Healthcare Challenges and Your Career

Presenter:Ernie Schmid, MSHP 97, FACHE

October 29, 2010

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Part OneEnvironmental Observations

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TEXAS

Year Total Population2010 25,409,5302040 45,388,036

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TEXANS and the Cash Economy

26.1% of Population Uninsured– 6.4 million

Large homeless population Large number of first generation Americans

– 13.9% of population foreign born 6.7% of population undocumented

– 1.6 million 17.3% of Texans in poverty (4.26M) (14.3% US) A family of four is below the federal

poverty level if its annual household income is less than $21,954.

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AND What Does the Future Hold?

Poverty growing in Texas schoolsMore than half of state’s students disadvantaged, report findsBy ERICKA MELLON

HOUSTON CHRONICLE

Jan. 2, 2010, 10:36AM

Almost six out of 10 Texas public schoolchildren hail from low-income families, marking a troubling spike in poverty over the last decade, a new state report finds.

 

AND What Does the Future Hold?

In 2009,Texas ranked sixth in the percentage of people in poverty, behind Mississippi (23.1 percent), Arizona, Arkansas, Georgia and the District of Columbia.

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US Income Distribution

http://www.census.gov/prod/2010pubs/p60-238.pdf7

2010-2011 Texas Budget all Funds-$182B

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Reform and State Budget Over Ten Years

Adds 2.3 M Texans to Medicaid rolls Cost $27 B in GR

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Current Government Sponsored Health Care

6.4 million uninsured 3.2 million Medicaid Beneficiaries 2.7 million Medicare Beneficiaries .537 million CHIP Participants

At a minimum half the state’s population relies upon government for health care

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600 TEXAS Hospitals

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81,000 Hospital Beds

Hospital Beds by Ownership 2007

41%

42%

12%5%

For ProfitNot for ProfitPublicState

42% of Texas Hospital Net Patient Revenue from Medicare and Medicaid

Net Medicare Net Medicaid Total Net Patient Revenue

$13.3B $5.4B $44.4B

30% 12%

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MedPac Payment Approach

“From 2007 to 2008, the overall Medicare margin fell from –6.0 percent to –7.2 percent…”

“Most of our payment adequacy indicators for hospitals are positive, but profit margins on Medicare patients remain negative for most hospitals.”

“A key question is whether Medicare payments are adequate to cover the costs of efficient providers.”

Reports to Congress: Medicare Payment Policy.

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Medicaid Payments to Texas Hospitals

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2007 Medicaid Hospital Payment SourcesAll Funds

Government does not pay for all services it mandates

In 1986, Congress enacted the Emergency Medical Treatment & Labor Act (EMTALA) to ensure public access to emergency services regardless of ability to pay. – hospitals must provide a medical screening examination

– Hospitals are then required to provide stabilizing treatment for patients with Emergency Medical Conditions

– If a hospital is unable to stabilize a patient within its capability, or if the patient requests, an appropriate transfer should be implemented.

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Private or Public?

Government sees hospitals/providers as private enterprises but treat them like public utilities.

Government and providers see each other as bad business partners.

“In 2008, the weighted average of the operating and capital payment updates was roughly 3 percent. (Medicare inpatient costs per discharge increased 5.5 percent in 2008-speakers addition) However, inpatient payments per discharge increased by 4.5 percent. The difference between the update and payment growth was primarily due to reported increases in case mix. “ MedPac March 2010

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Part TwoReform in Texas

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REFORM: Quality-Price-Access

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Case for Reform

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17.5%

Access: Senate Finance

Original Agreement Chairman’s MarkCoverage all persons in US (including undocumented)

94% 91%

Coverage of all legally residing in US

97% 94%

Left without coverage 18 million 25 millionHospital reductions $155 billion $155 billion

Reduced uncompensated care

$171 billion $140-$152 billion

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Access

Medicaid Expansion– State funding– Eligibility systems

Insurance Subsidy computation—need and subsidy always unsynchronized

Funding during gaps in coverage

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Access Continued

Coverage goals–Will goals be reached in Texas?–What if they are not?

Rural provisions support current favorable provisions but they are not transformative

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Price

US administrative costs 31% of health care expenditures (16.7% in Canada)– Stimulus invests $19 B for HIT

Uninsured cause cost shifting?– 1.6 m undocumented and others who will remain uninsured in Texas– 25 million uninsured in US-----cost shifting still necessary, but is it

possible?– Future of disproportionate share and UPL payments?

Unsustainable price increases– Demand will increase in short run

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Price Continued

Payments– Super MedPac or (IMAC) Independent Medicare Advisory

Commission---base closing model– Exchanges; negotiated rated or rate setting?

US per capita spending highest among industrial nations– Spending disparities – Physician referral and ownership– Liability reform– End of life care

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Price: Contributions in Billions—Taxes Roll Downhill

RX $ 80Medical Device Tax $ 40Hospital cuts $ 155Insurance tax $ 60Lab Tax $ 8Medicare Advantage $120Individual Mandates $150Employer mandates $200Other $100Total $900

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Quality: US Vs Organization for Economic Cooperation and Development

The 30 member countries of OECD are:Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece,  Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg,  Mexico, the Netherlands, New Zealand,  Norway, Poland, Portugal, Slovak

Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States. 27

Quality and Reform

Unnecessary Readmission Penalties (-$2 B) 20 percent of hospitalized Medicare patients are back within 30 days, according to a 2009 study published in the New England Journal of Medicine

– Who manages patient care? Value Based Purchasing (-$12.1 B)

– Reward the good, penalize the bad…..self fulfilling prophecy? Bundling pilots

– State laws adequate? Accountable Health Care Organizations

– How does the $ move?– Control

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AND for Texas?

– Will increase in hospital beds keep up with demand? Where are the investment dollars?

– Will Texas have enough health care workers?

– How will Texas laws need to change? Corporate practice of medicine prohibition?

Charity care expectations?

– How many Texans will be left uninsured?

– Will State and Local government spend more on health care? Is tax system adequate for the new demands?

– How will the delivery system change? Impact on ownership types?

What will happen in rural Texas? Hospital/Physician incentives aligned?

Access improved. Price and Quality, a work in progress.

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And what will the future hold????

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Speaker

Ernie Schmid, FACHEernie2010@sbcglobal.net

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