“Doing more with less” is a mantra heard everywhere across the nation, as businesses and organizations strive to become more efficient as the nation rises from a recession.
In health care, the urgency is great as costs are driven up by advances in technology and by aging baby boomers hitting the Medicare rolls drives up costs. The rollout of the Affordable Care Act adds to the pressure, particularly on rural hospitals that rely on Medicare payments — which primarily cover older people — for almost 45 percent of their annual income.
Under the ACA, rural hospitals such as those in the Finger Lakes region will see significant reductions in traditional Medicare payments, and some will see new payment requirements for patient care. There will be a $196 billion reduction in annual increases in Medicare payments to hospitals, skilled nursing facilities and ambulatory surgical centers over 10 years.
The changes in how Medicare money reaches rural hospitals — and all hospitals around the country — are an attempt by federal lawmakers to improve health care and reduce costs. The goals include measuring and rewarding quality of care and reducing expensive, uninsured visits to hospital emergency rooms. By having more people covered by insurance, the theory goes, there will be higher numbers of paying patients and less unpaid debt.
Mark Prunoske, senior vice president of finance and chief financial officer at Canandaigua’s Thompson Health, said within the ACA, hospitals agreed to absorb cuts in Medicare payments in order to help fund the extension of health care coverage to 32 million more Americans.
“Rural hospitals are struggling all over the country. The good news is Newark-Wayne, in collaboration with Rochester General Health System, have been planning for these changes for the past three to five years,” said Mark Klyczek, president at Newark-Wayne, which is now owned by RGHS. “The planning included making decisions as to the best possible investments to address our community’s health care needs in the short-erm and long-term future. We looked at investing in growth areas instead of taking cuts on the chin.”
Those decisions included building a new emergency department, adding an electronic medical record, construction of a new endoscopy suite, a local dialysis care center and the use of the DaVinci Robotics in surgery practices — including general surgery that was begun within the last two weeks.
Measuring quality
A major thrust of the Affordable Care Act is to improve the quality of health care and raise the overall health of Americans. So the ACA will tie millions in federal funds to quality of care, basing payments on positive outcomes. To protect their Medicare payments, some hospitals are starting new programs to meet the new requirements and quality benchmarks.
“While the changes in reimbursement will bring reductions to hospitals, Newark-Wayne is continuing to invest in growth areas, such as OB/GYN, orthopaedics, urology, and other specialty services to expand the services offered at Newark-Wayne; keeping quality care in our community while maintaining our revenue,” Klyczek said. “Overall we expect the growth in other areas throughout the hospital to offset the proposed reductions in revenue.”
In Newark, they are measuring their progress in meeting quality goals on a national level, he added. Part of that progress includes making use of the Rochester General Health System’s patient safety institute, which monitors progress with all quality measures, researches best practices, and assists Newark-Wayne in delivering the same high level of care as Rochester General, Klyczek said.
“It’s about investing in the right things to deliver quality care,” said Barb McManus, vice president of marketing and public relations at RGHS.
How does Newark-Wayne do it?
“Newark-Wayne is able to work on issues such as readmissions in partnership with Rochester General, giving Newark-Wayne access to top performing physicians and metrics to track progress,” Klyczek said. “This allows Newark-Wayne to function at much higher levels than stand-alone hospitals without the same affiliation.”
Many of the successes at Newark-Wayne Klyczek credits to its affiliation with Rochester General.
“The affiliation with Rochester General Health System is quickly setting Newark apart from other small community hospitals in the Finger Lakes and surrounding areas,” he said. “While many other hospitals have seen reductions in services and physicians, Newark-Wayne has grown in both areas.”
The ability of Newark-Wayne to attract and retain quality physicians is directly related to their affiliation with Rochester General Health System, Klyczek said. Physicians have a greater comfort level in knowing Newark-Wayne is part of a larger system, and allows for physicians who work in Monroe County the ability to practice in Wayne County since the clinical standards and practices are similar, he said.
In ensuring patients receive adequate discharge information, Champlin-Kuhn said Thompson Health has pharmacists in the clinical areas to help patients understand and reconcile their medications. Thompson also partners with transitional coaches in outpatient practices prior to patients being discharged, to smooth the transition from hospital to home.
Reducing medical errors is another area receiving special attention. Thompson participates in a special program focused on preventing falls, medication errors and pressure ulcers. And if a problem occurs, Champlin-Kuhn said it prompts an immediate response to investigate and complete a “root-cause analysis” on events in order to learn and prevent future occurrences. The goal is always to prevent problems, she said, and efforts are ongoing to increase awareness and promote best practices.
“We complete patient safety rounds and have a ‘Good Catch’ program to capture any potential failures in order to intervene proactively before any error occurs,” she said.
At Clifton Springs Hospital & Clinic, its chief executive officer and master of medical management, Dr. Lewis Zulick, said attention to quality of care is not new.
“The law only reinforces our commitment to quality care that is part of our culture here,” Zulick said. “That commitment is well established by our publicly reported data. We already have a team committed to reducing readmissions; improving discharge information for both the patient and the primary care provider; patient safety; and ISO certification for quality management systems. Clifton Springs Hospital has consistently had the highest-quality scores in the region since public reporting began.”
Rural solutions
In Ontario and Wayne counties, a saving grace for rural hospitals in the face of reduced Medicare payments and other pressures has been affiliating with the bigger hospitals and health centers.
“We bring resources and practices to Newark that a rural hospital on its own would have a real hard time offering,” McManus said of Newark’s affiliation with Rochester General.
A main component of adding services, such as pulmonary medicine in Newark, has been possible through physicians who practice at Rochester General and also practice at Newark-Wayne, Klyczek said. This allows the patients to receive most, if not all, of their care in Wayne County without traveling to see highly trained physicians.
“Newark-Wayne and Rochester General Health System have a plan to navigate through the changes brought about not only by Health Care Reform, but the changes required by employers and consumers of health care,” Klyczek said. “Our vision is to deliver the right care, in the right location, at the right price, for all patients served by Rochester General Health System. Rather than a strategy for one particular service, such as changing hospitals, this strategy continues the work of developing high performing services in every area a patient may require service.”
In 2012, University of Rochester Medical Center and Thompson Health entered into an affiliation, creating additional places where patients can go for a wider range of treatments in the Canandaigua area. The formal partnership also broadened what Thompson offers in medical and surgical specialties that include cardiology, neurosurgery, oncology and imaging.
From a financial standpoint, Thompson has been able to save about $800,000 annually by partnering with URMC and using its buying power.
“Together, we have taken advantage of group rates on malpractice insurance and group purchasing,” said Prunoske. “Thompson is continually working with URMC to identify other areas of opportunity to reduce costs within the health system.”
In terms of patient care, Prunoske said the affiliation means Thompson is offering new and expanded physician services.
“Vascular surgery, pulmonology and nephrology are evolving into full-time presences in our hospital, while plastic surgery, neurosurgery and pain management have an increased presence, as well,” he said. “Not only are these services beneficial for patients, but they contribute to the bottom line, making Thompson more financially robust.”
Clifton Springs Hospital & Clinic is also going a similar route with an affiliation with Rochester General Health System announced in September and due to be finalized by mid-2014. Clifton Springs will maintain its name, keep its local board and continue providing medical care, while also providing additional treatments and services.
“We feel the affiliation with RGHS will best prepare us for any changes that occur with the new law because we have seen that RGHS has been proactive in adapting to the changes brought on by the law,” said Zulick. “We feel confident that we can remain financially stable, continue to offer high-quality care and also gain improved access to nationally recognized programs and providers, including the Sands Constellation Heart Institute.”
Zulick said the heart institute connects Clifton with “the best in cardiac care in New York” and one “ranked among the top four nationally for three consecutive years by Delta CareChex quality rating group.” The affiliation also ties Clifton with RGHS’s state-of-the-art clinical and Electronic Medical Record technology.
Looking ahead
“Newark-Wayne is growing,” McManus said.
In the past five years, Newark has added nurses or their growing OB/GYN practice, increased surgeries to 5,000 a year and added 150 doctors to their staff.
“The future for Newark-Wayne is bright because of the shared vision with Rochester General Health System, and our ability to execute the vision,” Klyczek said. “The past six years at Newark-Wayne have been extraordinary and we continue to build upon our successes. Newark-Wayne will continue to position ourselves to serve our community, and offer the highest level of care through top rated physicians and a highly skilled and dedicated team. Our investment in proper places is what’s keeping our people here and allowing us to grow it.”
For rural hospitals used to small profit margins and low patient volumes, the changes wrought by the Affordable Care Act present a challenge. Some are already forming networks with other hospitals and primary care providers to find cost savings and best practices that can help meet the new requirements. Medicaid and the number of people who obtain insurance also will be factors in the economic equation for rural hospitals.
Experts believe some rural hospitals will not be able to make the adjustments and will be forced to close their doors. In other facilities, there will be program cuts — likely in long-term care units, in-patient mental health units and obstetrics departments, which are expensive to maintain in small towns. As a result, residents will have to seek care in more distant regional health centers.
Tim Putnam, CEO of Margaret Mary Hospital in Batesville, Indiana, works with master of health care administration students at Xavier University, Indiana University and University of Kentucky. Putnam said the next generation of health care leaders see the current delivery system as ineffective. He said he sees hope for improvements in health care under the Affordable Care Act.
"There are a lot of bright eyes in the next generation of health care leaders — physicians and nurses and administrators who can't wait to get ahold of this," Putnam said. "As frustrating as it is for people now, the next generation is really excited about the delivery models changing and being more focused on wellness."
— Includes reporting by Cristina Janney, managing editor of the McPherson Sentinel in McPherson, Kan. She spent four weeks researching and writing about the Affordable Care Act's effect on rural hospitals as part of the Pinnacle project reporting program for GateHouse Media Inc.