KH starts to feel pinch from ACA focus on quality

Martin L. Cahn

803-432-6157 ext. 115
January 19, 2015

KershawHealth will lose money in 2015 for a very specific reason: new quality performance standards which became law Jan. 1 as part of the Patient Protection and Affordable Care Act (ACA) of 2010.

Speaking as chair of the board’s quality committee during the board’s Jan. 12 meeting, Dr. Tallulah Holmstrom said there have been discussions for the better part of a year and half on how value and healthcare were, eventually, going to translate into an impact on hospital finances.

“That time has arrived,” Holmstrom said. “With the beginning of this year … Medicare has determined the consequences -- the real gains and real losses -- to organizations.”

She said there are three major categories involved for KershawHealth: value-based purchasing, hospital-acquired conditions and readmissions.

“What’s interesting about all these is value-based purchasing is the only program where you could actually gain money back. The other two are punitive only,” Holmstrom said, adding there was “good news and bad news” for KershawHealth.

In the hospital-acquired conditions program, she said KershawHealth did not perform favorably and will suffer an estimated loss of approximately $132,000 in 2015. However, Holmstrom said the reference period -- when the data was collected for Medicare’s review -- was in 2012 and 2013. That’s before, she said, KershawHealth began making gains in reducing instances of, for example, bloodstream and urinary tract infections.

“So, it’s very dated,” Holmstrom said. “So you’ll say, ‘Tullie, why are you coming here and telling us all these great things and now you’re telling us we’re going to have a $132,000 loss in hospital-acquired conditions?’ That’s because there’s a substantial lag period.”

During her presentation, Holmstrom said central line associated bloodstream infections hurt KershawHealth the worst during the reference period.

“There has been substantial correction. There was one year we had four (infections), I believe this year, we’ve had one. Granted, four resulted in this (loss) -- it’s not the only metric, but one of the biggest drivers -- but there are institutions out there who have zero. We’re working and striving toward that and making great gains,” she said.

Holmstrom said 2015 data won’t be reviewed by Medicare until 2017.

In readmissions, another program where Medicare penalizes rather than rewards, Holmstrom said the estimated loss will be about $75,000 in 2015. The reference period for readmissions is even further back: 2010 through 2013, according to Holmstrom.

“We’re talking about quite remote information. And, just on a side note, both (KershawHealth CEO) Terry (Gunn) and Divia (Reddy, KershawHealth’s director of quality services and hospitalist groups) have been contacted by Yale University … because someone has identified KershawHealth for such great performance in congestive heart failure readmissions,” Holmstrom said. “We have such low numbers of readmissions from congestive heart failure that (Yale) is actually looking to us to try to see how we’ve done that.

“The information is very confusing. We hear iconic institutions looking to us asking, ‘How are you doing so well?’ and yet you have CMS (the Centers for Medicare and Medicaid) saying, ‘You’re going to lose $75,000.’”

The good news is that, for the only program where KershawHealth can gain money, value-based purchasing, the hospital will receive a “bonus” of $13,000. Value-based purchasing, also known as “pay for performance,” rewards hospitals and other providers for meeting certain quality and efficiency standards while setting penalties for poor outcomes, medical errors or increased costs. As with the hospital-acquired conditions, the reference period for value-based purchasing was in 2012 and 2013.

With the value-based purchasing gain, KershawHealth’s total net loss from ACA-based programs in 2015 will be about $194,000.

“Going forward, we have opportunities to improve based on how we improve internally against ourselves. But, remember, all of these are also measuring out against what our peer group is doing. We’ll know what we’re doing, internally, but we don’t know what all the other peer groups and hospitals around are doing. The nice thing is, future penalties or awards are based on how better you perform.

“If you outperform yourself, they’ll use that metric. If you outperform your colleagues, they’ll use that metric. Regardless, improvement -- even if everyone else improves -- is where the programs are really driving us,” Holmstrom said.

While she told trustees KershawHealth’s better results in more recent years would hopefully reduce penalties and increase gains, how well other hospitals make gains would affect the outcome.

“I would hope that next year, our numbers will be better. I can’t predict today what January 2016 will look like,” Holmstrom said.

In his CEO report, Gunn said due diligence between KershawHealth and Capella Healthcare for its pending takeover of the healthcare organization is “right on track.”

“No road bumps at this point, just a lot of data transferring back and forth as we finalize all the due diligence. So, that’s going well,” Gunn said.

He then turned to KershawHealth’s “What Matters Most” marketing campaign, at which point Trustee Derial Ogburn asked Gunn’s report be tabled so the contracts subcommittee he chairs could discuss the public relations campaign before bringing the report to the full board.

At the beginning of the meeting, Ogburn indicated he would do so, asking if the “marketing campaign” discussion had to do with What Matters Most.

“Yes,” Gunn answered. “I continue getting a few questions about the spending of it, what it was all for and so forth, I had it on (the agenda) to go over again.”

Several people, including trustees, have questioned spending a total of more than $850,000 during the current and previous fiscal years on the What Matters Most public marketing campaign and a preceding internal campaign involving employees called “You Are Vital.” Both campaigns included videos; What Matters Most also includes newspaper advertisements and billboards.

In other business:

• Gunn reported admissions were up 14 percent and emergency department visits up 15 percent in December over December 2013 figures, primarily due to flu cases. He said KershawHealth did, at times, operate at or near capacity. Gunn also reported surgeries were up 6 percent compared to December 2013.

• KershawHealth Chief Nursing Officer Stacy Collier reminded trustees the hospital would be handing out its first-ever Daisy Award on Friday. She said there were 14 nominees and the winner’s story is “quite moving.”

• KershawHealth Vice President for Human Resources and Support Services said an employee satisfaction survey would be conducted for two weeks. Gunn said he wants to see if employee recognition building has “paid off.”

• Board Chair Karen Eckford reminded trustees of its schedule for the remainder of January and the month of February. The full board will next meet at 6 p.m. Jan. 26 and Feb. 9 at the Health Resource Center. The board’s Feb. 23 meeting will be held at the Bethune Recreation Center, part of the board’s commitment to hold meetings once a quarter in different parts of the county.

• The board met briefly in executive session to discuss three contractual matters.