Transcript Where Do Nurses Fit - South Carolina Hospital Association

Opportunities & Risks
Lynn Bailey, Health Care Economist
South Carolina Nursing Excellence Conference
April 11, 2014
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Friend of Nurses
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Share my perspective, as an economist, on SC’s health
care reform environment by following the dollars
Review SC’s current health care environment
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Historic & current health care business models
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Incentives & dollar flows
Anticipated reformed business model
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Facilities: Hospitals, ASC, Rehab, Long Term Care, Home Health
Professionals: Nurses, Physicians, Allied Health Professions
Care givers: Nursing assistants, HH Aides, Medical Assistants
Patients: acute or chronic, children or adult, public
Payers: Private , Public , or Self pay
Changing dollar flows needs changing incentives
What are the opportunities & risks for nurses in SC
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Change is a mixed blessing
With opportunities there are risks
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BIG BUSINESS: a $166 Billon business (2011)1
18% of SC’s total economic output (2009)2
That’s $6,323 per person in SC vs. $6,815 US
(2009)3
SC health care per capita expenditures are below
the US average but are increasing at a faster rate
2011 SC average employer premium
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Single = $5,098
■ Family = $14,2854
Employees pay ¼th of single and 1/3th of family
SC Health care businesses are shifting from
not for profit to for profit!
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SC Health Care $$ (2010)5
Dental
5%
Nursing
Homes
7%
Prescription
Drugs
17%
Home Health
2%
Hospitals
43%
Professionals
26%
6,000 Specialists & 3,000 PCPs
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Currently health care employees ≈ 250,000 folks 6
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≈ 48,000 Nurses
≈ 9,000 Physicians
≈ 9,000 Other licensed professionals
≈ 15,000 Allied Health professionals
≈ 5,000 Managers
≈ 80,000 Care Assistants
≈ 25,000 Billing and Insurance
Health care employment was fairly robust during
recession
2013 4th Qtr saw health care employment
decreased
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4.6 M people 7
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49% male & 51% female
68% Caucasian & 32% Minority
1.1M < 17 or 23%; 3 M Adults or 63% & 730K Seniors or
14%
Rank 43rd in health status 8 {poor, violent, fat, and
under-educated}
Health care coverage9
800,000 uninsured but ACA has covered ≈
100K(estimated) with 60K who have paid premium
 1.2 M covered by Medicaid up from
 820,000 Medicare beneficiaries before Gov. Haley
 1.9 M covered by private insurance
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 1M by employer provided insurance
 870,000 by private insurance
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Largest employer group = State employees 430,000
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Health IT is the biggest driver of change
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Consolidation of providers
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Drove physicians out of independent practices to employment
in hospitals
Reduced the efficiency of physicians
Lowered physicians’ satisfaction
Doesn’t save $ nor improve quality
Larger hospital systems
More physicians employed by hospitals (70% licensed MDs)
Rise of retail health “clinics”
Medicaid is the state’s largest health plan/payer
Medicaid is now almost entirely contracted to for profit
managed care
The rise of for profit health care
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SC declined to establish a state run exchange
SC declined to expand Medicaid
Feds run SC Health Insurance Marketplace 10
4 health insurance plans in gold, silver, & bronze
 28 to 32 plans per county
 Premiums vary by county and age
 Narrow networks and high deductibles
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By March 31, 2014 100 K were enrolled in
private insurance plans & added 23,000 in
current Medicaid
SC will continue to have a large number of
uninsured persons showing up for care
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Implementation has been a mess
Lots of background noise but poorly coordinated
outreach because of limited funding. SC’s $3 per
enrollee compared to $30 in Kentucky (state
exchange)12
Health insurance is complex, sophisticated
decision. Many are overwhelmed and confused.
Premiums, deductibles, and co-pays.
Narrow provider networks with a lack specialists
Research shows when a consumer is confused
Too many choices
 There is no “vanilla” default
 We make no decision or the wrong decision
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SC has added about 220,000 members in last
two years, mostly children
Without expanding Medicaid, SC leaves about
175,000 to 200,000 people “in the gap.” Too
poor to participate in the Health Insurance
Marketplace too much income for Medicaid.
Health Outcomes Program
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$15 M from Legislature to cover 8,500 folks 13
Finds medical homes for chronically ill patients who
frequent EDs in 46 SC hospitals
FQHCs, rural health clinics, or free clinics
Currently ≈ 3,000 enrolled or 36% target population
& 6 months through funding period
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And INCENTIVES in
SC
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Current business model is 60+ years old
Acute inpatient care medical model [sick care]
 Business to business model [provider serves insurance
pays]
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 Patient goes to provider for diagnosis and treatment
 Providers bills 3rd party for providing care
 3rd parties
 Public – Medicare, Medicaid, VA, DOD, State Programs
 Private – For Profit Commercial Insurance Plans
 Employer funded
 Employer insurance
 Private personal insurance
 Not for profit co-op: Consumers’ Choice (Directly from ACA)
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More patients + more services = more revenue
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The Customer to Business Model
You want a steak dinner, choices include
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Ruth Chris -- $100 a person (w/o wine)
Long Horns or Outback -- $25 to $35 a person
Ryan’s Steak House or Golden Corral -- $10 to $12 a
person
Kingsman in Cayce -- $10 to $12 a person
Grill your own at home
Which option satisfies you?
vs
Which option satisfies your 3rd party payer?
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Total Revenue = Price X Quantity
Total Costs = Fixed Cost + Variable Costs
Profit = Total Revenue – Total Costs
Profits are maximized when MR = MC
Markets function best when buyers and sellers
have information about each other or
Transparency & Value
Business learn to manage COSTS and demand.
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Professional reimbursement
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Based on codes (codes changing this year for some
and next year for others)
Based on physician specialty [E&M vs. Procedures]
 Surgeons, specialists, & subspecialist higher pay
 Primary care lower pay
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Surgeons, specialists & subspecialists have higher
status and income than primary care
Facility reimbursement
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A specified amount based on diagnosis
Outpatient facilities on a fixed “bundled” fee
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It isn’t customer to business, yet
Patients are ignorant about health care
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What services do they need and how much?
Who should they see for the service?
What’s price/cost/charge for care?
Where should they go?
3rd parties & Employers come between sellers
and patients (buyers). Have more information.
Barriers to information for almost all involved
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MDs don’t know what they or hospitals charge
Fiduciary obligation vs. Hippocratic Oath
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Terms used interchangeably but they aren’t
Charges are what providers says they are
Charges are disconnected from expenses
 Starting point for accounting department
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Costs are what providers expend to pay for labor,
supplies or capital.
Prices are what a payer is willing to pay
Self-pay are looking at billed charges
 3rd parties will pay what they are contractually obligated
to pay for “medically necessary” services or a discount
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Prices don’t connect supply or demand; buyer or
seller
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Economic theory tells us that in a competitive
market, consumers get more at lower prices
and sellers maximize profits.
How health care providers compete?
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More is better -- more patients or services
Bigger is better -- more beds, more MDs, more
parking
Specialty services – trauma, Academic Medical,
cardiac care, joint replacement
Hospital vs. Medical Center vs. Health System
How long does it take to get an appointment
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Hospital costs are: fixed or variable
Capital costs: big expensive buildings and
equipment. Fixed cost
 Supplies: medical & surgical supplies, prescription
drugs, and DME. Variable cost
 Labor: people. Variable cost
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Health care expenditures
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50% on capital – bond payments
50% are for people and supplies
So where do hospitals cut expenses? PEOPLE!
And or supplies small equipment
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Increase prices and increase volume [P ↑ x Q ↑ = TR ↑]
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Supply drives demand “If we build it, patients will
come and insurance will pay.”
Sick care ≠ health care
No easy way to determine value to patient
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Hidden ancillary charges
Fragment complex services into smaller units of service
Value = quality & quantity / price
Lack of information
Health care is an exchange where pricing mechanism
doesn’t function very well
Inpatient vs outpatient; facility vs MD office: where is
the low cost site of service? How do we know?
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Too many specialists & not enough primary
care providers
High administrative costs (keeping records,
tracking charges, process claims and doing
billing)
Hospitals and MDs profit from errors or poor
care
The number of uninsured grew
We aren’t healthier
We get “new” diseases – Low T, pre-diabetes,
ED, pre-cancer’s
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A fragmented disconnected (uncoordinated)
geographic clusters of providers with gaps in care:
Hospitals
 Home care
 Rehab care
 Skilled Nursing Care
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Poor or mixed quality patient care
Patients and families lost or fall into the
cracks/gaps
Estimated 1/3rd of health care results in no
benefits for patients, often result in mistakes and
harm14
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If we value something we measure it.
We pay for volume of services not results
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A poor image or lab study is always paid for
And repeated
We don’t pay to manage a patient’s care or
health education
We don’t pay for health
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Outcomes
Quality
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We can change what /how we pay
ACA offered funding to encourage experiments in
new care delivery structures with new
mechanisms of payment
Accountable Care Organizations , Patient Centered
Medical Homes or Integrated delivery networks
 One entity gets the total payment based on outcome to
allocate
 Manage (coordinate) care & related expenses
 The Umbrella Entity gets to keep what is left over to
reinvest
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Revisions to Medicare payment mechanisms
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Medicare is the payment unit floor for US healthcare
SGR
Medicare Advantage
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Changing dollar flow (think renting vs buying)
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FFS to capitated payment (PMPM used by Managed
Care)
 Who bears of risk?
 Risk of organization losing money
 Risk of an organization having all the really sick people
 Without risk sharing (insurance company bears risk)
 With risk sharing (both provider(s) & insurer)
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Bundling payment to a single organization
responsible for coordination of services based on
specific illness, injury, chronic condition over an
entire episode or defined period of time
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Dollars then flow from insurer to organization to
(contracted or employed) providers
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Shift from always doing more and more
Shift to doing less but better care in lower cost
sites of service at lower total cost
Shift to finding the right balance, Goldilocks
“just right.” Right place, right care, right time.
Knowing the actual “cost” of care and learning
to price health care looking for value
Value = quantity / cost
Pricing on the margin—cost on one additional
unit of care
This a major culture shift.
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Information transparency
Knowing on the front end what a service “costs or is
priced”
 Asking for evidence of medical necessity
 Ownership disclosure
 Conflicts of interest
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Managing patient care (new) vs managing costs
(old)
Focus on health, prevention, & care management
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Unfortunately little evidence prevention really saves $$$
Shift the balance of power between specialists and
PCPs. Will the rich providers accept a shift of
income to the not rich MDs? GIs giving up income
to PCPs?
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Health care in South Carolina has shifted toward
hospital centered consolidated organizations →
BIG
Fewer independent physician practices
 Increasing number of “for profit health organizations”
 Nonprofits don’t behave differently than for profits
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Palmetto Primary Care in Summerville, a 200+
physician centered integrated delivery system
Shifting to ambulatory based services
New service sites -- growth in retail health
Concentration of payers & providers (bilateral
monopolies) Big Health System vs. Big Insurance
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Where are SC nurses now?
What are the opportunities?
What are the risks?
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4 levels of nursing [out number MDs 4+ to 1]
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NOT ENOUGH NURSES (nor MDs)
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LPNs primarily in long term care
ADNs hospital staff nurse
BSNs staff nurse, manager, care coordinator
Advanced Practice more independent practice
Recent Moore School Business estimates in 2030 a
shortage of 17,500 RNs (1/3rd current supply)
Shifting role from nurse generalist to nurse
specialist
Assuming the role of patient manager/guide
Expanding role of patient advocate
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Hospital are where patients go for 24/7
NURSING CARE. You are THE HOSPITAL!
Who do patients’ trust, admire, and value—
Gallup says NURSES
Growing role of nurses in management and
decision making. What skills are needed?
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Critical thinking and problem solving
Project management
Information technology
Financial management or business management
People or soft skills to motivate folks…Momming
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Change is not something we do well in SC
Inertia is something we do very well
Some projects will fail two steps forward one
back
How will nurses learn new skills
No longer being viewed as “nice” but powerful
Scope of nursing practice to highest level
Continue to selling your skills too cheaply
Being exhausted
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Nurses are the most valuable labor unit in health
care
Productive
 Skilled + experience = flexibility
 Critical thinking and problem solving
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Still under recognized, acknowledged, rewarded.
Catching on and catching up.
Learning her/his value.
Primary Care Advanced Practice restructuring
Medicaid, DOD, and VA employ NOW
 Hospitals & MDs will catch on when $$$ flows change.
Nurses are more cost effective.
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Use nursing’s respect to influence/direct reform at
the policy and organization level.
Nurses need to claim regulatory control over lesser
level caregivers. 60% of the health care workforce.
What should be their scope caring? Who directs/
delegates this care?
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HHA
Medical Assistant
Certified Nursing Assistants
Improve education, quality, competence in the
business of health care.
Step up and Lean In to Lead .
Nurses must own the workforce or act like they do
until they do. Fake it to you make it.
Learn from the doctors mistakes. (there are plenty)
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US Bureau of Economic Analysis
www.bea.gov/newsreleases/regional/gdp_state
US Bureau of Economic Analysis
www.bea.gov/newsreleases/regional/gdp_state
ww.cms.gov/nationalhealthexpend/data/downloads/resident-stateestimates
KFF.org/statedata/
KFF.org/statedata/
http://www.sces.org/about-lmi.asp
Quickfact.census.gov
www.americashealthrankings.org/SC
KFF.org/interactive/uninsured
Healthcare.gov
http://aspe.hhs.gov
http://m.lifehealthpro.com/2013/07/25/states-ramp-up-exchangemarketing-campaigns
https://www.scdhhs.gov/reports-statistics
http://www.pwc.com/us/en/healthcare/publications/the-price-ofexcess.jhtml
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