12 November 2009

12 November 2009

California Edition

Calendar

OSHPD To Overhaul Review Process

Web-Based System Will Cut Construction Timelines November 16-18 8(2/9-*4/(!>++-?/(;/-4!-9!>*)( >5)4?/)+!-4!>5/45!>441(2!8-49)*)4?)6! W-L4;-L4!7-+!>45)2)+!S(**/-;;B!8-+;! @>!BX)&4-;)!+J)(Y)*!/+!8(2HJ;/A(!8ZH!
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Often criticized for delays in approving hospital construction projects, California’s Office of Statewide Health Planning and Development has begun an extensive overhaul of its aging computer database. OSHPD earlier this week selected San Ramon-based Accela Inc. to create a Webbased system that is expected to greatly streamline the process to obtain approvals for hospital construction. The system, which will cost about $1.9 million to install, is expected to be online by the second half of 2010. An OSHPD official says the current system, a “hodgepodge” of computerized and paper communications, could no longer handle the volume of submissions for construction projects. “We were running $2 billion to $3 billion a year in terms of project workload. Now we’re at $23 billion, and it’s no longer robust enough to handle that volume,” says Paul A. Coleman, OSHPD’s deputy director for the facilities development division and a licensed architect. Moreover, OSHPD’s retrieval-based computer system for managing construction projects – which dates back to the early 1990s – had become fundamentally unstable, according to Coleman. “When you run identical queries, you get two different answers, which makes it very suspect,” he says.

Much of the boom in hospital construction stems from mandates to seismically upgrade facilities, an undertaking hospital officials estimate could eventually cost $40 billion. Managing such projects has been particularly challenging for hospital executives. Construction costs increased 66% between 2003 and 2006, according to the California Hospital Association. Hospital officials also say that OSHPD – which conducts inspections and approvals through virtually every phase of a construction project – can drive up the costs via delays of plan checks and approvals. Coleman acknowledges that plans and paperwork gets lost in the mail, and changes are not always correctly entered into its database, creating contradictory data that compounds delay. Partly as a result, OSHPD’s average approval time before construction can begin is about 16 months, according to Coleman. Some projects require an approval process of two years or more before work can begin. Accela, which specializes in creating interactive computer databases for government agencies, will create a paperless system that will allow OSHPD officials and project managers to Continued on Next Page

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In Brief Cedars-Sinai Reports More Radiation Overexposure Victims Cedars-Sinai Medical Center disclosed earlier this week that 54 more victims had been discovered to have been dosed with high levels of radiation due to an improperly calibrated CT brain perfusion scanner. The Los Angeles hospital reported that at least 260 patients have been dosed with radiation levels up to eight times higher than required to perform the scan, which is used to determine the extent of internal bleeding after a stroke. The hospital had previously disclosed 206 victims. The radiation overdoses were linked to the hospital’s scanner being improperly calibrated in early 2008. The error was not discovered until August of this year. The Food and Drug Administration issued an advisory regarding CT brain perfusion scanners after Cedars-Sinai reported the errors. Hospital spokeswoman Simi Singer declined to say whether the victim count might increase in the future. The hospital also reported that about 20% of the victims suffered radiation exposure in the lenses of their eyes, which may put them at risk of developing cataracts at a higher than average rate. Cedars-Sinai has sent letters of apology to the afflicted patients, and has offered to pay to treat any medical problems associated with the overdoses. “We have a responsibility to do right by our patients, so we are committed to addressing their needs by providing information and resources as we continue to investigate the scanning equipment issues,” says Mark Gavens, CedarsSinai’s chief operating officer.

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NEWS

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OSHPD

(Continued from Page One)

communicate via Internet portals and continuously update project data. Hospital managers and building contractors will also have access to a “dashboard” that will provide a real-time status of their projects’ progress with OSHPD. And OSHPD inspectors will also be able to wirelessly submit data from construction sites, rather than have to input handwritten notes at a later date. “The future holds some great things for OSHPD in terms of streamlining processes and automating plan reviews and plan checks,” says John Sasson,

director of business development for Accela’s land management division. Coleman predicts that the Accela system will eventually reduce the average time for building a hospital in California from seven years to five. According to Sasson, that time reduction will also lead to cost reductions for hospitals. “They will spending less time paying for construction crews to be on-site,” he says, adding that this could shave millions of dollars off the costs of larger projects.

Hospital Margins On The Upswing

Fueled By Cuts, The Trend May Only be Temporary A national study of hospital margins show they have rebounded dramatically since they were clobbered by the onset of a steep recession last year. Those numbers were echoed in California, but industry observers believe nancial pressures unique to providers in the Golden State will make such gains only temporary. The study of more than 400 hospitals nationwide by Thomson Reuters concludes that overall margins have rebounded from a low of .37% in the third quarter of 2008 to 8.4% in the second quarter of this year. This was achieved primarily by slashing labor costs and other expenses. Cash on hand also rose from 90 days in the rst quarter of this year to 146 days in the second quarter – an increase of more than 60%. “The majority of hospitals are poised for a strong recovery,” says Gary Pickens, Thomson Reuters’ chief research ofcer for healthcare. According to Pickens, Thomson Reuters has date from 48 hospitals in California, with their numbers skewed toward larger teaching institutions. Financial data released late last

month by the Ofce of Statewide Health Planning and Development echo the national data, with total hospital margins averaging 8.1% in the second quarter, up from -4.9% in the fourth quarter of last year. “Hospitals trimmed contract labor, increased overtime and focused on boosting productivity,” Pickens says. Investment income has also rebounded considerably. According to Jan Emerson, vice president for external communications for the California Hospital Association, notes that total operating expenses for hospitals have only risen 3.7% over the past year, compared to a typical increase of 7% to 8%. “There have been a lot of layoffs, a lot of service line closures and reductions in nonessential travel,” Emerson says, adding that collections were also ratcheted up. One area where there is a serious deviation from the Thomson Reuters data is the number of hospitals operating in the red. Only 20% of the hospitals nationwide lost Continued on Next Page

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In Brief Providence, Crescent Enter Infusion Pact Anaheim-based Crescent Healthcare has entered into a pact with Providence Health & Services California Region to provide infusion therapy to patients at its three hospitals in the San Fernando Valley region of Los Angeles. Crescent will service Providence patients being discharged from Providence Saint Joseph Medical Center in Burbank and Providence Holy Cross Medical Center and Providence Tarzana Medical Center, both in Los Angeles. It will have onsite clinicians, primarily registered nurses, to identify patients who would benet from early discharge and infusion therapy. Crescent has opened outpatient treatment centers in Burbank and several other locations to accommodate the patient ow. Crescent ofcials say the can save acute care providers money by facilitating earlier patient discharges and closely managing their outpatient care. “We look forward to applying our methodologies to Providence's specic challenges to reduce costs at their Valley hospitals while providing smooth transitions into ambulatory care for their patients,” says Crescent Chief Executive Ofcer Robert Funari.

Blue Shield Makes Exec Appointments Blue Shield of California has named John Hedberg as chief financial officer for its individual, small group and government business unit. It also named Mike Sears as vice president of customer service. Hedberg was previously a business finance officer for Cigna. Sears was senior vice president of

NEWS

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Margins (Continued from Page Two) money during the second quarter. In California, the gure for 2008 was 35%, with 41% reporting negative operating margins. That deviation is more likely to mean that California’s hospitals will not share in the nancial largesse predicted by the Thomson Reuters study, according to industry observers. “If you look at the big picture, the rebound is temporary,” says Shane Passarelli, a senior vice president for Healthcare Finance Group, which provides nancing to hospitals throughout California.

Passarelli notes that health plan enrollment is down signicantly and is not expected to rebound immediately, meaning hospitals will have to cope with more uninsured patients. Access to capital markets is still challenging, meaning costs for borrowing are higher than in the past. And an economic recovery will also pressure hospitals to begin hiring again. “Many hospitals have put a freeze on hiring and capital (expenditures), but you can only do that for so long,” he says. “If you do it for too long, you’re out of business.”

Kaiser Reports Improved Earnings Quarterly Numbers up, But Enrollment is Down

Kaiser Foundation Health Plan and Kaiser Hospitals reported improved nancials for the third quarter ending September 30, but overall enrollment in its health plans were down. Kaiser’s nancials reect what has aficted many other major health insurers during the recession: better control of expenses, but lingering doubts about how to grow membership once a nancial recovery takes hold. The Oakland-based Kaiser, a not-for-prot that operates in California and eight other states, reported third-quarter net income of $569 million, compared to a loss of $399 million in the third quarter of 2008. Net income for the three quarters totaled $1.6 billion, compared to $201 million through the rst three quarters of 2008. Revenue for the rst three quarters of the year was $31.6 billion, up from $30.3 billion through the third quarter of 2008. Capital expenditures were cut slightly, to $1.7 billion from $1.8 billion through the rst three quarters of the year. Where Kaiser slipped was in enrollment: it has declined by 68,000 through the rst

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three quarters of the year, and stands at just under 8.6 million. Kaiser didn’t break out state-by-state enrollment numbers, but data from the Department of Managed Health Care suggests most of the losses are in California. Kaiser enrollment statewide stood at 6.75 million as of June 30, the most recent date for which gures were available. That compares to California enrollment of 6.81 million as of June 30, 2008 – an overall loss of 58,850, or 85% of its systemwide decline. However, the enrollment losses in California were not nearly as steep as some of its competitors. Anthem Blue Cross lost nearly 337,000 enrollees during the same period, according to DMHC data – a drop of about 8.5%. Kaiser ofcials made no forecasts about the upcoming year. “While we are seeing some positive nancial activity in the nancial markets, uncertainty in the economy and healthcare industry continues,” says Kathy Lancaster, Kaiser’s chief nancial ofcer.

Payers & Providers

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OPINION

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Providers’ Post-H1N1 Threat: MRSA

Migration of The Hospital-Acquired Strain Ups Risks Hospital emergency rooms are filling up There may be a variety of reasons, including with flu victims much more quickly than the inappropriate disposal of medical or other normal this fall, driven by the H1N1 swine waste into the oceans or other bodies of flu pandemic. Hospital employees are water. MRSA is a hearty bug, and it is not out treating the patients and gritting their teeth of the realm of possibility that lax to try and get through the flu season. environmental regulations in one country is But as the weather warms and flu cases affecting many others. subside, the spring and summer But if there is a burgeoning of may hold another new peril, MRSA on the nation’s beaches, one just as pernicious and it is also possible that we could dangerous as H1N1: be confronted by spring and methicillin-resistant summertime epidemics of the Staphylococcus Aureus, or bug that mirror the fall and MRSA. The bacteria has been a winter blossoming of H1N1. growing plague over the past Were that to occur, hospital several decades, killing nearly staff and management would 20,000 people a year – more have to be extraordinarily than those who succumb to vigilant. The use of N-95 AIDS. Although the antibiotic respirator masks may have to vancomycin is effective against become standard. Visitor MRSA in large doses, a restrictions may have to be recently reported strain is imposed. Hand-washing would resistant to the drug and has a become a constant. And the 50% mortality rate. housekeeping staff would have By MRSA is also playing an to be indoctrinated into the practices Jim Lott insidious supporting role to the of disinfecting every single square H1N1 pandemic: according to data inch of a hospital room after a patient in the Morbidity and Mortality Weekly leaves, including the window curtains. Report published by the Centers for I am not saying that hospitals must adopt Disease Control, MRSA was present in 8% a bunker mentality. The pharmaceutical of the children who died of H1N1 in industry, so long focused on developing August. “blockbuster” products that focus on non lifeWhy do I bring MRSA up? It used to be threatening quality-of-life disorders, may have a mostly hospital-acquired bug among the to devote more resources to expanding the severely ill, but that has changed. arsenal of available antibiotics. Completely healthy people have been Moreover, the public awareness getting infected outside of the hospital campaigns about MRSA have been extremely setting for the past decade or so. A recent limited. Most health experts agree that study by researchers at the University of transmission outside of the hospital setting Washington turned up MRSA in the water occurs through unprotected cuts and scrapes. and sand on seven beaches in and around Sign postings at public beaches asking Puget Sound. Most of those strains were patrons to bandage any nicks and cuts they the most dangerous type typically acquired have before they hit the sand and surf could in hospitals. make a huge difference. The discovery of MRSA may not be isolated to Washington State beaches. Jim Lott is the Executive Vice President of the Researchers tested at least two beaches in Hospital Association of Southern California. He is a California. Although those results were member of the Payers & Providers editorial board. negative, testing was also delayed, potentially degrading the quality of the samples. The death of a Los Angeles Op-ed submissions of up to 575 words are elementary school principal last year from welcomed. Please e-mail proposals to MRSA may have been linked to a vacation [email protected], or call he took on the beaches of Cancun. (877) 248-2360, ext. 3. Why is MRSA showing up on beaches?

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