Nevada’s 2013 healthcare checkup reveals an industry under an unprecedented combination of pressures – little surprise there – but also one that is holding its own, moving quickly to adapt, gearing up to provide the best patient care possible, and looking confidently to the future.
“Nevada’s healthcare industry is in a state of flux as a result of the changes occurring on a national level,” says Dr. Sherif Abdou, president and CEO of HealthCare Partners Nevada, a network of 245 physicians.
From the challenges posed by the listless economy and the still-unraveling Patient Protection and Affordable Care Act (ObamaCare) to the looming shortage of doctors, nurses, physician assistants and other healthcare professionals, healthcare providers across the state are reacting as quickly and as judiciously as possible — which, all considered, is precisely what they should be doing.
“From a hospital quality standpoint, Nevada hospitals are doing well,” says Dwight Hansen, director of financial services for the Nevada Hospital Association, “even though it is a struggle because of financial considerations.” The Center for Medicare & Medicaid Services (CMS), he explains, looks at a variety of quality measures, which can be broken down into categories. Within these categories, out of the 50 states and Washington, DC, Nevada hospitals rank 24th in Heart Attack and Chest Pain quality measures, 13th in Heart Failure quality measures, sixth in Pneumonia quality measures and 13th in Surgical Care Improvement quality measures.
“However, financially, Nevada hospitals are struggling,” Hansen adds. For more than four years, the Nevada hospital industry as a whole has lost money, with the most recent operating margin of a negative 2.2 percent for the first half of 2012. “This is mostly due to the fact that three-fourths of the payers do not even pay the cost the hospital experiences to care for their patients. Medicare, Medicaid, the uninsured and other government payers account for 75 percent of the inpatient days in hospitals.”
Medicare, Medicaid and the uninsured pay substantially less than the actual cost of care. This leaves the private insurers to pick up the losses experienced because of the payers who do not pay their fair share.
From advanced technologies and medical treatments for heart, cancer, neurology and specialized children’s services to numerous locations for urgent care, primary care and other outpatient services “our community’s access to services that are close to home is growing and better than ever,” according to Greg Boyer, CEO of Renown Regional Medical Center.
“There are a lot of great things happening in hospitals,” says Karla Perez, Vice President of Universal Health Services, “but so many of our initiatives are behind-the-scenes that people may not realize all the things we’ve done, and continue to do, to improve the quality of our community’s healthcare.”
The Valley Health System, Perez notes, has five accredited chest pain centers and a network of primary stroke centers. “We collaborate with other healthcare providers and agencies to reduce a patient’s risk of falling, of getting an infection, of reducing their chance of being readmitted to the hospital within 30 days for the same health issue.” Universal also started a Transitional Care Program in 2011 to reduce its readmission rate, “and it really does take a village to care for hospital patients. We examine everything from our patients’ current health status to their home environment.”
Universal also has palliative-care programs available at its five Las Vegas hospitals, Perez notes. This is specialized medical care for patients with serious and/or chronic illnesses like cancer, congestive heart failure, kidney failure, Parkinson’s, etc. “It focuses on relief from symptoms pain and stress and is appropriate at any stage of a serious illness.”
Nevada’s healthcare industry is in a state of flux as a result of the changes occurring on a national level, suggests Abdou. “While Nevada’s healthcare system remains in the bottom 10 percent nationwide, our state’s delivery system is being reconfigured to improve upon quality of care, access and patient outcomes.” This reconfiguration, he believes, is “steadily moving Nevada away from the fragmented, wasteful system we have seen in recent decades. Through continued mergers and acquisitions, we are seeing more healthcare organizations grow to embrace the collaborative, system-based delivery model that HealthCare Partners has practiced for decades. This allows for a significantly improved level of coordinated, patient-focused care and serves to reduce waste within the system.”
“The healthcare industry in Nevada is still challenged,” says Todd Sklamberg, CEO of Sunrise Hospital and Medical Center and Sunrise Children’s Hospital. “While at Sunrise Hospital and Sunrise Children’s Hospital we have seen an increase in patient activity, as a state we are faced with a high unemployment rate and a large uninsured patient population.” Indeed, he adds, Medicaid expansion in Nevada is a major component of the Affordable Care Act that will impact Nevada’s hospitals.
“We are pleased with the Governor’s early and ongoing support of Medicaid expansion,” Sklamberg says. “While expansion is an important first step, it is key to remember that Medicaid reimbursement covers only about 55 percent of the cost of care. Uninsured patients who are treated by Nevada’s hospitals pay in total about 5 percent of the cost for their treatment. Because they seldom receive preventive care, these patients often require expensive, complex care.”
ObamaCare
The initial impact of ObamaCare, according to Hansen, has both positives and negatives. “On the positive side, there were a number of immediate insurance rules which favored improving healthcare.”
These include:
- An avenue for those with pre-existing conditions to obtain insurance
- No lifetime or annual limits
- Eliminating the ability of insurers to rescind coverage (except in cases of fraud or misrepresentation)
- The extension of dependent coverage on the parent’s insurance
- The requirement for insurers to use at least a certain portion of the premium dollars received for direct healthcare, rather than administration.
“However, there is a significant downside financially for hospitals in the early years before the increase in coverage begins in 2014,” Hansen continues. Hospitals normally receive an increase in payment rates every year from Medicare, but these increases were cut back from the normal increase, costing Nevada hospitals about $3.8 million in 2013, and growing every year with a total 10-year cost of almost $900 million. In addition, there will be cuts to the Medicare and Medicaid Disproportionate Share Hospital (DSH) programs.
Hospitals that treat a disproportionate share of low-income patients typically receive an additional payment, Hansen points out, but this is scaled back under the Accountable Care Act. The cuts do not come until 2015, but the Medicare DSH cuts are expected to cost Nevada hospitals almost $208 million over ten years.
“Details of the Medicaid DSH cuts are not final yet but it is estimated that the Medicaid DSH cut in 2014 would be about 5 percent or $4 million, growing to about 50 percent or $43 million in 2019,” he notes.
Although it is not part of ObamaCare, the Middle Class Tax Relief and Job Creation Act, which extended tax cuts to most people, also included a provision to cut payments to hospitals by reducing the amount Medicare would pay for bad debts hospitals experienced for Medicare patients who could not pay their deductible or coinsurance. And the recent federal budget continued the sequestration adjustment for hospitals, cutting Medicare payments by 2 percent ($25 million per year) for Nevada hospitals.
According to Perez, the role of clinical integration (CI) will play a significant role in the Patient Protection and Affordable Care Act. Clinical integration is an effort among physicians, often in collaboration with a hospital or health system, to develop active and ongoing clinical initiatives that are designed to control costs and improve the quality of healthcare services. CI is a physician-driven, physician-led and physician-managed program. “We established our CI program.”
Since 2010, says Boyer, hospitals have incurred substantial cuts in payments “such that for every dollar we now spend to deliver care, we only receive 83-cents back from Medicare and 54-cents back from Medicaid.”
Abdou sees the Affordable Care Act as “fostering improved collaboration and integration between physician groups and hospitals. While (it) alone will not bring about all of the necessary changes within our healthcare system, I believe it has sparked a dialogue that will ultimately lead healthcare organizations to prioritize quality of care and outcomes rather than patient volume.”
“Ultimately,” says Sunrise’s Sklamberg, “there are a lot of details in the Affordable Care Act that we are still working through and determining the effect. But the opportunity for lower-income Nevadans to receive healthcare coverage and access to preventative services is definitely a positive for our community.”
Professional Shortage
In general, Nevada “has the same problem that most of the nation is facing right now,” according to Helen Lidholm, CEO of Saint Mary’s Regional Medical Center, “and that is a shortage of primary care physicians, internal medicine and family practice doctors.”
Early in March, Lidholm notes, the medical schools in the nation held their annual Match Day, in which they look at prospective medical students and upcoming residents to see what kind of specialties they want to go into. “For the first time in a very long time internal medicine was at the top, which is good news, but it’s not going to happen fast enough. That causes patients – and not just in Nevada – to have to go to more expensive options, meaning specialists for care that perhaps could have been taken care of by primary care doctors.”
According to Hansen, the latest information shows that Nevada ranks 47th among the states in physicians per capita, 49th in adequacy of prenatal care, “and we have a lower number of licensed MDs per capita in 34 of the 39 specialties tracked by the AMA. Nevada ranks last in RNs per capita, despite the fact that Nevada is the fifth-highest paying state for RNs.”
“As a private employer, we’ve developed programs to train healthcare professionals ourselves, and work closely with the university and colleges to offer residencies, clinical rotations, nurse mentoring programs and local faculty,” says Renown’s Boyer. “Our contributions to health professional education exceeded three million dollars in 2012. We are continuing to do what we can to prevent shortages, but we need the support of business leaders in Nevada to avoid staffing ratio legislation that would raise the cost of healthcare and create staffing shortages.”
The healthcare needs of Nevada’s expanding and aging population, Boyer points out, will drive staffing shortages in every area. “As a teaching hospital working with the University of Nevada School of Medicine, Renown Regional Medical Center devotes considerable resources to educating health professionals. We are a key partner in the state’s efforts to double nursing school output.”
Renown has planned and prepared to meet the future needs of the community in the face of the increased patient demand from ObamaCare, says Boyer. For access to care and to keep costs down, Renown has opened urgent care centers, primary care offices and other outpatient services.
Additionally, Northern Nevada Medical Center (NNMC) is working on growing and expanding to meet the changing needs of the community. The hospital has launched a pain management center which is co-managed by Nevada Advanced Pain Specialists. The center was recently the first of its kind in the nation to recieve certification from The Joint Commission in lower back pain. The center is designed to identify the source of patient’s pain and use image-guided techniques and therapies to treat the precise area.
“Due to the recession, our employees are working later into their careers than they originally planned, and that’s a wealth of knowledge and experience our newer employees can tap into,” Perez suggests. “We continue to review what programs we should add to our graduate medical education program. We currently offer seven residencies and two fellowships. However, particularly for physicians, the financial reimbursements must be figured out, and figured out quickly, so the field of medicine continues to attract top talent.”
When Universal established its graduate medical education program at Valley Hospital in 2006, Nevada ranked 46th in the nation in physician to patient ratio, Perez points out. The access to health insurance through the Patient Protection and Affordable Care Act, the vast number of baby boomers who will need additional medical care, and a retiring physician population will continue to create a challenging environment, she feels.
“However,” says Perez, “we’ve positioned ourselves to work closely with universities to provide an excellent clinical experience for students in nursing, therapy services and pharmacy programs, and to expose them to everything the Valley Health System offers its patients and employees. We are working with more healthcare extenders, like midwives, to increase access to healthcare professionals. I think there are many opportunities that can be explored.”
Preparing for the Future
“We have many initiatives in place,” says Perez, “but they weren’t created especially for the Patient Protection & Affordable Care Act. They were developed as part of our ongoing patient safety and quality programs, as well as community needs.” In retrospect, however, everything her group is doing will benefit patients and consumers once Obamacare goes live. “A few examples include our $26-million electronic medical record implementation in 2012 at all five hospitals. This also ties into the HealthHIE Nevada health information exchange program overseen by HealthInsight.”
The graduate medical education program at Valley Hospital has increased the number of physicians practicing in the community. “Our statistics show 51 percent of our program graduates stayed in Southern Nevada to continue their career,” Perez says, “either working in a private clinic or as hospitalist, or to continue their education with a fellowship in Gastroenterology or Pulmonary/Critical Care.”
Many hospitals are developing relationships with physician groups to prepare for the ongoing transformation of the healthcare system, Abdou says. “This is known as clinical integration. These companies recognize the integral role outpatient care will play in a value-based healthcare system, which is why they are trying to expand their presence and influence beyond the walls of their hospitals.”
Adapting to new realities is the future of healthcare in Nevada.
Paul Doherty says
Great article! Informative information about Nevadas Health Care Sytem.
I learned a lot!