Healthcare facilities are dealing with rising patient numbers and declining cost reimbursements ahead of federal reforms set for 2014. The Business Journal asked executives to discuss plans and concerns.
JIM BARBER
Chief executive, Hospital Association of Southern California
It is not certain that every hospital will successfully cross the transformational chain. Radical change and major financial investment are required by hospitals, while at the same time we face the most problematic economic outlook in 20 years.
Hospital inpatient volumes are falling, and it’s not only because of the depressed economy. Admissions per 1,000 populations and days per 1,000 populations are being reduced through better care coordination, fewer readmissions, more outpatient work and improved quality.
Comprehensive chronic disease management and post-acute care help people stay at home longer, perhaps for their lifetime, whereas before those at-risk and elderly populations consumed many admissions and inpatient days.
Payments to hospitals for the work they perform will flatten out and possibly go down in real dollars. The overall economy and job situation may improve, but hospitals will not be carried along with a rising economic tide and thrown a financial life ring the same way other businesses anticipate.
Coverage may improve under national reform. But Medicare, Medi-Cal and commercial payers will ratchet down payments and expanded managed care enrollment will wipe out any relief realized from reductions in bad debt and charity care.
Given this gloomy financial forecast, business as usual simply won’t cut it.
Hospitals must fundamentally change their operations—including how and by whom care is delivered—and create a new level of permanent cost and quality efficiencies. The fact that hospitals have survived bad times before without a big upheaval is no guarantee we can do it again this time.
This is no time for smugness over past success.
BARRY ARBUCKLE
Chief executive, MemorialCare Health System
While the heat is on with a challenging economic climate, declining reimbursement and a move by payers to value-based purchasing, at MemorialCare we are growing our capacity to provide even better, more integrated healthcare in our communities.
We are actively preparing for our future, a path we continue to pursue with diligence. We are increasing the number of acute-care hospitals, adding outstanding medical groups to our medical foundation we call MemorialCare Medical Group and broadening our outpatient and ambulatory care offerings.
MemorialCare will continue to focus on providing that finest quality care for our patients and their families, enabled by best practices, the clinical expertise of our top physicians and the most innovative technologies. The constant pursuit of bold goals in achieving continued excellence in medicine and healthcare and a steadfast fiscal discipline are essential.
We are continuing to focus on integrated efforts to better prevent illness and actively manage chronic conditions like heart disease, cancer, respiratory illnesses and diabetes through improved population health management.
As an early adopter of comprehensive electronic medical record systems at each of our hospitals, doctors’ offices and ambulatory sites, MemorialCare patients receive more coordinated care with clinicians accessing information about a patient’s condition, allergies and medications—all at the caregiver’s fingertips. We continue to expand our electronic medical records to outpatient sites, doctors’ offices and have an electronic health record that can be accessed by many of our patients.
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TERRY A. BELMONT
Chief executive, UC Irvine Healthcare
The long-term goal of UC Irvine Healthcare remains continuing to provide compassionate, world-class healthcare while improving access to care and finding greater efficiencies to drive down costs. However, there are still more questions than answers before health coverage under the Affordable Care Act is expanded in 2014.
In Orange County, it is estimated that 140,000 people will become eligible to receive Medi-Cal coverage, and another 280,000 may receive coverage through the California Health Benefits Exchange (see related story, page 16). UC Irvine Healthcare is working in partnership with the Orange County Healthcare Agency, community hospitals physicians and other providers to ensure access to all who need it.
We anticipate that the health benefit exchange will introduce competitive dynamics into the marketplace that may drive down costs. The state faces several challenges in this new environment, including how to ensure that medical education is adequately funded and that critical high-cost services are maintained.
The UC Irvine Medical Center makes a substantial financial commitment to support the UC Irvine School of Medicine. Similarly, our commitment to providing the county’s only Level 1 trauma center is the backbone of region’s emergency medical system. It is important that health care reform not erode support from services that benefit everyone.
One element of reform is incentivizing improvements in healthcare delivery. For example, UC Irvine is leading an effort designed to improve detection of hospital-acquired infections, like drug-resistant MRSA as part of the Delivery System Reform Incentive Program. The presence of such infections in hospitals across the country costs billions each year and potentially threatens patient safety.
Preserving the status quo is not an option. The healthcare environment is certain to change, whether the Affordable Care Act survives, is found unconstitutional or otherwise blocked after the next presidential election.
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MARCIA MANKER
Chief executive, Orange Coast Memorial Medical Center
The future of healthcare delivery depends upon the development of strong hospital-physician partnerships that manage patient care across a variety of settings. We are proud of our leadership role in establishing physician partnerships and will strengthen our strategies through access, connectivity and physician alignment as well as joint-venture development.
We are expanding our partnership options for physicians seeking a fully integrated structure and strengthening our relationships with physicians who want to maintain individual and group practices through the MemorialCare Medical Group and other collaborative opportunities.
Working to tackle current challenges while creating a dynamic, integrated system will help ensure the strength and stability of our healthcare family.
A major focus [of ours] is to provide the most comprehensive, coordinated and continuing care for community members in all stages of life. We are committed to offering the finest quality care for patients and their families, enabled by best medical practices, clinical expertise of top physicians and technology—in some cases, the only such technology available in the region.
MemorialCare is expanding our offerings in accessible, convenient care for minor illnesses and injuries at many sites. Those include MemorialCare HealthExpress retail clinics located inside Albertsons/Sav-On pharmacy stores in Huntington Beach, Irvine and Mission Viejo.
Our commitment to productivity, lean (management), utilization and care-model redesign is putting us ahead of the game. We have aligned all of our metrics by unit and department to ensure consistency in evaluating performance.
Making the right strategic moves to reduce our costs now make it possible to invest in new technology and capital equipment, even in the midst of the many changes healthcare providers face.
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DARRIN MONTALVO
Executive vice president, Southern California region, St. Joseph Health System
At St. Joseph Health System, we set a path for transforming our model of healthcare delivery in 2006, significantly before the passage of healthcare reform legislation.
In keeping with the traditions of the Sisters of St. Joseph of Orange, we assessed community needs and determined a course that later proved very much aligned with the path of healthcare reform. We are striving to become a healthcare system that embraces an illness and wellness model, while [striving to realize] a greater balance between hospital- and community-based care.
We must seek new partnerships, better align with physicians, pursue health and wellness programs, ensure our clinical excellence, foster the best possible patient experience and deliver care more efficiently.
Our clinical outcomes continue to improve. We have implemented programs to enhance the patient experience, our medical foundation and affiliated groups are growing and we have instituted a number of wellness-oriented programs.
Those include the Synergy wellness center at St. Jude Medical Center and Healthy for Life, which addresses childhood obesity in Orange County schools. At Mission Hospital Laguna Beach, a telehealth program links many of our specialists with underserved individuals and families at Camino Health Center.
We are making great strides in recruiting
and retaining outstanding teams, as evidenced by St. Joseph Hospital-Orange’s re-designa-tion as a magnet hospital for nursing excellence.
We are seeking healthcare partners that will work with us to ensure quality care, even as reimbursement models become more challenging. Our accountable-care (organization) with Blue Shield of California will provide integrated, cost-efficient healthcare to Blue Shield members and their families while keeping healthcare costs down.
