Healthcare, like every other industry in the state is undergoing substantial challenges. Serving the uninsured, dealing with regulations, collections, protecting itself from lawsuits and maintaining staff are not new challenges.
Administrators and healthcare professionals have dealt with these issues for years, but the economic downturn has created even more challenges for the state’s healthcare industry.
Fortunately, Nevada’s hospitals are ran by seasoned professionals that have weathered prior economic downturns.
Mike Uboldi took over in June of last year as the chief executive officer of Saint Mary’s in Reno. Uboldi’s job has been to assess the health network, pinpoint goals and outline strategies for achieving them.
“One of the reasons why I love this business is there is not an hour in the day that does not change,” Uboldi said. “There are all kinds of challenges every day.”
As the CEO Uboldi is responsible for overall operations and strategic positioning of the health network. The hospital is a member of Catholic Healthcare West, which includes a 380-bed regional medical centers 10 healthcare facilities and various health plans.
Karla Perez serves as the group vice president for Southern Nevada’s Valley Health System. Her role is to “provide oversight to the health system’s five hospitals and coordinate operations to function as a system,” she explained. As vice president, Perez also serves as a resource for her hospitals’ administrators to tap before they seek assistance at the corporate level.
In Northern Nevada, Jim Miller, president and CEO of Renown Health, a not-for-profit health network, is responsible for setting the system’s vision, hiring the proper people, supporting physicians and employees, creating services locally for the community and optimizing patient healthcare experiences, he said.
Rod Davis oversees the Las Vegas Valley’s only not-for-profit hospital campuses, as president and chief executive officer of St. Rose Dominican Hospitals, owned and operated by Catholic Healthcare West (CHW). They opened their newest hospital, San Martin Campus, two years ago this month.
Hospital administrator’s have a job that resemble top level corporate positions in that they are responsible for overseeing overall operations and implementing strategic goals, but do not conclude that just anyone with corporate experience would be capable of managing a hospital or health system.
“I don’t think people really know what goes into administrating a medical facility. It’s a very specialized and intense profession,” said Ann Lynch, vice-president of government affairs for HCA (Hospital Corporation of America) Health System, the parent organization to four Southern Nevada hospitals.
Administrating a health system or hospital requires a strong grasp of finances and economics, human resources expertise, a working knowledge of medicine and people skills, Lynch added. And even strengths in these areas is not enough to easily conquer the current realities of healthcare.
Serving an Expanding Population
Nevada’s rapid population boom has pressured the state’s health systems to keep pace. In Northern Nevada, that has included making services available locally so people do not have to travel out of town for care, Miller said. For instance, Renown Health’s efforts over the recent years have included opening a new, 10-story tower with 109 beds within its main hospital campus, developing additional hospitals, one in south Reno and another in Carson City; expanding to operate a rehabilitation hospital, adding 50 percent more emergency room capacity, opening urgent care centers around town and procuring new technological equipment. These activities are all in a bid to keep pace with the population growth the state is experiencing
“People trust us to be there when they need us and we want to make sure we are,” Miller said.
Some hospitals continue to see growth not only from the Las Vegas Valley area, but an increasing number of patients from the entire region, including southern Utah, Northern Arizona, and eastern California. “Sunrise Hospital and Sunrise Children’s Hospital see patients from a wide geographic area,” said Sylvia Young, chief executive officer of Sunrise Health System. “We find more people throughout the region choosing us because of the level of care we provide and the range of services we offer.”
Keeping the Lights On
Whereas the cost of providing healthcare is escalating, reimbursement for services delivered is decreasing. Consequently, getting care paid for is an increasingly imperative issue.
By law, hospitals must take care of any individual who arrives in their emergency room.
“Our federal government requires hospitals to provide care, but they don’t provide a means for paying for that care,” said Miller, adding that “Medicare payment structures are not keeping up with healthcare.”
Medicare pays about 70 cents on the dollar of the actual cost, which excludes any profit of care provided. In addition, as of October 1, 2008, Medicare will no longer pay for care related to any of the eight “never events.” Titled as such because the federal government deemed they should never happen to a patient in a hospital setting, they include patient falls, decubitus ulcers (bed sores), air embolisms, foreign objects retained after surgery and more. Some of the “never events” are understandable while others are controversial, as hospital staff can’t always prevent them, Perez said.
In addition, earlier this year Governor Jim Gibbons ordered cuts (unexpectedly, Uboldi said) in Medicaid’s reimbursement to hospitals by an average of five percent which totals approximately $5.8 million. Moreover, this loss will double, as an equivalent Medicare reimbursement-matching reduction will occur in the future.
“That number is huge when we were only getting 70 percent of the cost before the cut,” Miller said. “Who’s going to pay for the other 30 to 40 percent?”
When it comes to hospital reimbursement from healthcare insurers, most insurers pay a contracted rate, said David Dahan, chief executive officer of the Las Vegas-based insurance agency Orgill/Singer & Associates Inc. and member of North Vista Hospital’s board of directors.
Oftentimes, those contracted rates are based on Medicare’s reimbursement rates. For instance, an insurer may contract with the hospital for reimbursement at a rate of 90 percent, 120 percent or any percentage variation of Medicare’s rates.
“Very few billed charges are paid in full by insurance companies,” Dahan added.
Some types of healthcare, primarily that given to the indigent, a growing population, is provided at no cost to those receiving the care. In 2006, the state’s 16 largest hospitals delivered a total of $484.6 million in uncompensated care. Last year the amount was $536.5 million, reflecting a 10.6 percent increase, according to data from the Nevada Hospital Association.
“That financial burden can be difficult because a hospital can’t always absorb those costs,” Perez said.
Inadequately compensated care is a severe hardship to hospitals, Dahan said. They have to recoup those financial losses, so those amounts are shifted to those who pay—businesses providing healthcare for their employees and the individually insured.
“For every dollar hospital costs go up, business ends up paying not only their share of the cost increase but also the shares of state, local and federal government,” Miller said.
Closing the Gap on Mental Patients
Insufficient facilities dedicated to providing mental healthcare are increasing acute-care hospitals’ costs. Mental health patients, along with the homeless and drug and alcohol abusers, who need treatment at a mental health facility, are showing up at hospital emergency rooms instead. They are held, sometimes for days, until a bed opens up at a mental health hospital. On a given day in Las Vegas, more than 100 mental health patients are being held in emergency room, Perez said.
“This indirect cost of the mentally ill to the healthcare system in Nevada is tremendous,” Dahan said. “Again, this cost is shifted onto the people who actually pay for healthcare.”
For these reasons, the state and local Northern Nevada governments, Renown Health, Saint Mary’s and Northern Nevada Medical Center collaborated to the Reno Community Triage Center, which opened February 2008. The center, modeled after those in Las Vegas, is a place for the homeless and mentally ill population to receive care; rather than going to emergency rooms or jail, where they are typically stabilized before being sent elsewhere for longer-term care.
Wanted: Doctors and Nurses
The availability of medical professionals has not been able to keep pace with Nevada’s growth. The state faces shortages of primary care physicians, specialty physicians, nurses, pharmacists, social workers, respiratory therapists, psychologists, technicians and others.
In 2006, Nevada had 230 physicians per 100,000 people, compared to the national average of 321 physicians per 100,000 people, according to Nevada’s Health Access Profile compiled by the State Health Access Data Assistance Center.
The state is not producing enough doctors at its medical schools because the federal government has capped the number of residents allowed to receive Medicare funded care in Nevada. The caps, set some 20 years ago, are disproportionate with Nevada’s current population, Miller said, and cripple the growth of the state’s residency programs substantially.
An evolving trend among new physicians is their desire to be employed rather than start their own businesses. “It’s a very different scenario and requires a different kind of support for physicians when they enter a community,” Uboldi said.
The state’s nursing schools are producing only 20 percent of what Nevada needs, Miller estimated.
“Where are you going to get them? You can’t keep taking other states’ nurses forever,” he added.
Hospitals are incurring added costs in the form of higher salaries and financial incentives paid to medical personnel for recruitment and retention. In September 2008, both Saint Mary’s and Renown Health, for the first time, reached tentative contract agreements with two unions for at least a 27 percent pay increase for nurses and established nurse-to-patient ratios.
Numerous agencies and government entities have a hand in regulating healthcare. These include the city, county, state health department’s Bureau of Licensure and Certification (BLC), Centers for Medicare & Medicaid Services (CMS), the Joint Commission and the Office of the Inspector General.
“We are an industry that I believe is overregulated,” Uboldi said. “I know the intent is to protect the public, but at the same time, because of bureaucracy, it has a tendency to increase our costs and not be as value-added as intended. Healthcare has an awful lot of mandated but unfunded regulatory requests.”
One of those mandates is the aforementioned protocol that requires hospitals to treat all people who appear in their emergency rooms.
Other proposed legislation focuses on the government getting involved in the day-to-day operations of hospitals.
“We oppose having lay people try to define restrictions in operations at a time where we have shortages of caregivers and see challenges in the ability to provide care at costs that no one wants to pay,” Miller said. “Those are the type of regulations and legislation we have a great deal of difficulty supporting.”
Additionally, hospitals employ departments of people who gather data, create and submit reports and ensure regulations are being met. “They get paid [to make sure we are in compliance] and that comes out of the bottom line,” Lynch said.
The current economy has impacted healthcare revenue, as fewer people are seeking non-emergent care. Renown Health’s income has dropped off “quite a bit,” Miller said. Saint Mary’s, too, is seeing a softer volume than it did during the same time in 2007, according to Uboldi. Some of Valley Health System’s hospitals closer to the Strip have felt the tourism decline, Perez said. Regardless, the hospitals are each brainstorming ways to be even more efficient in care delivery while maintaining quality, looking at ways to reduce redundancy, lengths of stay and inpatient care.
Even before the economy began to falter, Nevada’s hospitals and health systems have been focusing more intently on cost control.
“We’re trying to be as cost effective and efficient as possible and keep pace with the costs associated with revenues so that we stay in the black. We want to continue to provide service without unnecessarily raising healthcare costs which would mean more people could not afford it,” Uboldi said.
One strategy employed is ‘best practices.’ Administrators find effective practices used in one of their facilities and implement those processes in others. For example, Spring Valley Hospital has gone for more than two years without a ventilator-associated pneumonia due to their effective preventative protocols. Perez implemented those exact procedures in the other four hospitals in her health system. They too have decreased their incidence of ventilator-associated pneumonia.
“Like many in the healthcare industry, we face the challenge of increasing uninsured and declining reimbursement while costs increase,” said Young. “That’s why we are focused on making our hospitals as efficient and effective as possible to position them for the future. The challenges of providing healthcare are well documented, and I think people are becoming more aware of that challenge.”
Hospitals are acquiring and employing technology that decreases the amount of time a patient must remain in the hospital. These include the da Vinci Robotic Surgical System, which allows for minimally invasive surgeries in urology, general surgery, gynecology and heart valve repair. As well as the Novalis Shaped Beam which is used to treat tumors and other conditions with reduced damage and faster recovery.
“It really gets down to cost, efficiency and quality of care,” Uboldi said.
Standards of Care
Hospital and health system administrators are continually working on ways to improve quality of care, said Miller. Currently, numerous agencies are developing standards for what they believe equal ‘quality.’ Once those standards are published, hospitals will likely find areas in which they excel but also areas in which they can improve.
“The emphasis now is on quality care, not just good care,” Lynch said. “They are focused on the best possible methods of curing you and the best possible follow-up and total recovery than say, 10 to 15 years ago.”
There are many third-party, independent organizations involved in the quality arena now, said Young. “Even if they have different standards, our goal is always the same – to provide the best possible outcome and patient experience.”
Because most of the Las Vegas Valley’s hospitals are for-profit facilities, competition is alive and well.
“I think it keeps us on our toes and forces us to stay efficient and constantly look for new growth opportunities to stay ahead of our competition,” Perez said.
In Northern Nevada, competition is “pretty significant,” Uboldi said, due to the presence of more inpatient, acute-care beds than needed. Because all the facilities have capacity, the hospitals differentiate themselves through quality.
Yet, these hospitals have found it important to collaborate when possible. For example, Saint Mary’s, Renown and more than 300 medical providers have partnered to create the Access to Health Care Network, which allows low-income, uninsured individuals to pre-pay for healthcare at a greatly discounted rate.
“We help those people who can afford to pay something get better access to care and maintain their self-esteem and their financial wherewithal,” Miller said. “I think that has worked out quite well.”
More and more independent hospitals are becoming affiliated with larger health systems, who can offer more resources. In Northern Nevada, Saint Mary’s became an affiliate of Catholic Healthcare West in January 2007 and Northern Nevada Medical Center is part of UHS. The greater Las Vegas region is home to three major health systems: Universal Health Services which currently holds 37 percent of the market share, Sunrise Health System with 27 percent and Catholic Healthcare West maintaining 17 percent of market share.
“I think that trend [of affiliation] will continue as the market continues to put pressure on us to reduce costs and eliminate duplication,” Uboldi said.
Large-scale changes in healthcare, and subsequently hospital and health system administrators’ jobs, will require consumers and legislators to grasp the fundamentals of how healthcare works, the costs involved and the challenges in paying for it.
“It is a very complicated business,” Lynch said. “It sounds easy, but it isn’t. There needs to be more cooperation and understanding of healthcare before people make broad statements, sweeping decisions and institute all-encompassing laws that prohibit the very people they’re trying to help.”