Healthcare In the Valley Series
Healthcare in the Valley: Part 1
National forces are playing themselves out on a local stage
March 9, 2012
By Alissa Johnson
Courtesy of Crested Butte News
Healthcare and healthcare reform are national news, making headlines everywhere from CNN to The New Yorker. It can be easy to get lost in the political jargon, but the conversation relates to every single American and their health—even in the Gunnison Valley. New federal mandates, rising healthcare costs, problems within the insurance industry and physician shortages are all questions faced here, at home. In a continuing series, the Crested Butte News looks at what’s happening on the local stage to provide affordable, quality healthcare for all of us.
In 2010, Pete Basile experienced what he calls spells of disorientation. After a visit to the doctor, he learned he had a brain tumor. Basile was fortunate— it was benign, and doctors in Denver were able to remove “almost every last bit of it.” He made a full recovery, and an MRI one year later showed no signs of the tumor returning.
Basile was fortunate on another front as well: his roommate, Kirsten Atkins, spearheaded a fundraiser. Even though Basile had insurance, he had a high deductible and out-of-pocket maximum. In total, the Crested Butte community kicked in about $15,000 to defray Basile’s medical costs. The community’s generosity took Basile by surprise.
“I was concerned at one point that there was too much money. I went to Kirsten and was like, ‘We gotta stop, I can’t end up with a whole bunch of extra money,’” Basile says.
But the funds covered his out-of pocket expenses just about perfectly, including the $1,500 MRI that was not covered by insurance at all. The thing that surprised Basile the most was the generosity of people he barely knew.
Ella Fahrlander, who had fundraising experience with Adaptive Sports Center, helped Atkins coordinate the fundraiser even though Basile didn’t know her well at the time. And a customer from the Rug Gallery donated $1,000. “You never think you’re that guy or that special to that many people,” Basile said.
Of course, Basile is not alone. Last weekend, soccer teams dueled for the well being of Steve Lawlor, who’s in Illinois getting treatment for large b-cell lymphoma. Businesses all around town sport jars next to their cash registers raising money for Cash Lamar, who’s in Denver fighting an infection in his lungs. On one hand, these examples speak to the giving nature of the Crested Butte community. But on the other, the fact that we have to raise money at all speaks to the growing challenges of paying for health care, even for the insured.
Another bubble ready to burst
“The first bill I saw was just for a three-day stay in the hospital, not including the surgery or the anesthesia or anything like that,” said Basile. “It was like $90,000 for two days in intensive care and one day in a regular hospital room.”
After insurance kicked in, the rates were adjusted and the bill dropped by about half. Insurance covered a good portion of the bill, but even $15,000 in out-of-pocket expenses is a stretch for many in Crested Butte.
Rick Huntington, husband of local physician Dr. Joanne Huntington, has been studying the business of health care for more than 30 years.
As the executive director of the Houston Business Group on Health and a principal in the benefits consulting firm Foundation Strategies, Rick Huntington has been surveying healthcare costs since 1995. During that time he’s seen them rise between 7 percent and 12 percent a year.
“This is not so unlike the financial bubble or any other bubble we’ve had,” Huntington said. “We’ve been kicking it down the road and now it’s here.” Many factors have driven the increase, he continued, not just the insurance companies.
Over the last 15 to 20 years, the United States has made great strides in medical and technological capabilities as well as advancements in the manufacturing of drugs. All of that comes at a huge expense. Administrative costs have also been on the rise, and the implementation of things like HIPAA (the Health Insurance Portability and Accountability Act) required massive investments in technology by healthcare providers.
“In the meantime, we’ve lost a lot of insured individuals who have become the uninsured 40 million we all read about in the newspapers, which is an enormous cost driver,” Huntington said. It’s complicated further by the fact that many healthy individuals are going without insurance. “If they don’t have the money they don’t have a problem going without. This is the number one issue we’re facing… because without getting the healthy people insured or in a position to pay their expenses, we’re just in a death spiral with the 10 percent. The first rule of insurance is that 10 percent of people have 90 percent of the cost.”
During the 1990s, employers absorbed the costs. Government programs also absorbed a lot of it, borrowing money or raising taxes to pay for Medicare and Medicaid. But as costs have continued to rise, there’s no place left to shift the burden.
“It comes down to, ‘How do we get control of the cost?’” Huntington said.
Less access to insurance
In many parts of the country, insurance companies deal with the cost of healthcare by engaging in something called cherry picking. Bob Brickman is the former medical director of Sentara Health System in Norfolk, Va. He now serves as chairman of the Gunnison Valley Health board of trustees. But he remembers an insurance provider who placed their enrollment offices on the third floor, with no elevator access. Right off the bat they eliminated anyone incapable of making the climb.
“They could analyze, identify and drop people before they developed things like emphysema,” Brickman said.
Rick Huntington also said he receives weekly emails from insurance companies saying they no longer sell coverage in specific regions. “If they can’t get ahead of curve of the increasing cost of the insurance products, they just pull them,” Huntington said.
Access to insurance is not as much of a problem for Crested Butte, he said. In general, Colorado is one of the healthiest states in the nation. We are consistently the thinnest state with lowest obesity rates, and it shows in our insurance rates. But rising costs are still borne by those with insurance or the ability to pay, and our healthcare providers bear those costs as well.
“Somewhere between 55 percent and 65 percent of medical spend [medical costs spent] in this country is on public programs, Medicare and Medicaid. They’ve cut reimbursements to providers, all providers,” Huntington said.
That’s taken its toll everywhere, including the Gunnison Valley, and not just because approximately 10 percent of the population is on Medicare or Medicaid. Reimbursements from Medicare influence insurance reimbursements across the board. Huntington’s wife, Dr. Huntington, has felt that pinch in her primary care clinic in Crested Butte.
“For me, that’s exactly what is happening. The cost of running a medical practice is skyrocketing at the same time they’re reducing reimbursements,” Dr. Huntington said. “We all hear about Medicare, but that rolls through the whole system. Every insurance payment out there is a percent of Medicare, and it’s met that critical level where there’s no way for me to stay open.”
Dr. Huntington is closing her clinic this spring, and will help her husband in his consulting. The idea of doctors closing their clinics due to financial hardships can be a hard one to grasp, especially for the average patient who sees the cost of medical bills. But financially, the odds are stacked against primary care physicians and it’s creating a shortage of doctors.
Reduced access to care
Dr. Eric Thorson opened the Town Clinic of Crested Butte with his wife, Marsha, in January 2011. He was lucky, he said. Through his own savings, support from his family and support from his wife, he was able to open his own clinic. But the average medical school graduate leaves school with $150,000 to $300,000 of debt—the equivalent of a second mortgage.
“That has a huge impact on what people choose to do,” Dr. Thorson said. “Primary care specialties—family medicine, internal medicine, pediatrics, psychiatry—are on the low end of the payment, and most specialties make two to four times what primary care makes.”
That alone is enough to keep doctors from choosing primary care specialties, but every healthcare expert in the valley cited additional financial challenges for primary care doctors, including the rising cost of malpractice insurance and the cost of implementing and maintaining medical records technology. The latter is not a one-time deal. Rich Huntington said annual upgrades cost thousands of dollars a year. And then there’s the administrative cost that comes in navigating the insurance systems. Doctors don’t necessarily have better access to insurance companies than patients.
Marsha Thorson said it takes an average of five to six months to receive in-network status with insurance companies. With Medicare, it took 11 months to become in-network. The challenges are familiar to patients trying to navigate the same companies: lots of time on the phone; repeated attempts to reach the right person; trying to understand what was incomplete in the original paperwork; and refilling out forms again and again, and sometimes again. It’s time-consuming and generates questions from patients.
“The patients didn’t understand why we were not taking Medicare, and why this is such an onerous process,” Thorson said.
“Or they wonder, ‘What did I do wrong that it takes 11 months? What is Medicare looking at?’” Dr. Thorson added.
Once they are in network, it can take three to six months to receive payments from insurance companies. And while the Thorsons are finding their way through the system, the pressures on primary care doctors are resulting in a projected doctor shortage in the valley. Brickman said GVH projects it will need to hire 2.5 doctors within the next couple of years to maintain adequate access to care in the Gunnison Valley. And while there are hires on the horizon, there are long-term costs involved. On average, a primary care doctor costs a hospital 100,000 more than he or she brings in business.
It’s just one more way that providing quality healthcare in the valley is complicated and expensive, but the takeaway is simple: everything happening on the national level is also taking place right here in the Gunnison Valley. Health care costs are on the rise and threaten to compromise access to care. The Affordable Care Act seeks to address some of these problems, but its fate is in the hands of the Supreme Court and there are still more questions than answers.
In the meantime, healthcare providers in the valley are making on-the-ground changes in the hopes of providing better-quality, affordable healthcare. Some of those changes will likely show up on the election ballot this fall, as GVH looks to improve healthcare for senior citizens.
It’s in anticipation of those decisions, and in acknowledgement of the way our community continues to go to bat for our neighbors’ health, that we’ll spend the next few weeks looking at healthcare in the valley. We’ll find out what national mandates will mean locally, and how players like small-town clinics and rural hospitals can work together to keep health care accessible. We’ll also look at a case study close to home that provides one map for doing that. We hope you’ll join us in taking a closer look at healthcare.
Healthcare in the Valley: Part 2
Patient-centered, integrated care
March 16, 2012
By Alissa Johnson
Courtesy of Crested Butte News
In a continuing series, the Crested Butte News is looking at what’s happening on the local stage to provide affordable, quality healthcare to the valley. Last week, we looked at the big picture and the ways that rising health care costs are straining the healthcare system. This week, we look at the type of care local providers are striving to provide—a model that puts patients first.
When Dr. Eric Thorson and his wife, Marsha, developed the way the Town Clinic of Crested Butte would operate, they envisioned a level of care that went beyond the clinic doors.
Patients would be able to correspond with Dr. Thorson securely by email, and make appointments and see their lab results online. Clinic staff would follow up with them after appointments, and treatment decisions would take into account the patient’s overall health and life circumstances— what kind of treatment he or she could afford; whether their work schedule or access to transportation allowed them to travel for further treatment.
“One of the things that was really important from the beginning was to make it patient-centered. That’s one of the driving forces in primary care, to do things like a patient-centered medical home. It puts the patient at the center of the focus as opposed to revolving around the doctor or the clinic,” Dr. Thorson said.
“Or even a particular piece of the patient—not just focused on diabetes or on obesity,” added Marsha Thorson. “It’s taking into account everything going on with them… making sure everything is where it needs to be when it needs to be for the patient.”
Dr. Thorson schedules longer than average appointment times—30 to 60 minutes—and the clinic is open Thursday through Monday. Patients can schedule appointments on weekends and weeknight evenings, although that feature is taking a little longer to sink in. Mondays tend to be busy, and patients will tell Dr. Thorson they got sick on Friday but waited to see him because they didn’t know about weekend appointments. But after more than a year in service, the Thorsons and Town Clinic staff feel they’re making a connection with the community.
“Some of the voicemails that come through, people are actually addressing specific people in the office thinking that’s who they’ll deal with,” Marsha Thorson said. “And they are. It’s true. People are comfortable knowing who is in this office.”
By acting as a “medical home,” Dr. Thorson’s primary care clinic represents one facet of what industry experts call integrated medical care, a form of care where care is coordinated by the primary care physician and information flows more freely from primary care to specialty services to rehabilitation and back to primary care. This model often results in better, more cost-effective care—and it’s something healthcare providers are beginning to pursue in the Gunnison Valley.
“Because of a lot of factors in an advanced medical home model, where the provider and patient are connected by a secure electronic portal, care can sometimes be done out of the office for such things as management of chronic diseases and routine primary care activity,” said Michelle Campbell, who joined Gunnison Valley Health last October as the chief marketing and business development officer. She has more than 17 years of experience in healthcare marketing and consulting.
If patients can email their doctor their symptoms, Campbell explained, they might be able to avoid an office visit. And if that clinic is integrated into a larger healthcare system, connected by technology such as electronic medical records, then patients’ records follow them from their primary care doctors to specialists. There is one patient history and one medication list, and things are simplified for the patient and the provider. Information flows through the whole system more seamlessly.
“In an integrated system, where physicians are compensated for serving a population and improving overall health instead of being compensated for an episode of care, people are looking to manage the primary care of a patient in a way that’s cost effective, and then extend that into specialist care so that you’re improving cost efficiency as well as the overall health of patients across the care continuum,” Campbell said.
The idea of integrated care is not new. In a 2009 article for the New England Journal of Medicine, Dr. Francis J. Crosson wrote that the Committee on the Costs of Medical Care recommended a group-based approach to medical care in 1933. At the time, U.S. health care expenditures were 4 percent of the U.S. gross domestic product. In the thick of the Great Depression, Crosson wrote, that sum was believed “to threaten the country’s financial recovery.”
The 1933 report recommended “Medical service should be more largely furnished by groups of physicians and related practitioners, so organized as to maintain high standards of care and to retain the personal relations between patients and physicians.”
The recommendation takes on added significance when you consider that nearly 80 years later, the United States finds itself in a similar place. A 2009 article on healthcare in The New Yorker, “The Cost Conundrum,” referred to a speech by President Barack Obama. He said, “The greatest threat to America’s fiscal health is not Social Security. It’s not the big investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is skyrocketing cost of health care.”
Yet integrated models have not become the norm in spite of examples that show cost efficiency and better patient care go hand in hand.
Better communication, better standards of Care
In 1998, a group of physicians—including current GVH board of trustees chair Dr. Bob Brickman—published a study that looked at “process improvement” in an integrated delivery system, Sentara Health System in Norfolk,
Va. (Dr. Brickman then served as medical director for Sentara). The study sought to improve care for several diseases, including community-acquired pneumonia and strokes, by increasing communication between healthcare providers, standardizing procedures and eliminating delays during diagnosis.
In short, patients got better faster and the cost of care went down. The study was published in The Journal on Quality Improvement and stated that for community-acquired pneumonia, “the mortality rate decreased from 12.5 percent to 9 percent, the average length of stay from 7.5 to 6 days, and the cost per case by more than $1,300.” For stroke patients, process improvement efforts decreased the length of stay from an average of 9.8 days to 5.3 days, with a cost savings of $2,000 per patient.
The New Yorker article also featured healthcare systems where increasing integration and communication resulted in better care and lower costs. In Rochester, Minn., home to the Mayo Clinic and some of the most advanced medical technology, Medicare spending is in the lowest 15 percent in the nation.
In the article, author Atul Gawande wrote, “The core tenet of the Mayo Clinic is, ‘The needs of the patients come first’—not the convenience of doctors, not their revenues. The doctors and nurses, and even the janitors sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients.”
Lower healthcare costs were simply the byproduct of patient-centered care. The same held true in Grand Junction, Colo., where Dr. Thorson completed his residency. There, the medical community adopted a patient-first approach to healthcare during the 1970s.
“They did some unique things to ensure that people with all different types of coverage were getting access to care that was affordable, and they were able to be seen by a provider in the community,” Dr. Thorson said.
“Medicaid does not cover the cost for me to see a patient, but in Grand Junction they pool a lot of the funding together so that patients on Medicaid have access to providers, and those providers are reimbursed at a level similar to private insurance reimbursement.”
The New Yorker article also pointed out that doctors in Grand Junction meet regularly for peer reviews, implemented at the request of the local health plan provider to study everything from poor prevention practices to unnecessary surgeries. And in 2004, they created a community-wide system for sharing lab results, patient data and office notes. The result is one of the lowest-cost markets in the country.
Integration in the Gunnison Valley
One of the primary examples of integration in the Gunnison Valley took place after GVH took over management of the Senior Care Center in 2008. At the time, the facility had an annual operating loss of more than $100,000. But at the recommendation of a consultant, GVH integrated several silos within senior care: home health, palliative care, hospice care, senior care and assisted living. “By integrating we reduced cost and that has in some measure allowed us to be in the black,” Dr. Brickman said. Full facilities and the right combination of paying residents have also played a roll.
Integration has also set the stage for better care. In Gunnison, Dr. John Tarr is chief medical officer at GVH and consults with seniors’ attending physicians. From a clinical standpoint, he said, integration has great promise for patients because they’ll have access to a full spectrum of medical services—from EMS to hospital care to the nursing home and everything in between—without any “siloing” of information.
“Having the whole package under one governance makes sure all organizations are working toward the same goal, which is the most appropriate care for the patient, regardless of the extent and stage of illness and health. It ultimately has not yet achieved the level of functional integration I would like to see but it’s progressing down the road,” Tarr said.
One of the biggest barriers—for which there is an implementation plan—is integrated electronic health records. But doctors are already holding weekly case conferences with home medical services to make sure clients receiving home health services, hospice and palliative care are getting appropriate care without duplication of services or other problems.
“The infrastructure is in place here to really facilitate integration, and in my opinion, make this a model for the way healthcare ought to be delivered,” Tarr said.
GVH taking leadership role
In addition to integrating senior care, GVH has also taken a larger role in making sure the valley has access to primary care. At the start of the year Gunnison County had nine primary care physicians. But to account for decreases, like the closing of Dr. Joanne Huntington’s office, GVH projects that 2.5 primary care positions need to be filled. To help account for that, GVH arranged for a temporary doctor to fill a vacancy in Dr. Jay Wolcov’s office in Gunnison and has been recruiting physicians to work for the hospital. Two primary care doctors—a husband and wife team with specialties in rural medicine—are expected to start on June 1. A medical student loan program also provides incentives for primary care doctors to work in the Gunnison Valley.
“The only entity in the valley that can ensure [adequate access to primary care] is the healthcare system,” Brickman said.
In most cases, independent primary care clinics can no longer recruit new doctors because graduates are not in a position to buy into a practice. As discussed in Part I, their debt is simply too high.
But GVH is trying to do more than fill positions; leaders are also looking for ways to connect practitioners across the valley, whether they work for the hospital or not. Campbell explained that any integrated approach to local healthcare must be a mixed model, because both GVH and independent practitioners serve the valley.
To that end, GVH hosted a meeting with local physicians in December 2011 to talk about ways to increase integration. They’ve even met with Dr. Thorson to discuss ways to support his unique business model. One question concerned his hours of care. Currently, if a patient needs access to radiology on the weekends, the only avenue is the emergency room. GVH is considering whether there is a different, and cost effective, way to support those types of needs.
And GVH is also talking to providers about starting a primary care service line—group conversations between primary care doctors to discuss trends in the care they’re providing. Because the valley is a mixed model, these ideas won’t necessarily lead to the same kind of standardized care that other systems, like Sentara or Grand Junction, have seen. But Gunnison Valley is a small, rural community where, Campbell pointed out, some forms of integration already exist. Primary care physicians and orthopedic specialists already serve in the ER. Leaders hope that increasing that partnership and communication can help open the door to more integrated (and cost effective) care.
Join us next week as we look at finances behind healthcare. We’ll learn how integrated care employs specific methods of payment to encourage patient-centered care, and learn how the Affordable Care Act and federal mandates play a role. We’ll end our series by looking at how individuals can navigate the insurance system and get involved in community conversations about health care.
Healthcare in the Valley: Part 3
Paying for healthcare
March 30, 2012
By Alissa Johnson
Courtesy of Crested Butte News
In our continuing series on healthcare in the Gunnison Valley, we’ve looked at the ways local leaders hope to provide Gunnison Valley with better access to affordable, quality healthcare. But no community acts in isolation, and changes at the national level will impact the way care is provided and paid for. This week, we look at trends and developments in the finances of healthcare, both in the valley and across the nation, and the potential impact of federal mandates.
In the Gunnison Nursing Home, residents in wheelchairs and their attendants cannot both fit into the bathroom at the same time. To compensate, they use a portable toilet in patients’ rooms, sometimes no more than a curtain to separate a patient from a roommate. For Dr. Bob Brickman, chairman of the Gunnison Valley Health board of trustees, that’s an unacceptable loss of dignity.
“We’re stuck with a facility designed in 1976 where the physical constraints preclude adequate care, and
the fact that adequate care occurs is a miracle,” Dr. Brickman said.
Since GVH took over the management of the senior care center in 2008, it has managed to turn around an annual loss of more than $100,000 by integrating senior care into one system. But, Dr. Brickman said, that isn’t a long-term solution—a full roster and the right balance of paying patients made it possible to break even; but it’s not sustainable.
“We’re seeing exactly what our consultants told us, that we would have a gradual increase in the need for assisted living and a diminution in the need for the nursing home,” Dr. Brickman said.
That trend is exacerbated, he said, by the intent of the federal government to keep people in their own homes. Federal funding is being funneled to home services, like transportation and Meals on Wheels. And on a local level, it’s driving the skilled nursing population into the red; as of February, there were 39 nursing home residents, with the potential of further decreases, instead of the 41 to 42 required to break even. At the same time, the assisted living facility isn’t big enough to meet projected demand.
GVH hopes to remedy the situation by replacing the nursing home, enlarging the assisted living facility and connecting the facilities. Medical personnel will be able to serve both the nursing home and the assisted living facility, resulting in more profitable senior care.
The plan is to go to voters with a referendum this fall, asking them to approve a sales tax levy to pay for the approximately $12 million project. Dr. Brickman said the alternatives—do nothing and lose senior care to a financial death spiral, or replace the buildings wing by wing and displace 10 residents at a time—were unpalatable. They’re banking instead on the palatability of a sales tax of .25 percent collected over a period of 20 years because it’s the only way to make senior care sustainable. GVH operates on a margin that’s too thin to absorb continued losses.
On a precipice
GVH is the only hospital on the Western Slope not funded by county tax dollars; the hospital itself is county owned, but while GVH receives about $600,000 to support senior services, hospital operations are funded solely through its own revenues. It’s a balancing act that’s getting harder to perform.
According to Randy Phelps, GVH CEO, “Gunnison Valley Hospital… in 2011 earned $155,000 on a net revenue of $22.6 million, which represents a 0.7 percent margin. Senior Services, which receives some property tax support, earned $157,114 on a base of $5.2 million, which represents a 3.0 percent margin.”
Industry knowledge dictates that a 5 percent margin is required to maintain and replace equipment, and this year’s first quarter financials suggest that GVH will be no closer to that benchmark in 2012. Phelps said that like other valley businesses, GVH is feeling the strain of fewer winter visitors. Compared to 2011, year-to-date hospital volumes are down 2.5 percent for January and February, and “bed debt and charity care are currently running at 10.6 percent of the total hospital revenues.” In other words, the uninsured and underinsured are taking their toll.
“In response, hospital staff across the entire GVH system will be reducing costs and working hard to increase efficiency as we challenge old ways of thinking to redefine our business and still maintain the excellent care and service our community expects,” Phelps added.
But Dr. Brickman was candid—with additional expenses expected over the next five years, including hiring 2.5 new primary care physicians and implementing federally mandated medical records technology to the tune of $2 million, keeping healthcare affordable will only become harder. The way he sees it, the Affordable Healthcare Act, which seeks to increase the number of insured, needs to be upheld or the community will need to take a larger role in funding healthcare.
Increasing the number of insured
In a nutshell, the more uninsured people there are, the harder it becomes to make insurance work. Gary Shondeck, of Shondeck Financial Services & Insurance, said in the United States, 1 percent of the people account for about 28 percent of all medical costs and 5 percent of the insured account for 54 percent of all medical claims. Dr. Brickman calls the latter “frequent fliers.”
From a financial perspective, insurance works when everyone is insured—the healthy need to pay into the system to pay for the sick. It’s a principle that informs the Affordable Care Act, which expands access to coverage in many ways by requiring providers to insure people with pre-existing conditions; preventing providers from dropping policy holders after they are diagnosed with an illness; putting an end to annual and lifetime limits on benefits; and mandating preventive care without co-pays or a deductible.
Many of these mandates have already gone into effect, including a provision that guarantees coverage for children under the age of 19. Children can also stay on their parents’ insurance until the age of26, and insurance companies are now required to spend 80 percent of collected premiums in the form of a claim. If not, they issue refunds to policyholders. For 2010, Shondeck said, 974 of his clients received refund checks from Anthem.
To make this expanded coverage possible, the Affordable Care Act mandates that everyone have insurance or pay a fee for not having it. It’s the Individual Mandate that’s garnered so much attention and is currently under scrutiny by the U.S. Supreme Court (see sidebar). If left intact, it restores balance to the current insurance system. But it also includes pilot projects that seek to reform the way insurance is paid altogether.
Paying doctors to keep people healthy
In most healthcare systems in the United States, healthcare providers are paid for each service they provide—it’s a “fee for service” model, and it rewards doctors for providing more services.
“If you’re rewarded for rendering services, you’ll render as many as you can,” Dr. Brickman said.
In no place is this more true than McAllen, Texas, which is renowned for some of the highest healthcare costs in the nation. Featured in the same article in The New Yorker that highlighted Grand Junction for its low healthcare costs, McAllen boasted Medicare expenses of $15,000 per enrollee in 2006. That’s twice the national average.
Not so coincidentally, McAllen is home to a physician owned, for-profit medical care system. When compared to El Paso, critically ill Medicare patients in McAllen received twice as many specialist visits between 2001 and 2005. In 2005 and 2006, they received 20 percent more abdominal ultrasounds, 30 percent more bone density tests, 60 percent more stress tests, 200 percent more nerve-conduction studies (for carpel tunnel syndrome) and 550 percent more urine flow studies (for prostate problems).
“The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine,” wrote author Atul Gawande.
It’s an extreme example across the medical care spectrum, but the pilot programs in the Affordable Care Act seek to test integrated healthcare models at the opposite end of the spectrum. In one scenario, “accountable care organizations” would be paid a set amount to care for a population.
In another, providers would be compensated for services via a bundled payment—a lump sum to be shared by everyone involved. In short, these programs would pay physicians to keep people healthy.
“The best outcomes are always the lowest cost because you don’t have to redo treatments. Patients don’t have complications,” Dr. Brickman said.
But we won’t know the status of the Affordable Care Act until the Supreme Court releases its final decisions this summer. As a result, there are currently more questions than answers. In the words of healthcare consultant Rick Huntington, as a nation, we couldn’t be more in the dark.
A host of unknowns
“We lose a few years every time we go through this… because we just don’t have direction right now. There’s a lot on the table but not a lot is actually happening,” Huntington said. “If the mandate gets shelved, it changes the whole model,” he continued. The financial backbone of the law would be gone. And even if it is upheld, many of the law’s regulations have not been written. It calls for higher Medicare reimbursements, for example, at the same time that it calls for $.5 trillion in cuts to Medicare.
“We don’t know what the Medicare reimbursements will be. There’s a provision to up reimbursements by 10 percent, but that doesn’t mean any of that will be in the final bill,” Huntington said.
It’s a classic waiting game, and the outcome will have big consequences locally. Looking at the bigger picture, Dr. Brickman believes that healthcare is at a critical point for hospitals like GVH; without getting more people insured, they won’t be able to absorb the increasing costs of the uninsured.
If the mandates are struck down, Dr. Brickman said, “the number of uninsured will continue to rise and insurance will become unaffordable because the only people remaining are the ones who are sick.”
Dr. Brickman believes that states might fill the void with mandates of their own—in Massachusetts, according to National Public Radio coverage, only 1 percent of people forego insurance. And if states don’t fill the void, Dr. Brickman thinks the community will be forced to play a larger role in financing healthcare or accept less access to care.
Finding local solutions For now, the one thing that remains clear is the need for increased cooperation on a local level. Both Dr. Brickman and Huntington believe that certain federal mandates are here to stay, like medical records technology. Simply getting up to speed will be costly and require integration.
“Whether the bill passes or not, the future is that the data with every patient visit is going to have to be assembled and reported to the government. It’s going to be a monumental administrative and technological challenge to do that,” Huntington said.
Dr. Brickman believes that it will also create competition in the marketplace, forcing healthcare providers to provide better patient outcomes for less money.
“If you have an electronic medical record, you can easily collect data on cost and outcomes. So when people shop around for healthcare, they’ll go to the people who cost the least and have the best outcome,” Dr. Brickman said.
Whatever the outcome, GVH is the valley’s healthcare leader; fostering that integration will fall on its shoulders. Dr. Brickman believes GVH is up to the challenge.
The National Rural Health Association recently named the hospital one of the top 100 critical access hospitals in the nation. They’ve made strides in access to medical technology, and they’re embarking on a process to build those relationships.
“We have a captive population of 15,000 that we’re responsible for. They are our owners and our benefactors, so we have to provide a system of care with the lowest possible cost and the highest possible care,” Dr. Brickman said.
Join us next week for the final installment of Healthcare in the Valley, when we’ll look at the ways individuals can make the most of their health insurance coverage. We’ll conclude by looking at how valley residents can join the healthcare conversation with local healthcare providers.
Supreme Court Hearings on the Affordable Care Act
On Monday, March 26, the United States Supreme Court began hearing testimony on the Affordable Care Act. The hearings addressed four key questions:
Is the penalty for not having health insurance a tax?
If the penalty were deemed a tax, an 1867 law called the Tax Anti-Injunction Act would prevent the court from considering the bill until someone had to pay it—which would not happen until 2015.
Can the federal government mandate that citizens have health insurance?
The Individual Mandate would be the first time the federal government required citizens to buy something; without this provision, many question the financial feasibility of the rest of the law.
If the Individual Mandate is nixed, which parts of the law—if any—can remain?
Proponents and opponents alike agree that the law’s provision to provide coverage for individuals with pre-existing conditions cannot exist without Individual Mandates to fund it.
Does Medicaid (a joint state-federal program) expansion in the law coerce states to participate, making it unconstitutional?
Fewer pregnant women, children and disabled people would benefit from insurance coverage changes in the Affordable Care Act.
In the State of Colorado, insurance companies can no longer charge women higher premiums than men, and maternity must be covered. Policies issued after January 1, 2011, must comply with these mandates. Local insurance agent Gary Shondeck said that in many cases, women have seen their rates go down and men’s rates have gone up to account for the difference. As a result, “a lot of young guys pulled out, and 30-35 percent of the county is uninsured.”
Healthcare in the Valley : Part 4
Healthcare for the Individual
April 6, 2012
By Alissa Johnson
Courtesy of Crested Butte News
This week, in our final installment of the Healthcare in the Valley series, we look at the ins and outs of individual health insurance coverage, and how to get involved in the local conversation about maintaining access to quality care.
On a local and national level, the healthcare conversation often focuses on the role of the uninsured. But in Gunnison County approximately 60 percent of residents have commercial insurance through their employers or individual plans, and they’re often in the dark when it comes to the details of their coverage.
According to health insurance agent Gary Shondeck, the biggest mistake the insured make is not reading the certificate of coverage—that big packet of information that arrives in the mail with the insurance card. Shondeck has been helping Gunnison Valley residents navigate the insurance system since the 1980’s, and he says that not understanding what’s covered can lead to some big surprises.
“The key is not necessarily what is covered but what is not covered. Some insurance companies will exclude adventure sports. They don’t cover you if you’re riding a motorcycle or if you’re backcountry skiing or if you’re involved in a race,” Shondeck said.
That can be a problem in a community that celebrates events like the Grand Traverse, where the hardiest among us ski from Crested Butte to Aspen in the middle of the night. To insurance companies based in the Midwest, that’s a risky venture, and holes in their coverage could leave the insured vulnerable.
“You have no idea what they consider to be an adventure sport. Mountain biking is a common activity in Gunnison and Crested Butte, but to somebody in Wisconsin, it might be an adventure sport,” Shondeck said.
Finding the right coverage isn’t just a matter of fi nding the right premium. It’s about sifting through the options to find the policy that best matches your lifestyle and your budget, and that’s where insurance agents like Shondeck enter the picture.
Navigating the insurance system
“The worst thing I could do is sell you a plan you can’t afford,” Shondeck said. Rates are a sensitive issue, he continued. Everyone wants a low deductible and a low premium, but that’s not how the system works. Most often, a low premium plan has a high deductible and vice versa. The best coverage, Shondeck said, balances the type of coverage with the cost of the premium, the size of the deductible and, in some cases, a tax-exempt Health Savings Account (HSA) to help cover medical costs.
Shondeck helps clients find that balance and make sure that any claims are handled properly; if he can’t find affordable commercial insurance for someone, he at least points them toward state programs that could help (see sidebar: Alternatives to commercial insurance). The biggest misconception about his job is that most people think it costs more to work with an insurance agent. But while Shondeck does receive a percentage of his clients’ premiums, their premiums are the same with or without an agent.
Many of the challenges Shondeck’s clients face echo nationwide trends: carriers are pulling their products out of specific regions or entire states as it becomes harder to turn a profit—Aetna recently pulled out of Colorado altogether—and insurance premiums have been sky rocketing.
In the Gunnison Valley, Shondeck said, four insurance carriers have established relationships with local healthcare providers: Anthem, Rocky Mountain Health Plans, Cigna and United Healthcare. And while there are trends among all of them, like rising premiums, not all companies’ policies are created equal.
Some insurance companies charge different premiums in neighboring regions; they might, for example, collect higher premiums in Gunnison County than Montrose County. In some cases, regional differences make sense because reimbursement rates to healthcare providers differ between one region, like the Western Slope, and another, like Denver.
“We don’t have as many people [on the Western Slope], but doctors on the Front Range have a higher volume and can absorb lower reimbursements,” Shondeck said.
But sometimes it gets tricky for the healthcare consumer because insurance companies don’t use the same models for setting premiums. Some companies treat Gunnison and Montrose counties the same, and it’s up to the consumer—or the insurance agent—to figure out which carriers are charging them more simply for living in a different county.
Add factors like that to ever-increasing insurance premiums, and it’s not only difficult to figure out which plan to pick but also how long to stick with it. One of the biggest points of confusion Shondeck observes in his clients is a misunderstanding over why their premiums rise when they haven’t had any major claims.
“Insurance companies share the risk with everyone; your rate is the same whether you’re 33 and in perfect health or 33 years old and just had the worst claim ever,” Shondeck said.
To compensate for rising premiums, Shondeck performs annual reviews for his clients, reevaluating their insurance and, if necessary, switching them to different deductibles or carriers. It’s a role he believes will become even more critical if healthcare reform goes through: rates will increase as mandates go into effect, and people will need even more help navigating the system.
“We have a much louder voice than an individual out there,” he said.
The evolving role of coverage
It’s not hard to see how people get frustrated and opt to go without insurance. In the Gunnison Valley, we have our own fair share of young, healthy people who think they can afford to go without health insurance and don’t prioritize it.
“We live in a community where somebody would rather buy a $3,000 mountain bike than health insurance,” said Dr. Bob Brickman, chairman of the Gunnison Valley Health board of trustees.
When people do get hurt, the cost of the premium and an out-of-pocket deductible — even if it is $10,000—is a lot more manageable to pay than the cost of a hospital stay that can quickly reach six figures. At the end of the day, that’s the reason to have insurance: to cover the catastrophic expenses.
It’s a shift in mindset from one where health insurance covers all care, including health and wellness. But as Dr. Eric Thorson of the Town Clinic of Crested Butte pointed out, people view health insurance differently from other types of insurance.
“You don’t use your car insurance to pay for your gas at the pump or an oil change. The same is true for property insurance. You use that when the house burns down, not when you need to replace the gutter,” Dr. Thorson said.
When individuals visit the clinic for a $40 flu vaccine or a $100 office visit and then have it billed to their insurance, Town Clinic office staff have to take several steps: generate the claim, submit it to the insurance company, wait for the claim to be processed, and oftentimes, find out that the patient has not reached his or her deductible. Staff must then seek payment directly from the patient.
“By using insurance for every healthcare expense, we increase the administrative time for both medical clinics and insurance companies. That translates into higher cost of care and higher premiums,” Dr. Thorson said. “With a $10,000 deductible, you would have to see me about 60 to 70 times a year to reach it, but a single hospitalization could quickly exceed that amount.”
By paying some costs—like the flu vaccine or office visit—without going through insurance, and reserving deductibles for high dollar items like surgery, Thorson believes the cost of care and premiums could possibly decrease. He could provide preventive care at a lower cost if his clinic didn’t have to account for navigating insurance reimbursements. It’s also helpful when patients keep the clinic up to date on policy changes.
“Almost every week, there is a claim we hear about where the patient wasn’t an eligible member, so it’s completely denied,” said Marsha Thorson, office manager at the Town Clinic. “Then we’re tracking down the patient, asking is this true, and do you have new insurance you didn’t tell us about?”
The process has grown so time consuming and cost prohibitive that some primary care providers are forgoing insurance altogether and pursuing a direct relationship with patients by providing care for a set fee. They’re called concierge doctors, and according to healthcare consultant Rick Huntington, they’ve become much more prevalent in the last five years.
“It’s a cash deal, no insurance,” Huntington said. “It really cuts down on a physician’s overhead and expenses, but the person has to have cash to pay the fee.”
According to an April 2011 article in The New York Times, patients pay, on average, between $1,500 and $25,000 per year to receive concierge care from their doctors. It’s a more personalized form of care that has received a lot media attention for serving the wealthy. One doctor featured in the article charges clients as much as $70,000 per year.
But some primary care providers are also developing what Dr. Thorson calls a “concierge variant” by charging a yearly membership fee for healthcare—some plans are as low as $500 a year, and include most services provided in the clinic setting.
These doctors, he said, are simply looking for a more sustainable model to deliver care. And indeed, one New Jersey doctor’s rationale for providing this type of wellness plan echoed Dr. Brickman’s insights in Part 3 about paying doctors to keep people healthy. The doctors web site reads, “Dr. Horvitz set up Wellness Plans that do not reward him for performing extra procedures, tests and office visits.”
His approach is just one example of how the current healthcare system is motivating physicians to consider alternative ways to provide care, testing new models even as the national debate over healthcare continues to swirl. It is a good reminder, in fact, that oftentimes the most innovative healthcare initiatives take place at the local level.
Finding solutions on the local level
“Healthcare is delivered locally,” Huntington said. By contrast, on a national level healthcare is often a political hot potato. After Hillary Care failed during the 1990s, it was politically dangerous to talk about healthcare and even now, the Affordable Care Act is mired in political debate.
“So most of the great initiatives—and not so great initiatives—happen on the local level,” he continued.
And if there’s one thing that’s clear in the Gunnison Valley, it’s that leaders are taking strides to keep healthcare accessible and affordable—and they also want to involve the community in that conversation.
“We have started talking about hosting a community meeting where patients and members of the community come together and tell us what they want from our clinic and the care they need, and to start having community-based conversations about health care,” Dr. Thorson said.
“Healthcare debates have been going on at the federal level for a really long time, and waiting on our politicians and congress to make changes also takes a long time,” Marsha Thorson added. “…I think we’re in trouble if we wait for our politicians to come to agreement. Changes can be made locally, whether at the state level or the county level, even the city level—I think that’s something every community needs to think about.”
The Thorsons plan to hold the meeting sometime this summer, but they’re first reaching out to patients for input on topics and timing. Community members interested in the meeting can contact them with ideas at email@example.com.
And according to Michelle Campbell, chief marketing and business development officer at GVH, plans are also in the works to create community advisory groups at both ends of the valley this fall.
“We’d keep them informed, but most of all, we would ask for their input to make sure we’re developing programs and providing services that meet the needs of the community,” Campbell said.
One thing is clear: now is the time to get involved. As Huntington said, “There’s a lot of uniqueness to every community and the way they finance and deliver healthcare. The individuals are unique, probably none more unique than Crested Butte.”
Alternatives to commercial insurance
Several programs provide health insurance to Coloradans who cannot afford individual insurance or have lost or been denied insurance due to pre-existing conditions:
Coming Soon: Colorado Health Benefit Exchange
In June 2011, Colorado lawmakers created the Colorado Health Benefit Exchange to increase affordability, access and choice of medical insurance through web sites sand other tools.
A new report from the Colorado Public Interest Research Group details feedback from over 700 Coloradans, including the Gunnison Valley, to inform its creation. It emphasizes the importance of personalized guidance and the ability to search by criteria like cost and covered benefits. More information about the report is available at www.copirg.org, and you can learn about the Exchange—which is expected to open in late 2013—at http://www.getcoveredco.org/Index.