Shelly Reese is a freelance writer based in Cincinnati, Ohio. She is a frequent contributor to Managed Healthcare Executive.

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SINCE THE ONSLAUGHT of the 2007 recession, safety net hospitals have seen usage numbers soar, according to a survey of the National Association of Public Hospital and Health System's (NAPH) members. And it's not just the emergency room that is being flooded. 

NAPH members provided nearly $128 billion in inpatient and outpatient services in 2010, according to a recent report developed by the National Public Health and Hospital Institute, NAPH's research affiliate.  

During 2010, the typical safety net hospital averaged 21,300 admissions, an increase of more than 16% since 1998. During that same 12-year period, ambulatory visits-which included 79,000 emergency department visits in 2010-soared 35% to more than 573,000.  

According to Bruce Siegel, MD, NAPH president and CEO, the increase in outpatient services reflects both harsh economic conditions and a greater focus by safety net facilities on providing integrated care.   

"The economy has driven many more people to the safety net, but you're also seeing a major investment in outpatient primary care by the safety net," he says. "It's something that distinguishes safety net hospitals from the rest of the industry. They've invested in huge community networks. They've invested in care management and they're moving ahead in medical homes at a breakneck pace. They're very committed to managing patients across the continuum beyond the four walls of the hospital." 

The typical safety net network now includes 20 or more ambulatory care sites providing both primary and specialty care. Roughly 58% of ambulatory visits in 2010 were for specialty care services, according to the report. 

Despite the growing mission, Dr. Siegel notes the economic strain under which the safety net hospitals operate. Although they represent only 2% of the nation's acute care hospitals, NAPH members delivered 20% of the uncompensated care provided by U.S. hospitals in 2010.  

The hospitals treat a high percentage of uninsured and Medicaid patients, with rates 30% to 40% lower than commercial reimbursement, Dr. Siegel says. Additionally, NAPH hospitals provide costly specialized services such as trauma and burn units, which often fill a unique need in their local communities. 

"We think of the safety net as the ultimate form of capitation," he says. "The safety net has gotten incredibly resourceful at care management. As the move toward managed care or other accountable models is going to continue, these hospitals can clearly provide models for the managed care industry." 

Articles

Some hospitals are feeling the pinch of the Great Recession.

Public hospitals feel recession's pinch

HOW YOU INTERPRET the avoidable hospitalization data in the Agency for Healthcare Research and Quality's (AHRQ) annual quality report depends entirely on your perspective. 

"It's a good news/bad news kind of thing," says Ernest Moy, MD, medical officer with AHRQ's Center for Quality Improvement and Patient Safety. "There's a lot of evidence that we are moving in the right direction, we're just doing it slowly." 

Unfortunately, the cost trend of such hospitalizations hasn't fallen at the same rate. Inpatient costs increased during the first three years of the study period, reaching a peak. They were ultimately higher in 2008 than they had been at the beginning of the study period, despite the later decline. From the peak in 2003 to the 2008 endpoint, potentially avoidable hospitalization costs fell 5.7%. 

Several factors have helped reduce the rate of avoidable hospitalizations, Dr. Moy says. Hospitals have become more skilled at addressing complaints such as dehydration and asthma in the emergency department, enabling certain patients to avoid admission. Patients deserve credit as well, as many are taking a more active role in managing their chronic conditions. Unfortunately, he says, adequate access to primary care-a critical element-remains precariously out of balance, attributed to the shortage of primary care physicians in many areas. 

Demographic data regarding avoidable hospitalizations underscores the role of primary care. Populations that face the most barriers to primary care have the highest rates of avoidable hospitalizations: rates were higher for low-income individuals and blacks than for higher-income individuals and whites. 

To put the data in perspective, the report compared national performance to that of the best performing states. At the current rate, it would take the nation 20 years to reach the avoidable hospitalization rate achieved by top-performing Hawaii, Utah and Washington, states whose average rate of 818 per 100,000 population is roughly 43% lower than that of the nation as a whole. 

Still, there is cause for hope, Dr. Moy says. By making insurance more broadly available, healthcare reforms will remove a major obstacle to care. What's more, promoting more coordinated, accountable care organizations should enable caregivers to address potentially dangerous complaints before they require hospitalization. CMS and private payers are putting pressure on healthcare providers to improve quality and lower costs. 

"I think everybody knows that in terms of reducing overall costs, reducing hospitalization costs is where you can get the biggest bang for your buck," Dr. Moy says. 

Despite those forces, change can be painfully slow. 

"We want things to get better faster," Dr. Moy says. "It doesn't help people who are paying high insurance premiums now to know that in 20 years things will get better." 

How you interpret avoidable hospitalization data depends entirely on your perspective.

Readmit rate improves ever so slowly

Promising as those findings may be, Americans aren't nearly as compliant as they think they are. Research indicates drug adherence rates might be less than 50% in some cases. The least-adherent patients are most likely to overestimate their adherence. In the survey of Express Scripts members, more than 90% of patients in the least-adherent group reported taking their medication as directed. In reality, fewer than 25% did so.  

"The gap between perception and reality is huge," says Sharon Frazee, Express Scripts' vice president of research and analysis. Frazee notes that failure to take medications as prescribed costs about $317 billion annually in unnecessary medical expenses. 

While health plans, pharmacy benefits managers and employers have focused a great deal of attention on clinical and economic barriers that contribute to noncompliance, these issues are secondary, Frazee says.  

The bulk of the problem, researchers found, lies in a patient's inability to focus on mundane tasks like taking their medicine, refilling a prescription or calling the doctor for a prescription renewal. Humans aren't a very attentive lot, Frazee says. In fact, simply forgetting to take a dose of medicine accounts for 39% of all nonadherence, while forgetting to refill a prescription and procrastinating on getting a renewal accounts for another 30%. 

Addressing economic or clinical barriers are straight-forward hurdles, but addressing behavior is far more complex, she says. For example, a payer can help a patient overcome cost barriers by encouraging them to switch to a generic alternative, a solution that requires a one-time action on the part of the patient. In contrast, remembering to take a dose of medicine requires a patient's constant attention, often multiple times a day. 

Payers have long relied on educational outreach to address the problem of patient compliance, but education only goes so far. 

"Education is great, but education isn't the end all and be all," Frazee says. "If your two-color brochure isn't moving the needle, it's not likely a three-color brochure will either."  

Toward that end, Express Scripts developed a predictive model that uses roughly 400 factors to identify which patients are at greatest risk of nonadherence. The company is now piloting an intervention program to reach out to patients with diabetes, hypertension and hyperlipidemia who are likely to be nonadherent. Targeted interventions include providing forgetful patients with audible timer devices that remind them to take their medication and encouraging those who put off filling prescriptions to sign up for home delivery or auto-refill services. The company plans to begin testing intervention programs for asthma, COPD and osteoporosis later this year. 

"You can't treat nonadherence as if it's a monolithic thing," Frazee says. "You have to look at the various causes." 

A survey by Express Scripts shows that patients tend to think that they are more compliant than they are.

Forgetfulness cripples drug adherence

ACCORDING TO a Pharmacy Benefit Management Institute (PBMI) annual survey, employers are satisfied with the services of their pharmacy benefits managers (PBMs). The bad news: PBMs have the weakest performance on the aspects that matter most to employers. 

In fact, since the non-profit began conducting its surveys in 1995, there's been little change in employer satisfaction. But qualities that employers consider the most essential-goal alignment, financial transparency and clinical programs-earned the lowest scores. 

However, PBMs have room for improvement on employer-facing issues that relate to goal alignment and financial transparency. Four of the five categories in which PBMs scored the lowest-drug utilization management, formulary management and rebates, management reports and utilization, and benefit management consulting-are measures that relate to employers' sense of partnership with PBMs. 

Improving those scores depends on transparency, Felthouse says, and should begin with the request for proposals (RFP) process in contracting. She says that when PBMI asked employers specifically about the RFP process, it found that clarity of the contract language was the factor most strongly associated with an employer's overall satisfaction rating. 

"If both parties are clear on the contract, then you've got goal alignment," she says. "You need to start with clear contracts that spell out the financial terms and the scope of the services to be provided. That's the first and biggest step to creating transparency. It's elemental. Employers need to know what they're paying for." 

It's virtually impossible for employers to make an apples-to-apples comparison of pharmacy benefits when PBMs don't break down cost data in RFPs.  

Another factor suppressing overall satisfaction scores is disease management, which  is consistently the lowest-rated service function, Felthouse says. The average DM rating has increased modestly from 5.9 in 1996 to this year's 6.7 out of a possible 10 points, but the category is always at the bottom, she says. 

"There's a huge spectrum of what PBMs will cover as far as disease management, and because there is such variation, it's hard to really know what people are rating and what depth of services they are responding to," Felthouse says.  

Because of wide service variations, it's difficult to extrapolate on the data and identify where PBMs need to improve. 

Many PBM's disease management programs aren't integrated into employers' overall disease management programs.  

"They're focused on the prescription drug therapy piece of disease management, but peer review literature says disease management is most effective when everybody involved in disease management-including pharmacy, disease managers, clinicians and therapists-are all working together," Felthouse says. "PBMs have an important role, but they're just one portion of disease management."  

Commentary is independent of source data.

The bad news: PBMs have the weakest performance on the aspects that matter most to employers.

Employers give PBMs positive scores

In the arcane argot of antitrust, the debate between the American Medical Assn. (AMA) and the nation's health insurers is a case of he said/she said. 

The AMA fired its latest salvo in February, when it issued the eighth edition of its "Competition in Health Insurance: A Comprehensive Study of U.S. Markets." The report describes a "near total collapse of competitive and dynamic health insurance markets," which the AMA contends is increasing the cost of health coverage and warrants the United States Department of Justice (DOJ) to enforce antitrust laws more aggressively and retrospectively study health plan mergers.  

America's Health Insurance Plans (AHIP) counters that the AMA data "are plagued by a number of significant limitations and appear to be unreliable" and that the force behind increasing healthcare costs isn't consolidation within the insurance industry but consolidation among hospitals and provider groups. 

In 54% of metropolitan markets, a single insurer controlled at least half the market-up from 40% in 2008-and in nearly all (92%) of the metropolitan markets at least one insurer had a market share of 30% percent or more. 

Health insurance "is not a vibrant marketplace," says Leemore Dafny, a professor of management and strategy at Northwestern University's Kellogg School of Management. "This industry is much more consolidated than others that encourage antitrust intervention." 

Balderdash, counters AHIP. Unlike AMA data, which points to near monopolies in the nation's major metropolitan areas, AHIP says there are eight or more health insurers in each of the nation's top 40 metropolitan statistical areas. 

"Health insurance plans operate in highly competitive markets across the country and consumers have numerous choices in the types of plans and in insurers," says AHIP spokesman Robert Zirkelbach. "To the extent that research has raised the question of competition as a factor in rising healthcare costs, it has pointed to consolidation among providers, not health plans."  

In evidence, AHIP points to its own whitepaper and state reports, including one released in January by the Massachusetts attorney general. The report, the result of a year-long investigation, attributed the state's escalating healthcare costs to the market power of the most highly compensated providers. A report by the Center for Studying Health System Change published two days after the AMA's study highlighted a similar dynamic in California. 

Robert Berenson, MD, a fellow with the Urban Institute and one of the authors of the Center for Studying Health System Change's report, says in many California markets, hospital and network consolidation have given healthcare providers so much clout that health plans have no option but to include them in their networks and pay them generous rates. Where the finger pointing will ultimately lead is anybody's guess. 

Dafny says the DOJ rarely intervenes to untangle mergers that have already taken place, so the AMA's call for retrospective review may be a long shot. If the federal government decides to intervene, she says, it would probably do so by reducing barriers to entry so more insurance competitors could break into tight markets. 

If new insurance players enter a certain market, existing players might have to work harder to rein in their costs, which, Dr. Berenson says, could have a paradoxical effect on the AMA.  

				"If the AMA gets what it wants-more competition in the insurance industry-you're going to see downward pressure on physician prices because right now there's no pressure on those rates in a lot of markets."			

In the arcane argot of antitrust, the debate between the American Medical Assn. (AMA) and the nation's health insurers is a case of he said/she said.

AMA calls for plan competition but might quickly regret that wish

When it comes to cost control, integrated care and improved communication among caregivers are among the most frequently cited needs. 

Those needs are at the heart of a collaborative effort between the Little Rock, Ark.-based Case Management Society of America (CMSA) and the Washington, D.C.-based DMAA: The Care Continuum Alliance (DMAA). In October, the two industry groups announced the creation of a taskforce that will define the relationship between case management and population health management.  

Working together, the organizations plan to develop a consensus statement detailing the interactions between case and population health management strategies and devise a roadmap for quality-based programs for the chronically ill.  

Despite the overlap, the two fields have historically acted independently, leading to duplication of services, unnecessary expenses and less than optimal care.  

Case management focuses on meeting an individual's comprehensive health needs through assessment, planning, facilitation and coordination of care, according to CMSA. DMAA's definition of population health management emphasizes a central care delivery model led by the primary care physician, patient engagement and personal responsibility and the expansion of care through coordinated programs. While the interventions vary, the groups acknowledge there's a lot of overlap between their functions.  

"The two fields are so integrated," says Lattimer. "If you continue to keep them siloed you continue to have a communication breakdown."  

By working together, the two organizations will be able to devise more collaborative, coordinated models that translate to better patient care and reduce duplication of services. Until the silos come down, legislation will have little impact, she says.  

"Communication isn't all about EMRs," she says. "It's about our processes, our basic communication strategy."  

Two leading industry groups put their heads together for seemless care