Feature Stories - November 2006

Healthcare Checkup

What’s Ailing Nevada’s Hospitals?

by Jessica Santina

Nevada makes a living from gamblers looking for “lucky numbers.” But with healthcare, Nevada’s numbers are anything but lucky: Nevada ranks 47th in the nation in physicians per capita, and 49th for nurses. Approximately 19 percent of the population is uninsured. And here in the fastest-growing state, those 65 and older – those who put the greatest strain on the system – are the most rapidly growing segment of the population. Hospital executives know there’s no easy remedy.

Bursting at the Seams

According to the University of Nevada’s Center for Economic Development, Nevada’s population will increase 29 percent by 2014. The number of Nevadans 65 and older – baby boomers – will increase by 45.8 percent. They will increasingly rely on new medical advances as they age, further straining an already overburdened healthcare system.

“For the last 15 or 20 years, growth has been an issue,” said Bill Welch, president and CEO of the Nevada Hospital Association. “It causes us to be short of the healthcare workforce needed to keep up. We haven’t had any major change in the number of nursing students we’ve graduated, and our physician education program hasn’t had a major change since the ’70s. Infrastructure hasn’t kept pace with demand.”

Maintaining adequate staffing levels is a problem around the country, but Nevada’s difficulties are compounded by growth. One effect is that housing costs in Southern Nevada are now holding at around $308,000; in Washoe County the median housing price is $330,000. The high cost of living makes recruitment of nurses, surgical technologists, medical assistants, home health aides and other lower-paid – but much-needed – staff a challenge.

Nevada also has the smallest capacity for residencies in the country. The average physician in Nevada is 55; as those doctors retire, the number of physicians per capita will continue to shrink.

Touro University and the University of Southern Nevada recently added nursing programs, and the private National University in Henderson offers nursing programs in the evenings and online. As Welch explains, in 2003 the Nevada Legislature approved the NHA’s request to double the size of all state-supported nursing programs. But this only increased the number of graduates from about 300 to 600 per year – not nearly enough to meet the demand, which the Western Interstate Commission for Higher Education (WICHE) said is about 1,100 each year.

“The chancellor and the Board of Regents have created an ad hoc committee focused on healthcare, which will recommend funding requests to again double nursing enrollment, and to coordinate nursing education at community colleges and universities to create better articulation,” said Welch. “But we still have an extreme shortage of nursing faculty.”

Without faculty, doubling enrollment does little good. The average age of nurse educators is 55, and retiring educators will soon need to be replaced. Both Nevada State College and the Community College of Southern Nevada turned away more nursing students than they accepted for this fall, due to a lack of resources.

As for physician staffing levels, Bill Welch said, “Tort reform was passed by the Nevada Legislature in 2004 and upheld in 2005. That’s starting to help get the medical malpractice issue – which was keeping so many physicians from practicing here – under control. But it’s not fixed yet. We’re running just under 200 residents a year, and we need more than double that.”

Staffing Solutions

Sam Kaufman, CEO and managing director of Las Vegas’ Desert Springs Hospital Medical Center, believes that quality, not quantity, is the key to employee retention. “Having a relationship with staff is important,” said Kaufman. “They like to be communicated with, so we’re always out on the floor with them. I hold monthly lunches and breakfasts so the staff can discuss issues with me. Retention is the most important thing, so we put tremendous effort into that.”

Desert Springs is part of the Valley Health System, which has four locations in Southern Nevada and a fifth in the works. It’s the only Nevada hospital to be nationally accredited by the Society of Chest Pain Centers; its Center for Surgical Weight Loss is a nationally accredited Bariatric Surgery Center of Excellence, and its Diabetes Treatment Center has been nationally recognized by the American Diabetes Association. Kaufman feels that having such quality programs helps with recruitment. “We have to offer competitive wages and benefits, too. But the fact that we have programs like these is very attractive,” he said. 

The flagship of the Valley Health System is Valley Hospital Medical Center in Las Vegas. As CEO Greg Boyer explained, Valley, like many hospitals, is determined to grow its own recruits. Valley now provides graduate medical education, through partnership with Touro University and the University of Nevada School of Medicine (UNSOM). Boyer projects about 100 new residency slots will be available in the next three years. A three-slot dermatology residency program was also recently approved.

Valley provides intensive education for nurses in areas of specialization, such as critical or emergency care, or labor and delivery. Tuition reimbursement is available, and its Nurse Apprentice Program helps students get on-the-job experience. Its partnership with UNLV allows Valley’s nurses with master’s degrees to serve as clinical instructors.

Renown Regional Medical Center (formerly Washoe Medical Center) in Reno is addressing cost-of-living barriers to recruitment. “We’re building a residential facility across from our main campus, which allows us to offer housing to potential employees,” said Renown’s CFO Dawn Ahner.

Renown partners with nursing programs at the University of Nevada Reno and Truckee Meadows Community College. This allows Renown to conduct a student nurse mentor program, add nurse educators and clinical nurse specialists to the staff, pay for nurses to gain specialized expertise and certifications, and provide faculty for those nursing programs. Renown is also a teaching hospital with a residency program for UNSOM.

St. Rose Dominican Hospitals, the only faith-based healthcare organization in Southern Nevada, has three campuses in Clark County. Vicky VanMeetren, president and CEO of the San Martín campus, believes this appeals to recruits. “We deal with the body, mind and spirit here,” said VanMeetren. “I think that makes us the employer of choice for many people.”

St. Rose pays tuition reimbursement and offers scholarships to every nursing school in town. VanMeetren added that for hospitals to boost staff numbers, they must reach out to young people. “We need to change attitudes about going to work in this field,” she said. “We go into schools, explain to young people what the opportunities are, and answer their questions. We even have high schoolers shadow our managers on Bosses Day in fields like marketing, to show them that those careers also exist.”

Saint Mary’s Medical Center in Reno is also a faith-based organization, which CFO Don Kowitz said is a major selling point. Aside from competitive wages and traditional benefits, its creative recruitment offerings include a new fitness center, career planning and coaching, bonuses for national certification, flexible scheduling, use of its Child Care Center and even discounted ski tickets.

A Healthy Bottom Line?

Hospitals aren’t exactly making money hand-over-fist. According to Welch, profit margins for hospitals in Nevada average between 2.5 and 4 percent – in the bottom quartile in the nation. So why are healthcare costs increasing?

Increasing technological advances and longer life expectancies are part of the issue. Meanwhile, as Welch explained, about 60 percent of a hospital’s business is with those Nevadans using federal programs, such as Medicare, Medicaid or Indian Health. Those reimbursement rates are set by the government. “The majority of those programs pay anywhere from 5 percent to 15 percent less than our actual costs to provide service,” said Welch.

Meanwhile, as Dawn Ahner pointed out, 19 percent of the state’s population is uninsured, so the pool of people to cover those remaining costs keeps shrinking. “Government payers don’t cover the cost of care, which leaves healthcare facilities challenged with being good stewards of resources and picking up the shortfall,” she said. “It’s a challenge to be financially viable.”

And the number of uninsured or under-insured workers keeps climbing. That means those people are using emergency rooms – where federal law requires hospitals to examine and treat patients – as primary-care facilities.

Another factor clogging ERs to the breaking point is a lack of mental health facilities in the state. “On any given day, we’ve got patients who need mental care sitting in our ER,” said Greg Boyer. “We don’t treat psychiatric patients, but we have to hold them if we think releasing them will pose a threat. We may end up holding as many as 15 people at a time. Those patients take valuable resources away from those with legitimate health crises.”

Sam Kaufman said this is especially true at Desert Springs Hospital. “Here in the center of town, we have more than our fair share of uninsured, indigents, illegal immigrants and hard-to-collect payments. It’s probably 25 percent of outpatients daily. Financial reimbursement is a real challenge for us.”

Boyer added that the Medicaid enrollment rate in Nevada is 7 percent; the national average is 13 percent. “The criteria here are far too high, so most people don’t qualify.”

University Medical Center in Las Vegas is Clark County’s only public hospital. CEO Lacy Thomas said that because UMC is owned by taxpayers, and not shareholders, remaining financially viable is a challenge. “Part of insurers’ appeal to companies is lower costs,” said Thomas. “They’ll then try to drive down costs with us. But the cost of care is the cost of care. We’re in a unionized environment. So you get into a tug of war that makes it difficult for hospitals to get their fair share.”

Ensuring Healthy Outcomes

Anthem Blue Cross and Blue Shield, the second largest insurer in Nevada, serves about 220,000 Nevadans. As Joe Hoffman, vice president and general manager of the Nevada and Colorado offices, explained, making sure people get the right kind of care is closely tied to rising costs. He referred to this year’s “First National Report Card on Quality of Care” by Rand Health, which found only 55 percent of Americans receive the recommended care, revealing “substantial gaps between agreed-upon standards of care and the care actually provided.”

Hoffman said Anthem negotiates with hospitals to arrive at a mutually agreeable reimbursement rate. (Sierra Health Services, the state’s largest insurer, chose not to be interviewed for this article because at press time, it was in the midst of contract negotiations with hospitals.) The per diems, or amounts paid for each day a patient is in the hospital, are locked in as a way to keep costs reasonable. “We try not to tie our rates to hospital bill charges, to make them more predictable,” Hoffman said. “They’ve gotten to be unrealistic. We’ve all heard stories of patients being charged $100 for Tylenol, those kinds of things. This puts a burden on hospitals to be efficient.”

Anthem, he said, is doing its part to improve outcomes. This includes offering case management programs to help members deal with ongoing conditions and properly follow doctors’ instructions. Anthem is also encouraging consumers to try to understand the cost of care they’re receiving.

“People read Consumer Reports to buy a dishwasher, but they don’t do nearly enough homework when it comes to cardiac surgery,” said Hoffman. “Prevention and appropriate treatments are a significant portion of costs.” He added that statistically only 10 percent of costs are driven by care delivered, 50 percent by behaviors, 20 percent by genetics and 20 percent by the environment. “If we can help to control behaviors – getting people to eat right, stop smoking and follow doctors’ instructions – that can be significant.”

Hoffman said approximately one-third of the uninsured are actually eligible for government programs like Medicare, yet aren’t enrolled, while another one-third live in households earning more than $50,000 per year. The remaining one-third are working poor who are unable to purchase insurance. Programs like Anthem’s new Tonic, for 20- to 29-year-olds, help cover those most likely to be uninsured, but who are generally in good health. “You want healthy lives in the insurance pool, to help offset the costs of the not-so-healthy,” he said. “If we can insure people who can afford it, and get others properly enrolled in government programs, that will go a long way to solving our problems.”

In some cases, hospitals themselves have become insurers in order to weather the reimbursement storm. In Northern Nevada, both Saint Mary’s and Renown offer their own healthcare plans; this is a rarity. “It’s really an out growth of how this community has evolved in terms of its relationship between hospitals and health plans,” said Kowitz, referring to many insurers’ contracts with specific hospitals. “[Having our own health plan] has provided another leg of stability.”

“We’d be hard-pressed not to have insurance,” said Ahner. “For us it’s an integral part of healthcare. It helps us compete with larger national players and offer services to the local community. “

What’s the Prognosis?

Most agree that there will have to be some changes in the healthcare industry. What they will be, and what effect they’ll have, is anyone’s guess.

Kowitz predicted that discussions about what kind of care is really necessary will begin taking place. “More isn’t necessarily better. Look at the pharmaceutical industry. We used to treat indigestion with antacid, but now it’s called ‘acid reflux disease’ and we have people asking for Nexium because they saw it on a commercial. As the system gets pushed, we’ll have to make decisions about what kinds of treatment we really need.”

VanMeetren points to St. Rose’s new Joint Replacement Program, which was developed for active, otherwise healthy patients needing joint replacement. This program treats patients like outpatients; a family member or friend receives early training to become a “coach” to the patient, and can assist with recovery after a short three-day stay. “While I believe the number of stays will increase, I think in the long run, their duration will be shorter, thanks to patient education,” said VanMeetren.

Thomas’ biggest concern about the future is that many boomers are healthcare workers. That leaves UMC to fill those gaps. UMC is looking to expand its part-time employee programs to attract more staff. But Thomas said it’s not keeping him up nights. “The reality is that we’ve had challenges in every decade, and we’ve met them,” he explained.

All in all, Welch is optimistic about the future of healthcare in Nevada. He said, “We have a dedicated hospital community, regardless of the challenges, and its members continue to look for ways to be more efficient, to better utilize their resources to ensure Nevadans access to quality, affordable healthcare. And we’re committed to meeting those challenges.”

Jessica Santina
Jessica Santina is a freelance writer based in Reno.