In many ways it seems that while healthcare technology may change, healthcare itself – the providing of health services to patients – would remain fairly stable through the years.
Not true. Healthcare has been changing, in the way it’s delivered to consumers, the way consumers access and use it and the way healthcare service providers are reimbursed. Two of the biggest factors generating change in the Nevada healthcare system in 2011 are the lingering effects of the economic downturn, and the Affordable Care Act.
Healthcare Reform
Nevada Healthcare & Nevada Businesses
The Affordable Care Act, signed into law in March 2010 and possibly appearing before the U.S. Supreme Court this fall, is made up of two bills, the Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act. Together they’re often referred to under the nickname ObamaCare.
The Affordable Care Act was created to bring healthcare reform to a country where 49.9 million people did not have health insurance in 2010, according to the U.S. Census Bureau. The Act is being implemented over several years, with the brunt of changes rolling out in January 2014. Some of the changes already seen in healthcare from the Act include expanding coverage to allow children to stay on their parents’ insurance policy to age 26, and the elimination of lifetime limits on care.
“With economic conditions the way they are, we’ve seen a lot of folks either lose their insurance coverage from private insurance altogether or shift to Medicaid, so on that front there’s certainly been a very big change in the payer mix for the provider community, which puts a financial strain on them,” said Michael Coleman, CEO, Southwest Medical Associates, United HealthGroup.
“Forty million people in this country are not insured,” said Brian Brannman, CEO, University Medical Center. “Any effort to get these folks insured is a step in the right direction. As taxpayers, we are absorbing the costs of under-insured and uninsured because the cost of healthcare increases for everyone.”
Meant to address the problem of uninsured Americans, the Act is currently creating discussion in many quarters and doubt and uncertainty in the business communities as employers and employees wait to see how benefits will be changed.
While there is no doubt the Act will impact the bottom line for both businesses and healthcare providers, it’s too early to see how it will affect Nevada’s businesses and healthcare. The Act is not the only factor causing changes to ripple through Nevada.
The other factor, of course, is the economic downturn, which has had an affect not only on Nevada business, but on Nevada healthcare and the way it’s both delivered to consumers, and consumed by Nevadans.
While the recession may have made healthcare services delivery more problematic, Dr. Sherif Abdou, CEO, HealthCare Partners of Nevada, isn’t convinced it’s the driving factor behind changes. “I think healthcare overall is evolving, moving toward an integrated, coordinated model. I think the economic downturn forced integration of groups and that, by default would improve quality and care.Not that the economy has necessarily directly affected the delivery model.”
Whether caused by economic conditions or simply by an evolving industry, another change is a great number of physicians becoming closely aligned with hospitals and large healthcare systems, said Donald Kowitz, president and CEO of St. Mary’s Health Plans. The flip side is that there aren’t as many independents working.
“We’ve had, for example, in Reno, the two major cardiology groups were acquired by Renown. There’s example after example across the country, not only cardiology but primary care, where physicians are becoming employed by hospital systems,” said Kowitz.
The Daily News
Since 2008, the recession and healthcare have been two fairly constant topics in the news. Healthcare in Nevada has changed over the last four years with regard to economic conditions. The economy has essentially impacted healthcare in three ways: through changes to commercial coverage (employer-paid benefits to employees), through the way individuals are using healthcare (healthcare consumption), and the affect of the recession on healthcare costs and the continuing pressure to force healthcare costs down.
“When you look across the country you have unemployment up, you’ve had companies struggling with costs and Nevada has been hit specifically hard,” said Mike Murphy, president and general manager, Anthem Blue Cross Blue Shield.
The number of people in Nevada without health insurance has gone up since the recession started, making Nevada the third highest state for the number of uninsured people over 21 percent in September. Add to that the economic pressure this economy has placed on businesses in Nevada and companies have just cause to be concerned.
“Early on in the economic downturn there was a lot of cut in pay and adjustments employers were making and at the beginning of things we saw businesses revising and making major changes to healthcare benefits,” said Murphy. “As things progressed and we’ve been in this economic cycle for a while, we are continuing to see companies that are one; going out of business, or two; are trying to do everything they can to continue to offer benefits but they’re doing so at reduced levels or at increased cost shares to their employees.”
Brannman has noticed substantial changes in the Nevada healthcare arena. As the economy dipped, more people found themselves unemployed and uninsured. “To compound the financial challenges, the Indigent Accident Fund was swept to the tune of $20 million, Medicaid reimbursements declined as well as Medicaid eligibility requirements. That means fewer people are even qualifying for Medicaid as a pay source, and when they do qualify, Medicaid reimburses hospitals less.”
The work isn’t going away, Brannman pointed out – just the funds to pay for the necessary services, which has never been a good financial model.
Consumers and Healthcare in 2011
The downturn in the economy engendered changes in the healthcare consumer’s behavior as it did with businesses that try to provide benefits. At the beginning of the down cycle, according to Murphy, individuals actually increased their consumption of healthcare. People who were concerned they were going to lose their jobs jumped to schedule elective procedures early on, making certain they could take care of such things before losing benefits. Further into the cycle, there was pull back as people became unemployed, lost benefits, purchased individual coverage or had a higher cost share for commercial, employer-provided healthcare.
According to Kowitz, consumers are now delaying voluntary or elective procedures, possibly because employee cost shares have gone up and they’re paying more out of pocket than they used to. “Where previously they might have paid a couple hundred bucks, they now have to pay a couple thousand to have a hospital procedure, so we see those kinds of things going down,” he said.
This can lead to complications. “At the same time, there may be a higher incidence of complicated cases where people just don’t seek treatment because they don’t have the money and they wind up with more severe illnesses,” Kowitz added. “At this point, the evidence of such consumer behavior is anecdotal, but consistentely observed.”
Dr. Abdou has seen a similar fall off of patient utilization of healthcare. “Patients are more cognizant about costs. We definitely saw a downturn of utilization of healthcare overall. Fewer people are accessing healthcare because they have economic issues or are uninsured.”
Another impact of the recession on healthcare is the number of emergency room visits. People finding themselves without health insurance sometimes wait too long to visit a primary care physician for a simple ailment, said Brannman, with the result that by the time they have the problem addressed, it’s become an emergency. Other people use the emergency room for non-emergency care, rather than making an appointment with a primary care doctor because they simply can’t afford a doctor’s appointment.
“So they present to the emergency room, and all hospitals are legally obligated to see the patients and treat them, regardless of the patient’s ability to pay. Emergency room care is the most expensive form of care. When people use the emergency department for the wrong reasons, they are driving up the costs of healthcare, and in UMC’s case, Clark County taxpayers pay for that care,” said Brannman.
Though while the number of people utilizing services has dropped off, Dr. Abdou hasn’t seen quality of care drop off. It’s possible, he stated, that people are only accessing care when it’s absolutely necessary.
The Recession and Healthcare Costs
The third area in which healthcare was directly affected by the economic events of the last few years isn’t that much different from the way it was before the recession started: healthcare costs. There has long been a pressure to reduce healthcare costs, as well as the stress on the industry caused by the costs to develop new technology, medicine and new procedures.
“The healthcare system, if you will, hasn’t changed,” said Murphy. “We’re still coming out with new technologies, we’re still coming out with new procedures, and we’re still coming out with things that drive up costs.”
So though there’s been a noticeable decline in the degree of utilization of healthcare technology as people hold off on scheduling necessary procedures or simply act in a more cost-conscious way, the advances in healthcare and the demand for healthcare itself and its advances hasn’t subsided.
“You continue to see costs increase, and the thought and discussion around the Affordable Healthcare Act that’s been going on is because there’s a whole lot of concern in the healthcare industry, especially on the hospitals and the doctors’ side,” said Murphy. Providers are worried about the kind of pressures they’re going to see from Medicare and Medicaid programs, all of the shifts in costs that will arise. “So what you’re seeing from a cost perspective is we continue to see increased costs on a commercial side and for individuals out there it makes it very challenging in a difficult economy.”
Healthcare is Still All About Patient Care
With regard to the hospitals and physicians, the Affordable Healthcare Act itself won’t change how healthcare is reimbursed, but it is forcing the industry as a whole to look at how healthcare is delivered to users. As the Act is being implemented, healthcare providers and insurers are looking to implement it with as little disruption to delivery of healthcare as possible and in as positive a way as possible, looking for ways to improve quality while cutting costs.
“As far as healthcare costs in the future, unless this country systematically changes several facets of healthcare, the cost of care will not go down,” said Brannman. “People need to ask themselves why they see double digit increases in their health insurance premiums, when the reimbursement to hospitals is going down. We spend more in the U.S. on healthcare than all but seven countries in the world spend on their gross domestic product, yet we still have uninsured folks and challenges with the system being able to afford healthcare.”
A PricewaterhouseCoopers study shows that 87 cents of every healthcare dollar goes directly to paying medical benefits, said Murphy; 13 cents goes to administration. “We continue to try and improve costs and transparency because the real change is making sure we’re spending the 87 cents out of every dollar as effectively as we possibly can to get the best quality system that we can.”
One of the possible changes in healthcare costs and quality is a move toward integration and coordination of healthcare, which seems a necessary step in improving the quality of healthcare.
“I think unless we all become a part and are engaged in the delivery of healthcare, be it patients, be it doctors, be it nurses, hospitals, be it payers, to consciously manage the quality and the costs of healthcare better, we will just see what we’ve seen in the last decade, which is costs increasing every year,” said Dr. Abdou. He expects with the healthcare reform legislation, integration and coordination will fit the curve of changes.
“Integration of a larger, more multi-speciality group, physicians and hospitals coming together forming what we call an integration model where the institution and physicians become one, having the same policies, procedures and delivery model and the same financial model as well,” said Dr. Abdou. “It’s where we put the patient first, put the outcome of the patient first, put the quality of patient care first, and then create the system around these principles rather than right now when it’s volume driven: ‘The more patients I see, the more I make money, the more patients in the hospital, the more I make money.’
“When you put patient care in the center and then create a financial operation model based on that patient care, I think this is when we’ll see the quality of healthcare improve,” Dr. Abdou added.
One of the positive effects the economic downturn has had on healthcare has been seen in advancing technology, according to Coleman. Federal economic stimulus money incentives have been directed at pushing physicians and hospitals to adopt electronic medical records, as well as the development of the health information exchange within the state, which is an online system that will allow hospitals, physicians and patients to share information via real time digital networks.
Southwest Medical Associates has used an integrated healthcare delivery system for over eight years now and is embracing the move to a more technologically adapted delivery system. “I think integration between hospitals and physicians just improves quality and lowers cost,” said Coleman. “We have [an online] portal where the patient can go and look at their medical records, can ask for prescription refills and can actually do e-visits and communicate with their physician. We’re a 24-hour town and this is 24-hour care, enabling patients to send messages to their physicians over the internet. I think consumers are changing the way they access information and we recognize that and try to change the way patients can access their care.”
One of those changes includes an app Southwest Medical is rolling out to allow patients to check their records on smartphones and tablets.
But healthcare still goes beyond technological advances, and patient care is still the most important thing. Integrated care allows physicians and medical teams to work with high-risk patients and keep up with case management so high-risk patients receive better quality care. The Patient Centered Medical Home model, with which Southwest Medical Associates is the first organization accredited in Nevada, makes the patient the center of the model and the primary care physician the key component to provide the patient access to care and information, a point of contact and to ensure patient needs are met from social work to medical care.
The Uncertainty Principle: Looking Ahead
What the Affordable Care Act is doing currently is creating discussions around the healthcare community between payers, employers, employees, constituents, state organizations and the industry itself. While it’s too early to say what changes will come out of the discussions, it’s considered likely by experts in the field that the discussions will vary from state to state.
The Act, which is already rolling out changes in some areas, is causing uncertainty, said Murphy. “In the short term, the business person is a bit anxious because they’re not sure what the future will look like. For the hospitals and the doctors, they know the reimbursement methodology is going to change, there are going to be shifts and there are going to be changes in Medicare and in Medicaid and those things cause some changes between how they look to fund their businesses and the care they’re going to provide. There needs to be an understanding of the third of the four legs of the stool which is individually insured folks, commercially insured folks who are people insured by their employers, and Medicare and Medicaid populations and how that mixes in, and that’s not quite known yet. And the last piece is how is it going to change for the insurers?”
The uncertainty for employers is made up of unknowns in the Act: What are benefits going to look like? What will the new exchange be? What are the costs going to be in the open market? What products are going to be available?
For the consumer, the questions remain: Can I afford to take preventative measures stay healthy? Can I afford to get sick?
“It certainly is a dynamic industry right now,” said Kowitz. “There’s tons of uncertainty regarding how we’re going to handle different aspects of healthcare reform. That alos provides tons of opportunities for people in the business to be creative and to work with regulators on how these things ultimately unfold.”
Looking Toward a Healthy Future
Even with the changes in healthcare and the roll out of the Affordable Healthcare Act, prevention is still the very best medicine, and Nevada’s healthcare providers and insurers support programs to help people stay out of reach of the industry. While working to improve the quality of healthcare and the availability and delivery of it, as well as driving down costs, healthcare providers are also interested in teaching people to avoid needing industry services in the first place through smoking cessation, obesity control, heart and lung health and obesity reduction programs.
“We try to educate consumers in general and our members in particular around healthy lifestyle habits,” said Murphy. “We know 70 percent of some of the additional costs of healthcare can be controlled just by healthy lifestyle behaviors, like lowering obesity, regular exercise, smoking cessation, all things that hit Nevada very hard. You ask if these programs are continuing, as state funding is being cut and as companies are limiting their philanthropic activity. It’s putting downward pressure on some of these programs and state-run programs and we’re trying to do our best to continue what we can to be involved and to drive these programs.”
Healthcare is always changing. Today’s healthcare has changed considerably from the way it was delivered 30 years ago or even 10 years ago. There are new pilot programs and partnerships, increased accessibility and attention to costs and quality.
Healthcare will continue to change going forward, putting costs and quality measures out for consumers to see and understand, allowing patients to make decisions for themselves as they weigh evidence-based outcomes from different providers and different programs.
“I’m very optimistic about the level of physicians and hospitals [in Nevada] and their desire to change the delivery model to improve quality and increase access,” said Dr. Abdou.
“Technology really does allow providers to provide higher quality and lower cost care with greater patient satisfaction,” said Coleman. “I think that’s the key for us to improve costs. There are a number of initiatives in the state right now, including the health information exchange to help ensure patients get better care.”
