Becker's Hospital Review

10 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 Many community hospitals are poised to join these networks for their economies of scale and bargaining power with payers. But how big is too big? That's the million-dollar question. There are regulatory and antitrust mechanisms in place to ensure these megasystems do not stifle competition or fix prices, but there are conflicting reports on whether these mergers are helping or harming the healthcare market. A report from the Robert Wood Johnson Foundation found hospital mergers in already concentrated markets can dramatically boost prices for consumers in the form of higher premiums and lower benefits. Costs can increase by as much as 20 percent. On the other hand, a report from the Center for Healthcare Economics and Policy, commissioned by the American Hospital Association, examined mergers and acquisitions from 2007 through 2012 and suggested there is still ample competition. "Of all those [551] hospitals that have been involved in a transaction, all but 20 have occurred in areas where there were more than five independent hospitals," according to the report. Robert Minkin, senior vice president with The Camden Group and former hospital CEO, says the rapid and tremendous amount of hospital M&A is the key behavior healthcare is starting to mimic from other industries, like manufacturing and airlines. "The whole notion of an independent freestanding hospital is truly becoming a rarity," he says. "There are still 5,200 acute-care hospitals in the country, but the majority are in organized systems," says Mr. Minkin. "We're starting to see those systems execute direct and much more aggressive strategies to expand their size and scale even more so. Hospitals are fearful their revenues will continue to decline and costs will continue to rise." Facing these circumstances, access to care may be overridden by economics. "There are many communities that operate two hospitals that can't support both of them," says Mr. Minkin. "They will have to combine and close one, just so the other can survive at all. When you analyze the economics of how hospitals operate, we've gone past the economics of hospitals being everything to everybody all the time." 300-thread count sheets and 20-page food menus Hospitals are increasingly mimicking hotels in an effort to boost patient satisfaction scores, which have growing financial implications. Some hospitals are offering room service and menus as extensive as those found in mainstream restaurants. But unlike hotels and resorts, expectations for a top-notch stay at a hospital may place undue pressure on hospitals to deliver on things they aren't necessarily responsible for and distract hospitals from what they are responsible for: high-quality medicine and personalized care delivery. Under CMS' rule for the inpatient prospective payment system for fiscal year 2014, hospitals will have 1.25 percent of their Medicare payments withheld under the VBP program. The resulting $1.1 billion in incentive payments will be doled out to hospitals that have the best total performance scores for quality of care (70 percent of the performance score) and patient satisfaction (30 percent of the performance score). The financial incentives have spurred many hospitals and health systems to revamp their amenities. At UNC Health Care in Chapel Hill, N.C., for example, patient menus are approximately 20 pages long. Other hospitals are incorporating distinctive perks into patient stays, such as private rooms with scenic views, massages, high-thread count sheets and more plush towels. Satisfaction scores may have a place in America's restaurants and hotels, but is this metric really telling of a hospital's care? Some studies have suggested no. In February 2012, a study led by researchers at UC Davis Health System found people who are most satisfied with their physicians are more likely to be hospitalized, accumulate more healthcare and drug expenditures and have higher mortality rates than patients who are less satisfied with their care. There's also a very obvious and simple difference between satisfaction scores in hotels, restaurants and hospitals: One of the three is not associated with leisure. Hotel stays are often planned and booked out of choice, whereas few patients visit a hospital for enjoyment. Some hospital leaders believe a positive patient experience boils down to hospitals having the right employees. Managers may encourage clinicians and staff to be attuned to patients' key indicators and those events most likely to make or break a patient relationship. These indicators include questions from the patient point-ofview, like: Did staff greet me? Did each point of contact throughout the care experience refer to me by my name? Did they make my stay feel personalized? Was registration properly performed, or did I have to sit and wait? Did staff thank me for choosing their facilities and explain the financial procedures that will occur? These questions reflect needs more basic than those for luxury amenities, suggesting hospitals can reinforce a positive patient experience without mimicking a Ritz-Carlton. Healthcare's odd relationship with HIT Healthcare has been slow to rely on HIT over the last few years, largely due to its cost and the time it takes to install electronic health records and redesign workflows. HIT adoption and use is on the rise by clinicians, but healthcare is still slow to integrate HIT into the broader spectrum of hospital operations and business development. Most hospitals haven't extended their technology to certain functions that are a norm for major utility companies, for instance, such as the ability to pay a bill online. And while banking customers can look up their balance on their mobile devices and tablets, even deposit checks from their smartphones, hospitals are still debating whether to allow patients access to their own EHRs. In a March 2009 study, researchers from Bostonbased Harvard School of Public Health, Massachusetts General Hospital and George Washington University in Washington, D.C., found "no reliable estimate of the prevalence of EHR use among U.S. hospitals," as fewer than 2 percent of hospitals surveyed had an EHR in place. PPACA and CMS' EHR Incentive Programs have driven change since that study. As of April 2013, approximately 80 percent of all eligible hospitals and critical access hospitals in the United States had received an incentive payment for adopting, implementing, upgrading or meaningfully using an EHR. Other recent surveys suggest providers' familiarity with HIT for clinical processes is growing. In a survey from Accenture, 91 percent of physicians across eight countries reported that they are active users of electronic medical records in their practice or clinic. There were also significant increases in the number of physicians in the United States who use HIT for various clinical tasks compared with last year. These include electronically entering patient notes either during or after consultations, electronically sending order requests to labs and e-prescribing. Taking a step back from hospitals, the relationship between EMRs and the broader healthcare industry is fascinating in itself. In a dynamic unfamiliar to most other industries, healthcare providers are incentivized by the government to use EMRs due to the cost of the technology and its ability to improve healthcare quality. This schema, when applied to banks and ATMs, just doesn't hold. What if the government had paid bonuses to banks for installing ATMs, which were a competitive advantage? Forbes has esimated that EMR vendor Epic and its digital records contain medical information for roughly 40 percent of the U.S. population. Paul Levy, former hospital CEO of Beth Israel Deaconess Medical Center in Boston, wrote a blog post about Epic and the ramifications of a vendor garnering such dominance. "As a country, we get nervous when any company in any sector has a market share in the range of 40 percent because we know that companies will use their market dominance to limit consumer options and hold back technological advancement," he wrote. Despite physicians' acceptance of EMRs in their workflow and hospitals meeting MU, HIT is still somewhat isolated from the rest of the hospital

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