The last article on the history of Skiff Medical Center delved into the events of 2009 and 2010 that brought about the implement of health-care reform. Though there are many, many details in the legislation and the subsequent rules developed by the government to implement it, following are the five basic ways hospitals are already changing, and are expected to change in the next several years:
1. More people will have insurance plans in the future, but those plans will tend to have very high deductibles or will be government plans that pay hospitals the least.
2. Payments to health-care providers, including hospitals, will be decreasingly tied to the volume of services provided and increasingly tied to the value of the care provided. Value is defined as quality of care provided in the hospital, as well as outcomes after discharge, patient satisfaction with their hospital care and decreased cost of care (collectively called the “Triple Aim” by Medicare).
3. Though payment for value will be an increasing reality, the ultimate goal is a payment system for health care that is focused on preventing illness (before it happens) rather than curing illness (after it happens) by tying payments for hospitals and other health-care organizations primarily to the health of the population of patients served, and secondarily to the value of the care provided to those patients.
4. Health care will be increasingly provided in primary care physicians’ offices and in patients’ homes, with case managers and navigators connecting the patients with the resources available to keep them healthy and prevent disease. Only the sickest and most complicated patients will be admitted to the hospital or seen in a specialist’s office.
5. Information from doctors’ offices, hospitals, long-term care providers, pharmacies, etc., will be integrated, and mobile devices in our homes will help to provide a seamless view of our health status. Predictive analytics will utilize this integrated information to identify those of us with health risks and interventions will be devised to help prevent major medical events from occurring in our lives.
These changes are already happening in health care nationally, and even right here in central Iowa, with the formation of large integrated networks of care including the University of Iowa Health Alliance and Unity Point Health. These large networks include hospitals, physicians, long-term care facilities, and other health-care providers who are engaged in sharing information systems and data, and are becoming clinically integrated through referral relationships. Additionally, many members of these organizations have integrated themselves operationally. Interestingly, 70 percent of hospitals in Iowa that are the size of Skiff Medical Center or larger have already integrated into official health system partnerships and more are in the process of doing so. To say that things are changing in major ways in the health-care field would be an understatement.
Our own hospital has been impacted in significant ways by the implementation of health-care reform during the past few years. For example, health-care reform accelerated the process of moving Medicare payments from merely being reimbursement for providing care (payment for services provided), to having a portion of that reimbursement placed at risk based on quality and patient satisfaction scores associated with services provided at Skiff. Essentially, Medicare reduced reimbursement to all hospitals nationally and placed the equivalent amount into a central fund which is used to reward (or penalize) hospitals based on their clinical performance. Essentially, if a hospital is above average, they get back more than Medicare took away. If they are average, they get back exactly what Medicare took away. If they are below average, they do not get as much back as Medicare took away, thus being paid less for delivering that particular service than in the past. Fortunately, quality scores at Skiff are good, and are getting better, so we have been rewarded by this program.
In addition, health-care reform extended a program already in place in other states called the Rural Community Hospital (RCH) Demonstration program. This program was originally focused on the lowest 10 states in America in terms of population (Alaska, Montana, the Dakotas, etc.). Hospitals in those states that were too large to qualify as a critical access hospital (CAH), had less than 50 beds, and were truly rural, qualified for a payment system that provided reimbursement based on the cost of inpatient care provided to Medicare beneficiaries. This program was extended to the next 10 lowest states in terms of population via the health-care reform law, and Iowa hospitals were eligible for inclusion. Since only 25 hospitals would be allowed to enter the program, it was with a bit of apprehension that we submitted our application. We were thrilled to be notified several months later that we had been selected. To maximize the benefit of this program, we fundamentally revised our operations to focus on inpatient and skilled nursing care. This required major changes in our hospital, but the result has been dramatically increased payment for inpatient services. Unfortunately, this program is temporary and is set to expire in June of 2016, thus we are working hard with our legislators to introduce legislation that would extend it another five years at the least, or make it permanent at best.
The health-care reform law also has provided access to insurance coverage for many residents of Jasper County. The expansion of the Medicaid program allowed some patients with no insurance to have coverage for the first time. Since Skiff labored to become certified to work directly with the Medicaid program to help patients enroll in coverage, we have new tools at our disposal to minimize the number of patients who are left with no insurance and a large hospital bill to pay. In addition, some patients who were once covered under a state program that allowed them to only seek care from the University of Iowa, or Broadlawns county hospital in Des Moines, now have their own insurance via the health-care marketplace and are allowed to use our hospital.
On balance, health-care reform has been positive for Skiff, but it has only stemmed the decreases in payment from other government programs. While the RCH demonstration program has been a boon to Skiff, it does not apply to patients who obtain their coverage from Medicare Advantage plans. Fully one-quarter of all Medicare patients at Skiff are now covered by those plans. In addition, Medicare has changed their payment policies such that many patients who are “admitted” and stay overnight in the hospital for their care are actually classified as outpatients by Medicare and are also excluded from the RCH demonstration program. On any given day, 15-20 percent of the patients staying overnight at Skiff are classified as outpatients.
In an effort to trim its expenditures, Medicare has taken many cost-cutting steps. For example, they have imposed limits on the amount of outpatient physical therapy a Medicare beneficiary can use during the course of a year, and have also attempted to allow several “extender” programs that provide additional reimbursement to rural hospitals to end. These include one program that provided extra inpatient payments for hospitals (including Skiff) considered to be “Medicare Dependent,” and another program that provides additional inpatient payments for low-volume hospitals (like Skiff). Congress has been successful at offering one-year extensions for a few of these two programs, because they have both expired at the end of each of the last two years, only to be reborn a few months later through legislation. Congress has not been successful with all the programs, though, as one that provided additional payments for outpatient services expired two years ago and was not renewed, and a program that provided payment for pathologist services to rural hospitals was also allowed to end. It is difficult making long-term plans when major sources of revenue end each year, only to be resurrected a few months later!
Health-care reform is not the only government program that has affected Skiff during the last few years, though. Another was born out the American Reinvestment and Recovery Act of 2009, also known as the “stimulus” program. You may recall that the intent of this program was to deliver nearly $1 trillion in spending from the government to stimulate the economic recovery. Of this, more than $20 billion was set aside for hospitals and other health-care providers to invest in electronic health records. In order to be eligible for these funds, hospitals were required to reach goals to achieve “meaningful use” of these electronic systems. Because Skiff had invested heavily in electronic patient records in the early 2000s, the additional funding from meeting these meaningful use goals was essentially repayment of investments which had already been made. This gave the hospital the ability to invest these additional funds in other areas.
The combination of meaningful use funds, along with additional revenue from the RCH demonstration program and a strategic partnership with the Philips Corporation, allowed for the development of the Philips Imaging Center at Skiff. This center provides state-of-the-art imaging technology in the areas of Magnetic Resonance Imaging (MRI), Computed Tomography Scanning (CT scanner), and digital radiology (X-ray). The result was a world-class imaging department which is virtually unrivaled in the Midwest.
Other positive changes to Skiff and the local health-care community have included the ongoing recruitment of physicians and the development of new outpatient clinic alternatives with NewCare Health Services, the development of a state-of-the-art medical laboratory in a portion of the old Maytag headquarters which will serve Skiff and several other hospitals in Iowa, and extensive investments in equipment and facility updates which have been supported by the generosity of our community via gifts to the Skiff Auxiliary and the Skiff Foundation. The extraordinary team of physicians and hospital staff has worked hard to ensure ever-improving quality and were recognized with an “A” patient safety score by the Leapfrog group this spring and one of our extraordinary nurses, Veronica Mangrich, was noted as one of the top 100 nurses in the state of Iowa for 2014.
All the changes at Skiff during the past few years have not been as notable or enjoyable as these. Although we have been handed a lifeline from a few new government and private programs, there are others which have had a very limiting impact as well. The sequester of late 2011, which was meant to be so terrible that it was thought congress would never allow it to become law, actually did become law and has removed 2 percent of Medicare reimbursement for all hospitals for two years now. With another 11 years to go, the cumulative reduction of more than 25 percent of payments from hospitals is devastating. This is coupled with payment reductions from private insurance companies as they seek to adapt to new requirements under health-care reform. These companies are bundling their payments for different procedures together; thus paying us one fee for two procedures where in the past we were paid for each separately. They have implemented new payment mechanisms for outpatient services such that only one company relates their payments to the amount we charge. For all the rest, we are paid based on what the insurance company is willing to pay, not based on our costs of providing the care, or on the amount we bill. This is why the “discount” or “adjustment” line on the explanation of benefits forms from your insurance company is getting larger and larger.
The impact of decreasing payments from government insurance plans (Medicare and Medicaid), decreasing payments from private insurance companies, and the imposition of the sequester is expected to result in a net reduction in payments to hospitals of 30-50 percent during the next 10 years. Like hospitals everywhere, we have responded to this expectation and are continually decreasing our costs through a number of measures. Some of these include not replacing retiring staff, reducing benefit plans for our employees, delaying or foregoing salary increases, using less expensive supplies, postponing major infrastructure replacement projects, and relying more and more on gifts from the community to fund improvements. We have made painful decisions in regards to closing some services and significantly changing other services, while still attempting to invest in areas that can help support us financially in the future.
The past three years have been a time of highs and lows, much of it associated with changes in government programs. It has been a mixed bag of excitement associated with investments in new technology and services, as well as sadness when difficult decisions affecting our hospital and community needed to be made. In reality, though, it has been a microcosm of the history of Skiff’s 90-plus years.
Since 1917, the only thing constant at Skiff has been change. Who would have thought that the small house leased from Caleb Lamb and operated with a budget of $350 per month would someday become the third largest organization in Jasper County, employing more than 350 people with a community impact of more than $30 million per year!
What began as the Newton Hospital Association, and then later became Mary Francis Skiff Memorial Hospital, then Skiff Memorial Hospital, and finally Skiff Medical Center in 1984 is still here today. Though the name, and many, many other things, may have changed during the years, one thing has remained — our commitment to being in Newton and providing absolutely the best care close to home!
Speaking of names, perhaps you heard that it might be changing again. It is, but it isn’t! Read the final installment in just a few weeks of this 11-part series on the “history of Skiff” to learn more!