The Big (and Profitable) Business of Dying

By Marlys Harris
CBS Moneywatch: The Consumer Reporter, May 21, 2011

Taking leave of life is never good. But when the time comes, most people would like to think that they could come to an end free of pain, without needles stuck in their veins or tubes up their noses, surrounded by their families, preferably at home or in a home-like setting.

Achieving that dignified death has been the purpose of the hospice movement which got its start with Dame Cicely Saunders, a physician who founded St. Christopher’s Hospice in 1967 in a London suburb. She eventually exported the hospice concept to America via the Yale School of Nursing where she taught the holistic treatment — spiritual, medical, psychological — of dying patients. Rather than being subjected to so-called heroic measures that were often inhumane and of little benefit, terminal patients in hospice would be able to choose the end-of-life care they would receive.

Initially, small nonprofit groups, many of them composed of dedicated volunteers, provided care. Now, however, according to a study published in the summer issue of the Journal of Law, Medicine and Ethics, hospice care has evolved into “a multimillion dollar industry where the surviving nonprofits compete with for-profit providers, often publicly traded, managed by M.B.A.-trained executives, and governed by corporate boards.” Right now approximately 52 percent of hospices are for-profit, 35 percent are non-profit, and 13 percent are owned by the government.

Can this possibly be a good development? I guess I would put it on a par with for-profit prisons, which haven’t worked out so well (what with owners scrimping on medical care, food and rehabilitation), for-profit orphanages, which, thank heavens, haven’t been around since Oliver Twist, or for-profit organ sales and child adoptions, which are both outlawed. The incentives for profit, say the study’s authors, Joshua E. Perry, assistant professor in the Department of Business Law and Ethics at Indiana University’s Kelley School of Business and Robert C. Stone, an emergency medicine physician and assistant medical director at Indiana University Health Bloomington Hospital Hospice, are not necessarily on the side of the patient.

Fueling the money-making is Medicare which since 1982 has provided a hospice benefit for terminally ill patients — those whom physicians certify to have a life expectancy of 6 months or less. The government pays a set daily rate, currently about $143, regardless of the services actually provided on any given day. By 2008, according to study authors, hospice expenditures exceeded $11 billion, Medicare beneficiaries receiving hospice services (for increasingly longer periods of time) topped one million. (The National Hospice and Palliative Care Organization reports that in 2009, hospices served a total of 1.56 milion patients.) The number of hospice locations has risen to about 3,300, most of the increase coming from for-profit providers.

And, the for-profit business has been, well, amnazingly profitable. A 2005 study in the Journal of Palliative Medicine found that large hospices owned by publicly traded companies generate margins nine times higher than those of large nonprofits. “These cost savings and profit margins appear to flow primarily from business decisions relating to selective recruitment of a longer-term, increasingly non-cancerous, population of Medicare patients and the payment of lower salaries and benefits to less-skilled staff,” say study authors.

And what about quality? While Perry and Stone are cautious about drawing conclusions, others have. For example, a 2004 Medical Care study of 2,080 patients enrolled in 422 hospices across the country found that “terminally ill patients who receive end-of-life care from for-profit hospice providers receive a full range of services only half the time compared with patients treated by nonprofit hospice organizations.” Families of patients receiving care from a for-profit hospice received counseling services only [45% as often] as those in a nonprofit hospice. What’s more, for-profit hospices are only half as likely as nonprofits to provide palliative radiotherapy, which reduces pain for patients with tumors. Research from the University of California, Irvine, found that patients who stay longer at for-profit hospices receive less high-skilled nursing care-such as tracheotomy care, wound care, and suctioning or feeding tubes-because skimping on these services keeps costs down.

In fact, tumor care happens less in for-profit hospices because they take on a smaller share of cancer patients, partly because their care costs more than that of patients with other diseases. “For-profits are targeting long-term dementia patients,” says Joshua Perry. Their demise could be years in the future, but, he adds, “as long as the hospice medical director declares them terminal every 60 days, Medicare will pay.” Gaming the system boosts profits but also perhaps unfairly burdens taxpayers, adds Perry.

When you (or someone you love) is in extremis, you don’t exactly go shopping for a hospice program. “Consumers can’t evaluate a hospice like they would a cell phone or a car,” says Perry. “They are compromised, overwhelmed, in a different state of mind.” Usually, the hospital or nursing home sends in – or recommends — the hospice team. It’s unlikely that you’d know whether they are non- or for-profit. And the study authors point out that hospice providers don’t always get business on the merits. For example, VITAS Hospice Services, LLC, the largest provider of hospice services in the United States reportedly sends its patient recruiters into nursing homes equipped with pens and coffee cups for staff and then pays a commission to those recruiters who successfully sign-up patients. A rival hospice provider was indicted for allegedly paying nursing home operators $10 per day to assist in patient recruitment efforts and paying physicians $89 a month to certify patients as hospice eligible without examining the patient or reviewing medical records.

MedPAC, which advises Congress on Medicare, has recommended a change in reimbursement — though not until 2013 — that would pay more per day in the earliest and last days of a patient’s hospice care, when service needs are most intense, and less for days in-between. But that will probably do little to discourage the for-profits’ cherry-picking of patients who are likely to last the longest — leaving the non-profits to deal with the sickest patients and giving them fewer resources to do so.

I am sure that there are some for-profit hospices that do a good job with their patients. But in general, you can’t say that the interests of for-profits and their patients are aligned. “Things get very messy when profit enters the picture,” says Perry. Until new regulations or payment structures come into place to remedy that, consumers had better be asking: who owns the hospice that’s providing care for me or my family?

http://moneywatch.bnet.com/spending/blog/consumer-reporter/the-big-and-profitable-business-of-dying/1107/

S&P Medicare and Commercial Indices

US Healthcare Costs Continue to Rise, But At Declining Rates According to the S&P Healthcare Economic Indices

S&P Indices
May 19, 2011

David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:

“If you look over the last year or so of data, it is apparent that the rates of increase in health care costs continue to slow down. While there was some volatility within months, the general trend has been a slowdown across all nine of the indices we publish. Most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by 2 percentage points or more. The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from +8.30% in August 2009 to +1.18% in March 2011. On the other hand, we have not seen an equal trend for the Hospital Commercial Index, where the annual growth rate peaked at +9.36% in May 2010, and is still reporting a healthy +8.36% as of March 2011. This phenomenon could be the possible result of two things: (1) costs for Medicare patients are being better contained than those covered under commercial insurance plans and (2) hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs. We see a similar differential across the Professional Services Indices, but not as severe.”

For the past several years, the trend of medical costs funded by commercial insurance plans is significantly greater than those funded by Medicare.

Click on this link for two graphs dramatically demonstrating these differences:
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245305077461&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

We frequently see reports that attempt to explain away the findings that medical costs funded by private commercial insurance plans are significantly greater than those funded by Medicare. This report from Standard and Poor’s leaves absolutely no doubt that the difference is not only real, but it is very significant.

Just to show how different the people on Wall Street think, the Hospital Commercial Index is reported as “a healthy +8.36% as of March 2011.” Leave it to Wall Street gurus to declare that extremely high private sector (commercially insured) health care cost increases are “healthy.” You would think that businesses paying commercial rates rather than Medicare rates would take notice.

Donald Light responds on Intermountain and single payer

Professor Donald Light responds to yesterday’s message on Intermountain Healthcare’s success in improving quality while reducing costs (https://pnhp.org/news/2011/may/achieving-aco-goals-without-the-aco):

Hi Don,

Thanks for sending out your excellent synopsis of the new article about how Intermountain Healthcare has saved money while maintaining high quality. As an adviser to the NHS since 1991 who has published critical policy analyses in the BMJ since then of its pro-competition reforms to create a market internal to its single-payer frame, I took advantage of your free link and read the article. Let me share some thoughts with you and colleagues.

From the first page, it becomes clear that Intermountain is much more like a single-payer health care system than the NHS, back to at least 1986, because of its integrated and constantly improved data systems measuring costs and clinical processes that form the basis for all of its achievements. I pointed out in 1991 that it was folly for Mrs. Thatcher to allow competing hospitals to choose what they measured and how, and in 1997 I recommended to new leaders at Richmond House who were keen on integrated data that they adapt one of two fully developed integrated data systems available free on the web, one from the VHA (Veterans Health Administration) and the other from Finland. No interest was shown, and the NHS continued to pour large sums each year into contracting with international companies to develop a fresh integrated data system. Fourteen years later none yet exists, and observers have wondered if this is a boondoggle from the government to those corporations? Intended or not, that has been the result.

Intermountain’s account also exhibits, as does the case of the VHA, strong, consistent leadership over many years dedicated to improving quality and reducing costs. NHS results have been mixed, with some achievements of improved quality but not as part of a “single-payer,” integrated plan to hold down costs while improving quality by reducing large clinical variations. Most important, Intermountain treats its hospital services as integrated with all services outside hospitals, as does the reformed VHA, Kaiser, Marshfield, and others. By contrast, the NHS has sharpened the divides between hospital and community or ambulatory services, and the new reforms led by Langley will entrench them further. This lies at the centre of my new critique of the single-payer NHS reforms, published in Social Science & Medicine [Social Science & Medicine 72 (2011) 821-822]. Note that we recommend the NHS turn to US examples of integrated care like Intermountain, an irony your readers will appreciate.

A key point of the Intermountain article is that reviewing “the entire continuum that patients experience,” such as “home-based, clinic-based or inpatient care” leads to a focus on population-level health rather than on health care services. Marketing shifts from selling the latest procedure to selling health gain. This becomes the key point of the article’s conclusion as it describes how the current US payment system by procedure led Intermountain to lose more than it saved as it lowered costs for high quality, and how this needs to change if the US is going to move forward. Sadly, the NHS reforms now feature pay for performance or “payment by results,” which are really payment by procedures, with little systematic measure of results. The NHS is not the only single-payer system enamoured by market-based competition as the way to make its services more cost-effective, as students learn in the course I teach at Stanford on health care systems in advanced capitalist countries. (See http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf.) The evidence shows that usually competition raises costs, fragments care as providers focus on more profitable patients or procedures, and increases administrative overhead. In my opinion, this is what has happened in the English NHS. One might think a single-payer national system would focus upstream on health and prevention, and the NHS does in some meaningful ways; but its reforms of medical services work against that goal and draw money away from it towards more costly “payment by results” specialty procedures once patients get seriously ill.

Finally, Michael Dixon, a national leader of GPs, and I have urged since 2004 that the NHS reorganize clinical leadership in an integrated way, and a key sentence in the Intermountain article states that “Physicians led almost all of the changes themselves.” So far, leaders of the English NHS have shown no interest in this idea, which has been critical to the success of Kaiser, Intermountain, and the VHA. I hope these experiences over the past 20 years enable your readers to refine their thoughts about what “single-payer” means and how it works. We need a more deeply textured and fully developed of that concept than reference to how a health care system is funded.

With best regards,
Don

Donald W. Light
Lokey Visiting Professor, Stanford University
Professor, UMDNJ
http://www.med.upenn.edu/apps/faculty/index.php/g358/p31974
(See our book, The Risks of Prescription Drugs)

References for Donald Light’s message

Donald Light’s message today included this link to a syllabus for a course he teaches at Stanford on health care systems in advanced capitalist countries; it contains a large number of invaluable references:

http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf

These are other references that relate more specifically to today’s message:

“Observations on the NHS reforms: an American perspective.” British Medical Journal 1991;303: 568-570.

“Betrayal by the Surgeons.” Lancet 1996;347: 812-3.

“Managed Care in a New Key: Britain’s Strategies for the 1990s.” International Journal of Health Services 1998;28:427-44.

“Is NHS Purchasing Serious? An American Perspective.” BMJ 1998;316:217-20.

“From Managed Competition to Managed Cooperation: Theory and Lessons from the British Experience.” The Milbank Quarterly 1997; 75:297-341 (Lead article)

“The real ethics of rationing.” BMJ (British Medical Journal) 1997;315:112-15.

“Managed Competition: Theory and Lessons from the British Experience.” Pp. 322-56 in Competitive Managed Care: The Emerging Health Care System. Edited by John Wilkerson, Kelly Devers and Ruth Given. SanFrancisco: Jossey-Bass, 1997.

“How Waiting Lists Work and their Hidden Agenda,” Consumer Policy Review (UK) 2000;10(4):126-132

“Here We Go Again: Repeating Implementation Errors.” BMJ (British Medical Journal) 1999;319:616-8.

“Managed Competition, Governmentality and Institutional Response in the United Kingdom,” Social Science and Medicine 2001;52(8): 1167-82.

Single-payer news on Vermont, new research, insurer greed

May 20, 2011

Dear PNHP colleagues and friends,

There’s been a flurry of activities by single-payer advocates – physicians and others – over the past several weeks. We’ll touch on only a few of them here:

1. Vermont governor to sign health reform bill May 26
2. Hoosiers rip WellPoint’s greed at shareholders meeting
3. New article sounds alarm on rise of for-profit hospice companies
4. Proposed Medicare, Medicaid cuts prompt outcry and calls for single payer
5. Sen. Sanders introduces Senate single-payer bill, S. 915
6. PNHP staff promotions announced

1. Vermont health bill to become law. Next Thursday, May 26, Gov. Peter Shumlin of Vermont will sign “An Act Relating to a Universal and Unified Health System.” The bill passed the Legislature in early May, after months of debate that included vigorous advocacy for single-payer reform by physicians and health professional students, among others. While the bill falls well short of a creating a single-payer system, as the PNHP board noted last month, its supporters claim it could lead to such a system several years down the road.

PNHP will issue a statement on the legislation next week. In the meantime, a concise summary of what the bill does and doesn’t do – and some of the obstacles it faces – appears in a story titled “Single Payer in Vermont? Well, Not Exactly.” Amednews also had a useful round-up; it’s one of several recent stories quoting PNHP leaders saying the bill’s an important first step, but only if it’s followed by steps leading to a true single-payer plan. The actual text of the bill starts on line 18 of this 213-page file.

In a somewhat related development, California’s Universal Health Care Act, S.B. 810, sponsored by state Sen. Mark Leno, passed a crucial hurdle last week when it passed out of the Senate Health Committee in a 5-3 vote. PNHP activists helped mobilize support for its passage out of committee.

2. WellPoint confronted on greed. When Karen Green Stone, a leader of Hoosiers for a Common Sense Health Care Program, PNHP’s Indiana affiliate, took the floor at the annual shareholders meeting of the giant health insurer WellPoint in Indianapolis this week, she made a blistering indictment of the company’s greed, its cruelly deceptive PR practices and the eye-popping compensation it gave to CEO Angela Braly last year.

On the CEO’s pay, Green Stone said, “Angela, it takes 285 public school teachers in Indiana who earn an average of $47,000 a year to equal your 2010 compensation package of $13.4 million. Would you kindly tell us why you are entitled to so much more than them?” Braly replied that her pay was appropriate. The dramatic exchange was picked up by the Indianapolis Business Journal. You can read the full text of Green Stone’s stirring 2-minute speech and more at PNHP’s blog. (By the way, in 2010, the combined declared profits of the five largest for-profit insurers – WellPoint, Aetna, Cigna, Humana and UnitedHealth – were $11.7 billion. The figure is expected to be even higher in 2011.)

Later that day, single-payer activists rallied outside WellPoint’s headquarters to hear speakers that included Donna Smith of National Nurses United, who wrote about it, and Dr. Rob Stone, coordinator of the Indiana group and national board member of PNHP.

3. Troubling questions on for-profit hospice care. Besides Dr. Rob Stone’s role at the WellPoint events, he was also in the news this week as the co-author of “In the Business of Dying: Questioning the Commercialization of Hospice,” in the Journal of Law, Medicine and Ethics. The article cites growing ethical and quality concerns as end-of-life hospice care, once the domain of charitable groups, has become increasingly dominated by investor-owned chains that cherry-pick patients and cut labor costs in order to maximize profits. PNHP’s news release on the article, which contains a link to the full text of the study, appears below. Also below is a commentary by Drs. Steffie Woolhandler and David Himmelstein on their recent research about Massachusetts’ medical bankruptcy rate and its implications for the federal health law.

4. Medicare under threat. The outcry over the proposal by House Speaker Rep. Paul Ryan, R-Wis., to dismantle Medicare and convert Medicaid into a block-grant program has included actions, statements and opinion pieces by PNHP chapters, leaders and activists denouncing such moves. PNHP affiliates in Wisconsin and Arizona are among the many chapters who actively worked to oppose such cuts, even as they acknowledge that both the Medicare and Medicaid programs contain serious flaws. Echoing a theme of PNHP’s, including Dr. Margaret Flowers’ testimony at the Deficit Commission last year, John Nichols of The Nation recently wrote that Medicare and other social insurance programs shouldn’t be cut, but should instead be replaced by a single-payer system, an improved Medicare for all. Rep. John Conyers Jr. made a similar argument in an op-ed yesterday. PNHP activists are encouraged to speak out and to write opinion pieces and letters to the editor on this theme.

5. Sanders introduces Senate single-payer bill. On May 10, Sen. Bernie Sanders, I-Vt., introduced his national single-payer legislation, the American Health Security Act of 2011, S. 915, into the Senate. PNHP President Garrett Adam’s comments on this welcome development can be found here. PNHP activists are encouraged to visit or otherwise contact their congressional representatives to urge them to support single-payer legislation in the House (especially Rep. Conyers’ bill, H.R. 676, which today has 55 co-sponsors) and in the Senate (S. 915). House members are scheduled to be in their home districts the week of June 6-10 and June 27-July 1.

6. PNHP staff promotions. PNHP President Dr. Garrett Adams made the following announcement this week: “The PNHP Board of Directors is very pleased to announce promotions of two of our wonderful staff members. After 20 years of dedicated and brilliant advocacy for single-payer national health insurance at PNHP, Dr. Ida Hellander finally gets her ‘dream job’ as PNHP’s new Director of Policy and Programs. For the first time, Ida now will devote herself full time to health policy for the benefit of PNHP and the single-payer movement. Matthew Petty, currently PNHP’s Administrative Director and our second-most-senior staff member, has accomplished efficiencies in the office and managed our finances extremely well. He recently brought in a large grant to PNHP. Matt will become PNHP’s new Director of Operations.”

Cordially,

Quentin D. Young
National Coordinator

Mark Almberg
Communications Director

FOR IMMEDIATE RELEASE
May 18, 2011

Rise of for-profit hospice industry raises troubling questions, new study says

Ethical and quality concerns grow as end-of-life hospice care, once the province of charitable organizations, is increasingly dominated by investor-owned chains that cherry-pick patients and cut labor costs in order to maximize profits

A new survey of hospice care in the United States says that the rapidly growing role of for-profit companies in providing end-of-life care for terminally ill patients raises serious concerns about whose interests are being served under such a commercial arrangement: those of shareholders or those of dying patients and their loved ones.

“Under a corporate model of hospice care, there’s an inherent conflict of interest between a company’s drive to maximize profits and a patient’s need for the kind of holistic, multidisciplinary and compassionate care originally envisioned by the founders of the modern hospice movement,” said Dr. Robert Stone, an emergency medicine physician in Bloomington, Ind.

Stone, who serves as assistant medical director at a hospital hospice program at Indiana University, is co-author of “In the Business of Dying: Questioning the Commercialization of Hospice,” a newly published article in the Journal of Law, Medicine and Ethics. Joshua Perry, a professor of business law and ethics at Indiana University, is the lead author of the article.

Stone and Perry point out that the for-profit hospice industry grew by 128 percent from 2001 to 2008, while the nonprofit sector grew by only 1 percent and government-sponsored hospices increased by 25 percent. The for-profit sector now accounts for 52 percent of hospices.

“Research shows that for-profit hospices, and especially publicly traded chain providers, generate higher revenues than their nonprofit counterparts,” Stone said. “They do this in part, studies show, by selectively recruiting longer-term patients, most of whom do not have cancer, thereby gaming the Medicare payment system.” Medicare currently pays hospice providers a fixed per diem payment throughout a patient’s stay, regardless of whether services are provided on any given day, he said.

“Hospice patients’ use of services are greatest on the first day of hospice care, when services are being set up, and in the last few days of life, when round-the-clock nursing care may be required,” Stone said. “Hospices that recruit longer-term patients will be overpaid and will drain funds from the hospice program that should be going to patient care.”

Stone continued: “Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns.”

Such practices not only undermine the Samaritan traditions of the hospice movement, he said, but also put nonprofit hospices at a competitive disadvantage, threatening their financial survival. Nonprofits have been shown to provide a greater range of services than their for-profit counterparts, including continuous home care and bereavement services, he said.

Stone and Perry point to research documenting ethically questionable marketing practices used by for-profit hospice companies, including instances of company representatives going into nursing homes and offering free pens and coffee cups to staff and subsequently paying a commission to staff members who refer patients to them.

While more research on hospice quality needs to be done, Stone said, comparative studies of U.S. hospitals, dialysis centers and nursing homes have shown that nonprofit institutions, on average, provide a higher quality of care than do for-profits.

******

“In the Business of Dying: Questioning the Commercialization of Hospice,” Joshua E. Perry, J.D., M.T.S., and Robert C. Stone, M.D., Journal of Law, Medicine and Ethics, Summer 2011.

A copy of the manuscript of the study can be found here.

******

Physicians for a National Health Program (www.pnhp.org) is an 18,000-member organization advocating a nonprofit, single-payer national health insurance program for the United States. PNHP had no role in funding the study mentioned above. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

https://pnhp.org/news/2011/may/rise-of-for-profit-hospice-industry-raises-troubling-questions-new-study-says

Obama Health Law Unlikely to Stem Medical Bankruptcies

By Steffie Woolhandler and David Himmelstein
CommonDreams, May 11, 2011

When President Obama kicked off his health reform push, he highlighted our research finding that 2 million Americans suffer medical bankruptcy each year, promising to end this disgrace. Our latest figures warn that his reform won’t stanch the flow of medical debtors.

The Affordable Care Act (ACA) passed by Congress in March 2010 was modeled after Massachusetts’ 2006 health reform plan – a plan that’s now been up and running for more than three years. So Massachusetts offers a preview of what to expect when the ACA is fully implemented in 2014.

Unfortunately, medical bankruptcies haven’t dropped much – if at all – in Massachusetts. When we surveyed bankruptcy filers there in August 2009, 53 percent cited illness or medical bills as a cause of their bankruptcy, a percentage that’s statistically indistinguishable from the 59 percent figure we found in
early 2007. Indeed, because the total number of bankruptcies soared in 2009, the actual number of medical bankruptcies increased from 7,504 in 2007 to 10,093 in 2009.

Why are so many people still suffering medical bankruptcies despite Massachusetts’ health reform? While only 4 percent of the state’s residents remain uninsured, much of the new coverage is so skimpy that serious illness leaves families with crushing medical bills.

For instance, the cheapest (and most commonly purchased) coverage available to a 56-year-old Bostonian through the state’s health insurance exchange costs $5,616. Yet, if you’re sick the policy doesn’t start paying bills until you’ve paid a $2,000 deductible. And even after that you’re responsible for 20 percent of the next $15,000 in medical expenses.

Little wonder that many insured families hit by illness are pushed over the edge financially by the double whammy of lost income and medical bills; 89 percent of Massachusetts families who suffered medical bankruptcy had coverage.

The insurance required under the federal ACA is no better than Massachusetts’ bare-bones plans. And as employers emulate this inadequate coverage, the race to the bottom leaves an increasing number of Americans UNDER-insured. Public workers are just the latest group to see their coverage downsized. What used to be called “health insurance” is now labeled “Cadillac coverage” – and reserved for those who drive Mercedes.

Because the ACA left private insurers in charge, it can’t offer Americans real protection against financial disaster due to illness. Too much is squandered on insurers’ overhead and the bloated bureaucracy they impose on patients, doctors and hospitals. Hence, even if reform works as planned, millions of families will continue to purchase private insurance in good faith, only to discover, too late, that it’s a defective product – an umbrella that melts in a downpour.

And the administration is weakening the modest consumer protections the bill imposed on private plans. It’s waived the minimum coverage standards for 1,040 plans covering 2.6 million Americans, including thousands of McDonald’s workers whose insurance covers only $2,000 in medical expenses annually. (The worker pays a premium of $728 for this faux coverage.) Meanwhile, insurers in Maine have already been exempted from the ACA’s paltry requirement that they spend at least 80 percent of premiums on medical care, with eight more states in line for similar exemptions.

While the ACA can’t live up to its “affordable care” moniker, a single-payer reform could save $400 billion annually on administrative costs, enough to offer every American first-dollar, comprehensive coverage. While U.S. insurers fight tooth and nail against the 20 percent limit on overhead, Canada’s single-payer program runs for 1 percent. (U.S. Medicare’s overhead is 3 percent.) Bureaucratic savings are a key reason why Canada can cover everyone and provide care at least as good as that received by insured Americans, while spending half as much per capita as we do.

We’ve lectured at seminars attended by hundreds of U.S. bankruptcy judges, where our medical bankruptcy findings are greeted by nods of recognition and an avalanche of heart-wrenching anecdotes confirming our statistical findings. The reaction was quite different at a bankruptcy seminar in Toronto early this year. None of the Canadian judges in the room could recall a single case.

Dr. Steffie Woolhandler is a co-founder of Physicians for a National Health Program. She is professor of public health at the City University of New York and visiting professor of medicine at Harvard Medical School. She is also a primary care physician at Cambridge Hospital in Cambridge, Mass. She worked in 1990-91 as a Robert Wood Johnson Foundation health policy fellow at the Institute of Medicine and the U.S. Congress. Dr. Woolhandler is a frequent speaker and has written extensively on health policy. Dr. Woolhandler is a principal author of many PNHP articles published in the JAMA, the New England Journal of Medicine, and other professional journals. She has also testified before Congress numerous times.

Dr. David Himmelstein is a co-founder of Physicians for a National Health Program, co-edits PNHP’s newsletter and is a principal author of PNHP articles published in the JAMA and the New England Journal of Medicine in conjunction with Dr. Steffie Woolhandler. He is professor of public health at the City University of New York and associate professor of medicine at Harvard Medical School. He serves as the chief of the division of social and community medicine at Cambridge Hospital where he practices primary care internal medicine, and also serves as co-director of the Center for National Health Program Studies at Cambridge Hospital/Harvard Medical School.

http://www.commondreams.org/view/2011/05/11-6

GOP plan is a non-starter

By Rep. John Conyers Jr.
The Bellingham (Wash.) Herald, May 19, 2011

Medicare is arguably one of the nation’s most successful and cherished public insurance programs. The program covers 47 million elderly and disabled Americans, and helps pay for hospital, physician visits and prescription drugs. It is truly hard to argue with success.

The traditional Medicare program, coupled with a supplemental private insurance policy, covers most of our seniors’ medical bills, with far less co-pays and out-of- pocket costs than private insurance.

Therefore, proposals to privatize Medicare — like Rep. Paul Ryan’s — have been met with such fierce opposition, because it was revealed in the national media that privatization meant much higher out-of-pocket costs for seniors. National polls have shown strong general support for maintaining Medicare or even increasing funding for it.

However, Medicare costs are projected to increase from $519 billion per year in 2010 to $929 billion in 2020.

The simplistic argument we often hear from conservatives is that Medicare is a costly federal government program because all federal government programs are inefficient and therefore costly. According to their line of reasoning, privatization is the only way to save money.

The truth is that there are several other ways to strengthen Medicare, but there has been a false debate in the nation regarding the rising costs of Medicare.

This may be partly due to not understanding a fundamentally key concept regarding current health care policy — there are no effective cost-containment mechanisms in place to control the private market costs of prescription drug costs, corporate hospitals and medical technology which are the main drivers of Medicare costs.

Research by respected economist Dean Baker shows that the federal government and Medicare beneficiaries would save $600 billion between 2006 and 2013 if Medicare were allowed to directly negotiate prices with pharmaceutical manufacturers.

One study by Families USA found that the Veterans Administration was able to negotiate substantially lower prices for the top 20 drugs used by seniors, compared to private Medicare part D plans.

It would only make sense for there to be bipartisan support for Medicare to be able to use the full faith and credit of the federal government and be able to negotiate down the rising costs of prescription drugs.

According to Forbes magazine, hospital charges represent about one-third of total health care spending — $718 billion altogether. Twenty-four hospitals in this country with more than 200 beds make an operating margin of 25 percent or more — a profit margin that compares favorably to drug giants like Pfizer, and easily beats the operating profit margin that General Electric reported in 2009.

We can no longer continue to have America’s hospitals make these kinds of large profit margins, when the health of our senior citizens and the fiscal health of our nation are at stake. It will take much needed political courage to address the root causes of rising Medicare costs — a Wall Street-dominated health care system.

America must transition to a non-profit improved Medicare-For-All program, if we are to have any chance of realistically containing overall health care costs. That’s why I have reintroduced H.R. 676, the Expanded and Improved Medicare For All Act, that would provide for a single-payer health care system, providing all Americans with health care coverage.

Japan, Taiwan and countries in Europe have been able to effectively contain their health care costs for decades through their very successful universal health care systems — without waiting lines, rationed care and out-of-control taxes.

America can learn invaluable lessons from other nations on how to control health care costs, and the time has come to be open minded about their success and honest about our need to change course from our corporate-dominated and inefficient health care system.

Rep. John Conyers Jr., D-Mich., is the ranking member of the House Judiciary Committee. Readers may write to him at 2426 Rayburn House Office Building, Washington, D.C. 20515.

http://www.bellinghamherald.com/2011/05/19/2021040/gop-plan-is-a-non-starter.html#ixzz1Mu7Pcms2

Donald Light responds on Intermountain and single payer

Hi Don,

Thanks for sending out your excellent synopsis of the new article about how Intermountain Healthcare has saved money while maintaining high quality. As an adviser to the NHS since 1991 who has published critical policy analyses in the BMJ since then of its pro-competition reforms to create a market internal to its single-payer frame, I took advantage of your free link and read the article. Let me share some thoughts with you and colleagues.

From the first page, it becomes clear that Intermountain is much more like a single-payer health care system than the NHS, back to at least 1986, because of its integrated and constantly improved data systems measuring costs and clinical processes that form the basis for all of its achievements. I pointed out in 1991 that it was folly for Mrs. Thatcher to allow competing hospitals to choose what they measured and how, and in 1997 I recommended to new leaders at Richmond House who were keen on integrated data that they adapt one of two fully developed integrated data systems available free on the web, one from the VHA (Veterans Health Administration) and the other from Finland. No interest was shown, and the NHS continued to pour large sums each year into contracting with international companies to develop a fresh integrated data system. Fourteen years later none yet exists, and observers have wondered if this is a boondoggle from the government to those corporations? Intended or not, that has been the result.

Intermountain’s account also exhibits, as does the case of the VHA, strong, consistent leadership over many years dedicated to improving quality and reducing costs. NHS results have been mixed, with some achievements of improved quality but not as part of a “single-payer,” integrated plan to hold down costs while improving quality by reducing large clinical variations. Most important, Intermountain treats its hospital services as integrated with all services outside hospitals, as does the reformed VHA, Kaiser, Marshfield, and others. By contrast, the NHS has sharpened the divides between hospital and community or ambulatory services, and the new reforms led by Langley will entrench them further. This lies at the centre of my new critique of the single-payer NHS reforms, published in Social Science & Medicine [Social Science & Medicine 72 (2011) 821-822]. Note that we recommend the NHS turn to US examples of integrated care like Intermountain, an irony your readers will appreciate.

A key point of the Intermountain article is that reviewing “the entire continuum that patients experience,” such as “home-based, clinic-based or inpatient care” leads to a focus on population-level health rather than on health care services. Marketing shifts from selling the latest procedure to selling health gain. This becomes the key point of the article’s conclusion as it describes how the current US payment system by procedure led Intermountain to lose more than it saved as it lowered costs for high quality, and how this needs to change if the US is going to move forward. Sadly, the NHS reforms now feature pay for performance or “payment by results,” which are really payment by procedures, with little systematic measure of results. The NHS is not the only single-payer system enamoured by market-based competition as the way to make its services more cost-effective, as students learn in the course I teach at Stanford on health care systems in advanced capitalist countries. (See http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Li….) The evidence shows that usually competition raises costs, fragments care as providers focus on more profitable patients or procedures, and increases administrative overhead. In my opinion, this is what has happened in the English NHS. One might think a single-payer national system would focus upstream on health and prevention, and the NHS does in some meaningful ways; but its reforms of medical services work against that goal and draw money away from it towards more costly “payment by results” specialty procedures once patients get seriously ill.

Finally, Michael Dixon, a national leader of GPs, and I have urged since 2004 that the NHS reorganize clinical leadership in an integrated way, and a key sentence in the Intermountain article states that “Physicians led almost all of the changes themselves.” So far, leaders of the English NHS have shown no interest in this idea, which has been critical to the success of Kaiser, Intermountain, and the VHA. I hope these experiences over the past 20 years enable your readers to refine their thoughts about what “single-payer” means and how it works. We need a more deeply textured and fully developed of that concept than reference to how a health care system is funded.

With best regards,
Don

Donald W. Light
Lokey Visiting Professor, Stanford University
Professor, UMDNJ
http://www.med.upenn.edu/apps/faculty/index.php/g358/p31974
(See our book, The Risks of Prescription Drugs)

References for Donald Light’s message

http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf

These are other references that relate more specifically to today’s message:

“Observations on the NHS reforms: an American perspective.” British Medical Journal 1991;303: 568-570.

“Betrayal by the Surgeons.” Lancet 1996;347: 812-3.

“Managed Care in a New Key: Britain’s Strategies for the 1990s.” International Journal of Health Services 1998;28:427-44.

“Is NHS Purchasing Serious? An American Perspective.” BMJ 1998;316:217-20.

“From Managed Competition to Managed Cooperation: Theory and Lessons from the British Experience.” The Milbank Quarterly 1997; 75:297-341 (Lead article)

“The real ethics of rationing.” BMJ (British Medical Journal) 1997;315:112-15.

“How Waiting Lists Work and their Hidden Agenda,” Consumer Policy Review (UK) 2000;10(4):126-132

“Here We Go Again: Repeating Implementation Errors.” BMJ (British Medical Journal) 1999;319:616-8.

“Managed Competition, Governmentality and Institutional Response in the United Kingdom,” Social Science and Medicine 2001;52(8): 1167-82.

Achieving ACO goals, without the ACO

How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts

By Brent C. James and Lucy A. Savitz
Health Affairs, May 19, 2011

Since 1988 Intermountain Healthcare has applied to health care delivery the insights of W. Edwards Deming’s process management theory, which says that the best way to reduce costs is to improve quality.

Intermountain Healthcare is an integrated delivery system based in Utah and Idaho. Its network of twenty-three hospitals and 160 clinics provides more than half of all health care delivered in the region. Intermountain’s hospitals range from critical-access facilities in rural areas to large, urban teaching hospitals. Although Intermountain has an employed physician group and a health insurance plan, the majority of its care is performed by independent, community-based physicians and is paid for by government and commercial payers.

In 1986 an Intermountain team launched an effort to measure practice variation, focusing on the details of care in specific, common treatments.

What Intermountain Learned

First, most hospital admissions for a specific treatment had similar characteristics. Even for coronary bypass surgery, more than 80 percent of the patients showed similar severity and complexity of disease on admission, had no major complications, and achieved good clinical outcomes. The team did not find a single instance in which any one physician’s patients demonstrated higher levels of severity or complexity (“my patients are sicker”) than the patients of other physicians in the study.

In contrast, there was massive variation in physicians’ practices. Although use rates of particular treatment elements were consistent for individual physicians, they varied greatly across physicians. For instance, when the team examined individual treatment elements used for patients who were similar at hospital admission and achieved a good final outcome, it found that the highest physician-use rates were 1.6–5.6 times greater than the lowest rates. For each treatment, the hospital’s cost per case, not counting payments to physicians, showed about a twofold variation.

Despite deliberately choosing some of Intermountain’s highest-volume treatments and focusing on high-volume physicians, the study lacked sufficient statistical power to rank physicians accurately. It did not find any physician who was consistently a high or low utilizer across all of the elements tracked. Best patient care did not reside in any one physician. Every physician had something to learn, but also something to teach.

Finally, although the study could not accurately identify which physicians were providing optimal care, Intermountain could legitimately ask why physicians’ use rates were so different and what constituted best care.

Process Management

Accordingly, the findings forced Intermountain to focus on the processes of care delivery that underlie particular treatments, rather than on the clinicians who executed those processes—the “measurement for improvement” approach discussed (in the full article). As the inquiry continued, the system was eventually able to document significant declines in physician variation. Physicians led almost all of the changes themselves. Declines in variation were associated with large declines in costs, while clinical outcomes remained at their original high levels. For example, Intermountain’s average internal cost for performing a total hip replacement fell from more than $12,000 in 1987 to about $8,000 per case in 1989.

The Intermountain clinical quality, financial utilization, and hospital efficiency analyses led the system to process management theory. Quality improvement is the science of process management. W. Edwards Deming, the father of quality improvement, argued that every process always produces parallel physical, cost, and service outcomes. In medicine, clinical outcomes correspond to Deming’s physical outcomes. Cost outcomes represent the resources expended to create the clinical outcome, and service outcomes describe the interactions between a care provider and a patient as the process takes place.

Deming carried his analysis one step further, demonstrating that most process changes that produce better physical outcomes also cause costs to fall, and that in most cases, the best way to reduce cost is to improve quality. Deming’s insights gave Intermountain the tools it needed to take broad advantage of the quality-cost relationship in clinical and administrative services.

Full article – free download for the next two weeks only:
http://content.healthaffairs.org/content/early/2011/05/17/hlthaff.2011.0358.full

W. Edwards Deming (Wikipedia):
http://en.wikipedia.org/wiki/W._Edwards_Deming

Comment:

By Don McCanne, MD

This is what the accountable care organization (ACO) concept is all about. Intermountain Healthcare has confirmed W. Edwards Deming’s principle that “the best way to reduce cost is to improve quality.” Although ACOs have stumbled coming out of the gate (see qotd May 17 at pnhp.org), Intermountian has shown that we can achieve higher quality at lower cost without a cumbersome bureaucratic ACO construct.

Of particular importance is that the focus was placed on the processes of care delivery rather than on the clinicians who executed those processes. This opened up great possibilities for reform without the physicians feeling as if they were tiptoeing through a minefield of punishment and reward. The goal was purely better quality care for patients, and the savings to the system ensued almost automatically.

The full Health Affairs article can be downloaded for free during the next two weeks. I would strongly recommend doing so. It would also be worth your time to review W. Edwards Deming’s concepts, including his fourteen key principles, available at the Wikipedia link above. Both of these resources can help to readjust our mindset to meet the challenges of health care reform that still lie ahead.

What does this have to do with single payer? An automated financing system for health care would allow us to set aside our concerns about payment while we concentrate on quality processes for our patients. Everybody comes out ahead.

For-profit hospice industry raises worries

UPI, May 19, 2011

BLOOMINGTON, Ind. (UPI) — End-of-life hospice care is being dominated by investor-owned chains that cherry-pick patients and cut labor costs to maximize profits, U.S. researchers say.

Dr. Robert Stone, an emergency medicine physician in Bloomington, Ind., and Joshua Perry of Indiana University say end-of-life hospice care was once the province of charitable organizations, but 52 percent of hospices are now part of the for-profit sector.

For-profit hospice industry grew by 128 percent from 2001 to 2008, while the non-profit sector grew by only 1 percent. During the same period, government-sponsored hospices increased by 25 percent.

“Research shows that for-profit hospices, and especially publicly traded chain providers, generate higher revenues than their non-profit counterparts,” Stone says in a statement. “They do this in part, studies show, by selectively recruiting longer-term patients, most of whom do not have cancer, thereby gaming the Medicare payment system.”

Medicare currently pays hospice providers a fixed per diem payment throughout a patient’s stay, regardless of whether services are provided on any given day, Stone says.

“Hospice patients’ use of services are greatest on the first day, when services are set up, and in the last few days of life,” Stone says. “Hospices that recruit longer-term patients will be overpaid and will drain funds that should be going to patient care. Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns.”

The study is published in the Journal of Law, Medicine and Ethics.

http://www.upi.com/Health_News/2011/05/19/For-profit-hospice-industry-raises-worries/UPI-78121305782622/

Rapid growth of for-profit hospices raises ethical concerns, study says

McKnight’s Long-Term Care News & Assisted Living, May 19, 2011

The success of the for-profit hospice industry has caused concern among ethicists who say that the goal of profitability interferes with their ability to provide quality end-of-life care, according to new research.

The for-profit hospice industry grew by 128% between 2001 and 2008, while nonprofits expanded only 1% and government-sponsored hospices jumped 25%, according to research published in the summer issue of the Journal of Law, Medicine and Ethics. Not surprisingly, for-profit hospices generate higher revenue than their nonprofit competitors. Investigators say they do this by selectively recruiting long-term patients who don’t have cancer, thus gaming the Medicare payment system. The study co-author, Robert Stone, M.D., says that other studies have shown that when for-profit hospices select longer-term patients, this results in overpayment, which, in turn, drains funds from the hospice program.

“Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns,” Stone said.

Stone and his co-author, Joshua Perry, J.D., M.T.S., contend that these practices put non-profit hospices’ financial survival at risk. The study also highlights questionable marketing practices used by for-profit hospices. One tactic involves sending representatives into nursing homes and giving residents branded gifts. Another is paying nursing home employees for future hospice referrals.

http://www.mcknights.com/rapid-growth-of-for-profit-hospices-raises-ethical-concerns-study-says/article/203160/

For-Profit Hospice Providers Skyrocket in Last Decade

By Emily Mullin
Dorlund Health, June 9, 2011

In the past decade, the for-profit hospice industry has grown at an astounding rate – from 2001 to 2008 the for-profit sector ballooned by 128 percent, according to a study released in the May issue of the Journal of Law, Medicine and Ethics.

In contrast, in those same years, the nonprofit hospice industry grew by only 1 percent and government-owned hospice grew by 25 percent.

The authors of the study, called “In the Business of Dying: Questioning the Commercialization of Hospice,” critique the rise in for-profit hospice care, a sector in end-of-life healthcare that focuses on improving the quality of life for people who face life-limiting illnesses.

Hospice, which traces its origins to 1960s London, started out in the United States as a fraction of the healthcare industry. In 1978, there were fewer than 60 hospice providers in the country, according to the study. But by 1981, that number grew to more than 400. In 2008, there were 3,300 hospice providers in the United States.

Currently, 52 percent of all hospices in the United States are for-profit while 35 percent are nonprofit entities and 13 percent are owned by the government.

This shifting landscape of the hospice industry could be troubling as the delivery of hospice services becomes increasingly commercialized, say authors Joshua E. Perry and Robert C. Stone, both faculty members at Indiana University.

Perry and Stone argue that the Medicare payment structure for hospice care, which reimburses hospices at the same per-diem rate regardless of the patient’s illness, is an incentive for for-profit hospices to select patients with illnesses that will allow them to stay in a hospice longer than patients with terminal illnesses like cancer.

“The concern is that some new hospice providers, which are predominantly for-profit, may be pursuing a business model based on maximizing length of stay and thus profitability,” a 2009 Medicare Payment Advisory Commission (MedPAC) to Congress said.

Perry and Stone say that adjusting the Medicare payment structure could help alleviate this. They suggest changing the payment structure so that hospices would be paid more per day for higher costs associated with the entrance of a patient into hospice and for higher costs at the end of a patient’s life with relatively lower costs in the middle.

While evidence indicates that for-profit facilities generate higher revenues than nonprofit ones, the study’s authors say that there is still not enough research to indicate whether for-profit hospices actually provider worse care than their nonprofit and government counterparts.

Brenda Mitchell, CEO of the nonprofit Crater Community Hospice, which serves central Virginia, said she has noticed a trend in the past several years of more for-profit hospices springing up.

“Really what has happened over the years is that the community not-for-profit hospitals have been sold to bigger for-profit hospitals, and some of those hospitals once they were sold got rid of their hospice services,” Mitchell says.

Plus, the recession and economic downturn have made it increasingly difficult for nonprofit hospices to stay afloat.

“You need profit regardless of whether you’re a for-profit hospice or nonprofit,” Mitchell says. “At this point in time, if you were going to start a nonprofit then you’ve got to have a lot of money up-front to make sure you’re going to be able to keep the doors open before you build up your business.”

Crater Community Hospice is the only nonprofit in Richmond and the surrounding area, but the facility still competes with other for-profit hospices, according to Mitchell.

“It’s hard to say that your tax status has anything to do with the quality of care that you’re providing,” she says.

Theresa Forster agrees. Forster, vice president for hospice policy and programs for the Washington, D.C.-based National Association for Home Care and Hospice, says it’s unfair to generalize about the values of a healthcare provider based on the financial structure of the organization.

“It is also important to keep in mind that the rise of the for-profit entity on the hospice ‘scene’ has occurred at the same time that hospice has gained greater public understanding, acceptance and popularity,” Forster says.

The National Hospice and Palliative Care Organization responded to a February article about for-profit hospices in the Journal of the American Medical Association by saying the article didn’t provide any correlation between the profit status of a hospice program and the quality of care provided.

In contrast, the Family Evaluation of Hospice Care, a quarterly survey conducted by the organization, has found that there is no difference in family caregivers’ evaluation of the quality of care based on a hospice program’s profit status.

http://www.dorlandhealth.com/adult_and_senior/trends/For-Profit-Hospice-Providers-Skyrocket-in-Last-Decade_1824.html

Concerns raised about increase in for-profit hospice care

By Stephanie Bouchard, Associate Editor
Healthcare Finance News, May 26, 2011

INDIANAPOLIS – In less than a decade, for-profit hospices have proliferated at an astounding rate, and that may be cause for concern, say the authors of “In the Business of Dying: Questioning the Commercialization of Hospice,” a study released earlier this month in the Journal of Law, Medicine and Ethics.

For-profit hospices grew 128 percent from 2001 to 2008, while nonprofits grew by 1 percent and government-owned hospices grew by 25 percent, the authors noted in the study.

While no one can explain why for-profits have grown by leaps and bounds, various arguments include aggressive marketing strategies and “cherry picking” patients on the part of for-profits.

“What we do know exists is that the for-profit facilities have figured a way to make healthy profits in this area,” said Joshua Perry, one of the study’s authors. “I guess that’s what was prompting some of the questions that my colleague and I raise in the article. How are they doing this? It turns out that in part they’re doing it because they are very selective about the types of patients that they treat. So there’s clearly a strategy whereby they’re going to target the patients that are least costly to care for.”

A study referred to in “In the Business of Dying,” which was released by the Journal of the American Medical Association last winter, reported that for-profit hospices seem to have a higher proportion of patients that are cheaper to treat than nonprofits – for example, patients who stay longer in hospice care.

Medicare’s payment structure reimburses hospices at the same per-day rate regardless of the patient’s illness – which, say the authors of “In the Business of Dying,” causes a perverse incentive for hospices to select patients whose illnesses will allow them to remain in hospice longer, such as dementia patients, over those with more acute illnesses, such as cancer patients.

“If you can recruit an Alzheimer’s patient, there may not be an awful lot of day-to-day expense, and yet the per diem is the exact same for that care as it would be if you’re a hospice taking all comers and you have a cancer patient that requires a lot more palliative care and end-of-life care,” Perry said. He noted that there has been no evidence of for-profit hospices denying patients admission based on their terminal illness.

“When they talk about cherry picking – which is a serious issue and that’s illegal – no hospice should be able to stay in business if they’re performing illegal practices of any sort,” said Jon Radulovic, vice president of communications for the National Hospice and Palliative Care Organization, an nonprofit member group representing hospice and palliative care programs and professionals, including both for-profit and nonprofit hospices.

Radulovic said he believes the rise in for-profit hospices has more to do with the roots of hospice, which began as a volunteer-based movement outside mainstream medicine and focused on end-of-life care for cancer patients. Because nonprofits have established decades-long relationships with those in the cancer community, he theorized, for-profits were forced to create a business model seeking non-cancer patients.

He also thinks nonprofits who are dedicated to the original vision of hospice may have a hard time facing the challenges of a maturing hospice marketplace.

“There’s competition in markets that never had competition before,” he said. “I think it means a lot of providers, regardless of their tax structure, those long-term providers who have been in their communities, have to market in a more aggressive way, and I think for a lot of those the marketing is sort of the ‘M’ word. It’s something that just – it’s not dignified. It doesn’t honor this sacred journey that we go on.”

While Perry said he believes changes to the Medicare reimbursement structure would even out the playing field between for-profits and nonprofits by eliminating the perverse incentives, Radulovic cautions against being hasty on the reimbursement issue.

“There is a need to look at reimbursement, absolutely,” he said, “but not until we are sure we have the data (to support that sort of change). Just changing it for change’s sake would ultimately end up turning into a barrier to reaching people who are in need of care.”

“Our concern is that if there’s too much of a focus on just the profit status question,” he noted, “you’re missing the opportunity to home in on those areas where we really do need to improve.”

http://www.healthcarefinancenews.com/news/concerns-raised-about-increase-profit-hospice-care

National health care debate can be summed up by bill introduced in California

By YESENIA AMARO – McClatchy Newspapers
The Bellingham (Wash.) Herald, May 17, 2011

MERCED, Calif. — The national debate over health care can be summed up in a bill on the table in Sacramento.

Supporters of state Senate Bill 810 say the legislation would be the only way to provide medical coverage for every resident of California.

Opponents deride the measure as “socialized medicine.”

The California Universal Healthcare Act was introduced by Democratic state Sen. Mark Leno. The bill would initiate a single-payer universal health care reform for the state of California, Leno said. “What that means in short is Medicare for all,” he explained.

Supporter Keith Ensminger, a Merced resident and owner of Kramber Translation, said the largest benefit of the legislation would probably be that it would include everyone. “Everybody would have insurance, regardless of their income and regardless of their position in life,” he said.

There are other positive effects from the bill, Ensminger said. It would lower the cost of insurance for most people, everybody would be covered with an insurance plan and it would allow people to have their medical condition treated early rather than waiting.

In addition, it would prevent medical bankruptcies, he said.

Dr. Bill Skeen, executive director of California’s chapter of Physicians for a National Health Program, said the organization supports the legislation because it’s the only way of providing coverage for everyone and controlling the high costs of the health care system. The organization advocates for a universal, comprehensive single-payer national health program. “I think it would be a win-win situation for almost everyone,” he said.

Providers would also see gains from the single-payer system, Skeen said.

“One of them is with a single-payer, there would be a simplified electronic billing system,” he said. That would help providers cut costs by not needing as many medical records clerks.

However, part of the bill that could be criticized is that everyone would be a part of the same plan, Enseminger said.

Organizations such as the California Chamber of Commerce and the Child and Family Protection Association strongly oppose the bill.

The CFPA calls it socialized medicine. “SB810 would destroy our choices in health care and force us to pay for and exclusively use a government-controlled socialistic health care system – regardless of what the courts or Congress do with the Obamacare,” the organization said on its website.

Marti Fisher, a policy advocate with the California Chamber of Commerce, wasn’t available for comment. In a letter she sent to members of the state Senate Health Committee on behalf of the chamber, she said the chamber opposes the bill because “it creates a new government-run, multibillion-dollar socialized health care system that would conflict with recently enacted federal health care reform and built from a yet to be specified premium structure.”

However, Leno said the bill wouldn’t conflict with federal health care law. In 2017, the federal law would let states apply for federal waivers, which would allow California to use federal dollars on health care in the state for a single-payer system, he said.

The idea is that states would provide broader coverage without increasing the federal deficit. Leno said the single-payer system in California would cover everyone, while the federal law would leave about 3 million without coverage in the state. “The single-payer would cover everyone and will reduce the cost and the growth in health care costs,” he said.

In California, there are about 12 million people without coverage at any given time, he said.

In the letter to the state Senate committee, Fisher said the bill would “establish a premium commission to impose a premium for all employers, which is essentially a tax.”

The state would use the same money it now uses to pay for the single-payer system. However, Leno said the money would be spent more efficiently.

The legislation is a two-year bill, Leno said, and the hope is to have it on the governor’s desk in the summer of 2012.

Two similar bills were introduced in 2006 and in 2008. They were vetoed by Gov. Arnold Schwarzenegger.

http://www.bellinghamherald.com/2011/05/17/2018501/national-health-care-debate-can.html#ixzz1MiSLyJK5

Achieving ACO goals, without the ACO

How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts

By Brent C. James and Lucy A. Savitz
Health Affairs, May 19, 2011

Since 1988 Intermountain Healthcare has applied to health care delivery the insights of W. Edwards Deming’s process management theory, which says that the best way to reduce costs is to improve quality.

Intermountain Healthcare is an integrated delivery system based in Utah and Idaho. Its network of twenty-three hospitals and 160 clinics provides more than half of all health care delivered in the region. Intermountain’s hospitals range from critical-access facilities in rural areas to large, urban teaching hospitals. Although Intermountain has an employed physician group and a health insurance plan, the majority of its care is performed by independent, community-based physicians and is paid for by government and commercial payers.

In 1986 an Intermountain team launched an effort to measure practice variation, focusing on the details of care in specific, common treatments.

What Intermountain Learned

First, most hospital admissions for a specific treatment had similar characteristics. Even for coronary bypass surgery, more than 80 percent of the patients showed similar severity and complexity of disease on admission, had no major complications, and achieved good clinical outcomes. The team did not find a single instance in which any one physician’s patients demonstrated higher levels of severity or complexity (“my patients are sicker”) than the patients of other physicians in the study.

In contrast, there was massive variation in physicians’ practices. Although use rates of particular treatment elements were consistent for individual physicians, they varied greatly across physicians. For instance, when the team examined individual treatment elements used for patients who were similar at hospital admission and achieved a good final outcome, it found that the highest physician-use rates were 1.6–5.6 times greater than the lowest rates. For each treatment, the hospital’s cost per case, not counting payments to physicians, showed about a twofold variation.

Despite deliberately choosing some of Intermountain’s highest-volume treatments and focusing on high-volume physicians, the study lacked sufficient statistical power to rank physicians accurately. It did not find any physician who was consistently a high or low utilizer across all of the elements tracked. Best patient care did not reside in any one physician. Every physician had something to learn, but also something to teach.

Finally, although the study could not accurately identify which physicians were providing optimal care, Intermountain could legitimately ask why physicians’ use rates were so different and what constituted best care.

Process Management

Accordingly, the findings forced Intermountain to focus on the processes of care delivery that underlie particular treatments, rather than on the clinicians who executed those processes—the “measurement for improvement” approach discussed (in the full article). As the inquiry continued, the system was eventually able to document significant declines in physician variation. Physicians led almost all of the changes themselves. Declines in variation were associated with large declines in costs, while clinical outcomes remained at their original high levels. For example, Intermountain’s average internal cost for performing a total hip replacement fell from more than $12,000 in 1987 to about $8,000 per case in 1989.

The Intermountain clinical quality, financial utilization, and hospital efficiency analyses led the system to process management theory. Quality improvement is the science of process management. W. Edwards Deming, the father of quality improvement, argued that every process always produces parallel physical, cost, and service outcomes. In medicine, clinical outcomes correspond to Deming’s physical outcomes. Cost outcomes represent the resources expended to create the clinical outcome, and service outcomes describe the interactions between a care provider and a patient as the process takes place.

Deming carried his analysis one step further, demonstrating that most process changes that produce better physical outcomes also cause costs to fall, and that in most cases, the best way to reduce cost is to improve quality. Deming’s insights gave Intermountain the tools it needed to take broad advantage of the quality-cost relationship in clinical and administrative services.

Full article – free download for the next two weeks only:
http://content.healthaffairs.org/content/early/2011/05/17/hlthaff.2011.0358.full

W. Edwards Deming (Wikipedia):
http://en.wikipedia.org/wiki/W._Edwards_Deming

Rise of for-profit hospice industry raises troubling questions, new study says

Ethical and quality concerns grow as end-of-life hospice care, once the province of charitable organizations, is increasingly dominated by investor-owned chains that cherry-pick patients and cut labor costs in order to maximize profits

FOR IMMEDIATE RELEASE
May 18, 2011

Contact:
Robert Stone, M.D.
Mark Almberg, PNHP communications director, (312) 782-6006, mark@pnhp.org

Stone continued: “Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns.”

******

“In the Business of Dying: Questioning the Commercialization of Hospice,” Joshua E. Perry, J.D., M.T.S., and Robert C. Stone, M.D., Journal of Law, Medicine and Ethics, Summer 2011.

A copy of the manuscript of the study can be found here.

******

Market decisions negatively impact safety-net emergency departments

Factors Associated With Closures of Emergency Departments in the United States

By Renee Y. Hsia, MD, MSc; Arthur L. Kellermann, MD, MPH; Yu-Chu Shen, PhD
JAMA, May 18, 2011

Our nationwide analysis of ED closures between 1990 and 2007 identified several risk factors that suggest economic drivers are associated with ED closures. Hospital-specific characteristics related to higher risk of closure were safety-net status, for-profit ownership, and low profit margin. After controlling for demographic and market factors, safety-net hospitals are at higher risk of closing their EDs compared with non–safety-net hospitals, suggesting that safety-net hospital status reflects other pressures that, although less measurable, are associated with ED closure. For example, some EDs have difficulty maintaining a full on-call panel of specialty physicians because of unwillingness of specialists to cover emergency calls, especially for poorly insured patients. While this finding deserves more study, it signals that safety-net hospitals may require particular attention if emergency care access is to be sustained.

Hospitals in counties where a high proportion of residents live in poverty were more likely to close their EDs than hospitals in more economically secure communities. Factors such as crowding and the increasing challenges of providing high-quality care in the face of burgeoning demand could contribute to difficulty in recruiting and maintaining staff at all levels. These community-characteristic findings are especially compelling given that vulnerable populations, including those in minority groups and both uninsured and underinsured patients, use EDs for acute care at greater rates than other populations. As more of these patients lose access to primary care, an increasing number of EDs are meeting criteria as safety-net facilities, which suggests that more EDs may be at risk of closing in the future. ED closures can have substantial effects on vulnerable communities, causing a decline in care as hospitals serving poor and minority populations select to provide services based on profitability rather than community health needs.

Local market competition is strongly associated with the ability of an ED to remain open. The presence of other EDs within a 15-mile radius and highly competitive markets are both associated with increased risk of ED closures. Previous literature reported that emergency services in areas with poor payer mix are often money losers. Our study extends this finding, showing that market forces, beyond profit margin alone, are substantially related to the ability of an ED to remain open.

Our findings expand the evidence base by showing that economic factors related to ED closures are similar to those related to hospital closures and may be even stronger. All factors (except for the increased risk of hospitals serving a higher proportion of patients in poverty) identified in our study can be shown to be market-driven. Profit margin, for example, is influenced by a number of factors ranging from patient payer mix, reimbursement decisions from payers (and negotiated discounts between hospitals and payers), to competition. Market factors may also be the reason that many for-profit hospitals choose not to provide emergency services.

In some areas, the episodic closure of EDs may be of little consequence, particularly in competitive health care markets where nearby facilities can deliver the needed clinical care for patients who seek ED treatment. Some might assert that such “creative destruction” is a manifestation of a healthy marketplace. However, the market economics of US health care, particularly emergency care, are distorted by the fact that 51 million Americans lack health insurance, and another 48 million are covered by Medicaid and other forms of public insurance that reimburse well below cost. With health care reform, the numbers of individuals covered by Medicaid and other forms of public insurance are likely to increase substantially, with far-reaching implications if these patients cannot access timely and adequate care. In most of the US health care system, an effective business strategy is to minimize uncompensated costs by declining to treat these patients, but EDs cannot do so.

The economic challenge of operating an ED in the face of a federal obligation may explain, in part, why for-profit hospitals were twice as likely to close their EDs as facilities that are nonprofit or publicly owned. It may also explain why hospitals in the lowest quartile of profitability (essentially, negative profitability) and those in highly competitive markets were more likely to close their EDs. Yet even after controlling for these and other characteristics, we observed that safety-net hospitals were significantly more likely to close their EDs than hospitals that did not serve this role.

The closure of an ED can have profound repercussions for a community. Closures can adversely affect access to emergency care for everyone—insured and uninsured alike. Hospital closures significantly affect access to care not only by increasing the distance to the nearest hospital but also by increasing the patient load at neighboring hospitals. ED crowding degrades quality of care, not only by prolonging patient waiting times and increasing the rate of patients who leave without being seen, but also in terms of outcomes, including increased rates of morbidity and mortality. Because Medicaid, SCHIP, and uninsured patients are highly reliant on hospital EDs for acute care, ED closure can displace tens of thousands of uninsured and low-income patients to other EDs, worsening crowding and potentially setting the stage for additional closures.

Our findings underscore that market-based approaches to health care do not ensure that care will be equitably distributed. In fact, the opposite may be true. As long as tens of millions of Americans are uninsured, and tens of millions more pay well below their cost of care, the push for “results-driven competition” will not correct system-level disparities that markets cannot—and should not—be expected to resolve.

In summary, this study demonstrated that from 1990 to 2009, the number of hospital EDs in nonrural areas declined by 27%, with for-profit ownership, location in a competitive market, safety-net status, and low profit margin associated with increased risk of ED closure.

http://jama.ama-assn.org/content/305/19/1978.short

Comment:

By Don McCanne, MD

We have a crisis with closures of our emergency departments. With our current dysfunctional mechanisms of financing health care – mechanisms that are perpetuated by the Affordable Care Act – market considerations rather than medical need are driving these decisions. The more vulnerable populations suffer the most.

Many of the affluent individuals who have had great influence over the reform efforts may not care that safety-net emergency departments are shutting down, but they should. They could become victims of major traffic accidents and taken through rush hour traffic to their preferred for-profit emergency departments. If they had to ride past padlocked safety-net emergency departments to the other side of town, they could DIE no matter how much money they had or how good their private insurance is.

A well designed single payer system includes regional planning and separate budgeting of capital improvements. Decisions on the location and funding of Emergency Departments are made based on community need rather than on market considerations.

Maybe most of the rich don’t care about the rest of us, but you would think that, at least, they would care about themselves and their families.

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