The Daily Briefing

News for Health Care Executives

12 'Must-Do' Strategies for Protecting Future Margins

July 30, 2013

Executive Summary

Every health care executive knows that pressures on the financial bottom line are already intense and growing stronger—but their goal should be sustainable margins, not cost reduction.

In the past, health care organizations have weathered downturns by cutting costs and holding on until the economic environment improves. But that approach will not be enough this time around. The basic financial realities of the industry are changing permanently, and providers won’t be able to stay above water just by slashing expenses.

The good news is that most providers can maintain a sustainable financial position if they make the right moves in the coming years. But to do so, they’ll need to look beyond cost cutting to take a broader view of margin management.

Modern Healthcare names the industry's best places to work

A ranked list will be released in October

August 15, 2013

Modern Healthcare on Wednesday released its unranked list of the 100 "Best Places to Work in Healthcare" for 2013.

  • The Advisory Board congratulates member organizations honored as "Best Places to Work in Healthcare" this year. The Advisory Board Company was also featured on the list.

The sixth annual list, which is co-sponsored by the Studer Group, recognizes health care workplaces that help employees perform at their optimum level and provide patients and customers with quality care, products, and services.

The list was compiled using information gathered from employers and staff at companies with at least 25 employees as part of a no-cost application process.

For the application, employers completed a survey detailing their policies and practices, benefits, and employee demographics. Meanwhile, employees were asked to evaluate their employers in eight areas:

  • Leadership and planning;
  • Culture and communications;
  • Role satisfaction;
  • Working environment;
  • Relationship with supervisor;
  • Training and development;
  • Pay and benefits; and
  • Overall satisfaction.

Dozens of hospitals and health systems were included in this year's list, including Bailey Medical Center in Owasso, Okla., and Memorial Healthcare System in Hollywood, Florida. (See the Advisory Board members that made the list.)

A ranked version of the list will be released in October (Modern Healthcare, 8/14 [subscription required]).


Advisory Board congratulates members named 'Best Places to Work'

More than 30 honorees are Advisory Board members

August 15, 2013

Modern Healthcare on Wednesday released its unranked list of the 100 "Best Places to Work in Healthcare" for 2013.

The Advisory Board Company was among the organizations named to this year's list.

We congratulate the member organizations also honored by Modern Healthcare:

  • athenahealth (Watertown, Mass.)
  • Bailey Medical Center (Owasso, Okla.)
  • Baylor Jack and Jane Hamilton Heart and Vascular Hospital (Dallas, Texas)
  • Bon Secours Virginia (Richmond, Va.)
  • CompHealth (Salt Lake City)
  • CQuence Health Group (Omaha, Neb.)
  • CTG Health Solutions (Dallas)
  • Doctors Hospital of Sarasota (Sarasota, Fla.)
  • Emergency Medical Associates (Parsippany, N.J.)
  • Encompass Home Health (Dallas)
  • Evolent Health (Arlington, Va.)
  • FreemanWhite (Charlotte, N.C.)
  • Health Catalyst (Salt Lake City)
  • Imprivata (Lexington, Mass.)
  • King's Daughters Medical Center (Brookhaven, Miss.)
  • Lovelace Women's Hospital (Albuquerque, N.M.)
  • McLaren Healthcare (Flint, Mich.)
  • Memorial Healthcare System (Hollywood, Fla.)
  • Memorial Hospital of Union County (Marysville, Ohio)
  • Palisades Medical Center (North Bergen, N.J.)
  • Saint Francis Medical Center (Cape Girardeau, Mo.)
  • Self Regional Healthcare (Greenwood, S.C.)
  • Signature HealthCARE (Louisville, Ky.)
  • Southern Ohio Medical Center (Portsmouth, Ohio)
  • St. Luke's Lakeside Hospital (The Woodlands, Texas)
  • Stillwater Medical Center (Stillwater, Okla.)
  • Sutter Center for Psychiatry (Sacramento)
  • Sutter Davis Hospital (Davis, Calif.)
  • Sutter Medical Foundation (Sacramento)
  • Texas Health Harris Methodist Hospital Southlake (Southlake, Texas)
  • Texas Health Presbyterian Hospital Rockwall (Rockwall, Texas)
  • VHA (Irving, Texas)
  • Weatherby Healthcare (Fort Lauderdale, Fla.)
  • Woman's Hospital (Baton Rouge, La.)


Researchers find the DNA 'signatures' of 30 common cancers

Discovery could lead to better treatments, preventive measures

August 15, 2013

British researchers have created the first comprehensive map of genetic mutations responsible for tumor development, pinpointing 21 DNA "signatures" behind dozens of common cancers.

Prior research has shown that cancer occurs when genetic mutations disrupt normal cell growth. Some triggers of the DNA mutations are understood; for example, chemicals in tobacco smoke can cause lung cancer and ultraviolet rays can trigger mutations in skin cells. But overall, researchers' understanding of the biological processes behind mutations is somewhat "rudimentary," says Mike Stratton of the Wellcome Trust Sanger Institute.

Details of the study

In a report published in the journal Nature this week, Stratton and colleagues outlined their discovery of "signatures" of process that mutate DNA.

For the study, U.K. researchers examined nearly five million mutations in 7,042 cases of cancer. Specifically, the researchers searched for patterns, or signatures, of mutational processes that underlie the 30 most common cancers. They discovered that:

  • All of the cancers studied contained two or more DNA signatures, a finding that shows the variety of processes that work together to cause the mutations;
  • Different cancers are driven by varying numbers of mutational processes (for instance, ovarian cancer is the result of two mutational processes, while liver cancer is the result of six);
  • Some of the signatures are present in more than one type of cancer, while others only feature in one;
  • Of the 30 most common types of cancer, 25 have signatures caused by mutation processes associated with aging.

The researchers also discovered a potential link behind more than half of the 30 cancers studied: A family of enzymes called APOBECs, which are already known to mutate DNA. The enzymes normally are activated when the body responds to viral infections; they attach viruses by damaging their DNA. The researchers believe the enzymes may cause collateral damage to the body's DNA.

Stratton described the findings as the discovery of "archaeological traces" of the many mutational processes that lead to most cancers. He told Reuters that the added insights may have "profound implications for the understanding of cancer," which could lead to better ways to treat and prevent the disease (Kelland, Reuters, 8/14; Paddock, Medical News Today, 8/15).

The Journey to Personalized Medicine

How can your organization help patients with genetic testing and targeted therapies?

From risk assessment to shared decision-making to self-management, the Oncology Roundtable has identified nine steps—laid out in this easy-to-navigate infographic—that your organization can take on the path toward personalized medicine.


In Florida, cutting readmissions by 15% saved hospitals $25M

Program helped hospitals cut readmission, infections at 107 hospitals

August 15, 2013

An improvement effort led by the Florida Hospital Association (FHA) helped 107 facilities cut costs by $47.5 million in five years by reducing readmissions and improving patient safety, according to an FHA report released this week.

FHA officials launched the initiative in 2008 amidst rising costs and poor outcomes. Through data analysis and sharing best practices, the initiative identified and implemented strategies for reducing readmission rates and patient harm.

According to the report, the five-year initiative helped participating hospitals save:

  • $25 million by reducing 15-day readmissions rates by 15%;
  • $15 million by reducing blood stream infections by 41% at 35 hospitals; and
  • $6.67 million by decreasing surgical errors by 14.5% at 67 hospitals.

"We are proud of the improvements we've achieved, proud of the fact that our hospitals are coming together across the state to ensure that quality patient care is central to all that we do," said Steven Sonenreich, CEO at Mount Sinai Medical Center in Miami Beach and chair of FHA's Board of Trustees.

Sonenreich added that the initial success is "only the beginning." Next, FHA aims to reduce readmissions by another 20% over the next three years and decrease instances of patient harm by 40% (Aboraya, Orlando Business Journal, 8/13; McGrory, Miami Herald, 8/13).


Providers worry that ACA grace period could leave them in the lurch

90-day grace period would apply to 80% of consumers

August 15, 2013

A CMS rule interpreting the Affordable Care Act (ACA) gives patients a 90-day grace period on premium payments, but health care providers argue that it puts them at risk of providing services for which they are never reimbursed, Modern Healthcare reports.

Details of the CMS rule

Current regulations on late and outstanding premium payments vary by states, with some states allowing insurers to drop consumers' policies without advance notice. Other states require insurers to offer a 30-day grace period before dropping customers' plans. If coverage is dropped for nonpayment, providers must work directly with patients to collect payments, according to Jennifer Kowalski, vice president of health reform practice at Avalere Health.

Under the CMS rule, which was released in March, consumers will get a 90-day grace period to pay their outstanding premiums before insurers are permitted to drop their coverage. The rule will apply to consumers in all states who purchase subsidized coverage through the Affordable Care Act's (ACA) insurance exchanges. According to Kowalski, the new rule would benefit about 80% of consumers in the exchanges.

The rule also requires insurers to reimburse providers during the first 30 days of the 90-day grace period. If a consumer still fails to make a payment after 90 days and his or her coverage is dropped, insurers will not be required to pay for claims incurred during the last 60 days of the grace period.

Provider groups criticize rule, take up issue with CMS

The Missouri State Medical Association (MSMA), the Missouri Hospital Association (MHA), and the Medical Group Management Association-American College of Medical Practice Executives (MGMA-ACMPE) are among the groups that have pressed CMS to revise the rule, Modern Healthcare reports.

In an Aug. 12 letter to CMS Administrator Marilyn Tavenner, MHA CEO Herb Kuhn and MSMA Executive Vice President Thomas Holloway wrote that the rule "unduly burdens physicians, hospitals and other health care providers" by making them directly collect payments from patients, "put[ting] them at an unfair and significant risk for providing uncompensated care to patients."

"If the current rules cannot be amended or interpreted in a more equitable manner, we fear there will be a widespread reluctance among physicians and other providers to participate in exchange plans," Kuhn and Holloway wrote. They warned that consumers could use the 90-day grace period to circumvent premiums and obtain free health care.

In a July 3 letter to Tavenner, MGMA-ACMPE CEO Susan Turney criticized the rule's provision that the exchanges' health plans "should notify all potentially affected providers as soon as practicable when an enrollee enters the grace period." Turney wrote that providers should be notified as soon as the grace period begins, otherwise "it will be too late for physicians to engage patients and make informed decisions prior to furnishing potentially uncovered services" (Block, Modern Healthcare, 8/13 [subscription required]).


Freestanding EDs provide luxury and convenience—at a cost

About 400 such facilities have opened in the last four years

August 15, 2013

Freestanding EDs—which are appearing in neighborhoods across the country—are providing more accessible, luxurious settings for emergency care, but they often charge three to four times more than their hospital counterparts, Carrie Feibel reports this week for NPR's "Shots" blog.

In the last four years, about 400 freestanding EDs—mostly owned by private companies—have opened nationwide, often in malls or office buildings. They also can provide care that urgent care centers cannot. According to Rice University economist Vivian Ho, the standalone EDs pop up "in places where there are high-income patients who are well-insured and who want to see [a provider] quickly."

Terri Hardy—chief of clinical operations for Texas Emergency Centers—said that their facilities provide a "service to the community" and give patients back what is most valuable: time. "They come here and we see them immediately. We perform the same labs, the same X-rays, the same CAT scans, the same ultrasounds. ... It's convenience."

With higher facility fees, standalone EDs charge three to four time more

The standalone EDs bill similarly to hospitals—cost of treatment, physician's fee, and more—but can charge much more in facility fees than traditional EDs. One patient interviewed by Feibel said that a shot in his back and a prescription cost $1,200, $900 of which was the facility fee.

Since insurers must cover ED visits by law, many companies are speaking out against the standalone ED trend. Some have even sued over high facility fees or tried to make deals with freestanding ED companies for lower payments.

"For these freestanding [EDs], we've seen our dollars and visits just about double over the past year," said Blue Cross Blue Shield of Texas Vice President Shara McClure. She added that while a patient is entitled to their choice, "it's a high-cost choice and it's one that can cost five to seven times more than a typical office visit" (Feibel, "Shots," NPR/Kaiser Health News/KUHF, 8/13).


Forbes: It can cost more than $5 billion to bring a drug to market

More than 95% of experimental meds fail, research shows

August 15, 2013

A recent analysis of nearly 100 pharmaceutical companies paints a stark picture of what it costs to develop a new drug: About $5 billion per new medication, according to Forbes' Matthew Herper.

For years, researchers have estimated that inventing and developing a drug cost about $1 billion or more. However, these estimates account only for the costs that related directly to a specific drug's approval.

To obtain a more precise estimate, Herper calculated the cost of 10 years of research and development (R&D) at major biotechnology and drug companies and divided it by the number of new drugs they launched during or around that time. 

He found that companies that launched just one drug this decade spent about $953 million to bring the average drug to market. However, for major pharmaceutical companies that have brought to market between eight and 13 medicines over the decade, the average cost per drug was nearly $6 billion.

Expert: Drug research costs is becoming 'unsustainable'

The University of California-San Francisco's Susan Desmond-Hellmann, former head of development at Genentech, called the costs "crazy," adding, "For sure it's not sustainable." She noted that "any businessperson would look at this and say, 'You can't make a business off this. This is not a good investment.' I say that knowing that this has been the engine of wonderful things."

According to Forbes, more than 95% of experimental medicines that are studied in humans fail to be both effective and safe. The numbers clearly show "how horrendous the failure rate is and how that causes the cost of success to be so much higher," says NIH Director Francis Collins.

In 2011, Collins started the National Center for Advancing Translational Sciences to remove barriers that prevent drugs from reaching patients. The center is currently looking into ways to "reengineer the pipeline so if failures happen, they happen very early and not in later stages where the costs are higher," Collins says (Herper [1], Forbes, 8/11; Herper [2], Forbes, 8/11).


ACO roundup: Mass. hospitals launch member-owned health plan

Key accountable care news from August 8 to August 14

August 15, 2013

The Daily Briefing editorial team rounds up accountable care news from the last week.

  • The nation's largest insurance companies are launching hundreds of ACOs, and some providers say they are more enthusiastic about these private-sector organizations than their Medicare counterparts, Modern Healthcare reports. For hospitals and physicians, private-sector ACOs appear to have more potential than Medicare ACOs because they allow from more leeway to design benefits that encourage plan members to use network providers (Daily Briefing, 8/13).
  • Massachusetts: Tufts Medical Center, its physician group, and Vanguard Health Systems are preparing to launch a new member-owned health plan, called Minuteman Health, which will focus on greater transparency and lower costs for individuals and small businesses. Five different plans with varying premium costs, co-pays, and deductibles will be offered through the Minuteman website, insurance brokers, and the state's health insurance exchange. So far, the co-op includes 2,000 doctors and 14 hospitals (Donnelly, Boston Business Journal, 8/12).
  • New Jersey: Barnabas Health—an eight-hospital system—is starting an ACO with Horizon Blue Cross Blue Shield of New Jersey to improve care and lower costs for the insurer's Medicare Advantage patients. The ACO will go live on Sept. 1 (McCann, Healthcare Finance News, 8/9).


Daily roundup: August 15, 2013

Bite-sized hospital and health industry news

August 15, 2013

  • California: The state's Assembly Committee on Business, Professions, and Consumer Protection this week approved a bill that would allow nurse practitioners (NP) to treat patients for primary care services without physician supervision. The original bill—which failed to get out of committee—was amended to restrict NPs from setting up their own offices without an affiliation from a hospital, clinic, practice association, medical group, or ACO (Sisson, U-T San Diego, 8/13).

  • District of Columbia: City officials have asked police to investigate two ambulances that caught fire last week in what officials are calling a "highly coincidental occurrence of experiencing two vehicle fires in the same day." The fires are the latest in a series of D.C. ambulance problems, and they occurred one day after an ambulance was pulled from President Obama's motorcade to fix a broken fuel gauge (Cella/Noble, Washington Times, 8/13).

  • Texas: A former nurse convicted of killing a baby and suspected of murdering dozens more is scheduled to be released from state prison under Texas' mandatory release law, state officials say. Genene Anne Jones was found guilty of murdering a baby in 1984 when she gave the infant a lethal dose of a muscle relaxant, but prosecutors at that time said Jones may have murdered as many as 46 more babies between 1978 and 1982. When she is released in 2018, she will have served 35 years of her 99-year sentence (Chumley, Washington Times, 8/13).

  • Washington: Critics say that state officials' decision to bar five proposed health insurance plans from the state's health insurance exchange could limit consumer choices when the exchange opens for enrollment on Oct. 1. State Sen. Linda Evans Parlette (R) warned the state is moving away from the goal of insurance exchanges, which was to "increase choice and competition for health insurance" (Ostrom, Seattle Times/Kaiser Health News, 8/13).

  • Christopher Kerns details three ways to prepare for the health insurance exchange tsunami. Read more.