Contracting Activity for Santa Clara Valley Medical Center by cuiliqing

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									 Contracting Activity for Santa Clara Valley Medical Center & Valley Health Plan
                        July 1, 2007 through June 30, 2008




This report reflects contracting activity under the resolution and contracting criteria for
the period of July 1, 2007 through June 30, 2008. During this period, 69 contracts, 122
Valley Health Plan payment agreements and 80 prompt payment agreements were
completed.


Contracting Activity Highlights

Below is a table depicting inpatient days for commercially insured patients for the last
five years and a graph showing the commercially insured patient day trend for the last ten
years. As a result of SCVMC actively pursuing and expanding its managed care contract
base, discharges for commercially insured patients in FY 2008 have increased over FY
2004 by 14.1 percent. However, there has been a significant decrease in lengths of stay
that has resulted in lower patient days. Broader utilization of routine SCVMC services
by commercial patients has resulted in higher patient volume with shorter stays. In
addition, high patient census at SCVMC for all payers has required movement of patients
as soon as clinically possible to lower levels of care.


Utilization Trend Information for Commercial Insurance


                                                                                  Net
Fiscal Year        2004        2005        2006         2007         2008       change
                                                                               From 2004
Discharges        2,623       2,697        2,859        2,913        2,991       14.1%
Days             19,559      19,733       19,381       18,683       17,420      (10.9%)
Average            53.4        54.1        53.1         51.2          47.6      (10.9%)
Daily Census
Average              7.5        7.3         6.8          6.4          5.8       (22.7%)
Length Stay




                                              1
                                                                 Insuranc e Payer P atie nt Days
                                                              Fiscal Y ear 1998 - F iscal Year 2008



                   25,000


                   20,000                                                                                                        18,683
                                                                                    1 8,2 34
   Patie nt Days




                                                                                                            19,733    1 9,7 00
                                                  1 8, 775    1 9, 400                           19,559
                                                                         18,338
                                      1 3,8 07                                                                                            17,420
                   15,000   13,22 3



                   10,000


                   5,000
                            FY 98     FY 99      F Y00       FY 01       FY 02      FY 03      FY 04      FY 05      FY06        FY07      FY08
                                                                                  Fiscal Y ear




CALIFORNIA HEALTH MAINTENANCE ORGANIZATIONS (HMOs)

Within Santa Clara County, several large HMOs have significant enrollment. SCVMC
now maintains agreements with all of the five major HMOs since bringing Blue Shield
back as a contracting insurer in October 2006. During FY 2008, SCVMC completed a
new 3-year rate agreement with Blue Cross of California. This was a challenging
negotiation because of Blue Cross’ merger with Anthem Blue Cross.

These five HMOs accounted for approximately 9,463 days, resulting in an average daily
census of 26.0, at SCVMC in FY 2008. The table below lists the distribution of days by
the type of care for their members. SCVMC has continued its considerable marketing
efforts this past year in promoting its Rehabilitation Center, NICU and other specialty
services to these organizations. SCVMC has also worked to achieve recognition of the
Burn Center as a scarce but valuable resource in Northern California. Utilization of
rehabilitation services continues to account for approximately 49% percent of total
insured HMO patient days at SCVMC.

The table below profiles patient day utilization for HMO patients in FY 2008.

Health Plan                                 Adult            Burn                  Maternity              Pediatrics                  Rehab        Total
Blue Cross                                   26%              8%                      8%                     11%                        47%          100%
Health Net                                   37%              5%                      1%                     12%                        46%          100%
PacifiCare/United                            22%              3%                      3%                     10%                        62%          100%
Kaiser                                       33%              9%                      2%                     13%                        43%          100%
Blue Shield                                  31%              4%                      5%                      8%                        53%          100%
TOTAL                                        29%              7%                      5%                     11%                        49%          100%




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Discharge Profile

Of the 2,991 commercially insured discharges in FY 2008, 80 % were in-County
residents and 20% from out-of-County. The table below presents an age profile of
commercially insured patients:

                      Age             Percent of Discharges
                       0-18                  29%
                      19-39                  29%
                      40-64                  36%
                      65+                      6%


Large Case Admissions

As regional provider of burn, trauma and rehabilitation services and a tertiary specialty
center, SCVMC admits a large number of patients who have had catastrophic healthcare
episodes or been victims of a major trauma. They are often transferred to SCVMC from
the community as the facility’s case managers work with SCVMC’s case managers and
Planning & Business Development Department to identify insurance resources and/or to
put appropriate individual reimbursement agreements in place.

This type of business is very important to SCVMC. For example, a sample of 124
catastrophic cases (charges greater than $250,000) from FY 2008 represented 5,200
inpatient days with average length of stay of 41.9 days. These cases contributed an
average daily census of 14.3 to 13.5 for a similar sample of cases from FY 2007. On-
going efforts to better manage bed census seem to have supported an increase in
SCVMC’s availability to accept these types of cases.

In FY 2008, 43 cases greater than $250,000 were classified as transfer admissions from
other facilities and 31 of the transfer cases were admitted to one of the rehabilitation
units. Forty-three catastrophic cases were classified as emergency trauma admissions.

The profile of the services for the FY 2008 cases is as follows:

                                Service                 #Cases
                       Rehabilitation                     50
                       Burn                               12
                       Trauma Surgery                     30
                       Neonatology                         9
                       Pediatrics                          5
                       Emergency Medicine                 14
                       Other                               4
                       Total                             124



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The cases below are examples of the diverse services provided to these patients:

   •   A 10-week old baby had a cardiac arrest at home and was hospitalized for almost
       6 months. Her stay was covered by the Great West Healthcare PPO contract.

   •   A 25 year old male was in a motorcycle accident and sustained severe multiple
       fractures including the spinal cord. He was airlifted from Monterey to SCVMC
       directly. His 101 day stay included rehabilitation services and was covered by
       TriWest under an individual patient agreement.

   •   A 27 year old male patient was brought to the SCVMC ER after diving into a pool
       of water and hitting his head on a log. After extensive surgery to stabilize his
       spine he was transferred to the SCVMC Rehabilitation Center. His 45 day stay
       was covered by United Heathcare.

   •   A 52 year old female sustained a severe burn on her foot and ankle that required
       several skin grafts. Her 64 day stay was covered by Healthnet.


BLUE CROSS OF CALIFORNIA

SCVMC continues to be a major provider for Blue Cross and its utilization reflects the
institution-wide trend of increased discharges with lower patient days. The number of
cases increased in FY 2008 as compared to prior fiscal years but patient days declined.
Average length of stay was approximately 7.1 days in FY 2008 as compared to 8.5 days
in FY 2007. Blue Cross members are utilizing SCVMC for a range of shorter stay
services, particularly in adult medicine and pediatrics. This utilization pattern began in
the latter part of FY 2007 and continued in FY 2008.

A recent development at Blue Cross was good news for SCVMC. The catastrophic case
management group for California has merged into the Anthem national program and has
new leadership including 3 new physical medicine and rehabilitation specialists. One of
these physicians is a former SCVMC employee and another is very familiar with
SCVMC through his former work at Kaiser Redwood City. We expect to see a
significant change for the better in how Blue Cross is managing its spinal cord and TBI
patients and an increase in referrals to SCVMC.

For SCVMC, the increase in the utilization of shorter stay services, as previously
discussed, is not necessarily a positive development on its own. However, when
combined with potential beneficial changes to Blue Cross’ catastrophic case management
program, also discussed above, SCVMC may experience an upswing in Blue Cross
patient days in FY 2009. Planning & Business Development will continue to closely
monitor these changes.




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In late 2007, SCVMC signed a new 3-year rate agreement with Blue Cross that included
a significant increase in SCVMC’s reimbursement rates. During negotiations, a number
of the issues related to the lower census were discussed and both parties committed to
working together to increase overall utilization from Blue Cross’ Northern California
membership.

                                         No. of cases         No. of days
     Fiscal Year 2002                        283                2,416
     Fiscal Year 2003                        431                3,776
     Fiscal Year 2004                        411                4,819
     Fiscal Year 2005                        488                4,833
     Fiscal Year 2006                        512                5,056
     Fiscal Year 2007                        471                4,005
     Fiscal Year 2008                        527                3,739


PREFERRED PROVIDER ORGANIZATIONS (PPO) CONTRACTS

In FY 2008, SCVMC completed a facility contract that merged the Cigna and Great West
agreements into a single contract and provided a significant annual rate increase for the
next five years. The two companies are still working on the merger of their physician
systems and therefore, SCVMC renewed the physician contracts separately with the
expectation that we will need to merge them later. SCVMC is still working on its Aetna
renewal.

PPO plan options in Santa Clara County take several forms and often offer more flexible
Point-of-Service (POS) choice plans along with more restrictive “HMO-like” options.
PPO insurers have been active in Santa Clara County trying to gain market share from the
larger HMO insurers described previously.

The table below shows current activity at SCVMC for three of the larger insurers. These
plans represented 1,369 patient days and 182 discharges in FY 2008 with an average
length of stay of 7.5 days. Their utilization also reflects a decreased patient day trend
with a level number of discharges as compared to FY 2008. Their utilization is spread
throughout SCVMC as shown in the following table.

Health Plan      Adult      Burn        Maternity       Pediatrics   Rehab      Total
Aetna            24%        10%         13%             23%          30%        100%
Cigna            26%        1%          4%              24%          45%        100%
Great West       8%         0%          4%              67%          21%        100%
Total            21%        5%          8%              33%          33%        100%




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PHYSICIAN GROUP CONTRACTS

SCVMC maintains referral relationships with most of the major physician groups in and
around Santa Clara County. Several of these groups are responsible for the payment of
physician claims under their risk agreements with HMOs. Therefore, SCVMC must
contract with the physician group and the HMO in order to obtain full payment and to be
considered fully “in network” for patients assigned these groups. During FY 2008,
SCVMC completed physician group contracts with Palo Alto Medical Foundation,
representing itself, Camino Medical Group and Santa Cruz Medical Clinic and another
agreement with Physician Medical Group of Santa Cruz.

OUTREACH ACTIVITIES

Some of the major outreach activities conducted by VMC during FY08 are as follows:

Rehabilitation

The professional staff from the Rehabilitation Center visited and made presentations to
hospitals and medical groups throughout Northern and Central California, which include:
UCSF, San Francisco General Hospital, California Pacific Medical Center, John Muir
Hospital, Palo Alto VA, Mercy Redding, El Camino Medical Center, Regional Medical
Center of San Jose, St. Louise Regional Hospital, Salinas Valley Memorial, Santa Rosa
Memorial, Memorial Hospital and Doctor’s Medical Center in Modesto, Sierra Vista
Regional Medical Center San Luis Obispo, Camino Medical Group, Sutter Gould
Medical Group and others. Two new physicians, Dr. McKenna and Dr. Shah are
beginning to present at conferences as well as to referring facilities and payer groups.
Their presentations have been highly rated by the attendees.

The Rehabilitation staff also continues to foster relationship with many health plans.
Several recent tours of the hospital have been coordinated by the Rehabilitation Team.
These include tours for a new Medical Director at Blue Cross, a new Case Manager at
State Fund, a new Medical Director at PacifiCare, and the staff of Paradigm, a
catastrophic case management company.

The Rehabilitation physicians, nurses and therapists were also speakers at conferences
and symposiums sponsored by VMC as well as conferences hosted by other professional
organizations. A few examples for these conferences include: Totally Trauma
Conference, Salinas Valley Trauma Conference, and the San Francisco General/UCSF
Neuroscience Symposium. Contemporary Forums, who hosts the most well attended
national conferences for both Spinal Cord Injury and Traumatic Brain Injury, has chosen
SCVMC staff members to be on their faculty for the past 5 years.

In April 2008, VMC hosted the Fourth Traumatic Brain Injury Conference in Los Gatos
at which most of the speakers were from VMC and the attendees included 100 nurses and
physicians.



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The VMC Rehabilitation staff was very busy during the late Spring and early Summer
2008 preparing for the closure of the Stanford Hospital’s Rehabilitation Department.
With this closure, VMC anticipates an increased census in the Rehabilitation Center and
has worked closely with Stanford to facilitate the case review and admission process
during this transition.

In June the VMC Foundation hosted a Celebration of Collaboration for the joint research
projects in the areas of spinal cord injury and TBI that will involve SCVMC, Stanford
and the VA Palo Alto.

In addition to giving presentations, the Rehabilitation staff also hosted special lunch and
round table discussions on various topics related to Rehabilitation to outside agencies
such as the American Association of Critical Care Nurses, State Compensation Insurance
Fund and the California Brain Injury Association.

Finally SCVMC field based clinical liaisons evaluated over 400 potential rehabilitation
patients in FY 2008. This face- to- face contact with referring facilities serves as a
marketing tool and provides our admitting team with the clinical information they need to
make appropriate admissions decisions.

The overall results of SCVMC’s Rehabilitation Center Outreach Program have been
significant. The strategies of contract renegotiation, regular and reasonable charge-
master increases and targeted programmatic outreach/marketing have resulted in
measurable net revenue growth in the Rehabilitation Center over the last five years.


                                  Rehabilitation Center Net Revenue FY2001 - FY2008

                $50,000
                                                                                                                   Est.
                                                                                                               $43,000
                $45,000
                                                                                          $40,912
                $40,000

                                                               $34,755
                $35,000

                                                                                $33,922             $36,449
                                                     $32,598
                $30,000
  Net Revenue




                $25,000

                                          $22,237
                $20,000
                            $20,771

                $15,000


                $10,000


                 $5,000


                   $-
                          FY 01        FY 02        FY 03        FY04           FY 05       FY 06      FY 07     FY 08
                                                                       Fiscal Year




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Trauma and Burn

In February 2008, SCVMC physicians and nurses spoke at the Totally Trauma
Conference held in Monterey. SCVMC Rehabilitation Services also hosted booths at
this conference which allowed SCVMC staff to meet face to face with many of the nurses
and physicians who refer cases into our Center.

The SCVMC Trauma Department hosted its own conference in November 2007 that
focused on the pre-hospital care givers as well as Emergency Department nurses. The
Pediatrics Department provided a keynote speech and several other presentations at the
Pediatric Trauma Conference in November 2007 which also targeted the pre-hospital care
providers and ED nurses.

SCVMC Burn Center has partnered Pacific Gas & Electric to provide 20 classes this year
on burns and burn care to the company’s employees. The presentations included line
staff, management as well as State Fund, their worker’s compensation insurer.

The Burn Center staff worked with two schools on re-entry programs for two children
that were severely burned and now ready to do back to school. One of the schools is in
Contra Costa County and the Burn Team will be recognized by the Contra Costa County
Board of Supervisors in November 2008 for their outstanding work.

The Burn Center has continued its partnership with San Jose Fire Department on a
Juvenile Fire Setting program that is used to show at risk youths the dangers and
consequences of setting fires.

The Burn Center Staff continue to provide educational outreach to outlying hospitals and
EMS providers focusing on the initial treatment and management of burn patients until
they can be moved to a burn center. The Staff also provided two Advanced Burn Life
Support classes for caregivers, one conducted on-site at SCVMC and the other in
partnership with San Mateo County EMS.

Neonatal Intensive Care Unit (NICU)

SCVMC completed an agreement with St. Louise Hospital for the NICU physicians to
provide administrative oversight, patient consults and education services at St. Louise
Hospital effective July 1, 2008. This process is similar to the partnership approach that
SCVMC has taken with O’Connor Hospital and the expansion of their NICU facility that
is staffed by SCVMC physicians.

The NICU hosted its second annual one day conference in November 2007, for a group
of 100 nurses from the Bay Area and Central California.



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Valley Health Plan (VHP)

Valley Health Plan focused significant resources in FY 2008 on renewing agreements and
providing additional member access in ophthalmology, orthopedics. Also, VHP worked
to increase the range of available home health and DME services.

Currently, over 2,032 VHP members are assigned to 155 to the Santa Clara County IPA
(SCCIPA) primary care physicians, an almost 50 percent increase over FY 2007. The
association with SCCIPA has increased VHP’s primary care services in areas of Santa
Clara County where VMC clinics were previously less accessible and has helped support
commercial member retention and enrollment of new commercial members.




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A snapshot of the network available to VHP members is shown below.


                 # of Providers     Type of Provider
                  33                SCVMC and Community Health Partnership Clinic sites
                 434                Primary care physicians:
                          130       Employed primary care physicians within the 9 multi-
                                    specialty clinics
                            48      Primary care physicians within the 12 Community
                                    Health Partners clinics
                           250      Independent primary care physicians via IPA
                             4      Independent primary care physicians
                 421                Specialty care physicians:
                           310      Employed specialty care physicians within VMC and
                                    associated VHC clinics
                            71      Community Clinic specialty care physicians
                            68      Independent specialty care physicians
                             6      SCCIPA urgent care locations
                    7               Acute care hospitals and mental health facilities:
                                         - SCVMC
                                         - O’Connor Hospital
                                         - St. Louise Regional Medical Center
                                         - Stanford University Medical Center
                                         - Lucile Packard Children’s Hospital
                                         - El Camino Hospital
                                         - Fremont Hospital
                 160                Independent behavioral health practitioners
                  25                Independent substance abuse facilities
                  22                Acupuncture sites
                  22                Chiropractic sites
                  59                Ancillary providers
                   5                Skilled nursing facilities



Attachments:
Summary Contract Management Report
Detailed Agreement Management Report
Third Party Payor and Organization Affiliation Criteria




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