By Dawn Marie Yankeelov
Published in The Lane Report, Kentucky’s state business magazine.
Editor's note: Part 1 of a two-part series examining major trends reshaping healthcare in the commonwealth. This month: new partnerships, the rise of the 'hospitalist,' and Accountable Care Organizations.
Waves of consolidation are sweeping Kentucky's healthcare industry, realigning and repositioning many of the major players. It's a national trend that's picking up momentum since enactment early this year of federal healthcare ref orm aimed at seeking new ef ficiencies for one-sixth of the U.S. economy.
November was a month of big partnership announcements in the commonwealth. Meanwhile two massive capital projects broke ground in the summer and fall are among those not taking part - yet anyway - in the spate of quasimergers. Among the recent flurry of activity were four important announcements in the state:
Senior Vice President of Strategic Planning Tim Marcum said more such acquisition activity is anticipated by Baptist Hospital East, which last month was named as one of 50 top U.S. hospitals f or inpatient cardiovascular services in a Thompson Reuters study. Louisville-based Baptist HealthCare System, one of the state's largest not-f or-prof it healthcare systems, owns f ive acute-care hospitals with 1,500-plus licensed beds in Lexington, Louisville, Paducah, Corbin and La Grange, manages another 300-bed acute-care hospital in Elizabethtown, and own Bluegrass Family Health, a big medical benef its provider in Kentucky.
Alliances, mergers, acquisitions and similar deals are expected throughout the nation in healthcare corridors, particularly among acute-care hospitals, diagnostic imaging and ambulatory surgery centers, HealthLeaders magazine reported.
Bill Altman, senior vice president of strategy and public policy of Kindred Healthcare, another Louisville-based Fortune 500 healthcare company, said all types of af f iliations are being developed with healthcare institutions, specialists and physicians in Kindred's markets across the United States.
"We primarily serve the chronically ill, the acute-care patients who leave the regular hospital setting," Altman said, "and we are seeing an increase in discussions on how to integrate healthcare services and manage transitions. For example, hospitals in general are moving closer to docs. But f or (Kindred f acilities), we must look at market-specif ic answers to ensure the continuity of care."
Kindred, through subsidiaries across the United States, operates hospitals, nursing centers and a contract rehabilitation services business.
The Lane Report asked key hospital players and industry experts throughout the state to identif y and discuss key trends in healthcare - including the f ramesetters and staging areas of the industry around healthcare ref orm. In healthcare ref orm staging, highlights include:
Disappearing are the days where the f amily physician f ollows patients at the hospital. Already entrenched in some healthcare settings and widely expected to replace it is the hospitalist model, under which a doctor at the hospital oversees all treatment onsite care, returning oversight to the primary care physician upon release. "Physician alignment is the No. 1 topic on our administration's mind," Baptist's Marcum said. "Hospitalists are an established phenomenon, evolving in strength over the last f ive years.
"All hospitalists at Baptist are independent and not employed by the hospital. They pref er to be independent and it f rees up our resources. Generally speaking, our (Baptist East-) employed physicians are satisf ied with our independent hospitalists."
While Baptist is in acquisition mode regarding physician subspecialties and primary care doctors, Marcum sees a f uture f or "deliverists, " OB/GYNs who wish to be based at and practice in the hospital setting, reducing their on-call lif estyle. Also coming are "intensivists," hospitalists who handle critical care.
"Hospitals outside the state have begun to build up in this area," Marcus said. "We will see it here in the state." The hospitalist model is more ef f icient, said Mark Carter, managing director of consulting services for Dean, Dorton, Allen & Ford and a f ounding member of the Greater Louisville Inc.'s Health Enterprise Network. "It was a dysf unctional payment system that led to hospitalists in the f irst place, a precursor of healthcare ref orm," Carter said. Primary care "doctors tend to get paid by the number of patients they see, so they must be in the of f ice to be making money, not at the hospital. I think most primary care physicians were ambivalent to the hospitalist wave, seeing it as an ef f iciency and an opportunity f or more productivity. "The case could be made," he said, "that hospitalists should also be a physician population better owned by the hospital, since this f its in with stronger measures of inf ection control and critical care f or coronary care." Hospitals have their f inancial limits, though.
"We do not have enough money to employ all the physicians that practice at our hospital," Marcum said, "so there will be a selection process in areas of need and where it makes sense f rom a historical perspective and where f unds make a dif f erence f or the patient."
"There are three key components in healthcare ref orm: integration, risk, and accountability," said Rishabh Mehrotra, president/CEO of SHPS Inc., a Louisville-based provider of administration services f or medical benef its and health improvement programs that had more than $200 million in revenue in 2009. Increased public accountability is available f or the tech-savvy on websites such as hospitalcompare.hhs.gov and more than 30 online services that rate physicians. The American Medical Association and 47 state medical groups are calling f or more accurate inf ormation about physicians online, in response to concerns that patients are choosing their doctors based on the cost of services and misinf ormation f rom insurance plans instead of quality care.
The Accountable Care Organization (ACO) model, said Steve Menaugh, vice president f or public relations and communications of Norton Healthcare, has gained national recognition as a meaningf ul way to create new f inancial incentives in the U.S. healthcare system. It holds providers accountable f or the overall cost and quality of the care they provide.
In contrast, the current fee-for-service payment system rewards volume and intensity rather than ef f iciency and quality of care, of ten penalizing those systems that attempt to improve care, Menaugh said. ACOs such as the Humana-Norton entity were specif ically addressed in the 2010 f ederal healthcare ref orm legislation through a new Medicare shared-savings program. And ACOs have been applauded f or their intent to support patient engagement and the promotion of evidence-based medicine, he said.
But what does accountable care mean in light of healthcare ref orm provisions at the hospital level? "Healthcare services have not been based on the patient need. It has been doled out through silos, such as subspecialties, and not across the continuum of care," said Glenn Whitf ield, a healthcare expert and director of process improvement services f or Dean, Dorton, Allen and Ford. "Now every employee in the system will have to optimize what is done f or the patient."
How remains the question.
"The law is vague on accountable care," Carter said. "We expect to see more specif icity in the regulatory process. Accountable care will be dif f icult to do without a payor onboard, and we really don't have many robust insurance payors in the state to choose f rom - we primarily have two (Anthem and Humana) plus United." Humana of f icials indicate they are ready to take on the task.
"Humana is committed to innovative local and national models that improve clinical outcomes ef f iciencies, reduce costs and improve ef ficiencies," said Bruce Perkins, senior vice president of Humana's Healthcare Delivery Systems and Clinical Processes Organization.
"Humana plans to continue to develop more ACO models by partnering with providers in multiple regions. Our focus in exploring additional ACO relationships is to help drive innovation in the marketplace." While no rules have been issued, Baptist's Marcum suggests that a single bundled payment f or episodes of care - f or example, covering admission first to a hospital, then to a nursing home and then to physical therapy - likely would require pre-contracted relationships across the continuum of care. "There are some advantages to owning all parts of the continuum," he said, "but we are not going to buy up every area along that spectrum of care."
Kindred's Altman said the current payment systems in place in healthcare are disjointed, and Kindred created a joint operating committee to manage transitions in care to improve quality and reduce hospitalizations, particularly re-hospitalizations.
"We have seen improvements already in the last six months with this f ocus," he said. "A solid clinical example can be f ound in a Cleveland, Ohio, partnership. Patients in sub-acute settings were getting urinary tract inf ections that of ten led them back to the hospital bef ore a diagnosis. We are now determining risks and correcting this issue at the early onset, avoiding a hospital stay."
Rural markets will present the geographical challenge in our state, according to Whitf ield. At Norton, Dr. Steve Hester, senior vice president and chief medical of f icer, said that broad outreach in the state with UK onboard is important, particularly in the areas of f amily practitioners, cancer/neurosciences and OB/GYNs integration.
"It's early and learning how to help rural hospitals by working collaboratively will help make our institutions more accountable in the state," Hester said. "This was coming, regardless of healthcare ref orm measures." Coming in January in Part 2: Value-based purchasing, acquisition of physician practices, electronic health records and community health initiatives.