The Daily Briefing

News for Health Care Executives

Why dramatic labor cost cuts are not sustainable

November 22, 2011

The reprieve granted during the recession as nurses delayed or even came out of retirement is unlikely to persist. Between 2010 and 2020, the national shortage of nursing labor is expected to increase considerably. This scarcity will continue to drive nursing wages upward. At the same time, hospitals will need to attract skilled nurses to care for older, sicker patients. And as ever, organized labor (or the threat of labor union organizations) is likely to remain a powerful force advocating for more generous benefits and higher staffing levels.

Achieving sustained cost improvement, not just one-time savings

Providers have little influence on the long-term price of inputs like labor, but they have substantially more control over the utilization of those inputs. By focusing on utilization rather than price, providers can transform their cost reduction paradigm from a short-term “campaign” mentality into one of sustainable improvement.
For example, short-term strategies for cutting labor expenses involve wage freezes or reductions in force, while sustainable reductions in cost growth tend to involve the development of flexible staffing models that enable providers to more efficiently staff to demand. A detailed analysis of individual positions can help determine appropriate staff.

Similar opportunities exist when considering health benefits expense. Health Care Advisory Board research has shown that sustainable employee benefits spending results less from increased cost-shifting to employees, and more from a sustained focus on benefit utilization. Health plans that foster proactive management of chronic conditions, or improve overall employee health, tend to incur lower costs than traditional benefit plans.


Learn effective strategies for curbing growth in labor spending

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After Super Committee meltdown, what's next?

Health leaders brace for deeper cuts

November 22, 2011

The Super Committee has failed to reach a deal—and triggered billions of dollars in spending cuts—but experts warn that more health rollbacks loom as lawmakers continue to search for a federal deficit fix.  

The 12-member supercommittee—which was tasked with developing and passing at least $1.2 trillion in federal spending cuts over 10 years—on Monday announced that it would "not be possible to make any bipartisan agreement available to the public" before its Thanksgiving deadline, citing an "inability to bridge the committee's significant differences."

Failure triggers across-the-board Medicare cuts

The panel's failure will trigger $1.2 trillion in automatic spending cuts over 10 years beginning in 2013, which will reduce Medicare spending by 2%, or $123 billion.

The cuts are expected to have the biggest impact on hospitals, which receive nearly 50% of Medicare funding. According to Fitch Ratings, the triggers could slash average not-for-profit hospital operating margins by about 29%. Hospital company stocks, including Health Management and HCA, on Monday dropped with the overall market in anticipation of the committee's announcement.

  • Regardless of whether automatic spending cuts actually go into effect in 2013, maintaining financial viability over the long term will require hospitals and other health care providers to take strategic action beyond cutting costs.  The Health Care Advisory Board's Medicare Breakeven Project offers best practices and resources for helping members achieve the new performance standard.

For physicians, the panel's failure also represents a missed opportunity to overhaul the widely panned Medicare sustainable growth rate formula. Since 2002, Congress annually has passed a series of short-term bills to block scheduled cuts to Medicare reimbursement rates under the formula. The most recent "doc-fix" bill, enacted in December 2010, is scheduled to expire on Jan. 1, 2012, at which point physicians face a 27.4% payment rate cut.

"The failure of the deficit committee forces our nation to continue on an unsustainable path that puts current and future generations of Americans at risk for harsh consequences," American Medical Association President Peter Carmel said. He added that the scheduled reimbursement cut likely "will force many physicians to limit the number of Medicare … patients they can care for in their practices."

Smaller cuts now may mean larger cuts later

The automatic cuts are significantly less than the $500 billion to $700 billion in health cuts that likely would have been included in a debt deal, Reuters reports. However, the failure to reach an agreement this year likely will increase future pressure to rein in health care spending, which accounts for roughly one-fifth of the federal budget, Kaiser Health News reports.

"Congressional staffers and members have been pretty direct with health care industries: If you're not on the list now, you probably will be later," said financial analyst Ipsita Smolinksi.

Future proposals could include raising copayments, premiums, and other costs for Medicare beneficiaries, Reuters reports. Meanwhile, hospitals could lose $20 billion in federal funding to cover bad debts and $9 billion in Medicare funding for medical education (Morgan, Reuters, 11/21; Steinhauer, et al, New York Times, 11/21; Montgomery/Kane, Washington Post, 11/21; Walker, MedPage Today, 11/21; Baker, "Healthwatch," The Hill, 11/21; Lowes, Medscape Medical News, 11/21; Werber Serafini/Carey, Kaiser Health News, 11/20).

How to improve RN efforts to deliver quality care

Study IDs factors that influence RN perceptions of care quality

November 22, 2011

Improving easy-to-change factors of an RN's work environment may significantly improve the quality of care they deliver, according to a study in Health Care Management Review.

Previous studies have identified nurse-to-patient ratios as an important determinant of patient care quality; however, amending ratios may be difficult without significant cost and resource investment. In addition, a projected nursing shortage may make it even more difficult to increase nurse staffing levels.

For the study, New York University (NYU) researchers and colleagues examined results from a 98-question survey of 1,226 RNs that is part of a 10-year longitudinal study that began in 2006. In the surveys, RNs identified various environmental factors that influence quality of care. In order of importance, those factors include:

  • Physician work environment; 
  • Workgroup cohesion; 
  • Nurse-physician relations;
  • Procedural justice; and 
  • Job satisfaction.

The results also showed that nurses' patient care quality ratings are higher at Magnet hospitals and lower in facilities experiencing organizational constraints, such as supply shortages.

According to the study authors, hospital officials to can make several strategic changes to improve nursing care. For example, they note that Magnet recognition and workgroup cohesion have a nearly equal impact on patient care quality ratings. However, it is significantly less expensive to invest in workgroup cohesion than to strive for Magnet recognition.

According to study author and NYU nursing professor Christine Kovner, hospital leaders "need to examine their resources and determine which changes are possible and which will have the most impact on improving patient care" (NurseWeek, 11/21; Robert Wood Johnson Foundation release, 11/21). 

Banner Health, Aetna to launch ACO

New health plan to focus on wellness, care coordination

November 22, 2011

Phoenix-based Banner Health and Aetna on Monday announced that they had formed an accountable care collaboration to market a health insurance plan that affords patients access to a coordinated provider network.

Under the Aetna Whole Health plan, patients may access Banner Health Network physicians, who will leverage technology and a team-based approach to help patients pay less out of pocket, focus on wellness, and manage their chronic conditions.

Banner Health and Aetna will implement a risk-sharing agreement that offers Banner awards for meeting certain quality, efficiency, and patient satisfaction benchmarks. The metrics include providing recommended preventive care and screenings, reducing readmission rates, and expanding access to primary care physicians. 

According to a news release, the program aims to improve patients' health care experience through greater engagement and care coordination and reduce per capita health costs by aligning payment with quality and value (Aetna release, 11/21; Evans, Modern Healthcare, 11/21 [subscription required]).

Why the doctor isn't in

PAs, APNs delivering more care in hospital outpatient clinics

November 22, 2011

Physician assistants (PAs) and advance practice nurses (APNs) are taking on larger patient loads in hospital outpatient departments compared with the last decade, a recent CDC data brief finds.

According to the brief, the percentage of hospital outpatient department visits handled by PAs and APNs increased from 10% in 2000 and 2001 to 15% in 2008 and 2009. In addition, the findings showed that the size of the hospital was related to whether patients were seen exclusively by a PA or APN, with 24% of such visits being in hospitals with fewer than 200 beds and only 10% occurring in facilities with 400 or more beds.

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The brief also showed that PA and APN involvement varied by location, with the non-physician professionals handling 36% of visits in nonmetropolitan centers and only 6% of visits in urban hospitals. PAs and APNs also delivered care more often in clinics associated with nonteaching hospitals. Meanwhile, CDC reports that PAs and APNs handled a higher percentage of Medicaid, CHIP, or uninsured patients, as well as younger patients.

According to the researchers, PAs or APNs "continue to provide a critical health care function" by administering care in communities that are prone to physician shortages, including in rural, small, and nonteaching hospitals (Walsh, MedPage Today, 11/18).

Why workers come to work sick

Study highlights why ill employees still clock in

November 22, 2011

Why do staff clock in despite feeling under the weather? A recent study in the Journal of Occupational Health Psychology highlights several factors that might drive employee "presenteeism."

For the study, researchers at Canada-based Concordia University's John Molson School of Business surveyed 444 individuals about their job requirements, work experience, absenteeism, and presenteeism. Respondents reported an average of three presenteeism days and 1.8 absenteeism days over the previous six months, with illness accounting for most days off.

The findings showed that presenteeism is most common among employees working in teams or those who felt insecure about their jobs. In addition, the study found that caregivers had one of the highest rates of presenteeism compared with employees in other fields. "

Often, a person feels socially obligated to attend work despite illness, while other employees feel organizational pressure to attend work despite medical discomfort," lead study author Gary Johns says. He added that employees who feel secure in their jobs "don't fear retribution for an occasional absence because of sickness."

Meanwhile, absenteeism appeared to be more common among unionized workers and when unemployment rates are low.

Johns says employers and human resources departments traditionally have focused on absenteeism and directed few resources to combating presenteeism. "Estimating the cost of absenteeism is more tangible than counting the impact of presenteeism," Johns says, adding, "Yet a worker's absence—or presence—during illness can have both costs and benefits" (Infection Control Today, 11/17; Medical News Today, 11/21; Toronto Star, 11/17). 

The changing face of U.S. labor

NYT examines female union leaders' role on health care, workforce

November 22, 2011

The New York Times this week examined how the female leaders of health care-related unions have rekindled hope for organized labor and inspired nationwide movements like Occupy Wall Street.

In recent years, women leaders at labor unions—including the National Nurses United's (NNU) Rose Ann DeMoro and the Service Employees International Union's (SEIU) Mary Kay Henry—have pushed boundaries and engaged traditional labor foes, the Times reports. "Some of these women might even make unions relevant to the average American again," says labor journalist Steve Early.

NNU's Rose Ann DeMoro inspires national 'Occupy' movement

DeMoro began her career in nursing unions in 1986 at the California Nurses Association, where she fought to pass nurse-patient ratio laws and took on the state government. Recently, she brought together local nursing unions from across the United States to form NNU, one of the nation's largest unions, which counts approximately 170,000 members.

According to the Times, DeMoro runs NNU with "dramatic flair." As its executive director, she began the "Heal America, Tax Wall Street" movement, which hopes to implement a 0.5% tax on stock trades and credit swaps. If implemented, the tax would generate up to $350 billion per year for health, education, and jobs programs.

DeMoro—along with about 1,000 RNs—promoted the tax on Wall Street in June and later visited 60 congressional offices in 21 states to urge adoption of the tax. According to the Times, the nurses' efforts inspired Occupy Wall Street protesters, with Andy Pollack, a committee member in Manhattan, noting that "nurses go beyond their own contract issues and try to tackle the root of the problem."

SEIU's Kay Henry aims to heal ailing union

Following her graduation from Michigan State University, Henry joined SEIU as a researcher. Over the years, she has planned nursing strikes in Kaiser Permanente hospitals in San Francisco and helped Seattle nurses negotiate with their employers.

In 2010, she was elected SEIU's president, promising to heal the organization following a contentious battle for power among the nation's largest unions. As the first woman to lead the two million-member union, Henry has set a diplomatic tone, the Times reports.

Specifically, she is courting politicians, including Republicans, in an effort to mitigate cuts to services that benefit union members. For example, SEIU in California has launched a political action committee to elect moderate Republicans in GOP counties (Sharp, Times, 11/19).

Book compiles X-ray images of objects found in patients

November 22, 2011

What's the most bizarre thing to appear on an X-ray? A recently released book compiles 100 "wacky" images of the items found in patients.

The book—called "Stuck Up!"—was written by forensic psychiatrist Marty Sindhian and two other Massachusetts physicians. The physicians used pseudonyms to protect the identities of their patients and their practices.

According to Sindhian, coins are the most common object ingested by children, while wedding rings commonly turn up in adults. Other objects observed on X-rays included surgical clamps, dental braces, and thermometers.

Click here to view a photo gallery of select X-ray images from the book.

Sindhian says the physicians wrote the book for humor and educational purposes. "We hope it takes away the stigma of people seeking emergency treatment," he says (Kotz, Globe, 11/17; Moye, Huffington Post, 11/18).

Medicare Shared Savings Initiative

November 22, 2011

Join us for a complimentary webconference covering the critical success factors for managing a population of Medicare beneficiaries under the Shared Savings Program and how the Advisory Board is helping to accelerate provider readiness to join the program. More.

Daily roundup: Nov. 22, 2011

Bite-sized hospital and health industry news

November 22, 2011

  • California: Designer Donna Karan's Urban Zen Foundation has partnered with the Ronald Reagan UCLA Medical Center to open an Eastern medicine healing program, the Wall Street Journal reports. The hospital—which already has begun training 30 staff members in yoga therapy, nutrition, essential oil therapy, and contemplative care—will launch the program in December. Hospital officials ultimately expect to train up to 300 staff members as part of the program, which initially will focus on cancer patients (Binkley, "Runway," Journal, 11/18).
  • Massachusetts: State Attorney General Martha Coakley (D) on Friday outlined a plan to address the state's "dysfunctional" health care market, in which costs are driven by health providers' market clout instead of the quality of care, the AP/Boston Herald reports. The plan would subject large providers to automatic market impact reviews and require "unwarranted price variation" corrections by 2015. If providers do not correct the variations, the state then could intervene and reject health insurer contracts (AP/Herald, 11/18).
  • Ohio: The 53 Ohio hospitals participating in the voluntary Ohio on the CUSP: Stop BSI program have reduced central line-associated bloodstream infections (CLABSIs) by 48% over 22 months, Healthcare Finance News reports. Using the Comprehensive United-Based Safety Program (CUSP), the hospitals saved more than $4.5 million, prevented 86 CLABSIs, saved 17 lives, and avoided 688 hospital days (Letourneau, Healthcare Finance News, 11/17).

  • Wisconsin: Froedtert Hospital surgeons last month delivered heated chemotherapy directly to a patients' liver through the organ's blood vessels, the Milwaukee Journal Sentinel reports. The hospital is one of three in the United States to use the highly invasive treatment, which involves isolating the liver with clips, catheters, and cannulas so that it can be perfused with concentrated chemotherapy agents heated to 102 degrees. Last month's operation was the second time the procedure was performed at the Milwaukee hospital. According to the Journal Sentinel, research suggests that the procedure extends life expectancy by one year on average (Fauber, Journal Sentinel, 11/21).

Revamping VA care: Efforts to improve efficiency may have backfired

Measures intended to make the military's health care system for severely wounded servicemembers more efficient may have caused duplication, confusion, and inefficiencies, the Washington Post reports.

In 2007, a nine-member presidential commission led by former Sen. Bob Dole (R-Kan.) and University of Miami President and former HHS Secretary Donna Shalala issued a 29-page report urging "fundamental changes" to military and veterans' health care programs. The panel issued six steps to improve care.

According to the Post, the changes to military health programs—which were intended to improve health care delivery—have had the "opposite effect," said Debra Draper, health care director for the Government Accountability Office. The numerous options can bring additional paperwork and conflicting treatment rules, as well as numerous case managers overseeing care for one patient.

A RAND study released last week found that the U.S. military provides 211 programs to prevent, identify, and treat brain injuries and psychological issues, such as post-traumatic stress disorder. The Pentagon-commissioned report found that some of the programs have been duplicated and created "a high risk of a poor investment" in defense spending.

The Department of Defense (DOD) has defended its programs. Philip Burdette, DOD's director of wounded-warrior care, said the agency built an "intentional safety net" to cover all military personnel. However, the Post notes that Pentagon officials consider veterans active military personnel health care separately. As a result, there also is no database tracking all wounded military personnel, making it difficult to know who is getting federal assistance (Vogel, Post, 11/18).