Payers & Providers 8/6/09

6 August 2009

PAYERS & PROVIDERS California Edition

Calendar

New Seismic Compliance Concerns Citing Capital Crunch, Hospitals Seek an Extension

August 9-11 Governance Support Conference, Grand Hyatt, San Francisco. Exploring ways to provide governance support, including the use of e-portals and case studies. Conducted by the Governance Institute. $1,195. Register online: www.governanceinstitute.com

August 29-Sept. 2 Western Angiographic and Interventional Society Annual Meeting Torrey Pines Resort, La Jolla Discusses advances in interventional procedures. Keynote Speaker: Joan Embery. Fee: NA Register online: http://www.westernangio.org/9199.html

September 24 P4P Stakeholders Meeting, Sheraton Gateway, Los Angeles. A forum for California healthcare stakeholders to discuss pay-forperformance efforts. Conducted by the Integrated Healthcare Association. Fee TBD.

A new survey of chief financial officers by suggested its continued operations are in the California Hospital Association paints a doubt after its primary lender defaulted fiscal landscape so bleak the CHA says it on nearly $13 million in financing. That may hinder full compliance with looming firm, Medical Capital Holdings, deadlines for seismic structural specialized in buying hospital compliance. receivables. It was ordered shut down by According to the survey of a federal judge earlier this week. approximately 130 hospital CFOs To address the issue of keeping statewide, nearly two-thirds report they hospitals online, the CHA has sponsored cannot currently secure capital to fund the SB 289. Authored by Sen. Denise mandates required by SB 1953, which was Ducheny, D-San Diego, the bill would passed into law grant some form of shortly after the “deadline Percentage of California Hospitals Experiencing: 1994 Northridge flexibility,” says earthquake. Many of CHA spokeswoman Admission Elective Difficulty the hospitals also report Decreases Jan Emerson. However, Procedure Securing shrinking margins Decreases Capital the text of the bill is not aggravated by treating expected to reach a 51% 58% 64% more uninsured final form until the patients. Legislature reconvenes Source: CHA About 900 of California’s 2,700 later this month. hospital buildings must be Meanwhile, 52 hospitals compliant with SB 1953 within four to six required to comply with SB 1953 by years. The remainder must be compliant by 2015 have requested extensions until 2030. 2020 from the Office of Statewide “There will be a lot of hospitals closing Health Planning and Development, if there is not relief,” says Roger Richter, which oversees hospital construction in the CHA’s senior vice president of California. The extensions would be professional services. granted based on several criteria, A case in point may be Integrated including whether or not the facility is Healthcare Holdings, Inc., which operates vital for delivering healthcare services to four hospitals in Orange County. Filings Medi-Cal recipients. Among the with the Securities and Exchange Commission at the end of June strongly Continued on Next Page

Info: http://www.iha.org/2009P4PSM.htm E-Mail [email protected] with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

www.lakesidecommunityhealthcare.com

2009 by Payers & Providers Publishing, LLC

Payers & Providers Top Placement... Bottomless Potential

Advertise (877) 248-2360, ext. 2

In Brief CNA Pickets Over Swine Flu Protections Members of the California Nurses Association picketed at UCSF Medical Center on Aug. 5 to protest what the union claims is lackluster preparations for a potentially large outbreak of the H1N1 flu strain this fall. The union, which represents some 70,000 nurses statewide, claims that California’s hospitals have unclear policies on how to deal with cases of swine flu, and that they often fall short of guidelines recommended by the Centers for Disease Control. “Hospitals across California--and possibly the entire country--are putting registered nurses and other front-line caregivers at risk by inadequately preparing for this pandemic,” says CNA co-president Deborah Burger. The CNA also claims UCSF fired a nurse in retaliation for complaining about unsafe working conditions. USCF claims the nurse was released during her probationary period for performance issues. Hospital officials also say their H1NI infection control policies are stringent.

St. Joseph, Aegis Team On Employee Health Initiative St. Joseph Health System – Sonoma County has reached a deal with Nashville, Tenn.-based Aegis Health Group to create a health management program that will be developed for local businesses. The program will be spearheaded by Aegis Health’s proprietary, which will be used to determine future health risks for the employees of

Continued on Page 3

NEWS

Page 2

Seismic

(Continued from Page One)

applicants are Alameda County Medical Center in Oakland, Loma Linda University Medical Center near San Bernardino and UC Davis Medical Center. OSHPD is expected to announce extension recipients by the end of this year. Not all of the applicants are financially pressed. San Francisco General Hospital submitted an extension application last December. It received $887 million from a bond measure passed overwhelmingly by San Francisco voters last November. That money is

expected to ensure a replacement hospital is operating by 2015. “Construction projects are all projections, and we wanted to make sure we were not violating any (regulations) in 2015,” says SF General spokeswoman Rachael Kagan of the rationale behind the application. But Kagan admits her institution is in the relatively unique position of being able to float a public bond issue. “We’re not in the same category as a lot of other hospitals,” she says. “We’re very fortunate we don’t have that struggle ahead.”

Waiting Game For Prop. 3 Funding With Bond Issue on Hold, L.A. Reconstruction Slows The renderings for the new 317-bed Childrens “We will resume our aggressive Hospital Los Angeles portray a state-of-the-art construction schedule just as soon as we have facility with private, light-filled patient rooms the proper funding in place,” says Ken Wildes, that contain soothing the hospital’s vice ceiling fixtures and president of daybeds for parents. communications. Proposition 3 Lounges for families Childrens had abound. The HBO Children’s Hospital Bond Act Program completion funds in Hollywood Cafeteria the bag: $98 million Purpose: To raise $998 million for 13 boasts enormous it’s entitled to via private and UC childrens hospitals skylights and a Proposition 3 funds. statewide. Private institutions soaring wall of glass. But that expected allocated $98 million apiece; UCs The new $583 check isn’t arriving $39 million apiece. million facility was anytime soon. supposed to open by The money to Approved November 4, 2008. Vote: February 2010. But it pay for Proposition 3 55.2% yes; 44.8% no. is currently a steel was supposed to be shell, slowly being raised through a state filled out by a bond sale. Such sales skeleton crew of construction workers. In a are usually as routine as fire drills. But the near financial pinch, Childrens Hospital cut the collapse of the bond market with last fall’s project’s workforce 90% in March, from 600 financial crisis prompted California Treasurer construction workers to 125, according to Bill Lockyer to put most sales on hold. hospital officials. The slowdown was worked California has held only one since late 2008. out between hospital management and the So, Proposition 3 sits in a holding pattern with project’s contractors. Plans now call for an opening sometime in 2011. Continued on Next Page

RFS Consulting Expert Healthcare Communications ■White Papers

■Media Campaigns

(818) 848-8510

2009 by Payers & Providers Publishing, LLC

■Newsletters

www.rfsconsult.com

Payers & Providers Longer ALOS!*

Advertise (877) 248-2360, ext. 2 *For our ads, not your hospital

In Brief participating businesses. “Employers are looking for ways to offer effective health-management programs to their employees as a way to rein in escalating healthcare costs, and hospitals are trusted health resources for their communities,” says Henry Ross, chief executive officer of Aegis Health Group. St. Joseph’s operates Santa Rosa Memorial Hospital and Petaluma Valley Hospital. Financial terms of the deal were not disclosed.

Molina Reports Lower Quarterly Earnings Medi-Cal HMO Molina Healthcare reported slightly lower earnings for the second quarter ending June 30, even as revenue growth for the Long Beachbased health plan grew at an impressive clip. Molina reported net income for the quarter of $14.6 million on revenue of $927.6 million. Earnings were down 7.6%, compared to second quarter 2008 net income of $15.8 million. That’s despite the fact that revenue for the quarter was up 17.4%, from $766.5 million. Overall membership also grew 11% compared to the second quarter of 2008, and now approaches 1.4 million nationwide. Company officials attribute the earnings drop in part to increasing medical expenses, which increased to 84.8% of premium dollar, compared to 81.9% in the year-ago quarter. Molina Healthcare also reported a steep drop in investment income, due primarily to lower interest rates. “Much of our efforts in the second half of the year will be focused on addressing these challenges,” says J. Mario Molina, M.D., Molina Healthcare’s chief executive officer. Molina’s stock, which trades on the Nasdaq Exchange, dropped about 10%, to $20.30 per share, a day after its earnings were announced on Aug. 4.

NEWS Prop. 3

Page 3 (Continued from Page Two)

dozens of other projects that need bond funding. The holdup occurred despite the fact voters passed Proposition 3 by a double-digit margin last November. All the state’s pediatric facilities are cooling their heels while they wait for the Prop. 3 funds, but the need at Childrens Los Angeles was particularly crucial. “All of the hospitals are being affected, but none to the degree of Childrens Hospital Los Angeles,” says Diana S. Dooley, president of the California Children’s Hospital Association. “There were no anticipations that the state’s fiscal emergencies would be as they are, and they are very much reliant on the remaining bond funds.” There is no immediate timetable as to when the bonds will be sold to finance Proposition 3. Lockyer spokesman Joe DeAnda says a sale may occur during the fall

– a full year after the original ballot proposition passed. “Obviously our short-term borrowing needs are upfront, and what (Lockyer) has said that if we don’t go to market for long-term borrowing by the fall, the projects will start freezing up,” DeAnda says. Officials with other childrens hospitals in California say their construction projects are far enough into the future that not immediately getting the Prop. 3 funds has had minimal impact. Childrens Hospital of Orange County succeeded in raising $140 million in June for its expansion via private bond placements. CHOC is adding 425,000 square foot of space to add ancillary services, and remodeling an existing patient tower. “We’re in pretty good shape for the next year plus,” says Dave Schinderle, CHOC’s vice president of finance.

Some UC Doctor Furloughs Likely Facilities Will Also Juggle Hiring Freezes, Pay Cuts

Faced with a 20% reduction in state funding, the hospitals operated by the University of California are scrambling to find ways to accommodate an emergency spending plan that includes mandatory employee furloughs. Unlike the university campuses, the UC hospitals were granted more flexibility by the Board of Regents in how they achieve their cuts. Interviews and documentation supplied suggest the hospitals will be juggling a number of cost-cutting initiatives. However, large portions of the medical staff at UC hospitals hold faculty positions and are classified as employees. As a result, many may have to take mandatory furloughs when the new fiscal year begins on Sept. 1. The number of compulsory furlough days per employee range between 11 and 26, the total rising in tandem with salaries. Furloughing members of the medical staff is likely the case at UC Davis Medical Center, according to a June 30 letter sent to employees by hospital CEO Claire Pomeroy, M.D. Although some 350 members of the medical staff are exempted as non-faculty employees, up to 750 members of the staff are employed as faculty, according to hospital officials. “We’re trying to figure out how to best absorb this significant without having too negative an impact,” says Bonnie Hyatt, UC

2009 by Payers & Providers Publishing, LLC

Davis’ Medical Center’s assistant director for public affairs. Other UC facilities, such UCLA Ronald Reagan Medical Center, appear to shying away from furloughs. “We are able to achieve the savings through a variety of ways, including elimination of vacant positions, management of overtime pay, elimination of pay increases…and salary reductions for senior management,” says spokeswoman Roxanne Yamaguchi Moster. UC Irvine Medical Center and UC San Francisco Medical Center appear to be operating along similar lines. “Under our plan, medical center employees...will not be furloughed or have their pay decreased,” says a letter sent on July 30 by UCSF CEO Mark Laret to employees. According to UC officials, plans will not become more definitive until closer to Sept. 1. “The basic plans are in place, but have not yet been firmed up,” says Leslie Sepuka, spokeswoman for UC President Mark Udolf. “They’re trying to figure it how to implement it.” Officials with the two major unions that represent UC hospital employees – the California Nurses Association and the Service Employees International Union – did not return phone calls seeking comment.

Payers & Providers

Vol. 1, Issue 2 Payers & Providers is published every Thursday by Payers & Providers Publishing, LLC. An annual individual subscription is $99 a year ($149 in bulk). It is delivered by e-mail as a PDF attachment, or as an electronic newsletter. All advertising, subscriber and editorial inquiries: (877) 248-2360 [email protected]

Mailing address: 818 N. Hollywood Way, Suite B Burbank, CA 91505

Website www.payersandproviders.com

Facebook www.facebook.com/payersproviders

Twitter www.twitter.com/payersproviders

LinkedIn www.linkedin.com/in/ payersandproviders

Editorial Board Steven T. Valentine, President, The Camden Group Ross Goldberg, Chairman of the Board, Los Robles Hospital & Medical Center Jim Lott, Executive Vice President, Hospital Association of Southern California Elaine Batchlor, M.D., Chief Medical Officer, L.A. Care Health Plan Keith Richman, M.D., Executive Vice President, Lakeside Community Healthcare

Publisher Ron Shinkman [email protected]

OPINION

Page 4

Stretching To Buy Medical Homes Studies Show They Work – But at a Price Patient-centered medical “homes” may be information technology implementation or coming of age. They have been proposed infrastructure investment. as an integral tool in the new healthcare However, the proposed payment reform delivery model. In January, the structure does not grant the provider Centers for Medicare and Medicaid accountability for reducing per capita costs; Services launches a demonstration project nor is there any risk-bearing for excess costs to test their efficacy. or for increasing patient volumes and care The patient-centered medical home intensity. Specialists, hospitals, and other moves away from the process of seeking providers receive no incentive to participate primary care only when one is sick. in care coordination. Instead, they assure the accessibility As a result, what financial of timely, culturally appropriate data is obtained from the CMS healthcare coordinated by a project may not necessarily apply multidisciplinary team led by a to medical homes if they’re used on physician. a large scale. On paper, the benefits of For those providers mulling medical homes appear obvious: whether to switch to the medical studies have shown their use home model on their own, here are results in better health outcomes a few essential guidelines: through improved chronic disease •Primary care must be the focus of management and high patient the organization and the team must satisfaction. In some instances, be fully-committed to moving away they have also eliminated racial By from episodic care and ethnic healthcare disparities. Carolyn S. •The practice must have the But medical homes may reap Tung information systems, staff expertise, huge benefits only after equally huge and quality improvement plans in investments are made. Most primary place to achieve NCQA certification care practices lack the resources in staff or • The practice must have a network of technology to function as a medical home. highly-trusted specialists who are They require sophisticated patient tracking electronically connected and accessible to systems, and ease in communication and and by the practice making appointments. A study recently • The organization must have a fullypublished in the Annals of Family functioning electronic medical record Medicine that examined medical practices in Virginia concluded that fewer than 1% Meanwhile, until primary care physicians, of all practices possessed the elements of specialty care physicians, hospitals, and other the patient-centered medical home model. providers are appropriately aligned, the high Other research has shown that medical expectations for medical homes in improving practices are reluctant to spend large costs and quality may not be realized. Should amounts of money on technological medical home use become widespread and upgrades. When they make advances, they part of an overall reform package, they will tend to do so in small increments. have to be linked with other incentive and Aside from the cost of technological payment initiatives that ensure every party is investment, medical homes will likely accountable for the care they provide. require certification as well. The process by the National Committee for Quality Carolyn S. Tung is a Manager with The Camden Assurance, while exhaustive, runs nearly Group, a healthcare advisory firm in El Segundo. $3,000 for a practice of six to 100 She holds a masters degree from the Harvard School of Public Health. physicians. The proposed payment mechanism for the CMS project would give physicians Op-ed submissions of up to 525 words are roughly $40 to $50 per member per welcomed. Please e-mail proposals to month. For a practice with 500 Medicare [email protected], or call enrollees, this could mean up to $300,000 (877) 248-2360, ext. 3. per year to help defray the costs of

2009 by Payers & Providers Publishing, LLC

Payers & Providers

EMPLOYMENT/MARKETPLACE

It costs up to $27,000 to fill a healthcare job.* We’ll do it for a lot less. Employment listings starting @ $1.65 a word Advertise: (877) 248-2360, ext. 2 Or: www.payersandproviders.com *New England Journal of Medicine, May-June 2001

LOOKING FOR A NEW POSITION? PAYERS & PROVIDERS can help. We publish advertisements for those seeking new career opportunities for just $1.25 a word. If you prefer anonymity, we’ll handle all responses to your ad. Discreetly. Call 877-248-2360, ext. 2, or e-mail [email protected] for more information.

2009 by Payers & Providers Publishing, LLC

Page 5