The Perfect Storm


Four local hospital executives—including the CEOs from two of our local hospitals—sat down with Ocala Style Health for an in-depth interview concerning our country’s deepening economic crisis. We discussed the state of our area’s healthcare, ER issues, and the rising costs of insurance. How will these larger issues affect your checkbook in the year to come?


We figured the best way to get the in-the-know answers was to gather a hand-picked group of top hospital officials—including two at the very top—together to ask them a series of tough questions face to face. Over a 90-minute luncheon at a private room at Golden Hills Golf & Turf Club on a beautiful winter morning, Publisher Kathy Johnson and Editor-In-Chief Dean Blinkhorn hosted a unique forum where the camera was clicking and the tape was rolling. Here’s what everyone had to say.

‘Next Year Doesn’t Look Pretty’


Dean: Let’s talk a little bit about funding—about current funding and what you might expect to see in the next year.


Jeff: What’s happening now is we have decreasing reimbursements from our federal sources. We’re expecting Medicaid [payments] to continue to be reduced, which is a significant portion of our patients. Obviously, the portion of patients that don’t have insurance continues to rise and probably will at an even faster rate, which leaves not very much left to be able to fund a business.


One of the things that we’re doing is to find funding from other sources—a lot of manufacturers out there provide for patients without insurance. We’ve tapped into those when the patient needs it.


The other thing that’s going to be critical to our success is to make sure we get paid, to make sure we do authorizations appropriately, to make sure that if we contract for a payment for a particular service that they actually pay us. With Medicare, the big push now is linking quality to payment. If a patient has heart failure, we make sure we educate them appropriately and they get all the things that they need.


Dean: Sure, for any business in tight times, uncollected debts become critical. Steve, what are you seeing budget-wise?


Steve: Well, this next year doesn’t look pretty. Jeff alluded to what’s happened with the state revenues. The state of Florida is in a big hole, and they’re trying to figure out how to dig themselves out of it.



Our problem is that we’ve been under-funded through the Medicaid program for years. There’s a wide range between hospitals and what kind of reimbursement they get from Medicaid—some getting as little as, say, 50 percent of their costs; some getting 80 percent of their costs. But that means you’re losing 20 percent on every single patient that you serve. Certainly we’re here to serve those folks, but hospitals can’t absorb the cost of serving an under-funded patient.


Unfortunately, there’s this ripple effect of unfunded, hidden tax over to commercially insured folks and employers who provide health insurance for their own employees. It’s just not a sustainable situation. Our estimates—because of Medicaid cuts this next year—are about $875,000 out of our bottom line.


But it’s not just a hospital issue; it’s a community issue.

‘People Are Having To Make Tough Choices’


Dean: Is there anything the average person who has insurance can do to reduce those costs if a hospital visit is necessary?


Lon: Well, first and foremost, don’t delay. When people show up late in our office, the costs are much higher because the disease or disorder has progressed to the point where more dramatic intervention is needed. Being proactive, catching a disorder early, can stave off costs down the line to a significant extent.


It’s also very important having a regular relationship with a physician. This can pay off by avoiding the high costs of going to the hospital in crisis.


Dean: That definitely makes sense. Is the medical community going more toward preventative care and pushing more dollars into that?


Ginger: I don’t see it is as a trend here yet, but it needs to be. I think part of our responsibility is to help facilitate that. People say, “What you don’t know won’t hurt you.” Well, in healthcare that’s not true. What you don’t know may be a major problem in the future that could have been staved off with some preventative care. Even for the non-insured patient, there are resources out there to get regular health maintenance, and we need to do a better job at letting folks know about those resources.


Kathy: It just seems like a vicious cycle. Right now employers are laying off employees, so they’re going to lose insurance, they’re under stress, and they’re more likely to get ill. Of course, that’s more taxing on the healthcare system. And doctors and hospitals have to charge more because of the number of patients who can’t pay their bills. I don’t see how it ever ends.


Steve: It’s a perfect storm. We’ve got a scenario now—nationally, but also right here in Marion County—where there is absolutely going to be no way for us to fund a reasonable level of healthcare because there’s not enough of a base to fund it.


We don’t want to make the hard choices now because it’s politically unpalatable, and it’s unpopular to do, but we’re just kicking the can further down the road.


Jeff: Eventually it comes home to roost. It’s difficult to financially make it as a primary care physician, but somebody who does surgeries is compensated well for that procedure. The system’s almost not set up for preventative care.


Dean: Do you think people who have insurance view it as something for catastrophic events only, that it’s not something they should be using regularly?


Ginger: Almost every insurance plan, even the best, has a co-pay. They may be choosing between gas and co-pay. And if they have children and there are several family members, you may be talking quite a bit of co-pay on an annual basis, so that’s a significant issue.


Steve: There are plenty of examples out there where people—because they lost their jobs or their income’s been cut back—are having to make tough choices. They don’t have insurance, and then there goes the cost shift again, and there’s hardly any place to shift it anymore. That’s when the hospitals end up increasing that line that’s uncompensated care, and it puts pressure on our ability to provide quality patient care because funding is just going down. It’s a spiral.


Ginger: You know, everything is cyclic, and some of us in here have been in healthcare for 30-plus years. There was a time when we had some great public programs. Every school had clinics and school nurses, dental checks, eye checks, and ear checks.


Much of that has gone, but those were good types of public programs that were preventative. There was even a time when public health nurses went into the home and did post-delivery visits.


Steve: Right now there’s a resurgence in midwifery. We have a large midwifery program at Munroe. They’re trying to loosen up some of the standards to be able to deliver babies at home.


Of course, they’re meeting resistance from the OB/GYNs and the physicians, and where that balances, I don’t know. But cost-effective care is what that’s all about. For example, how long did it take when screening mammography started to be instituted for Medicare to finally realize they were going to pay for that?


Ginger: Years.


Steve: They didn’t realize that early detection was going to save them money down the road. They didn’t have that mentality to look at that full-cycle cost. We still deal with that to a certain extent.


Ginger: On mammography screening, we’re talking about $35. That’s about what Medicare pays for it, whereas if that was an undetected malignancy, we’re talking thousands and thousands—and potentially death.


‘Quality ÷ Cost = Value’


Kathy: Whose responsibility is it to set those programs up?


Steve: Those are public policy questions, ultimately. Medicare generally leads the way, and then the commercial planners look at it and generally follow. That’s typical.


Lon: We often sacrifice the good for the perfect. We try to get the most advanced test where we could never supply all the women who qualify in this country. We don’t have the capacity to do that, but we do have breast exams that can be done that are reasonably good.


We’ve just kept pursuing this perfect approach that’s unaffordable and unattainable for the general population. A doctor at a bedside can’t make a decision based on the dollars for reimbursement. That’s not right to expect them to make that decision. What you end up with is very defensive medicine in practice that fractures the care of the patient.


Dean: So it’s like a sliding scale. You can help more people if you’re not in this constant pursuit of perfection.


Lon: That’s correct.


Kathy: So do you put different options out for the patient?


Lon: So many of the improvements we can make in patient care are low- or no-cost solutions. When you talk about patient safety issues, it has no cost to do a time-out before a procedure that goes through a checklist of items. That’s not a technology cost. It’s a different mindset that we have to achieve to get better outcomes for the patients.


Steve: It’s a real simple equation, and we use it at Munroe all the time—quality divided by cost equals value. When hospitals go about making changes in the way they deliver care, they ought to be looking at how it affects the quality of the service to the patient in relation to the cost.


If all we’re doing is holding quality constant but increasing the cost, then value to society goes down. But if we’re holding quality constant and decreasing cost, then we’re increasing the value of what we provide. Ideally, what you want to do is increase your quality and reduce your cost at the same time. It’s not an easy thing to do.


Here’s the other thing that’s complicated—end-of-life care. Eighty percent of our costs are spent on the first and last year [of life]. Here’s an example. There’s a patient in the intensive care unit—multiple problems, multiple diseases. High risk, maybe 88, 90 years old. Probably has a couple of days to live based on physicians’ best estimates, and somebody wants to put in a $50,000 pacemaker. Then the patient goes home with a pacemaker that costs $50,000 that you’re not going to get your reimbursement for and passes away in two days. These are ethical questions that aren’t being addressed.

‘Healthcare Is A Hard Job’


Dean: Hospitals are put in the very uncomfortable situation of providing excellent care, but your job is to also serve the whole community. And it becomes hard to do that if you’re spending a good deal of your resources in one area.


Jeff: Collectively, everybody agrees with that concept, but usually not on an individual level. “But now it’s my grandmother…”


Dean: Sure, we agree in the abstract, but not when it hits closer to home with our loved ones.


Lon: That’s exactly right. Physicians are some of the most time-pressured individuals on the planet, and they need to be well-supported. They’re trying to do extraordinary things. But the demographics are such that there are not enough intensivists—physicians that undergo specialized training in critical care—to staff all our ICUs.


Dean: That leads me to another topic. I know in education there’s been a big trend to be able to hire really qualified teachers. What kind of programs are you looking at to deal with the nursing and physician shortages? Because let’s face it, the nurses are the face of any hospital.


Steve: No question.


Ginger: So much focus has been on the economic situation that the shortage of healthcare workers hasn’t been front and center. We have no more nurses or ultrasound techs than we did a year ago. We’re going to find ourselves without enough staff in the next 10 to 12 years. The average age of the nurse right now is between 45 and 47.


The hospitals have supported CFCC to add additional teachers and give them extra dollars because they, too, have budget cuts. We certainly have offered scholarship programs. But there’s only so fast you can push people who are going to be taking care of very sick people.


Kathy: So, why aren’t more people going into the profession?


Ginger: Healthcare is a hard job.


Steve: I’m married to a nurse and our daughter’s an ICU nurse. You will know very quickly once you go through nursing if you’re cut out to be a nurse—it’s tough. You’re involved in critical situations every single day. I have a motto—as goes nursing, so goes the hospital.


Ginger: The majority are women. They’re mothers, wives, and nurses. It takes a special kind of person to do that.


Steve: Ginger knows this—research will tell you that within the first year or two is where you’re most vulnerable to lose your new nurses. It’s a calling.


Ginger: Absolutely.


Steve: If we can keep them beyond the two years, then you have a much better chance. We just launched a mentoring program that I’m very excited about that gets our senior nurses to take new nurses under their wings, support them, and make them feel comfortable in their orientation period and throughout their early years in the hospitals.


There are all kinds of things that you need to be doing as a hospital in a scarce workforce situation—recruitment, work climate, retention efforts.


Dean: How do you keep doctors, say primary care physicians, where they’re most needed, instead of having them specialize?


Lon: That one hasn’t been solved. (laughs)


Ginger: With Medicare squeezing our primary care physicians in terms of reimbursement for those office visits, we’re concerned about the future of primary care physicians. It’s tough for them to make a living right now.

‘Medicare Holds Up Everything’


Kathy: It takes a long time to get reimbursed, I understand.


Steve: Do you know how long it takes for a new physician coming out and setting up a practice to get a Medicare provider number? Six months.


Ginger: It’s ridiculous.


Steve: And they’re having to front that cash flow that whole time.


Ginger: Medicare holds up everything.


Lon: There’s a large national trend where healthcare facilities are actually employing primary care physicians. That’s actually a significant expectation of physicians coming out of training now as I’ve interviewed them.


Steve: If you’re going to work for a public facility, then you have the protection of sovereign immunity. That’s attractive to physicians.


Dean: So having them in the hospital or related to the hospital brings down some of their up-front costs?


Lon: They have security.


Jeff: It’s hard to make a financial go of it with a private practice. With a hospital, the hospital carries the risk. Think about what it takes just for one person to run an office—the overhead and how many individuals have to be paid between billing, medical records, clinical support staff, and insurance.


Kathy: So there’s an advantage to grouping together?


Jeff: It’s a transfer of business risk. If I were a doctor, I’d want to care for patients, get paid an adequate amount, and let guys like us worry about all of those other issues.

‘Information Can Be So Useful’


Dean: So, if a patient went to both our local hospitals for different procedures, would there be complete duplicity of their records or would that be shared?


Ginger: You can share, but we can’t electronically share because our systems don’t talk to each other.


Steve: It’s not fully integrated.


Lon: Indianapolis is one of the shining examples of healthcare competitors sharing information. I discussed with them what that looks like, and it can be remarkable.


One story—a gentleman who was in the ER one night, had indigestion, and decided to go home. He went to a different hospital the next day and they were able to log on to their shared system and found out that he had tests indicative of a heart attack from the night prior. He was taken urgently into the cath lab. It can make a dramatic difference in the lives of people, if done responsibly.


The privacy issues are a bit of a struggle, yet providing the information can be so useful in getting them the right care at the right time. Indianapolis is a special place in that regard. It took some pretty remarkable people to get that working.


Kathy: Are you trying to do that locally between our hospitals?


Steve: We’re doing that through Healthy Ocala right now. I think that’s going to be a model that’s going to be looked at across the state and across the country. The biggest challenge has been how you fund it.


Lon: The beneficiary of this typically is the insurance payers because they get more efficient care. They benefit more than the physicians.


Kathy: So why don’t they help support it?


Steve: They’re just trying to keep afloat.


Lon: A lot of physicians, because they feel it’s the right thing to do in caring for their patients, forge ahead anyway and take on the cost.


Ginger: I think it’s important for the public to know that there probably is not a more regulated industry out there than healthcare. And a lot of the regulations are completely unfunded. In other words, the hospital has to figure out, one, how to work within it; two, how to pay for the resources needed to do things that are unfunded in mandates; and then, three, how to take care of patients while you’re doing all this noise.

‘What Is Universal Healthcare Going To Look Like?’


Dean: One of the big election issues last year was the idea of universal healthcare. Is that something you think could happen?


Ginger: One of the things in this economic stimulus package that’s being considered is that people who are becoming uninsured would automatically be eligible for state Medicaid. But the states can’t pay for the people on Medicaid now. I don’t know if it’s going to pass the Senate that way. And then, what is universal healthcare going to look like?


Steve: There’s no consensus right now because our healthcare system is so fragmented. In many ways, it’s still a cottage industry. You’ve got all these special interests groups and to get them together is going to be a huge task.


However, there is much more of a willingness today to explore payment reform because we in healthcare understand that what we’re doing now is not sustainable and we’re frustrated. Some of my most conservative colleagues around the nation 10 years ago would have said, “We don’t want universal healthcare.” Now it’s, “Maybe we need to look at something like that.” It won’t get done anytime soon.


Jeff: There needs to be payment reform when it gets to a point where that local level can’t be provided.


Steve: Bottom line? We have to come up with local solutions. But where is the money going to come from?


Kathy: A tax?


Steve: There are all kinds of mechanisms that need a public dialogue. We’re trying to link electronic medical records for doctors and patients to reduce all this duplication.


Dean: Do you see that happening?


Steve: It’s happening right now. You’ve heard a lot of talk about information technology from [Barack] Obama and Hillary Clinton, but who’s going to pay for that?


Ginger: There is so much technology out there to do so much more than what we’re doing now. It’s one thing to buy the software, but we have to get more basic than that. We have to have exchange policies of information. Currently, there are federal requirements that won’t allow us to exchange information. Unless our systems talk to each other and we’re free to move around the country with our information…


Kathy: As a patient, you sign these forms saying that you can’t give any information out.


Ginger: And we can’t either. Before the money comes, there’s a lot of groundwork that needs to happen.

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