Feature Stories - June 2007

Industry Focus

Healthcare

Recently, industry experts sat down at Cili in Las Vegas to discuss the challenges facing Nevada’s healthcare industry, such as recruitment, retention, emergency room overcrowding and Medicaid. Kathleen Foley, former editor-in-chief of Nevada Business Journal, served as the moderator for the event as part of the magazine’s monthly Industry Focus series, which brings industry leaders together to discuss issues pertinent to their professions. Following is a condensed version of the roundtable discussion.

Impact of Sierra Health Services Buyout by United Healthcare

Paul Davis: United and Sierra look at this as a positive for the community. We think it will expand choices for the community by increasing products and innovations by combining the best of both organizations to benefit both sides of the equation, in terms of the merger.

Bill Bannen: United brings a big, national corporate presence to Sierra. It’s a positive acquisition for the community.

Anthony Pollard: I think there is less concern from a contractual agreement standpoint. United has a broad range of products, and they have an impact nationally, as well as geographically, so I think that helps.

Steve Dixon: It raises a variety of issues for the insurance industry, in terms of concentration on market power and targeting insurers.

Ken D’Amico: I think that physicians are receptive to United entering the market. Historically, Sierra has created a lot of tension between providers and payors, and it can only improve.

Expediting Medicaid Care Through Presumptive Eligibility

Dixon: This has worked well in other states because it provides an easier methodology for making sure the patients receive care without having to go through the financial hurdles for those who have no resources at all. This paves the way toward expediting patient access to sites of care and solving the financial issues.

Charles Perry: The fiscal note that has been placed on the bill Medicaid presumptive eligibility is around $10 million. And, there is a $100 million shortfall gap that everybody is wondering how to close. I’m not real optimistic that it’s going to pass.

Howard: It comes down to available dollars. In some cases, there are other priorities in the state, usually where an established program is already in place, and this will attempt to expedite some of the dollars.

Perry: Well, the fact of the matter is, this is not supposed to cost more money. But it does involve the state expediting money a little bit faster than it would normally.

Staffing Crisis

Howard: We have made progress. We’re no longer the worst in the United States with regard to nursing staff shortfalls and poor nurse-to-patient ratios in our hospitals. We’re behind California now, and Utah is number three. The nursing program will help hospitals. The Legislature has increased the size of the programs and new programs have started within the last three years with University of Southern Nevada and Nevada State College. The healthcare industry has done an extremely good job of including those students in our hospitals and other facilities so they can get the proper education. As a result of its explosive growth, however, Las Vegas is unique. What other community has had eight new hospitals built in the last twelve years? It comes down to the number of people moving into the Valley, the amount of healthcare facilities, the number of beds required to serve the growing population and the shortage of qualified healthcare employees. There is another bill that recently surfaced that will give the mental health facilities the ability to do onsite medical examinations of their patients so they don’t have to be brought to a hospital emergency center first.

Howard: The other interesting thing is that even with the HCA (Hospital Corporation of America) hospitals not accepting the Sierra Health patients, we have not seen any abatement in our emergency center visits, especially at MountainView. We actually treated more patients in the first quarter of this year than we saw first quarter last year. And that’s with about 25 percent of those who previously came in through Sierra Health. So with the growth, we are still seeing more and more patients in our emergency room centers.

Relieving Emergency Room Overcrowding

Dixon: If passed, this bill will help with emergency room overcrowding. When I walked in this morning, we had five mental health patients occupying beds. They were all cleared medically, but they were just waiting for a place to go. We are still severely lacking in mental health resources in this community.

Howard: As previously discussed, providing alternative services for mental health patients will go a long way toward alleviating the problem. We have reported at times, anywhere from 90 to 150 beds here in the emergency centers in Nevada that are occupied by mental health patients waiting to be transferred. Providing dedicated facilities for these patients will be the quickest, most cost effective way to free up beds in the acute care services and emergency departments of Southern Nevada’s hospitals.

Addressing the Uninsured Population

Dixon: I haven’t seen a significant change in numbers of uninsured patients coming to our facility. It is an interesting part of the hospital’s patient population. We provide care just like all hospitals do, regardless of people’s ability to pay. So that seems to be a fact of life for us. Many states are trying to address the uninsured issue on a state-by-state basis.

Howard: Emergency rooms are the uninsured population’s only access to healthcare. And those patients are sicker when they come in because they wait longer to go to healthcare facilities.

Pollard: That’s because they can’t pay.

Bannen: First, the truly poor who can’t afford insurance and don’t have any coverage. Second, 15 million young adults who earn $50,000 to $60,000 a year and don’t see the value of health insurance. We are developing catastrophic insurance plans for this group of people. An additional 15 million in this second group are struggling to survive on hourly pay just above the poverty line – they cannot afford insurance and are ineligible for Medicaid. The third segment consists of 15 million people who are eligible for Medicare and Medicaid, but for whatever reason, don’t seek medical treatment until it’s an emergency. Many don’t earn enough money to buy insurance, but need it – working moms, single moms, housekeepers or employees of small businesses. So, I don’t think the problem is quite as big as the numbers, but these individuals continue to appear in the ER as uninsured. Unfortunately, the group aged 25 to 50 who make $50,000 a year, end up taking a real hit. The unpaid costs of those people who are not on Medicaid, as well as the uninsured poor, are absorbed and written off by the hospital.

Insurance Reimbursements

Perry: Most of the government programs started out as cost-based programs. About 40 years ago, they were actually paying the cost of care. Now, hospitals are being shorted nearly 30 percent of what it costs to provide the care. This cuts into such expenditures as improvements needed at facilities or the addition of new technology. In the nursing home sector, we have lived with that phenomenon for a long time. And now, hospitals are taking the same type of hit to their bottom line. Something has got to give somewhere.

Howard: Hospitals would gladly take any kind of reimbursement, but we typically do not see any. We have eaten the whole unpaid cost in the past. But, this is a national problem and Nevada is one of the five worst states when it comes to that.

Dixon: Well, medical insurance doesn’t cover the full cost of care regardless, so those costs do get passed on to somebody. Hospitals don’t have a printing press where we’re able to just grind money out at-will. Employers end up paying for those costs in the form of higher healthcare benefits for their employees.

Howard: Our coverage for the uninsured is increasing each year. More and more uninsured people are passing through, and they’re usually sicker so their stay is going to be a day or so longer and they’ll need more costly care and treatments.

Pollard: Given that, would there really be a reduction to the paying customers who have policies based upon a true program?

Dixon: Insurance companies are accountable for setting premiums and a portion of that premium is designed to subsidize the uninsured.

Bannen: I think that’s realistically true, although we’re not happy about having to subsidize the uninsured. This is reflected in premium costs and Nevada is a very sensitive state to the continual rise in premium rates. It truly is a free market enterprise where the ability to negotiate the market shares and other things come into it.

Davis: I agree. From a public policy perspective, regardless on which side of the equation you sit, the citizens of this state are ultimately paying for that care. If you want to put a program in place that pays for it proactively, then preventive care may be the solution. The simple proverb, “An ounce of prevention equals a pound of cure,” means that, dollar for dollar, hospitals can provide far more preventive care, funds, technology and management, than emergency treatment for very sick patients who are there because that’s their only access to healthcare.

Dixon: Unfortunately, that is right. In the early ’80s, the promise from the federal government was that every year we would receive an update payment raise based on medical care cost inflation. That lasted for one year, maybe. Every year after that, it’s been medical care costs, inflation minus 1 percent to 3 percent.

Sanchez: We represent a very small segment of the market, but it’s also probably one of the most costly portions of the market, in the terms of providing care for cancer patients. Often the vast majority of expenses are incurred during the last few months of these patients’ lives. The explosion of new drugs and treatments has really helped our situation. These treatments are not all generic, in terms of treatment. One treatment, for example, costs as much as $14,000 – every two weeks. So, it’s a tremendous financial burden that we’re all bearing. Is it worth it – given the outcome some of these patients can expect? Fortunately, we are not in a situation where we are forced to ask that question. It is more of a societal issue and a constant tug of war. From our end, we feel that by managing costs, we can properly manage the type of care we provide. U.S. Oncology has a program called Clinical Pathways which allows us to take every patient with every type of malignancy and determine the optimal treatments to be administered. In a sense, it’s almost a model for the industry. A model like this would significantly change the way we practice in the future. We think that we can work together with the healthcare agencies and hospitals to try and continue to provide the quality of care, but also be mindful of the costs of care.

D’Amico: With acute long-term care, the expenses are exaggerated even more because the situations are medically complex – sometimes directly from the ICU. Because of the decreasing reimbursement of Medicare and the insufficient reimbursement of Medicaid, the burden often falls on our ability to negotiate an agreement with the payors. Someone has to absorb the cost.

Recruitment and Retention

Howard: It is becoming harder to recruit healthcare personnel because of the increased cost of housing. Nevada used to be the place to move to because of the low costs. But now, people are looking at the Midwest or Texas because they can buy a huge property and still have money left over. That is not the case in Nevada anymore. It affects both recruitment and retention.

Dixon: Ultimately, it affects the cost of the care provided. The inpatient-care costs are driven by those factors. If we can’t recruit people at the current rates, then the rates go up. And those costs again get passed on to the government, should they choose to pay, or private employers who choose to offer health insurance.

Perry: We’re pricing our employees out of the market, too. I mean, where are your employees going to live if they can’t get affordable housing right here in Nevada? It’s a big problem. We have vacancies in our facilities because we can’t get the staff. And if you can’t take care of somebody in long-term care because you have a shortage of staff, you better not take them as a patient at all. We get sued increasingly under contract law because we either did something that we weren’t supposed to do – or we said we would do something but didn’t – and then, that’s where they sue you for malpractice.

Pollard: We have an issue with recruitment of physicians here. It’s going to continue, and eventually cause an issue in the ability to give adequate care. Soon, the physicians who are graduating here won’t be able to afford to practice here.

Dixon: These physicians, once trained, are competing in a nationwide market. That competition plays out when physicians choose to set-up practice. We can train them but unless we can retain them, it has a very limited impact. The hope, of course, is that if you train folks here, they will stay here. But there is no guarantee that will happen.

Howard: Most physicians have to see 20 percent more patients now than they did five years ago, to make the same amount of money.

Sanchez: It’s worse than that. The median age of a physician in oncology is 55 years. Doctors who are in training look at oncology as stress-type employment for which training takes far too long. We’re seeing physicians in medical school migrating towards areas of dermatology, ophthalmology – areas where they can set their hours, as well as their rates. We’re also finding that younger physicians have a completely different work ethic. They don’t work as hard or long as seasoned physicians.

Managing Growth

Pollard: I think you are going to see more Wal-Mart type settings for medical practices – one large governing body because of the space limitation and high rent. It just won’t work in today’s environment, based on the rent rolls to operate typical clinic-type facilities. I can see medical practices becoming like Wal-Marts and Walgreens – it may have already started happening.

Bannen: It has – it’s called Medical Clinics in America and they have partnered with Walgreens or Wal-Mart. Basically, they put nurse practitioners in Medical Clinics of America and you don’t see a doctor, but a physician assistant or nurses assistants. Those options are already occurring for patient’s care. To solve the larger problem, we have to decide end-of-life issues. It will come down to the cost. These are legal, ethical and political issues that we have to start dealing with. We have to manage our healthcare decisions. Are we going to cover everything from cradle to grave? At what point does the family take care of it? And, at what point do we say, “Maybe this person really shouldn’t have a transplant.”

Pollard: Can you take a socialistic formula and squeeze it into a capitalistic formula? That’s basically what we are doing with healthcare.

Dixon: It will have to play out politically. The can will be kicked down the road so that somebody else has to deal with it.

Davis: Drug companies are also hurting us with their commercials that say, “Ask your doctor for this prescription.” But, these people don’t know the side effects or if there’s something better for their issue that’s less costly. Providers and insurance companies like providing the purchasers of insurance with the transparent claims information so that they can start making some real consumer group decisions, all the while the consumers still believe they can access the healthcare environment for a $5 co-pay.

D’Amico: There is only one person who can admit or discharge a patient. But every time a group accepts a lower rate for higher volume, it waters down the programs for their own benefit. Physicians have let this get out of control. At some point, there has got to be some solidarity for them to come together and say, “Enough is enough.” There’s so much competition, we have almost sold our souls. Now you have the insurer, payer and attorney – all trying to determine the right decision. But we know who is supposed to make the decision and who has the most liability for that decision. We need to look toward our physician leadership to pull us back in line and tell us the right way to go.

Pollard: In terms of business, ethics and managing care for patients, I think we [physicians] are more empathetic towards people and the delivery of care. We really weren’t trained to be businessmen. The real issue is that people do not take care of themselves. There is no accountability here for why people have the sicknesses and diseases they have. We all have free demeanor of choice. We all have to make choices and accept the consequences for those decisions.

Davis: Until we come together as respective organizations and discuss how to manage healthcare, we’re not going to ever lower healthcare costs, we’re just going to shift the costs to each other [physicians and payors].

Bannen: I think you are exactly correct – kicking the can down the road.

Pollard: It’s called realistic expectations.

Howard: But you always have the unexpected. My 21-year-old daughter was a senior in nursing college and she came down with leukemia. The chance of survival was 90 percent, but she was among the 10 percent who do not make it. What caused the leukemia? Was it the Agent Orange in Vietnam? Was it growing up in Las Vegas during nuclear test? You are always going to second guess.

Bannen: You do whatever you need to do to try and save them. I’m not sure you transplant a heart into an 80-year-old. I’m not sure we spend enough or too much money on leukemia treatment and research. I’m not sure those are appropriate decisions for us to make. We can offer preventive OB-GYN healthcare for thousands of women, which is a better use of the dollar. I’m kind of optimistic. Our problem is bringing everybody together and staying open-minded. If we don’t, the government will force us to and we’ll pay the consequences.

D’Amico: I can see crossroads here – diagnosis just so the family can keep the checks coming. I’ve faced some real ethical issues. I think that’s where we are in the healthcare. We’re kind of at an ethical crossroads – do we go more toward socialist or back to capitalist?

Bannen: We need to use common sense and be realistic. We need to say we have a limited healthcare dollar here. How do we use it to our advantage? Let the American public tell us what they want?

Davis: We spend more on healthcare as a society than any other civilized country in the world. The reality of it is that the dollars aren’t being spent appropriately. It’s great to talk about this in theory, but the person we’re talking about is somebody’s daughter, somebody’s wife and somebody’s granddaughter perspective changes everything.