Hospitals eye ways to boost care, cut costs

Dr. Kristofer Smith, left, of North Shore LIJ

Dr. Kristofer Smith, left, of North Shore LIJ listens to Anne Hennies, right, breathing during a routine check up inside her Bellerose home. (June 19, 2012) (Credit: Steve Pfost)

Dr. Kristofer Smith sat on a stool on a Wednesday evening beside his patient's chair in her small Queens living room.

"You know what I would like?" the 98-year-old Anne Hennies asked. "I would like a new set of feet."

Smith smiled and gently stroked her bruised and swollen legs, the result of poor circulation and inadvertently going off her diuretic for three days.


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"The legs are looking better," he said to Janet Golon, a visiting nurse seated on the couch, and Judy Cipio, Hennies' Medicaid home attendant. "The swelling has gone down."

The visit harked back to an era in which doctors visited their patients and viewed their health in the context of how they lived.

And yet, Smith's visits represent the leading edge of the health care overhaul and is just one approach of many that doctors and hospitals nationwide are initiating in an effort to improve care and, the hope is, to trim costs.

Keeping Hennies healthy and out of the hospital or nursing home is at the essence of a seismic shift in the practice of medicine.

The transformation is partly mandated by the Affordable Care Act. But it also is propelled by a recognition among doctors and hospital executives that health care costs too much and delivers too little. The United States has the most expensive health care system in the world -- $2.6 trillion annually -- but was last among 16 industrialized nations in preventable deaths such as those from smoking, obesity and drug abuse, according to a 2011 study by The Commonwealth Fund, a private health-policy advocacy foundation.

Changes under way

Profound changes in how the United States delivers health care and rates its quality were inevitable, experts agree. Exactly what will be put into place, however, is only just beginning to come into focus.

Smith's visit was part of a three-year program the North Shore-Long Island Jewish Health System is participating in under the Affordable Care Act to provide home-based health care to about 350 elderly patients. The hope is to take care of their medical problems before those spiral out of control, reducing expensive visits to the emergency room and time in hospital.

While North Shore-LIJ said the program is losing money on each patient because of the way it is reimbursed by the government, Smith said the program has reduced hospitalizations by 40 percent.

The program is just one experiment to keep people out of the hospital.

The Affordable Care Act and private health insurers are moving toward a system in which doctors and hospitals will be rewarded for keeping patients healthy, instead of being reimbursed for each service -- called fee-for-service -- used to treat them when they are sick.

Many doctors and hospital executives alike hope these efforts succeed in refocusing the health care system, which often rewards overuse, duplication and inefficiency, and leaves doctors and patients frustrated.

"I think it is easily the most rewarding work I have ever done," Smith said of his home visits. "If you pay for things differently, you can spend the time winning back the trust of your patients that the current model doesn't provide."

Many uncertainties

Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council, which represents all of Long Island's hospitals, agreed. "The time has come," he said. "Everyone knows the practice of medicine has to change."

Yet there is so much uncertainty about the future that Dahill was reluctant to predict what health care will look like on Long Island in five to 10 years. But there are three things he is confident would happen:

More health care providers will ensure that patients, especially those with chronic illnesses -- who cost the most -- get sustained, coordinated care to keep them healthier and out of the hospital. Primary-care doctors and more preventive services will be at the center of this approach.

Hospitals and doctors will be linked by electronic medical records, which will make it easier to coordinate care. "A lot of information -- with a patient's consent -- will travel more seamlessly from provider to provider," Dahill said.

Hospitals and doctors will be paid "based on patient outcomes" rather than on the volume of procedures. A healthy patient will yield more money for providers than one who gets the most tests or procedures. In some cases, the provider will be given a percentage of savings for good outcomes. Or, providers will be paid a set fee upfront for managing the care of a group of patients. A patient's hospitalization or expensive tests will come out of that fee.

Because hospitals are more labor intensive and full of high-tech machinery, hospital care nationwide and in New York costs much more per patient than outpatient care. In New York, $2,949 was spent per patient on hospital care versus $1,696 on outpatient care, according to 2009 data by the Kaiser Family Foundation, a nonprofit that analyzes health policy.

So, under this payment system, the provider has an incentive to keep the patient healthy, out of the hospital and away from unnecessary, expensive tests.

"The hypothesis is that costs will be reduced because utilization will be decreased as the system becomes more efficient," Dahill said. "Whether that has an impact on the bottom line for hospitals, that's anybody's guess."

Creating new alliances

Some hospitals and doctors on Long Island are waiting to see how the Affordable Care Act unfolds, Dahill said. Others are trying to be ahead of the curve.

Catholic Health Services is rolling out electronic medical records at its six hospitals, developing closer ties with physician groups and working to ensure that care is seamless, whether it is in the home, the hospital or at one of its rehab or long-term care facilities. Asked whether he thought the changes would work, chief medical officer Dr. Joel Yohai said: "I think it has to work."

On the East End, a consortium of doctors and Peconic Bay Medical Center, Eastern Long Island Hospital and Southampton Hospital are linking themselves electronically so they can easily share information on patients, keep tabs on their health and measure, overall, how good their health care is compared with national norms. By becoming more connected and improving patients' outcomes, they hope to have better leverage with insurers and command better reimbursements.

On the other end of the Island and spectrum is North Shore-LIJ, the largest health care system in the region. North Shore-LIJ has expanded its outpatient services to 38 percent of its business compared with 31 percent in 2005. That represents a bigger increase than it seems, said Richard Miller, vice president for finance, because outpatient visits at this point still bring in less money than inpatient.

The health system also has forged alliances with hospitals outside its system; it has affiliated with large primary care groups and doctors as far away as Westchester County and Connecticut and hired more doctors to work directly for the health system.

And like Catholic Health Services, the East End group and others, it is investing in information systems and hiring coordinators to ensure that patients get seamless care that is tracked and measured according to national norms.

All of this is intended to keep patients out of the hospital. "Hospitals should be very efficient places where people deliver babies or take care of very sick people," said Michael Dowling, North Shore-LIJ's chief executive. "To me, it's the right way to deliver medicine but it's a complete transformation."

And it is a transformation fraught with unknowns. Fee-for-service payments still account for about 95 percent of North Shore-LIJ's reimbursements, said Howard Gold, the system's senior vice president for managed care and business development. Gold said he expects that will begin to rapidly change so that, within five years, about half of payments will be based on the health system's performance.

'Big transition'

The next three years will see "a big transition when Medicare and a lot of commercial insurance companies" will start paying under the new system, he said. "Who will be left in fee-for-service will be the very rich or there might be some population exempted, like the mentally ill."

But not yet.

Nassau University Medical Center in East Meadow, which is affiliated with North Shore-LIJ, runs four federally qualified health centers that offer full primary and preventive care in low-income communities, in part to reduce the number of people who use the emergency department for routine care.

Chief executive Arthur Gianelli said the hospital has also tightened entry criteria into the emergency department, which is reimbursed at a higher rate than the clinics. "Even though that's the right thing to do, I lose money," he said of the tighter criteria. "I have to balance out doing what I think we should do, given that payers haven't caught up with that."

Smith said North Shore-LIJ also loses money on each visit to Hennies. He is not reimbursed for all the time he spends on her case outside of the visits to her home -- rather, he is reimbursed on a fee-for-service basis just for the home visits. He estimates the program loses about $2,000 a year per patient.

Gianelli and Dahill described the situation similarly. "It's like the hospital has feet in two boats and they are moving in two directions," Gianelli said.

"The slogan I use is hospitals have one foot on the dock and one foot in the boat," Dahill said.

Savings questioned

Economist Martin Cantor, director of the Long Island Center for Socio-Economic Policy, a Melville think tank, believes the boat will sink regardless.

"When government interferes, the marketplace becomes less efficient; it becomes political," he said.

Cantor believes the Affordable Care Act will not save money. He pointed to Massachusetts' health care overhaul, on which much of the federal health care act is modeled. There, he said, the state ended up paying more because more people signed up for insurance than predicted.

"My beef on Obamacare is that it's a shell game," he said. ". . . but at the end of the day the pea isn't under any one of the shells."

Critics also charge that the Affordable Care Act doesn't directly address medical malpractice litigation, one of the drivers of high medical costs, especially on Long Island where doctors pay the highest malpractice insurance rates in the state.

Even for those who support the health care overhaul, there are questions no one can answer yet. How do you best keep an aging population, many with multiple chronic illnesses, functioning and out of the hospital? What approach will yield the best results? With more emphasis on providing preventive services, will people actually use the health system less -- or more? At what cost?

No one really knows. North Shore-LIJ's Dowling has a cartoon he likes to use in a PowerPoint presentation explaining the anticipated changes to employees. It shows a man jumping from one bare rock on a cliff to another, with a deep chasm below. The chasm is what keeps hospital executives awake at night.

As Gold put it, the results "could be phenomenal -- but it's not called risk for nothing."

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