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CRAIN’S DETROIT BUSINESS
March 2, 2009
Page E1
Extra
Physician groups split
over online information
networks, Page E5.
Monthly news for health care professionals
People
Richard Reynolds has been
appointed surgeon-in-chief by
Children’s Hospital of Michigan. He
had been chief of orthopedic surgery.
Reynolds joined Children’s in 2006
from Children’s Hospital Los Angeles.
Ruben Gomez has joined the staff at
Detroit Receiving Hospital as a
surgeon. Gomez specializes in burn
surgery and will be a member of the
hospital’s burn center team. He
previously was a civilian burn surgeon,
Institute of Surgical Research Burn
Unit, at the Brooke Army Medical
Center, Fort Sam Houston, in San
Antonio, Texas.
Andrew Konski
has been named
chairman of the
Department of
Radiation Oncology
for the Wayne
State University
School of Medicine
and service chief
for radiation
oncology at the
Konski
Barbara Ann
Karmanos Cancer
Center. Konski had been chief medical
officer for the partners’ program at
Fox Chase Cancer Center,
Philadelphia.
Alexa Simkow has
joined Botsford
Hospital, Farmington
Hills, as surgical
services nursing
director. She comes
from St. Vincent
Medical Center,
Toledo, where she
was administrative
director of
Simkow
perioperative
services. She also was a 17-year
employee of Henry Ford Health
System.
Oakwood
Healthcare System
has appointed
Timothy Sell chief
of cardiothoracic
surgery. Oakwood
also named Eric
McBride
administrator of its
oncology service
line; he continues
to oversee the
Sell
cardiovascular
service line. Also, Lisa Rutledge,
corporate director of community
outreach, assumes responsibility for
the Center for Exceptional Families
and Pediatric Rehab Program.
Ambika Mathur, professor in the
Wayne State University School of
Medicine Department of Pediatrics,
has been appointed assistant dean
for combined degree programs and
postdoctoral affairs.
Antoinette Wozniak, president of
the medical staff for the Barbara Ann
Karmanos Cancer Center, has been
named associate center director for
education. She will step down as
leader of the thoracic multidisciplinary
team. She will be replaced in that
position by Shirish Gadgeel.
Also, Cassann Blake was named team
leader of the breast multidisciplinary
team and Zeina Naleh was named coleader.
The case
for
reform
MICHIGAN PERSPECTIVES
Here are two prescriptions for health care reform:
Nancy
Schlichting:
Universal
coverage with
delivery
focused on
primary care
and incentives
aligning health
care providers.
Michigan’s health care leaders
say need is clear, but key
questions are how and when
Dr. Gregory
Forzley: Universal
coverage that
rewards
physicians for
quality care,
focuses on
wellness and
expands electronic
medical records.
NATIONAL PLANS
BY JAY GREENE
Here’s what major U.S. health care reform proposals would provide:
WydenObama Baucus Bennett
CRAIN’S DETROIT BUSINESS
Most Michigan hospital, physician, insurance
Employer “pay or play” mandate
Yes
Yes
No*
and business leaders are ready for comprehenExclude small employers
Yes
Yes
NA
sive health care delivery and financing reform.
A consensus is emerging in Washington and
Health insurance pool/exchange
Yes
Yes
Yes
among health care practitioners and executives
Individual coverage mandate
Child
Yes
Yes
in Michigan for universal coverage and the goal
Expand Medicaid and SCHIP
Yes
Yes
Yes*
that everyone should have a basic set of health
benefits.
Medicare buy-in at age 55
No
Yes
No
Universal coverage means providing health inUniversal coverage
Phased Yes
Yes
surance — either government sponsored or privateImprove
primary
care
Yes
Yes
Yes
ly purchased — to the 46 million uninsured Americans, including 1.1 million in Michigan. Another 25
Enhance IT, training programs
Yes
Yes
Yes
million are underinsured, for a total of 71 million
Single-payer
No
No
No
people — or 40 percent of adults under age 65 — needRetaining private insurance
Yes
Yes
Yes
ing basic or expanded coverage.
Prohibit
denial
of
pre-existing
conditions
Yes
Yes
Yes
More than half of Michigan’s uninsured live in
metro Detroit and rely on hospital emergency dePrivate delivery system
Yes
Yes
Yes
partments and free clinics for health care services.
Cost controls
Yes
Yes
Yes
Some of the working uninsured use cash or credit
Tax
credits
Yes
NA
Yes
cards to pay when they need health care. While
many are charged higher prices, hospitals and docNOTES: *Employer-based health insurance system eventually phased out under
Wyden-Bennett plan. A new, state-based private insurance pool system would be
tors write off much of the unpaid cost as bad debt,
created. Medicaid and the State Children’s Health Insurance Program (SCHIP) would
which ends up as a hidden tax on individuals and
be included in the insurance pools that would offer group coverage.
companies who pay for insurance.
Sources: Web sites for President Barack Obama
But the hard part about reforming the health care
(www.barackobama.com/issues/healthcare/index.php); Sen. Max Baucus, Dsystem is paying for it.
Montana, chairman Senate Finance Committee
(finance.senate.gov/healthreform2009/finalwhitepaper.pdf); Rep. Ron Wyden, D-Ore.,
Estimates range from $100 billion to $150 billion to
and Rep. Robert Bennett, R-Utah (www.govtrack.us/congress/bill.xpd?bill=s110-334);
provide universal coverage, although some MichiS.B. 334.
gan health care leaders believe there is enough money in the system if it were spent more wisely.
For the past five years, U.S. Rep. John Conyers, DMore than 100 health care reform plans have been
Mich., has sponsored H.R. 676, the United States Naproposed or suggested. Some federal legislation has
tional Health Insurance Act, which would create a
been introduced for universal
government-funded, singlecoverage, including the Healthy
payer system that would
Americans Act, or S.B. 334, by
cover everyone. The proSens. Ron Wyden, D-Ore., and
gram would eliminate the
Robert Bennett, R-Utah.
private health insurance
More legislation is expected
system.
in Washington and at the state
Rejected by Michigan
level in Michigan this year.
leaders also is the idea to
Aside from supporting uniprovide tax incentives and
versal coverage, Michigan’s
health savings accounts to
leaders agree on another thing:
increase coverage. This
A proposal to create a singleconcept was put forth by
payer system that would do
former President Bush and
away with the employer-based
most recently by Sen. John
and private insurance system,
McCain, R-Ariz.
similar to government systems
On the other hand,
in European countries and
Michigan leaders like PresDaniel
Loepp,
Canada, is unworkable in AmerBlue Cross Blue Shield of Michigan
See Reform, Page E2
ica.
we are doing now
“isWhat
inefficient,
with 46 million
uninsured. It is
a very poor way
to do
business.
”
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CRAIN’S DETROIT BUSINESS
Health Care Extra
Reform: State health care leaders say key questions are how, when
■ From Page E1
ident Barack Obama’s goal of universal coverage and preserving
the employer-based health insurComparing proposed health care reform plans by industry associations:
ance system.
AHIP
AMA
AHA
Obama’s plan, which has not
Employer “pay or play” mandate
No
No
Yes
been formally proposed as legislation, would mandate that large
Exclude small employers
Yes
NA
No
and medium-sized employers covNational insurance pool/exchange
No
Yes
No
er workers. If employers do not ofTax credits to purchase insurance
Yes
Yes
No
fer coverage, companies would be
required to pay a 4 percent payroll
Individual coverage mandate
Yes
No*
Yes
tax.
Expand Medicaid and SCHIP
Yes
Yes
Yes
Obama would then use the payMedicare
buy-in
at
age
55
No
No
No
roll taxes to expand coverage by
subsidizing health insurance in a
Universal coverage
Yes
Yes
Yes
national health insurance exImprove primary care
Yes
Yes
Yes
change. People could select private
Enhance
IT,
training
programs
Yes
Yes
Yes
plans or a new publicly operated
Single-payer
No
No
No
insurance program. The program
could reduce the number of uninRetaining private insurance
Yes
Yes
Yes
sured by 25 million people, experts
Prohibit denial of pre-existing conditions
Yes
Yes** Yes
say.
Private delivery system
Yes
Yes
Yes
But Obama’s plan and most other major health care proposals, inCost controls
Yes
Yes
Yes
cluding ones presented by nationNOTES:
al trade groups such as the
* No, but those with means have coverage responsibility.
American Hospital Association, the
** Yes, for those continuously (or already) insured.
American Medical Association and
Sources: America’s Health Insurance Plans, American Medical Association, American
America’s Health Insurance Plans,
Hospital Association
also argue that aggressive efforts
need to be made to reduce costs
and directing incentives for high- in this country. It was built ham Farms, said physician organier quality.
around Medicare and Medicaid 40 zations should be given incentives
There is no doubt, however, that years ago and relies on employer- to improve quality and the chance
financing this type of health insur- based tax credits,” Schlichting to implement best practices that
ance expansion would initially said. “Employers are challenged to will reduce health care costs.
cost taxpayers billions of dollars pay for it because costs are up and
“I don’t think the status quo is
and add to an already off-the-chart we reward the wrong things.”
fine,” said Grant. “Everybody
federal budget deficit.
Schlichting said she favors uni- wants to cover the uninsured. You
So how can health care reform versal coverage with a delivery can’t argue with that, but that
be achieved, and how soon?
system focused on primary care won’t solve the problem.”
“What we are doing now is inef- and incentives that align hospiWhile experts talk about imficient, with 46 million unin- tals, physicians and other health proving quality, physicians are on
sured. It is a very poor way to do care providers.
the front lines trying to deliver
business,” said Daniel Loepp,
Dr. Gregory Forzley, chairman quality health care everyday,
CEO of Blue Cross Blue Shield of of the Michigan State Medical Soci- Grant said.
Michigan.
ety, also agrees with the premise of
“In the back rooms, people are
“Hospitals are struggling to take universal coverage, but said com- talking about costs, not quality,”
care of the unemployed,” Loepp prehensive reform could take up Grant said. “We have a $2 trillion
said. “The whole notion of uncom- to two years.
annual health care bill, and it is
pensated care is not sustainable
In the medical society’s 2006 Fu- going up 10 percent a year. We
over the long
ture of Medicine have to tackle those costs first, and
term. We have
report,
Forzley physician organizations have the
got to find a sussaid reform also ability to root out waste and duplitainable way to
must
reward cation and drive down costs.”
cover
everyphysicians
for
Grant said health care reform
body.”
providing
safe, won’t work unless doctors change
Loepp,
who
quality care; focus their behavior.
also chairs the
on prevention and
“Until we get to the point when
health
policy
wellness; fund an we order fewer (diagnostic tests
committee of the
expansion of elec- such as magnetic resonance imagChicago-based
tronic
medical ing), costs will continue to rise,”
Blue Cross Blue
records; and en- he said.
Shield Association,
courage coordiGeorge, chairman of the Senate
favors preservnated care among Health Policy Committee, said he
ing the employerproviders
with wants Michigan to move forward
based health inmore patient in- with its own health care reform
surance system.
volvement.
plan that focuses on covering the
The association
“As we reform uninsured and addressing inrepresents
39
the health care equalities of the employer-based
Blues’ plans namarket, we want system and individual market.
Sen. Tom George,
tionally, includto simplify bene“I don’t think we should fall in
R-Kalamazoo
ing the Michigan
fits and product the trap of waiting for the debate
Blues.
Like the Blues’ and AHIP’s design so it is easier for patients at the federal level,” said George,
plans, Loepp believes there should and doctors,” Forzley said. “We who recently announced he will
be mandated coverage, but only need a patient-centered medical run for governor. “States can
when it is linked to a guaranteed home and reform of the reimburse- make inroads, and Michigan
community rating. Under commu- ment system. The incentives are should be discussing it.”
George said he will hold a series
nity rating, sicker people do not wrong.”
At least two other physician of health policy hearings this year
pay higher premiums than
leaders, Dr. Steven Grant and state to discuss various state approachhealthy people.
Nancy Schlichting, CEO of Henry Sen. Tom George, R-Kalamazoo, es to developing a basic set of beneFord Health System and chair of the an anesthesiologist, believe in an fits and coming up with a funding
Michigan Hospital & Health Associa- incremental approach to health plan. Work groups will be created
to discuss affordability and accestion in Lansing, said the cost of care reform.
Grant, chairman of United Physi- sibility of insurance.
health care has become unaffordcians, a 2,000-physician indepen“I hope a proposal comes out of
able for too many people.
“We have a very strange system dent practice association in Bing- that, a Michigan solution,” he said.
WHERE THE INDUSTRY STANDS
I don’t think we
“
should fall in the
trap of
waiting
for the
debate at
the
federal
level.
”
Gary Faja, Trinity Health’s East proach to coverage,” Halladay
Michigan regional executive and said. “We could cover all 160,000
CEO of St. Joseph Mercy Health Sys- uninsured children in Michigan if
tem in Ann Arbor, said there is we put the State Children’s Health
enough money in the system to Insurance Program funds, Medicaid dollars and (a private insurcover the uninsured.
“It is just not allocated with the ance investment) into a pool …
right incentives,” Faja said. and have people pay according to
“Rather than incent with number their ability.”
of procedures, you incent on qualiHalladay said a public-private
ty procedures.”
partnership to cover the uninIn 2007, Trinity developed a sured is the way to go.
health care reform plan with nine
In her annual State of the State
essential elements for change. Its speech in January, Gov. Jennifer
plan matches up best with the Granholm said the federal stimuWyden-Bennett plan, but Faja said lus package approved last month
Trinity hasn’t endorsed that plan.
by Congress will help Michigan
Trinity’s elements include uni- “move further and faster into a
versal, continuous coverage; better future.”
broad pooling of insurance risk;
The National Governors’ Associaaligning payment incentives to co- tion appointed Granholm co-chair
ordinate care; use of health infor- of a bipartisan group to make recmation technology; maintaining ommendations to the Obama adhealing relationships with pa- ministration on health care retients; and a special emphasis on form.
those at the end of life.
“We must have affordable, acOne way to save money is to re- cessible health care for all Ameriduce the variation of care that ex- cans,” she said.
ists in different parts of the counFaja predicted that several
try, he said.
health care bills will be introduced
“There is a huge variation. You this year, but the federal govern(smooth things over) with evi- ment will take an incremental apdence-based protocols,” Faja said.
proach to reform. Comprehensive
Health care researcher Marireform will take several years beanne Udow-Phillips, director of
cause of political and economic rethe Center for Healthcare Research
alities, he said.
and Transformation in Ann Arbor,
Schlichting said the stimulus
said costs will continue to rise unpackage
is the first step toward
less the system is overhauled.
“The U.S. spends more money health care reform. But how
per capita than any other country Michigan uses its estimated $3 bilin the world, but most health sta- lion will determine how many immediate benefits
tistics put us just
accrue to Michiabove Cuba on
gan, she said.
critical measures
“There are a
like life expectannumber of feacy and infant
tures in the packmortality,” Udowage for improved
Phillips said. “We
are paying more
access: (expanded
and getting less
children’s health
than many other
insurance), Medcountries.”
icaid dollars, inAccording to
creasing COBRA
the Commonwealth
benefits,
and
Fund, the United
funds for inforStates is last out
mation technoloof 19 industrialgy,” Schlichting
ized nations when
said.
it comes to health
Unlike in the
Marianne Udow-Phillips,
care quality. The
Center for Healthcare Research
early 1990s, when
Congressional Budpowerful specialget Office estiinterest lobbying groups derailed
mates that one-third of the $2.3 trilhealth care reform proposed by
lion annually spent on health care,
then-President Bill Clinton, there
or 16 percent of the U.S. economy,
does not improve Americans’ is widespread support for massive
change.
health outcomes.
Loepp acknowledged that in the
Udow-Phillips said improvements must be made on the deliv- past, the insurance industry has
ery side through increased use of been “more obstinate than I would
evidence-based guidelines, more like” toward health care reform.
involvement of patients in deci- Over the past two years, he said,
sion-making, better dissemination there has been a change in attitude
of quality measures and more inte- among health insurance executives.
gration of care.
“There is a conclusion we can’t
“We must have improvements
to the financing side — funding for sit by the sidelines. We need to be
universal coverage, strong incen- reasonable and compromise,” he
tives for cost control and con- said.
Schlichting said that for the
sumer protections,” she said.
Doug Halladay, director of Michigan first time, she believes there is
Cover the Uninsured Network, said cover- hope for health care reform.
“Do I have a crystal ball to know
ing the state’s uninsured will require a
plan to stabilize rising health care how soon it will happen? The decosts, and to emphasize prevention bate is very important. If we don’t
debate, it won’t happen,” she said.
and wellness.
Jay Greene: (313) 446-0325,
“I like Obama’s idea of a blend of
options and a sliding scale ap- jgreene@crain.com
We are paying
“
more
and
getting
less than
many
other
countries.
”
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CRAIN’S DETROIT BUSINESS
Page E3
Health Care Extra
MSMS priorities for ’09: Smoke-free workplaces, tort reform
Julie Novak, 46, was appointed It was when I had to function withexecutive director of the Michigan out his support that I realized how
State Medical Society in Lansing in much I had really learned from
January after serving 10 months him and from all of my experias acting executive director. She ences.
replaced Kevin Kelley, 52,
You can never erase
who died in January after
the loss of someone like
a long illness.
him, and you feel even
Novak joined the state
more responsible for carmedical society in 1990 afrying on the mission that
ter receiving a bachelor’s
he so passionately bedegree in international
lieved in: to help doctors
relations in 1985 from
care for the patients who
Michigan State University
need them.
and a master’s of health
What are your priorities
services administration
for 2009?
in 1990 from the University
At the end of last year,
of Michigan School of Public
we were very close to getHealth.
Julie Novak,
ting legislation to ensure
Novak spoke with Jay
Michigan State
smoke-free workplaces. It
Greene, editor of Crain’s
Medical Society
Health Care Extra.
will remain a top legislative priority this year. We
What was it like to take over for also will continue work to preKevin Kelly, who worked for the med- serve Michigan’s tort reforms. Acical society for 30 years, the last sev- cess to care for seniors and for the
eral as executive director?
most vulnerable Michigan citizens
I worked with Kevin for 18 must be maintained through apyears, and he was a tremendous propriate funding for Medicare
mentor to me and to so many oth- and Medicaid.
ers. I’ve said before that if you
Fighting inappropriate scope of
meet one person like him in your practice expansion will be imporlifetime you are more than lucky. tant again this year.
Education remains a core mission for us, offering our physicians
courses on everything from practice management to scientific
classes, from the autoworkers’
VEBA (Voluntary Employee Benefit Association for health care) to
the patient-centered
medical
home.
we seek to reform our health care
system.
Do Michigan’s doctors stand to gain
under President Barack Obama’s
health care reform plan? His plan calls
for an expansion of Medicaid, Children’s Health Insurance Program and a
large employer payor-play mandate to
cover their workers
What are the
or chip into a nabiggest challenges
tional insurance exfor Michigan’s docchange.
tors?
We all stand to
Physicians
gain if there is a
want to provide
way for more peoJulie Novak,
the very best care
ple to have coverMichigan
State
Medical
Society
for their patients,
age. One of our
and they work
principles is to
hard to stay curensure universal
rent on medical treatments, but in
coverage for essential benefits and
the last two decades many other help make coverage options availrequirements have fallen to physi- able for all residents. There is a
cians — understanding complex sense of urgency because employpayment rules, complying with an er-provided coverage is declining
increasing number of state and with the poor economy.
federal regulations and hiring and
Does Blue Cross Blue Shield of
managing larger numbers of adMichigan need a legislative fix to help
ministrative staff.
There is every reason to believe it in the individual market?
We did not take a position on the
there will be more complexities as
We all stand to
“gain
if there is a
way for more people
to have coverage.
”
individual market reform bills. We
are committed to assuring that
health insurance is accessible and
affordable.
While the case for stabilizing the
individual insurance market may
be compelling, it should not be
done in isolation. Considerable attention should be given to the role
that Blue Cross and other insurers
have in assuring that any reforms
have a tangible effect on the ability
of individuals to purchase suitable
coverage at an affordable price.
How goes MSMS Connect, the electronic health information network the
medical society launched last year to
allow doctors to tap into a variety of
health care data to more effectively
coordinate patient care?
We are in the early stages of describing MSMS Connect to our
members and identifying those
who are interested in being early
adopters. It is clear that health
plans and the federal government
are increasing the call for information technology in medical practices, and this portal is meant to be
an easy entry point for physicians
to get started.
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CRAIN’S DETROIT BUSINESS
Health Care Extra
BOYDEN DETROIT ON
ATTRACTING TALENT
WITH THE HENRY FORD HEALTH SYSTEM
“Right from the start the executive candidates Boyden “Our ability to recruit talented and sought-after leaders
Detroit brought us were of the highest caliber and
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L_[YLTLS`X\HSPÄLK¹
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—9VILY[.9PUL`*OPLM6WLYH[PUN6MÄJLY
HK]HU[HNLZPZPTWVY[HU[[VH[[YHJ[[VWL_LJ\[P]LZ>L
Henry Ford Health System
\UKLYZ[HUK`V\YI\ZPULZZHUK^LILSPL]LPU4PJOPNHU¹
/LUY`-VYK/VZWP[HS»Z:[H[LVM[OL(Y[:\YNPJHS:PT\SH[PVU*LU[LY
—Jeff Evans, Boyden Detroit Partner
Yaremchuk named to panel on
ambulatory care practices
Kathleen Yaremchuk, chair of otolaryngology-head
and
neck
surgery at Henry Ford Hospital, has
been appointed to serve as a member of the National Quality Forum’s
steering committee for a project seeking to
identify top ambulatory care
practices using
electronic clinical data.
Yaremchuk
The project
will study quality measures for
ambulatory care based on administrative data, enriched by laboratory and pharmacy data and other
electronic clinical data. Funding is
from Aetna Foundation, United
Health Foundation, Cigna Foundation,
Wellpoint Foundation and the Pacific
Business Group on Health.
Winston joins American College
of Cardiology board of trustees
global executive search.
-FBSOIPX
#PZEFO%FUSPJUDBOBUUSBDUUPQUBMFOUGPSZPV Call 248.258.0616.
%PVH"MMFOt+FGG&WBOTt$ZE,JOOFZt#BSC4XBOt%BNJBO;JLBLJT
/0ME8PPEXBSE"WFt#JSNJOHIBNt.*t tboydendetroit.com
Stuart Winston, cardiologist at St.
Joseph Mercy Health System’s Michigan Heart and Vascular Institute, has
been named to
the board of
trustees of the
American College
of Cardiology for
a five-year term
beginning this
month. Winston
already
had
served as presiWinston
dent
of
the
Michigan chapter and on national
committees dealing with quality of
care and advocacy. He has been
recognized for his work in coordinating Michigan hospitals’ efforts
to improve door-to-balloon times
for the treatment of myocardial infarction.
Cardiac surgery quality project
finds improved results
A project of the Michigan Society
of Thoracic and Cardiovascular Surgeons, Michigan hospitals and Blue
Cross Blue Shield of Michigan is
starting to facilitate improved outcomes in cardiac surgery and decreasing complications and costs
in Michigan.
The Cardiac Surgery Quality Collaborative was formed in December
2005 to advance cardiac surgery
quality in the state. By collecting,
sharing and analyzing patient and
hospital
outcomes,
cardiac
surgery team members have implemented process improvement
plans based on their best practices
to benefit all heart surgery patients in the state.
Outcomes to date include:
Increased use of the internal
mammary artery graft for coronary bypass among seven cardiac
surgery programs from 82.1 percent to 91.3 percent.
A decrease in the number of
patients requiring ventilator support for more than 24 hours postsurgery from 19 percent to 16.8 percent.
Health Care Briefs
UM Medical School seventh
overall in NIH funding for 2008
University of Michigan Medical
School doctors and biomedical scientists brought in $301 million in
National Institutes of Health research
funding in federal fiscal year 2008,
ranking the school seventh overall
and second among public university medical schools.
The awards cover 712 grants to
the medical school. Other areas of
the university also receive NIH
funding totaling $127 million.
Nursing mag: Five state hospitals
among top hospitals to work for
Five Michigan hospitals were
named among the “100 Top Hospitals to Work For” by Nursing Professionals, a magazine
targeted
at nursing
students.
The five
are: William
Beaumont
Hospital,
Royal Oak;
Genesys Regional Medical
Center, Grand Blanc; Henry Ford
Hospital, Detroit; Spectrum Health,
Grand Rapids; and University of
Michigan Hospitals and Health Centers, Ann Arbor.
More than 25,000 randomly selected hospital nurses were surveyed in early 2008 to measure
their job satisfaction. Nurses were
asked about flexible work arrangements, training and development,
diversity and equality, and how
strong the nursing voice is within
the institution’s workforce.
Cleveland Clinic adopts MedHub
management system
Ann Arbor-based MedHub Inc.
has signed a contract with the
Cleveland Clinic to deploy its enterprise residency management system across all residency and fellowship
programs,
graduate
medical education and hospital finance.
The system is a Web-based
group of modules developed to improve communication, information workflow and reporting for
physician training and residency
program accreditation.
The contract, which will involve
nearly 5,000 users over 115 residency and fellowship programs, is one
of MedHub’s largest installations.
Covisint’s data-sharing network
picked by Calif.-based initiative
Detroit-based Compuware Corp.
said its Covisint subsidiary will
provide the VIP Health Initiative
with a network for the secure sharing of patient information and improved physician collaboration.
The Southern California-based initiative was formed by Scripps Mercy
Physician Partners, SMPP Services
and Physician Partners Management
Services.
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March 2, 2009
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Health Care Extra
Physician groups split over online information networks
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
A rift has developed between the
Michigan State Medical Society in
Lansing and Bingham Farmsbased United Physicians over competing online health information
networks the two organizations
are now offering physicians.
Last September, United Physicians unveiled its my1HIE
information network in a
partnership with two other
doctor groups. A month later, the medical society announced its MSMS Connect
online physician portal.
Both systems have contracts with and use technology from Covisint, a subsidiary of Detroit-based
Compuware Corp.
“We are in competition, and it is
confusing physicians,” said Dr.
Steven Grant, CEO of United
Physicians.
But Dr. Gregory Forzley, chair
of the medical society, said that
while the two online systems —
and the nine regional health information networks under development throughout the state — are
somewhat different, they are also
complementary.
“My1HIE has a bigger package
they want to offer to physicians,”
said Forzley, who also is director
of informatics at St. Mary’s Health
Care in Grand Rapids. “There is
some overlap, but doctors can decide what they want and pick what
is best.”
United Physicians has partnered with two other physician organizations in Southeast Michigan
— Olympia Medical Services and Continuum Management Services, both
located in Livonia — to develop
my1HIE. Huron Valley Physicians As-
are in
“ We
competition,
and it is
confusing
physicians.
”
Dr. Stephen Grant,
United Physicians
sociation in Ann Arbor joined
my1HIE earlier this month.
MSMS Connect and my1HIE
each will allow participating doctors to use the Internet and their
computers to retrieve patient insurance eligibility information,
electronically order prescriptions
and view lab results.
The online health information exchanges are intended to help improve patient care by enhancing
communication among doctors, hospitals, health plans and other
providers. They also have the potential to save money by reducing duplicative tests and increasing quality.
So far, about 700 of 4,000 doctors
in the four groups are using
Breast cancer linked to gene
A specific gene may contribute to the reason Caucasian women have a higher incidence of breast cancer than Asian women,
according to research conducted by the
Wayne State University School of Medicine.
The study, published in the Dec. 15 issue
of Cancer Research, provides evidence than
an allelic variation in the galectin-e gene
may influence a woman’s risk for developing breast cancer. This is a form of the gene
that appears more often in Caucasian
women than in Asian women that is associated with breast cancer.
If further studies support the research, it
could lead to the development of drugs that
target high-risk genes.
Lead researcher: Avraham Raz, professor of
pathology and radiation oncology.
Additional researchers: Vitaly Balan, research associate; Pratima Nangia-Makker, assistant professor of pathology.
UM advances cystic fibrosis fight
Researchers at the University of Michigan
may have found a way to kill the drug-resistant infections that kill people with cystic fibrosis: a superfine oil-and-water emulsion.
The nanoemulsions are nontoxic in people
but have successfully killed 150 tested “superbugs.” The results of the study were published in the January issue of Antimicrobial
Agents and Chemotherapy.
Lead researchers: John LiPuma, professor of
pediatrics, University of Michigan Medical
School, and James Baker Jr., director, Michigan
my1HIE, and another 1,300 have
signed licenses to use it, Grant
said. About 85 are being added to
the system each month.
Since January, 100 physicians
have signed up to use MSMS Connect, but the medical society may
add several thousand doctors this
year, said Ben Louagie, director of
subsidiary operations for the medical society’s Physician Services Inc.,
a for-profit subsidiary.
Forzley said the purpose
of MSMS Connect is to offer
a benefit to the association’s 16,000 members and
allow them to use the online system on an “a la
carte” basis.
“We wanted to bring up
fairly quickly a tool already
developed for doctors by Covisint to give doctors e-mail and
other resources (on the Internet),”
Forzley said.
Forzley said MSMS Connect can
be used with physicians’ own practice management systems and other online services they purchase.
“We offer (for sale) a number of
modules for physicians, like a disease registry tool, quality controls
and credentialing services,” Forzley said. “If you have existing services, our way to collaborate is
that you don’t have to buy that
from us. We can link that in.”
But Grant has a few gripes with
how the medical society is presenting its network to physicians.
“We tried to work with the medical society to partner with them,
Research Roundup
Nanotechnology Institute for Medicine and Biological Sciences, and the study’s senior author.
Additional UM authors: Sivaprakash Rathinavelu, Bridget Foster, Jordan Keoleian, Paul
Makidon, and Linda Kalikin.
Funding: T. Carroll Haas Research Fund for
Cystic Fibrosis, Cystic Fibrosis Foundation, National Institutes of Health, NanoBio Corp.
Urinary incontinence treatment
William Beaumont Hospital is researching
urinary incontinence treatment using the
patient’s own stem cells, which are used to
strengthen weak muscles that control urination. The hospital said it is the first in
the U.S. to conduct this research.
The hospital is working with 48 female research participants, whose stem cells will be
collected and duplicated. The cells will be injected into the muscles that control urination to strengthen them and prevent leakage. The study will last 12-14 months.
Leader researcher: Ken Peters, urology department chair
Prostate cancer indicators
Researchers from the University of Michigan Comprehensive Cancer Center have identified a panel of small molecules, or metabolites, that appear to indicate aggressive
prostate cancer. One metabolite in particular, sarcosine, appeared to be one of the
but the meetings didn’t go very
far,” Grant said. “Our problem is
their promotional literature is
strongly implying they are giving
(Connect) free to physicians. It is
not free. There is a charge for eprescribing and for each additional module.”
to
“ We wanted
bring up
fairly quickly
a tool already
developed.
”
Dr. Gregory Forzley,
Michigan State Medical
Society
Grant said my1HIE does not
charge doctors to integrate its existing systems into the network. It
also offers a significant discount
for the first year for additional
software applications such as eprescribing and reference laboratory results.
Forzley said the medical society
has posted additional information
on its Web site to more clearly explain the differences between
MSMS Connect’s free and paid services. Nonmembers are charged
$70 a month for the basic services,
he said.
One physician leader who has
evaluated MSMS Connect and
strongest indicators of advanced disease.
The finding, if verified by further testing
and development, could lead to a simple
test that would help doctors determine
which prostate cancers are slow-growing
and which require aggressive treatment.
Results appear in the Feb. 12 issue of Nature.
Senior authors: Arul Chinnaiyan, director,
Michigan Center for Translational Pathology;
Christopher Beecher, professor of pathology.
Funding: National Cancer Institute Early Detection Research Network, National Institutes of
Health, an MTTC grant, the Burroughs Welcome
Foundation, and the Doris Duke Charitable
Foundation.
Note: Pending patents related to this research have been licensed to Metabalon, a
Durham, N.C., company, in which Beecher
and Chinnaiyan own equity.
my1HIE is Dr. Paul Harkaway,
president of Huron Valley.
“We had a choice, and we chose
my1HIE because they already had
done a lot of background work and
were ready to take the next step,”
Harkaway said. “Our goal is similar to United Physicians’. We need
better tools to connect doctors to
each other and to other applications to help manage patient care
more effectively.”
Grant said he is in discussions
with physician organizations all
over the state about joining
my1HIE.
“If we can tie up all the physicians in Southeast Michigan, I
don’t know what MSMS will do,”
Grant said. “Many physicians
want to come with us.”
Forzley said he expects a number of physicians in individual or
small practices to join MSMS Connect.
“We are in talks with larger
physician organizations,” he said.
However, Grant and Forzley
agree that information technology
subsidies in the recently approved
federal economic stimulus package will encourage physicians to
buy electronic medical records
and join online health information
networks.
“The stimulus package will help
bring down the barrier of using
EMRs, and with some doctors saying, ‘I can’t afford that,’ the stimulus dollars will help them pay for it
and help doctors with best practices,” Forzley said.
Jay Greene: (313) 446-0325,
jgreene@crain.com
quire them to undergo competency tests or
retraining before returning to practice medicine.
That could lead to patient safety issues,
according to Gary Freed, the lead author of a
pair of studies published in Pediatrics.
Freed is chief of the division of general pediatrics and director of the Child Health Evaluation and Research Unit at the University of
Michigan Health System.
Young adults showing signs of a stroke
are being misdiagnosed in hospital emergency rooms, according to a study by Wayne
State University School of Medicine researchers. Seemant Chaturvedi, professor of
neurology and director of the WSU/Detroit
Medical Center stroke program, is senior
author. Abraham Kuruvilla, the study’s lead
author, is a stroke fellow in the Neurology
Department.
Other research
Longtime airline pilots may be in danger of DNA damage from prolonged exposure to cosmic ionizing radiation, according
to a study by a 10-person team that included
James Tucker, professor and chair of the Department of Biological Sciences in Wayne
State University’s College of Liberal Arts and Sciences.
The study, which was led by Lee Yong of
the National Institute for Occupational Safety
and Health, was published in Occupational
and Environmental Medicine.
One in eight physicians have been inactive in the state where they are licensed for
at least a year, and most states do not re-
Grants
Frank McMaster, a postdoctoral research
assistant in the Wayne State University School
of Medicine, has been awarded nearly $60,000
for a Young Investigator Award from Narsad
to investigate the neurobiology of familial
depression in adolescents.
The Juvenile Diabetes Research Foundation has awarded nearly $900,000 to Wayne
State University faculty to investigate strategies for stopping diabetic retinopathy in its
early stages.
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CRAIN’S DETROIT BUSINESS
Health Care Extra
Health care hot seat
CON Roundup
Report on tax-exempt hospitals finds high salaries, limited benefits to communities
BY MELANIE EVANS
CRAIN NEWS SERVICE
The Internal Revenue Service on
Feb. 12 released a long-awaited report on executive pay and community benefits at not-for-profit hospitals. The report, which found
six-figure salaries and uneven aid
from hospitals to their communities, comes as many tax-exempt
hospitals are shedding jobs,
squeezing budgets and threatening
further cuts to payroll and services in a weak economy.
Industry observers say the findings, coupled with public frustration over a painful recession,
could fuel calls to replace what are
acknowledged to be vague standards for giving tax breaks to hospitals with quantifiable measures
— such as spending — of community benefits.
“It’s going to seem out of synch
with today’s economy,” said Gerald Griffith, a health care lawyer
with Jones Day, of the survey’s 2005
executive pay figures.
Findings from the 2006 survey of
roughly 500 tax-exempt hospitals
for the first time reported how
much top executives earn in salary
and benefits and clarified previously disclosed figures on how
hospitals give back to communities in exchange for certain tax
breaks. Results are mixed, and industry insiders quickly denounced
the survey as unreliable.
The recently released report “is
NOT-FOR-PROFIT HOSPITALS
The Internal Revenue Service released final results from a May 2006
survey of how much roughly 500 tax-exempt hospitals spend on
community benefits and executive compensation. Among the key findings:
■14% of hospitals reported
63% of uncompensatedcare spending.
■ 9% of hospitals reported
60% of community benefit
costs.
■The aggregate margin was 5%. Roughly
one in five hospitals operated at a loss.
■Uncompensated care accounted for the
greatest share of community benefit costs,
followed by medical education and training,
medical research, and community
programs.
Source: IRS Exempt Organizations Hospital Compliance Project final report
a historical compendium — that’s
it,” said J. Douglas Clark, vice
president of audit compliance and
tax at Detroit-based Henry Ford
Health System.
There were no
“aha!” moments
in the 200-page
report, he said.
“Clearly, the
data in this compendium is inconsistent and
all over the
board,” in part
because
the
Clark
questions posed
to nonprofit hospitals and health
care systems to come up with the
data were very ambiguous and because there are no clear metrics for
quantifying the community benefit
a nonprofit health institution or
system provides, Clark said.
The report is probably the best
prima facie evidence that revamp-
ing the 990 tax forms and disclosure standards, as was done for filings beginning in 2008, was very
much needed, he said.
The hope is that once institutions
adjust to the new disclosure rules,
some of that ambiguity and difficulty in answering questions will be
reduced “and comparisons like this
will have value,” Clark said.
According to the report, not-forprofit CEOs surveyed earned an average of $490,000 in salary and benefits in 2005 and tax officials noted
that compensation figures “appear
high but also appear supported under current law,” in a summary of
the survey’s findings. And among 20
hospitals singled out for unusually
high compensation compared with
similar hospitals, the average total
payout was $1.4 million. The figures
exceed 2005 executive payouts reported by compensation consultants
Sullivan, Cotter and Associates in Modern Healthcare’s yearly salary sur-
vey. Hospital CEOs earned an average total cash compensation in 2005
of $334,000 for system-owned hospitals and $364,500 at free-standing
hospitals.
Results also found that less than
10 percent of surveyed hospitals accounted for 60 percent of community benefit costs. Care for which hospitals received no payment,
including free and discounted care
to needy patients, showed a similar
concentration, with 14 percent of
surveyed hospitals reporting 63 percent of spending. The IRS survey
asked hospitals to detail spending
for medical research, medical education and training, uncompensated care and programs to deliver
health education, screening, immunizations or other initiatives.
The American Hospital Association
was critical of the survey and dismissed its findings as flawed. Melinda Hatton, general counsel for the
group, said the poorly worded questionnaire elicited widely different
answers from hospitals on the value
and type of community benefits
they provide, leaving the results incomplete and misleading.
Hatton argued the same ambiguity clouds findings on executive
pay. The survey did not require
hospitals to separately report
bonuses or deferred compensation, which can skew salaries upward from year to year and can
vary depending on an executive’s
tenure. She lobbied for policymakers to wait for more specific and
comprehensive executive pay and
community benefit figures that
hospitals must begin reporting on
yearly tax forms, known as the
Form 990, starting in 2009.
The IRS last year finished overhauling the Form 990 and added a
separate schedule for hospitals to
itemize how much and what type of
community benefits they provide.
The form clearly defines what may
be counted as community benefits
— Medicare losses and bad debt are
excluded from the list — and says all
expenses must be reported at cost.
The survey is one of many inquiries in recent years by regulators and Congress into the business
practices and governance of tax-exempt hospitals. The sector came under scrutiny for aggressive pricing,
billing and collection practices that
left the uninsured paying rates well
above those charged to the insured.
Critics, including Sen. Chuck
Grassley, R-Iowa, who is the ranking member of the Senate Finance
Committee, have pushed for
greater transparency and more
oversight of tax-exempt health
care, with some success. An overhaul of not-for-profits’ yearly tax
filings last year included a separate schedule for hospitals to itemize how much and what type of
community benefits they provide.
Grassley is expected to push for
legislation that would tie hospitals’ tax exemptions to quantifiable measures of how much hospitals give back to communities.
From
Modern
Healthcare.
Crain’s Detroit Business reporter
Sherri Begin Welch contributed to
this story.
Cancer partners
file to move MRT
to new center
Moving ahead with their joint
venture to build a $17 million
outpatient radiation cancer center, Crittenton Hospital Medical
Center in Rochester Hills and
Barbara Ann Karmanos Cancer Institute in Detroit have filed a certificate of need to relocate a $3.4
million megavoltage radiation
therapy unit to the new facility
under
construction
in
Rochester Hills.
“We are proposing to relocate
the MRT from Crittenton, where
we provide radiation oncology
services in a joint venture with
Karmanos, to the new outpatient center off M-59 and Crooks
Road,” said Michelle Hornberger, Crittenton’s chief strategy officer.
Last September, the two hospitals broke ground on the
30,000-square-foot facility, located at 1901 Star Batt Drive. The
center, which is expected to
open later this year, will include
clinical office space, chemotherapy, imaging services and radiation oncology.
Hornberger said the hospitals
have not made a final decision
on the name of the center. It is
tentatively named the CrittentonKarmanos Cancer Center. The center will be will be dedicated to
the memory of Vivian Stolaruk,
the late wife of Steve Stolaruk,
who donated the three-acre site.
— Jay Greene
The following are selected
certificate of need filings and decisions from Feb. 1-23. The filings are made with the Michigan
Department of Community Health
and can be found at www.michigan.gov/mdch by navigating to
the “providers” section.
Applications received:
University of Michigan Health
Center, Ann Arbor: Add second
fixed CT/PET scanner, $4.5 million.
West Winds Medical Center,
Commerce Township: Add 15
nursing home beds, $1.2 million.
Heartland Health Care, Sterling Heights: New 120-bed nursing home, $15.3 million.
Medilodge of Howell: Add 20
nursing home beds, $1.7 million.
Livingston Health Campus,
Howell: New 56-bed nursing
home, $5.3 million.
Livingston Care Center L.L.C.,
Howell: New 56-bed nursing
home, $5.5 million.
Levan Internists P.C., Livonia: Initiate fixed CT scanner,
$1.5 million.
Filings not approved:
Michigan Institute for Radiation Oncology, Pontiac: Replace
CT simulator, $265,000.
University of Michigan Health
Systems, Ann Arbor: Replace
two gamma cameras, $2.1 million.
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March 2, 2009
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Health Care Extra
Insurers address therapeutic drug-switching concerns
BY MIKE SCOTT
SPECIAL TO CRAIN’S DETROIT BUSINESS
Local health insurers are developing policies to address lingering
concerns over therapeutic switching, a practice that has come under
fire by physicians, pharmacy
groups and consumers.
Physicians say they want more
authority over whether brandname drugs — such as the sleep-inducing drug Ambien — should be
switched for lower-cost generics.
They also want compensation for
the extra time it takes them to investigate whether such a switch
benefits patients.
Depending on a patient’s pharmacy benefits, an insurer could
save money and the patient could
reduce out-of-pocket co-payment
costs.
Physicians sometimes prescribe
a drug because other options
haven’t been effective, said Dr.
Rose Ramirez, vice speaker of the
House for the Lansing-based Michigan State Medical Society, which opposes therapeutic switching.
“I write generic prescriptions
as much as possible to cut costs,
but often as physicians we have
specific reasons for selecting the
drug that we do,” said Ramirez, a
family practitioner at Jupiter Family Medicine in Belmont.
Another problem with medication switching is that it could take
physicians more time to find the
right therapeutic balance for a given condition, said Arlene Gorelick, president
of the Epilepsy
Foundation
of
Michigan.
Most physicians prescribe
medications
based on their
knowledge of the
drug and the paGorelick
tient’s needs and
condition, Gorelick said. Patients
could be adversely affected if generic and brand-name drugs are
switched back and forth, she said.
“As more generic drugs have
come into the marketplace over
the past several years, these
switches have increased in num-
SKEPTICS OF SWITCHING
An October 2008 national
survey of approximately 1,400
adult users of prescription
drugs found that 77 percent of
respondents would oppose the
practice of
therapeutic
switching
without the
consent of the
prescribing
doctor or
patient. Many of
the respondents
Opposed
were unaware
that such switching even
occurred.
The survey also indicated broad
opposition to insurance
companies offering incentives
for physicians who switched
from brand-name prescriptions
to generics.
It was conducted by the
Washington-based National
Consumers League, a private,
nonprofit advocacy group
representing consumers on
marketplace and workplace
issues.
77%
Source: National Consumers League,
www.nclnet.org
bers,” Gorelick said. “There can
be significant side effects, and
when it happens to an epileptic
patient, the results could be catastrophic.”
Blue Cross Blue Shield of Michigan
began a program in September 2007
that identifies opportunities to promote to physicians cost-effective
drug therapies in specific areas.
The Blue Cross program notifies
physicians of generic drug options
without using financial incentives
or other tactics to get doctors to
prescribe generics, said Laurie
Wesolowicz, a certified pharmacist and director of Blue Cross’
clinical pharmacy services.
However, earlier in 2007, Blue
Care Network, Blue Cross’ health
maintenance organization, used an
incentive program for three months
that compensated physicians up to
$100 for each time they prescribed a
generic drug instead of a branded
drug for certain classes.
Helen Stojic, Blue Cross’ director of corporate affairs, said the
policy saved members and businesses “several million dollars.”
Blue Cross withdrew the program
after it experienced backlash from
doctors and consumer groups.
Wesolowicz said that under the
Blues’ current program, a letter is
sent to inform a member’s physician when a prescription for a
name-brand drug is written that
the insurer determines could be
replaced by a comparable generic
drug at a lesser cost.
Wesolowicz said the physician
always can agree to or decline the
therapeutic switch. If the physician agrees, a second letter will be
sent to inform the insured member
of the option. The member then
also can challenge the medication
switch and can contact the physician with concerns, she said.
To reduce physician time in the
process, Blue Cross does not require
the doctor to explain a decision to
continue using the higher-cost
name-brand drug, Wesolowicz said.
Still, Ramirez said physicians
spend too much time on the switching requests without being fairly
compensated. She said the medical
society supports paying physicians
more for a therapeutic switch.
The use of electronic prescribing may be one way to reduce time
and make the process more transparent, Ramirez said.
But e-prescribing will work only
if insurers make available online
their drug formularies and physicians have electronic medical
records or other software in place
and pharmacies are linked.
“My (electronic medical record)
will send a message back to me
about (the patient’s insurance details) and will walk me through options and suggestions so we don’t
have all the headaches when the
patient drops off the scrip,”
Ramirez said.
“E-prescribing doesn’t alleviate
all my concerns, but it can save a
ton of work and frustration for
everyone involved. But you need a
lot of pieces in place for it to
work,” she said.
Blue Cross also does not force
pharmacists to switch a member’s
medication without approval from
both the physician and the member, she said.
“Our goal is to let our physicians
and members know that there are
effective alternatives available for a
lesser cost,” Wesolowicz said.
“When you look at the rising cost of
member co-pays, there is a significant benefit here.”
Not all classes of prescriptions
are managed under this program.
There are about 25 brand-name
drugs that would trigger such a
physician letter, with the list
based largely on FDA approval
and guidelines, Wesolowicz said.
The classes of prescription
drugs that are treated in such a
way by Blue Cross tend to be for
less serious clinical diagnoses,
Wesolowicz said. Examples include sleep drugs, prescription
nasal sprays and more. Epileptic
drugs, for example, do not generate a physician letter.
“We tend not to target drugs
where there are therapeutic controversies,” Wesolowicz said.
In January, Blue Cross tracked
more than 1,100 positive responses
in Michigan in which a prescription was switched from a branded
drug to a generic, she said. Both
physician and member approved
of such switches, she said.
American Community Mutual Insurance Co., a Livonia insurance company, contracts with a pharmacy
benefits manager to administer its
prescription drug programs and
make care more affordable.
“Generic drugs help us do this
by providing therapeutically
equivalent solutions for consumers as an alternative to more
expensive brand drugs,” said Ellen
Downey,
vice
president of corporate communications.
“Our (pharmacy benefits
manager) has
worked with us
to
implement
appropriate
generic substiDowney
tution and formulary management programs to
provide clinically appropriate
medications that save consumers
money,” she said.
If an American Community Mutual Insurance Co. member pre-
sents a prescription for a brandname medication at a retail pharmacy or by mail and a generic alternative is available, the insurer’s pharmacy manager or the
retail pharmacy may substitute
the generic alternative when appropriate, Downey said.
Similarly, if a more cost-effective preferred brand alternative is
available, the pharmacy manager
or retail pharmacy may contact
the policyholder’s physician to request a change from the original
prescribed brand drug to the preferred brand drug when medically
appropriate.
Any changes to a patient’s prescription, other than a permitted
generic substitution, must be authorized by the patient’s doctor,
Downey said.
“We do not automatically switch
patients from one therapy to another,” she said.
To address the medicationswitching policies, the Epilepsy
Foundation has been working
with state legislators on a bill that
would prevent pharmacists from
switching unless the change is approved by both the physician and
patient, Gorelick said.
State Sens. Bruce Patterson, RCanton Township, and Tom
George, R-Kalamazoo, an anesthesiologist and chair of the Senate
Health Policy committee, introduced
Senate Bill 1311 in May 2008. The
bill, which wasn’t acted on, would
have prevented some therapeutic
switching.
It also would have eliminated any
financial incentives to physicians
for prescribing generic drugs.
Sue Trussel, Patterson’s media
coordinator, said it is possible that
a new bill addressing some of the
same issues could be introduced
this year.
Insurers are looking at a variety
of ways to manage prescription
costs and streamline ordering,
Wesolowicz said.
“Members have indicated to us
that they need help in paying for
their prescriptions, and if we can
provide such assistance while keeping physicians in the role of the key
decision-maker, then it’s a win-win
for all parties,” Wesolowicz said.
Oakwood CEO: Focus on patients to survive tough times
BY JAY GREENE
CRAIN’S DETROIT BUSINESS
Putting patients, quality and customer
service first is a challenge for hospital executives as they seek to cut
costs and adjust service
mix in the face of a worsening economy and declining profit margins,
said Brian Connolly,
CEO of Dearborn-based
Oakwood Healthcare.
Speaking Feb. 16 before fellow health care
executives at a breakfast Connolly
meeting of the Midwest
Healthcare Executives Group and Associates,
Connolly said Oakwood is closely evaluat-
ing its entire health care operation. MHEGA
is an affiliate of the Chicago-based American
College of Healthcare Executives.
“Many hospitals are at the same place. ...
If we focus on patients, we will get through
these tough times,” said Connolly. “Everything is on the table now.”
Last November, Oakwood announced it
would reduce nonclinical employees
through attrition by 8 percent to 10 percent.
So far, some 35 to 50 employees have been
laid off. It also is in the process of cutting
costs by $20 million to $30 million.
“We continue to hire RNs and clinical occupations,” said Paula Rivera-Kerr, Oakwood’s media relations manager. “We are
looking very closely at other nonclinical positions. Any nonclinical position being filled
requires review and approval first.”
One of the chief drivers of declining profit
margins at Southeast Michigan’s 45 hospitals, including Oakwood’s four acute-care facilities, is steadily increasing uncompensated care costs.
For example, Oakwood’s uncompensated
care, which includes charity care, bad debt
and unpaid costs of Medicare and Medicaid,
increased 233 percent to $100 million in 2008
from $30 million in 2005, Connolly said.
“More Michigan patients have more outof-pocket costs (as insurance co-pays and deductibles rise), and that is increasing uncompensated care,” Connolly said. Another
driver of uncompensated care is the growing numbers of the unemployed and uninsured.
The state’s 144 hospitals recorded more
than $2 billion in uncompensated care in
2008 — a record amount, according to a report this month from the Michigan Health and
Hospital Association.
In response, Connolly said, Oakwood is
reassessing its strategic plan, with an eye on
cutting costs. However, the plan will maintain Oakwood’s focus on quality and research, along with building care upward
from physicians to primary and specialty
services.
“We need to demonstrate value — that is,
quality, costs and customer service,” Connolly said. “You need all three or the stool
will fall over.”
This article first appeared on www.crains
detroit.com
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