HEALTH MANAGEMENT ASSOCIATES Shelby County Health Care System: Assuring the Health of the Public July, 2003 Pat Terrell, Project Leader Terry Conway, M.D. Eileen Ellis Dave Ferguson Jay Rosen Steve Scheer Shelby County Health Care System: Assuring the Health of the Public Introduction In May, 2003, Mayor AC Wharton contracted with Health Management Associates (HMA) to undertake a two-month study of the following aspects of the health care delivery system in Shelby County: 1) the potential for short-term financial remedies and long-term sustainability of The Regional Medical Center at Memphis (The Med) and the other health care facilities owned or subsidized by the County; 2) opportunities for enhancing the structural and operational cohesiveness of the existing network of clinics and hospitals that serve the County’s poor, particularly focusing on TennCare enrollees and the uninsured; 3) recommendations on enhancing the working relationship between the health system and its medical staffs; and 4) possibilities for partnerships with other health care providers to allow the County to more effectively meet its mission to assure the health of the public residing within its jurisdiction. Over the past sixty days, members of a diverse HMA team have met personally with elected officials, physicians, health care administrators, business leaders, community representatives, and staff from state and local government (a list is attached in the Appendices). Financial, clinical and utilization data were collected and analyzed. Comparisons were made to public health care systems in other cities. The analysis and recommendations that follow are the result of this inquiry. Overall, several key findings have emerged related to the “health care system” that serves the medically and socially fragile residents of Shelby County: The role of Shelby County government in the health care system in greater Memphis is significant, both in terms of its quantifiable financial commitment of over $44 million annually and in the breadth of its investment in the continuum of care. It either directly operates or is the primary source of subsidy for facilities and programs ranging from public health stations to primary and specialty care outpatient clinics to inpatient and long term care institutions to correctional health services. Because of its current and historic role in guaranteeing access to health care services, Shelby County government is in a unique position to lead a restructuring that will assure the greatest possible efficiency and effectiveness of the health care system. The component parts of a comprehensive health care delivery system are all in place but need to be coordinated to assure the most effective and accountable delivery of care to meet the complex needs of a medically vulnerable community. Additional capacity appears to exist in the system to assure access to all of those who need services. No one element of the system can stand alone, however, and the relationships between the various levels of care need to become disentangled and clarified. The current components of the health network taking care of the 2 majority of the TennCare and uninsured patients in Shelby County are: the Health Loop clinics (primary care), the MedPlex (specialty care), the Med (inpatient and emergent care), LeBonheur Hospital (outpatient, emergent, specialty and inpatient care of children), Methodist Hospital (through its operation of Bowld Hospital and its care for certain patients referred from The Med), and Oakville Nursing Home (long term care). The University of Tennessee School of Medicine (UT) is also a major component of the system through its provision of medical staff at most of the institutions named above. It is likely that additional money will need to be infused into the system in order to adequately meet the needs of those who depend upon the safety net for their health care. There are new avenues to be explored to maximize state and federal dollars coming into Shelby County and, in addition, there are internal activities that could generate additional revenue and save costs. The relationship between the components of the health system and its medical staff—at all levels of the delivery of care—is an essential element in both understanding the current situation and in embarking on new directions to improve the quality, patient experience, academic and financial stability of the health care system. Partnerships between the publicly supported components of the health care system and private providers are already a critical element of the continuum of care. However, it is essential that these relationships are clear, accountable and coordinated as part of one “seamless” delivery system. It will be vital to align the incentives on all levels that assure ongoing participation in the system. The most essential requirement for the establishment of an effective and efficient health care system for the most fragile residents of Shelby County is a clear and universal understanding of the following: who are the patients to be served; what services need to be provided to adequately care for them; who will provide what level of care and where will it be provided; how is continuity assured and duplication prevented, and; how is this care going to be paid for. This vision must be shared by the providers that deliver care, the funders that pay for the care, and the patients that rely on the care. The analysis that follows is built around the findings described above. 3 Vision for a Shelby County Health Care System At first glance Shelby County could simply be characterized as less healthy than the United States overall. Certain sentinel conditions such as infant mortality stand out (Shelby County 12.5, Tennessee 8.7, and USA 6.9 per 100,000) as worse than the national rates. Likewise, HIV/AIDS is high for Shelby County as is homicide and sexually transmitted disease. When Shelby County is compared to other counties in the United States of similar size and similar levels of poverty, the residents of Shelby County are shown to live shorter lives and report their health as worse. More specifically, infant mortality, adverse birth measures such a low birth weight, deaths from cancer, heart disease, stroke and injuries are all higher than other poor urban counties. (See additional data in the Appendices). Despite its poor health status, Memphis is a city with an impressive amount of medical resources. The area has more hospital beds than the rest of the USA on average. The residents of Memphis with Medicare receive 163% more cardiac catheterizations than others in the country as well as a third more upper gastrointestinal endoscopies and 75% more MRIs. However, who receives these services does not necessarily seem to be determined by patient or population pathology or need. It should be recognized that Shelby County is not composed of one homogenous population. Certain census tracts, primarily those located within the City of Memphis, suffer a startling burden of poor health. These communities are much poorer with a substantially lower median household income than the remainder of the county. In these communities, mothers are often young and their babies are born smaller and are more likely to die before the age of one. These are all conditions that are amenable to prenatal care and general women’s health care. Adults are much more likely to die of heart disease and stroke in Shelby County than in similar counties across the country. These conditions clearly respond to ambulatory care of hypertension, hyperlipidemia and arrhythmias as well as assistance in behavior change such as smoking. Subspecialty care is also indicated, such as cardiac and vascular procedures to decrease mortality and morbidity. HIV disease and sexually transmitted diseases are more prevalent in these communities, requiring treatment, education and follow-up to decrease effects on the patient but also to prevent spread of these conditions. In order to best address the health care disparities in the Memphis community, a vibrant and focused medical care delivery system, coupled with strong public health and social services, must be in place. The elements exist in Shelby County for such a comprehensive health care delivery system that would: be financially stable; include a comprehensive continuum of care built upon the health care needs of a defined set of patients, most particularly those patients who are covered by TennCare or those who are uninsured; 4 foster unique and clearly delineated partnerships between public, publiclysubsidized and private health care providers committed to a common mission and focus of services; minimize duplication of effort, assure efficiency and maximize revenue streams; have services delivered by a dedicated medical staff committed to all levels of health care within the system, with equal attention paid to the training needs of future providers and the clinical needs of the patients served; operate at optimum capacity to care for the greatest number of patients possible, particularly assuring capacity for all TennCare and uninsured patients who seek services; assure that all dollars spent on services within the system are accounted for and that all levels of care are integrated with the others to guarantee a “seamless” system for patients and staff alike; and provide the best possible opportunity to prevent illness and disability, deliver high quality personal medical services and make documentable progress toward healthier patients and communities. On the following pages, this report documents how such a system could be realized, funded and structured. 5 Elements of the Shelby County Health System PRIMARY CARE Situation Shelby County, in a contractual agreement with The Med, operates a network of ten comprehensive primary care centers, called the Health Loop Clinics. These facilities are, for the most part, co-located with the public health services provided by the combined Memphis/Shelby County Department of Public Health, providing a unique opportunity for assuring that the full needs of vulnerable patients are met in as coordinated a system as possible. In addition, The Med operates primary care clinics within its outpatient specialty care facility, the MedPlex, located on The Med’s campus. The services delivered at the Health Loop Clinics are provided by attending physicians and nurse practitioners on the payroll of The Med (with a few physicians remaining in the employment of the health department) while the primary care at the MedPlex is offered primarily by resident physicians in the departments of Internal Medicine and OB/Gyn. The location of the Health Loop clinics seem to be appropriate to the location of the geographic pockets of need, as gauged by the residences of TennCare enrollees. (See map in Appendices). The migration of pockets of poverty around Shelby County, however, requires that the location of these clinics be regularly assessed. Over the past three years, there has been a steady drop in utilization at the Health Loop clinics. This decline is the opposite experience of most primary care systems that serve the medically indigent around the country, where the demand for primary care continues to rise. The decrease at the Health Loop cannot be attributed to an increase in private or federally funded community health centers targeting care to this population because Memphis has relatively few other such providers. It also cannot be attributed to a decrease in the uninsured and other vulnerable populations. It is of concern that the numbers of visits for adults, the group most likely to be uninsured, has dropped significantly. Just as troublesome, the number of visits for supplemental food programs for pregnant women and children (WIC) and immunizations have dropped from 25,536 in 2001 to 17,126 in 2003. These reductions come at a time when there is heightened awareness of the adverse health status of both adults and children in Shelby County. Despite the seeming available capacity and despite the fact that 74% of Health Loop patients are covered by TennCare, the major TennCare managed care organization (MCO) serving the Memphis area, TLC, states that they could send additional patients into the Health Loop clinics but cannot seem to get them in. The Health Loop’s utilization numbers, compared with the number of providers and physical space, indicate additional capacity for 34,000 community based primary care visits annually. 6 In 2002, approximately 120,000 patients were scheduled for appointments with 9.5% of appointments allocated to new patients. More than a third of the patients scheduled did not show for their appointments. Approximately 27,000 patients were seen as walk-ins. It is clear that the number of patients originally scheduled is inadequate to reach the normal productivity level expected for primary care. The number of exam rooms available is more than ample for this expansion. Support staff for Health Loop clinics is clearly more than adequate to support full productivity levels of current providers. Using the examples of other safety net institutions or private sector staffing levels for primary care, the Health Loop centers are generously staffed with nursing, lab and clerical staff. If additional provider staff was added and hours extended at selected sites (perhaps based on proximity to unassigned TennCare patients), that capacity could be further extended. The irony of having excess capacity is exacerbated by the fact that few if any attempts are made in any coordinated way to refer either adults from The Med Emergency Department (ED) or children from the LeBonheur Hospital ED for ongoing primary care at Loop clinics. There has been a significant effort over the past several months to solidify the relationship between the Health Loop clinics and at least some components of The Med. The referral of primary care patients into specialty services at the MedPlex has received a focused effort to improve the rate of return of specialty consult reports to the primary care provider. The providers being hired by the Health Loop as employees of The Med were initially hired explicitly outside of the usual UT provided staff model. However, several more recent hires are UT-trained with better connections to The Med and other University-affiliated hospitals. There have been some attempts to link the outpatient care at the clinics and inpatient admissions at The Med. However, almost all adult admissions to The Med from Health Loop centers are made through referring patients to The Med Emergency Department. This causes long delays for elective admission patients and unnecessarily utilizes busy ED resources. This outpatient/inpatient connection seems to function more effectively with LeBonheur Hospital for pediatric admissions, although there is still a problem in getting back pediatric specialty consult reports from LeBonheur to the clinics. It is often unclear where patients are sent for inpatient admissions, although the hiring of obstetricians for the clinics who have University of Tennessee appointments and connections at The Med seems to have resulted in a significantly increased rate of referrals for deliveries. Finally, the management of the Health Loop clinics appears to be somewhat convoluted as it is unclear how the health department employees and The Med employees and contract management interact. There seems to be some distrust between the County and The Med which could be exacerbated, in part, by a lack of clear expectations for productivity, linkages between different levels of care/services, and conflicting financial incentives. Ongoing joint planning to meet the demands of patients seeking care, TLC referral needs, or community health status seems lacking. 7 Opportunities The County should pursue Federally Qualified Health Center (FQHC) designation, including Section 330 grants from the US Department of Health and Human Services (the Department). This designation would guarantee cost-based Medicaid and Medicare reimbursement and provide (under Section 330) grants to cover the costs of providing care to the uninsured. A cursory review of the clinic system indicates that they would meet the Department’s requirements to serve populations in need, the partnership with the health department already provides the full range of services necessary to become designated, and there is only one other Section 330 FQHC in Memphis, a very small number for a city of this size. While this designation would require governance change, recent decisions by the Department indicate a willingness to make some concessions for publicly owned clinics. Aggressive measures should be put into place to expand the number of patients scheduled into appointments at the Health Loop clinics. A system should be established with LeBonheur Hospital to facilitate referrals of children without primary care providers into Health Loop clinics. LeBonheur experiences 72,000 pediatric ED visits annually, many for primary care services. This effort should be coordinated with TennCare MCOs to assure assignment of Loop physicians for primary care. In return, LeBonheur should enter into discussions with the Loop clinics about developing specialty care services on-site at Loop clinics of particular interest for Loop patients (i.e., asthma or diabetic services). A system should also be established with The Med ED to refer adults needing primary care into Health Loop clinics. It is clear that the staff in The Med’s ED has very little awareness of the clinics as part of their system and would welcome a way to refer patients using the ED for primary care. This system would need to be designed to be as simple as possible, perhaps providing a certain number of appointments per clinic per day for ED referrals. This should be a priority for both The Med (which needs to decompress their ED) and the clinics, to address the decrease in adult visits. The management of the Health Loop clinics should be clarified so that there is a single point of accountability to the County for operations and a single set of goals and objectives. The physicians practicing at the Health Loop clinics should have admitting privileges at either The Med or at LeBonheur (for pediatricians). They should be expected to admit their patients or be a part of a hospital-based group that would follow their patients as inpatients and return them to the clinics upon discharge. Discussions should take place with UT to develop a physician group practice for the Loop clinics. 8 The Loop clinics should be included in the overall scope of a “public health authority” to oversee all levels of health services serving the medically underserved in Shelby County. (See discussion of the authority below). SPECIALTY CARE Situation The primary source of outpatient specialty care for adult referrals from Health Loop clinics, discharge referrals for inpatients from The Med or from The Med’s ED and from other primary care facilities throughout the area (the FQHC and faith-based clinics) is the MedPlex. Operated by The Med, the MedPlex is a modern clinic facility on the hospital campus. Its outpatient services are provided primarily from UT residents, supervised by UT attendings. One of the most universally expressed frustrations throughout various components of the health system is the difficulty in gaining access to timely specialty care appointments at the MedPlex. This is a particular issue for TennCare MCOs like TLC who seek to refer patients to the MedPlex for specialty care but cannot gain access. This “leakage” from the system cost a significant opportunity for revenue generation. An ongoing concern in gaining capacity in the MedPlex is the overall lack of provider staffing, particularly attending physicians. The current staffing of many subspecialties is miniscule compared to the demand of a medical center the size of The Med, its busy emergency rooms, the Health Loop clinics, the TLC managed care organization, and other safety net providers in the County who have almost no other option for specialty care. Further, the reliance on residents for the majority of the care provided constrains productivity. Attending physicians are able to provide care to a significantly greater number of patients. Thus, the exam room capacity is not fully utilized and a significant number of patients wait a long time for appointments, causing a cancellation rate of 31% and no show rates of nearly 40%. In addition, the regular rotation of residents from service to service disrupts continuity of care for often the sickest patients. Finally, there is significant concern about the obstacles to productivity posed by the management of the facility and its general operations. Despite the national growth of attention to chronic disease management for such complex illnesses as diabetes and heart disease, management which requires regular and consistent visits to specialists, the numbers of visits at the MedPlex have remained nearly flat. The number of exam rooms indicate that, if scheduled differently and if productivity could be extended by using more attending physician staff, a significant amount of capacity could be realized. That capacity would be 9 good for chronically ill patients and good for the system, as more revenue would be generated by serving more TennCare patients. There appears to be problematic management of the MedPlex itself, with tension between UT Chairmen and The Med administrative staff. The MedPlex is clearly seen as an adjunct to The Med’s training programs and its operations can best be understood as primarily serving residency training needs. For example, when it was suggested that, at minimum, the appointment scheduling should take into account the no show rate and appointments should be over-booked by that rate, it was expressed that only the Chairmen could make decisions about scheduling. Other specialty services offered within the system—the pediatric specialties at LeBonheur, the cancer services at UT Cancer Institute, the geriatric clinic, the HIV/AIDS clinic—seem to function more productively, although there is a common complaint that information does not get back to the primary care referring physician. Opportunities The management of the MedPlex must be reviewed to assess the staffing levels, the appointment scheduling appropriateness and the accountability of attending physicians contracted to be present in the specialty clinics. A thorough review of waiting times for new appointments, by specialty area, should be completed and should take into account unmet community demand (i.e., how many diabetics are in the system who will need ophthalmology visits during the course of a year). Scheduling should immediately take into account no show rates and over-booking should be instituted. UT and The Med should engage an independent ambulatory administrative assessment to recommend a clear management model, develop a staffing plan, and determine productivity standards and a monitoring mechanism that both parties agree to. This information should be gathered for inclusion into the UT medical services contract. Efforts should be made, when renegotiating the UT/Med contract, to increase the number of attending physicians paid to care for patients in the MedPlex. It is clear that there will be a higher level of productivity, allowing for a greater number of TennCare patients to be referred from TLC, and other MCOs, generating additional revenue. A scheduling system should be established for specialty care that institutes “rules” for referral into specialty care to assure that these referrals are an appropriate use of scarce specialty resources. For example, all headaches don’t need to be referred to neurology and referral rules, with appeal procedures built-in, would be extremely helpful in determining how best to utilize specialty appointments. Specialty physicians will need to be intensively involved in establishing these referral rules. Models exist in other 10 public and/or academic health systems that attempt to assure the appropriateness of specialty care referrals. LeBonheur Hospital should work with the Health Loop clinics to improve its practice of returning patients to primary care from specialty consults with reports of their visits and recommendations for follow-up. The hospital should also explore the potential for making certain pediatric specialty services available in community clinics. The operation of the MedPlex should be incorporated into the oversight scope of the “public health authority.” EMERGENT CARE Situation It is estimated that 75% to 85% of the admissions to The Med come through the Emergency Department (ED). The emergency services are overwhelmed and, like most large hospitals serving primarily medically indigent populations, are often the site for people in search of regular physician care who are not able to otherwise access it. The clinical and administrative staff in the ED have little awareness of the options available to them for referring patients for primary care. Patients who do need to be admitted to the hospital often wait for many hours until available beds are located, causing further backups in the ED. Over the years, the configuration of the various Departments and teaching services have resulted in the operation of a number of separately administered emergency services areas (medical, trauma, burn, psychiatric, OB) which may not be the most efficient use of space or staff. The psychiatric unit is essentially a holding area for patients who, having been brought in during a crisis, await evaluation and potential transfer to a State psychiatric facility. For a variety of reasons, this process can be prolonged. These patients, many of whom are clearly disturbed, sit for hours and even days in lounge chairs in large rooms (male and female) awaiting disposition. Although staff may be skilled and compassionate, the physical characteristics of the unit may actually worsen the condition of patients being held. Because the ED is the front door to the hospital, the confusion and over-crowding can discourage patients who have other options from seeking treatment there. 11 Opportunities A system should be put into place to give blocks of daily appointments at Health Loop clinics to The Med ED staff so that they can give out real appointments to patients waiting in the ED for primary care. This system should be jointly developed between The Med and the Health Loop clinics to assure transfer of ED discharge summaries to minimize duplication of diagnostic tests. A procedure should be developed to allow for the direct admission of patients from clinic settings to minimize the number of patients sent through the ED when it has already been determined that they will be admitted to the hospital. The Med should explore, through its current space planning consultants, the potential for establishing an Observation unit near to the ED. This will allow patients who are either waiting for beds or who need to be observed for a period of time before a decision is made whether or not to admit to be moved out of the traffic of the ED during this period of time. It will also allow The Med to bill for Observation days in addition to the ED visit. Many other hospitals like The Med have successfully utilized adjacent observation units to monitor chest pain or asthmatic patients, preventing a significant number of admissions without clogging up the ED. The creation of such a unit, or units, could also help to deflect some patients out of the psychiatric ED, a move that should be a major priority for The Med. The Med should explore the potential for the consolidation of its various emergency services to determine the potential for efficiencies. The Quick Care clinic, an after hours clinic located at the MedPlex, should be operationally, if not geographically, better linked to the ED. Patients should be triaged at the ED and sent to Quick Care for treatment and referral into community-based primary care. Pediatric emergency care at LeBonheur Hospital should be linked to primary care referrals into the Health Loop clinics. Negotiations should be undertaken with the State to expedite psychiatric referrals out of The Med’s ED and into State mental health facilities. Emergent care should be included in the oversight scope of a “public health authority.” 12 INPATIENT CARE Situation It is important to note at the outset that it is a testament to the leadership of The Med over the past decades that it has been able to successfully continue to care for the medically indigent in Shelby County, despite the many obstacles that it has and continues to face. The challenges ahead are exacerbated by the rise in the numbers of the uninsured, the increasing cost of the delivery of medical care, and the changes in the hospital and health system industry that have refocused how and where patients are getting their care. The Med will need to respond to these changes in order to continue to play the necessary role that it has for more than 170 years. The Med is the centerpiece of an inpatient system for TennCare and uninsured patients in Memphis that also includes LeBonheur Hospital for children, Methodist Hospital (close to The Med campus), and the Bowld Hospital, operated by UT and Methodist. These relationships are critical to understanding the current situation at The Med, as it is not a stand alone hospital for all patients targeted by this assessment. The Med has several Centers of Excellence (neonatal, burn, trauma) but none of these services should be viewed as isolated “silos” of care. In the same way that inpatient services should not be viewed outside of an overall context of a comprehensive system of care, pockets of inpatient services should not be evaluated without looking at the entire range of hospital care necessary for a defined population. Access to inpatient beds, whether from the ED or from referrals from MCOs, is a significant problem at The Med. The hospital has made significant progress in recent years in addressing the overall length of stay (LOS) for its patients. The Department of Medicine, in particular, has reduced LOS for its patients. The LOS for surgery patients, however, is till of concern and the efficiency surgical services—particularly the turnover of the operating rooms—seems to be a universally recognized problem for The Med. If the ORs ran at full capacity, it is likely that the hospital’s overall LOS would be reduced, more elective (and paying) surgery cases could be brought into the hospital, and there would be greater capacity for TennCare referrals. Bed control is a significant issue in freeing up inpatient beds. The average time that it currently takes from the writing of discharge orders of one patient to the admission to the same bed of the next patient is about 7 hours. In addition, there are approximately 8900 inpatient days now generated by ventilator patients who are difficult for The Med to move out but who don’t need to be in an acute care hospital. There are likely other patient populations that could be better and more efficiently cared for in other settings. Alternatives should be explored for these patients. The Med also relies on a number of relationships with other providers to assure a full range of services for its patients. While there are many positive aspects of these 13 arrangements, and they are critical in assuring the availability of the full spectrum of service, there is also little scrutiny of the details of how these institutions fit together. For example, despite the fact that The Med operates the only Level 1 trauma center in the region, and despite the fact that heart disease disproportionately impacts the type of patients seen in this system, it relies on the cardiac surgery at the Bowld Hospital for referrals. The Bowld is currently operated by Methodist in partnership with UT. It has been determined that the Bowld will close within the next year and the services will be moved to Methodist. There appears to be little intensive planning about what this change will mean to the patients from The Med or its larger system. In addition, the closing of the Bowld will mean a net loss to The Med in annual revenue that it currently receives by contracting out its interventional radiology services to support the Bowld. Further, The Med refers its neonatal surgical cases to LeBonheur Hospital. It was determined several years back that TennCare was not an adequate payor for LeBonheur so it requires that The Med provide direct reimbursement rather than bill TennCare. There seems to be a willingness to rethink this practice. Finally, patients from The Med requiring cancer services are cared for through the UT Cancer Institute and Methodist Hospital. While there is no payment required of The Med for this care, it should be clearly documented for which patients these institutions will continue to provide care and what scope of treatment is included. One of the more problematic arrangements at The Med is the contractual relationship between the hospital and UT and the UT Medical Group (UTMG). While all parties agree that the role of The Med in training residents is of vital importance to both the school and the hospital, there is less conviction, on both sides, that there is equal commitment to the scope and quality of the clinical services provided. The contract is particularly concerning in its lack of specificity for what The Med is buying and the accountability of both the hospital and the school and/or UTMG in meeting the clinical needs of the patient population. Moreover, it is likely that there are areas of the contractual agreement that are underfunded (medical sub-specialties seem to be especially short). There needs to be a comprehensive evaluation of the clinical needs of The Med and the contract should reflect those needs, with clear accountability over what clinical care, housestaff and supervision is being purchased. In addition to concerns about the contract itself, the structure of the medical staff relationship needs to be explored. Clinical direction and accountability is widely viewed to reside in the UT Chairman, with some delegation to on-site “chiefs.” There are clearly a great many UT medical staff—and its leadership—who are committed to the mission of The Med and who choose to work there. There is no organized process, however, for the Med and its physicians to collaboratively determine clinical priorities, allocate resources to match those institutional priorities, and assure accountability. There should be designated medical staff who primarily work in The Med, the MedPlex, and the Health Loop clinics and who would identify themselves as a cohesive group practice. The clinical services are dominated by residents at all levels. The emergence of the 14 UT/Methodist relationship as the University’s primary teaching focus will most likely have significant impact on The Med, although that impact has not yet been clearly defined. The importance of the relationship between The Med and UT cannot be understated and, thus, its effectiveness is of critical importance to both institutions. Opportunities All of The Med’s inpatient partnerships (LeBonheur, Methodist, Bowld) should be documented in writing, assuring that each party has a clear understanding of the roles of each institution in the inpatient configuration. This process should also address the potential for new collaborative opportunities, building on the strengths of each hospital. For example, the idea of creating a regional women’s and infants’ center as a partnership between The Med and LeBonheur should be explored for what it could bring to both hospitals and, even more important, what it could bring to the women and children of Shelby County. The issue of bed control should be a top priority for The Med administration. This effort should include: restructuring the ORs to open capacity and decrease surgical length of stay; implementing processes to significantly decrease the waiting time for new admissions; developing alternatives to keeping chronic ventilator patients in an acute care setting, and; exploring the establishment of observation bed capacity near to the ED (see discussion in previous section). Opening capacity for additional patients will mean bringing in additional revenue, particularly from TennCare patients. A commitment should be made by The Med, UT and UTMG to re-negotiate the current contract for clinical and resident services. This discussion should focus on the following issues: 1) contracting for provider services based on an assessment of the areas of clinical deficiency at The Med and the MedPlex; 2) establishing a mechanism to assure that the services contracted for are provided; 3) paying for additional attending physician time in the inpatient and the outpatient settings to address both productivity and continuity of care; 4) identifying all physician revenues generated as a result of the agreement and adding them to the mix in contract negotiations; 5) creating a designated medical staff for The Med and the MedPlex, the Health Loop clinics (and, perhaps, Oakville Nursing Home), with Chiefs of Service in all clinical areas who are dedicated to the system full or nearly full time; 15 6) establishing a Medical Director position for The Med and the broader system who is also an Associate Dean at UT and also has a role at UTMG, with authority over the clinical care and the contractual services at The Med and the other services within the system; and 7) committing to a regular assessment of the arrangement, based on agreed upon measures of productivity, community demand, institutional support committed by The Med, and changes in the health care delivery system. The operation of inpatient care, either at The Med or at affiliated/contracting institutions, should be included in the oversight scope of a “public health authority.” LONGTERM CARE Situation Shelby County operates a 237 bed long term care facility called Oakville Nursing Home. The County subsidizes its operation by providing it with $3 million annually and providing the 82-year old physical plant which it occupies. Oakville has had some success in recent years in addressing quality of care issues and this past State survey resulted in 7 deficiencies—no Type 1s—compared to the State average of 9 and the Oakville’s prior year’s 15. The facility is operating at about 90% of capacity and 93% of its patients are covered by Medicaid and Medicare. Oakville has a modest relationship with The Med. It contracts with The Med for its parttime Medical Director and also for the hospital’s wound care van services. The Med sends about 10% of all of its long term care referrals to Oakville, usually those without any source of payment and those who are sicker or who may have other compliance problems. Despite these connections, Oakville is not viewed by most at The Med as a part of their system of care. The patients at Oakville include traditional “nursing home” patients, some HIV/AIDS patients, others who are paraplegics or quadriplegics transferred from the trauma unit at The Med. Besides the Medical Director, there are only two other physicians who care for the patients at Oakville, one who is a radiologist. Although there was once medical teaching at Oakville, there is not any longer. Physical, occupational and speech therapy are contracted out to private providers. 16 Opportunities Oakville could become a vital component of a continuum of care for the Shelby County system, particularly in partnership with The Med. The 8900 days in chronic ventilator care currently provided at The Med could be cut drastically if a unit could be provided at Oakville. Long term IV antibiotic therapy patients, “rule out tuberculosis” patients and others who do not need to be in an acute care hospital beds could be transferred to Oakville, given the appropriate medical staffing. Geriatric training is a significant deficiency for UT and one that they would be interested in exploring in connection with services at Oakville. Such an arrangement could provide the medical school with a training site and Oakville with expanded medical staff coverage. A relationship with The Med also offers significant opportunities for sharing of ancillary and support services (laboratories, food services, housekeeping, etc.). This potential could be realized to an even greater extent if Oakville was located in greater proximity to The Med. The potential for moving Oakville from its 82-year old facility into the soon to be vacated Bowl Hospital should be explored. The County owns the building and, although there may need to be capital infrastructure investment, the long term cost and system benefits could be significant. The Veteran’s Administration Hospital has a contract with Oakville for its longterm care patients, but few referrals currently take place. It is likely that these referrals would be in greater number if Oakville were located closer to The Med and the VA. Oakville now contracts for certain services with private companies that could be “bought” from The Med and The Med now sends patients to private nursing homes that could be sent to Oakville, supporting both institutions. Oakville represents an area of financial opportunity for the County that is described more fully on the following pages. Longterm care services at Oakville should be included in the oversight scope of a “public health authority.” 17 MEDICAL STAFF Situation Just as the various levels of medical service within the Shelby County health system are not well connected into one continuum of care, there is no true medical staff that practices within its hospitals and clinics. Instead, there are separate groups and categories of providers with uneven abilities, different levels of provider staffing, and a seeming lack of planning to assure the appropriate types and numbers of providers to meet need and demand. The Med has a medical staff that is composed of physicians from UT, some through the UT Medical Group (UTMG). Although the physicians are of high quality, and many are ardently committed to the mission of The Med, they work within a teaching model that has largely gone by the wayside at most high quality hospitals, even in public hospitals and academic health centers. In almost all situations, direct hands-on care is provided by residents under variable attending supervision. While teaching actually can be a powerful aid to providing quality care, it has been widely recognized that effective teaching must be an adjunct to care directly delivered by senior clinicians who maintain a personal relationship with and responsibility for patients. The UT/UTMG physicians are university personnel who report primarily to their department chairmen, although there are chiefs of service, appointed by the chairmen, at The Med. The chairmen and the medical college leadership may be sympathetic to the clinical needs of The Med and its patients but the mission, first and foremost, of the university is to excel in academic endeavors. The mission of The Med should be, first and foremost, to assure comprehensive and high quality clinical care for its patients. These two missions need to be aligned in such a way that both institutional needs are met. Advancement and prestige in a medical college are based upon research and publishing first, teaching a surprisingly distant second, and direct clinical care trailing in third place. This is reflected at The Med by an attending physician staff with a significant number of doctors dedicated only part-time to patient care in order to allow for other academic pursuits. The lack of coordinated planning for the effective allocation of medical staff resources is a responsibility of The Med as well as UT/UTMG. The Med has not been aggressive about determining what clinical services are required to meet the needs of its patients and the broader community or working collaboratively with UT/UTMG to decide on the best use of limited medical staff dollars. The Health Loop clinics are staffed by primary care physicians with little or no relationship to UT/UTMG, even though many of these physicians are UT-trained. There is a haphazard connection to inpatient services and a very limited relationship with outpatient specialists who might offer consultation. One result of this disconnect, as well as the general difficulty in gaining access to specialties at the MedPlex, is the referral of some primary care patients, particularly those with insurance, to facilities and physicians outside of the health system. 18 The Department of Public Health employs a few physicians who have some relationship with the Health Loop and The Med staffs, but these connections are based more on personal relationships and less on planned and coordinated staffing as part of a coordinated system. Oakville Nursing Home has what appears to be an inadequate physicians staffing level and plan. Except for the contractual connection with The Med for Oakville’s Medical Director, the physician services appear to be private enterprises that are clear outliers in even the disjointed staff arrangements that make up the rest of the system. Opportunities Discussions should begin to create a medical staff that is dedicated to the Shelby County health system. Its members should practice and teach full time or nearly full time within the system. A strong link and relationship with the UT Medical College is important and should be maintained and formally extended to all the components of the health system. Several options are available to accomplish this consolidation including, but not limited to, creating salaried positions directly with the system, deriving salaries partially from the health system and partially from the UT or UTMG for teaching activities, or contracting with UT or UTMG for physicians that they salary. There could also be a combination of the scenarios listed above. The most significant issue is the development of a medical staff dedicated to the service of the health system. All options for a single medical staff are predicated on a newly negotiated agreement between the Shelby County health system and UT/UTMG, broadening the scope of the current contract between UT/UTMG and The Med. This agreement should delineate the level of affiliation between the two bodies, the expected types and level of clinical services provided by the medical staff (to the system and UT), and payment that is tied to the delivery of patient care services as measured by agreed upon productivity levels. The membership of the medical staff can be drawn from many of the physicians currently working in the institutions that will make up the system. However, it is likely that some current staff may not meet criteria for staff membership by credentials or willingness to commit enough time or effort. Unmet needs of the patient population or institutions will require the recruitment of additional new providers including subspecialists. The medical staff members should work under new job descriptions that describe direct service expectations, such as necessary clinical skills to address prevalent health status problems or certain cultural competencies. The system’s medical staff will report to the Medical Director of a Shelby County public health authority (see description below). The medical director and chiefs of 19 service at The Med, as well as medical directors at the MedPlex, Health Loop Clinics, TLC and Oakville will have reporting responsibilities to the system Medical Director. They in turn should have responsibility for recruitment, evaluation and retention of the health system medical staff. The University of Tennessee Medical College has the opportunity to train physicians and medical students to address the profound health disparities that exist in the population served by the Shelby County health system. In addition, research and program planning to discover the causes of these health disparities and to craft and test effective solutions to address them is an opportunity for the health system and Medical College. The system may be charged to encourage and support such academic activities. The system’s medical staff should be included in the oversight scope of a “public health authority.” OTHER ELEMENTS OF THE CONTINUUM OF CARE Situation In addition to the elements of care described on the previous pages, the County operates, in conjunction with the City of Memphis, a public health department that delivers comprehensive services to the most vulnerable residents and communities of the area. Given the adverse health status of the County, these services are critical to successfully address the broader determinants of health and prevention of disease and disability. It is also crucial that these services be well-integrated into the overall health care delivery system. There have been some attempts to coordinate care, most notably through the Health Loop clinics and in particular disease areas such as HIV/AIDS. There was also an historic attempt to create a new model in past years through a collaboration between the health department and The Med/UT in the design of disease treatment protocols used by public health nurses in community settings. In 1998, the Health Department, Shelby County government and The Med entered into a joint venture to operate a ten-clinic primary care network – the Health Loop. This primary care system consists of six public health clinics and four primary care centers of The Med. The County also provides approximately $5.6 million in a contractual agreement to provide health services at the County’s correctional facilities. Transfers from these facilities account for approximately 2800 inpatient days at The Med annually, with a LOS of 6.4 days. There is little attention now on efforts to minimize inpatient transfers through an examination of services provided at the jails. Further, other counties have aggressively utilized their connections between correctional, public health and medical services to address significant community health problems. 20 In addition to the services directly provided by the County, there are many other social, mental health, substance abuse, educational, violence-prevention and other activities and programs which are critical components to the overall health of the community. It appears that there is minimal coordination of all of these services. Opportunities The health department should be freed up to focus on those public health services that directly impact the health status priorities of Shelby County. The management of the Health Loop clinics should be re-evaluated, through the public health authority, to minimize the current duplicative management structure. The health department should be supported to provide ongoing epidemiological assessments of the health care needs of the Shelby County community. The County should begin an analysis of the referral patterns for detainees in their correctional health system to determine ways to minimize any unnecessary transfers to The Med for care. An assessment should also be made of the opportunities for using the correctional health facilities for public health interventions. Both the health department and the correctional health program should be included under the scope of the “public health authority.” 21 Financing the Shelby County Health System TENNCARE Situation The Medicaid Program is a joint state/federal program that requires local funds as match to access federal funding at a prescribed rate. When state Medicaid program costs increase due to increases in enrollment, utilization, or provider payment rates, the federal government participates in those increased costs at the prescribed “matching rate” for that state. Absent a waiver, payment levels under Medicaid are constrained only by the availability of non-federal funds to support the program and the federally defined upper payment limits (UPLs) for various provider groups. By electing to operate its Medicaid program under a comprehensive waiver, Tennessee has gained flexibility that in part allows Tennessee to extend coverage to populations that are not normally eligible for Medicaid service, but has in exchange given up several funding opportunities used in other states. One particular constraint is the overall cost neutrality requirement in the TennCare waiver. The cost neutrality ceiling for the entire TennCare program is computed as the sum of three components: Group 1 -- A per member per month (pmpm) amount for Medicaid eligible TennCare enrollees times the actual number enrolled. Group 2 -- A pmpm amount for individuals who were not eligible for Medicaid under the pre-TennCare Medicaid program, but could be Medicaid eligible without TennCare, times the number of such individuals that are enrolled in TennCare. The amount of Medicaid Disproportionate Share Hospital (DSH) payments that Tennessee would receive for disbursement to fee-for-service (FFS) providers under the state-by-state federal limits on Medicaid DSH payments. Many of the Medicaid financing options used in other states (e.g., provider taxes, intergovernmental transfer agreements (IGTs), special payment groups) have limited applicability in Tennessee due to the overall federal funding limitations that were created as part of the TennCare waiver. Expenditures that count against the ceiling include: The TennCare managed care payments for Group 1 and Group 2 members. The TennCare expenditures for uninsured or uninsurable persons who would otherwise not be eligible for Medicaid (Group 3). TennCare Essential Access Hospital (EAH) payments. 22 TennCare Graduate Medical Education (GME) payments. The State’s actuary, PricewaterhouseCoopers (PwC), determines the pmpm payment levels for all Groups. The size of both the EAH and the GME pools are limited by the Centers for Medicare and Medicaid Services of the federal Department of Health and Human Services (CMS) as part of the waiver approval process. At present, the State of Tennessee has limited the number of persons enrolled in Group 3 (those that do not meet traditional Medicaid eligibility criteria) due to a shortage of nonfederal funds. Should additional state funding become available, enrollment in Group 3 could be increased. Under the assumption that Medicaid Disproportionate Share Hospital (DSH) payments were intended to assist hospitals that primarily served the uninsured and that the expanded eligibility made available by the Section 1115 waiver would eliminate the uninsured in the State of Tennessee, the State eliminated Medicaid DSH payments when it implemented TennCare. Several years later the State created the Essential Access Hospital (EAH) program to partially compensate those hospitals, such as The Med, that serve a high proportion of Medicaid and uninsured patients. EAH is currently set at $100 million, far less than the over $413 million federal ceiling on DSH payments that Tennessee could pay without the TennCare waiver. It is important to note that the $313 million difference between EAH and what would have been the DSH ceiling is built into the waiver and is eligible to be paid on a pmpm basis to enrollees in any of the TennCare Groups, including those that do not meet traditional Medicaid criteria. Under the current configuration, EAH payments only consider Medicaid activity and not the number of uninsured at each hospital. EAH pays high Medicaid hospitals for a portion of the difference between regular Medicaid payments and the cost of treatment of Medicaid clients. This approach harms hospitals such as The Med and has directly contributed to its current financial crisis because of the large volume of services to uninsured patients. In a report to Mayor Wharton dated May 23, 2003 The Med presented data illustrating the cost of unreimbursed charity care. In FY 2001, The Med incurred over $51 million in unreimbursed costs for uninsured patients, an amount more than twice as high as any other hospital in the State. TennCare disburses a pool of $50 million per year through university medical schools to fund Medicaid’s share of GME costs. Before TennCare, Medicaid GME in Tennessee was paid using a formula similar to Medicare. Currently all Tennessee Medicaid GME payments are allocated to the states’ four medical schools, based primarily on the number of primary care residents being trained. Funds are directed from the medical schools to the sites where residents are being trained. The goal of TennCare is to have 50% of aggregate residency positions in the primary care specialties. 23 Another aspect of current TennCare financing is the Stabilization Plan that was created in response to recent issues of solvency for MCOs participating in TennCare, including the actions of some MCOs seeking to withdraw from or reduce their participation in TennCare. The TennCare Quarterly Report to the Legislature dated October 15, 2002 describes the Stabilization Program: In order to provide increased stability for the TennCare program, it was decided that TennCare MCOs would temporarily operate under a non-risk agreement effective July 1, 2002. This arrangement will last 18 months, until December 31, 2003. The purpose of the plan is to allow a period of time to establish greater financial stability while maintaining continuity of the managed care environment for enrollees. Each MCO must demonstrate throughout the period of the Stabilization Plan that it has sufficient financial capital to insure uninterrupted delivery of health care on an ongoing basis. Under the Stabilization Plan, MCOs are being paid an administrative fee to manage a medical fund for health care services. Efficient management of the medical fund will result in a sharing between the state and the health plan of any savings generated. Administrative bonuses will be used as rewards for the achievement of high priority targets. Changes in provider contracts are subject to TennCare approval. During the period of the Stabilization Plan, we expect to be able to generate actuarial data that will provide an improved picture of the elements of risk in the TennCare enrollee population. Because the plans will be operating on a non-risk basis, the data will be less influenced by MCO solvency issues, enrollment shifts, and other variables that affect the actuarial calculation of risk. The data should allow us to establish improved rate structures so that MCO operations can return to a risk basis at the end of the stabilization period. CMS recently allowed the State to expend up to $175 million for the Stabilization Program. The CMS action allows TennCare to access federal matching funds for Stabilization Program expenditures that would not otherwise be eligible for matching funds. These expenditures must be applied to the TennCare 5-year overall budget ceiling. Opportunities Changes within the TLC payment arrangements from TennCare could benefit The Med and affiliated physician groups. If the changes can be done in a manner that modifies the actuary’s underlying assumptions and increases the pmpm rates paid to TLC after the stabilization period has expired, the net effect would be positive on all involved parties. Identification of Medicaid GME funding opportunities within the existing distribution methodology should be explored. It may be that the State’s emphasis on primary care has unintended adverse impacts upon tertiary hospitals like The Med. 24 The Med should be proactive in the reconfiguration of EAH payments. Access to the base data for all hospitals is necessary to develop a proposed distribution methodology that appropriately recognizes the cost of treating uninsured patients. TLC PAYMENTS TO THE MED Situation The Stabilization Plan for TennCare removes the MCOs from risk arrangements. In essence, the MCOs are operating as administrative service organizations (ASOs) on behalf of TennCare. To minimize the State’s risk during this period, all rates paid to providers by the MCOs have been frozen at rates those MCOs were using before the beginning of the stabilization period. Prior to the stabilization period, the reimbursement from TLC to The Med was set at a low level. This arrangement provided an incentive for TLC to use The Med and enabled TLC to operate profitably. TLC is restricted from changing provider reimbursement levels while within the stabilization period. As a result, The Med is losing money on the care that it provides for TLC enrollees. Opportunity TennCare staff have indicated a willingness to consider a proposal to increase the rates paid by the TLC to The Med, provided that the overall impact on expenditures for TLC members was budget neutral. This could be supported by other hospitals that have an interest in maintaining The Med as a viable provider of Medicaid services for Memphis and the region. OAKVILLE NURSING HOME Situation Current Tennessee Medicaid reimbursement to long-term care (LTC) facilities is subject to a ceiling at the 65th percentile of average cost per day. Tennessee Medicaid places all facilities in a single group. The reimbursement methodology assures that approximately 35% of the facility days in Tennessee are reimbursed below the cost of providing services. 25 Like many states, Tennessee uses intergovernmental transfers (IGTs) from the local governments that own LTC facilities as a means of increasing the extent to which federal funds are available to fund LTC services. Some interviewees indicated that while longterm care is not part of the basic TennCare program, total Medicaid LTC reimbursement in Tennessee is part of the global budget cap created by the TennCare waiver. These individuals indicated that as a result of the global ceiling on expenditures for Medicaid related to the TennCare waiver, Tennessee was unable to maximize IGT opportunities with public LTC facilities like other states. Under the present arrangement, Oakville is allowed to keep 2% of the IGT amount as an administrative fee. However, other than this nominal fee, the net reimbursement to Oakville is still subject to the 65th percentile ceiling. This is unlike the situation in some other states where the public entities derive greater benefit from their status and ability to provide IGT funding as the non-federal share of enhanced payments. The limitations on LTC reimbursement are not related to the calculation of the Upper Payment Limit (UPL), a provision of federal law that limits Medicaid reimbursement to what Medicare nominally would have paid for the same services. The Tennessee Health Care Association has been aggressive in calculating the Tennessee UPL, with the result that current Tennessee LTC payment levels, including the IGT opportunities, are not at the UPL. Instead the limits on LTC reimbursement are due to an overall spending cap on Medicaid related to the TennCare waiver. HMA contacted the Centers for Medicare and Medicaid Services (CMS) regarding the inclusion of longterm care services in the TennCare budget neutrality limit. The CMS official stated that LTC was outside of the TennCare budget neutrality limit. As this report was being finalized, HMA was able to receive the definitive answer from Eugene Grasser, the Chief Operations Officer of TennCare, that LTC is outside of the State’s budget neutrality limit. Oakville’s cost per day is about $160. Medicaid reimbursement for Oakville’s Level 1 patients is $114 per day (70% of all days) and Level 2 Medicaid days are paid $162 (22% of all days). Thus, the weighted average rate of about $125 per day covers about 78% of the cost for serving the 92% of the population that is Medicaid. Opportunities Establishing policy that increases per day reimbursement to Oakville is clearly possible. This could occur through creation of a new facility class, exempting Oakville from the percentile limit, or allowing Oakville to retain a greater share of the IGT arrangement. This action should be pursued immediately. 26 STATE FMAP CHANGE Situation The current FMAP rate for Tennessee is 64.59%. The regular Tennessee FMAP declines to 64.40% for FY 2004. Recent federal action provides enhanced FMAP for five fiscal quarters - from April 1, 2003 to June 30, 2004. For Tennessee that means one quarter of the state fiscal year that ended June 30, 2003 and all of the current state fiscal year. The estimated dollar value of this 2.95% increase in FMAP is $232.5 million for Tennessee. In addition to the increased matching rate, each state is receiving a “Flexible Spending” amount from the federal government. The lump sum grant for Tennessee totals $193.5 million, with half to be paid in the current federal fiscal year and half next year. These funds can be used for most any purpose since they can be used for "essential government services.” Opportunities The potential opportunities related to the FMAP change seem to be in the area of the retained benefit from the nursing home IGT arrangement. Fewer nonfederal dollars are needed to maintain provider payments at current levels. At minimum, about 4.6% more federal funds will be available for all public LTC facilities. With State level direction, a proportionately larger share of the benefit than would otherwise be obtained could be directed to Oakville. There may also be an opportunity to capitation increase rates to Medicaid MCOs and still be within the overall TennCare budget ceiling. That would require an increase in the actuarial assumptions and could be offset by physician reimbursement increases that are either funded by the new FMAP or through a new IGT. INTERNAL OPERATIONS Situation There are several opportunities within the facilities that make up the health system in Shelby County to either save costs or generate additional revenue. Attention is already being given to some of these pursuits. 27 Opportunities The Med should annually review the cost report to identify opportunities to maximize Medicare reimbursement and situations where costs incurred by The Med are not being covered by Medicare reimbursement. The Med’s high DSH rate makes it likely that adding Medicare patients with “average’ costs would be cost beneficial. The impact of adding a geriatric unit should be explored and evaluated. The Med appears to exceed the Medicare ceiling for resident and intern count. This issue should be further explored. Oakville Nursing Home should institute aggressive billing for all reimbursable services. There may an opportunity to increase Medicare Part B revenue. A thorough assessment of all Part B billing opportunities should occur. The Health Loop clinics should pursue FQHC designation and seek Section 330 grants for the care of the uninsured. The grants would provide ongoing operational support, as well as open the possibilities of capital improvement dollars and other benefits. All entities within the system should review current service contracts to assure accountability, explore ways to decrease reliance of “outside” providers by directing service contracts internally and functioning as a real system. (For example, it might be beneficial for Oakville to contract with The Med for PT services). OTHER STATES Situation Mississippi Medicaid pays adequately for services to Medicaid patients and also allows The Med to participate in an IGT funded DSH payment. The federal Center for Medicaid and Medicare Services (CMS) has indicated that the opportunity for The Med to provide funds to Mississippi through an IGT is not permitted. It is the CMS position that IGTs are permissible only within a State and not across state lines. Should this interpretation be upheld, both Mississippi and The Med would be adversely affected. Discussions are underway on ways to resolve this issue in a positive manner. 28 Arkansas Medicaid is severely limited in their ability to make DSH payments. The pool for the entire state is approximately $20 million and is distributed proportionately to hospitals that meet the federal minimum requirements regarding the proportion of patients that are Medicaid or uninsured. Since the ratio of Arkansas Medicaid services to the entire hospitals inpatient services would need to be high, it is unlikely that The Med would meet the federal minimums and be eligible for an Arkansas DSH payment. The Arkansas Medicaid inpatient payment per day is limited to a ceiling of $675. Exceptions are granted to teaching hospitals with Arkansas affiliations. Opportunity If positively resolved in discussions with CMS, it may be possible to expand the IGT opportunity with Mississippi and to create a similar arrangement with Arkansas. Given limited DSH capacity, the Arkansas potential would need to focus on rate increases funded through IGTs. FEDERAL GOVERNMENT Situation The TennCare waiver budget ceiling restricts Tennessee’s ability to recognize the costs of one provider without adverse impact upon others. Exceptions are needed in selected areas to allow providers that are using a significant amount of local funds to be able to use those funds as the non-federal share of Medicaid payments. As the waiver was developed, the base cost was derived without consideration of local supplementation. As costs have risen faster than Medicaid rate increases, it is appropriate to allow these local funds to be matched as a way of covering medical costs. Opportunities Expansion of the Essential Access Hospital Pool with the non-federal share funded through IGTs Continuation of IGT arrangements with Mississippi and expansion to include Arkansas. 29 The Structure of the Shelby County Health System: The Creation of a Shelby County Public Health Authority Why is a New Oversight Body Important? While Shelby County faces daunting issues of poor community health status, it is in the unique position of having all of the elements in place for a comprehensive system of health care delivery. The County is overseen by a government that has demonstrated financial commitment to assuring the health of the public. All segments of the community, including all of the other hospitals and health centers, have strongly expressed their support of The Med and the role of the public system of care. The facilities and personnel exist to create a seamless continuum from public health and outreach through primary and specialty outpatient services through acute inpatient and longterm care, assuring both patient access and appropriate and efficient utilization of all levels of service. Shelby County could be in the position of becoming a national leader in the creation of a local “safety net system” of care that includes public and private providers, all dedicated to a vulnerable and growing population in need. A coordinating entity, such as a Public Health Authority, is essential to perform the following functions to bring about and maintain this continuum of care: community-wide health planning and the establishment of service priorities based on documentable need and demand; assurance of appropriate use of all levels of care (i.e., chronic ventilator patients taken care of in Oakville instead of The Med) and ease of access between levels of care for patients; creation of one designated medical staff serving an entire system instead of one institution or one Department; coordination of information to minimize duplication of effort and expenditure of resources and enhance the continuity of care as the patient moves through the system; realization of efficiencies in the sharing of services (i.e., purchasing, legal, billing, planning, ancillaries) between institutions within the system; and enhancement of financing and advocacy potential. 30 Who Should be Included in Such a Public Health Authority? There should be several tiers of participants in such a system. The first tier should consist of all of those providers that are either operated or funded by Shelby County government. These entities would include: The Med (and the MedPlex), the Health Loop clinics, Oakville Nursing Home, the public health department and UT/UTMG (through their contractual agreement to provide medical staff). It should be noted that this oversight Authority need not require any dissolution of any existing governance structures, such as the not-for-profit Board of The Med or the UT Board. In fact, if the Health Loop clinics are successful in gaining FQHC designation, they will need a Community Board to govern their day-to-day operations. Memoranda of Understanding (MOUs) can be generated between these institutions to ensure participation. The second tier of participants would include those entities with a direct responsibility in the continuum of care for the patients of the system. Currently, those providers would include: LeBonheur Hospital, Methodist Hospital (also representing the Bowld Hospital) and TLC managed care organization. In addition, there are several free-standing primary care centers that care for the medically underserved in the County. These providers represent critical components of the system and need to be active participants in the setting of priorities and allocation of resources. A final tier of participants would include those mental health, substance abuse, primary care, violence-prevention, social service, education and other organizations who have a significant role in preserving the broader definition of health of the patients and the communities that are the core of the Shelby County health system’s focus. A formal mechanism needs to be in place to assure the input of and the coordination with these organizations in order to most effectively address the adverse health status of the community. Who Convenes and Organizes the Authority? The most logical organizer for creating a governmental body that provides oversight for the health system that services the most vulnerable residents of Shelby County is the Mayor of Shelby County. What is the Composition of the Authority’s Board and Staff? The most important element in the effectiveness of a coordinating Authority is the skill and leadership ability of the governing Board and the senior staff. The Board should be representative of the broader community, including business, labor, religious and civic leaders who are committed to the common mission of the health care system. It will also be important to involve the key unions in the discussion of this restructuring, providing some avenue for representation from the onset. 31 The Authority should not duplicate the staff of the individual institutional components of the Authority but should, at minimum, include a Chief Executive Officer, a Medical Director, a Chief Financial Officer, a Chief Information Officer and planning staff. It is critical that these positions are filled with highly skilled and dynamic people who are able to provide leadership to the effort to move from a set of diverse institutions to a cohesive system of care. The CEO, in particular, will need to be highly experienced, able to move diverse institutions and maintain the focus of the system on the needs of the patients and communities that it is designed to serve. What are the Functions of the Authority? There are a variety of models for coordinative bodies for safety net health care systems throughout the country, including organizations that include both public and private institutions. The most effective of these systems maintain the following basic functions: budget approval; coordination/linkage of information systems; consolidated medical staff; health system planning and priority setting; contract negotiations for services; approval of the leadership of participating institutions; coordination of governmental advocacy activities; and potential for taxing authority. What are the Next Steps in Establishing Such an Authority? It would be wise to research other health system restructuring efforts as a first step in establishing a health authority for Shelby County. Each community is different and it is important that a new structure reflect these local issues. Funding of both the establishment of an authority and maintaining its ongoing operation should also be explored. There are many options, ranging from contributions from participating institutions to using the administrative dollars from the Medicaid program to seeking a demonstration project grant from the US Department of Health and Human Services. Discussions will need to taken place with those institutions that will need to be a part of the system. While the Mayor can mandate the participation of the institutions that are directly operated by the County, he will need to work with the Board and leadership of The Med, UT and the private hospitals and health centers that will need to be included to assure their participation in this system. In addition, a group of civic leaders should be 32 brought into the process at an early point to demonstrate that the creation of this Authority is a community response to a community problem, not just a reaction to the financial troubles of an institution or institutions. Finally, a workplan should be developed, with timelines, that outlines the movement toward the establishment of the Authority. Leadership, both for the staff and Board of the new entity, should be recruited as an early component of such a plan, as these individual should be involved in the creation of the entity, not come into the process after it is completed. 33 Conclusion HMA has been universally impressed by the commitment of the administrative, academic and clinical leadership of all of the health care providers reviewed as a part of this study to the creation of an effective system of health care services for the most vulnerable residents of Shelby County as well as their stated willingness to bring their institutions to the table to find new ways of meeting that mission. We believe that the recommendations in this report targeting the various levels of care, the financing of health care services and, most important, the creation a comprehensive system of care for Shelby County provide the framework for an innovative model in which a community comes together to address the complex health care needs of the people who live there. Coupled with the support of the health care institutions and government and civic leadership that will need to make it happen, this model could have tangible national implications. 34