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Hospital Collections Hit By Recession

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					                                                                   15 April 2010




                                                    California Edition

       Calendar                                Hospital Collections Hit By Recession
                                                Facilities Now Turn To Real-Time Adjudication of Bills
           April 26-27                         A new report by credit reporting giant              the first quarter of 2009 and 2010,
                                               TransUnion concluded that hospitals                 according to TransUnion, which
   '(</)4<!N(9)<&!B(4(5)C)4<!N&+<)C+@!         around the country are not only being hit           handles nearly 70% of all such
  T4/.)*+/<&!-9!N-1<3)*4!8(2/9-*4/(!U/<)*%/!   hard by the recession, but California’s             transactions statewide. Such
    N;3--2!-9!V45/4))*/45@!IR##WIJ##@          facilities may be faring worse than others.         transactions are sometimes a precursor
                                                    As a result, TransUnion officials say at       to hospital admissions.
              E)5/+<)*!K42/4)L
                                               least two hospital
           3<<>LGGC(>>@1+;@)01G                chains in the state                                                         •The overall credit
   >*-9)++/-4(2>*-5*(C+GN3-*<8-1*+)+G          have turned to                        California         U.S.               worthiness of
                 'NBN@3<C                      presenting bills to                                                         Californians –
                                               patients before they                                                        which was
                                               leave the hospital to                                                       significantly better
                May 4                          enhance their chances      140                                              than the national
                                               of receiving payment.                                                       average at the start
                                                    According to          130                                              of the recession –
7-+!:45)2)+!8-14<&!D)>(*<C)4<!-9!M)(2<3!
 N)*./;)+GM-+>/<(2!:++-;/(</-4!-9!N-1<3)*4!    Chicago-based                                                               is now worse than
8(2/9-*4/(@!D/+(+<)*!B(4(5)C)4<!O*(/4/45@!     TransUnion’s survey,                                                        the national
                                                                          120
E(4;3-!7-+!:C/5-+!P(</-4(2!E)3(%/2/<(</-4!     96% of hospitals have                                                       average. According
           8)4<)*6!D-F4)&@!IQR@                been hit by having to                                                       to TransUnion,
                                               treat uninsured and        110                                              Californians were
              E)5/+<)*!-42/4)L
                                               underinsured patients.                                                      2% less
    3<<>LGGFFF@3(+;@-*5G).)4<+@;9CS            But some factors in        100                                              creditworthy than
                                               California may be              2007              2008                2009    the rest of the
                                               exacerbating the                                                             nation at the end
                                               phenomenon for                                                               of 2009. That
                                                                         Credit Risk Index, 4Q 2007 to 4Q2009 (Lower
                                               hospitals. They                                                              compares to being
                                                                         Number Equals Better Risk).
           May 13-16                           include:
                                                                                                        Source: TransUnion
                                                                                                                            8.7% more
                                                                                                                            creditworthy than
                                                    • The number of payments by private            the national average at the end of
8(2/9-*4/(!:++-;/(</-4!-9!'3&+/;/(4!=*-1>+6!      payers –health plans and patients – to           2007.
 :441(2!8-49)*)4;)6!?@A@!B(**/-<<6!'(2C!          independent practice associations
   D)+)*<@!E)4-F4!(1<3-*G+1*5)-4!:<12!            declined about 6% in California between
 =(F(40)6!B@D@6!/+!<3)!H)&4-<)!+>)(H)*@!                                                                    Continued on Next Page
                   IJ##@

              E)5/+<)*!K42/4)L

  3<<>LGGFFF@;(>5@-*5G;-49)*)4;)"#$#
                                                    THE EMERGENCE OF MEDICAL HOMES

                  E-Mail
                                                  A PAYERS & PROVIDERS Exclusive White Paper
 info@payersandproviders.com with
    the details of your event, or call
   (877) 248-2360, ext. 3. It will be
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  published in the Calendar section,
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   Payers & Providers                                                 NEWS                                                              Page 2

                                                                           Payers (Continued from Page One)
     Top Placement...
    Bottomless Potential
                                                                                          five or six years ago. “(Virtually all) of the
                                                 • A strong regulatory environment.       cases are resolved when we suggest the
            Advertise                          With the passage of AB 774 in 2006,        patients apply for charity care,” Forbes
  (877) 248-2360, ext. 2                       California has some of the strictest       said.
                                               regulations regarding how hospitals             With fewer paying patients and
                                               proceed with collecting on patient bills.  narrowed alternatives for collections, that
                                                                                          puts California’s hospitals in the position of
          In Brief                                “This all goes hand in hand with
                                             hospitals having difficulty with patient
                                                                                          finding new ways to collect revenue
                                                                                          without violating AB 774. Bohnsack noted
                                             revenue,” said Jim Bohnsack,                 that some facilities are turning to real-time
                                             TransUnion’s vice president of product       adjudication, using an on-site point-of-sale
   Healthcare M&A                            development for its healthcare division.     system to produce a bill for the patient
 Activity Waned In First                     “California is more heavily regulated than before they leave the facility. TransUnion
                                             other states, and it makes it more difficult offers such a product to its healthcare
         Quarter                             or them to collect.”                         clients.
                                                  Hospital officials concur with the           “If a hospital tries and collects before
Healthcare-related merger and                TransUnion survey. “It’s a balancing act. If the patient leaves, 90% of them will get
acquisition activity dropped 21% in          we go after patients too aggressively, we    something,” Bohnsack said. “If they leave
the rst quarter of 2010 compared to         get criticized by advocates,” said Jan       without a bill, the payment rate goes down
the fourth quarter of 2009, according        Emerson, vice president of external          to about 10%.”
to a new report by Irving Levin                                                                According to TransUnion officials, San
                                             relations for the California Hospital
Associates.
   The Norwalk, CT-based Levin said          Association.                                 Francisco-based hospital chain Catholic
only 211 deals were consummated                   K.B. Forbes, executive director of the Healthcare West and Burbank-based
during the rst quarter, compared to         Consejo de Latinos Unidos, a Los Angeles- Providence Health & Services have
268 in 2009.                                 based advocacy group that pushed             installed such systems or are in the process
   “The decrease in deal and dollar
volume from previous quarters may be         hospitals throughout the state earlier in    of doing so at several of their hospitals.
attributed in large part to the attention    the decade to modify their collection             The official in charge of the CHW
focused on national politics leading up      practices, said that AB 774 has              initiative did not return a phone call
to the passage of health care reform in      dramatically cut down on patient             seeking comment. Providence officials
early March. Deal makers appeared
                                             complaints his organization has received. were not able to immediately provide
reluctant to announce new
transactions until the outcome of this       He estimated that Consejo has received       comment.
erce debate became clear,” the              about 50 cases so far in California this
company said.                                year – compared to 300 to 400 a month
   Hospital m&a activity accounted for
just 9% of all activity during the rst

                                               CDPH: Surgical Mishaps Still On Rise
quarter of this year. Most of the activity
focused on pharmaceuticals and
medical technology rms.
                                                Linked to Greater Transparency; Southwest Fights
   Los Angeles DME
Business Owner Pleads                        After levying six administrative penalties for           said CDPH spokesman Ralph Montano. He
  In Medicare Fraud                          surgery-related mishaps against hospitals this           pointed to SB 1301, a law enacted in 2006 that
         Case                                week, the California Department of Public                required hospitals to report any event that
                                             Health acknowledged that there has been a                leaves patients in immediate jeopardy within
                                             signicant rise in such violations. But agency           ve days of its occurrence. “At some point, we
The owner of a Los Angeles-based
durable medical equipment firm               ofcials say it has more to do with an                   expect to see these adverse events plateau, and
pleaded guilty this week to                  increase in hospital transparency than an                begin to decrease as we see hospitals increase
submitting nearly $500,000 in false          actual elevation of risk at facilities statewide.        their vigilance,” he added.
claims to the Centers for Medicare                Payers & Providers rst reported a                       Montano noted that medication mishaps
and Medicaid Services.
   Sylvester Ijewere, 49, submitted          dramatic rise in surgical-related penalties last         were still the leading cause of the 146
the guilty plea to one count of              year. In September 2009, the CDPH levied                 penalties levied to date, with 42 such
healthcare fraud on Monday in the            12 administrative penalties against hospitals            violations. Retained surgical objects is the
Central District Court in Los                whose surgical staffs had left objects in                second-leading violation, with 28 levied to
Angeles. He faces up to 10 years in
                                             patients. Prior to that, only nine such                  date.
                                             violations had been levied since early 2007.
                                                  “At this point, it is largely because                        Continued on Next Page
       Continued on Page 3                   hospitals are getting better at self-reporting,”




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Payers & Providers                                          NEWS                                                                Page 3

       Longer ALOS!*                                             Penalties (Continued from Page Two)
          Advertise                        This week’s penalties, which were levied           after an instrument ash sterilized during the
                                      against seven hospitals for 10 separate                 procedure was not allowed to cool properly
 (877) 248-2360, ext. 2               incidents, have elicited diametrically                  before being redeployed. The patient later
                                      opposite reactions from some of its                     required skin grafts. Its second penalty, for
   *For our ads, not your hospital    recipients.                                             $50,000, was for leaving a sponge in a patient
                                           Southwest Healthcare System in                     in early 2009 during a cesarean section. The
                                      Murrieta issued a strong statement that it              sponge was subsequently removed.
        In Brief                      would appeal the three penalties totaling
                                      $225,000 it received this week. It was twice
                                                                                                   Special bags are now used to collect
                                                                                              surgical sponges, which are used to reconcile
                                      penalized for failing to follow procedures for          sponge counts, according to Kaiser.
                                      treating newborns with high concentrations              Instruments that are ash sterilized are now
prison and a $250,000 fine when       of bilirubin in their bloodstream – a                   treated with sterilized cool water before being
he’s sentenced on Aug. 16.            condition that can lead to brain damage or              redeployed.
   Ijewere owned a firm called        death. It was also penalized for failing to                  Other recipients of administrative
Maydads Medical Supply. Between
                                      maintain proper humidity levels in an area              penalties included St. Bernadine Medical
June 2007 and October 2009, he
procured false medical documents      where cesarean sections were being                      Center in San Bernardino; Sutter Davis
and prescriptions in order to         performed, creating a re hazard.                       Hospital; Scripps Mercy Medical Center in
submit bogus claims for high-end           “Southwest does not agree that any of              San Diego; California Pacic Medical Center's
medical equipment.                    the current nes assessed against Southwest             Pacic Campus Hospital in San Francisco; and
   Investigators were suspicious
when more than half of the claims     met the criteria for ‘immediate jeopardy’               St. Joseph Medical Center in Orange.
were submitted on behalf of           because they neither caused, nor were likely                 St. Bernardine was ned $50,000 for a
Medicare beneficiaries who lived      to cause, serious injury or death to any                2009 incident where the tip of a laryngoscope
more than 100 miles from Ijewere’s    patient,” the statement read in part.                   was left in a patient’s throat. The patient later
business.
                                           Southwest has received six                         coughed up the tip and brought it back to the
   CMS officials have made it a
priority to crack down on medical     administrative penalties, making it the most            hospital. The hospital agreed to partially revise
equipment fraud in Southern           penalized hospital in California. All the               its procedures for intubations.
California after a 2006 survey        penalties are being contested by the hospital,               Sutter Davis was ned $25,000 for
revealed score of such businesses     which is owned by Pennsylvania-based for-               administering contrast dye to a patient
that had submitted claims did not
physically exist.                     prot operator Universal Health Services,               undergoing a CT scan who had an allergy to
                                      Inc.                                                    iodine. The patient later died.
                                           Montano conrmed that Southwest                         Scripps Medical Center was ned $25,000
 City of Hope Officially              underwent a multi-day, “full-validation”                for a 2007 incident where a sponge was left in
     Launches $1B                     inspection in mid-January by both the CDPH              a cancer patient undergoing a hysterectomy.
       Campaign                       and the Centers for Medicare and Medicaid               The sponge was not discovered until early
                                      Services. Such inspections often lead to the            2009. It required two procedures to remove.
                                      withdrawal of a hospital’s Medicare and                      California Pacic Medical Center was
City of Hope in Duarte has
announced a fundraising campaign      Medicaid funding should they fail. A CMS                ned $25,000 for a 2008 incident where an
it expects will raise $1 billion.     spokesman said the report has not yet been              orthopedic surgeon performed a knee
     The campaign, known as “The      released.                                               arthroscopy on the wrong knee. The surgeon
Power of Hope,” was given a soft           By contrast, Kaiser Permanente’s                   realized the mistake during mid-procedure,
launch in 2005 and has raised
                                      Southern California Region issued a                     and peformed a second arthroscopy on the
some $500 million to date.
However, officials with the 217-      statement of regret after its hospitals in              correct knee.
bed hospital want to make a final     Fontana received two penalties for surgical                  St. Joseph was ned $50,000 for a 2009
push over the next three years to     mishaps. It was ned $25,000 for inicting              incident where staff failed to monitor the
reach its goal.                       third-degree burns on a patient in late 2008            oxygen provided to a patient who later died.
     Of the money raised, $750
million will be used for cancer,
diabetes, stem cell and hematology
research, and advancing cancer
treatments. The remaining $250
million will be used to improve
existing structures or build new
ones.                                                           Expert Healthcare Communications
     “We are seeing tremendous
promise and opportunities in
research,” said Michael A.                     !White Papers                    !Media Campaigns                      !Newsletters
Friedman, M.D., City of Hope’s
chief executive officer.
     The end of the campaign in                                 (818) 848-8510                www.rfsconsult.com
2013 will mark the hospital’s 100th
anniversary.




                                              !!!"#$#!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers                                           OPINION                                                          Page 4

 9-21:)!"6!;++1)!$<                      Clearing Healthcare Delivery’s Clutter
                                          Using Techniques From Manufacturing Can Cut Costs
      '(&)*+!,!'*-./0)*+!/+!
  =1%2/+3)0!).)*&!>31*+0(&!%&!
 '(&)*+!,!'*-./0)*+!'1%2/+3/456!         Have you ever seen a CAT scan technician               We start out by examining the overall
    778?!@4!(441(2!/40/./01(2!           reading a novel when the waiting room is          flow. What happens to the patients as they
    +1%+A*/=B/-4!/+!CDD!(!&)(*!          full of patients? I’ve seen it many times.        move through the system, whether for a
  EC$FD!/4!%12GH?!;B!/+!0)2/.)*)0!       It’s usually the result of a patient              simple radiology procedure or for a complex
       %&!)I:(/2!(+!(!'JK!               bottleneck rather than staff laziness.            surgery? Often drawing a diagram is very
 (BB(A3:)4B6!-*!(+!(4!)2)AB*-4/A!        Receptionists often fail to realize, or           helpful in gaining a necessary level of
            4)L+2)BB)*?                  forget, that the last patient has left and the    understanding, as are discussions with the
                                         scan room is now open. It is seemingly            hospital staff. Next, like engineers always do,
   @22!(0.)*B/+/456!+1%+A*/%)*!(40!      mundane – but critical issues – such as           we try to measure what is going on and to
         )0/B-*/(2!/4M1/*/)+N            these that the new healthcare reform law          quantify things. How long is the patient
                                         will likely never address. However,               waiting time? How often are resources
           EOPPH!"FOI"QR#                providers must confront                                            utilized, and how often do
     /4S-T=(&)*+(40=*-./0)*+2?A-:        them immediately.                                                   they sit idle? What is the
                                             Good patient flow is                                            hospital’s real capacity?
         U(/2/45!(00*)++N
                                         represented by short waits at                                       We also look at the data
    O$O!V?!W-22&L--0!X(&6!Y1/B)!Z        registration, examination,                                          available from computer
         Z1*%(4G6!8@!D$<#<               diagnostic testing, surgery,                                        systems. We generally find
                                         placement in beds, and                                              tremendously detailed
              X)%+/B)                    discharge. Poor patient flow                                        clinical data on patient
     LLL?=(&)*+(40=*-./0)*+?A-:          is a symptom of a poor                                              conditions, but shockingly
              K(A)%--G                   staffing plan, inability to use                                     little information on how the
  LLL?S(A)%--G?A-:[=(&)*+=*-./0)*+       critical resources at                                               system is working or where
               >L/BB)*                   maximum capacity, and a                                             bottlenecks occur.
   LLL?BL/BB)*?A-:[=(&)*+=*-./0)*+       lack of synchronization.                                                 We also look for
                                             Hospitals are largely                                           opportunities to make an
                                         managed by physicians and                                           impact, such as by
          \0/B-*/(2!Z-(*0                nurses who have never                                              eliminating delays, changing
                                         contemplated the design of their                By      the work schedule for underutilized
   YB).)4!>?!9(2)4B/4)6!'*)+/0)4B6!
        >3)!8(:0)4!]*-1=                 workplaces, nor compelled to look for         David staff, or changing the physical layout to
                                         cost-cutting efficiencies. Because over Belson, eliminate unnecessary steps.
  ^-++!]-20%)*56!83(/*:(4!-S!B3)!        50% of funding for healthcare comes                         Hospitals must move toward the
   Z-(*06!7-+!^-%2)+!W-+=/B(2!,!         from the government and most of the            Ph.D. ‘pull’ method of work flow rather than
          U)0/A(2!8)4B)*                 remainder from insurance companies,                     the ‘push.’ Implementing this
                                         health providers have found that the more         innovation, first introduced as part of the
  _/:!7-BB6!\`)A1B/.)!9/A)!'*)+/0)4B6!   they bill, the more they are paid.                Lean Method in manufacturing, encourages
   W-+=/B(2!@++-A/(B/-4!-S!Y-1B3)*4!         This lack of incentive to cut costs has       the technician, and other hospital personnel,
              8(2/S-*4/(                 lead to the remarkable statistic that the         to ‘pull’ the patient from the waiting room
                                         U.S. spends 2.5 times as much on                  rather than waiting for the front office to
    \2(/4)!Z(BA32-*6!U?J?6!83/)S!
  U)0/A(2!aSS/A)*6!7?@?!8(*)!W)(2B3!     healthcare per capita as any other                ‘push’ the patient inside. It can result in a 30
                '2(4!                    country, despite the fact that we lag way         to 50% improvement in patient flow
                                         behind all Western nations when it comes          efficiency. I will discuss this in greater detail
   b)/B3!^/A3:(46!U?J?6!\`)A1B/.)!       to positive patient outcomes.                     next week.
       9/A)!'*)+/0)4B6!7(G)+/0)!             Simple steps can produce vast savings.
       8-::14/B&!W)(2B3A(*)              Working with over 20 major California              David Belson is an industrial engineering
                                         hospitals, my team of students and faculty         professor at the University of Southern
    W)4*&!7-1%)B6!83/)S!YB*(B)5&!        from the USC Industrial Engineering
    aSS/A)*6!b))4(4!,!@++-A/(B)+                                                            California and a healthcare management
                                         Department has found an ample supply of            consultant.
                                         low-hanging fruit when it comes to cutting
    '1%2/+3)*[\0/B-*I/4I83/)S            costs. Because healthcare is a service
           ^-4!Y3/4G:(4                  industry, the first variable we generally            Op-ed submissions of up to 600 words are
    )0/B-*T=(&)*+(40=*-./0)*+?A-:        examine is the time it takes for medical               welcomed. Please e-mail proposals to
                                         professionals in any particular hospital              editor@payersandproviders.com, or call
                                         department to do their jobs.                                    (877) 248-2360, ext. 3.




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Payers & Providers                 MARKETPLACE/EMPLOYMENT                                                  Page 5




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                     If you plan to attend only one conference in 2010, make it this one!
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Payers & Providers   MARKETPLACE/EMPLOYMENT                                                               Page 6




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Payers & Providers       MARKETPLACE/EMPLOYMENT                                   Page 7



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