Healthcare Challenges and Your Career
Ernie Schmid, MSHP 97, FACHE
October 29, 2010
Year Total Population
TEXANS and the Cash Economy
26.1% of Population Uninsured
– 6.4 million
Large homeless population
Large number of first generation Americans
– 13.9% of population foreign born
6.7% of population undocumented
– 1.6 million
17.3% of Texans in poverty (4.26M) (14.3% US) A family of four is
below the federal poverty level if its annual household income is less than $21,954.
AND What Does the Future Hold?
Poverty growing in Texas schools
More than half of state’s students disadvantaged, report finds
By ERICKA MELLON
Jan. 2, 2010, 10:36AM
Almost six out of 10 Texas public
schoolchildren hail from low-income
families, marking a troubling spike in
poverty over the last decade, a new
state report finds.
AND What Does the Future Hold?
In 2009,Texas ranked sixth in the percentage
of people in poverty, behind Mississippi (23.1
percent), Arizona, Arkansas, Georgia and the
District of Columbia.
US Income Distribution
2010-2011 Texas Budget all Funds-$182B
0% 6% Judiciary
11% Economic Development
General Provisions, Regulatory,
42% 3% Legislature
2% American Recovery and
7% General Government
HHS without Medicaid/CHIP
Reform and State Budget Over Ten
Adds 2.3 M Texans to Medicaid rolls
Cost $27 B in GR
Current Government Sponsored Health
6.4 million uninsured
3.2 million Medicaid Beneficiaries
2.7 million Medicare Beneficiaries
.537 million CHIP Participants
At a minimum half the state’s
population relies upon government
for health care
600 TEXAS Hospitals
81,000 Hospital Beds
Hospital Beds by Ownership 2007
41% For Profit
Not for Profit
42% of Texas Hospital Net Patient
Revenue from Medicare and Medicaid
Net Medicare Net Medicaid Total Net Patient
$13.3B $5.4B $44.4B
MedPac Payment Approach
“From 2007 to 2008, the overall Medicare margin
fell from –6.0 percent to –7.2 percent…”
“Most of our payment adequacy indicators for
hospitals are positive, but profit margins on
Medicare patients remain negative for most
“A key question is whether Medicare payments
are adequate to cover the costs of efficient
Medicaid Payments to Texas Hospitals
2007 Medicaid Hospital Payment Sources
57% Share Payments
Government does not pay for all services
In 1986, Congress enacted the Emergency
Medical Treatment & Labor Act
(EMTALA) to ensure public access to
emergency services regardless of ability
– hospitals must provide a medical screening examination
– Hospitals are then required to provide stabilizing treatment for patients with
Emergency Medical Conditions
– If a hospital is unable to stabilize a patient within its capability, or if the patient
requests, an appropriate transfer should be implemented.
Private or Public?
Government sees hospitals/providers as
private enterprises but treat them like
Government and providers see each other
as bad business partners.
“In 2008, the weighted average of the operating and capital payment
updates was roughly 3 percent. (Medicare inpatient costs per
discharge increased 5.5 percent in 2008-speakers addition)
However, inpatient payments per discharge increased by 4.5
percent. The difference between the update and payment growth
was primarily due to reported increases in case mix. “ MedPac
March 2010 17
Reform in Texas
Case for Reform
Access: Senate Finance
Original Agreement Chairman’s Mark
Coverage all persons in 94% 91%
US (including undocumented)
Coverage of all legally 97% 94%
residing in US
Left without coverage 18 million 25 million
Hospital reductions $155 billion $155 billion
Reduced $171 billion $140-$152 billion
– State funding
– Eligibility systems
Insurance Subsidy computation—need and
subsidy always unsynchronized
Funding during gaps in coverage
– Will goals be reached in Texas?
– What if they are not?
Rural provisions support current favorable
provisions but they are not transformative
US administrative costs 31% of health care expenditures (16.7% in
– Stimulus invests $19 B for HIT
Uninsured cause cost shifting?
– 1.6 m undocumented and others who will remain uninsured in
– 25 million uninsured in US-----cost shifting still necessary, but is it
– Future of disproportionate share and UPL payments?
Unsustainable price increases
– Demand will increase in short run
– Super MedPac or (IMAC) Independent Medicare
Advisory Commission---base closing model
– Exchanges; negotiated rated or rate setting?
US per capita spending highest among
– Spending disparities
– Physician referral and ownership
– Liability reform
– End of life care
Price: Contributions in Billions—Taxes
RX $ 80
Medical Device Tax $ 40
Hospital cuts $ 155
Insurance tax $ 60
Lab Tax $ 8
Medicare Advantage $120
Individual Mandates $150
Employer mandates $200
Quality: US Vs Organization for
Economic Cooperation and Development
The 30 member countries of OECD are:
Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak
Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.
Quality and Reform
Unnecessary Readmission Penalties (-$2 B) 20 percent of
hospitalized Medicare patients are back within 30 days, according to a 2009 study published in the New England
Journal of Medicine
– Who manages patient care?
Value Based Purchasing (-$12.1 B)
– Reward the good, penalize the bad…..self fulfilling prophecy?
– State laws adequate?
Accountable Health Care Organizations
– How does the $ move?
AND for Texas?
– Will increase in hospital beds keep up with demand?
Where are the investment dollars?
– Will Texas have enough health care workers?
– How will Texas laws need to change?
Corporate practice of medicine prohibition?
Charity care expectations?
– How many Texans will be left uninsured?
– Will State and Local government spend more on health care?
Is tax system adequate for the new demands?
– How will the delivery system change?
Impact on ownership types?
What will happen in rural Texas?
Hospital/Physician incentives aligned?
Access improved. Price and Quality, a work in progress.
And what will the future hold????
Ernie Schmid, FACHE