The past year has again been one of significant upheaval in the local hospital industry, as hospitals addressed a host of challenges precipitated by an uncertain fate of health care reform, a prolonged recession and the need to offset higher costs to invest in the future delivery of medical care.
Perhaps more than ever, hospitals and health systems are closely examining how to improve quality while reducing spending. Trends include more consolidation, efforts to reduce avoidable readmissions, and a focus on care coordination.
There is a backdrop of uncertainty in the industry as hospital executives await the fate of health care reform. All eyes continue to watch the federal government and its Patient Protection and Affordable Care Act, awaiting updates on the potential impact of continued deficit reduction talks in Washington. At year-end 2011, Congress reached agreement for a two-month extension that prevented a 27.4 percent cut to Medicare physician payments scheduled to take effect January 1. Given that Medicare and Medicaid currently reimburse hospitals less than the cost of providing services, further budget cuts would have significant negative impact on local hospitals, many of which are already under considerable financial pressures.
While certain aspects of health care reform remain uncertain, Tristate hospitals have been actively preparing for what is a predictable future – a continued shift from fee-for-service to payment models that are based on outcomes.
Care Delivery and Payment Reform
The health care law adopts several key delivery system reforms to better align provider incentives to improved care coordination and quality. These reforms include: value-based purchasing that rewards or penalizes providers based on their performance relative to quality, patient safety and effectiveness metrics for hospitals; voluntary pilot projects to test bundled Medicare payments that consolidate payments for services delivered across an episode of care as a way to encourage hospitals and doctors to work together to hold down costs and improve care; and voluntary pilot programs where qualifying providers including hospitals can form accountable care organizations and share in Medicare cost savings.
Hospitals and health systems in Greater Cincinnati are developing internal strategies and evaluating various pilot opportunities to determine whether their organizations want to pursue any at this time.
In the meantime, Greater Cincinnati insurers, businesses, the Health Collaborative, HealthBridge, safety net organizations, the Health Council and a group of area hospital/health system leaders are working together to establish an infrastructure that would support new approaches. They are also developing a regional strategy to specifically prepare for payment reform and exploring the readiness and willingness of Greater Cincinnati to apply for federal payment initiatives.
The national and local trend of hospitals and health systems joining with primary care physicians remained strong in 2011. Locally, changes in hospital system organizational structures and ownership, combined with the growing trend of hospital alignment with physician practices, are transforming the region’s health care system. Some of the reasons for this trend are: a desire to have resources that span the entire delivery of health care as a means to improve quality and care coordination; to prepare for future payment reform models that emphasize care coordination; to rely on interoperable information systems; and to provide a referral pipeline.
A look at the local health care environment reveals the following:
Work force. What one health care forecaster calls a “human resource crisis of unprecedented magnitude” is awaiting the health care system when baby boomer caregivers leave their jobs in full force. In the next 10 years, one-third of all physicians will retire nationally and in Ohio, 48 percent of registered nurses are expected to leave the field. Hospitals are working with the Health Council on various fronts to help build a pipeline of future health care professionals. Health care reform and its core focus on improving outcomes and reducing readmissions will require strong clinicians with increased competency. New or enhanced job duties are likely to be required in the areas of consumer health education and case management. And greater collaboration will be required among various disciplines, as well as among care organizations.
Vacancy rates increased 5.2 percent in June 2011, up from 3.4 percent in December 2009 – the first increase since 2007.
Population. With the release of official 2010 Census data, the city of Cincinnati saw a decrease in its overall population figures of 10 percent since 2000. Meanwhile, census figures show that the Greater Cincinnati metropolitan area continues to grow, particularly Butler, Clermont and Warren counties. The number of older residents grew nearly 11 percent (age 65+) and 22 percent (age 85+) in the 10-year period, as baby boomers continue to age and hospitals work to prepare to meet their increased health care needs.
Utilization. While the number of patients coming to Greater Cincinnati area hospitals for treatment had shown consistent slight increases during recent years, 2010 marked the first time in several years that some trends reversed. The number of inpatient discharges, inpatient days and patient days showed slight decreases. The number of inpatient and outpatient surgeries continues to show diverging paths as inpatient surgeries declined but outpatient surgeries continue to rise. ED visits in 2010 were slightly lower than 2009 totals. The number of staffed beds in the area has risen in recent years; the community in 2011 had 4,882 staffed beds.
The local hospital marketplace is experiencing significant change. In terms of new affiliations, Drake Center sold its inpatient rehabilitation services to Birmingham, Ala.-based HealthSouth, and HealthSouth Rehabilitation Hospital now operates those services at the facility. Drake Center, now part of UC Health, continues to provide long-term acute care services on the campus.
UC Health bought The Jewish Hospital’s Avondale medical center and is developing plans to re-develop the campus. Meanwhile, TriHealth purchased the Butler County Medical Center, a 10-bed multi-specialty surgery center in Hamilton, Ohio, which will be consolidated into Bethesda Hospital. Bethesda North Hospital assumed operation of it and will open a 15-bed emergency department in 2013. Also, Lindner Center of HOPE leased a 16-bed inpatient unit and a partial hospitalization program to Cincinnati Children’s.
Southwest Health Care purchased and now owns Brown County General Hospital and changed its name to Southwest Regional Medical Center; in addition, Southwest Regional Medical Center is now an affiliate of The Christ Hospital.
With the purchase nationally of Regency Hospital Company LLC by Select Medical Corporation (SMC), the local Regency Hospital (a long-term acute care hospital based at Deaconess) joined another local long-term acute care hospital, Select Specialty located within Good Samaritan Hospital, to be part of SMC. St. Elizabeth Healthcare has also entered into a partnership with Select Medical to offer long-term acute care at St. Elizabeth Fort Thomas, and the 33-bed facility will be called Select Specialty Hospital.
In addition to changes in affiliation, some new facilities are opening that are improving patients’ access to health services and increasing economic impact and tax revenues. Mercy Health is building a new hospital in Green Township, expected to open in 2013. The Christ Hospital opened an outpatient center in Anderson Township and an urgent care center on Red Bank Expressway in Cincinnati, with plans for another outpatient center on Cincinnati’s west side in 2012. Cincinnati Children’s broke ground on a new outpatient location in Green Township to open in 2013, and McCullough-Hyde Memorial Hospital announced the opening of Brookville Urgent Care. Construction is currently underway for Margaret Mary Community Hospital’s new Physician Center in Batesville.
Deaconess Hospital ended inpatient services as the hospital continued to struggle financially. UC Health – University Hospital signed a five-year lease agreement with Deaconess and has relocated all of its inpatient, outpatient and emergency psychiatric services there.
Financial challenges. Local hospitals continue to face significant financial challenges. Member hospitals had a median operating profit margin of 2.8 percent in CY2010/FY2011, down from 3.4 percent in the prior year. Investments in personnel and assets to upgrade hospitals’ IT infrastructure, in part driven by the move to electronic medical records, is driving up costs as are patient safety initiatives, the conversion to ICD-10, and other factors.
Health information technology. Changes to health care financing and the rise of new payment models means health care providers must leverage their new information technology (IT) systems well to prepare for the future. HIT is a growing piece of hospital facility budgets, as hospitals and health systems across Greater Cincinnati have been busy either implementing new electronic health record (HER) systems or installing new meaningful use-ready versions of existing EHR systems with most planning to apply for Medicare EHR incentives in 2012. The large number of incentive payments will bring a much-needed cash infusion to the region just as the regulations for Stage 2 meaningful use are released.
Health care costs/employers. A difficult economy, combined with uncertainty about the effects of federal health care reform on employers, is causing businesses to tighten up the costs they incur for employee health insurance benefits. In Greater Cincinnati, this focus takes many shapes, among them heightened business interest in collaborative, community-wide efforts to improve quality, cost and efficiency, and a renewed interest in keeping employees well. There is a focus on measuring the return on investment in employee wellness programs. In addition, some employers are looking to adopt a tiered system internally to pass on the bulk of health care costs to their employees by assigning bigger contributions to workers in top salary brackets and offering some relief to workers who make less money.
Primary care and the uninsured. With the massive increases in people expected to gain access to health insurance under federal health reform in 2014 and beyond, the demand for physicians is expected to exceed supply, locally and nationally. To help ease the physician shortage, mid-level providers such as nurse practitioners and physician assistants are becoming somewhat more common in physician practices.
Estimates for adults ages 18-64 in Greater Cincinnati and Kentucky who are uninsured range from 21-32 percent. Area hospitals provided more than $327 million in uncompensated care in 2010, an increase of more than 5 percent over the previous year. The closings and reduced funding in recent years of local health clinics has exacerbated the stress on the region’s public safety net delivery system. A multi-stakeholder group is assessing the region’s current primary care capacity to evaluate current and future needs.
Health disparities. Hospital and health leaders throughout the Tristate are paying more attention to health disparities. Many are involved in the Health Collaborative’s Aligning Forces for Quality effort that is addressing equity and language issues and their effects on quality of care. The Health Council is leading this local effort on behalf of the Collaborative that has standardized collection of REL (race, ethnicity, language) data in the community and is now beginning to evaluate the data. Locally, the Limited English Proficiency Task Force has for years been assisting hospitals to improve services to non-English speaking patients.
Community health. Local hospitals partnered with one another and several other community health organizations to conduct a regional Community Health Needs Assessment. This assessment is crucial, as the economic downturn has made it even more important for hospitals to contribute to meeting community health needs. It will be available to the public, and strategies will be developed to meet the community health needs identified.
Long-term care. According to local experts, increased regulatory demands and requirements governing physician referrals for post-acute services have resulted in an under-utilization of skilled home health services. Meanwhile, nursing homes are adjusting budgets to deal with state and federal reimbursement cuts. Changes such as new payment models are underway in the nursing home sector in our region and nationally.
Nationwide drug shortage. Many hospitals are carefully watching nationwide drug shortages across all treatment categories and establishing plans to counteract possible future shortages, as hospitals across the country are calling on the federal government for help.
Reducing Readmissions and Enhancing Transitions in Care
Tristate hospitals are paying unprecedented attention to quality and patient safety. In particular, they are partnering on numerous projects that address preventable readmissions and care coordination. These improvement efforts involve sharing data with one another, sharing best practices, and using both to guide improvement efforts.
Broader community work is also focusing on improving patient transitions among hospitals, physicians and other community providers. Health information technology is an important component of this work, and HealthBridge, the area’s regional health information exchange, is providing significant infrastructure for the efforts.
Transparency is a cornerstone of quality improvement efforts. Cincinnati area hospitals are leaders in the transparency effort in the state of Ohio having voluntarily and publicly posted outcomes data for a number of years. In 2012, the Health Council is working closely with the Health Collaborative to expand that organization’s “Your Health Matters” website that currently reports physician performance measures to include a variety of hospital measures. Providing consumers “one-stop” access to provider data is the goal of efforts to combine and enhance these reporting approaches.
Tristate hospitals also post such measures on their own websites for the community to view and publicly track progress toward improvement. Information on hospital-acquired conditions became publicly available for the first time through Medicare in March 2011. There are a growing number of requirements to report various measures, and locally discussion continues on the best way to approach all of these expanding calls for quality reporting as future reimbursement will include incentives and penalties based on certain measures. For example, readmissions are a “funding stops, date certain” proposition as October 2012 approaches when new Medicare penalties kick in.