Jun 1, 2018 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Ascension’s refocus exemplifies challenges facing healthcare systems as shrinking reimbursement rates, stagnant inpatient admissions, and changing care models put a financial squeeze on traditional hospitals
Hospital-based medical laboratories and anatomic pathology groups are adapting rapidly to both external and internal forces in the healthcare continuum. Efforts to shift clinical care from hospitals to ambulatory settings is a trend that impacts how, where, and when ordering physicians request testing.
Further, healthcare consumers are responding positively to the growth in local urgent care and walk-in clinics, even as hospital support for in-home healthcare treatments for chronic diseases is increasing. This is why even large-scale health systems are seeking ways to bring caregiving to patients, wherever they may be. (See Dark Daily, “Consumer Trend to Use Walk-In and Urgent Care Clinics Instead of Traditional Primary Care Offices Could Impact Clinical Laboratory Test Ordering/Revenue,” May 25, 2018.)
One good marker for this trend is the year-over-year change in hospital admissions. Data given to Congress in the latest MedPac (Medicare Payment Advisory Commission) report on Medicare payment policy show that, between the years 2006 and 2016, the cumulative percent change in the number Medicare inpatient discharges per beneficiary declined by 21.8%. During these same years, the cumulative percent change in the number of outpatient visits per Medicare beneficiary increased by 49%!
Now, Ascension Healthcare of St. Louis—reportedly the nation’s largest nonprofit healthcare system—also appears to be shifting its focus from hospital-based care to less expensive outpatient settings and services. It is doing this by using new staffing models and external businesses.
The move highlights an industry trend. Driven by continued economic, regulatory, and care delivery challenges, hospitals and health systems have been forced to consider different business/clinical models that better serve the evolving needs of their patients.
However, fewer hospitals and shrinking budgets also could impact hospital-based medical laboratories’ revenue, as hospitals seek new formulas for profitability.
In a video message, Ascension President and CEO Anthony R. Tersigni (above), EdD, FACHE, told 165,000 employees that Ascension would be reducing its hospital footprint and administrative costs, while exploring telemedicine and other outpatient care delivery models. This is potentially a major shift in how the nation’s largest nonprofit healthcare system does business, which could impact in-hospital and local independent medical laboratories. (Photo copyright: Ascension.)
New Strategic Direction
According to Modern Healthcare, Ascension President and CEO Anthony Tersigni, EdD, FACHE, outlined the company’s “advanced strategic direction” via video message to his 165,000 employees on March 23. He told his employees a new strategy was needed, due to dwindling reimbursements from both federal and private insurers, increasing regulatory complexity, skyrocketing pharmaceutical costs, and a shift from inpatient to outpatient care and from fee-for-service to value-based care.
“We are in the midst of major transitions, not only in how we provide care, but in how we are reimbursed for the services we provide,” Tersigni revealed in the video message.
Tersigni stated that the world’s largest Catholic health system needs a “dual transformation,” a process that would both “transform current healthcare delivery and operations to meet the challenges presented by the rapidly changing environment” and “safeguard a sustainable presence in its communities that responds to the changes in how people are accessing care.”
In his remarks, Tersigni outlined changes Ascension already had made to reduce administrative costs by $400 million. Further leadership and organizational restructuring is expected to net $61 million of additional savings in fiscal 2019.
In addition, he noted, the health system would save $57 million a year by “aligning its pay practices” to eliminate inconsistencies and follow common benchmarks.
Reducing Hospital Footprint and Controlling Patient Experience
Modern Healthcare also noted that the health system had “implemented new staffing models and productivity standards for nurses and other caregivers, as well as for nonclinical positions that align with other Ascension facilities.”
Ascension recently signed a letter of intent to sell St. Vincent Medical Center in Bridgeport, Conn., to Hartford Healthcare. The deal, according to a St. Vincent’s press release, includes a:
- 473-bed community teaching hospital;
- 76-bed inpatient psychiatric facility;
- Vincent’s Special Needs Services; and
- Multi-specialty provider group.
“There has always been a need for hospitals in our country, but not as many as we have today,” Tersigni told Modern Healthcare. “We don’t need to control everything. What we need to do is collectively control the patient experience along the continuum.”
In addition to selling off hospitals in cities where it is not the market leader, Ascension is looking for partners that will enable it to expand its reach in outpatient settings, such as:
- Urgent care;
- Skilled nursing;
- Home healthcare; and,
- Telemedicine.
Ascension’s plans also include minimizing business travel to reduce costs and hiring a Chief Digital Officer, whose job will include improving price transparency, Modern Healthcare reported.
Are the Days of Large Hospital-based Health Systems Numbered?
Healthcare Dive reported that admission rates for many health systems are declining as expenses are rising. That double-edge sword is causing the healthcare industry to question “whether the days of large hospital-based health systems are numbered.” The article also noted Tenet Healthcare (a network of 69 acute care and specialty hospitals in 11 states) and Community Health Systems (operator of 126 hospitals in 20 states) both are shedding hospitals in an effort to reduce debt. Tenet’s restructuring also includes laying off 2,000 employees.
According to Ascension’s website, the healthcare system operates more than 2,600 sites of care—including 153 hospitals and more than 50 senior living facilities—in 22 states and the District of Columbia. Nevertheless, it has not been immune from the multi-faceted pressures facing the healthcare industry.
Becker’s Hospital Review reported that Ascension’s operating income dropped 78% to $84.7 million in the first half of fiscal 2017, while operating revenue fell to $11.3 billion from $11.4 billion during the same period one year ago. The decline in revenues was largely attributed to the 2017 sale of Ministry Saint Joseph Hospital in Marshfield, Wis., and the divestiture of Door County Medical Center in Sturgeon Bay, Wis., in 2016.
Gwen MacKenzie, former Senior Vice President, Ascension Healthcare, and Ministry Market Executive, Ascension Michigan, oversaw Ascension Health in Michigan’s employee layoffs and management restructuring, which saw the 14-hospital system lay off 500 workers, including 20 executives and managers.
Concerning Ascension’s new direction, she told Modern Healthcare, “We think this is our new normal. The landscape we are navigating here is the new reality.”
If Ascension’s restructuring of its operations away from hospital-centric care is a harbinger of things to come, hospital-based and independent clinical laboratory leaders may be forced to revamp their business models as well, to survive the changes.
—Andrea Downing Peck
Related Information:
Ascension Could Shift Away from Hospital Focus, Modern Healthcare Video Finds
2018 Report to the Congress: Medicare Payment Policy
Ascension Revamps to Enter New Era
Ascension Layoffs in Michigan Total 500 So Far
As Ascension Restructures, it Hints at Smaller Hospital Footprint
Ascension’s Operating Income Dips 78% in First Half of FY 2018
Ascension Michigan’s Market Leader Leaving Post
Ascension, Hartford HealthCare Sign Letter of Intent for Hartford to Acquire St. Vincent’s Medical Center
Apr 4, 2018 | Laboratory Hiring & Human Resources, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Management & Operations
Clinical laboratories may want to offset plunging patient lab specimens by increasing outreach business
Hospital admissions are in decline across the country and the trend is being blamed in part on the rising use of high-deductible health plans (HDHP). The implications for hospital-based clinical laboratories is that lower in-patient totals reduce the flow of patient lab specimens as well. This situation may encourage some hospital and health-system labs to increase their lab outreach business as a way to offset declining inpatient lab test volumes and help keep down overall average test costs.
Healthcare Dive, which named “changing patient admissions” its “Disruptor of the Year,” used data from America’s Health Insurance Plans (AHIP) annual surveys to show the admission rate trend that is causing hospital operators and health systems to rethink how they do business going forward.
“We are really talking about how providers are not taking in as much revenue as they are spending,” Healthcare Dive noted. “Hospitals are largely fixed cost businesses, and rising expenses have been outpacing admissions growth.”
Experts Claim the ‘Hand Writing Is on the Wall’
According to Healthcare Dive’s analysis of US hospital admissions, which used data from the American Hospital Association’s Annual Survey, hospital admissions peaked at 35.4 million in 2013, coinciding with the roll out of the Affordable Care Act. The total fell to 34.9 million in 2014, before rebounding slightly to 35.1 million in 2015. The 2016 survey, published in 2018, showed hospital admissions remaining relatively flat at approximately 35.2 million.
Paul Hughes-Cromwick (above), Co-Director, Sustainable Health Spending Strategies, Altarum in Ann Arbor, Mich., expects hospitals to be challenged by flat admission rates going forward. “Times are still pretty good, but the writing is on the wall for hospital operators,” he told Modern Healthcare. This will impact clinical laboratories owned by hospitals and health systems as well. Photo copyright: Long Beach Business Journal.)
Most experts place the blame for slumping patient admissions on HDHPs. Such plans, which are paired with a tax-advantaged health savings account, have enabled employers to shift initial medical costs to workers in exchange for lower monthly health insurance premiums. Nearly 20.2 million Americans were enrolled in HDHPs in 2016, up from 15.4 million in 2013 and far above the roughly one million plans in existence in 2005, the AHIP surveys revealed. HDHPs were first authorized by Congress in 2003.
Consumers Delaying or Opting Out of Healthcare
Faced with higher out-of-pocket medical costs, consumers are opting to postpone or forgo elective surgeries and procedures, which in turn is placing pressure on healthcare systems’ operating revenues.
According to Healthcare Dive, Community Health Systems experienced a 12% drop in operating revenue in the first nine months of fiscal year 2017, while HCA Healthcare and Tenet Healthcare dropped 6.7% and 3.8%, respectively.
J. Eric Evans, President of Hospital Operations, Tenet Healthcare (NYSE:THC), a 77-hospital chain, told Modern Healthcare, today’s consumers are spending their healthcare dollars differently.
“The more elective procedures, things like orthopedics, we see the softness,” Evans told Modern Healthcare. “So, we think that does play into the story of deductibles rising and changing behaviors.”
The challenges for not-for-profit hospital systems are no different. Modern Healthcare noted that the 14-hospital Indiana University Health system reported a 46% drop in operating income in the third quarter of FY 2017 on a year-over-year admission decline of 2%.
Healthcare Systems Rethinking Their Business Strategies
“Health systems en masse are reacting to shifting dynamics in healthcare utilization by throwing money and resources to lower cost settings, such as urgent care centers and freestanding emergency departments,” Healthcare Dive noted. Dark Daily has reported on this trend. (See, “From Micro-hospitals to Mobile ERs: New Models of Healthcare Create Challenges and Opportunities for Pathologists and Medical Laboratories,” May 26, 2017.) Health systems also are selling unprofitable hospitals and laying off or eliminating positions to cut costs. Tenet Healthcare, for example, is laying off 2,000 workers while selling eight of its US hospitals and all of its nine United Kingdom facilities, Modern Healthcare reported in January.
“We are seeing and are working with health systems to take out pretty significant amounts of cost out of their operations, both clinical and nonclinical, and setting targets like 15-20%, which is a transformative change,” Igor Belokrinitsky, Vice President and Partner at Strategy&, PricewaterhouseCoopers’ strategy consulting group, told Healthcare Dive in a 2017 interview.
Lower hospital in-patient volume means less clinical laboratory test orders. This, in turn, will result in increases in the average cost per inpatient test. Anatomic pathology groups and medical laboratory leaders who work in or service hospitals may wish to take proactive steps to boost test referrals from outpatient and outreach settings as a way to help keep down the lab’s average cost per test.
—Andrea Downing Peck
Related Information:
Disrupter of the Year: Softening Patient Admissions
Hospital Volumes Laid Low by High-Deductible Health Plans
How Hospitals Feel about AHCA’s Death, Future with ACA
2016 Survey of Health Savings Account-High Deductible Health Plans
Fast Facts on U.S. Hospitals, 2018
5 Things to Know about Tenet Healthcare’s Restructuring
From Micro-hospitals to Mobile ERs: New Models of Healthcare Create Challenges and Opportunities for Pathologists and Medical Laboratories
Sep 22, 2017 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement
Medical laboratories and pathology groups should expect point-of-service collection strategies to become increasingly important to their overall success
Not only is patient bad debt a growing problem for the nation’s hospitals, but it is now getting national attention within the hospital industry. This is bad news for clinical laboratories and anatomic pathology groups, because the same trends causing increased patient bad debt at hospitals are doing the same thing within the lab industry.
Much of the blame can be attributed to the increase number of patients with high-deductible health plans (HDHPs). The latest statistics reveal that patients’ out-of-pocket payments now make up 30% of hospital revenues. That is why hospitals desperately need strategies for successfully collecting payments from patients. And they’re not alone.
Kaiser Family Foundation (KFF) reported that more than half of all workers have deductibles and out-of-pocket liability of greater than $1,000. That is the reason why clinical laboratories and anatomic pathology groups also need a formula for collecting the total bill from their patients.
Jase DuRard, Chief Revenue Officer for revenue-cycle technology company AccuReg, told Modern Healthcare the increase in patient self-pay represents a seismic shift from roughly five years ago. At that time, patients paid only 10% of their hospital bills out-of-pocket and insurers paid about 90% of hospital claims.
Patient Responsibility to Blame for Revenue Loss at Nation’s Hospitals
A November 2016 study of 660 hospitals conducted by Crowe Horwath—an international public accounting, consulting, and technology firm—stated that “patient responsibility” was to blame for an overall managed care net revenue decline of 2.5% for outpatient care and 1.4% for inpatient care. Self-pay-after-insurance (SPAI) collection rates have improved slightly during the past 12 months—with the inpatient median rising 0.2% and outpatient median increasing 0.7%.
However, according to the Horwath report, “While seemingly a good sign for providers in the face of rising patient copays and deductibles, slight increases in patient collection rates are not enough to counter the larger increase in self-pay-after-insurance patient responsibilities.”
High-deductible health plans (HDHPs) are becoming the coverage of choice for healthcare consumers struggling to pay medical bills in full. The net effect is that revenues are declining at hospitals, clinical laboratories, and pathology groups, as well as other providers. (Graphic copyright: Consumer Reports.)
In a Modern Healthcare article, Crowe Horwath’s Managing Partner of Healthcare Services, Brian Sanderson, noted, “It’s imperative that healthcare organizations establish effective point-of-service collection programs by training and educating front-line staff.”
Complicating matters is that many patients faced with self-pay are unable to pay their medical bills at time of service.
“Higher deductibles and the increase in patient responsibility are causing a decrease in patient payments to providers for patient care services rendered,” John Yount, TransUnion Vice President for Healthcare Products, told RevCycle Intelligence. “While uncompensated care has declined, it appears to be primarily due to the increased number of individuals with Medicaid and commercial insurance coverage.”
Hospitals Offer Patients Financial Options for Paying Bills
Some hospitals are responding to this trend by rolling out programs that offer patients financing options for their out-of-pocket costs. A recent article in Modern Healthcare outlined the steps taken by Missouri hospital system Mosaic Life Care, as it realized the full impact that $23 million worth of self-pay patient care had on its bottom line. Though the hospital posted record census and gross revenue during the first four months of 2017, net revenue was flat because patient self-pay didn’t keep pace.
“We win all kinds of awards for patient quality, but our revenue cycle didn’t match that performance,” Deborah Vancleave, Mosaic’s Vice President of Revenue Cycle, told Modern Healthcare.
Since then, Mosaic has taken steps to improve the accuracy of information it gets at registration and how it makes determinations on patients’ ability to pay. In addition, it has joined forces with ClearBalance— a provider of patient loan programs to US hospitals and health systems—to offer zero-interest or low-interest revolving lines of credit to patients for their out-of-pocket medical costs.
According to Modern Healthcare, ClearBalance pays hospitals “upfront for the outstanding bills of patients who sign up for their financing program, but the hospital guarantees the money and repays lenders if patients default on their credit lines. The companies make their profit by getting a 10% to 15% fee for the outstanding amount of the loan.”
Medical Laboratories Slow to Respond to Consumer Demand for Price Transparency
As consumers shoulder more of the burden for their healthcare, they also will be demanding more price transparency from medical laboratories and anatomic pathology groups, which so far have been slow to respond to the trend.
“Patients expect cost estimates in every other retail industry, and are starting to demand them in healthcare as well. According to one recent study, for example, more than 90% of patients felt it was important to know their payment responsibility upfront,” TransUnion, a global risk information provider, stated in a white paper outlining the importance of precare cost estimates.
As hospitals struggle to collect from patients saddled with HDHPs, laboratory executives and other healthcare providers should take note. The change in payment mix means the ability to collect payments from patients at the point of service is becoming a critical success factor.
—Andrea Downing Peck
Related Information:
Hospitals Struggle with the Dilemma of Patients Hit by High Deductibles
Kaiser Family Foundation 2016 Employer Health Benefits Survey
The Impact of Consumerism on Provider Revenues
Patient Financial Responsibility On the Rise
Improve Revenue Cycles and Patient Engagement by Delivering Pre-Care Cost Estimates
68% of Consumers Did Not Pay Patient Financial Responsibility
Jul 12, 2017 | Laboratory Instruments & Laboratory Equipment, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Management & Operations
High-tech hospitals of the future will ‘bring the healing to the patients’ with virtual consultations and remote diagnostic/monitoring services delivering added value to patient care
Hospitals of the future may look nothing like the hospitals of today and those changes could have major implications for clinical pathologists and medical laboratory scientists.
That’s according to Samuel Smits of Gupta Strategists, a consulting firm in the Netherlands that focuses on the four pillars of the healthcare value chain: suppliers, payers, providers, and government institutions.
In an article in The Economist, Smits predicted that traditional hospitals soon will be no more. “We have reached the peak of bringing patients to the healing centers—our hospitals,” he said. “We are on the brink of bringing the healing to patients.”
The article further notes that the technological revolution on the horizon “means abandoning long-held assumptions about the delivery of care, the role of the patient, and what makes a good doctor.” Virtual consultations and remote monitoring will mean fewer patients will need in-hospital care, while those who do will find a facility that operates “more like a cross between a modern airport and a swish hotel, with mobile check-in, self-service kiosks for blood and urine tests and the like, and updates on patients’ and relatives’ phones,” the Economist article states.
Changing How Care is Delivered
The Economist predicts that “as some sophisticated diagnostics, including blood tests and virtual imaging, become available remotely, more patients will receive hospital-quality care without leaving home.”
Patrick Murray, PhD, Senior Director of Worldwide Scientific Affairs for Becton Dickinson Diagnostics in Franklin, NJ, stated in a Clinical Lab Products (CLP) article that technological advances in laboratory testing and diagnosis will enable pathologists to find increasing numbers of ways to deliver added-value to patient care.
“In my opinion, all diseases and conditions—particularly in the areas of overall wellness, women’s health, chronic diseases, and infectious disease—will benefit from the development of new tests and technologies,” Murray stated in the CLP article. “Additionally, new technologies can help meet the need to ensure traceability and seamless communication of test results not only within the lab, but also with the pharmacy, retail clinics, and physician offices, ultimately aiding in better patient management and providing more accurate insights in public health.”
Patient-and-Digital-First Hospitals
While experts predict patient-and-digital-first philosophies to be the future of hospital design, some healthcare systems already have embraced the trend. At Humber River Hospital in Toronto the future is now. An article in Modern Healthcare describes the patient-centered, high-tech, 656-bed facility, which opened in October 2015, as North America’s “first fully digital hospital.” The hospital leverages technology “wherever possible to improve quality, safety, efficiency, and customer service,” the hospital’s website states.
Humber River Hospital (above) in Toronto has been described as North America’s “first digital hospital.” It offers virtual check-in and registration as well as integrated bedside patient computer terminals that enable patients to order meals, adjust lights, play games, and access internet, television, radio, and their patient portal. (Photo copyright: Humber River Hospital.)
Humber River Hospital’s high-tech features include:
- Robotic blood and specimen testing with results available in minutes and sent electronically to the care team with alerts for immediate attention;
- Computerized patient documentation for immediate bedside charting;
- Bedside computers that enable patients to control lights, use telephone and internet, order food, and review their medical, virtual check-in, and registration information;
- A 4,500-square-foot “Command Center” (opens late 2017) will provide real-time data and predictive analytics to improve clinical, operational, and patient outcomes.
Additionally:
- Three-fourths of the hospital’s supply chain is fully automated; and
- Real-time locating systems (RTLS) track wandering patients and improve security for newborns.
Quality, Safety, Efficiency, Customer Service
Despite all the predicted upheaval to the status quo, John Deverill, Managing Partner at GE Healthcare Partners, expects the modern hospital will survive in some form. “There will always be hospitals where patients with complex needs go for multidisciplinary diagnosis and treatment by teams of specialists,” he stated in the Economist article. He does note, however, that stand-alone facilities for specific surgical interventions, such as joint replacements, may become the norm.
However, former Humber River Hospital President and CEO Rueben Devlin, MD, recommends hospitals not assume every high-tech healthcare innovation is worth pursuing.
“The four things that I think about are quality, safety, efficiency, and customer experience,” he stated in the Modern Healthcare article. “People talk about the Internet of things. I think about the Internet of junk. They’re nice toys but they need to show value to healthcare to make it purposeful.”
Anatomic pathology laboratories have a track record for adopting new technologies. Pathologists were early users of the remote telemedicine models, where telepathology systems enabled a pathologist to remotely control the stage and microscope of the pathologist who originated the telepathology session.
Similarly, the current generation of whole-slide imaging and digital pathology systems are gaining regulatory clearance in both Europe and the United States. If this next wave of technological innovations produces a shift in how clinical care is delivered, an opportunity will be created for clinical pathologists and medical laboratory scientists to adopt technologies that deliver added value to patients, including making inpatient hospital stays less likely.
—Andrea Downing Peck
Related Information:
How Hospitals Could Be Rebuilt Better Than Before
The Hospital of the Future Is Here…But it Needs more Gadgets and Bandwidth
Clinical Lab Trends 2016
NASA-like Command Centers are Coming to Hospitals
Will Growth in Number of Tele-ICU Programs in the Nation’s Hospitals Create an Opportunity for Clinical Pathologists to Deliver Added Value?
Feb 24, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Pathology, Laboratory Testing
Experts point to the challenges: not only is there a lack of consensus in how to best measure patient satisfaction, but there are also different opinions as to what are the right steps providers should take to improve the patient experience
In today’s healthcare industry, “Patient Satisfaction” is high on the list of phrases likely to be heard in any medical facility, including in pathology groups and clinical laboratories. With recent and ongoing changes to the way that providers are paid, patient satisfaction as a measure of quality will only gain in importance.
But if there is consensus that it is important to monitor patient satisfaction and use that data to guide efforts to improve how patients view their care, there is certainly no consensus on the most effective ways to measure patient satisfaction. Nor is there much consensus on how providers, including medical laboratories, should use patient satisfaction data to improve the patient experience.
This challenge is addressed by Deirdre Mylod, PhD, who pointed out in a PatientEngagementHIT article, “The exercise is not to make consumers happy. The exercise is to reduce patient suffering.” Mylod is Executive Director of the Institute for Innovation, a nonprofit research collaborative that publishes relevant and practical findings concerning patient satisfaction that help healthcare organizations deliver better care. (more…)
