The 100 Years' War: For Over a Century,
CHHSP Has Taken the Fight for Good Health Into the Home
Focus, 11/18/1987, 2282 words.
Massage Therapists: Muscling in on Healthcare
Treatments
Focus, 06/17/1987, 2594 words.
Early Health Care
Management to Help Contain Costs
Focus, 05/13/1987, 2294 words.
Long-Term
Care Financing Woes: No Short-Term Solutions
Focus, 05/13/1987, 2365 words.
AIDS
& TB Epidemics: Medical/Social Déjà vu
Focus, 05/13/1987, 2294 words.
Is Private
Practice on Its Way Out?
Focus, 04/15/1987, 3046 words.
Health
Care Joint Ventures Are Hot
Focus, 04/15/1987, 3046 words.
Trauma
Centers Fill a Critical Need
Focus, 04/15/1987, 2390 words.
Medicare Proposals: Good
& Bad
O.T. Advance, 03/02/1987
Medicare Proposals: The
Good News and the Bad News
O.T. Advance, 02/26/1987
Blue
Cross: IRS Gets the Blues
Focus, 02/18/1987, 2089 words.
HMOs: As
Competition Heats Up, HMOs Take the Gloves Off
Focus, 02/18/1987
Why HSA Won’t Be Missed:
The demise of federal Health Systems Agencies does not signal
the end of health care
regulation.
Focus, 02/18/1987, 2411 words.
Who's the Doctor?: Insurers or Physicians?
Focus, 01/14/1987, 2865 words.
Quality vs. Profit
Focus, 01/14/1987
Treatment at Pennsylvania
Skilled Nursing Facility Fills Gap in Post-Acute Care of Traumatic Brain
Injured Patients
O.T. Advance, 12/08/1986
Retiring Professor Views
Future of OT with Pride – and Concern
O.T. Advance, 09/29/1986
Dr. Hopkins to Create
Videotaped Presentations of OT Treatment Sessions
O.T. Advance, 09/29/1986
Focus, 08/13/1986, 3177 words.
Crisis
in Home Care: Catch-22 Replaces Safety Net
Focus, 08/13/1986, 2410 words.
Focus, 08/13/1986, 2395 words
Lifecare in the Delaware
Valley
Focus, 08/13/1986, 2395 words
Functional Needs
Assessment Program for Chronic Psychiatric Patients
O.T. Advance, 03/10/1986
Occupational Therapy and
the Sounds of Music: Therapeutic Program for the Handicapped
O.T. Advance, 02/24/1986
Some Hope Remains for
Passage of OT Medicare Amendments
O.T. Advance, 02/17/1986
O.T. in a Traumatic Brain
Injury Unit
O.T. Advance, 02/10/1986
High Tech Hand Therapy
O.T. Advance, 01/27/1986
Lifecare Communities: How
to make the Safest Choice
Golden Years: The Magazine for Mature Floridians,
12/1985
The 100 Years' War: For Over a Century, CHHSP Has Taken the Fight
for Good Health Into the Home
By Thomas Derr
11/18/1987
Focus
Pg. 54
Philadelphia, PA, US -- BETTER late than never.
That's the way the people at Community Home Health Services of Philadelphia
(CCHSP) are looking at the general public's recent "discovery" of
home health care.
Ever since its birth in 1886 as the Visiting
Nurse Society of Philadelphia, CHHSP and its affiliated organizations have been
quietly and effectively servicing the needs of homebound patients. But it's
only recently that the advantages of home care have taken center stage in the
public's eye.
Adele S. Hebb, president of Philadelphia Home
Care, the umbrella organization for CHHSP, Philadelphia Medical Equipment Co.,
and Home Care Specialists (an affiliated private care services organization),
offers several reasons for this new-found recognition.
"Home care provides a patient with a way of
getting the medical care he or she needs in the most desired setting,"
Hebb says. "No one likes to have to be in the hospital, especially when a
patient can be treated less expensively and just as effectively at home."
GROWING ASSERTIVENESS: With the exception of a few
home care patients who might require 24-hour coverage, home care tends to be a
far more cost-effective alternative to acute institutional care, Hebb explains.
That cost savings potential has played a large part in growing assertiveness on
the part of many patients, who increasingly are asking for home care services
through their referring physicians.
But according to Hebb, that doesn't mean that
the physicians necessarily are in need of prodding. "In recent years,
physicians have become much more aware of the potential of home care,"
Hebb says. "Our services are provided under their orders, so naturally we
work very closely with the physicians."
Tied in with this greater appreciation for home
care on the part of physicians are the many advances which continue to take
place in the kinds of therapies and technical services that can be provided
outside of the institutional setting.
"The continued refinement of medical and
technological advances that have taken place over the last half dozen years only
improves the viability of home care services," Hebb explains.
"Pharmaceutical and medical equipment companies are continually developing
new techniques for treating patients in the acute care setting which we are
able to adapt and utilize in the home."
THE BED IS DEAD: The growing acceptance of such
services in the home instead of in the more expensive acute care setting has
led to the development of something of a rallying cry for home health care:
"The bed is dead," she adds.
As Hebb explains, there is a variety of services
now available in the home that once were available only in acute care settings.
Some of these now fairly common home care procedures include chemotherapy,
ventilator therapies, and enteral and parenteral feeding.
Alice Shields, Director of the Home Care at
Mercy Catholic Medical Center, notes the advent of Diagnostic Related Groups
(DRGs) as a means of controlling health care costs. DRGs have had a tremendous
impact on the home care industry and the overall health care delivery network.
"We're all very much aware that patients
are being discharged from the hospital at a lower level of recovery than before
DRGs," Shields says. "As a result, there is a far greater demand for
nurses who can provide skilled care -- especially high tech-related treatments
such as hyperalimentation and IV therapy -- in a home situation."
Shields says she is impressed by the fact that
CHHSP places a continuing emphasis on educational programs to keep its nursing
staff up-to-date on new and developing treatments. Because of these ongoing
educational programs, CHHSP seem to demonstrate a very strong all-round
knowledge in all aspects of medical care, as well as good basic knowledge in
oncology and other specialty areas.
VITAL LINK: The ultimate beneficiary of this
extensive training, of course, is the home care patient -- who from a medical
standpoint often defies categorization.
"We have had patients with acute episodes
of diabetes, heart attack patients, cancer patients, stroke victims, and some patients
with multiple symptoms requiring home care treatment," Hebb says.
In fact, many of these patients, especially
stroke victims, have been left with permanent disabilities, she adds.
"Skilled nurses, followed by therapists, are restoring functions which
these patients would not have had without home care services," Hebb says.
In that sense, home care provides a vital link
between acute care institutions and out-of-the-home ambulatory therapy centers.
In order to recover to their maximum level of functioning, patients who are
released from hospitals and return home need the kind of nursing and
specialized therapy services agencies such as CHHSP provide.
"Without homebound care, many patients
would be stuck at that initial post-hospital level of functioning -- they
simply would not be able to manage by themselves," Hebb says.
PATIENT & FAMILY: One care which illustrates
the importance of such services involved a South Philadelphia couple. The
husband had been incapacitated by a heart attack and was being cared for by his
wife. One day the wife fell and suffered a skull fracture. Upon her release
from the hospital, CHHSP nurses and therapists began a regimen of services
designed to help her regain her normal level of functioning. Once that goal was
achieved, she again was able to help care for her disabled husband, and worked
with CHHSP staff in his rehabilitation program.
"Without the intervention of home care
professionals, it would have been almost impossible for this elderly couple to
manage for themselves," Hebb says. According to Hebb, the case also
exemplifies one of CHHSP's basic home care tenets -- that the patient and
family members should play key roles in the recovery program. To further this
aim, CHHSP staff members teach family members
how to administer appropriate treatments or
therapies. This helps to supplement the work of the home care professional as
well as further facilitate the recovery of the homebound patient.
In addition to providing that kind of in-home
training, CHHSP also seeks to develop linkages with other community resources
in health care and health-related human resources, Hebb says. The idea is to
provide a network of health care providers of various types that can work
together to maximize a patient's recovery.
For example, once a patient is discharged to
home care, he or she may require the services of a speech pathologist as part
of the home care program. Once the patient recovers enough so that he or she is
no longer homebound, CHHSP may arrange for the patient to visit a center for
speech therapy so that the patient's highest possible level of speech function
is reclaimed.
This continuity of care is provided for all
types of patients, for all ages -- from the two day-old infant to patients who
are over 100 -- and regardless of ability to pay, Hebb says.
WHO PAYS? Therein lies the rub. Over the years,
CHHSP's commitment to serving the medically indigent population -- as well as
patients who can pay for home care services -- has placed great strains on the
organization's financial resources.
"As we strive to meet the needs of the
community, we ask the community's help in helping those who can't pay,"
says Hebb. "As a result, we rely heavily on the support of community
organizations, philanthropic individuals, and corporate donations." Some
of the major contributors to CHHSP include the Visiting Nurse Society of
Philadelphia, the City of Philadelphia, the United Way, and grants from the
Medical Trust, the William Penn foundation, SmithKline Beckman Corp., and Tasty
Baking Co.
Another key sponsor of CHHSP's efforts has been
the Pew Charitable Trusts, and its senior program officer of that program,
Brent W. Roehrs. "We understand and recognize that voluntary services
comprise an extremely important part of the overall healthcare delivery
system," Roehrs says. "This is especially true for those who can't
afford to pay full freight for the care they
receive."
According to Roehrs, the home health care market
has grown increasingly competitive in recent years, so that many for-profit
home care agencies now are going after many of the paying clients that CHHSP
might once have gotten. "The problem is, these for-profit agencies don't
have the same commitment to subsidized home care that a voluntary agency such
as CHHSP has," says Roehrs.
"CHHSP has to take the money they get from
paying customers and use it to underwrite the cost of its indigent care
services. Thus the for-profits often are able to undercut CHHSP's prices --
they don't have to factor in the free cases as CHHSP does."
HCFA A MASTER HEADACHE: But free market
competition is only one of the challenges facing CHHSP's financial well-being,
Roehrs adds. "I think what has really hurt home health agencies in general
-- and voluntary agencies like CHHSP in particular -- is the ongoing problem
with the Health Care Financing Administration," she says.
Over the past two years, HCFA has significantly
increased its rate of payment denials for a variety of services agencies
deliver in the home. This has served to further increase the financial strain
on home health agencies -- especially voluntary organizations which already
allocate a sizable amount of money toward unreimburseable care.
The HCFA policies are designed to save money for
the nation's costly Medicare program, HCFA officials charge. However, the
primary effect of the policy is that agencies who are denied reimbursement must
"swallow the cost" of services already provided. As a result, many
agencies are finding it increasingly difficult to continue to provide home care
to patients who cannot afford to pay for such services.
"HCFA has been one of our major
headaches," CHHSP's Hebb asserts. Throughout 1986, HCFA pursued a policy
of denying payment for services on the grounds that many treated patients were
not actually "homebound." The policy created such an uproar that Sen.
John Heinz (R-Pa) and other government and health care officials across the
nation were able to pressure HCFA into relaxing its stance.
This year HCFA has been denying claims on the
basis that many patients did not actually have a "medical necessity"
for the treatments home care agencies provided.
"The program is, every time we think we
have one problem solved, another HCFA-related problem pops up," Hebb says.
BUREAUCRATS DICTATING POLICY: What makes the new
"medical eligibility" controversy even more unconscionable is the
fact that the home care services CHHSP provides are done under the direction of
physicians. What this boils down to is that a group of government bureaucrats is
dictating healthcare treatment policy to medical professionals.
The situation also creates something of a
dichotomy in that HCFA administrators seem intent on constricting Medicare expenses
at a time when recent federal legislation actually has increased the range of
Medicare coverage, Hebb says. The challenge for agencies such as CHHSP will be
finding a way to keep pace with the evolving medical needs of the homebound
population in this time of shrinking government support.
"We are continually developing and
expanding our services to meet the changing patterns and needs of our
patients," explains Hebb. "Over time, the pattern of what people want
or need changes substantially in health care."
TWO MAJOR ISSUES: This leads inextricably into
major changes in the way health care ultimately is delivered, she adds. As a
result, many more changes can be expected in the way patients are served by
physicians, hospitals, and home care providers.
"The one thing we can count on is that the
way we deliver health care services at present will not be the right way of
doing it two years from now, because of the way the health care environment
continues to change," Hebb says. Two current health issues in particular
likely will have a profound impact on the nation's health care delivery system
-- and home health agencies in particular,” says Hebb. These two issues are the
continued "graying of America," and the growing AIDS epidemic.
America's aging population is "of major
significance for home care," says Hebb. She sees a continued expansion of
home care services in nonskilled "personal care" support services,
private duty nurses, meals and laundry services, and other services provided by
agencies such as Home Care Specialists, an affiliate of CHHSP.
"As more and more older people opt away
from the 'hated' institutional care, home care will become an increasingly
popular and demanded alternative. We see it as being a substantial part of our
future," Hebb says.
At the same time, the health needs of AIDS
patients will continue to expand as the disease spreads -- with many patients
being left where they simply can't function without some kind of outside help.
Home care, because it is so much less costly than institution-based care, is a
logical means of dealing with those increased needs. Still, it's not the kind
of service which home care agencies will be able to provide without outside
support.
"This is one for federal and state
government entities to handle," Hebb says. "It's just too big a
problem to deal with unless we get all the people involved."
So far it's a manageable problem in this area.
But as more AIDS patients deplete their own financial resources for expensive
medical care, their numbers could swell the already growing numbers of the
medically indigent. That will only magnify the pressures already being placed
on CHHSP and other voluntary non-profit health care organizations.
BOTTOM LINE: "We're thankful for all the
support we do get from foundations, corporations, individuals, and other
organizations," says Hebb. But the constant demands for more services, and
the continued funding restriction of HCFA are taking their toll.
"The bottom line is we very much need all
the community support we can get," Hebb says. "We could do so much
more for the medically indigent if we only had the money."
Massage Therapists: Muscling in on Healthcare Treatments
By Thomas Derr
06/17/1987
Focus
Pg. 24
Philadelphia, PA, US -- SAY the word "massage"
to most people and two mental images generally crop up. One is of a large,
muscular blond gentlemen of Scandinavian descent, usually named
"Sven" -- the other is of a scantily-clad young woman named Sheila
whose specialized training and expertise could only in the most remote way
possibly be considered part of the "healing arts."
Those are images which Gayle Davidson and the
rest of the American Massage Therapy Association hope to change very soon.
Davidson's young Philadelphia-based company, Sportsmassage
Associates, Inc., is part of what are among the most popular
"alternative" healthcare trends in recent years -- sports massage and
massage therapy.
And a quick glance at the list of clients served
by Davidson should give a clear idea of the kind of credibility that her field
of endeavor has come to enjoy. Davidson has worked the Boston Marathon for
several years, as well as the 1984 Olympics in Los Angeles. She also has
provided sports massage services at the International Games for the Disabled,
the Chicago Marathon, the Pittsburgh
Marathon, and a wide array of other professional
and amateur games and races.
In the recent first round of the Stanley Cup
playoffs, her firm was called upon to provide sports massage therapy for the
visiting New York Rangers hockey team as they challenged the Flyers. Davidson
says it’s about time the concept of sports massage began to take root in the
U.S.
RESOURCE: "With all the input and media
hype over cocaine, steroids, blood doping and everything else under the sun you
could imagine, massage is probably the most natural untapped resource in
American sports medicine," Davidson says.
While European athletes have been utilizing the
technique for years, as far as American sports medicine community is concerned
-- it's just coming out of the closet, she adds.
In fact, within the past two months alone, major
articles on sports massage have been featured in Time magazine, The New York
Times, The Runner, and The Physician and Sports Medicine.
One nationally prominent physician and running
advocate, Dr. George Sheenan, even called the technique a "miracle."
Though thankful for the attention and the good doctor's enthusiasm, Davidson
notes that his claim is probably somewhat exaggerated.
"It's not a miracle, really," she
says. "It's just one of these special areas of interest which we have not
studied in the American sports medicine community."
According to Davidson, the American sports
medicine community has tended to be more involved with activities that involve
drugs and other more traditional lines of research. That's not hard to
understand, because pharmaceutical companies are usually the financial backers
for such research programs. So until very recently, there has not been the will
to investigate such alternative approaches to sports medicine, she says.
But thanks to the efforts of several
well-respected and enlightened physicians, a committed group of hardworking
massage therapists and organizations such as the American Massage Therapy
Association (AMTA), sports massage seems primed to come into its own.
CERTIFICATION: According to Jean Neiswinter,
National Eastern District Director of AMTA, sports massage has become a very
prominent thing in the massage dimension.
"I would say it is now one of the priority
things on our agenda, with the American Massage Therapy Association," says
Neiswinter. "We are, I think, the only association which gives sports
massage certification upon taking a very rigid examination."
One of the problems that "legitimate" massage
therapists such as Neiswinter, Davidson and other AMTA members have faced is
the lack of uniform standards for certification and regulation of massage
therapists.
In the City of Philadelphia, for example, all
one has to do to go into the massage business is to provide two photos for
personal identification, then pay a twenty dollar fee for a masseur's license,
and another fee for a state license. There are no city or state requirements as
to training or experience for individuals who seek to practice massage. This
fact has caused a certain amount of consternation among "legitimate"
practitioners.
Because of the lax city and state standards of
regulation, it is virtually impossible for law enforcement authorities to
differentiate between legitimate massage therapists and the kind of
"message" services that generally gain the attention of the police
vice squad. And the Philadelphia police department does maintain records on who
is licensed to practice massage in the city.
"What infuriates me more than anything is
that I am listed in the police department's "Blue Files" because I
have my masseuse license," says Davidson. "It's not a nice
compliment."
NO RESPECT: Several months ago, Davidson
telephoned a city assistant district attorney to complain about his using the
terms "prostitution, escort and massage" all in the same sentence.
Although he was apologetic, and in fact, was well aware that legitimate,
professional massage therapy did exist, there was little he could do.
"We don't get the press. Because of the
AIDS thing and everything else going on people are more interested in hearing
about the prostitution and the escort business," Davidson explains.
Davidson says she ran into the same type of
general apathy while trying to bring about attention and media awareness for a
Sports Massage Workshop which was held in Philadelphia during the last weekend
in April, and which drew approximately 100 massage therapists from throughout
the MidAtlantic region.
"One radio producer said pointblank that if
it was about prostitutes, massage and escort, he'd cover it," she says.
"He admitted that his station does not give equal time to the professional
massage services. That's just the way it is."
Nevertheless, AMTA continues to sponsor such
events, in hopes of bringing together some of the best people in the field to
come up with some greater uniformity, high standards, and to establish high
qualifications for would-be massage practitioners.
EDUCATION: Basically the AMTA is trying to
educate therapists to a higher level of education than they are accustomed to,
Davidson says. By AMTA standards, it's not the kind of education that can be
done over a weekend, although there are some "schools" which
advertise such programs.
By contrast, AMTA schools require a minimum of
500 hours of training in a wide variety of subjects, including anatomy,
physiology, kinesthesiology, hydrotherapy, business practices, ethics, and
contraindications of massage therapy.
The only AMTA-certified school in Pennsylvania
is the Pennsylvania School of Muscle Therapy in King of Prussia. According to
the school's director, Victoria Ross, it is one of about 50 AMTA-recognized
facilities across the country.
Ross, who also operates the Deep Muscle Therapy
Center at the same location, says she has worked with patients who have a wide
variety of conditions, including polio, lupus, muscular sclerosis, muscular
dystrophy, as well as other joint and muscle injuries. She says most of her
referrals come through physicians, lawyers and insurance companies.
CLOSE TIES: But the facility has other close
ties to the medical profession as well. Ross says that one of her chief
supporters in the field is the renowned Philadelphia neurosurgeon Dr Eugene
Spitz. Ross credits Dr. Spitz with being one of the first
"traditional" medical professionals to acknowledge the potential of
massage therapy as a legitimate and viable medical treatment.
Ross also retains several other medical
professionals as consultants, including a medical doctor, a chiropractor, and a
cranial specialist. Compared to the Pennsylvania School of Muscle Therapy, most
"massage schools" fall woefully short, notes Davidson.
"In Philadelphia there are some schools
that last from 16 hours on a weekend to maybe 100 hours," Davidson explains.
"That really doesn't give you enough information to be what I'd call an
informed massage therapist -- a person that could handle an emergency
situation."
AMTA requires its students to be certified both
in cardiopulmonary resuscitation and first aid. That's important because of the
fact that massage therapy greatly increases the activity of the patient's
circulatory system.
"Thus, if someone is on your table, it is
very important to know it in case a situation occurred," Davidson notes.
SENSITIVITY: Another difference is that in
legitimate massage therapy, the patient is draped and the professional is
covered at all times. Communication is also important. There is extreme
sensitivity involved, so that communication between the patient and professional
is critical. It is important to know whether or not the pressure being applied
is too heavy, or too light. And if the
patient has any specific injuries, this too must
be communicated between therapist and client. Still, most people seem to be almost
completely unaware of the concept or the value of legitimate massage therapy.
"A lot of people just don't understand
massage therapists," explains Davidson. "They just don't understand
-- who are these people, what kind of training do we have? And with the lack of
licensure, regulation, legislation -- you just have a can of worms there.
That's why you need to have some type of governing body or professional
association."
It is that void which the American Massage
Therapy Association hopes to fill. The AMTA, which was established in 1943, is
the national organization for massage therapists. Through AMTA, certified
massage therapists can obtain liability insurance, and malpractice insurance,
as well as its professional publication, the Massage Therapy Journal, and an
organizational newsletter.
In addition, the AMTA sponsors a series of
periodic continuing education programs, conferences and conventions that are
designed to bring members together so they can share experiences, compare
techniques and learn about new innovations in the field of massage therapy.
Under current national president, Robert King, the AMTA has been at the
forefront of giving real credibility to
the profession, Davidson says.
RECOGNITION: Apparently some of that effort is
beginning to pay off. Elaine Beaver, president of the Pennsylvania Chapter of
AMTA and the organization's Membership Chairperson, notes that a growing number
of hospitals and individual physicians now recognize massage therapy as a
legitimate and important method of therapy.
"We're receiving prescriptions and
referrals for massage now, which is something that doctors just disregarded
prior," says Beaver. "I work by referral with physicians and
attorneys, and this would be by prescription. So they're acknowledging it, and
that's a bonus for massage therapists."
Part of the reason for the healthcare
community's growing acceptance of massage therapy as a legitimate technique is
the emphasis that has been placed on other types of "alternative
care" in recent years.
As Davidson notes, the type of care provided
sometimes depends on the attitudes and beliefs of the individual patient. Many
people opt for what might be considered "traditional" medical
treatments, so that when they are sick or injured, they enlist the services of
an MD. Other people choose to go to a chiropractor or osteopath. Today such
practitioners are gaining increasing acceptance by both the medical community
and the general public.
"Before you couldn't even mention a
chiropractor around a U.S. Olympic official," Davidson says. "Now you
can. It's really shifted around a bit as far as their understanding and
willingness to work together."
It is that need for the different factions --
especially athletic trainers, physical therapists, and massage therapists -- to
work together which Davidson emphasizes in her work and in her attempts to
promote the concept of massage therapy. Usually people can do that if they're
not threatened by one another, and if they understand what each other's roles
are, she says.
Davidson, who began her career in the healthcare
field working as a respiratory therapist in a center city hospital trauma unit,
says she has had a unique opportunity to see the trend in medicine gradually
shift from an atmosphere of stand-offishness to one of greater acceptance among
different practitioners of each other's roles. This is especially important
when judged within the context of knowing when to refer a patient to a
specialist in another area, she says.
"I think one of the number one
responsibilities of any healthcare professional is to know when it is outside
of your professional responsibility -- knowing when to refer to a physician, or
another professional who has much more expertise, or if the patient needs
special equipment, X-rays, or whatever," says Davidson. "That's one
of the most important things I see with my field -- educating the therapist as
to what the contraindications of massage are and when they should be giving
massage therapy, and when they should be referring out."
ALL BENEFIT: Davidson says she maintains a very
good rapport with all the sports medicine facilities in Philadelphia, as well
as various physicians, orthopedists, chiropractors and other appropriate
healthcare professionals.
"I have a very good rapport with those
people because I want to know what's going on," she says. "At the
same time, they also want to know what's going on. So we work with each other.
That's the way it should be."
But it's not athletes alone who stand to benefit
from massage therapy. For example, there are massage therapists in New York
City working with AIDS patients in New York City. From corporate executives all
the way down to the neonatal, to the mother who is prenatal -- all can benefit
from massage therapy, Davidson says.
We even get involved in teaching the husband or
partner how to do massage on his pregnant wife. How to relax her and the baby.
We've even had massage in the birthing rooms, so that right away we teach
families infant massage," Davidson says. "Then it goes all the way up
to geriatrics and hospice programs."
RELIEVING STRESS: Corporate executives also are
discovering the benefits which massage therapy can offer, and have begun to
feature massage therapists in some of the larger corporate fitness centers
around the country.
One person who definitely believes in the
potential benefits of corporate massage is AMTA Pennsylvania Chapter president
Elaine Beaver. What makes corporate massage different, is the fact that it is
done with the patient fully clothed, and the required time period is much
shorter.
“We're talking about seven minutes of hands-on
therapy for alleviating stress," Beaver says. "That means seven
minutes of work, mainly on the shoulders, neck and back area. That's seven
minutes during which a person would not have had a cigarette. It really makes
sense, and I think it will really take off."
In fact, in other cities, such programs already
are in place. One of the best known consumers of the service was Apple Computer,
which hired massage therapists for its employees during the design phase of the
Macintosh personal computer. Other companies in New York and San Francisco also
have turned to certified massage therapists as a means of managing stress in
the workplace, and in most cases the cost is picked up by the firm's insurer.
Hopefully, it will just be a matter of time before that kind of benefit is
common in Philadelphia, Beaver says.
SEVEN-MINUTE BREAK: "Corporate massage is
something that is just delightful," she adds. "And from speaking with
coworkers, so far, I've found it to be something which they definitely would be
interested in. It's a seven-minute break -- and I, personally, would prefer it
any day to a cup of coffee."
According to Beaver, corporate massage, will
probably be the next area of popularity and attention for AMTA and associated
massage therapists -- and will closely follow on the heels of sports massage.
And as far as Gayle Davidson is concerned, that's just fine. From her perspective, it doesn't matter where the attention is focused, as long as accurate information does become more and more available to the public. She adds: "The bottom line is, massage therapy is probably the only profession that can affect every individual across the board without exception."
Long-Term Care Financing Woes: No Short-Term Solutions
By Thomas Derr
05/13/1987
Focus
Pg. 214
PA, US -- It's an all too familiar scene for
many caseworkers. The elderly patient who is in need of nursing home services --
and who may even have set aside a small amount of money in hopes of
supplementing his or her Medicare income -- suddenly discovers Medicare simply
does not pay for nursing home care. And the meager savings that he or she has
set aside disappears almost immediately.
"Everyone thinks Medicare will pay for it,
but it won't," says Joan E. Lynaugh, Ph.D., F.A.A.N., associate professor
at the University of Pennsylvania's School of Nursing. "It truly is one of
the most unpleasant surprises to either the middle-aged child or the older
adult -- even to the most sophisticated people. They just can't believe the
person in the nursing home or the social worker in the hospital when they tell
him that all of this insurance they've been buying isn't going to do them a darn
bit of good."
RUDE AWAKENING: It's a widespread phenomenon. In
fact, according to David M. Eisenberg, Ph.D., Director of Long Term Care for
the Philadelphia Corporation for Aging, a recent survey conducted by the
American Association of Retired Persons found that nearly 80 percent of
respondents believed that Medicare would, if necessary, cover their long-term
care needs.
"It doesn't," Dr. Eisenberg says.
"And if 80 percent think Medicare covers something it doesn't cover, then
people are in for a rude awakening -- and they get that rude awakening. We see
them rudely awakened when they come to us seeking nursing home care."
The realization suddenly hits these people that
they either will have to pay for the care out of their own pockets, or quickly
become impoverished so state medical assistance will pay for it. In fact, the
financing of long-term care in the United States is so expensive that about
half the cost of institutional long-term care is covered out of pocket by
families, with the other half being picked up by medical assistance.
Furthermore, of all the people who enter nursing
homes as private pays in a year in the United States, fully half of them spend
down to poverty level within one year.
"They exhaust all their assets and spend down
to poverty level so that they become wards of the state, essentially -- they
become medical assistance eligible," Dr. Eisenberg explains.
For many elderly citizens, that "spend
down" process won't take long at all. According to a recent report by the
Urban Institute, 13 percent of the nation's elderly live below the poverty
line, which is $4,775 for a single person older than 65, and $6,023 for an
elderly couple. In 1985, the poverty level for Americans 65 and over was 12.6
percent (compared to 14 percent for the general population), with an additional
8.3 percent rated at "near poverty" -- leaving a total of more than
21 percent of elderly citizens near or below the poverty line.
CATASTROPHIC CARE CONTROVERSY: The Reagan
Administration's recently announced plans to increase Medicare part B coverage
for catastrophic care would do nothing to mitigate this problem. The proposal,
developed by Health and Human Services Secretary Otis R. Bowen, would assess
Medicare recipients an additional monthly premium of $4.92 in return for
coverage of an unlimited number of hospital days, and a cap of $2,000 on the
beneficiary's personal payments.
But according to a spokesman for the Senate
Committee on Aging, less than one percent of the Medicare population actually
will end up using these costs. In addition, the plan would not extend coverage
to include any item that is not already covered by Medicare. It would not
extend coverage to include prescription drugs (which cost elderly Americans
nearly $10 billion annually), physician's costs that are apart from hospital
costs, or, most important, the cost of long-term care -- which is by far the
greatest economic threat facing elderly citizens.
"It's very simple to explain," Dr.
Lynaugh notes. "No matter how much money an individual or couple has
saved, if they can't manage their care outside of the nursing home, they will
have to pay cash for that care until they run out of money."
IMPACT: The impact on the individual or the
family is obvious. Perhaps less obvious is the impact on the nursing home. By
definition, the state has an interest in keeping its medical assistance costs
as low as possible. That means the number of nurses and amenities provided to
Medicaid nursing home patients is also kept at a minimum. Therefore, any
nursing home that has a substantial number of medical assistance patients in
its patient mix will probably have a marginal financial solvency.
As a result, one of two things has to happen,
says Dr. Lynaugh. First, the nursing homes have to control the percentage of
Medicaid patients they serve in order to remain solvent. Those patients then
must remain the hospital, or go without care.
"The other thing that happens is that these
people who are in their 70s, 80s, or 90s -- with a chronic illness that
prevents them from living at home -- they're really stuck with extending their
savings and their family's inheritance to pay for this care," Dr. Lynaugh
says.
According to Dr. Lynaugh, skilled nursing care
costs an average of about ninety dollars a day -- more than $30,000 a year. And
there are few ways around that expense, because it is essential for any patient
with complicated medications, or who requires supervision of care by a registered
nurse. Of course, the level of care can vary significantly from nursing home to
nursing home.
THE TEACHING NURSING HOMES: Interestingly, Dr.
Lynaugh notes that introducing a higher level of care in nursing homes could
actually lower overall healthcare costs. The concept involves what Dr. Lynaugh
calls "the teaching nursing home."
The idea is to get schools of nursing in
universities to team up with nursing homes. It legitimates the nursing home in
a sense, but it also implicates the schools of nursing in the problems that the
nursing homes have, she says.
Nursing homes often suffer from a lack of
skilled professional help, she says. And if there is an insufficient number of
people who are well-trained, it stands to reason the residents are going to get
less than adequate care.
By introducing a better prepared nurse in the
nursing home (one who can make patient care decisions right there on the
premises) there will be less need to send nursing home patients to acute
hospitals for minor emergencies -- which is much more expensive.
"That's a real advantage on two
levels," notes Dr. Lynaugh. "One, it saves a lot of money, and two,
it's a lot less hard on the nursing home patient who is usually a very old
person who is not going to do well in a hospital situation."
The dilemma, however, is that the money does not
come from the same pot, Dr. Lynaugh says. Currently there is no incentive to
keep the patient out of the hospital, which is reimbursed by Medicare. However,
if Medicare were at risk on both sides of the equation, then a more rational
system of incentives and disincentives might be put in place.
"The idea is to try to get the health-care
system to face up to both the critical and the fiscal issues that are
inherent," Dr. Lynaugh says.
TWO POLAR EXTREMES: There are other programs in
the works, but they are few and far between. As PCA's Dr. Eisenberg notes, the
real challenge is to establish a continuum of care that includes long-term care
options that supplement institutional care.
Currently such a continuum does not exist, he
says. Instead, the continuum is heavy on the two polar extremes -- the families
and the institutions.
"There isn't a whole lot in between,"
Dr. Eisenberg says. "Medicare does not cover long-term in-home care. In
Pennsylvania, Medicaid doesn't either. A lot of the services that are needed in
order to keep someone at home healthfully -- personal care for example -- are
not covered by Medicaid."
The only public financing available for in-home
long-term care comes through agencies such as PCA, Dr. Eisenberg says. And PCA
now has extremely long waiting lists for homemaker services.
How these institutional and in-home long-term
care options will be balanced -- and who will be doing the balancing -- are two
of the major issues confronting officials in both the private and public
sectors. And for the moment, no one is willing to take full responsibility.
COST SHIFTING: "What we are seeing under
the Reagan administration is this massive cost shifting from system to system,"
says Dr. Eisenberg. "When DRGs went into effect, the Health Care Finance
Administration basically shifted the burden from an inpatient to an outpatient
emphasis. But at the same time, the Medicare intermediaries started very
tightly constraining home health benefits under Medicare. That was a further
shift onto the states -- onto medical assistance and onto families."
To solve this problem, it will be necessary to
develop a system of rational planning for some kind of reasonable approach to financing
long-term care, Dr. Eisenberg says.
"But until this happens, we're likely to
continue to see this massive cost shifting between feds and state, and between
different systems," he says. Further complicating the issue of long-term
care is the fact that the problem is not limited to the elderly population. The
same problems can be readily detected with the chronically mentally ill people,
and with the developmentally disabled.
"One of the reasons we have so many street
people around is because the state decided to get out of the institutional
business, and it never followed through with in-home care," explains Dr.
Eisenberg. Therefore, although the business of how to take care of people who
need long-term care is more than just an aging problem, it is clear that the
elderly population is fare greater than any other subgroup.
ROLE OF PROVIDERS: Another key issue that must
be dealt with involves the roles which providers can be expected to play.
Currently there are a number of provider sectors, including hospitals, nursing
homes, home health agencies, hotel chains, and even department store chains --
who are all starting to think of themselves as a focal point for the delivery
of services to the elderly.
Hospitals especially are looking at possibility
of vertical integration. That is, they are starting to look at themselves as a
focal point for meeting the needs of the elderly beyond the acute care state --
even to the point of owning and operating nursing homes.
The golden ring which each of these provider
sectors hopes to grasp is a foothold in the enormous elderly market. And once
reimbursement mechanisms are worked out satisfactorily, the potential for
control of the market is huge, notes Dr. Eisenberg.
At the same time, however, he cautions that
while providers possess a powerful incentive to sell what they create, it may
be far different than what the elderly population actually requires. It also
may be different from what the public wants to pay for.
WHO CONTROLS? "Another big issue in the
organization of long-term care services as they develop is -- who should be in
control?" says Dr. Eisenberg. "Who should be the focal point for the
development of long-term care services for old people? One of these provider
sectors? The government? An honest broker middleman such as PCA?"
One of the most talked about options for
financing long-term care currently is being promoted by Rep. Claude Pepper, the
chairman of the House subcommittee on health and long-term care. The bill, H.R.
65, would cover a number of health care items currently outside the realm of
both private insurance and Medicare -- such as dental care, eye care, hearing
care, prescription drugs and physical exams.
As Richard Browdie, Deputy Secretary of the
Pennsylvania Department of Aging, notes, "While this country does not like
the idea of nationalizing its insurance problems, when it comes to long-term
care, the government is the only insurance company big enough to cover
everybody."
One possible alternative to Pepper's plan would
be to have the federal government reinsure private insurance companies against
catastrophic losses. Such a plan essentially would create a national health
insurance strategy for long-term care while privatizing its actual
administration. At the moment, however, such plans are being considered in
"think tanks" not in legislatures, Browdie notes.
EXPERIMENTAL POLICIES: Some private insurers are
offering experimental policies that would enable some elderly people, who
otherwise would have to be admitted to nursing homes, to stay at home. The
services offered would include housekeeping, cooking and shopping, physical
therapy, overseeing medication, and helping with bathing and dressing. An added
twist is that the new policies do not require prior admission to a hospital or
nursing home.
Dr. Lynaugh notes that the AARP recently began
offering a long-term care policy to members in eight states through the
Prudential Insurance Company of America. In addition, the Travelers Insurance
Co. recently began offering policies that include nursing home care, home
health care and adult day care benefits to employees of large corporations,
while Aetna Life Insurance Co. recently signed a similar agreement for state
workers in Alaska.
One of the keys to the success of the new
ventures, says Dr. Eisenberg, will be the organizations' ability to identify
and cope with the fact that older people have multiple and interrelated needs
that run across different service systems and may involve acute health, mental
health, nutrition, social and other problems.
NEED FOR CHANGE: "The point is that
professionals tend to see problems in terms of the solutions with which they
are most familiar," Dr. Eisenberg says.
"Sometimes you need someone who has a broad
understanding of a patient's problems to meet his or her needs."
The problems are magnified further because
financing is also done by system, he adds. Therefore, any solution must take
into account the wide variety of problems elderly patients face. But whatever
happens, the current system of financing has to be changed.
"Any approach to financing care that
impoverishes such a large group of people
regularly is grossly unfair. We have to be able to do better than that."
AIDS
& TB Epidemics: Medical/Social Déjà vu
By Thomas Derr
05/13/1987
Focus
Pg. 201
PA, US -- The numbers are startling. They show
the disease accounting for one out of every nine deaths in the population --
one out of three among men and women aged 25 to 34.
The numbers also show blacks being far more
at-risk then whites, with a death rate of 428 per 100,000 as compared to 174
per 100,000. The year was 1900, and the disease that was causing such
widespread public alarm was tuberculosis.
And as Joan E. Lynaugh, Ph.D., F.A.A.N.,
associate professor at the University of Pennsylvania's School of Nursing,
notes, there are a number of comparisons that can be drawn -- not between TB
and AIDS, per se, but rather in the way the medical community and the general
public has tended to approach them.
MISCONCEPTIONS: According to Dr. Lynaugh, one of
the most apparent commonalities between the AIDS and TB epidemics involves the
way AIDS victims are viewed. During the late 1800s, incidence of TB often was
seen to be a function of lifestyle. New immigrants to this country, the urban
poor and other downtrodden classes all were potential carriers of TB. And
because TB cases tended to be concentrated among those groups in highly
congested urban areas, it was widely espoused by some rabble rousers that the
cause of the disease could be traced to the inherent squalorous lifestyle of
these groups, or to some genetic dysfunction.
As a result, new immigrant groups and poorer
classes often became scapegoats for the TB epidemic.
"There also were lots of misconceptions as
to how TB could be spread," says Dr. Barbara Bates, a lecturer at Penn's
School of Nursing who also has strong historical interests. There were fears
that one could contract TB as a result of things the didn't make any difference
whatsoever -- licking envelopes, public libraries and laundries, touching dirty
straps on public trolleys, from silverware, or from sleeping in a public
railroad car. In fact, Dr. Bates notes that many cities' anti-spitting laws
were enacted as a result of the fear that TB could be spread through the
expectorant of a TB victim.
"The fact is, TB is not an easy disease to
contract," Dr. Bates says. Generally speaking, TB is transmittable only
when an individual has experienced close and prolonged contact with a patient
who has the disease, and when they are situated in an environment where
ventilation is extremely poor, she says.
Before the realization that most illnesses were caused
by microorganisms such as bacteria and viruses, it was popularly believed that
they were brought on by nighttime air or some malady-producing invisible gases.
For that reason, it was a common practice to keep doors and windows tightly
sealed against fresh outdoor air. When new immigrant families came to this
country and found it necessary to conserve their limited resources by living
together in crowded, congregate
situations, the result was an ideal environment
for a TB epidemic.
The observed threat of a TB outbreak merely
added to the prejudice which the immigrant poor experienced upon their arrival,
Dr. Bates says. That prejudice extended to the workplace, as well. Dr. Bates
notes that, just as many AIDS patients today are finding, TB sufferers in the
late 1800s were often shunned or fired from their jobs.
As a result of pressure from parents and public
school authorities, TB-stricken teachers found it difficult to get jobs or
insurance.
As Dr. Robert Sharrar, director of the Office of
Health Promotion and Disease Control for the Philadelphia Department of Public
Health, notes, there is just as much public alarm about disease transmission in
the current AIDS controversy.
SYPHILIS: Dr. Sharrar prefers to compare the
current AIDS uproar not with TB, but with another sexually transmitted disease
that had serious social and medical undertones until a cure for it was found.
"The thing is, AIDS can only be spread by
intimate sexual activity -- intercourse -- or by intravenous exposure to
contaminated blood, and from the mother to the child in-utero just about the
time of birth," Dr. Sharrar explains. "So the modes of transmission
are clearly different from tuberculosis."
According to Dr. Sharrar, a more suitable
comparison might be made to syphilis, which also is a sexually transmitted
disease, and which claimed 14,000 lives in 1941 -- before penicillin was
developed.
"The difference is that you don't die of
syphilis," he says. "What you end up dying from is the long-term
complications that occur, maybe 20 years after the fact. With syphilis, the
death wasn't quite as immediate as it appears to be with AIDS. But again,
you're dealing there with a sexually transmitted disease for which there was no
cure."
In addition, Dr. Sharrar notes that there is a
good deal of debate about whether or not AIDS victims pose a threat to
co-workers, fellow students and other people with whom they have normal, casual
contact.
"I think the issue that keeps popping up is
should a patient with AIDS continue to work? And the answer to that is 'Yes' --
AIDS is not spread by the kind of contact that takes place in the
workplace," he says. "You don't spread AIDS by using office machines,
telephones, drinking fountains, or through any other kind of contact which
typically comes into play at work."
In fact, a recent U.S. Supreme Court ruling --
which ironically involved the case of a TB sufferer -- makes it illegal to
dismiss an employee on the basis of AIDS.
TWENTY CASES A MONTH: Nevertheless, employers do
have a vested interest in helping to find a cure for AIDS as well as to control
the spread of the disease. Recent projections show that by 1991, loss of
productivity due to AIDS-related illnesses and premature deaths could cost
American industry approximately $55 billion. In Philadelphia, 633 cases of AIDS
have been reported since 1981. Currently the Department of Health receives
reports of an average of 20 new
cases each month.
According to Dr. Sharrar, the Center for Disease
Control projects that if the outbreak continues at its current pace, the
Philadelphia metropolitan area will have approximately 5,000 cases of AIDS.
That marked increase will undoubtedly place a burden on the medical care
system, he adds.
"One of the points I keep making when I
give my talk on AIDS is that this is one disease that everybody has to know
about, because it could, in fact, affect each and every one of us," Dr.
Sharrar says. "Therefore, an educational program for employees becomes
important in this respect."
As Dr. Sharrar notes, an employee who becomes
infected with the AIDS-causing virus and who goes on to develop AIDS will
certainly cost his or her company a lot of sick time. At the same time, these
individuals will be cut off from what statistically is the most productive
periods of their lives. Losing such employees will mean the added need to hire
and train new employees to fill those
positions -- always an expensive proposition to
most companies.
"Most of the cases so far have been young
to middle-aged men of all racial and ethnic backgrounds. So if you are talking
about people from 20 to 49 years of age getting AIDS, you're talking about
people who normally would be independent, productive, creative, and doing their
thing," he says.
One of the most dangerous generalizations is
that AIDS is a disease of only a certain class of people, he adds. Because AIDS
is a sexually transmitted disease, every member of society is at risk of
developing the disease.
EDUCATION: "I know of no sexually
transmitted diseases that is unique to the gay population," Dr. Sharrar
says. "Whatever sexually transmitted diseases occur there also occur in
the heterosexual population."
Whether or not the disease will spread in the
heterosexual community as it will in the gay and intravenous drug using
community may be debatable, but even if is transmitted to only one to five
percent of the cases of heterosexuals -- that still translates into an enormous
number of cases. And that's why it is particularly important to make sure that
accurate information is made available
to everyone, he adds.
"So I think education is very important to
protect your employees to guarantee that they will be able to do the work you
want them to do," Dr. Sharrar explains.
Hopefully, that belief will serve as a driving
force for the development of an effective means of caring for AIDS patients,
notes Dr. Susan Day, director of the Medical Clinic at the Hospital of the
University of Pennsylvania. She feels that challenge can be met best through
the mobilization of people in many different fields -- not just the medical
care field alone.
PRIVATE SECTOR INITIATIVES: And for an example
of how this might be brought about, one again can examine the historical
lessons of the TB controversy, says Dr. Lynaugh.
With the TB epidemic, various initiatives from
the private sector -- often led by benevolent groups such as churches and
social reformers who sought to provide proper shelter, food and nursing
services to stricken, generally helpless patients.
These voluntary organizations, working in
conjunction with representatives of the medical and nursing professions, then
enlisted the help and support of other entities -- including private business
and media.
"Eventually everyone gets involved in what
they see as being an important crusade," notes Dr. Bates.
Two significant results of the growing movement
against TB were: the development of specialized facilities for TB patients; and
greater efforts in research to find a cure for TB.
Naturally there were a few drawbacks. First, no
one knew for sure what a proper treatment for TB should involve. Some of the
more common treatments included lots of cool, fresh air and lots of food. TB
patients tended to deteriorate physically as their disease progressed. By increasing
food intake, it was reasoned, TB patients would build up their bodies and
thereby overcome the disease. Through such treatments, in fact, some
individuals did seem to improve.
As a result, facilities that showed limited
success with a number of people were able to promote themselves and thereby
attract additional miracle-searching TB patients.
FAMILY & FRIENDS: Although the value of such
institutional care from a medical standpoint may be questioned, the establishment
of a systemized care system did prove fundamentally useful -- in terms of hope
and shelter -- to individuals who lacked money and/or the critical support of
family and friends, says Dr. Lynaugh.
As Dr. Susan Day notes, there are many AIDS patients
in the same boat -- with very little social support from either friends or
families. And a number of specialized AIDS hospitals already have been
established, in part to respond to this situation.
On the downside, the pressure that was exerted
by many local health agencies to separate and isolate TB patients in such
institutions caused great consternation among both TB patients and the general
public.
Although in most cases a patient legally could
not be forced to stay in a sanatorium, laws such as the New York City
anti-spitting ordinance could enable local police to incarcerate a
"careless consumptive" in a hospital against his or her will.
That situation may pose even more dramatic
problems in the current AIDS controversy, suggests Dr. Bates.
"Even from the testing standpoint, concern
by the patient about subsequent public reactions could cause problems,"
she says. "Once you start separating and labeling a group of people, it is
more likely that they will simply refuse to be tested. So widespread AIDS
testing could prove self-defeating in the long run."
Part of the answer is greater emphasis on mass
public education. U.S. Surgeon General C. Everett Koop's campaign to increase
understanding of the disease, and President Reagan's recently announced special
AIDS commission represent a step in the right direction and has focused more
research dollars and attention on the problem.
But as Dr. Lynaugh notes, the search for a cure
is only part of the problem. Until that cure is found, society cannot overlook
the need to care for AIDS sufferers who must live with the disease.
ALLOCATING RESOURCES: The current situation
creates serious ethical dilemmas relating to resource allocation, adds Dr.
Bates.
"How do we provide custodial care to
patients who are diagnosed at an early stage of the disease? How do we pay for
custodial care? The public is much less willing to spend money on comfort and
care of people who are not going to get well," she observes.
Part of the answer may be in changing insurance
programs. Two insurance companies in Pennsylvania recently announced they would
begin covering the costs of testing and of prescriptions for the drug AZT,
which has been approved by the FDA for treatment of AIDS patients. The costs of
such prescriptions are expensive, however, running about $10,000 a year.
BUSINESS COMMUNITY'S RESPONSIBILITY: How society
will deal with the turmoil that expensive AIDS treatments will bring may depend
ultimately on the attitudes of the business community, notes Dr. Lynaugh.
"Business doesn't thrive on a society in
turmoil," she says. "That's why business has a special interest to
promote the image and the reality of a healthy community."
Given the experience of the TB epidemic in the
late 19th and early 20th centuries, the business community therefore is in the
most strategic position to urge innovations and to bring about greater efforts
in education, research, and, most important, the care of AIDS patients, she
says. By taking a lesson from the past, business, health professionals, and
community groups may yet develop an
effective means of working together to deal with
society's newest devastating and economically burdensome disease.
Until that time comes, the society that conquered
TB, smallpox and polio is again reminded that we are still, after all, mere
mortals.
Health Care Joint Ventures Are Hot
By Thomas Derr
04/15/1987
Focus
Pg. 58
PA, US -- ONE of the effects wrought by recent
changes in Medicare and private insurers' payment systems is that hospitals and
other health care services have been scrambling to find new, innovative ways of
raising additional revenues while cutting back on inefficient or unnecessary
costs.
One way this two-pronged interest has been accomplished
is through the rise of joint venture operations between various health care
entities.
"Joint ventures are among the hottest
things going in the health care field," says Jeffrey B. Schwartz, a
partner in the law firm of Wolf, Block, Schorr and Solis-Cohen. At the same
time, however, he notes that although the topic of joint venturing is receiving
an inordinate amount of publicity, joint ventures themselves still account for
only a small percentage of the changes which the health care field is experiencing.
Schwartz explains that joint ventures can
involve a broad range of interests, including: ambulance services, ambulatory
surgical centers, comprehensive outpatient rehabilitation facilities (CORFs),
durable medical equipment services, free-standing clinics, free-standing
emergency centers or surgi-centers, home health agencies, independent clinical
laboratories, mobile diagnostic services, outpatient renal disease services,
pharmacies, CAT scan services, and magnetic resonance imaging centers.
There is a main underlying reason offered as to
why health care entities might become involved in such joint ventures -- money.
"I think the bottom line is that most joint ventures are done for economic
reasons in terms of generating a profit," explains Henry C. Fader,
coordinator of the Health Law Group at Fox, Rothschild, O'Brien and Frankel.
But quite often, experts warn, that goal is far more difficult than it first
appears.
WIDER INVESTMENT: Glenn A. Shively, a partner in
the Management Consulting Services division of Coopers & Lybrand and a
specialist in the health care industry, says that changes in the tax law
combined with unprecedented levels of competition in the health care
marketplace may ultimately spur wider investment in the joint venture market,
which until now has been of interest mainly to physicians and others directly
involved in health care.
Institutionally, joint ventures are still of
value to non-profit hospitals, Shively believes. One potential advantage is
that the joint venture entity may avoid being subject to the state's
Certificate of Need (CON) program, whereby hospitals need permission to make
major capital investments, says Shively.
Shively cites a number of reasons a joint
venture could make sense for a non-profit hospital:
· It
provides a mechanism for increased patient flow and increased revenue.
· It
aligns the hospital with an experienced for-profit partner(s) with a particular
expertise.
· It
provides the opportunity to offer a broader array of high quality services to
patients at potentially lower cost.
· It
creates partnership opportunities between the hospital and its staff
physicians.
· It
can reinforce the image of the hospital as an innovative and competitive
enterprise, concerned with the well-being of the community it serves.
But how has the Tax Reform Act of 1986 (TRA),
with its broadside attack on tax shelters of all types, affected the viability
of such health care joint ventures?
According to John J. Hopkins, a partner in
Coopers & Lybrand's tax department, a properly structured joint venture
will generate what the Tax Reform Act defines as passive income to limited
partners.
"This is the only type of income one can
use to offset passive losses from existing tax shelters, such as real estate
limited partnerships," he notes.
Hopkins thinks there is a growing demand for
investment vehicles which will produce passive income, and that this fact will
soon generate greater interest in health care joint ventures among
nontraditional players.
Prior to the Tax Reform Act of 1986 joint
ventures that were based largely on tax shelter implications were easier to
sell to physicians who might be interested in investing a certain amount of money
in return for the tax sheltering of some of their income in the years ahead.
For example, physicians who invested in joint ventures could often get
investment tax credits on equipment purchased, and favorable depreciation on
medical buildings, and so on. Also, losses that were generated could be taken
by physicians against their practice income.
"You're really in a position now where you
can't take passive losses in these investments and apply them against your
practice income," says John C. S. Kepner, partner and chairman of the
Health Law Department at Saul Ewing Remick & Saul. For the ventures to be
salable to limited partner physicians, they have to be economic deals that
stand on their own and generate sufficient cashflow to be marketable to physicians.
It also helps if the joint ventures are what is
known as "passive income generators," he adds. In such cases, the
joint ventures produce passive income, defined as an income which is not
generated in the active business of a physician. This income can be used to
offset losses from passive losses from other investments, as well. Thus,
although the economics and the dynamics of the joint ventures may have changed,
they may still prove to be viable business enterprises.
THREE GROUPS: According to Kepner, there are
basically three groups of possible participants in a health care joint venture
-- the hospitals, physicians, and for-profit "entrepreneurs."
Currently the health care field is seeing
ventures between various combinations of those groups -- just the entrepreneur
and the hospitals; just the hospital and the physicians; the entrepreneurs and
the physicians; and in some cases, multi-hospital ventures just alone, or in
conjunction with the two other groups, says Kepner.
"The dynamics are quite interesting in that
respect, and the business and legal issues that come up are influenced
significantly by the specific kind of venture and who is participating,"
he adds.
In fact, the business dynamics are quite
different if there is an entrepreneur involved who is not just in it for
investment purposes -- in such cases the entrepreneur often plays the role of
developer/general partner, and looks forward to having a significant degree of
control over the project.
Such an arrangement provides a much different
motivating force than joint venture situations that might involve several
nonprofit hospitals -- who might be inclined to go to their participating
physicians to raise additional equity if the need arises.
MRI PROJECTS: How capital intensive the specific
kind of joint venture is will influence the way the deal is structured as well.
Some of the more highly capital intensive projects involve Magnetic Resonance
Imaging (MIR) centers, which are proving to be extremely popular.
"Because MRIs are so capital intensive, it
is not atypical for several hospitals to get together to do one of those
projects," Kepner explains. "It's also not atypical for an
entrepreneur to be the primary focus."
An MRI project, which is very costly, is very
different from durable medical equipment (DME) ventures, where the start-up
expenses are not as significant and there usually are no exorbitant capital
costs, such as the construction of a new building or the purchase of expensive new
equipment.
"You don't need a lot of money to get going
with a DME project," Kepner points out. "That will influence the
structure and dynamics of the joint venture."
One person who has had a unique opportunity to
see what can go wrong in health care joint ventures is Alan E. Morrison, senior
principal, Health Care Advisory Service of Laventhol & Horwath. Much of
Morrison's experience emanates from his firm being called in on an "after
the fact" basis. Often, when the joint venture operation has already
gotten into financial difficulties, the supporting bank or other financial
institution will contact Laventhol & Horwath and ask the firm to
participate in a "work-out," a term
derived from the banker's desire to "work something out" from the
joint venture's unfortunate financial situation.
REASONS FOR FAILURE: Morrison notes that there
are two major reasons why joint ventures often fail. The first reason is a
failure on the part of the parties to the joint venture to establish what their
common economic interests are. Without common objectives and an established
means of working together to reach those objectives, parties that are
frequently competitors in other arenas will have a tendency to pull apart,
rather than together.
The second -- and most common -- mistake that
joint ventures make is to initiate a joint venture project for providing a
particular service largely on the belief that the simple act of doing something
creatively will create a market for that service.
"I have seen a number of joint ventures
that were structured wonderfully, their legal documents were in excellent
shape, but the people involved overlooked one thing -- there was just no
business," says Morrison.
One of the more popular joint ventures for
hospitals and physicians, or hospitals and independent for-profit companies
involves the area of home health care. Although the hospitals may see what it
thinks is a potential market for a home health care service -- based on the
belief that a certain percentage of its discharged patients will require
follow-up home-based medical care -- that does
not guarantee that there is a strong enough
based of clients to support a new business enterprise.
FILLING A NEED: The joint venture will not
create the need just by offering the service, says Morrison. It may still
succeed, but it will do so because such a need really did exist, or because the
new joint venture was able to carve enough of a market share out of its already
existing competitors so that it would be successful.
"Too often, I think the parties tend to
overemphasize the importance of the legal and financial structuring of their
joint venture," says Morrison. "And in so doing, they tend to ignore
the basic business perspective. In other words, does the joint venture make sense?"
Anything can be a joint venture if it makes good
business sense, Morrison says. That's true either on an inpatient basis, which
might involve a hospital using leased nursing services from another hospital,
or on an outpatient basis, such as radiology or ambulance services.
One key area of concern for hospitals and
physicians in particular is what Medicare and Medicaid determine to be examples
of fraud and abuse, or of illegal remuneration, notes Schwartz, of Wolf, Block,
Schorr and Solis-Cohen.
On the surface, it would seem preferable to be
able to attract those physician/investors who are going to be referring
patients to the new MRI, surgi-center, or DME venture. If a physician is an
owner of a joint venture, he or she probably would he more likely to send
patients to that center because, as an investor, he or she wants to help ensure
the success of that venture. The problem is, that kind of referral may be
illegal.
According to Schwartz, it is unlawful for physicians
to knowingly and willfully solicit or receive any remuneration "directly
or indirectly, overtly or covertly, in cash or in kind, for referring persons
for any item or service or for arranging for acquisition of goods or services
for which payment may be made in whole or in part under Medicare or
Medicaid."
The theory offered above does not take into
account whether or not the joint venture operation really is the best place to
send a patient for the best quality care, or whether or not the physician will
unduly utilize or over-utilize that facility because it will make money for the
center -- and therefore create more revenues to distribute to the investors.
CRIME AND PUNISHMENT: Under Medicaid and
Medicare, it is a criminal act for a physician to receive remuneration in
exchange for a referral. The crime is punishable by up to five years
imprisonment, a $25,000 fine, and suspension from the program, notes Schwartz.
In addition, the statute is very broadly worded, so that federal authorities do
tend to enforce it very strictly.
But there are ways of accommodating the law,
notes Fader, of Fox, Rothschild, O'Brien and Frankel.
"If the physician receives his return on an
investment in proportion to the amount of patients or business he sends to the
center, then you clearly have a problem -- and there are millions of ways you
could fashion joint ventures to arrive at that result," Fader says.
The acid test is often whether or not counsel to
the partnership is able to give an opinion that there is no fraud and abuse
problem, he says. Most good attorneys do not lightly give opinions, especially
when it involves interpreting criminal statutes.
One key factor that should be considered in
structuring a joint venture to avoid fraud and abuse problems is that the
investor's return should be in proportion to the amount of his investment, as
opposed to his amount of referrals.
"If you have one twenty-fifth of the
ownership, you should get one twenty-fifth of the profits, losses and cash flow
from the partnership," Fader explains.
CAPITAL RATIONALE: A second factor to consider
is that physicians should be at some risk. In other words, there should be some
need or rationale for the physician's capital apart from just generating
referrals for the investment.
Needed capital for an expensive capital project
is a good rationale, Fader suggests: "It's different if you're investing
twenty-five dollars, as opposed to addressing $10,000."
Finally, Fader says his firm likes to see an
independent utilization review program in place at the joint venture. In such
cases, the partnership hires a medical consultant to come out, look at referred
cases and determine if they have been appropriately referred. Such an activity
could protect investor physicians from charges of inappropriate referrals as
they relate to the Medicaid and Medicare fraud and abuse statutes, Fader notes.
Another problem relating to the tax-exempt
status is currently being considered by the Pennsylvania state legislature. In
1986, one state representative from Erie County introduced legislation that
would have placed restrictions on the ability of nonprofit hospitals to
transfer funds to related corporations to fund for-profit activities. A series
of public hearings were held across the state on the topic; these hearings are
expected to be continued this year.
Apparently, the legislator is concerned that
some hospitals are taking unfair advantage of their nonprofit status by getting
into for-profit ventures and thereby have an unfair competitive edge with free
market businesses. A similar analogy on the federal level can be seen in the
recent loss by Blue Cross/Blue Shield of its tax-exempt status.
That is potentially a very important development
and could affect joint ventures because it could inhibit the ability of
hospitals to provide funding for these ventures, says Fader.
TRANSITIONAL PHASE: One thing that is beginning
to change as a result of the increased joint venture activity of these health care
providers is that there is less and less of a separate, "tripartite
system" among the hospitals, the physicians and the insurers, says
Laventhol & Horwath's Morrison. More and more, these three entities are
going through a transitional phase that likely will bring about a more
integrated health care provider network.
Of course, this has been one of the major goals
from the hospital's point of view for some time. Many times, in fact, in
situations involving a hospital/physician venture, the hospital could do by
themselves if they wanted to, says Fader. But what they are mainly trying to do
is to find a way to create staff loyalty, and to encourage physicians to
continue referring patients to their particular institution.
"Part of what is going on out there is that
hospitals are wooing physicians either within their primary service area, or
trying to go outside of their particular area to get people in," Fader
explains. "I think a good example of that is Graduate Hospital, which for
a long time was just a community institution. But they started all these
programs almost on a regional basis to try to attract patients which they
normally would not have gotten."
One of the ways they do that is by setting up a
center for some specialized service, such as sports medicine clinics or
nutrition counseling, or cosmetic surgery -- which is done in joint investment
with their physicians -- and say, "We will package you, market you, all of
that. If you invest X dollars we think you will make money out of physician
fees, and we will make money because you
will be sending patients into our
hospital," Fader says.
Basically, the hospitals are trying to convince
physicians in their area that their institution is the place where they should
practice medicine.
ALL-IN-ONE SERVICE: Another possible reason for
a hospital's interest in such activities is that at some point in the future it
will be able to offer an insurance provider such as Blue Cross or HMO, all the
services that provider might need for its patients within one institution.
"So as a result of generating loyalty from
their physicians, they hope to be able to package themselves as being able to
provide a lot of services to this very important segment of the market
today," Fader says.
Nevertheless, Morrison says he has seen too many
projects fall short to get excited about many joint venture programs, and both
sides -- hospitals as well as physicians or independent entities -- should
think carefully before they decide to get involved in a joint venture.
One of the key political issues in dealing with
hospitals is what seems to be a general expectation -- albeit an unspoken one
-- that if things do not work out as well as projected, that the hospital will
somehow bail out the joint venture operation. But that doesn't always happen,
Morrison says.
Obviously it is a good idea and it's important
to make sure that all the technical issues -- the legal, reimbursement,
accounting and so on -- are sorted out. But the real issue, the one that can
never be overlooked, is whether or not the joint venture is a good business
decision, says Morrison.
"Health care is a market-driven field;
people seem to forget that. You need to have a strong client base," he
says. "No joint venture I've worked on has ever failed because of a
technical issue. "That's why anyone who is considering a joint venture
should look at it from a realistic perspective.
"Chances are, if it seems too good to be
true, it is."
Trauma Centers Fill a Critical Need
By Thomas Derr
04/15/1987
Focus
Pg. 42
Philadelphia, PA, US -- ANYONE who has been a
regular viewer of the long-running (now syndicated) television show M*A*S*H
should be able to appreciate the basic concept of Pennsylvania's recently
activated trauma center system.
Generally speaking, the term "trauma"
refers to any form of physical energy that results in tissue injury -- usually
the term is applied to critical injuries sustained through a criminal act or
accident, such as shootings, stabbings, vehicular crashes, fires, bad falls, and
the like.
According to Dr. Stanton Carroll, director of
the Trauma Center for Albert Einstein Medical Center, Northern Division, the
basic concept of the trauma center system was established earlier in the
century during the world wars.
"It was based on the concept of military
medicine, where there were front-line hospitals, and attempts were made to get
wounded soldiers to the place where they could receive the best treatment
rapidly," explains Carroll. "That came to involve the use of both air
and ground crews. If you look at the history of medical treatment from World
War I through World War II, through Korea, to Vietnam, the time between injury
and treatment dropped anywhere from 12 to 18 hours to sometimes less than an
hour. At the same time, the survival rates went up."
That was a concept which many health care
professionals thought should be translated into the civilian population. In
some places, such as West Germany, systems were developed that were based on
the military-type systems. Carroll says. And the initial results were extremely
encouraging.
"I believe in West Germany, for example,
within a five-to-10-year period the rate of mortalities on car accidents was
cut in half," he says.
A BETTER CHANCE: The central theme of the
concept is that patients who meet certain medical criteria would stand a
significantly better chance of surviving if their initial acute care treatment
took place in a hospital with a trauma center -- as opposed to their being
treated in a non-trauma-center-type institution.
Here in the United States, major civilian
studies were done in the San Francisco area, which tended to support that idea.
Of course, most people who may require hospital treatment don't require a
trauma center.
"If you were to look at all the trauma that
occurs in the country, you would see that 90 percent of the people that have
some kind of traumatic injury can go to any regular, well-equipped hospital
emergency room and be treated," Carroll says.
Nevertheless, trauma remains one of the most
serious health hazards facing society today -- and also one of the least
recognized. Statistics show that trauma is the leading cause of death among
people between one and 44 years of age. For children aged one to 14, the
numbers are even worse
-- nearly 60 percent of all deaths result from
trauma in the age category. That's more than five times the number of children
that die each year as a result of cancer (10 percent).
In the general public the numbers run as
follows:
· More
than 160,000 Americans die each year as a result of trauma;
· 350,000
trauma victims are permanently maimed each year;
· It
is estimated that one out of every five patients who die from traumatic
injuries, dies of survivable injuries.
· Trauma
costs the American economy $563 million per day in lost wages, with the total
cost of trauma -- counting lost wages, medical expenses and indirect work
losses -- amounting to about $85 billion each year.
ECONOMIC IMPACT: According to Dr. John
Templeton, Jr., associate professor of pediatric surgery and associate director
of the trauma service at Children's Hospital, people under the age of 44 tend
to be at or near their highest levels of economic productivity. For that
reason, the economic impact of trauma-related deaths and injuries -- many of
which are preventable, he emphasizes -- is even more severe than the impact of
cancer and heart disease. According to Templeton, nearly four million future
work years are lost each year due to trauma. By comparison, heart disease
(which impacts a predominantly older population) is responsible for the loss of
2.1 million future work years; while cancer is responsible for the loss of 1.7
million future work years each year.
Currently there are four Level I trauma centers
in the Philadelphia area: Einstein Northern, Hahnemann University, Thomas
Jefferson University, and the state's first designated pediatric care Level I
trauma center, Children's Hospital. To receive designation as a trauma center,
hospitals must be able to guarantee a range of medical services, according to
Dr. Charles C. Wolferth, director of Hahnemann's Division of Trauma and
Emergency Services and professor of surgery.
These services include the 24-hour-a-day
presence of a certified trauma surgeon and an assistant surgeon, a
neurosurgeon, certified nurses, an anesthesiologist, a respiratory therapist, a
blood bank, a laboratory, a radiologist, and additional services for acute
spinal cord injury management, CAT scans, burn care, and a wide variety of
surgical specialties. Each Level I trauma center also must have a lighted
helipad in close proximity to the hospital emergency department.
CRITICAL DIFFERENCE: From the medical care
standpoint, there are only a few differences between Level I and Level II
trauma centers -- the main difference is in the hospital's commitment to
education and community outreach. And in the long-run, it is this difference
that may mean the most to the community which the trauma center serves.
One of the obvious educational programs which
the trauma centers initiate is training of police and other frontline personnel
who may end up in a situation where they must administer initial first aid or
triage services to a potential trauma patient. But there are other important community
programs in the works as well.
"Being a trauma center gives us a new
interaction with the communities we serve, and gets the hospital into the
position where it becomes more of a community establishment -- as opposed to
just a place down at the corner," says Carroll. "We get involved with
educational processes in the schools. I talk to Lions Clubs, school groups,
etc. It moves the hospital almost into the realm of a
church, synagogue, or a local charitable
organization, because you are out there interacting with the community."
To Children's Hospital's Dr. Templeton, that
community education role looms most important in terms of prevention. He notes
that Children's Hospital currently is engaged in an early education program
that tries to help show children how trauma happens, how they can prevent
accidents, and what actions they can take in certain emergencies.
"In the inner city, we especially try to
instill in the children the importance of having their homes adequately
protected by smoke detectors, so we can try to prevent many of the needless
deaths and injuries that result from fires," Templeton says. "Kids
love to be proselytizers, so we try to get them to be the fire wardens of their
homes by working with their parents to get smoke detectors and make their homes
safe from fire.
FORUM FOR PUBLIC ISSUES: In another vein, the
trauma centers can also serve as a kind of nonpartisan forum for public
interest issues, adds Hahnemann's Dr. Wolferth. He notes that many areas of
Pennsylvania, especially rural areas, still don't have an emergency 911 system.
By working with appropriate community and government leaders, trauma center
representatives can serve an extremely useful purpose in the community by
promoting such projects which can have a direct positive influence on the
health and well-being of the community the hospital serves, says Wolferth.
"Some of this education effort will be
pushing for certain changes in laws," adds Carroll. "Let's say for
example, a seat belt law. Clearly, in many people's studies, if there were a
seat belt law that said you had to wear a seat belt, lives would be saved. You
may never be able to get that kind of impetus, but with this kind of
educational and organizational process, that's a help. The drunken driving concept,
helmets on motorcycles, perhaps even gun control in the future. I think the
community gets an organization that's nonpartisan and helping it on an
educational level and as a movement or force to the city and the country. And I
think that's a role we will be placed in because we're going to see this kind
of problem. So the community gets a whole bunch of benefits."
Clearly, however, not every institution has the
resources, manpower, ability, or inclination to provide such an important role
to its surrounding region.
"The basic fact is, there are a number of
institutions that simply do not meet the qualifications required for trauma
center designation," says Michael J. Bradley, vice president for Health
Services and executive hospital director for Thomas Jefferson University.
"Mainly you will find that it's the large teaching hospitals, those who
have the capability of providing the enormous resources and
required commitment to rehabilitation, research,
education and quality assurance who are being designated as trauma
centers."
NEARLY NIL: For many hospitals who are already
caught in the financial crunch that is being promulgated by the Medicare
prospective payment system and other programs, the likelihood of initiating an expensive
trauma center program is nearly nil.
"Given the limited number of patients that
can be expected, and the expense of paying qualified general surgeons and
neurosurgeons to remain on call, one wonders whether or not some hospitals will
really be able to afford to institute a trauma center program," notes Dr.
Jerome J. Vernick, director of the Thomas Jefferson University trauma program.
"I know one institution that is paying more than $1.5 million to meet the
on-call physician standards set forth in the adult trauma center requirements.
Now that money doesn't bring even one more patient into the hospital -- it just
allows them to meet the standards."
Locally there are 1,000 major trauma cases that
occur per one million people in the adult population per year, Dr. Vernick
notes. Thus, the Philadelphia area can logically expect to see about 2,000 to
3,000 trauma cases each year.
Naturally, some other serious cases that don't
really require the services of a trauma center ("over-triage" cases)
can be expected, and may help to fill any patient void. But even so, it doesn't
seem economically feasible to buy a new trauma service just to take care of a
few patients, Vernick says.
Luckily, Jefferson doesn't fall into that
category, he adds.
"It's an endeavor that you undertake while
realizing that it may not be underwritten by the amount of revenues which that
particular endeavor generates," explains Bradley. "Some people look
at you -- including our trustees, who may give you a blank stare and say: 'Tell
me again why you want to do this.' And it's hard to explain that institutions
have a unique behavior, and a moral and ethical obligation. If we have the
capabilities and the need is there, then that's what we should be doing."
'TAKE THE PLUNGE': If everything that was
initiated in the history of American medicine had to stand on its own merits
from a financial perspective, many innovations and developments would not have
happened, Bradley says. In the case of many new programs, sometimes it's
necessary just "to take the plunge and make the commitment and, as time
goes on, prove the necessity and eventual merits and success of the case. And
that proof often follows later on," he adds.
Similar sentiments were expressed by Children
Hospital's Dr. Templeton. "From a cost viewpoint, it is a very expensive
undertaking," says Dr. Templeton. "One of the reasons is the amount
of staff involved. Typically, it takes more than twice the number of people to
treat children as it does to treat adults."
Children who are brought into a hospital setting
often have many more developmental reactions to their diseases and treatment
programs, he explains. As a result, there is a need in the hospital to provide
more services, such as bedside counseling, play therapy, as well as traditional
school classes, family-oriented therapy and training and even church services.
Another challenge which is unique to a
Children's Hospital is the need to keep rarely used pieces of equipment and
supplies on hand and available, so that any child may be cared for immediately
under any circumstances.
"Compared to adults, children have a very
small anatonic structure, and staff at regular hospitals often don't have
either the necessary equipment or the expertise to use it," Dr. Templeton
explains. "For example, a child’s larynx is positioned differently than an
adult's -- unless you worked with children every day, you might not realize
that at first. It also takes special training and skill to be able to get an IV
into a tiny vein that you can barely see -- but the medical staff of a
Children's Hospital have to be able to do that the first time, especially in a
trauma case."
SPECIALIZED EXPERTISE: Another example of the
specialized technical expertise which Children's Hospital must maintain involves
the physiological nature of the young patients. Water makes up a higher
percentage of a child's body weight -- which can make the determination of
proper drug and fluid dosages difficult, Templeton says. Again, the ability of
the medical professional to make the right decision swiftly often depends on
his or her direct experience in pediatric medicine.
"All of these reasons point to the
compelling need for a pediatric trauma center in this region." Templeton
explains. "And it is that need which we are seeking to fill."
At the same time, all the trauma center doctors
agree that the program should not be looked upon as a means of getting "a
step up" on a potentially competing hospital. Any additional psychological
prestige which a hospital is able to garner as a result of being a designated
trauma center is not likely to mean much from the standpoint of bringing in a
significant number of patients that it
would not otherwise have gotten, says
Jefferson's Bradley.
"Not all hospitals can be all things to all
people anymore," adds Hahnemann's Dr. Wolferth. "That's why we should
recognize the kind of commitment which hospitals that are designated trauma
centers are trying to make. At the same time, we can recognize that other
hospitals which should not be trauma centers might specialize as cancer
research centers or transplant centers."
Blue Cross: IRS Gets the
Blues
By Thomas Derr
02/18/1987
Focus
Pg. 144
Philadelphia, PA, US -- Thanks to the Tax Reform
Act of 1986, Blue Cross and Blue Shield plans across the country now enjoy a
tax status that is comparable to commercial property and casualty insurance
carriers.
Commercial insurers will probably greet this
news item with glee. After all, their Washington lobbyists fought long and hard
to persuade Congress to take away the Blues' tax-exempt status.
Consumers, no doubt, will be somewhat less
enthusiastic. As the Blues' costs of operations rise, thousands of subscribers
will probably be shelling out more for their premium payments.
"The other insurance organizations felt
that there was unfair competition," explains B. Michael Watkins, partner
in charge of the tax department at the Philadelphia office of Peat, Marwick,
Mitchell & Co. "The Blue Cross/Blue Shields were competing in their
marketplace for customers, and for premiums. Other insurance companies felt it
was unfair that they had to pay federal income taxes on their profits, but the
Blue Cross/Blue Shields did not have to pay federal income taxes on their profits."
That explains the extensive lobbying effort in
both the House Ways and Means Committee and the Senate Finance Committee. Both
groups apparently decided that something was amiss in the competition because
the Blue Cross/Blue Shields were tax exempt.
"Therefore they came up with the revocation
of the Blues' tax-exempt status and the treatment now starting in 1987 to tax
the Blue Cross/Blue Shield plans as, in effect, property and casualty insurance
companies," explains Watkins.
NOT FROM FIRST DOLLAR: According to the new law,
each Blues plan will now be taxed as if it were a stock insurance company.
Based on that guideline, the Blues' taxable income will be taxed at a 40
percent rate. But under a special provision, that income will not be counted
from the first dollar. Instead, the taxable income will include anything over
25 percent of the organization's total
claims paid and administrative expenses.
According to Paula Cholmondeley, senior vice
president/finance and chief financial officer for Blue Cross of Philadelphia,
that measure was inserted to ensure that the financial health of the
organization is safeguarded.
"They had to assume that the Blue
Cross/Blue Shields were still providing a service for the community,"
explains Watkins. "And their service, simply, is to provide insurance to a
broad range of customers and users of insurance. Now the government had to be
careful that they didn't put such an onerous tax burden on the Blue Cross/Blue
Shield plan that it would impact on the ultimate providing of insurance
coverage and services to those customers."
That's why the Blue Cross/Blue Shields did get a
few breaks -- situations of more favorable tax treatment -- more than even
now-existing property/casualty insurance companies have. Primarily, the federal
regulators wanted to ease them into this new taxable status, Watkins says.
"The government is saying it has determined
that you should probably be trying to maintain reserves that are at least
equivalent to the 25 percent," says Cholmondeley. "And only when you
go above the 25 percent does Uncle Sam feel that you are generating enough
profit where he wants a piece of it."
TWISTS AND TURNS: But the plot still has a few
twists and turns left in it.
"In addition to having to be concerned
about whether or not our profit exceeds the 25 percent in claims and
administrative expenses, there is another tax calculation that we also have to
go through called the Alternative Minimum Tax which has a rate of 20
percent," explains Cholmondeley.
"The Alternative Minimum Tax is a different
calculation and it is done purely based on the amount of book income that you
have. And basically, what it says is that when you compare the two
calculations, even though you may not be subject to tax under one tax
guideline, you could still be subject to tax under the other."
In addition, the Alternative Minimum Tax
calculation offers no special reserve deduction. Should the Blues have any
reserve income, that income must be added back into the Alternative Minimum Tax
calculation.
"Under the Alternative Minimum Tax
calculation, you do not get the shelter of setting aside 25 percent of your
administrative expenses as a reserve," explains Dick Leonard, tax manager
for Blue Cross of Philadelphia. "The Alternative Minimum Tax is basically
designed to say, 'Although we recognize you are an insurance company and need
to maintain a certain level of reserves, we still want you to be subject to the
payment of some level of tax. We don't want you to get away totally
tax-free.'"
But even the tax rates noted above will likely
be changing in a matter of months.
"The Blues currently are dealing with
either the 40 percent corporate rate for 1987, or the 20 percent Alternative
Minimum Tax rate for 1987," notes Watkins. "That corporate rate will
go down to 34 percent in 1988, presumably. It's scheduled to go down, because
the tax rate changes for Tax Reform go into effect July 1, 1987. So, in effect,
you only get half a year's impact of the tax
decrease in 1987. The full impact of the tax
decrease doesn't take effect until 1988. At that point it will go down to 34
percent."
ONE DECLINES, ONE STAYS to be many corporations
now paying tax rate will be declining, the Alternative Minimum Tax rate of 20
percent will stay the same. According to Watkins, the reason for the two
different rates is just to make sure that each organization does pay some fair
amount of taxes.
"If a company has book income, no matter
what they do from a tax planning viewpoint, they are likely going to be in this
20 percent tax bracket," says Watkins. "Whereas if they have enough
taxable income, then they will be in the ordinary tax bracket. There is a whole
theory of rationale as to why they enacted and beefed up the alternative minimum
tax, not just on Blue Cross/Blue
Shield organizations, but on all corporations.
There are going to be many corporations now paying alternative minimum taxes
who were previously escaping federal income taxes. Companies as large as
General Electric and people of that stature."
"Apparently, it was the large corporations'
creative handling of the tax code that caused Congress to say 'Hey, this isn't
fair, how can a multibillion dollar company not pay any income tax, yet Joe
Blow wage earner has to pay out 20-30 percent of his wages in taxes?'"
says Watkins. "So they came up with this Alternative Minimum Tax which is
so broad and sweeping that it does obviously
impact on Blue Cross/Blue Shield, as well as any
other corporation."
According to Cholmondeley, tax experts at Blue
Cross are still studying the new laws and what their impact on Blue Cross
programs will be. One Blue Cross of Philadelphia program that will be basically
unaffected by the change, is Delaware Valley HMO, which has been taxable all
along.
"We imagine that we will have to reach
conclusions on this during the first half of 1987," says Cholmondeley.
"But that doesn't mean there necessarily will be any immediate change in
what we do in the marketplace. Once we determine what the impact is, then we will
have to decide what the best way is for Blue Cross and also Blue Shield -- who
are our partners in this -- to respond. In addition, we also have to talk to
the insurance commissioner. So rates are all subject to their scrutiny and
review."
CRYSTAL BALL GAZING: The crystal ball of Peat,
Marwick, Mitchell's Watkins appears to be a little more clear. Obviously, any
organizations that pay income taxes have to adjust their product prices to
account for those taxes in determining what their overall net return on
investment is going to be or what their net income levels have to be, he says.
"So since the federal government has
imposed income taxes on these organizations, it more than likely will have some
kind of a ripple effect on increasing premiums that individual customers and
policy holders are going to have to pay," Watkins explains. "The fact
is, you have just added another expense to doing business for the Blue
Cross/Blue Shields which did not previously exist -- and obviously they can't
just absorb that. Their structure was set up where they were making whatever
level of profit they thought was suitable and necessary to operate their
businesses. Now they have another expense level -- federal income tax -- and
they now have to include that expense
in determining their premiums. Their cost of
business has gone up so they are going to have to have more premiums to pay for
that cost of business going up."
Whether this ripple effect will have a
short-term or a long-term upward impact on premium prices is unclear, he adds.
But the implications will likely soon be felt, and probably as soon as the Blue
Cross/Blue Shield plans determine what the impact of the new tax law is on
their particular operation.
According to Watkins, the Blues will have to
make their determinations, see what the costs are and then decide just how much
they can pass along, while taking into consideration what the competition is
providing.
"Then they have to decide whether or not it
can be passed along in one year, two years or three years, or however long it
may be. I really assume we will start seeing some of it fairly soon, depending
on the competition and the competitive impact of Blue Cross/Blue Shields being
able to increase their premiums in relation to other competitive products that
may be on the market," says Watkins.
COMPLICATED STRUCTURES: Cholmondeley says she
would caution against attempting to draw more of a conclusion than there really
is. She notes that Congressmen can never "be 100 percent" sure that
when they make some of their budgetary decisions as to how to raise income,
that they are not necessarily able to foresee all of the potential impacts a
change like this can have, because the whole economic structure is so
complicated, she says.
"I think somewhat it is going to be harmful
indirectly," Cholmondeley says. "But in the long run I think it
probably is going to be more harmful or detrimental to the average consumer on
the streets."
One of the things that Blue Cross has always
prided itself on is trying to develop a strong enough relationship with the
insurance commissioner that the organization is very responsive to its
subscribers in terms of trying to hold rates down as low as possible.
“And I think we have evidence of that in some of
the large refunds given back to subscribers. Whenever we have seen our reserves
accumulating, we have always tried to turn that back and refund them to our
subscribers or use them to keep our subscribers' premiums as low as
possible," Cholmondeley says.
"When you tax organizations such as ours,
you indirectly impact the consumer because you reduce that flexibility for
us," she asserts. "The only lesson I think that can be learned is
that the federal government has determined it needs to take its fair share, so to
speak, of our profits. In the past, they were foregoing them so that those
profits could be used for the consumer. Now they have decided it is necessary
for them to take those profits into the federal government coffers."
PREMIUMS GOING UP: That is probably the most
negative impact on the general population -- that premiums are bound to go up,
agrees Watkins. He adds that the Blue Cross/Blue Shield plans will try to hold
increases in line; they will be forced to, somewhat, due to competitive
pressures.
That competitive aspect could be the key factor
in determining just how far the Blues' premiums will rise.
"Just because your costs go up doesn't mean
you pass those costs along to your customer," Watkins explains. "If
there is a competitive product out there that is so strong and well entrenched,
and it is competing with the product of a Blue Cross or a Blue Shield, they may
not necessarily be able to increase their pricing on that product."
"I think it's hard to pinpoint what the
impact will be on specific products. Furthermore, I'm almost certain that it
won't be the tax law that will be determining how they price their products. It
will be the competitive nature of the industry -- even though they now will
have to take into consideration taxes as another cost element."
By Thomas Derr
02/18/1987
Focus
Pg. 140
Philadelphia, PA, US -- In recent years, the
battle for supremacy among HMOs in many sections of the country has been
nothing short of a slugfest.
The competition among HMOs in Philadelphia
meanwhile, has, until recently, seemed rather tame by comparison -- as if the
Marquis of Queensbury himself were refereeing the match. Now, apparently, the
gloves have come off. And from the looks of things, the fight for Philadelphia
may be the best donnybrook of them all.
According to certain informed sources, over the
next two years there may be as many as a dozen different players involved in
this high stakes battle. One of the most recent entrants is Keystone Health
Plan East, a new HMO entity which is owned by Pennsylvania Blue Shield.
"I think what's happening in Philadelphia
is that only 10 to 12 percent of the population right now is enrolled in
HMOs," notes Linda Taylor, director of marketing for Keystone Health Plan
East. "That's a relatively low figure. It means 88 to 90 percent of the
population is not enrolled in HMOs. And that's why I think there is so much
activity in the area today."
COMPLICATED ORGANIZATION: An indication of just
how complicated that activity may become can be found in the organization of
the Keystone Health Plan itself. According to Robert Shryock, marketing
director for Keystone Health Plans, Inc.
Keystone Health Plan East is one of three
independent but related HMOs which Pennsylvania Blue Shield operates in the
Commonwealth. Both Keystone Health Plan of Central Pennsylvania, which operates
in Harrisburg and the Lehigh Valley, and Keystone Health Plan West, which is
based in Pittsburgh, are owned 50-50 by Pennsylvania Blue Shield and the local
Pennsylvania Blue Cross organization. Keystone Health Plan East, however, does
not have a Blue Cross affiliation -- it is owned fully by Pennsylvania Blue
Shield.
Why? One of the reasons is that Blue Cross of
Philadelphia recently purchased its own HMO organization -- Delaware Valley HMO
-- and has since expanded its service area beyond the organization's original
base in Delaware County to include the entire five-county region of
Southeastern Pennsylvania. The Blue Cross unit even became the first federally
qualified HMO to operate in the state of Delaware.
According to Jim Dare, marketing director for
Delaware Valley HMO, based in Concordville, the organization's new approach is
designed to deal with the anticipated expansion of competing HMO organizations
in the area.
"Just to give you some perspective on the
trends in this market, we became operational in 1978. At that point there were
really only four players in the market, and one of those was from New
Jersey," explains Dare. "That has changed. What you are now seeing is
a proliferation. Now we can identify about a dozen players that we'll see in
this market in the 1987-88 time period. Of these dozen players, the largest is
HMO PA/NJ, and the second largest is Delaware Valley HMO. We have some unique
advantages that we hopefully will continue to have."
FUTURE ROLES: But will an increasing number of
players and a greater awareness of HMOs on the part of the general public
ignite enough increased demand to carry all the new HMO groups that are being
planned? Probably not, say most observers.
"It is conceivable that some HMOs will
decide that they are not in business to be a medium or large-sized player, but
they are here to command a relatively small niche and they will be content
reaching that niche and not going beyond it," explains Dare. "We may
see some of that, but I think we can definitely say there will not continue to
be 12 relatively important or strong players here. The market just does not
seem to bear up in the presence of some of the strong players who already have
their foothold."
But that doesn't mean that some of the new HMOs
will not be playing significant roles in the future marketplace.
"With all the new competitors, it's a new arena,
but only the strong will survive. There's no question about that," says
Keystone's Taylor. "I think what will happen is a lot of the HMOs that
have been in existence, along with the new ones, will definitely fall by the
wayside. We will not in 1990 or 1992, have nearly as many HMOs as we have now.
There is no way all the HMOs can be successful."
RETAINING CLIENTS: One of the advantages on
which Dare is pinning his hopes is his organization's ability to retain
clients. Delaware Valley HMO claims it has the highest member retention rate of
any HMO in the Philadelphia area.
"That figure shows that Delaware Valley HMO
continues to be sensitive to the market and primarily to what the employers are
looking for," he says. "Because the employers are the buyers, they
are going to be looking at these plans very, very intently. And they are going
to be making decisions in the coming years that they have not made in past
years. We're sensitive to that, and we think we are in a better position to
respond to what those employers are looking for because we have the
experience."
Similar sentiments are expressed by Lynne
Morgan, executive director of John Hancock Health Plan, which until recently
was the Philadelphia Health Plan, one of the original "big four" HMOs
that has resided in the city for several years.
"I think the Philadelphia market is one of
the last to see what has happened in the rest of the country as far as
continued growth of managed care systems -- both PPOs and HMOs," says
Morgan. "I think it is going to mean extreme competition. We still have to
provide a benefit package. And if we're federally qualified, that will be
dictated to us by the feds. It's generally better
benefits than a regular, straight indemnity
plan."
Morgan sees "something on the order of
eight or nine entrants" coming into this market at the present time. But
she also suggests that distinct advantages remain for those HMOs who have been
in the city the longest, and who have had an opportunity to develop significant
name recognition.
"Furthermore, I think any increased
competition will only serve to put us in the limelight more," she adds.
"In the event that there is a shakeout in the local HMO industry, the
names that people know -- the John Hancocks, HMO PA -- we'll all do fine. The
increased awareness will help us: It will be difficult for people who are not
well capitalized and who don't have the backing to follow
through. So in two to five years there should be
a consolidation."
HEALTHAMERICA BECOMES MAXICARE: One area
organization that has already become
part of such a major consolidation is
HealthAmerica, one of the original founding four HMOs in the Philadelphia area.
HealthAmerica recently joined a national network of HMOs which includes
Maxicare, a million-member plan concentrated mostly west of the Mississippi;
Healthcare USA; the Independence Health Plan of Michigan; GenMed in Southern
California; and HealthAmerica, which had most of its concentration east of the
Mississippi.
These HMOs consolidated into Maxicare, which is
now the largest investor-owned HMO in the country, according to Philip Hertik,
executive director of Maxicare/HealthAmerica in Philadelphia. Hertik looks forward to operating within the
new, more financially solid network, which he thinks will offer a number of
benefits to his Maxicare/HealthAmerica group, including: a strong reputation
for well developed management systems and well developed approaches to provider
contracting,
excellent market success and better promotion
capabilities.
Hertik foresees using Maxicare's greater
marketing and financial resources to build on its existing market share.
"We've developed a good quality reputation
in the Philadelphia area already," says Hertik. "We also market to a
fairly large number of employer groups where we feel we've established good
relationships. And we think that's very important. Our feeling is that the
employer groups will be less and less interested in offering a large number of
HMOs to their employees, and that they
will become more selective and more
discriminating in their evaluations of the various plans -- to the point where
they only offer those they think are of high quality, and accessible, and so
on."
In fact, Hertik sees greater discriminating tastes
on the part of employer groups as being the single most important factor in the
changing HMO arena.
"That factor goes hand in hand with the
growth in the number of plans and the competitiveness issue," Hertik says.
"In addition, we have to be aware of the entry into the marketplace of
major insurance companies which are attempting to develop HMO subsidiaries and
developing multiple product lines, as well."
MULTIPLE PRODUCT LINES: Hertik sees a movement
toward multiple product lines on the part of both the HMOs, coming from their
traditional perspective, and also the insurance companies, coming from their
traditional perspective. Each appears to be headed more toward a middle ground
of offering multiple product lines to employer groups, particularly in what is
often called "the triple option" type of products.
Possibly the best example of that triple option
is currently provided by Blue Cross of Greater Philadelphia, which, as noted,
recently purchased Delaware Valley HMO. That purchase surprised a number of
observers who began to wonder what would happen with the Blue Cross Personal
Choice program, which the organization introduced during the spring of 1986
with a highly controversial marketing campaign that was targeted against
existing HMO systems.
But where some people see the Blue Cross HMO as
a schizophrenic action, Blue Cross prefers
to look upon it as a way of filling different
market niches.
"I think Personal Choice will be set up as
a stand-alone unit, and there will be some cross-selling or synergistic
opportunities taking place," says Gary Michaelson, vice president of
marketing for Delaware Valley HMO. "If you look at the trade magazines and
forecasts, there is a strong belief that the PPO marketplace is going to have a
particular niche. If that is true -- and it seems to be true in other parts of
the country and it is therefore reasonable to assume it can be transported to
the Philadelphia marketplace -- then there is going to be a need for PPO.
Whether it is going to be formatted exactly as it is now, that is open for
discussion, just like out formatting is open to
discussion. We're all going to react to changes
in the marketplace, but I think the blurring that is taking place between
indemnity products, PPO products and HMO products is going to become even
greater, depending on what regulations come out of Washington."
According to Elaine Gallagher, vice
president/sales for Personal Choice, Blue Cross of Greater Philadelphia, the
acquisition of Delaware Valley HMO will not have any adverse impact on Personal
Choice. In fact, the ultimate overall result will be a very positive impact on
Blue Cross of Greater Philadelphia, she predicts.
TRIPLE OPTION: "We are soon going to be in
a position to offer employers the triple option," says Gallagher.
"That will position Personal Choice as the PPO product, DV HMO as the HMO
product, along with our traditional product. So we're not really looking to
materially change Personal Choice, or even the way in which we have marketed
Personal Choice. "We've been very successful and I really don't think I
want to tamper with success at this point in time."
The bottom line is that Personal Choice and
Delaware Valley HMO represent two different products which Blue Cross can put
in front of employers and employees in the Delaware Valley.
"We think that is going to give us a
strategic marketing edge over our competitors," says Gallagher. "No
one in this area that I am aware of has been successful in putting together.
Many have tried and many have failed."
"Personal Choice is a different product --
it's not an HMO," says Keystone Health Plan's Taylor. "And there is
room in the market for more than one product. Just like General Motors sells
Chevrolet as well as Oldsmobile. There is a similar type of situation here.
There is room for more than one product, and what is happening is that more and
more people will be switching out of
traditional health care coverage and going into
alternatives. Instead of calling it an alternative to HMOs, I would prefer to
say it is an alternative to traditional health care coverage. It's just a
different form of health care."
Taylor also sees advertising as playing a major
role in the future of HMOs.
"HMOs are now beginning to advertise on TV,
radio and in print more and more. There was a time when advertising was never
done, certainly not on TV, and not for health care of any sort," says
Taylor. "You just didn't see it. But those days are changing. I think once
advertising becomes commonplace, the educational process will speed up quite a
bit because people will begin understanding what the HMO is all about."
SIGNIFICANT ADVANTAGES: She notes that HMOs can
offer significant advantages in terms of cost effectiveness and convenience, both
of which will become more and more important as awareness of HMOs increases in
the Philadelphia area.
"For example, women in this country still
die of uterine cancer, and they don't have to," explains Taylor.
"They do have to catch the cancer early enough, but because many women
don't get their annual or semiannual PAP and pelvic tests, those problems
sometimes are missed. And that's what HMOs help to do. In my own case, I know
it's a lot easier for me. It's convenient -- I just make a phone call. I don't
have to worry about paying for the exam and that makes a difference. I think it
makes a difference for a lot of people."
There is a huge potential out there for
additional HMO enrollment, she adds. But only the strong HMOs will continue to
be here.
"And those will be HMOs with the right type of backing, the right type of reputation, the right type of relationships with both employers and physicians. I think that's really key," Taylor says. "Relationships are key -- how you set up in the beginning, how you continue to operate, what your structure is, all those things will be key in the future. "I think the fun is about to begin. What will happen is that the strong HMOs will be here, and the others will not."
Who's the Doctor?: Insurers or Physicians?
By Thomas Derr
01/14/1987
Focus
Pg. 42
PA, US -- The implementation of DRGs and other
cost containment mechanisms undoubtedly has had enormous impact on the
continued growth of health care spending.
Theoretically, by refusing to pay for
"unnecessary" or "uncalled for" tests and therapies, the
DRGs are limiting expenditures that might otherwise have added to a patient's
hospital bill.
That's all well and good. Or is it? As Dr.
William Kissick, who holds an endowed chair as the George Sekel Pepper professor
of public health and preventive medicine in the school of medicine at the
University of Pennsylvania, and who is also a senior fellow at the Wharton
School's Leonard David Institute of Health Economics, explains:
"A physician is presented with a clinical
problem and tries to address that clinical problem in terms of a therapeutic
strategy. Now that therapeutic strategy often involves a selection among an
array of drugs, therapies, diagnostic studies and so forth. He or she tries to
make the selection in the best interest of the patient in order to benefit the
patient as much as possible. So there is all sorts of complicated
decision-making going on."
Under the DRG program, the physician who has
been making all of those decisions on behalf of the patient, is now obliged to
make cost decisions too. The problem is that the physician has been trained to
make biomedical decisions -- not cost decisions.
"Therefore, the way organizations such as
the insurance companies, the government, and so forth have approached this
problem is to say: 'OK, physician, you make the clinical decisions and we'll
make the cost decisions,'" says Kissick.
"I think this is what makes physicians
madder than anything else," he says. "And it would make me mad -- if
you are my patient and I set out to treat you, and then before I can treat you
I have to call an insurance company and have a clerk tell me whether or not I
can do it. Now, in my eyes, the clerk is practicing specialty medicine."
FAIRLY STRAIGHTFORWARD: Obviously, the answer is
not that simple, Kissick adds. And for the most part, a physician's decision to
order a certain test or to prescribe a certain type of therapy will be fairly
straightforward.
"The problems lie in those enormous gray
areas in medicine, where the clinical diagnosis is unclear, the treatment
patterns may vary considerably throughout a community, and more important, the
peculiarities of the individual patient come into play," explains Charles
F. Pierce, Jr., president of the Delaware Valley Hospital Council, Inc.
"And I think it is in this gray area where there is mounting concern. It
is probably because Medicare is the biggest payer, but clearly they also have
one of the most aggressive programs."
Pierce notes that with a predetermined set of
standards, many kinds of procedures are outpatient procedures, and seem to be
somewhat inflexible in dealing with patients. Although there may be a standard
way to deal with a patient on an outpatient basis, that standard way may not be
appropriate for all patients.
"You may have a patient who is disoriented
and who lives alone. True, that's custodial care, but that kind of custodial
care may be necessary for the treatments to be successful," Pierce says.
"I think that's the area where we have a lot of anxiety and growing amount
of antagonism between the physician and the payer. Furthermore, I think this is
an issue in which we can expect to see a
growing amount of antagonism and analysis, at
least for the short-term future."
The possibility that economic restrictions may
unduly influence a physician's practice of medicine has other serious legal
ramifications as well. Dr. Joshua Barnett, M.D., is a neuroradiologist at
Presbyterian Hospital. At the same time, he is a graduate of the Harvard Law
School and he teaches summer classes at Temple Law School.
"It does raise an interesting question, and
that has to do with malpractice," explains Barnett. "We hear a lot
about defensive medicine, which is a very difficult topic to define. People
often talk about it as if it were something very easy to distinguish. Some
physicians will say: 'Well, I ran such and such a test, but I wasn't sure the
patient really needed it.' It's the idea that you had to give this patient a
complete work-up and because you were being very defensive and very
'malpractice conscious'."
Such a situation may happen, Barnett concedes,
but he adds that he can't imagine it being a part of a physician's train of
thought.
"I think there must be very few physicians
who say: 'Well, I'm not sure I really need that X-ray because I'm going to
protect myself from a future malpractice suit.'" Dr. Barnett adds.
"It's just a very odd way of thinking. But everybody talks about it.
People write commentaries on it and lawyers talk about it."
INFLUENCE OF REGULATORS: But the growing
influence of federal government and
insurance company regulators cannot be ignored.
"Essentially, the government is saying:
'Listen, you have four days to take care of this patient and we're going to pay
you X number of dollars for it, plus we're not going to pay for investigation
of certain things," Barnett says. "For example, we aren't going to
pay for a particular procedure which may detect a disease that has an incidence
of one in 1,000, because we don't think it's cost
effective to do 1,000 procedures to detect one
illness whether it be cancer or anything."
The medical profession became very upset about
the new limitations and the subsequent malpractice implications which might result.
"For example, if a hospital can't do a CAT
scan because it can't get a certificate of need, then what is the status of the
ambulance that picks up a patient who has a head injury and takes him to that
hospital rather than another hospital that has a CAT scanner?" asks
Barnett. "You can't have it both ways. You can't say we can't do
such-and-such, but we're liable for not doing such-and-such. That's just too
big. You know, lawyers are nothing if not innovative and they will seize on
that, but whose fault is it? It's clearly not the hospital. It's not the
physician."
The real risk will become apparent if or when
money begins to be emphasized as the bottom line instead of quality, because no
physician and no lawyer is going to defend a malpractice case on the grounds
that something was not done for a patient because there was no money to pay for
it, Barnett adds.
"I think the government has, in essence,
said: 'We're going to squeeze you a little bit, but you had better keep on doing
what you were doing, because we're certainly not going to hold you harmless in
any liability," he says. "And I think physicians have responded by
doing exactly that. They've said: 'OK, we're being squeezed. It was inevitable,
but it is not going to influence the quality of our medical care.' They were
able to do that because of the hospital's being able to cut costs in various
areas of medical care. But how much more they can cut it, I have no idea."
One person who has strong feelings on the
limitations being placed on physicians is Dr. Frank Bove, president of the
medical staff at Methodist Hospital, and medical director of the hospital's
Home Care Division.
"I don't think (the government regulators)
are really practicing medicine, but what they are doing is putting such
restrictions on us so that you are damned if you do and you're damned if you
don't," Bove says.
For example, with a given disease, the hospital
is allowed to keep a patient for a maximum of six days, Bove explains. If the
patient is kept for a seventh day or longer, the hospital does not get paid for
the extra time.
"Now, if you abide by that and by some
magic get the patient out in six days and, by golly, he has to come back in
four days, they get you by saying: 'This is a readmission for the same reason
that he was admitted in the first place.' In that case, they won't pay the
hospital for the second admission because it's a readmission. And not only
that, they say: 'You people should not have discharged the patient in the first
place.'"
CATCH-22: Bove calls it a "Catch-22"
situation that is having a slow but growing effect on his medical staff.
"We're starting to get denials of
admissions that occurred last April and March," he says. "The
regulators write to the patient and they tell the patient that he or she should
not have been in the hospital. And they somehow word it so that it sounds like
it's the doctor's fault that all this happened. And on top of all that, they
tell the patient that he is now responsible for the hospital
bill because they're not going to pay for it on
the grounds that the doctor could have done what he did on an outpatient
basis."
The denial of payment can be appealed if the
hospital is notified and is able to respond within a set period of time and, in
fact, most cases are won on appeal. According to DVHC's Pierce, many insurance
companies, and other third party payers, particularly Blue Cross, have a very
quick appeal mechanism.
"When their reviewer says a case was not an
appropriate admission, the physician can challenge him and generally they get
together very quickly," says Pierce. "That is not the story we're
hearing about KEPRO."
KEPRO is the Pennsylvania Medical Society's peer
review organization that by law must review all admissions and treatments for
Medicare. KEPRO performs its duties through an agreement with the Department of
Health and Human Services and its subgroup, the Health Care Finance
Administration, a contract it has with the Commonwealth of Pennsylvania. Much
of the controversy mentioned by both Pierce and Bove seems to stem from
"the arbitrary nature" of KEPRO's Medicare denials, as well as the
fact that the HCFA has, in essence, instituted a quota system for the denials
which KEPRO must meet.
"That makes the physician the guy in the
middle, because he has a patient who is sick and he has the hospital that he
wants to keep alive and viable. Otherwise, where will he put patients if the
hospital goes under?" says Bove.
"So in order to protect both the patient
and the hospital, you really have to be a genius," he adds. "At the
same time, if you do send the patient home a little bit quicker but they come
back again, then, according to KEPRO, you're not a good doctor because you
didn't keep the patient in long enough.
According to the University of Pennsylvania's
Kissick, the ideal answer will probably never be found.
"In my experience, the best way that is
approached in our society is at Kaiser-Permanente," explains Kissick.
Kaiser-Permanente has been called the prototype of the modern Health
Maintenance Organization (HMO). Founded during the 1930s as part of Kaiser
Industries, the organization went public in 1945 and has since grown to include
more than five million people in over a dozen states.
According to Kissick, the Kaiser-Permanente
organization features a plan that structures the tension between the physicians
in the medical groups, and the administrators and the plans in the hospitals.
"Basically, they organize the physicians
into group partnerships. And those group partnerships' physicians negotiate for
resources along with hospital administrators -- the management side. And the
two of them negotiate as peers for resources from the plan, which is the
beneficiary resource. And they have developed and perfected that over 50
years," Dr. Kissick explains. "They say it's a compromise, and there
is no right answer. The best analogy for me is in the legal system. We don't
know what 'truth and justice' is. But if a jury says "yea," it is, by
definition, just and true. Well, Kaiser says the two elements negotiate. And
they come to a clinical cost compromise."
COMING TOGETHER: According to Dr. Kissick, the
modern HMO is the preferred model
because it (hypothetically, anyway) offers a
means by which the physician and the patient can come together in a
collaborative relationship.
"The bottom line is -- we cannot do
everything that needs to be done for the health care of all the people in our
society. The ideal state is impossible. Now what are the approximations that we
develop? That is the generic, abstract problem. And what we are encountering is
that as we try various approaches, there are unforeseen side effects. And there
is a lot of complaining,
frustrations and mistakes," Kissick says.
"The president of Kaiser several years ago
said it very well," he adds. "We are not the panacea of healthcare,
anymore than we were the pariahs in 1950. And in 1950 they were really on the
outs."
The problem is that American medicine has been
"idealized" for its emphasis of free choice of physician, sole
practice, and fee for service, explains Kissick. But that ideal has been built
in a non-market economy in which a third party or a fourth party was paying the
insurance.
"If I admit you to a hospital, you
theoretically get two kinds of services. You get my services and you get
hospital services," he says. "The hospital has been a schizophrenic
organization historically, because the hospital administrator is responsible
for the budget and whether or not the hospital lives or dies. But all the
purchasing decisions are made by the physician. The physician decides how long
you are going to be in the hospital, what we do to you, what laboratory
studies are done, etc."
That situation is further compounded by the fact
that both the physician and the hospital have historically sent their bills to
a "disinterested" third party -- Blue Cross, Blue Shield,
Metropolitan, or Prudential.
"And they just paid whatever bill we sent
them," Kissick says. "The hospital was paid retrospective cost
reimbursement. Once they made the expenditure they sent the bill. And, as I
have said in the past, that's the equivalent of my giving my American Express
card to my daughter and telling her that I will reimburse the expenses on a monthly
basis. So what the hell is going to happen?"
Not only is the doctor getting his fee for
service reimbursed, but he or she is also determining both the services and the
fees. These services and expenses are then reimbursed by third-party agencies that
for many years simply totaled up the expenditures, increased the premiums, and
passed the costs on to major private payers.
Of course, the implementation by the federal
government of Diagnostic Related Groups has had an enormous impact on the
hospital part of that payment structure.
"Because of the DRGs, the hospital now is
reimbursed a pre-set lump sum for, say, a myocardial infarction, but the doctor
still charges his or her fees," Kissick explains.
LUMP SUM PAYMENTS: One of the government's most
recent propositions, he adds, is to pay the hospital one lump sum for the
hospital services as well as the physician services, and then let the hospital
and the physician decide who gets how much. In other words, treat the two
groups as a single entity.
"Well, what the government is trying to do
is what Kaiser already does," he says. "Kaiser treats the medical
services and the hospital services as a single entity. Now the government is saying
let's try that for the hospitals of the country and the doctors of the
country."
But will the government be able to do it as well
as Kaiser-Permanente? Probably not, mainly because of the enormous scales
involved. The Kaiser plan covers a total of about five million people. The
government's plan would involve more than 30 million Medicare beneficiaries.
Anyone who has ever witnessed the federal
bureaucracy's attempts to handle an operation on a grand scale -- whether it be
the postal service or an international arms transfer -- can draw
their own conclusions about how successful such
a health plan would be.
The bottom line is: we still have not seen the
final shakeout from the government's health care cost containment mechanisms.
Clearly something must be done to forestall the upward spiral of medical
inflation. But at what price?
"During the '50s, '60s, and on into the
'70s, a physician's clinical decisions were unconstrained by cost
considerations," says Kissick. 'No cost is too great to save a human life'
was the exaggerated statement. Now what we are facing is the reality that
resources are not limitless."
But what can be expected of the modern physician
in view of increasingly limited resources, increasingly limited treatment
options and ever-growing malpractice insurance premiums?
Perhaps Presbyterian Hospital's physician/attorney, Dr. Barnett, offers the best answer: "Physicians ask me, 'Well, you're a lawyer. How do I protect myself against being sued?' I say it's very simple. You just practice the best medicine you know how. That's all. There's nothing magic about it. You don't order tests the patient doesn't need, you just do what you were trained to do and that's basically it."
By Thomas Derr
08/13/1986
Focus
Pg. 80
PA, US -- A nurse is not a nurse is not a nurse.
So says Ann O'Sullivan, Ph.D., R.N., at
the University of Pennsylvania's School of
Nursing. What prompts this Gertrude Stein-like statement is what Dr. O'Sullivan
describes as an exciting and innovative alternative for individuals educated in
the nursing profession who are not satisfied with "traditional"
nursing roles.
"Nursing, per se, is a very provocative
profession," says Dr. O'Sullivan. "It's provocative because you can
do many things in nursing. You can do what most people know as nursing --
bedside nursing, changing bedpans -- the kind of thing that gets played up on
soap operas each afternoon, or you can get involved in the corporate world --
working to support the efforts of the corporation in many different ways."
CORPORATE SECTOR: According to Dr. O'Sullivan,
as many as one-third of the nation's one and a half million nurses are
currently involved in the corporate sector, and their responsibilities vary. In
one realm, corporation nurses are involved in doing hands-on clinical kinds of
nursing, which can include managing employee illnesses or doing corporate
physical examinations.
"Primary care nurses work with individuals,
and have a lot of hands-on experience in diagnosing and treating common
ailments and illnesses -- things that traditionally have been part of the realm
of medicine, such as headaches, stomach aches, muscle aches and strains, ear
aches, sore throats, and so on," she says. In the past, only physicians
diagnosed and treated those kinds of problems, but now nurses who have been
trained with the necessary knowledge and skills can provide those services in
hospital clinic rooms, in private physician offices, or in a corporate
environment, according to Dr. O'Sullivan.
Many corporations are hiring that kind of nurse
to complement their staffs of physicians for a number of reasons, she notes.
First, nurses command a salary which is less than that which must be paid to
physicians, even though the type of work performed by the nurse and doctor may
not be markedly different -- particularly as it involves physical examinations
or treating minor ailments.
DOVETAILING: "Nurses also tend to enjoy
performing these kinds of services more than the physicians because the
physicians have been educated to do a lot more -- the minor ailments were never
their primary focus in the first place, and so they did not maintain their
expertise or interest in doing just those minor common illnesses," says
Dr. O'Sullivan.
On the other hand, nurses who are educated to
handle such minor illnesses find the work dovetails nicely with their level of
expertise, she says. Because these nurses are interested in doing that kind of
work, they tend to enjoy their jobs more, and they stay with their jobs longer.
In addition, their work in these positions can lead some nurses to go on into
more specialized areas of health
care -- such as patient education.
"When nurses talk to parents of children, we
call it anticipatory guidance. But in adults it is referred to as wellness,
self-improvement, or self-care, and that is what a nurse would talk to an
employee about -- this idea of self-care," says Dr. O'Sullivan.
ONE-ON-ONE: Nurses and nurse practitioners who
have a community or occupational health focus have proven to be particularly
adept at this kind of individual, one-on-one intervention, as well as with
groups of people, says Judith A. Smith, Ph.D., R.N., also of the University of
Pennsylvania's School of Nursing. For example, in the corporate environment,
workers who are required to sit before computer monitors or at their desks for
eight hours each day can be susceptible to a variety of job-related problems,
such as stress, eye strain, and other problems that are often associated with a
sedentary life-style.
"The nurse would provide some sort of
exercise routine, or would initiate a program to aid relaxation, or would check
their vision to see if they are suffering from eye strain -- thereby addressing
those kinds of potential problems that might affect a particular group of
employees and add to people's ill health," Dr. Smith says.
One area company which uses nurses to work with
corporate clients is Corporate Health Management Center of the Delaware Valley,
which marketing representative Sandy Weiner describes as "a healthcare
cost containment and health promotion company" which provides a wide
variety of services to firms that may employ from 100 to 15,000 people.
SCREENING: "We will often use nurses in our
business either in a marketing role or in a screening project. An example of
that would be a blood pressure screening held at a corporate site in which we
would use nurses, nursing students or nurse practitioners to help with the
screening," says Weiner.
Weiner's company also provides cardio-vascular
screenings and risk assessments at corporate work sites. During these
activities, CHMC will bring in doctors, cardiologists, exercise physiologists,
phlebotomists for taking blood, as well as nurses, Weiner says. And the nurses
play a "very, very key role as far as making sure the tests are being done
properly -- which is a different responsibility than when they are working
under doctors in a hospital situation," she says.
It is often the nurse's responsibility to
determine which tests are appropriate for different employees, Weiner says,
noting that the nurse is trained to assess various risk factors that can
foreshadow the probability of many serious diseases or conditions.
It is not cost-effective from the corporation's
standpoint to run the full battery of tests on all employees, says Weiner. For
example, you might want to give an EKG to an individual who is 35 or 40, but if
that individual is a marathon runner, that test would be a waste of the
company's money. At the same time, if a 20 year-old company secretary is
overweight, smokes, has diabetes,
and a family history of heart disease, then the
test would be warranted. Deciding on who should and should not undergo certain
tests is the nurse's responsibility.
CONFIDENTIAL PROBLEMS: In addition, CHMC works
with companies to establish Employee Assistance Programs -- preventive
counseling services that are set up by the company to offer confidential help
to employees who may have personal problems that may affect their work. Typical
problems involve alcohol, gambling, and substance abuse, but they can include
cases related to single parenthood and situations in which employees must care
for terminally ill or elderly and infirm relatives at home.
"We maintain an 800 number for employees to
call, 24 hours a day, seven days a week. That phone service is staffed by
psychiatric nurses. They might talk to a caller once and work out the problem
on the phone, or in a crisis situation, they may have to refer the caller to an
appropriate crisis intervention facility, and then follow-up to ensure that the
necessary service is provided. That involves something which is a little bit
different from 'typical' nursing duties," Weiner says.
"From our company's standpoint, the main
thing is that, depending on what kind of background the nurse has, or her
personality, he or she could have many skills that are transferable to the
corporate world," Weiner adds. "Nurses usually have very good people
skills. And that advantage, plus their health care background, makes them a
wonderful asset for companies such as ours."
UTILIZATION REVIEW: Another area that has proven
to be a major avenue of employment for nurses in the corporate world involves
utilization review. Utilization review, case management, and risk management
are similar areas wherein a corporation may hire nurses to go over employees'
medical records to determine whether or not the most appropriate health care
service has been
provided.
Corporations are finding that nurses are
especially adept at this type of work because they usually have had hospital
experience, they understand medical charts and the overall concept of patient
care, as well as the kinds of debilitating and handicapping conditions that
figure so prominently in
job-related injuries or long-term illnesses.
LAWYERS often hire nurses in lieu of or in
addition to insurance examiners to review medical records, says Penn's Dr.
O'Sullivan. In addition, rather than hiring a physician to review a medical
record, lawyers will often hire a nurse to give them direction and guidance as
to where malpractice may have been involved in a particular case.
"From the insurance perspective, it is
important to investigate the idea of: 'How can you manage this case better so
that we can get this person up and on his feet and doing something? Perhaps a
worker can't do what he or she was once able to do, but what other employment
opportunities might be open to them?" notes Dr. O'Sullivan.
Corporations also have hired nurses to go into
hospitals and see that their physicians are managing cases as appropriately as
possible. There have been instances where patients have been kept in the
hospital a day or two later than was medically necessary because an earlier
discharge had not been planned, or because the patient did not have a hospital
bed at home, or because a visiting
nurse service had not been assigned to the case
in time, says Dr. O'Sullivan.
Nurses can play an instrumental role in seeing
that the healthcare delivery system is utilized most effectively to best
satisfy each worker's health needs, she says.
MANAGERIAL: In fact, managing the healthcare
delivery system is something at which nurses should be particularly adept, says
Claire M. Fagin, R.N., PhD., F.A.A.N., dean and professor of the University of
Pennsylvania's School of Nursing.
"There is no nursing job in the world that
is not managerial," says Dr. Fagin. Even new nurses must exercise
management skills in the handling of the 5, 6, 7, or 8 patients that are put in
their charge, she adds.
Dr. Fagin notes that more and more nurses are
becoming involved in areas of the healthcare marketplace that are
"quasi-care" and "quasi-educational" in many respects.
Utilization reviews, fitness programs, and patient education programs at
corporate sites are good examples of what nurses can do outside the typical
hospital setting, she adds.
“When you think about it, who else has the
overall perspective and sensitivity to patient needs that a nurse has?"
Dr. Fagin inquires. "Only the nurses have the chance to see what's going
on everywhere in the healthcare environment. And now we are beginning to take
advantage of the opportunities that are out there."
Dr. Fagin says that the nursing school at the
University of Pennsylvania is at the "leading edge" of institutions
providing educational programs for nursing students which go beyond the
traditional hospital care setting.
"Our purpose is to educate students so they
can address the health care needs of today's and tomorrow's marketplace,"
notes Dr. Fagin. The growing presence of nurses in the corporate world
represents one very important example of how that approach has been successful,
she adds.
QUALITY CARE: Marie Constance-Ross, R.N., serves
as the Administrative Director of Medifit, a subsidiary of Med-Services
Management Co., Bala Cynwyd, a healthcare cost containment consulting firm
which offers a comprehensive approach to corporate health planning, with
special emphasis on the areas of utilization management, hospital bill review,
and health care plan design.
According to Ross, her Medifit staff consists of
registered nurses who use their professional background to ensure the effective
administration of quality care for corporate clients, as well as by monitoring
charges so that only those which are appropriate are paid.
"Our staff members look closely at the
medical records of our corporate clients' to determine if the health care which
was administered was appropriate. If we find that there was, in fact, some
mis-utilization, we then negotiate on behalf of the client for an appropriate
modification of the bill," says Ross.
In addition, her nurses will compare the
corporate employees' medical records against the hospital bill to verify that
all billed services were actually necessary and provided. Ross says the process
is much the same as that which a restaurant diner performs when comparing the
menu bill against dinner items that were ordered. On the average, such
comparisons (and subsequent negotiations) can save her clients ten percent off
their medical hospital bills.
"In one instance, we actually saved a total
of $400,000 for a corporate client," Ross says. "When you begin to
talk about numbers of that magnitude, it's easy to see how important such cost
containment programs can be, especially for those corporations that are
self-insured."
Ross notes that her nurses are highly trained
professionals with strong backgrounds in the clinical areas. Furthermore,
because of their background in the healthcare provider arena, her nurses tend
to be cognizant of the needs of the consumer, and are thus able to reach
creative solutions by working from both ends of that spectrum -- a factor which
also helps protect the healthcare rights of her corporate clients.
ENVIRONMENTAL PROBLEMS: A third means by which
corporations make use of nurses is in an environmental arena. Basically, this
involves investigating the environment in which an employee works, and then
dealing with any problems or potential hazards that may result from it.
One individual who has been directly involved in
such activities is Phil Greiner, a registered nurse who did his master's degree
training under Dr. Smith at the University of Pennsylvania, and who is now an
assistant professor of nursing at Villanova University, and executive director
of the Wellness Council of Southeastern Pennsylvania.
The Wellness Council is a federation of
corporations in the Delaware Valley who work together to emphasize employee
health, with the idea that workers are more productive if they can be
encouraged to manage their own health better, he says.
"We have observed a groundswell of support
within the business community," says Greiner. "Company executives
have begun to recognize the value of such programs. They agree that wellness
programs can be of significant benefit to their employees and, in the long run,
be a positive influence on their own attempts to hold down employee health care
costs."
As an example, Greiner notes that an antismoking
program implemented by Tenneco resulted in a cost savings of approximately $635
per employee per year in company health care costs. At the same time, and to
the pleasant surprise of Tenneco's directors, there were additional, indirect
cost savings attributed to the new nonsmoking environment.
"They found that ventilation costs fell
significantly because there were no more smoke fumes to get rid of, and there
was no longer any need to replace furniture and carpets that were damaged by
cigarette burns," says Greiner.
EDUCATING EMPLOYERS and the general public about
these kinds of healthy benefits is one of the major challenges facing the
nursing profession today, Greiner says. As the problem of drug and alcohol
abuse continues to increase, educational counseling and support at the work
site can be a positive step against the problem, he says.
But even though many company executives may
agree that the programs are useful, it is still up to the promoters of the
programs themselves (particularly if they are sponsored by proprietary groups)
to market the concept. As Greiner notes, a growing number of programs are being
offered to companies and corporations of all sizes. And many times, the trained
nurse can also act as a very effective marketer of the programs.
ENTREPRENEURIAL STANCE: In fact, it is often
those nurse, who become adept at marketing who often stand out the most in
corporate health programs. And in some cases, nurses have even taken a strong
entrepreneurial slant to their corporate roles.
At Quakertown Hospital, Winnie Hayes, Ph.D.,
R.N., C.R.N.P., has developed a for-profit organization in affiliation with the
hospital to serve the varied healthcare needs of a broad range for corporate
clients.
"Although Quality Health Services is
affiliated with Quakertown Hospital, it really is a separate entity, and its
market objectives are far different from the limited area serviced by the
hospital," says Dr. Hayes. "We actually serve clients on a nationwide
basis."
Dr. Hayes notes that Quality Health Services
works in three broad service areas: Utilization Review, which is overseen by
Kathy Walker, R.N.; Occupational Health and Safety, which Dr. Hayes oversees;
and Industrial Hygiene, which is the responsibility of Rachel Rosenstoch, R.N.,
M.S.
By using nurses in these roles, Dr. Hayes feels
she can provide her corporate clients with a much-needed professional insight
into the ever expanding and increasingly complex healthcare delivery system. Thanks
to their professional knowledge and experience, the nurses can help companies
make the most effective healthcare choices.
SMALLER COMPANIES: One target group for Quality
Health Services is smaller companies who before would probably not be able to afford
the same kinds of healthcare coverages as they now can, Dr. Hayes says. But
thanks to the Quality Health Services' programs, many smaller companies can now
offer their employees health benefits packages that are "as extensive as
can be found in a Fortune 500 company," she says.
Most small employers don't have the in-house
talent or resources to put together the kind of health promotion or wellness
programs which the nurses at Quality Health Services can establish for them,
Dr. Hayes says.
She adds that it is the nurses' experience in
the healthcare delivery system which makes them more cognizant of how the
healthcare industry works -- especially who's paying the bills. As a result,
they are able to create programs whereby corporate clients can realize a
greater cost savings via a more effective utilization of more appropriate
healthcare services, she notes.
This for-profit type of program is becoming more
and more common among hospitals, says Penn's Dr. O'Sullivan. Many hospitals are
trying to develop a corporate arm that will provide a source of much-needed
revenues.
"The nurses at Quality Health Services go
to many small and medium-sized companies on behalf of this corporate arm of the
hospital, and set up programs that are clinical -- the one-on-one kind of care
with the clients, or environmental -- so they can do something such as
decreasing the employees' hazards which would then decrease the insurance
premiums the company's 'experience rating.' That's a buzzword in insurance --
you're rated based on how many hazards your people have, and how much you use
your insurance policies," Dr. O'Sullivan explains.
As a result, the nurses at Quality Health
Services are able to work with these little industries to get them a better
rating -- which represents yet another way that nurses are working with
corporations both large and small to influence the good of the corporation, she
adds.
EXPANDING ROLE: What Dr. O'Sullivan hopes this
growing nonhospital trend for nurses will lead to is that people will finally
begin to think of the role of nurses "as being beyond just passing
bedpans, so that their sons and daughters will be encouraged to go into nursing
as a profession," she says.
"Too many people are not aware of the
different modes available in nursing, and the different alternatives that are
available," says Dr. O'Sullivan. "They don't look at how the
profession has grown and can grow in the future, and how one can grow as an
individual within it."
Crisis in Home Care: Catch-22 Replaces Safety Net
By Thomas Derr
08/13/1986
Focus
Pg. 110
Philadelphia, PA, US -- In recent years, home
health care has been the proverbial good news/bad news topic. Spurred on by the
continually rising cost of acute care hospitalization, health care planners sought
a less expensive, but effective alternative. They found it in home health care.
During the 1970s and into the early 1980s, home
health care was one of the fastest growing segments of the health care
industry. Medicare expenditures for home health care rose from $63 million in
1970 to well over $1 billion in 1981. During the same time period, Medicaid
expenditures rose from $15 million to over $400 million.
Then, in 1983, Medicare instituted its new
reimbursement system for hospitals. Thanks to the Diagnostic Related Groups
(DRGs), hospital stays have decreased and formerly hospitalized patients are
being sent home -- "sicker and quicker," as the saying goes. In fact,
since the implementation of the DRGs, hospital discharges to home health have
increased by 37 percent, according to figures released by the Senate Special
Committee on Aging. So much for the good news.
BAD NEWS: According to data from the Health Care
Financing Administration (the umbrella organization for Medicare), there has
been a 133 percent increase in the denial rate for home health care benefits,
and a 164 percent increase in the actual number of these denials since the
advent of the DRGs.
The Senate Special Committee on Aging has more
bad news. The rate of growth in home health services also has slowed since the
implementation of DRGs. Medicare-covered visits increased by an average of 19
percent per year from 1980 to 1983, but only 8 percent in 1984 -- that's after
DRGs took effect and the demand for home care services began to increase.
In addition, since the last quarter of 1983,
when the DRGs were first initiated, home health care denials have nearly
tripled. In fact, during the first quarter of 1986 alone, Medicare denied
47,855 claims, compared with 18,121 denied claims in the last quarter of 1983.
Thus, in spite of the fact that seriously ill
Medicare patients are in need of home health care, increasing numbers are being
denied this care. In short, the home health care safety net is being ripped
apart.
CONFUSING GUIDELINES: The main culprit,
according to most experts, is the Health Care Financing Administration's bevy
of new regulations and policies and, as the Senate Committee on Aging has
noted, "HCFA's use of vague and confusing guidelines" for providers
-- many of which are unwritten and unpublished -- to limit the Medicare
benefits.
Ann Morris, R.N., M.S.N., is director of
Methodist Hospital's Home Health Services, which like most home health agencies
provides skilled nursing care, physical therapy, occupational therapy, and
speech therapy to home-bound patients on an intermittent basis. Morris calls
the new HCFA policies and guidelines a "blizzard of paperwork,"
noting that HCFA and its fiscal intermediaries (which in this region is Blue
Cross of Philadelphia) are now doing their medical reviews of home health care
cases on the basis of new Forms 485 and 486 without seeking additional
information.
"We are finding that well over 90 percent
of our denials are what are called 'technical denials, rather than 'medical,'"
explains Adele S. Hebb, president of Community Home Health Services of
Philadelphia and its affiliate, Philadelphia Home Care. "In a medical
denial, the HCFA's representatives question whether we needed to visit a
particular patient at all or as often as we did. There has been virtually none
of that in our experience. But we are beginning to be concerned over the number
of denials which were technical either because out of literally hundreds of
care plans that our nurses and therapists file each month, perhaps three or
four would have a clerical error, or because HCFA determined that a patient was
not homebound."
Hebb emphasizes, however, that the problem is
not with the fiscal intermediary. Blue Cross is just carrying out HCFA's
orders, she says.
NEED FOR CLARIFICATION: At a public hearing
before the Senate Committee on Aging, held in Philadelphia on July 28,
committee chairman Sen. John Heinz emphasized the need to clarify a number of
the technical terms HCFA uses as a basis for denying Medicare reimbursements
for care to home health care patients.
These clarifications are necessary, Heinz says,
"to establish once and for all a clear road to care for the 1.4 million
older Americans who so desperately need home health care."
A report issued by the committee also featured a
number of "horror stories" to illustrate just how severe the growing
problem of denials has become. In one, a 93 year-old female who was diagnosed
with arteriosclerotic heart disease, pernicious anemia, rheumatoid arthritis
and severe degenerative joint disease who left her home only to go to scheduled
doctors appointments was
denied home health care benefits because
Medicare determined she was not homebound. As of January 30, 1986, her
condition had declined -- she also suffered a severe fall, her anemia and
arthritis are worse, and she now is confined to her bed.
In another case study, a 78 year-old man was
receiving Medicare home health services after repeated hospitalizations for
liver disease, severe blockage of the bowels, and prostate problems. A tube was
inserted into his right side to his bowel. This tube required daily changing
under very strict conditions to guard against infections and improper drainage.
In addition, he had a catheter,
and required weekly blood testing and help with
his changing medications. As a result of an old stroke, he was unable to use
his right side or to speak.
In January, 1986, it was determined that this
patient was receiving more care than was medically reasonable and necessary,
"despite his very limited abilities, his physician's orders for the home
health care, and his obvious care needs." As a result, he began receiving
less care and his condition continued to worsen. He died in May.
HOLES IN THE NET: "These services always
served as a kind of net, which tended to catch the people in the worst
situations," says Morris. "Now the holes in the net are getting
bigger -- a lot bigger, and people aren't getting caught. They are just sitting
somewhere without help, and some of them are going to make it and some of them
aren't. I think it's a disgrace, because there is no reason why these kinds of
services cannot be provided."
Furthermore, in the long run, unless the patient
dies, the cutbacks in home health care can easily cost the health care industry
even more, she adds.
"Those patients are going to come back to
the hospital," Morris says. "You are putting the burden on the
families and you're not giving them any help, and they are going to get
overwhelmed more quickly and more easily. As a result, the patient will be
readmitted to the hospital, not unnecessarily, because by the time they come
back they will be sick again. And that is going to cost Medicare even
more."
Many families in Pennsylvania rely on Medicare home
health services in order to ensure that elderly family members can be kept at
home and cared for properly, notes the Senate committee report.
IMPRACTICAL OPTION: But with Medicare home
health care services being taken away, and hospitalization so costly, the only
other alternative is usually long-term skilled nursing care in an appropriate
facility, says Catherine Coble, a senior staff specialist, Continuing Care,
with the Hospital Association of Pennsylvania. Unfortunately, that option is
usually impractical as well, because of the high demand for nursing home beds
available. Nationwide, the nursing home
occupancy rate is 95 percent, while in
Pennsylvania, the rate is over 92 percent.
But even when beds are available, says the
Senate committee report, HCFA administrative policies often limit Medicare
patients' access to skilled nursing facilities -- many times on the basis that
these patients should be receiving care in their homes. "The
Administration then limits the availability of home care, leaving Medicare
patients with few Medicare-financed care alternatives,"
the report says.
Mary Kay Pera, executive director of the
Pennsylvania Association of Home Health Agencies, says that HCFA's increasingly
narrow definitions of Medicare eligibility, as well as its strict
interpretations as to what constitutes allowable and reasonable care, not only
endanger the well-being of many current Medicare home health care recipients,
but also will make it very difficult for some home health agencies in the state
to not only serve their clients, but to survive as home care providers.
PROBLEMS WITH BILLINGS: But the problem involves
more than Medicare denials, HAP's Coble notes. She says that HCFA's new 485 and
486 billing forms, which needed to be revised several times, helped produce a
claims-processing backlog, which in turn has produced significant delays in
Medicare reimbursements to home health agencies.
Other HCFA policies also serve to hinder the
home health agency's cash-flow health. One is the revised appeal process
concerning HCFA-denied reimbursements. Technical denials, for example, are no
longer paid by HCFA under the "waiver of eligibility." The waiver of
eligibility (Section 1879 of the Social Security Act) provides protection for
the beneficiary and provider by allowing payment for denials in cases where it
can be determined that the home health agency did not know or could not have
reasonably known that the services were not reasonable and necessary, or
constituted care.
At the same time, HCFA says only a beneficiary
can submit a technical denial for reconsideration (not the provider, who has
the resources and knowledge to do so). Moreover, once a denial is paid under
the waiver of liability, it cannot be appealed.
"Many Medicare patients live alone and are
too sick to make their way through the bureaucratic jungle to appeal these
denials," notes the Senate committee report. "As a result, Medicare
beneficiaries have no realistic protection under the Medicare program without
access to a suitable representative."
Many times, home health care agencies will
absorb the costs entailed in providing the home care services, rather than
attempt to recover the money from the already financially strapped Medicare
patient. Such uncompensated care cases also add to the burden already facing
home health agencies.
GRAMM-RUDMAN: But there are other problems as
well, notes CMHSP's Hebb, and some of the most serious involve "the
peculiar way in which HCFA has applied the Gramm-Rudman cuts."
Despite the Supreme Court ruling which declared
certain aspects of the bill unconstitutional, Gramm-Rudman-Hollings remains the
principal statute regulating the outcome of the federal budget process.
Essentially the Gramm-Rudman bill mandates a $144 billion cap on the 1987
federal budget deficit, with successive budget deficit reductions occurring in
subsequent years until a balanced budget is achieved in 1991. In addition, the
bill calls for certain automatic cutbacks to come into play if the budget does
not achieve set quotas.
The legislation says that in the event the
automatic cuts are triggered, Medicare is not to be cut more than one percent
in the fiscal year ending in September, and not more than two percent in the
fiscal year beginning in October.
From the home health care standpoint, HCFA has
ruled that those one and two percent reductions must be implemented without
reducing services.
"If they were saying: 'Look, we're only
going to give you $990,000 for every one million you spend,' we would at least
have a fighting chance. In that case, we could look for ways of becoming more
efficient," says Hebb. "But that's not what they are saying."
REASONABLE COSTS: Unlike hospital DRGs, with
their flat prospective payments, home health care is based on a reimbursement
of "allowable, reasonable costs" under Medicare, notes Hebb.
"New HCFA says: 'Well, because of
Gramm-Rudman, you will be reimbursed 99 percent of your allowable, reasonable
costs, and beginning October, you will be reimbursed 98 percent of your
allowable, reasonable costs. And if you are very, very efficient, that's
wonderful -- we'll pay you less," says Hebb. "There is no way you can
get your costs below what they pay you. No matter how much you reduce your
costs they will reduce their payment to being 98 percent of that. No matter
what you do, you get reimbursed less than you spend, and that's only counting
those expenditures that already have been audited and agreed to as being
allowable and reasonable."
The bottom line for many home health agencies is
that they will no longer be able to afford to serve Medicare patients, says
Hebb. Herb’s agency, which is a private agency relying largely on philanthropic
funds to carry out its programs, delivered more than 200,000 skilled home care
visits in 1985. Of those, approximately 29,000 were for uncompensated care.
Hebb expects to lose approximately $100,000 as a
result of HCFA's plan to withhold two percent of the agency's cost
reimbursements because of Gramm-Rudman. That means the agency will need to
raise at least another $100,000 from philanthropic contributions and from
private corporations if it is to continue to serve the Medicare public, she
says. But paying for the home care of the medically indigent is another matter.
"The actions of HCFA have made it such that
all of a sudden Medicare patients, who were full-paying patients, are now only
partly-paying patients, and so they are diluting the pool of community support
we receive," says Hebb.
Thus, instead of using the community dollars for
indigent care, Hebb's agency has been obliged to spread the money around to
make up for the dollars that have been taken away from the Medicare and
Medicaid programs. As a result, funding for the
"fall-between-the-crack" patients -- those who have no money and no
Medicaid, is increasingly limited.
THEY NEED HELP: "The Reagan Administration
says that poor people should be supported by the private sector, and that's
what has been happening. We are supported very generously by the private sector,"
says Hebb. "The problem is that we are now in a position of greater need
as a result of these changes in public support. The expectation of the federal
government is that the private
sector is going to pick up the shortfall. It is going
to be very interesting to see what happens."
"I hope they will, because if not, I don't
know what we are going to do for our patients," says Hebb. "I hope
that the private sector will either pick up the shortfall or put the pressure
on their legislators to say: 'Hey, we want an efficient, economical government,
but this is ridiculous. These people need care.'"
By Thomas Derr
08/13/1986
Focus
Pg. 114
PA, US -- SOME of the greatest changes in
America's healthcare delivery system can be
attributed directly to recent revisions in
Medicare policies. Hospitals, in particular, have been impacted profoundly by
the changing Medicare policies.
The new DRG system alone can be held directly
responsible for such factors as decreased average length of hospital stays, the
rising popularity of home healthcare services, and increased interest among
many hospitals in the establishment of other new, profit-making ancillary
service ventures to help offset the decrease in Medicare reimbursement payments
being experienced by most
hospitals in the Delaware Valley region and
across the U.S.
Clearly, the financial aspects of Medicare's
changing policies are especially salient to hospitals. Well, now a new set of
Medicare policy revisions is in the works, with an entirely new set of probable
financial implications for hospitals. And as that old healthcare observer from
many years ago, Al Jolson, once said: "You ain't seen nothin' yet!"
The issue at hand is the manner by which
Medicare provides capital spending aid to hospitals, and according to Charles
F. Pierce, Jr., president of the Delaware Valley Hospital Council, Inc., it is
the dominant issue facing hospitals today "in terms of hot interest and
significance."
Up to now, Medicare essentially has treated
capital spending as a pass-through, says Pierce. "What that means is that
for many years, any hospital that had a project which went through the
certificate of need process, and was able to obtain a C/N from Pennsylvania's
health commissioner, than that was deemed a needed project, and it was fully
reimbursed," says Pierce.
Although there was widespread recognition that
there were many problems inherent with the C/N-capital spending issue, no one
was able to come up with a solution that would be fair and equitable to all
parties concerned. Even the social security amendments of 1983 -- which
provided for the implementation of the earth-shaking Medicare prospective
payment system (DRGs) -- addressed the issue of capital spending in only
tangential terms.
Most hospitals that were in the process of
developing new projects realized there would be some change, probably of a
minor nature, that would constrict financing for future projects, Pierce notes,
but no decision had yet been made. Pierce says it is important to note that
when a hospital begins to develop a project that will require capital
investment, the process usually takes from one to three years inside the
hospital just to get going.
It sometimes takes that long just to gain a
consensus among all the interested parties as to how the environment is
changing, and how the proposed project will support the hospital in the new
environment, he says.
"Nearly everyone agreed that there would be
a greater need for outpatient surgery and other outpatient services, and you
will find that most of these hospital projects usually called for a fairly
substantial expansion of ancillary services and space. Very little was for
additional new beds, because hospital planners know that the DRG system was
bringing that game to an end," says Pierce.
As a result, many hospital boards across the
country, hospital managers, financial feasibility consultants, bond attorneys,
and investment bankers, were able to undertake the planning process for new
projects with very little foreshadowing of what Medicare's future policies
would be in regard to capital reimbursements. All assumed there would be a
change, but that it would turn out
to be a minor change, says Pierce. No one knew
for sure what the change would be, and until Medicare offered some concrete
proposals on the subject, all they could do was speculate on it.
So much for past history.
MEAT AXE: In the June, 3, Federal Register, the
Healthcare Financing Administration (HCFA), the umbrella organization under
which Medicare operates, released its recent proposal for Medicare's treatment
of capital reimbursements for hospitals. The bottom line implication of that
proposal is that the Delaware Valley's 63 acute care hospitals stand to lose a
total of more than $95 million per year by 1991, if that proposal is enacted.
"This proposal is Draconian. It is clearly
a federal budget-saving measure, and essentially it winds up telling hospitals
in this region: 'We'll pay you roughly half at the end of four years of what we
are currently paying you in capital reimbursements,'" says Pierce.
"That's not a healthcare policy, it's a meat axe."
Pierce notes there is at least one hospital, but
frequently several that stand to lose more than a million dollars a year in
each of the five counties of the Greater Philadelphia region. Heading the list
is Albert Einstein Medical Center, which would lose more than $9.1 million per
year by the end of 1991 -- a whopping cumulative total of $31.2 million over
the next five year -- if the HCFA proposal is enacted. According to the
Delaware Valley Hospital Council, Albert Einstein Medical Center has recently
financed approximately $135 million worth of renovations. Thus, many hospital administrators
are becoming extremely concerned about what Medicare will do next.
Pierce likens a hospital's capital cost debt to
a mortgage payment. The payments are for buildings and equipment, and there is
no way to cut back on them because the amounts are fixed in bond documents.
"While it is true that capital may amount
to only nine to 12 percent of a hospital's budget, it's also true that
hospitals are pretty well restricted in their ability to maneuver," Pierce
says. "I think we are going to have dire consequences if those proposals
go through. I just don't see where hospitals can make up a million dollars a
year, year after year."
GO SLOW TACTICS: One can only speculate as to
the ultimate ramifications of such proposals, but Pierce notes that hospitals
will likely react as they have in the past when funding seemed to be in
jeopardy.
"The first thing you do is postpone
preventive maintenance. You don't put in any new programs -- perhaps you don't
bring innovation and change to a complete halt, but there will be an incredible
slowdown. Also, you don't hire new staff -- in fact, you look to holding staff
at a minimum, and if those mortgage payments continue to mount, then you go to
cutting back staff," says Pierce.
In addition, Pierce notes that the financial
requirements for some institutions may be so onerous that the possibility of
default will become increasingly likely. It is much less likely that such
defaults will happen in Philadelphia than in New York City, but wherever they
begin to happen, they will make hospital financing in general very difficult,
he adds.
Another result of the proposed Medicare
proposals would be an acceleration of cost shifting, Pierce adds. Cost shifting
involves increasing the charges to private payers to make up for those bills
that lose money for the hospital. Pierce concedes there is little flexibility
for the hospital to maneuver in this area as well, but if its financial
situation becomes particularly desperate, cost shifting may come to be seen as
a viable course of action.
PLAN'S BASIC ELEMENTS: In response to the
HCFA-initiated Medicare proposals, the Delaware Valley Hospital Council has
devised its own plan. This plan contains three basic elements, the first of
which involves a commitment to protect old capital.
"Our proposal, essentially, is that you
take all capital up to December 31, 1985, and say that if a hospital has played
by the rules in existence, then Medicare should make a commitment to continue
those payments. It is a 'hold harmless' provision that we believe will provide
some fairness to a very dramatic change in the system," Pierce says.
The second provision is designed to respond to
congressional and administration concerns about controlling the runaway costs of
health-care investments. Based on available data, and the fact that hospital
projects generally take approximately three years to come on-line, the year of
maximum payout is determined -- probably calendar year 1988. The amount
Medicare would pay during that year then is treated as a pool, and tied to a
construction index to account for inflation and other normal economic
influences. That amount is then treated as a constant.
Finally, as old capital is paid off, the gap
within that pool between the amount spent on old capital and what is left over
serves as a base for investment in new capital.
"We think this plan establishes a
responsible payment system that honors Medicare's prior commitments," says
Pierce. "After all, to change the rules now on commitments that extend 30
years into the future is grossly unfair." The DVHC plan is also more
viable, Pierce says, because it takes into account only those capital
investments that are made in needed services. The HCFA proposal, on the other
hand, will produce some drastically financial stresses "that don't relate
at all to whether a hospital is efficient or
providing needed services," he adds.
Mark S. Levitan, President of Albert Einstein
Medical Center, holds a similar position. He explains: "My idea is that
old capital -- any project approved before sometime in 1983, when they put in
the DRG program, and when they said they were going to then put capital into
the DRG rates, should continue to be paid on a cost reimbursed basis. I feel
that is a position which is equitable and fair to the hospitals."
Now the drama switches to the U.S. Congress,
where legislators in both the House and Senate have been working on various
alternatives that are not as harsh as the HCFA-initiated proposals, but are
still designed to satisfy many of the Gramm-Rudman budget targets. For the past
few months, the Senate Finance Committee has been involved in debate over
various alternatives to the HCFA-initiated Medicare proposal.
One proposal still involved a capital savings plan,
but with a longer phase-in period -- 10 years instead of four. In addition, a
provision was included whereby a hospital whose capital payments are twice as
high as the national average would be covered by an extraordinary exceptions
clause.
NO CHANGE IN BOTTOM LINE: At the same time,
however, the total budget would remain budget neutral -- which basically means
if money is given to those hospitals whose payments are twice as high as the
national average, that money must come from funds that would normally go to
other hospitals, so that the total bottom line does not change. Similar
legislation is being considered in the House, although there are additional
"twists and gadgets" in it, Pierce says.
"One is that major moveable equipment will
be phased-in over a three-year period. That would be equally disastrous as far
as we are concerned, because roughly one quarter to 30 percent -- the ranges
are enormous -- of a hospital's capital budget is for equipment. You would end
up having to lay off nurses in order to be able to pay for a CAT scanner,"
says Pierce.
What actually happened in the Senate Finance
Committee on July 23 came as something of a surprise to DVHC and many hospital
administrators who were "expecting the worst," Pierce says.
PERCENTAGE REDUCTION: The Senate Finance
Committee included in the reconciliation package that they will be taking to
conference with the House a provision that continues current law for payment of
capital to hospitals, but meets its budget targets for capital by taking a
percentage reduction off those current law payments. That percentage reduction
will be three percent for fiscal year 1987, four percent for fiscal year 1988,
and five percent fiscal year 1989.
A spokesman for Sen. Dave Durenberger
(R-Minnesota) says that the policy selected by the Senate Finance Committee
means that if a hospital is eligible to receive from Medicare in FY 1987 an
amount equal to $100,000 in capital reimbursement, it will get 97 cents on the
dollar, or $97,000. That figure drops to $96,000 in FY 1988, and $95,000 in FY
1989.
"This is a step in the right direction
because they appear to have come away from trying to create a formula that
folds everything into the DRG payment rate," says Pierce. "Clearly,
I'm not happy with the percentage reductions, but the concept of retaining the
pass-through is very good. The percentage reductions will produce hardships,
but nothing like the massive dislocations that will occur if the HCFA proposals
are yet enacted."
IN A BOX: Albert Einstein Medical Center's
Levitan is somewhat less enthusiastic. "What HCFA is proposing is
Draconian, and terrible, and what the Senate is proposing is better, from that
standpoint. I like it better, but I still think it's wrong," says Levitan.
He notes that the Senate Finance Committee proposal (which still has a long way
to go before becoming law) still tends to ignore the problem of protecting old
capital.
On the subject of what will happen in the
House/Senate reconciliation package, Levitan is just as blunt: "I haven't
got a clue. I with I knew. All the hospital associations -- the American
Hospital Association, the Hospital Association of Pennsylvania, the Catholic
Hospital Association, the Federation of American Healthcare Systems -- everyone
is going down this road, and they all have begun to look at the numbers and
realize that unless we protect old capital, there is going to be absolutely
dreadful damage done to the healthcare field."
"The legislators have a tough
problem," Levitan continues. "They put us in the box, and it's really
very unfair of them to say: 'Hey, that's the way it is, we're going to take the
bottom out of the box.' That isn't very nice at all. A promise was made, and I
think it is the government's obligation to live up to its promise."
ANOTHER GO-AROUND: Sen Durenberger's spokesman
says his "gut feeling" is that the basic proposal outlined by the
Senate Finance Committee will be what finally results once the reconciliation
bill is passed. (As of this writing, no action has yet been taken in the
House.)
"The longer term prospects for capital I
think are still very much up in the air, however," says the spokesman.
"And I'm almost certain they (Congress) will have to revisit the issue
next year when the budget deficit reduction targets are much greater than we
have this year, and I suspect there will be another go-around on it."
Or, as another well-known observer of the world
by the name of Leo Durocher once said: "It ain't over 'til it's
over."