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Slide1
Rural Relevance Under Health Reform
Research from the Hospital Strength Index
Michael Topchik
Senior Vice President
mtopchik@ivantagehealth.com
207-518-6705
Slide2“$37 screws, a $7,622 coffee maker, $640 toilet seats; suppliers to our military just won't be oversold”
Headlines of inefficiency from the past
Slide3Headlines of
inefficiency
from last year
“Pay until it hurts”, “A Bitter Pill”, “How to bring price of healthcare into the open”
Slide4Headlines of
inefficiency from last month
“In 2012, hospitals charged more for every one of 98 common ailments that could be compared to the previous year. For all but seven, the increase in charges exceeded the nation’s 2 percent inflation rate for that year.” NYTimes June 2, 2014
“Federal
data released Monday show an increase in the average price hospitals charge to treat common conditions, with vascular procedures and chest-pain treatment showing some of biggest
upticks.The
numbers from the Centers for Medicare and Medicaid Services include 2012 prices at 3,376 hospitals for the 100 most common inpatient stays by Medicare
patients”
Wall Street Journal June 2, 2014
Slide5Headlines of inefficiency from last week
“Although U.S. hospitals account for the single largest chunk of the nation’s $2.7 trillion in health spending, few of them can say how much it actually costs them to care for every patient they admit
.” Healthcare Finance News July 1, 2014
“…without
understanding
where
inefficiencies, fat and waste are
,
hospitals under pressure to reduce spending may make the wrong
cuts…”
Healthcare Finance News July
1
, 2014
Slide6A study of rural healthcare in America demonstrating rural vs. urban cost effectiveness, efficiency, patient perception and quality.
Setting The Context For Rural
Full study available at www.ivantagehealth.com/rural-relevance-under-healthcare-reform/
Slide7Delivering Value
Study Area A - Medicare Costs and Charges
What if non-CAHs charged a CAH per case rate?
Critical Access Hospitals
vs. Non-CAH
Total Medicare Charges
Of the 351 DRGs common to CAHs and non-CAHs
$207
BILLION
LESS
CHARGE
63%
Source: Rural Relevance Under Healthcare Reform 2014, Study Area A.
Slide8Delivering Value
Study Area B - Shared Savings (Medicare beneficiaries)
Less spending per beneficiary
Apply the rural rate of
spend to urban beneficiaries
Total savings if all beneficiarieswere treated at the rural equivalent?
In Potential Medicare Savings
* Approximate Totals
Medicare spends less on rural beneficiaries than on urban beneficiaries
Rural vs. Urban
Spending
$5.2
$1.5
$
6.8
BILLION
BILLION
BILLION
Source: Rural Relevance Under Healthcare Reform 2014, Study Area B.
Slide9Rural vs. Urban
Slide10Delivering Value
Study Area C – Hospital Performance
QualityPatient SafetyPatient OutcomesPatient SatisfactionPriceTime in the ED
Data sources include CMS Process of Care, AHRQ PSI Indicators, CMS Outcomes, HCAHPS Inpatient/Patient Experience,
MedPAR, HCRIS
Source: Rural Relevance Under Healthcare Reform 2014, Study Area C.
Rural
Urban
Who has the edge?
Rural hospitals match Urban hospitals on performance at a lower price
Slide11Delivering Value
Study Area D - Emergency Department
56
mins
Faster than Urban
50%
Of ED Visits are Low Acuity
9
to
5
>50% of Low Acuity Visits Occur Between 9 am and 5 pm
Do
r
ural patients have adequate access to primary care?
14%
Utilization Increase
Source: Rural Relevance Under Healthcare Reform 2014, Study Area D.
Slide12Hospital Strength Index Performance Summary
Slide13Hospital Strength Index
Overall Composite
Mid-South CAH Median
9.3
All Mid-South Median
33.15
All US CAH Median
34.37
Slide14Hospital Strength Index
Competitive
Strength Index
Competitive
Intensity Idex
Market Size &
Growth Index
Population Risk
Mid-South CAH Median
33.22
29.11
21.50
27.55
All Mid-South Median
48.11
45.07
46.78
27.23
All US CAH Median
45.79
34.16
17.50
65.86
Slide15Hospital Strength Index
Quality IndexOutcomes IndexPatient Perspective IndexCost IndexCharge IndexMid-South CAH Median15.1426.0349.2725.7963.83All Mid-South Median40.8236.1049.2761.0443.69All US CAH Median31.9742.7859.3824.9576.33
Slide16Hospital Strength Index
Financial Stability
Index
Mid-South CAH Median
21.82
All Mid-South Median
41.47
All US CAH Median
44.79
Slide17Rural vs. Urban
Slide18Mid-South Effects of Sequestration
average
average
total
total
Slide19Charge Rate
Slide20Direct Cost Rate
Slide21Total Cost Rate
Slide22Mid-South Comparison
Summary Points
:
Rural hospitals in Mid-South states
served around
8%
of
the region’s total
Medicare inpatients in 2012
.
Medicare wage-adjusted
charges
for
rural hospitals in Mid-South states were $2,361,939,094
accounting for
around
4
%
of
region’s
Medicare wage-adjusted
charges
.
Charges
for
all hospitals in the Mid-South region
totaled $55,758,152,910
.
Medicare wage-adjusted
total costs
for rural hospitals in Mid-South
states were $819,456,000
accounting for around
5%
of
the region’s wage-adjusted
total costs
.
Total costs
for
all hospitals in the Mid-South region totaled
$15,313,292,833
.
Medicare wage-adjusted
direct costs
for rural hospitals in Mid-South states were
$400,427,089
accounting for around
4%
of
the region’s wage-adjusted
direct costs
.
Direct costs
for all
hospitals in the Mid-South region totaled
$8,980,935,596.
Slide23Rural vs. Urban
For the purposes of cost and charge analysis
iVantage
examined
507
DRGs that are common to
both rural hospitals in
Mid-South
states
and
the Mid-South Region’s
PPS hospitals. DRGs with less than 5 total cases were excluded
.
The average
charge
per case for rural hospitals in Mid-South states
($19,629)
is
47
% less than the average
charge
per case for
Mid-South
PPS hospitals ($
37,321).
The average
total cost
per case for rural hospitals in Mid-South states ($
6,826)
is
32%
less than the average
total cost
per case for
Mid-South
PPS hospitals
($10,076).
The average
direct cost
per case for rural hospitals in Mid-South states
($3,332)
is
43%
less than the average
direct cost
per case for
Mid-South
PPS hospitals
($5,882).
If
Mid-South PPS
hospitals charged the same rate
as rural hospitals in
Mid-South
states
there would be
$6,180,801,460
less in Medicare charges.
Slide24Rural vs. Urban
iVantage
examined
507
DRGs that are common to
both rural hospitals in
Mid-South
states
and all US hospitals. DRGs with less than 5 total cases were excluded
.
The average
charge
per case for rural hospitals in Mid-South states
($19,629)
is
52%
less than the average
charge
per case for all US hospitals
($41,003).
The average
total cost
per case for rural hospitals in Mid-South states
($6,826)
is
40%
less than the average
total cost
per case for all US hospitals
($11,417).
The average
direct cost
per case for rural hospitals in Mid-South states
($3,332)
is
48%
less than the average
direct cost
per case for all US hospitals
($6,358).
If all US hospitals charged the same rate as
rural hospitals in Mid-South states
there would be
$113,636,026,778
less in Medicare charges.
Slide25A Call To Action
27
th Annual Rural Health Care Leadership Conference
Keys for Community Hospital Survival
“… the new healthcare market tends to favor large systems that aggressively pursue transparency, cost efficiency and high quality …”
“… there are severe and growing downward pressures on hospital revenues, prices, and utilization exacerbated by employers shifting costs to individuals who are more careful with their healthcare spending…”
Hospitals MUST reduce your cost structure by 20-40% and Target 6-10% improvements per year”
James E.
Orlikoff
Slide26Financial and Operational Performance: Managed Care Rates
Slide27Financial and Operational Performance: Managed Care Rates
Slide28Data Exploration by Region – All Service Lines
Slide29Data Exploration by Region - Orthopedics
Slide30Data Exploration by Region (hospital drill) - Orthopedics
Slide3131
Overall Functional Cost Performance
Internal system comparisons reveal cost variation
Hospital 1
1
2
3
4
5
6
7
Hospital 2
Hospital 3
Hospital 4
Hospital 5
Hospital 6
Hospital 7
Slide3232
Intermountain Rural – External Performance
External comparison against a national database provide insight and direction for cost improvement
1
2
1
2
3
4
5
6
3
4
5
6
7
Slide3333
Cost v. Quality
The value compass of healthcare is improved quality at decreased cost
Slide3434
Intermountain RR - Major Findings
What were the major findings for
rural hospitals?Trends/patterns – IT, Benefits, Supplies consistent among all facilitiesChallenging of Assumptions? Expected labor hours to be highest areas of opportunity.
Slide35Quality- Crossridge Community Hospital, AR- Reeves Memorial Hospital, LA- Union General Hospital, LA- Field Memorial Community Hospital, MS
Patient Perspectives- St. Elizabeth Grant, KY- Morgan County ARH Hospital, KY- Saint Joseph Martin, KY- Marcum And Wallace Memorial, KY- Richland Parish Hospital, LA- Lady Of The Sea General Hospital, LA- Lawrence County Hospital, MS- Pearl River County Hospital, MS- Trousdale Medical Center, TN
35
2014 Top Quartile Performances
Finance
- Chicot Memorial Medical Center, AR
- Dallas County Medical Center, AR
- Lady Of The Sea General Hospital, LA
- Richland Parish
Memorial –
Delhi, LA
- Reeves Memorial Medical Center, LA
- Union General Hospital, LA
- Camden General Hospital, TN
Slide36Quality- Union General Hospital, LA- Reeves Memorial Medical Center, LA
Patient Perspectives- Morgan County ARH Hospital, KY- St. Elizabeth Grant, KY- Richland Parish Hospital, LA
36
2014 Top 100 All CAH
Finance
- Chicot Memorial Medical Center, AR
- Lady Of The Sea General Hospital, LA