Note: Kingman Daily Miner Editor Rich Thurlow, News Editor Alan Choate and Reporter Suzanne Adams visited with Kingman Regional Medical Center Chief Executive Officer Brian Turney about the hospital's future as it regards the Affordable Care Act - aka ObamaCare. Jamie Taylor, the hospital's director of Development and Pubic Relations, also sat in and participated.
MINER: Has KRMC's business model changed at all since the passage of the Affordable Care Act?
TURNEY: From my perspective, one thing that's clear that we're going to have to do as an organization is to get better.
There's certain quality measures that have actually been implemented over a several-year period. If you go to Hospital Compare (a federal website that helps Medicare patients compare hospitals and other medical facilities at www.hospitalcompare.hhs.gov) that was actually a kind of a precursor to what the government was planning, as far as what health care needs to be doing and the direction it needs to be moving.
I'm actually supportive of that. I think that the more transparency, from a hospital standpoint, I think that's better both for institutions as well as for people who are consumers of health care. I don't have any big gripes about that piece, as long as what they're measuring is important.
In other words, we're not chasing our tail over stuff that we really don't think is that important. I'll give you one example, the smoking cessation (program). You know we're required to give smoking cession counseling to every single person and that's reported. That's a nice easy one to measure, but there's a lot more important things to be measuring, quite frankly, and it uses resources from our standpoint. I'm not saying that it's a bad thing to do but it's just, it's just one of those things. It's something else you have to do.
There's a lot of other things, like aspirin within a certain period of arrival, that's an important thing that clearly affects medical care and the more consistent you are about that. I mean the bottom line is, you're in essence, at least in one way, you're providing better health care.
I think those types of things that they're implementing, patient satisfaction, (and) having that publicly reported, I'm not sure that I argue with that. I think as institutions we should be held accountable for those things and we're not perfect as an institution. Neither is anyone else. But as long as it's good information, it's timely, it's accurate and it's meaningful, I don't have an argument with that.
The other piece that's clear ... as you look at the cost of the Affordable Care Act - they're estimating almost a trillion dollars in cost over a 10-year period of time.
To us as an institution, what that means is our reimbursement will be less.
It's clear that part of this is getting financed from the institutions, the American Hospital Association, and part of it is brokering a deal along with a lot of other organizations that if more people can have insurance, then we'd be willing to take less reimbursements, or we're willing to accept a certain amount of cuts over a period of time, as long as the uncompensated care burden is reduced. That was part of the deal making along with drug companies and everybody else.
The unfortunate part is that it looks like that people getting insured piece is really up in the air now with what ended up happening with the Supreme Court ruling. I guess that remains to be seen.
So back to your original question: We feel like the only way we're going to be able to do that effectively is having more alignment, for example with our physicians.
They have a huge impact on what's ordered and how things are done at the institution. They're kind of like the quarterback.
And the old model, way back when, was you had a bunch of independent physicians and they had privileges. Their financial incentives weren't aligned with the hospital and sometimes there'd be this kind of stuff going on (he said this while bumping his knuckles together.)
So from our standpoint, we want our physicians to be more engaged with how we deliver care here. So we approved something called the Physician Leadership Council where we have physicians that we consider good, strong clinicians and who are also leaders amongst the medical staff being more engaged.
Saying, "You know what? If we delivered care in a certain way, not only would it make it more efficient and reduce the variation, it would also improve good care." So, we feel like long-term that's where we're going to have to get as an organization.
You can only cut housekeepers and nurses and stuff like that so much and it starts effecting care. We've really been resistant of that. We feel like a better strategy is to reduce the kinds of resources, reduce variation. We still got a long ways to go, but that's ultimately what I think we're going to have to do strategically to be successful.
MINER: How do the doctors feel about that?
TURNEY: Actually, most of the physicians, I'd say the majority, actually embrace that now, where as five or 10 years ago they would have been fighting us on it.
But they've seen the handwriting that's on the wall as well.
There's still a handful of physicians on our staff, and I'm sure at other places, that are still kind of in denial.
MINER: They're used to being the quarterback and now they have to be part of a system.
TURNEY: It's human nature.
There was some of that and there still is some of that even at our institution. But overall, we have an advantage from the standpoint that a lot of our physicians are employed (by the hospital.)
We have quite a few that come from other institutions - for example, Mayo has been doing this forever. So, we've got quite a few physicians that either trained or worked at Mayo and some of these guys are leaders. So it's helped us.
They speak the same language. So, when you have a physician talking to another physician going "You know what? It's not passing my giggle test. This really is something that's good for the patient and we as physicians need to keep that in mind." That conversation usually goes much better than if it was coming from a CEO.
MINER: Have you added more doctors to staff; doctors that have been here established in their own practice and have you acquired practices since the passage of the ACA?
TURNEY: We've acquired a few, but most of our additions have been from outside of the community. There's been a handful of practices that we ended up buying.
MINER: Is that a direct result of the ACA or is just something you would have done?
TURNEY: Every physician practice that we ended up buying was as a result of somebody talking to us and saying, "You know what? I'm tired of the headaches of managing our practice. I just don't want to do this any more. I want to practice medicine."
We actually had some physicians that approached us that we declined to do that. We wanted to make sure they were aligned with what we were trying to accomplish as an institution.
You know what was going on with the other hospital (when the doctors at Hualapai Mountain Medical Center split from KRMC). They didn't hurt us, but there were other things up and above that that were driving the decision (to buy it).
It was us seeing that we were going to have to really work together as a system, versus independently. We're still working on it quite honestly. I mean we've got a long ways to go.
JAMIE TAYLOR: But it didn't just happen either. That's something you've had in place before the ACA. Right?
TURNEY: We started that a while ago.
It was a dynamic with a lot of physicians, especially younger physicians because of the ACA and other things.
Just government being involved in medicine has become so complex that they're just tired of messing with it. As we bring physicians in, especially the younger physicians, they're not interested in setting up a private practice. They're not interested at all.
I think our strategy actually helped us bring in stronger physicians, the ones that kind of hold the line with that mindset.
MINER: I have read that, the way (the ACA) is written, that it's an incentive for doctors to not be in private practice.
TURNEY: Like I said, dealing with the billing issues between Medicare and Medicaid and dealing with all of the insurance companies, you have to be not just a physician, but a really sharp businessman and a lot of physicians are going, "I don't want to do this anymore. It's time-consuming."
This kind of naturally pushed physicians toward, "Well, who can I line up with? Who can help me do this?" And it's either a practice management group or a hospital.
MINER: Part of the ACA is the readmissions rate. (How many times a patient is readmitted to the hospital for the same illness within a certain time period.) How is that going to impact you guys?
TURNEY: You know, we've been fortunate.
It actually is already in place. That's one of those things they've actually started rolling out. One of the quality things they've been rolling out for several years, the readmission rate.
Right now, it's in three major categories: Pneumonia, heart failure and heart attack. A majority of Arizona hospitals got dinged (this year.)
It starts out with a 1 percent (cut in payments) and each year it goes up. In three years, it will be up to 3 percent of your payments could be withheld if you perform poorly.
We were fortunate this year. Kingman has a population that tends to be sicker than normal and there are certain things that are really tough to control, (such as) if you discharge them and they don't take their medicines.
As a hospital we're going to have to get better at that. At this point in time, our readmission rates are lower than expected. So we didn't get any penalty. Just a handful of hospitals in Arizona didn't get dinged.
I wish we could say it was because we were so good, but not (I'm) sure that we can take full credit for that. We do have something with case management stuff but there's probably more we're going to have to do long-term as far as following people after they get discharged and stuff.
MINER: If this trends, like government programs do, and they run short of money, it looks like it wouldn't be too hard for them to find a reason to withhold money.
TURNEY: I've got to agree with you on that one. That's just their nature. The government is having a budget crunch and as they have a budget crunch, they're watching things. They're going to look at ways to be able to cut reimbursement.
Like I said with the readmissions, the hospitals don't have full control over that, but what (the government is) saying is, "That costs us money. So hospitals, even though it's not totally in your purview, maybe you have some responsibility if you discharge people too quickly."
But there's a lot more to it than that. They're saying, "We don't really care. You figure out how to fix it because it effects our pocketbook."
At KRMC, almost 60 percent of our patients are Medicare patients. People complain about socialized medicine, (but) between Medicare, Medicaid and self-pay, that's 80 percent of our patients, so for the most part we already have socialized medicine. I hate to admit it, but that's how it is right now. They definitely, definitely have shown a willingness to do that. I think over time, especially if the financial projections are right, there will be more of that and I think it will be pretty painful for providers.
MINER: Not knowing what's coming, that's pretty scary to me. I think because everyone counts on KRMC being here. It looks like this could really hamstring you, but on the other hand you just don't know.
TURNEY: You just don't know.
As an institution we've just decided to focus on what we can control. We don't have a whole lot of influence with Washington, so really our focus right now is just to try to get better at what we're doing.
It's hard to do. You have your ups and downs. That's the challenge for us as an institution, is just to get better, better from an economic standpoint.
I can give you an example of our supply costs. Working with Mayo Clinic and tying in with a supply chain in the upper Midwest consortium we've been able to trim about $3.5 million per year in our supply costs.
To me, by doing that kind of work with other institutions, it's work but it's kind of free money. That's the kind of stuff we're going to have to do to trim our costs.
Otherwise it's (cuts to) labor, and we just don't want to be in that position. I think when you start cutting labor then that affects delivery of what you do.
MINER: As far as patients who come here once the ACA is in place, are they going to see anything different? Is the experience of being a patient going to be different?
TURNEY: I don't think so, other than what I talked about before. I think the focus is going to be getting our systems more aligned with reducing variation. I think, as we are successful in that, ultimately that will end up benefiting the patient. That's our focus.
That's going to be the challenge for us, but if (the government) ends up having such economic problems that the government is saying, "You know what? We're going to continue to trim and cut."
Then where you really start to feel the effect, from the patient care standpoint, is if we were to have to make changes in how we staff, for example, a nursing unit, and right now we have resisted doing that. We don't want to do that and we haven't had to do that.
We have had to do some trimming, not lay-offs, but through attrition, just be a little leaner. But if it gets pushed down the road, that could create some problems for us.
It's not just the ACA, there's others issues with (the Arizona Health Care Cost Containment System.) They've frozen our rates for four years and then did a 10 percent cut. Those are the kinds of things that cumulatively effect how you deliver care.
MINER: Have you formed an opinion about the best thing about the ACA from KRMC's perspective?
TURNEY: From my perspective, I have mixed feelings about it.
I do think that it's very difficult for families out there that can't get coverage.
I'll give you an example; I have a couple of friends who are Republicans that were very opposed to the ACA. Yet they ran into a situation where they had a family member that ended up having pre-existing conditions, that basically they were uninsurable. It was thousands per month to have their loved one cared for. Yet they were able to qualify under some of the new provisions and were able to get a subsidized insurance premium.
I do think there are some positive things from a coverage standpoint. The whole concept of insurance is that people pool together and you have some people that are lucky and some people who are unlucky, but you kind of pool that risk together.
In America right now, there's been quite a few people on the outside, whether it's college kids or people who have pre-existing conditions. From that standpoint, I do see the reasoning behind that and I do think as a nation we should be trying to take care of those things.
The biggest concern I have about the ACA is not in principle what it's doing, but how it (goes) about it. I do think it would have been better to do some pilot programs in states, work out the kinks.
Right now, this thing is supposed to be rolled out and we're still waiting for information on the health exchanges. It's just a gigantic program that's getting rolled out all at once. There's going to be a lot of mistakes made. I think it would have been better to do some pilot projects and to do it incrementally.
The ultimate goal I'm not sure I have a lot of argument against, but doing it so big at a national level, I don't know. I've never seen the federal government do anything in a cost-effective way. I would have rolled it out differently.
Conceptually, I do think that we do need a better system that helps cover those people who can't afford it.
It would have been less costly (with) fewer mistakes affecting fewer people (to) get some models that work and then let the states do it.
MINER: I don't think anyone objects to the goal. What do you think is perhaps the worst (part of the ACA) from KRMC's perspective?
TURNEY: I think the worst piece of it is going to be the potential cost and the lack of sensitivity as to how it effects providers.
For example, they're projecting a shortage of 50,000 primary care providers as a result of the increased demand.
So there's pieces of the whole puzzle that aren't yet being managed, as far as how you actually deliver that care.
There's other pieces that because of politics aren't being addressed.
There's a huge amount of waste and cost in health care at the end of life - we see it in the hospital, - that because of political reasons (is) not being talked about or addressed. Both sides, both the Democrats and Republicans, have used the term "death panels." I don't think that kind of discussion is helpful to actually tackling something that is a very real issue. They estimate that 25 percent of the cost of health care is in the last six months of care. There's just been unwillingness, because of the politics, to address that.
If they're going to take on something this big why didn't they take on the whole ball of wax? We all know it's something ...
TAYLOR: Nobody one wants to talk about.
TURNEY: That's the whole thing that probably worries me the most about the ACA. It's become a political football and the right things aren't always done.
MINER: How will the health care exchanges affect the hospital?
TURNEY: In Arizona they haven't decided yet whether the state's going to do it or if they're going to let the feds do it. (This interview was recorded a few days before Gov. Jan Brewer announced the state would not build its own health exchange.) The problem is that they haven't made all the rules. (The rules they do have) haven't been 100 percent clear. So they're kind of asking people to make a decision without all of the information.
It remains to be seen what happens there, but the concept is that you have these places where people can buy insurance. You have four levels of plans and people can kind of pick and choose what kind of plan they have.
I don't know what happens there, but it's pretty clear that the state's not, they're not going to bump up the Medicaid eligibility above 100 percent of the federal poverty level.
(Part of the ACA required states to include more people on their Medicaid programs or risk losing all of their Medicaid funding. The U.S. Supreme Court said the federal government couldn't take all of the funding away but it could refuse to send additional funding.)
So you're going to still have a lot of uninsured people. So in essence what's going to happen to KRMC is we're going to have the cuts in payments and still have uncompensated care.
Last year, uncompensated care grew to $37 million bucks here, up from $22 (million) the year before. Most of that just because of the changes in AHCCCS.
The thing that people that buy insurance and the politicians that make the decisions (like the ACA and cuts to AHCCCS) don't understand (is) that we (at KRMC) end up either making cuts or we cost-shift (in order to cover the cost of uncompensated care.)
If everybody just paid equally, we could lower our bills for people that buy insurance. We could drop the rates almost 70 percent if Medicare/Medicaid just paid their fair share.
I call it a hidden tax on people that buy insurance and the more you have Medicare and Medicaid as part of your mix, the more you have to do it.
Some of the hospitals that have 50 percent of their patients commercial, they are in so much better shape to weather the storm.
We're not in that position, but we're fortunate from the standpoint that when we don't have a whole lot of debt. So we've got some advantages too. I think we're going to be fine compared to some of the other facilities, relatively speaking.
MINER: Is there a drug shortage problem here? And does it have anything to do with the ACA?
TURNEY: I don't think it has to do with that so much as it's just more of the economics.
I don't understand 100 percent of it. There are certain kinds of drugs that - just from a drug company standpoint - that economically, they don't make as much money on. So they don't produce as much and it ends up that there are shortages.
It's not across the board for all shortages. It's usually those particular ones that have just ended up being not as profitable for drug companies. So there ends up being shortages, then over time as hospitals can't get that (drug), its almost like you have to buy them on the, not the black market, but the gray market, so to speak, and it becomes more costly over time, will the economics work (out in such a way) that people say "Hey there's a market for it right now"?
There's discussion to try to deal with that from a regulatory standpoint but I'm not sure how that's all (going to work out.)
MINER: That almost doesn't make sense, because you always hear if you need the drug, how could it not be profitable?
TURNEY: There are some, that from a manufacturing standpoint, that they do better at then some of the non-generic. Some of the other things you would think that over time it would end up that the supply and demand, that for you to get (to the point for the drug to become profitable), you have to have the shortage and the demand and the price to go up. So in the meantime, you have pain. That's kind of how the free-market system tends to work.
MINER: This has been hotly debated for four years now and it's been through multiple votes in Congress, it's been through the Supreme Court and it sounds like there's still so many unanswered questions out there. Is that a pretty fair summation?
TURNEY: Yeah, they're still coming out with rules. I think the ultimate goal, the ultimate structure that's been pretty clear about how they want to do this. But when it gets to the nitty-gritty detail, they're still coming out with the rules.
For example, with the exchanges that just came out, and they have more (stuff waiting to be rolled out) and people have questions.
It's a huge bill and I think that's what makes people nervous about it. It's just so big and there's so much and this is one where the details do matter in how well it works. There's certain pieces of that (law) the government's still working on. That does make people nervous.
Bottom line is, that I think more people will be covered. Not everyone will be covered like it was promised. I think to that degree, you're still going to have problems with people not having insurance.
So it's maybe solved some of the problems but not all of the problems. Clearly, economically, how it's going to be paid for is still a legitimate question.
TAYLOR: I don't know if you want to share some of the things about what KRMC is doing to be proactive in managing our communities health care needs? Those are things like our collaboration with Mayo Health Clinic and the Mohave County (Public) Health Department? As we collaborate with these agencies not only does that help reduce overall costs but the service?...
TURNEY: Yeah, I guess I kind of hinted at that a little bit, but I think that ultimately health systems that are going to be successful aren't just going to focus within the walls of the hospital.
I think that's a piece where you get the systems down as much as you can. There's always going to be physicians (who) are always going to be using (their best) judgment and I think appropriately so, but the more you can reduce variation (the better it will be.)
When you get outside of the walls of hospitals, you were asking about the readmissions, that's where the hospitals will have to be involved outside of the facility.
For example, in this community you have a lot of people that suffer from diabetes. I think that long-term what the ACA is really pushing is for health care providers to be more proactive in dealing with that outside of the walls of the hospital. In other words, if you get people that are compliant and actually taking care of themselves, that will reduce the cost of health care overall.
That's really ultimately where they want to get with the ACA. It's almost like a revisit of a regional HMO (Health Maintenance Organization) concept. That's an oversimplification, but we're managing that out in the physician practices. You can't do that with independent physicians typically, usually you have to have more of a system in place.
In fact, they have some incentives that they call a Medical Home Concept. Where if you have certain patients that are enrolled (in the program) that come in a certain amount of times per year to make sure that that maintenance of their health is taking place, they'll actually pay a little bit more money to care for those patients. There are concepts like that that do make a lot of sense and we as an institution are taking a look at that.
We're working with the county as far as, say, the health needs assessment, and figuring out, OK, what in Mohave County are the big health issues?
We already have a feel, but I think it will become more clear as we finish that. Then hopefully (we) have enough resources, which is another thing we worry about. You can see all the needs in the world, but if you don't have any money to take care of them, it doesn't do you any good. That's what keeps me up at night.