Tuesday, May 26, 2009

Our experience at Non-Profit Healthcare Investor Conference

CHRISTUS Health was recently invited to present our story at the 10th annual Non-Profit Healthcare Investor Conference in New York City. Over 500 bankers, investors, bond-holders and bondraters were in attendance.

As one of 28 health systems invited to present, the CHRISTUS team described an overview of what CHRISTUS Health looks like after its first decade, summarizing the work of Futures Task Force I and the resulting strategic direction to transition our portfolio to 1/3 acute care in the U.S., 1/3 non-acute care in the U.S. and 1/3 international, and our desire to move from expensive acute care to less expensive chronic disease management, senior independent living and health and wellness services. The four Directions to Excellence were then highlighted, stressing our goal for sustainability being a high quality low cost provider.

Six continuing trends which are shaping health care were then enumerated, including:
• Pressure on reimbursement
• Accelerated shift to ambulatory driven by new technologies
• Inpatient roles continue to change
• Physician-hospital relationships reshaped
• Increased demand for transparency
• Impact of aging baby boomers

The Futures Task Force II process was then highlighted followed by detailed data showing our financial picture over the last several quarters as we traversed the almost perfect storm of the financial crisis as well as the real storms in September – Hurricanes Gustav and Ike. This section included a presentation on our:
• Interest Expense Trends
• Bond Portfolio Transition
• Quarterly Statement of Operations
• Admission Growth – 3.3 percent
• Surgeries Growth – 2.4 percent
• Key Indicator Trends
- Operating revenue per adjusted discharge
- FTE per adjusted occupied bed
- Labor expense per adjusted discharge
- Supply expense per adjusted discharge
• Operating Margins
• Operating Cash Flow
• Funded Status of Pension Plan

I also gave a brief description of our key visions in health care for 2016 and beyond, which include:
• Some diseases will be “cured”
• Trauma leading cause of death age < 55
• Some diseases treated by alternative medicine
• Increase in global warming related illnesses
• Home health and remote monitoring drive retail orientation
• Increase in retail services including e-commerce
• Increase in philanthropy
• Improved disease management through provider-payor partnerships
• Innovations in physician employment models
• System integration of medical tourism and international strategies
• Integrated EMR and IT strategies
• Expansion of non-acute programs and partnerships

Wednesday, May 20, 2009

Have you reviewed the Senate Finance Committee’s policy options for expanding health coverage to all Americans?

Pointing out that the U.S. is the only developed nation that does not guarantee health coverage for all its citizens, the Senate Finance Committee is exploring whether to impose a mandate that would require individual Americans to purchase health insurance, which has proven controversial in states where it has been attempted (Massachusetts, California, etc.). The committee explored the idea in depth in a special policy options paper released recently in advance of a planned private negotiating session last week, where committee members debated options to expand health coverage in the United States.

The committee has since released an additional policy paper on financing health care reform as well. However, I think it is important today to first address the committee’s proposals for expanding health care to all Americans.

The paper refers to the requirement to buy insurance not as a mandate but as “a personal responsibility” to own health coverage. In addition, the committee will weigh three options for a public health insurance plan that would allow all Americans to buy coverage through the government for the first time. However, the committee might also reject the public plan all together, and rely instead on a “reformed and well regulated private market” to expand access to health insurance — a move that could help a sweeping health overhaul draw some Republican support.

Thursday’s session — the second of three — includes some of the most hotly debated aspects of health care reform. Those include questions over whether to create a public plan option to compete with private insurers, and whether to allow Americans between ages 55 and 64 to temporarily purchase Medicare coverage while a reform bill is implemented — an idea likely to draw opposition by private insurers because it cuts into their market. Now, two Senate committees will work over the next four weeks to move bills to the floor. The Senate Health, Education, Labor and Pensions Committee is expected to release bill language before the Memorial Day recess, and the Finance Committee will follow in the first week of June, according to people familiar with the timeline.

The committee proposed three options for the public plan. One would resemble Medicare, an option favored by liberal lawmakers. The second option calls for third-party administrators to oversee the public plan, a middle-road option that resembles a plan proposed last week by Sen. Chuck Schumer (D-N.Y.).

The third option would allow states to decide whether to create public insurance plans. Under the idea of an insurance mandate, those who do not obtain insurance by a set date would pay an
excise tax, although individuals could seek exemptions. Insurers have pushed vigorously for an individual mandate, arguing that it cannot guarantee coverage for Americans with pre-existing conditions unless the risk is spread around by requiring the young and the old to buy insurance. Tax credits would be available to low-income taxpayers and small businesses to offset the cost of buying insurance, the paper states. In addition, the paper seeks to explore several options for mandating employers to provide health insurance coverage for workers or to pay some form of assessment.

Meanwhile, an alliance is taking shape involving key stakeholders in the health care industry, including such principals as the American Hospital Association, the American Medical Association, America’s Health Insurance Plans, the Pharmaceutical Research and Manufacturers of America, Advanced Medical Technology Association and the Service Employees International Union. In a joint letter this week addressed to the Obama administration, the various groups state a determination to work together to achieve affordable, high-quality and accessible health care for all Americans.

The groups point out that in order to achieve that goal, their unprecedented unified efforts will be directed at offering concrete initiatives to transform the health care delivery system. Primarily, the alliance will be developing consensus proposals to reduce the rate of increase in future health and insurance costs through changes made across the health care sector. Specifically, the letter outlines:
• Implementing proposals that focus on administrative simplification such as standardization and
transparency efforts;
• Reducing over-use and under-use of health care by aligning quality and efficiency incentive among providers across the continuum of care;
• Encouraging coordinated care, both in the public and private sectors, and adherence to evidence-based best practices that reduce hospitalization and manage chronic illnesses more
• Reducing the cost of doing business by addressing specific cost drivers in each sector through simplified common-sense improvements in delivery models, technology, workforce development and regulatory reform.

Wednesday, May 13, 2009

Revenue vs. Costs

Remaining financially viable, as we know, was a difficult proposition for many hospitals long before the economic downturn took hold both in the U.S. and globally. But as the economic challenges continue, multiple hospitals and health systems are facing even greater financial challenges as they try to maintain their margins. Some recent research studies utilized several metrics and indicated that over 60 percent of the 5,500 non-profit hospitals in the U.S. are in financial crisis.

Clearly, a major task for both hospitals and health systems is striving to balance their revenue with their costs, an increasingly complicated undertaking because of such factors as the continuing shift to outpatient care (which CHRISTUS has been predicting and planning for) and the expanding payment shortfall relative to costs for Medicare and Medicaid. In addition, CHRISTUS Health has many facilities and programs in Louisiana and Texas, two of the states with the lowest Medicaid payments, which has been verified by the Kaiser Family Foundation.

Because CHRISTUS Health has experienced significantly lower revenues for similar services than other health care providers, it has had to develop a lower cost structure, now one of the most competitive among Catholic health care systems. In addition, during our first decade, CHRISTUS has also seen significant improvement in both our clinical quality and service quality metrics. Hence, as we continue our Journey to Excellence, obtaining our goal to be one of the highest quality, lowest cost health and wellness providers appears to be within our reach.

Tuesday, May 5, 2009

Can a Faith-Based Health System Make a Difference?

We all know that having hope alone without empowerment action plans will not be adequate for any health system to address the operational challenges generated by the global economic crisis. But perhaps a more important question is, “How do hope and faith contribute to the healing of patients?”

The Feb. 23, 2009 issue of Time magazine included several articles on faith and healing. After reading these articles, I reflected on this important question, as I have periodically in my 40 years of physician leadership in four health care systems.

As a surgeon, I observed in my early years on many occasions that two patients could have very similar pathological disease pictures which were treated almost identically by me and my team. However, the post-op outcomoes of each would be very different, one patient getting well quickly, and the other having a more prolonged recovery period with our inability to uncover any organic reasons for the unusually slow recovery.

Over the years, I always assumed that the “early” recovery patient had perhaps a stronger will to live, a greater strength to overcome pain and adversity and a much more optimistic outlook on life in general. In addition, however, I would periodically ask what part “keeping the faith” and “never giving up hope” played in the notable difference in the recovery of patients.

My interest in this question caused me to always be a supporter of exploring alternative and complementary medical therapies and asking how they might best be integrated with traditional therapies that we all learn so well in medical school and our residency programs. When I heard, while in training, that 80 percent of all “health care” is done through self-diagnosis, self-treatment and non-prescription medications purchased over the counter, I knew that it would always be important to at least be open to what alternative modalities are available, how they are being used and what if any outcomes have been documented.

Clearly, the strong opponents for my support of complementary/alternative therapy practices including the use of herbs, therapeutic touch, acupuncture, therapeutic music and prayer remind us that there is no documented research which has calculated that they result in positive outcomes. They cite the lack of “evidence-
based medicine.” However many patients throughout the world would say that they have been “cured” because of their use of prayer, faith or alternative/complimentary medical therapies for symptoms related to diagnoses given by traditional practices but which were not relieved by traditional therapies.

Those practitioners today who do embrace the integration of Eastern and Western medicine believe that if there is no proof that the therapy, medicine or activity do harm and the patient wants to try them, they should be encouraged to do so. However, the true believers in the power of faith, herbs, etc. know that a more widespread use and support by traditionalists will only occur if more traditional research methodologies are utilized to garner evidence that these approaches are enhancing health and wellness in the people we treat. Fortunately, this research is escalating in the U.S., as is referenced in the four Time articles and is being supported at the federal level by the National Center for Complementary and Alternative Medicine, created in 1991.

With my openness to exploring the causes for my early observations of different recovery periods for similar patients, I spearheaded the Alternative/Complementary Clinic in my time at Henry Ford as well as similar programs at CHRISTUS Health. Based on some studies we did at Henry Ford, we are comfortable that alternative therapies may be better for such diagnoses as sinnitus and migraine headaches.

In a large clinic we run in Tampamalon, close to a Reservation in Mexico, we are observing the work and herbal treatments done by the tribal medicine men and women and observing how they can complement the traditional treatments we are providing. I predict that a much larger number of diagnoses will be treated more successfully by a mixture of both in the next decade.

The articles clearly indicate that more research and focus is being placed on gaining a better understanding of how, in addition to the other alternative modalities, faith and spirituality assist in a more rapid recovery. The high cost of traditional therapies also supports the acceleration of this research.

What will be the ultimate findings? No one has the answer and only time will tell. But I do know that faith-based health care systems foster a greater openness to alternatives which we have observed to “selectively” work, and support them, l as long as they do no harm, until objective data can be collected.

Certainly, the worst case would be that a successful alternative therapy will never be used because no one is open enough to studying it. It does take a “faith” to continue this exciting journey which hopefully uncovers more less-expensive, non-invasive alternative therapies which will only make our traditional medicine better. I, for one, am very hopeful and optimistic.