6 December 2011

Midwest Edition
December 4-7
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Tumultuous Times for Health Plans
Opportunities Abound, but so do Huge Business Risks
director at Credit Suisse Investment Research The health insurance industry is about to -- to share their views on where the embark on a hair-raising journey toward the marketplace is headed. post-Affordable Care Act age. Nobody knows The speakers’ views were far from exactly what threats and opportunities lie unanimous, but they highlighted several ahead. But experts and outside observers have trends: enough data points to make some informed * Financial responsibility for medical risk is observations and predictions. moving away from insurers, and toward “The next several years will be employers, providers, and tumultuous,” said Charlie Baker, consumers, Mango said. executive in residence at General * Many health plans are Catalyst Partners and the 2010 building in-house products Republican candidate for and offerings that they governor of Massachusetts. could buy more easily and “The states and the federal cheaply from vendors, government are broke. Five Boorady said. percent of the population is 50% * Medicaid managed of spend, and 1% of the care is the place to be. population is 30% of spend. We Expect to see a rapid have never addressed this as a acceleration in governmentcountry. Health plans will have sponsored health plans and to take this on.” a decline in commercial Baker spoke to about 400 insured populations, attendees in mid-November at especially full risk-bearing the America’s Health Insurance Charlie Baker products, Baker noted. Plans annual Fall Forum in Former Massachusetts * High-deductible Chicago. As part of its plenary Gubernatorial health plans may be session, AHIP invited Baker and coming fully into their own, Candidate two other commentators -- Paul now that they have passed D. Mango, leader of the healthcare practice at McKinsey & Company, and Charles Boorady, managing
Continued on Next Page

January 6-8
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March 6-7
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Friday, December 9, 2011

Noon CST

Midwest Healthcare: A 2012 Business Preview
E-Mail info@payersandproviders.com with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

Please join Michael Millenson, president of Health Quality Advisors, Jay Warden, senior vice president of The Camden Group and William M. Dwyer, president of Dwyer HC Strategies, to discuss the trends that will shape the Midwest!s healthcare business environment in 2012:

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Health insurance Predictions (Continued from Page One)
the critical inection point of 25 million lives, Don’t expect good behavior from the public Mango said. sector, he advised. * Despite the merger mania and desire to The health reform in Massachusetts, which get big in anticipation of the full rollout of served as a model for many of the innovations health reform, hospitals might want to think in the Affordable Care Act, has been a mixed twice about acquiring too many physicians bag, he said. practices. “I am hearing some buyers remorse A key battleground is determining what from hospital system CEOs who bought should be in or out of the basic essential physicians practices,” Mango told the benet plan. Public entities push up the oor gathering. on the minimum benets plan, AHIP President Karen which drives up the cost. In Ignagni, who moderated the Massachusetts, this had dire discussion, asked the three to consequences for the small group comment on where unit costs market, which saw its premiums are headed. skyrocket, but it also created an Transparency and attractive individual market where accountability are going to none had existed before. Small depress unit cost growth, businesses ended up with fewer Mango suggested, because choices of plan. informed consumers can walk Baker said he “wouldn’t bet away from expensive providers. the farm” on the huge expansion Consumers now realize they of Medicaid as a solution to the can consider various options. uninsured problem. States and Charles Boorady Boorady was skeptical that the federal government don’t this would really work to have enough money to live up to Credit Suisse consumers’ advantage. “In the promises made in the ACA. Investment Research some markets you don’t have Expect governments to cut their choices,” he said. “The U.S. is payment rates to providers largely a rural country. Paul’s thesis only works “because they can’t do real reform,” he said. in urban areas.” You have to gain leverage over To Ignagni’s question whether health plans the supply chain to really affect unit costs, and should build or buy their new products, hospitals have built a brick wall around their Boorady said plans are destroying enormous cost structures, he said. amounts of value by building things they Baker said that low-cost providers have could purchase from vendors. never had the opportunity to talk about what a Take Weight Watchers, for example. A great job they do. “Transparency and data will recent article in The Lancet demonstrated that allow them to crow about it,” and that might people generally lose much more weight in drive some volume their way. this program than in the conventional health The industry must treat a careful course so plan wellness program. “Yet no health plans as not to repeat the errors of the 1990s, when are offering Weight Watchers as a disease people were forced into HMOs they didn’t management option” and making it free to like by their employers, Baker said. This time it employees,” he said. would be preferable to let people nd the lowMango pointed out that in times of great cost providers and plans on their own, via the disruption, enormous wealth accrues but not new products that make them responsible for to incumbent organizations. “Plans need to choosing their providers. think like an attacker,” he advised. Baker, who was CEO of the Harvard Mango thinks high-deductible health plans Vanguard physicians organization and later will continue to grow as a market segment. head of the Harvard Pilgrim health plan after The so-called Cadillac tax on rich health it emerged from state supervision, gave a fairly benets will move employers to adopt downbeat assessment of the prospects facing HDHPs, he said. the industry and the country in general, where In Massachusetts, because of its high cost health spending is concerned. He expressed a basis and high-income population, almost distrust toward the public sector and its habits everybody in large employer groups will be of mind, and warned the crowd that “the touched by the Cadillac tax, Baker said, public sector will be inclined to regulate further encouraging movement toward the more. They won’t necessarily regulate well.” high deductible plans.

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In Brief
HHS Issues Final Rule for Calculation of Medical Loss Ratios
The Department of Health and Human Services declined to accept certain recommendations of the health insurance industry when it set the nal regulation last week setting standards for calculation of minimum medical loss ratios. The Affordable Care Act requires large-group health plans to spend at least 85% of premium revenues on actually medical care for insureds, known as the medical loss ratio, or MLR. The required MLR for small groups and individuals is 80%. Improvements to medical quality may also be included in the MLR. In comments on the preliminary rule issued last December, the health insurance industry requested that antifraud programs and all coding costs be included within the accepted denition of the MLR. The agency agreed to allow some of the costs related to ICD-10 coding implementation. AHIP, the health insurance lobby in Washington, said HHS had followed “a thorough and balanced process in crafting this nal regulation.” It said it would continue to work with HHS on the fraud issue, and expressed satisfaction that some of the claims upgrading expenses “are appropriately recognized as activities that improve healthcare quality.”

Journalism Group Asks Supreme Court to Broadcast Arguments
The Association of Health Care Journalists has asked the U.S. Supreme Court to allow live video and audio coverage of the oral arguments on the

Continued on Page 3


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Michigan Blues Win Medicaid Deal
State Requires Medigap Price Freeze for Seniors
Blue Cross Blue Shield of Michigan will be permitted to invest in an out-of-state for-prot Medicaid managed-care plan after Michigan Attorney General Bill Schuette negotiated a rate freeze for the state’s 200,000 Medigap policy holders. The Michigan Blues, together with Independence Blue Cross in Philadelphia, are purchasing the AmeriHealth Mercy Family of Companies, which operates Medicaid plans in a number of states, but not in Michigan. The Michigan Blues have invested about $132 into the AmeriHealth Mercy purchase, while Independence Blue Cross has paid about $170 million. The two partners want to expand the business nationally, and Blue Cross would like to increase its Medicaid business in Michigan. Medicaid is expected to cover millions of newly insured Americans under the Affordable Care Act. Acquiring the plan lets the Blues partner “with the best Medicaid managed care plan in the whole country,” said Andrew Hetzel, a Michigan Blues executive. The deal will give the company expertise to serve Medicaid consumers in Michigan that it didn’t have, he said. The Blues needed the permission of the state’s attorney general to swing the deal. Schuette extracted from them a moratorium on increasing premiums on Medigap customers in the state until July 31, 2016. In June Michigan allowed the premium to rise 9%, bringing the average monthly charge for the Medigap Plan C to $121 a month.

In Brief
Affordable Care Act, scheduled to be heard in March 2012. In a letter to Chief Justice John G. Roberts, association president Charles Ornstein said that such a historic case with a profound impact on the lives of ordinary Americans deserves more than the traditional renditions by print reporters in the court room. Recently, the court began to allow delayed audio recordings of oral arguments. “The case before the court has ramications for these and many other aspects of healthcare in America, however it is decided,” the letter said. Given the importance of the issue, the court has expanded its usual one hour of oral argument to ve hours, and has appointed two special counsel to advise it on aspects of the law. Republican attorneys general in 26 states challenged the constitutionality of the so-called individual mandate, and are hoping that the court will invalidate the law.

HHS Relaxes Deadline on Exchange
New Rules Allow Applications Until June 29, 2012
States may receive as much as $220 million in new grants to help them set up health insurance exchanges, the Obama administration announced last week. Thirteen states, including Iowa ($7.7 million), Nebraska ($5.4 million), and Michigan ($9.8 million), won grant awards from the Department of Health and Human Services based on the steps they have taken toward establishing the new internet marketplaces, which are intended to simplify shopping for health insurance on the part of consumers and small employers. The Affordable Care Act of 2010 created the exchanges as one mechanism to expand the ease of obtaining health insurance. Acting in response to requests from state insurance commissioners to allow more time to set up the exchanges, HHS delayed by six months a deadline for ling grant applications. Where previously they had to apply by Dec. 31, now states have until June 29, 2011, to get their applications in. HHS also signaled a new exibility in helping states gure out how to proceed. Susan Voss, Iowa’s insurance commissioner and the president of the National Association of Insurance Commissioners, said in a letter to HHS Secretary Kathleen Sebelius that the law’s inexibility “in allowing the states to select which elements of the ve core functions they would like to perform may prevent some states from participating in the partnership.” In Kansas, where Insurance Commissioner Sandy Praeger is still hoping to get a statebased exchange operating, the deadline extension is giving some breathing room in deciding how to proceed. Praeger’s department had earlier won a $31.5 million planning grant, but it was turned back by the administration of Gov. Sam Brownback, like Praeger a Republican, who didn’t want the state to participate in any part of implementing the ACA. Lt. Gov. Jeff Colyer said the delay in the application deadline afrms the state’s wisdom in holding off making any large investment in the exchange. The delay also means the U.S. Supreme Court will have heard and probably ruled on the legality of the act before the applications are due. Kansas is one of the 26 states that have sued to invalidate the law. Implementing an exchange prior to a ruling would be an imprudent use of taxpayer dollars,” Colyer said last week. Michigan will use the money to to analyze the exchange and establish contracts with vendors.

Henry Ford System Wins Malcolm Baldrige Award for Quality
Detroit’s Henry Ford Health System was awarded the prestigious Malcolm Baldrige National Quality award in November, one of four organizations in the country to be so honored. “We are extremely proud and humbled to have been selected,” said Nancy Schlichting, the system’s CEO. “Our team members ... are national role models for performance excellence who demonstrate pride and passion in what they do.” Congress created the Baldrige award in 1987 to acknowledge manufacturing and service quality in U.S. industry. Healthcare as a category was added in 1999. Since then only 15 organizations have won for excellence in healthcare. Bob Riney, Henry Ford’s president and COO, said the award validates the system’s business acumen and its “energized and focused organizational culture.”


Payers & Providers


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Embracing Holistic Management
Systems Are Too Complicated to Envision Piecemeal
Perhaps no state in the country has done as expense of other treatment units. A radiology much for holistic medicine as California. But institute’s streamlined procedures may throw a it’s time to apply the concept of holistic— monkey wrench into cardiology’s processing dealing with entire systems as a whole, not records and patients. No wonder there is often individual parts—to healthcare management negative synergy created, where improvements in as well as medicine. one area cause worse performance in another. California’s healthcare systems are facing To navigate through the increasing complex the same tidal wave of pressures found in landscape of healthcare, organizations need to other states -- a conuence of new regulastart looking at themselves more holistically, so tions,oversight, cost and quality requirements -- that improvements can be synchronized that is about to get even more complex. The horizontally—not just vertically. In some ways, impending changes in reimbursement, this is similar to the trend towards patientregulations, and closer scrutiny of patient centered care, where practitioners work more outcomes are just the tip of the iceberg. closely to coordinate all the treatment a patient Healthcare systems are receives—and to make sure that increasingly coping with all the components are working continually soaring costs together and not in conict (which have led to staff layoffs with each other. If you think of when hospitals nd no other the “patient” as the health-care way to meet budgets), system, the metaphor is a shortages of personnel and perfect t. supplies, increased waiting Holistic, patient-centered time and changing care applies in another way relationships between here as well. The one thing that providers and payers. Given can align all the components of that California’s inpatient a healthcare system is making hospital costs are already sure that everyone is looking at among the highest in the the system from the patient’s nation, it’s clear that the perspective. Getting “macro” pressures to control costs, around how you give care to a manage effectively, and patient and how the patient improve patient outcomes are receives that care is not easy, only going to get more but developing that perprevalent. spective in your organization Talk to the CEO of any can help you decide where and By Ron Wince hospital system and odds are that how to deploy unied and cohe or she will be able to cite ordinated improvement efforts. pockets of success in their organization. But Taking this holistic view of your organization, ask about the overall impact on the patients shaped by the patient’s perspective, is the rst and the bottom line, and most would admit component of developing a high-performance falling short. healthcare culture that can address the myriad of And that is the problem in a nutshell: challenges ahead. Healthcare system improvement is being Leadership at all levels must think and act attacked in isolated pockets instead of looking more holistically as well as ecumenically to at the whole. The CFO focuses on cost. The synchronize performance improvement in CMO looks at quality of care. The CIO is sure order to make change effective and see a that IT will be the solution to most of the tangible difference in patient and institutional problems. The CEO is thinking about whether success. to join a new provider network or negotiate partnerships with other providers or payers. Department heads innately focus on ensuring that their people are working most effectively and efciently…often at the
Ron Wince is chief executive officer of Guidon Performance Solutions, a hospital and health system consulting firm in Mesa, Ariz.

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Governed by a ve-member board, Girard Medical Center is a district, critical access hospital (CAH) licensed for 25 acute care beds with a 10 bed DPU, providing comprehensive health care for its patients .! The hospital has 15 physicians on staff with another 32 courtesy physicians.! Girard Medical Center offers health care services for children, adolescents, adults, and geriatric patients The hospital services the town of Girard, KS (population 2,800) and Crawford County (population 44,000) with net revenues of $17.5M and an ADC of 20.! They have a Senior Behavioral Health Unit and 5 clinics. The hospital website is www.girardmedicalcenter.com

The Chief Executive Ofcer is responsible for all day-to-day operations of the Hospital. This position is accountable for planning, organizing, and directing the hospital to ensure that quality patient care is provided and that the nancial integrity of the hospital is maintained. The CEO ensures compliance with applicable laws and regulations as well as all policies and procedures set forth by the Governing Board and Medical Staff, and those required by Medicare Survey Standards.!! The CEO is responsible for creating an environment and culture that enables the hospital to fulll its mission by meeting or exceeding its goals, conveying the hospital mission to all staff, holding staff accountable for their performance, motivating staff to improve performance and being responsible for the measurement, assessment and continuous improvement of the hospital's performance.

• • • • • MHA or MBA Preferred. 5 plus years progressive experience in hospital operations as hospital CEO or equivalent. Previous Critical Access Hospital (CAH) experience preferred. Strong physician relations and understanding of physician practice management. Managed care experience, experience and knowledge in quality initiatives.

BENEFITS AND COMPENSATION • • Salary is commensurate with experience. To attract!and retain the best professionals, we offer a comprehensive and competitive benets package that includes medical, dental, vision, 401(k), employee assistance program, and much more. Contact: Mary Ann Holloway, Director, Human Resources (620) 724-5142 maholloway@girardmedicalcenter.com


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