws Flex gown is a patient warming and patient satisfaction tool. It’s the future of patient warming, and it’s available today.

Practicing Arthroscopic Surgery on Computers, Not People: A Toltech/Sensable Case Study

Learning diagnostic knee arthroscopy is not unlike learning to play the violin — both art forms require a mixture of cognitive and proprioceptive skills that can only be developed through rigorous practice. And while both require intensive mentoring, surgical apprenticeship is unique in its resulting increase in operating room time and potentially patient risk. Just as with a violin that makes no sound, little can be learned from surrogate surgical environments having no objective feedback, including costly and labor-intensive cadaver training. And little transference of either skill can be expected from computer based training lacking the feel of the instrument(s).

In late 2009 the University of Michigan Medical Center’s Orthopaedic Surgery department, led by James Carpenter, MD, became an early adopter of the Knee Arthroscopy Surgery Trainer (KAST) from Touch of Life Technologies (ToLTech). This simulator was co-developed with the American Academy of Orthopaedic Surgeons (AAOS), Arthroscopy Association of North America (AANA), and the American Board of Orthopaedic Surgery (ABOS). It provides both cognitive and haptically-enabled skills training for the proper and efficient techniques required for diagnostic arthroscopy of the knee as done on an outpatient basis — including training to competency, and a modality for complete evaluation of residents’ skills.

In the KAST simulator, trainees hold a customized stylus in each hand — emulating the probe and camera used in actual surgery — that are attached to PHANTOM® force-feedback haptic devices, made by SensAble Technologies. The haptic devices allow trainees to navigate in true 3D space while interacting with high-resolution models that are viewed on-screen, as if through an actual arthroscope. The force feedback devices are programmed to push back on the user’s hand to deliver the “feeling” of the soft tissue, cartilage, and ligaments involved in knee arthroscopy.

The “Virtual Mentor” in KAST guides, critiques, and scores the resident on each part of the procedure. In one module, trainees must perform three steps for examining the medial meniscus with a probe. The Mentor requires the trainee to score 100 percent on each step before attempting subsequent tasks, and finally a time-trial. A special “cheater view,” only available at the novice level, shows the outside image of the knee (seen in the right hand portion of the Mentor screen), to help residents understand where the tools they are using are located with respect to the anatomy. KAST switches seamlessly between a right and a left knee, forcing the trainee to be ambidextrous with respect to the camera and probe.

Haptically-enabled surgical simulation provides cognitive and skills-based training — freeing up the outpatient facility’s attending physicians to teach higher-level skills, and giving residents unlimited autonomous practice opportunities. It allows residents’ skills to be objectively measured and validated before they undertake procedures on patients. The University of Michigan Health System’s Orthopaedic Surgery department plans trials comparing beginning residents who have trained on KAST, against a control group. Separate validation studies led by the AAOS using KAST are underway nationwide during 2010.

In The Eye of the Political Storm: N.J. Association Advocates for ASCs

Throughout the country, ambulatory surgery center (ASC) associations are fighting back against assaults on their industry. No association has fought harder than the New Jersey Association of Ambulatory Surgery Centers (NJAASC), which has been at the eye of the storm in the attack on physician ownership and referrals. The NJAASC works closely with other specialty medical societies and healthcare groups, and its board is composed of physicians who have ownership interests in ASCs as well as ASC administrators and ASCs that are co-owned by physicians and development companies.

One issue that has taken precedence lately is a recent New Jersey Superior Court decision adopting a strict interpretation of the state’s anti-kickback statute. A Nov. 20, 2007 ruling, Joseph Garcia, MD, et al v. Health Net of New Jersey, Inc. v Wayne Surgical Center, LLC, established that referrals of a patient to an ASC in which the referring physician owns an interest violate N.J.S.A. 45:9-22.5, known as the Codey Act. This ruling prohibits a physician from referring a patient to a healthcare service in which the physician has a significant beneficial interest. The statute contains an exception for physicians who provide the patient with a written disclosure form and post this disclosure form in a conspicuous public place.

The Garcia case had been on appeal; at press time in late November, the Appellate Division upheld the trial court’s determination that Wayne Surgical Center (WSC) and its physician owners did not violate the Insurance Fraud Prevention Act (IFPA) because they failed to disclose that WSC frequently waived collection of co-insurance due on WSC’s facility fees. Further, the Appellate Division held that there is no New Jersey rule, regulation or directive from any administrative or licensing agency barring the waiver of co-payments or other co-insurance amounts. In support of its decision, the Appellate Division noted that WSC required each patient to sign a form stating that “he or she is fully responsible for 100 percent of the center’s charge.” And further, that at the time claims were submitted, WSC did not know whether it would enforce the patient’s agreement to pay co-insurance.

In March, then-New Jersey Gov. Jon Corzine signed Senate Bill 787, amending the state’s existing physician self-referral statute and significantly changing how ASCs are regulated under state law. In short, the law disallows new ASCs unless an exception applies; allows hospitals to establish new ASCs and enter into ASC joint ventures with physicians or other parties; prohibits indirect referrals from physician owners to their ASCs; requires certain state reporting requirements; and requires accreditation of all ASCs.

Helping the NJAASC navigate this political minefield is attorney John D. Fanburg, managing member of BrachEichler LLC and chair of its Health Law Practice Group. He recalls how he and the NJAASC sprang into action that fateful November more than two years ago: “After reading the decision, we immediately communicated with all of the key people in New Jersey to begin to right the wrong. One of the first calls we made was to Sen. Richard Codey’s office, since he was the author of the original bill, to begin to explain to him what the judge ruled in the Garcia case and how contrary it was to what we believe his original thinking was when he passed the law in the 1990s. We spent the next several months talking with him and also spent time with the state Board of Medical Examiners. We finally got to the point where the bill came up through the Legislature and was then signed by the governor this past March.”

Fanburg acknowledges how the bill split the physician community: “There was great debate as to whether the bill should or shouldn’t go forward, and should it have a grandfather clause, which it did. The radiology society at the time felt it was a good bill and that it should proceed because self-referral was bad. The medical society fought it and ultimately the compromise was that if you had an ownership interest prior to the effective date you could continue to own it; going forward, however, you were prohibited unless you met one of the several exceptions. Questions to the Board of Medical Examiners increased as ASCs began to proliferate and they were deemed and utilized as an extension of the practices. We went to the board and said, ‘Hey, this is what’s going on, would you agree with us that this is an extension of an office and the Codey prohibitions don’t apply,’ and they agreed. Then you had changes on the federal level; when the Feds took the view that an ASC, if structured the right way, would indeed be viewed as an extension of the practice, it added to the proliferation of surgery centers. In time, you have a surgery center on every block and hospitals feel they are being economically challenged by that. So now here we are on the cusp of 2010, and due to the political implications of further ASC development, the hospitals were able to convince the legislators to allow no more ASCs, unless you meet an exception, or you filed your plans in September, the last chance to get a surgery center built.”

The next step for the NJAASC, Fanburg says, is to get involved in the drafting of the rules and regulations associated with the amended Codey Act. “The way the statute is written, it covers the jurisdiction of two of our administrative agencies — the Board of Medical Examiners and the Department of Health and Senior Services,” Fanburg explains. “When a statute is passed, depending on who and what it impacts, these two administrative agencies need to draft, propose and adopt regulations that are used to interpret the statute. So we really won’t know how the exceptions are going to be narrowed or broadened until these agencies do so. We are going to be very active in the development of those rules and regulations, and being involved in that process is better than being shut out. Because of the relationships we have and all of the work we have done over the years, they know that they need to run things past us before they propose them.”

As far as the Codey Act amendments having a chilling effect on ASC development elsewhere, Fanburg says he thinks it will depend upon the political strength of hospitals versus physicians. “Different states may very well look to this to either curtail ASC development or to expand it,” he says. “And that’s something we were well aware of and that’s why we brought in the national ASC Association for its input and support. What happens here could happen elsewhere.”

Just what happens from here is anyone’s guess, but Fanburg believes there may be an acceleration of the development of hospital co-ventured ASCs. “If I were developing a surgery center in the northern part of the state, I would find a hospital in the southern part of the state and say, ‘Why don’t you own 10 or 20 percent of this thing — I am not in your geographic catchment area but these things are profitable; I can only do it if you’re a co-owner, so join me.’ You will probably see more of these kinds of relationships, so surgery centers will continue to proliferate for the sake of quality, efficiency and patient convenience. And maybe this is a product line that hospitals can’t be or shouldn’t be in anymore. I think hospitals must rethink what types of services they can provide. There are quite a few joint ventures between hospitals and physicians in ASCs currently; that’s something many physicians want to continue to do. They recognize an ASC’s economic impact on a hospital and out of loyalty and support they say, ‘We’re going to impact you, we don’t want to kill you, so why don’t you participate with us,’ and many hospitals have taken them up on that offer.”

In addition to working on regulations associated with the Codey Act, Fanburg says the NJAASC has a number of priorities on its agenda, including fighting off an assault by insurance companies on out-of-network providers. “We are very busy right now,” Fanburg says. “We are not resting at all because we think the ASC industry is going to continue to be under attack by hospitals as well as those who feel threatened by ASCs. It’s pretty much a 24/7 job.”

The importance of persistence in any advocacy effort is not lost on the NJAASC. Nor should it be on any ASC owner/operator anywhere else in the country, Fanburg says. “Advocacy by everyone in the industry is critical because the political arena can be where your business is going to be impacted,” he says. “Here in New Jersey, people are surprised at how accessible their local legislators and regulators really are. If you want to go the extra yard you have to be part of an ASC organization so you can be heard on a larger scale. If you don’t do it, your adversaries will, and the people who are going to be making decisions impacting your business are not going to have the benefit of your viewpoint. If you are in business, you have to become involved in politics and advocacy.”

Growing a Grassroots Advocacy Effort

By Kelly M. Pyrek

You first met Marcy Sasso in the December issue of SurgiStrategies; she’s the director of operations at the ASC of Union County in Union, N.J. Sasso has become a seasoned political activist on the behalf of her center and other ASCs in New Jersey, and was successful in launching a political coalition in her region, the Surgery Center Coalition (SCC).

“I knew I needed to become active in the industry when a colleague of mine said she felt we were isolated in the larger New Jersey ASC industry,” Sasso recalls. “We started our grassroots group, the SCC, in her waiting room as a place to share ideas in the day-to-day running of an ASC. We had discussions regarding a number of topics such as inspections, vendors, HR issues and policies and procedures. Word of mouth had our group growing and meeting more frequently. We outgrew her waiting room and with our membership at 70 strong, we found ourselves in the conference room of our generous attorney Bob Towey of Lowenstein & Sandler.”

Sasso continues, “Over the past four months we have not been able to have our usual day-to-day conversations, but rather we found ourselves immersed in the out-of-network (OON) issues facing New Jersey. Our meetings focused on reduced insurance payments, denials, threats to terminate participating physicians, etc. I personally couldn’t sit back and watch things get worse and felt that members of our group were smart and highly dedicated to the philosophy of ASCs, and so from there our advocacy meetings took shape.”

Sasso says she met with two state senators to provide them an educational overview of New Jersey ASCs’ concerns. “They listened and suggested that our ASCs have a louder voice,” Sasso says. “The ASCs and hospitals are really not on the same sides in business; having said that, the insurance carriers end up having to choose sides. The hospitals have lobbyists with louder voices and overpower the ASC industry. So getting our legislators involved is pure necessity. The insurance carriers want to do away with OON facilities, and want the selected centers to be on their panel as in network providers. With more than 300 centers in New Jersey, I personally felt that many centers would never be asked to be on their panel for various reasons and thought 2009 is the time to make a difference in our industry.”

Sasso says she believes that persistence is the key to any grassroots work. “Believing in your cause is essential,” she emphasizes. “Joining your state and national ASC associations will prove to be effective for networking and spreading your message. Stand up to the insurance carriers, and ask questions. Insurance carriers can be powerhouses but the ASC industry can prove itself to the consumer by continued low infection rates, excellent patient satisfaction rates, efficient turn-around times and cost effective rates! I believe in our industry and all of our employees nationwide need to have their voices heard. Why are we here? Because we can provide a service that the consumer requests!”

BCBS Massachusetts contributed $1.6 billion to state economy

An economic impact analysis found that Blue Cross Blue Shield of Massachusetts’ (BCBSMA) contributed nearly $1.6 billion to the Commonwealth’s economy.

Similarly, the Economic Impact Study, conducted by Tripp Umbach, found that BCBSMA contributed 5,856 jobs to the economy in positions that span the entire economic spectrum. The direct benefits reached across the commonwealth in 2008, including direct contributions of $5.2 million to more than 470 charitable organizations.

“BCBSMA felt it was important to conduct this study to track the company’s overall economic impact,” says Jay McQuaide, vice president of corporate communications for BCBSMA. “It is also important for members, customers and the community to have a better understanding of BCBSMA’s impact to the economic health and well-being of the region as a not-for-profit business.”

The impact is more than commercial, according to McQuaide. He says philanthropic efforts, tax dollars and investments in transformational initiatives make healthcare more affordable and accessible.

One of the most promising ways to slow the rise in healthcare costs is to improve quality, and the overuse, underuse and misuse of healthcare services.

“Research shows that approximately one-third of all healthcare spending is wasted on care that is medically unnecessary and potentially harmful,” he says. “By making investments in transformational initiatives that will help eliminate waste, duplication and inefficiency, the healthcare industry can work together to improve the quality and affordability of healthcare.

For example, the report singled out: $590 million in incentives to physicians and hospitals to improve quality and effectiveness; $60 million in community initiatives such as the Massachusetts eHealth Collaborative; and $9 million to collaborative efforts such as Healthcare Administrative Solutions Inc., a non-profit working to reduce administrative complexities.

Of note in the Economic Impact Study was that in addition to the $39 million BCBSMA paid in taxes to the federal government, the report found that despite BCBSMA’s not-for-profit status, the company contributed nearly $217 million in revenue to state government last year.

BCBSMA also created the Alternative Quality Contract, a provider contract model that combines two forms of payment: a global payment adjusted for health status, which increases annually in line with inflation; and performance incentives tied to measures of quality, effectiveness, and patient experience of care.

Pleasing Your Surgeons

Pleasing the surgeons of your facility needs to be the number one priority for any staff member.  I say this is number one because they are the ones that bring the patient (who is in close competition for being in that number one position).

In our facility our surgeons don’t need a lot of the visible perks to make their day easier and their return quicker.  The belief around here is that they are our number one customer and should be treated as such.

Customers in the retail business expect to be treated in a certain manner.  In the retail business customers return when they are treated with respect, their purchases are treated with care, and their time is treated as being valuable.  This comparison can be seen as the surgeon’s “retail” experience.  Respect is seen when you make them feel welcome each day, let them know that you are here to help them get the job completed efficiently, and that the staff is knowledgeable.  The patient can be seen as the surgeon’s “purchase”.  The patient must be treated with care and concern.  Each patient must feel that they are safe during their visit.  A surgeon is very pleased and proud when his patient says that they would return to the facility if needed.  They know that the staff treated the patient with care.  Time is very valuable to any person.  To get in and out of a business with the items you came for and little time is spent “waiting in line” speaks wonders.  Quick room turnover time speaks wonders for your surgeon!  The surgeon sees this as efficiency and realizes that each staff member is doing their part in making sure that time is treated as valuable.

The surgeons at our facility are seen as our number one customer.  Customers in any business must be treated with respect and know that their time is valuable.  By making these the “perks” to their day they will continue to return.

Green initiatives growing among healthcare facilities

From Recycling and waste management programs to nontoxic paint and permeable pavement, hospitals across the country are implementing green initiatives to produce healthier environments for patients and staff, which they say saves not only energy, but money.

Among several provider facilities going green is Stony Brook University Hospital, in Stony Book, N.Y., which recently signed an agreement with the U.S. Environmental Protection Agency (EPA). The agreement outlines energy and water conservation, waste management and the use of environmentally friendly products, and the hospital is currently auditing areas to reduce energy consumption.

“A hospital is unique in that it’s a structure that operates 24/7,” says Andrew Bellina, EPA program coordinator, “So, there are opportunities for powering down in many areas of the hospital that do not impact the people that are working or the care of the patients.”

He says the EPA is helping Stony Brook through the audit as part of its Energy Star program, which strives to reduce energy by 10%.

In addition, the hospital is taking on a number of initiatives designed to reuse materials and reduce material waste. For example, staff has eliminated the blue, disposable wrapping used for sanitary operating tools, says Bellina. Tools now arrive in reusable containers.

However, he notes, the hospital has to evaluate recycling from a practical standpoint while also maintaining strict accreditation standards. Even so, recycling at the hospital increased by about 420 tons in 2007 and 2008, and it is expected to be higher this year.

“It significantly affects your carbon footprint when you recycle waste instead of just throwing it out, because you don’t go through the actual mining, the treatment, the procurement, the manufacturing and the transportation,” he says. “You’re cutting all that out.”

Water conservation is another important aspect of the agreement struck with the EPA. Bellina notes water supply costs recently increased 20% in New York City. He predicts water shortages in as many as 36 states in the next three to five years.

The hospital is looking to conserve water in two ways. First, captured storm water can be reused for non-contact functions, such as watering lawns and landscaping. Second, he says, it will be important to reduce demand for water. The hospital is monitoring water use with equipment that limits water flow and reduces total use.

Going green will definitely show a return on investment in the long run, and in most cases, produce immediate savings, Bellina says.

“Five years ago it [going green] would have cost you money, and the payback would be seven, 10 or 12 years, but now there are immediate cost savings. For example, recycling is an immediate cost saver,” he says, “And you reap the economic benefits through the lifetime of the structure after that.”

Determining effects on the quality of care is not as easy, he says, but he postulates that once the hospital’s energy audits are complete and the air handling is upgraded to a more efficient mix of outdoor and indoor air, the quality of air will improve within the hospital. Better air means better health, especially for those who need respiratory care.

EAST CAROLINA HEART INSTITUTE

The East Carolina Heart Institute, which is attached to the Pitt County Memorial Hospital in North Carolina, has implemented both green and general health ideas into its structure, including ergonomic equipment, natural light and an energy efficient utility plant.

The structure has only been open for a year, but was built with energy efficiency in mind, according to Brian Floyd, executive director of the Heart Institute. It also contains recycled materials in the carpet as well as in bathroom, kitchen and ceiling tile.

Natural lighting is one feature that overlaps in the green movement and healthy hospital movement. An effort was made to light the Institute with large windows in patient rooms, physician work areas, waiting rooms, lobbies and cafes.

“Many studies show that people recover faster when they have access to sunlight, and we want to make people as comfortable as possible and acclimate them to the day and night cycles so they can heal faster,” Floyd says.

It also requires less energy to light the facility during the day. With the help of sensors, artificial lighting turns on only when someone is in the room and dims when natural light levels are adequate.

The utility plant powering the Institute operates on energy efficient air conditioning chillers, high-efficiency electric motors and variable-speed pumping and air flow systems, according to Floyd.

The monthly electricity expenses at the Heart Institute have averaged 30 cents per square foot, or $142,000 per month, since opening in January 2009, according to James Ryals, Media Specialist for the Heart Institute and Pitt County Memorial Hospital. To compare, over the same period, monthly electricity expenses in the main hospital have averaged 45 cents per square foot, or $533,000 per month. The main hospital was built in 1977, and is twice as big as the Heart Institute, says Ryals.

“The per-square-foot figures are a better basis for comparison than the monthly totals,” he says. “It’s safe to say that, with the efficiency measures we’ve taken, our power expenses at the Heart Institute are roughly 33% lower than the main hospital.”

Certain intangible cost savings, such as worker productivity, are harder to define, says Floyd, but he has noticed that retention of staff is higher and length of patient stays are shorter.

KAISER PERMANENTE MODESTO

Kaiser Permanente’s Modesto Medical Center in California is a pilot model for green healthcare facilities aimed at improving public health, according to John Kouletsis, national director of strategy, planning and design for Kaiser. The center is equipped with everything from solar panels on the roof, rubber flooring instead of vinyl inside the hospital and permeable pavement in the parking lot.

“We’re always looking at public health,” says Kouletsis, “so, to me it’s probably the least obvious things that I think are the most dramatic and the most impressive.”

Those not-so-obvious endeavors include eliminating toxicants from paint and upholstery and eliminating polyvinyl chloride (PVC) from flooring and carpet. There is a case for patient care: When a vinyl floor is cleaned, aerosolized particles release into the air and become asthma triggers.

“It’s ironic, because [these steps are] not very sexy, they’re not very eye-catching, but they actually have a much bigger impact on keeping people healthy,” he says.

At Modesto, calculating all the sustainable strategies show a cost savings of roughly $400,000 over what would have been spent on a typical project without those sustainable elements, Kouletsis says.

“A long-term savings in terms of public health is incalculable,” he says.

Kaiser looks at sustainability through a different lens than other providers, says Kouletsis.

“Our lens has to do with patient safety and workplace safety, and what we’ve discovered is that if you look through these two lenses first, you almost always get to a sustainable product,” he says.

Quality Models

Five years ago, Aetna and several large employers confronted Virginia Mason Medical Center in Seattle over how much it was charging for treatment of migraine, severe acid reflux and narrowed aortic valves, and other conditions. Virginia Mason, a not-for-profit hospital system that employs about 400 salaried physicians, took the message to heart.

Working with the employers and Aetna, doctors and staff began to re-engineer care protocols. For example, the system ensured back pain patients same-day access to a physical therapist and physical medicine physician and sharply reduced medically unnecessary MRI tests and physical therapy visits. From 2004 to 2007, the changes yielded a 50% reduction in lost employee work days due to back pain, almost $2 million in cost savings and high patient satisfaction scores.

Following the overhaul, however, Virginia Mason’s spine clinic was losing revenue because of fewer billed tests and services. To offset the loss, Aetna boosted reimbursement for appropriate physical therapy sessions. With the higher payments and the greater volume of patients it could handle under the more efficient system, Virginia Mason covered its costs—while payers achieved a significant net savings.

President Obama and health policy experts have specifically touted integrated delivery systems, such as Virginia Mason, Geisinger Health System, the Mayo Clinic and others, as national models for innovation. Dartmouth University researchers have found, for instance, that Mayo spends one-third to one-half less than other top hospitals to care for similar patients with equal or better results.

Geisinger has gotten so much attention from politicians that it reportedly hosted tours for more than 70 visiting payers and providers last month.

Leaders of integrated delivery systems say the model won’t work just anywhere. It’s challenging to build a culture of high quality and low costs through contractual relationships. Independent delivery markets don’t have the dynamic of salaried doctors and instead must manage the powerful fee-for-service forces.

Robert S. Mecklenburg, MD, medical director of the Center for Health Care Solutions at Virginia Mason, says his system’s experience shows how health plans and employers can benefit from collaborating with an integrated hospital-physician group. But, he adds, moving away from fee-for-service to payment models that reward better patient outcomes, higher patient satisfaction and lower costs is key.

“[Innovative providers] want to be paid for value,” he says. “That’s very important in straightening out U.S. healthcare.”

Mayo Clinic CEO Dr. Denis Cortese describes integrated systems as having high levels of physician engagement, teamwork, connectivity and greater use of industrial efficiency and quality controls. All this is hard to achieve in contracted networks.

At the same time, experts say, non-integrated systems haven’t felt the pressure—or been given the financial incentive—to change because payers have been slow to revamp payment methods to encourage coordinated delivery. The current fee-for-service model simply rewards greater volume of services.

So far, Dr. Mecklenburg says, no health plans have agreed to pay Virginia Mason based on actual patient outcomes, except on a temporary experimental basis. He believes the system should realize a positive margin when it meets its quality targets.

“You won’t get system reform without changing the reimbursement dynamics,” says Andrew Webber, president of the National Business Coalition on Health in Washington, D.C. “I’m sure the leaders of integrated delivery systems are frustrated with the current payment system.”

ALIGNMENT OF INCENTIVES

At the state level, Massachusetts, with its individual mandate, now is eyeing a shift from fee for service to bundled payments to control spiraling costs.

In line with that, Blue Cross & Blue Shield of Massachusetts continues to leverage its Alternative Quality Contract with episode-based global payments, which pushes providers to work together on improving patient outcomes and cost-effectiveness, according to Jim Conway, senior vice president of the Institute for Healthcare Improvement in Cambridge.

The alternate contract sets specific outcome measures provider groups must achieve in managing patients with chronic conditions. For the first few years, provider groups won’t face financial penalties as long as they meet the process standards, but down the line, they’ll take a financial hit if they don’t meet the outcome targets.

“It took a while for the first hospital and physician group to sign up,” Conway says. “But now a lot of people are signing up because they see this as the direction the industry is going—away from fee for service to a system that takes care of overall global health.”

In other parts of the country, Blue Cross & Blue Shield of Minnesota also has started paying providers for care of the whole patient rather than for specific services, Conway says.

Self-insured employers are testing new reimbursement approaches as well.

Members of the Colorado Business Group on Health are paying providers additional reimbursement on top of fee-for-service payment to manage the care of diabetics and other patients with chronic conditions, according to Webber. They’re using a program developed by the Bridges to Excellence industry partnership. Similarly, the Employers Coalition on Health in Rockford, Ill., is experimenting with paying providers a bundled case rate for patients with chronic conditions, using the PROMETHEUS Payment System, of which Bridges to Excellence is the operational partner.

Webber says health plans and employers should offer financial incentives to patients to get their care from integrated systems, taking advantage of emerging value-based benefit designs.

“There will be opportunities to say to patients, ‘We’re willing to reduce your premium share if you’re willing to participate in more integrated, high-performance delivery systems,’” he says. “I think more and more consumers would be willing to join more closed-panel systems if they could reduce their premium share. Then we can reward high-performance providers in two ways: with payment differentials and with more patients.”

HOME TEAMS

Some health plans and employers around the country are working with provider organizations—and even small physician practices—to support the emerging patient-centered medical home model.

In the model, a primary care physician leads a team of allied health professionals to provide or facilitate each patient’s care needs, including self-care and prevention. The team uses data to proactively manage care for its entire patient population as well.

The Geisinger Health System in Pennsylvania and Group Health Cooperative, a Seattle nonprofit health plan that employs salaried doctors, have reported that their medical home pilots have reduced emergency room use and preventable hospital admissions, improved outcomes for chronic care patients and boosted patient satisfaction. They’re expanding the model to all primary care sites, but it’s costly to properly staff, train and equip practices to become effective medical homes. The practices must be adequately reimbursed to cover the extra patient management services and the forgone fees for service.

Health plans and Medicare have moved slowly on implementing the model, waiting to see evidence of cost savings and quality improvement.

“The medical home is a very important element, and we need to reward primary care doctors, because this can move us toward more integration of care,” Webber says.

Beyond the medical home initiative, Geisinger Health System has taken another step in aligning payment. The not-for-profit system, which includes three hospitals, a multispecialty group practice with 700 doctors and a health plan, is beginning to re-engineer care protocols, starting with coronary artery bypass surgery. Its payment methodology for the re-engineered services, called ProvenCare, bundles comprehensive care for the procedure at a fixed price, instead of piecemeal services and costs. Essentially, by bundling services and paying a flat rate, some risk is shifted to the provider, so it’s in the provider’s interest to deliver the best care, not more care.

Geisinger and its doctors identified 40 factors that produce the best outcomes for bypass operations and built a checklist that ensures those best practices are performed every time. Since its redesign went live early in 2006, Geisinger reports markedly improved patient outcomes for bypass surgery, including a 44% reduction in the 30-day readmission rate, a 21% reduction in patients with any complications, and a 55% reduction in re-operations for bleeding.

Geisinger similarly has redesigned care for hip replacement, interventional cardiology procedures, cataract surgery, obesity surgery and perinatal care.

Duane Davis, MD, chief medical officer of Geisinger Health Plan says Geisinger has gotten a “marketing buzz” out of ProvenCare. Employers like the fact they pay once for the product, just like for other goods and services. But surprisingly, no other health plans have taken Geisinger up on its ProvenCare guarantee deal, except for Geisinger’s own plan. Dr. Davis says he isn’t sure why that’s the case.

“That’s stupid,” says Jeff Goldsmith, a veteran industry forecaster based in Charlottesville, Va. “If a provider group is organized well enough to give you a guarantee they won’t have to readmit, I would rush to sign a contract like that. Maybe some attitudes need to change.”

Goldsmith says that health plans and provider organizations are leery about working together on global payment contracts because of the disastrous experiences with capitated contracts back in the 1990s. Many physician groups and hospitals formed joint ventures to accept these fixed-fee deals and suffered big losses. New structures aim to even out the economics with gainsharing.

WATER UNDER THE BRIDGE

However unfortunate, private practice is collapsing, and more hospitals are employing doctors and creating their own multispecialty, integrated delivery systems. That, Goldsmith says, will allow hospital systems to manage care with their employed doctors. Likewise, health plans may be ready to return to working with provider groups to manage their patient populations because current cost-control methods, such as external utilization review and patient cost-sharing, aren’t sufficient.

“I can’t tell you whether that mindset has changed and whether plans have decided they’ve run out of tricks and are ready to return to working with providers in a constructive way,” Goldsmith says.

Scott Armstrong, president of Group Health Cooperative, says, “our whole industry is in the process of trying to come up with an answer to how health plans can work with providers. How can [global payment] create alignment around common goals? We have to overwhelm the skepticism based on bad experiences in the past.”

Even beyond that, however, Geisinger’s Dr. Davis says it’s going to take time to make healthcare better and cheaper. While integrated systems like his offer important lessons, there are no “big bang” solutions. The primary care medical home is a good place for health plans to start aligning payment incentives for improved care.

“There’s a huge opportunity for the insurance industry to use its skill sets and work in partnership with the clinical side to coordinate very fragmented care,” he says. “If we don’t figure out how to do primary care and coordination better, in the long run, payers will lose anyway.”

While private-industry payers can work on reducing fragmentation, government-supported coverage continues to face budget challenges. As a result, even the highest quality, most efficient providers stand to lose further reimbursement as rates decline.

The Mayo Clinic announced early last month that its Rochester, Minn., clinic, which has treated patients from the Midwest and West, will only accept Medicaid beneficiaries from Minnesota and the four states that border it. Meanwhile, its Arizona location no longer accepts Medicare for patients seeking primary care at its Glendale facility after reviewing results from a two-year pilot project. Mayo leaders made the decisions to limit service based on the low payment rates in Medicare and Medicaid.

Turning Data Into Insights: The Power of a Centralized Data Warehouse

Have you ever asked your information technology (IT) group for the answer to a question, only to receive an inadequate response (or no response at all)? It’s hard to fault the personnel. IT departments in the healthcare world are all too often over-tasked and understaffed. Typically, they are too busy with daily operations and systems maintenance to deal with requests that fall outside their normal duties. Items found on the chopping block often include marketing initiatives and/or requests for business intelligence.

To remain competitive in an increasingly competitive healthcare industry, organizations need high-level answers and in-depth insights — about patients, about the physicians they work with or the physicians that refer to them. How can you get the information you need to make key decisions on a day-to-day basis?

For many healthcare providers, the solution is a centralized data warehouse that stores a wide range of electronic information, from patient records to marketing data. As providers throughout the country look for ways to optimize American Recovery and Reinvestment Act (ARRA) funds earmarked for healthcare IT, this is the perfect time to take a close look at data warehousing and the benefits it provides.

The components of a data warehouse

If your organization is like most, you compile massive amounts of data but do very little with the information. By centralizing all of your data in a single place, you’re in a position to extract insights that can be valuable in many areas, including patient retention, reactivation and acquisition. Most data warehouses include the following:

» Patient records

» Inbound marketing data, including call centers and Web sites

» Donor and fundraising data

» Physician information

Every day, healthcare professionals use science as the basis for medical care and treatment, yet the vast majority of organizations are only beginning to infuse science into marketing efforts, market planning processes and in driving answers to key business questions. Just as data can drive better medical decisions, it can lead to greater effectiveness and efficiency in other organizational functions.

Who are your patients?

One of the biggest benefits of a centralized warehouse of data is the incredibly accurate picture it provides of your patient base. Many healthcare executives presume that they have a clear view of their patient population, only to be surprised by what the data reveals.

By linking your patient records with information from external databases, you can develop a precise picture of who your patients really are, including the demographic, financial and behavioral characteristics that set them apart from other patients in a market that you currently serve. You can also understand the differences between your “best, average and worst” patients and “best, average and worst” referral sources, whether it be system-wide, facility specific or within targeted service lines/specialties.

In addition, by having all of your patient records in one place, you can capture information at every touch point — from pre-op visits to surgeries, from phone calls to Web interactions.

Turning raw data into marketing insights

Once you have all of this information, what can you do with it? A data warehouse provides benefits in many areas:

Acquire new patients and new referrers. Once you know the profile of your best patients and best referral sources, you can examine your markets of service (or future interest) for people that “look” just like them. As a result, you’ll know exactly who should receive your marketing messages and who should not. The more targeted your prospect list, the greater your return on investment (ROI).

Retain your best patients. You’ll know who your best patients are, based on metrics and evaluation methods that are important to you. This will allow you to optimize your efforts to have them come back when next they may need your services.

Maximize marketing dollars. By truly knowing the target patient population and the target referral sources that you are after, your media plans will have less waste and higher return.

Minimize patient churn. Analysis of data can be useful in predicting those patients that are likely to churn. This proactive information allows you to have strategies in place to communicate with these patients before you lose them.

Develop long-lasting patient relationships. Once you attract new patients into your network of care, it is critical to convert them to life-long patients. Data warehousing allows you to drill down and filter information to yield valuable “business intelligence.” For example, you’ll know how much you’re spending on patient acquisition, and how long it will take to break even on new patients. You’ll also know how much annual revenue comes from top-tier patients and the average patient value at different stages of the patient relationship.

Ease the burden on your IT department. In most healthcare organizations, the IT department is simply not equipped to perform the level of analytics needed to solve for marketing, market planning and business intelligence questions. By outsourcing this work to experts, you can enable your staff focus on what they do best while gaining the insights that you need.

For healthcare systems, the time is now.

As networks of all shapes and sizes continue their EMR conversions, the benefits of housing all pertinent information in a singular location will become increasingly evident. Those proactive providers that factor a data warehouse into their current and long-term processes will remain on the leading edge of the industry – and far ahead of the competition.

Ken Rabinoff-Goldman, DC, is vice president of Buxton – HealthCareID and is responsible for business planning, market development and sales focusing on superior site selection, targeted marketing and other strategic planning tools for the healthcare industry. Having served patients at his private practice in Albany, N.Y., for 22 years, Rabinoff-Goldman contributes greatly to Buxton’s executive medical experience by helping understand the needs of clients in the healthcare field.

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