As seen in the Business Ledger
Published October 14, 2009
By John T. Slania | Contributing Writer

Area hospitals are prescribing some preventative medicine in anticipation of national health care reform that is certain to impact their bottom line.

Specifically, hospitals are busy trying to determine how to adjust their operating plans to address expected changes resulting from health care restructuring.

Emergency room procedures, primary care, laboratory and diagnostic testing, physical therapy and psychological treatment are among the services hospitals predict would be affected by reform.

Hospital administrators also believe that reform would result in a greater emphasis on quality of care, whereas the better hospitals do to keep patients healthy, the larger their reimbursements.

And a premium also would be placed on communication, especially in the development of electronic health records, allowing hospitals to more efficiently share patient information with doctors, nursing homes, off-site medical centers and other health care providers.

Developing a concrete strategy is difficult given that there are three separate reform proposals, one floated by the Obama administration and two more in Congress. But hospital administrators say there are enough similarities between the proposals to make assumptions of how health care reform would alter their business plans.

“It’s tough to make any definite plans because it’s a political process, and what goes in is not often what comes out. But there are things that seem certain, and that’s where we can do some planning,” said J. Alex Bacchetti, vice president of planning and marketing for Provena Mercy Medical Center in Aurora and Provena Saint Joseph Hospital in Elgin.

One area of certainty: The goal of each reform proposal is to provide health insurance to the nearly 50 million Americans without coverage. While each plan varies in the way the uninsured would receive coverage, hospital administrators assume universal health care would shift demand for services.

It begins in the emergency room, a place where hospitals have been performing financial triage for years. As a rising number of uninsured patients are using emergency room visits to receive routine medical treatment, hospitals have incurred increased operating expenses.

The theory goes that if more people have health insurance, they might be inclined to visit a primary care physician, thus reducing the number of patients seeking emergency room treatment, said Dr. Kevin Most, vice president of medical affairs and chief medical officer at Central DuPage Hospital in Winfield.

“We really kind of expect activity in our emergency room to drop down a little bit...as [uninsured] patients who have not had an opportunity to see a doctor will do so,” Most said.

For Central DuPage Hospital, the anticipated shift could result in a reduction in un-reimbursed expenses in the emergency room, Most said. Of the 65,000 people who visit the hospital’s emergency room each year, up to 15 percent are uninsured, and any reduction in either number would reduce costs, he said.

“The emergency room is not the most efficient way for us to treat patients. The cost structure of seeing someone in an office is much lower,” Most said.

However, a drop in emergency room visits would create an attendant rise in demand for primary care, as newly-insured patients would make appointments to see physicians for physicals, shots and other non-emergency treatment, Most said. Central DuPage, which now has 70 primary care doctors on staff, will be looking to increase that number to meet the expected increase in demand, he said.

So too will Central DuPage be expecting an increase demand for laboratory tests, diagnostics such as MRIs and CAT Scans, physical therapy and psychological services, Most said.

“When you have an increased number of people seeing primary care physicians, there will be a resultant increase in volume in ancillary tests and services,” he said.

Hospitals are more than willing to meet this demand if it keeps patients out of the emergency room and keeps them healthy. It would not only lower expenses, but under the reform proposals, the healthier the patients, the larger the reimbursements for care.

A provision in some versions of the legislation would penalize hospitals with high readmission rates, that is, patients who must return to a hospital for follow-up treatment. Lawmakers are specifically trying to crack down on hospitals with a high rate of medical errors, patient infections and lack of follow-up communication with patients and their doctors.

Thus, health care reform would place an increased focus on providing better quality care, said Bacchetti, the Provena administrator.

“Our product is delivering quality,” Bacchetti said. “No matter what happens with health care reform, the better quality providers will be better off and therefore, so will the patients.”

A corollary to better quality care is greater communication between hospitals and patients, administrators say, since better informed and educated patients generally remain healthier.

Delnor Hospital in Geneva has spent $51 million the past year on its community benefits program, the majority going to pay for treatment for the uninsured and for unfunded Medicare/Medicaid services. But a sizeable portion has funded community health education programs, free health screenings and even language assistant services.

“Our education programs, health screenings and other community benefits programs are designed to empower people to take charge of their health,” said Brian Griffin, Delnor’s director of public relations. “We believe in an increased emphasis on community education, testing and screening to promote detection and early prevention.”

So too is Delnor interested in implementing an electronic health records system to improve communication with physicians, nursing homes, off-site medical centers and other health providers, Griffin said. If every provider giving care to a patient has access to the same updated electronic records, it would improve the quality of care and lower costs, he said.

Congress has already allocated $19 billion toward the development of a national electronic health records system and the Obama administration has pledged another $50 billion. Area hospitals are busy applying for grants to gain access to this funding so they can develop their own electronic health records systems.

“Electronic records are important to providing patients the right care at the right time in the right setting,” Griffin said.

Despite all these best-laid plans, even if health care reform legislation was passed within the next year, it might take 5 to 10 years before all the changes are implemented, said Danny Chun, assistant vice president of communications for the Illinois Hospital Association, a Naperville-based organization representing 200 hospitals statewide.

The good news is that the specter of health care reform is prompting hospitals to re-examine their practices and implement changes now.

“A lot of the ideas you’re seeing with health care reform are already in play,” Chun said. “Hospitals already are moving in the right direction. Health care reform will only accelerate that.”