Hospitals Penalized by Medicare for Excessive Hospital-Acquired Conditions.

I have been interested in attempts to measure the quality and safety of healthcare since my year of fellowship on the Senate Finance Committee that oversees the Medicare program. In the run-up to what would become Medicare’s Hospital Compare program, a long list of things that might be measured was proposed. Most were set aside because of concerns about utility, comparability, reliability, difficulty of collection, or ability to be gamed. The shorter list evolved into the current iteration of Medicare’s own Hospital Compare database that is incorporated into virtually every proprietary hospital rating system. The quality measurements are part of a new payment structure that hopes to pay for quality and value instead of volume alone.

This month, the rubber hit the road. For an eligible 3360 or so acute-care hospitals, CMS released a composite score of the frequency of Hospital Acquired Conditions and infections (HAC). The 25% of those hospitals with the worst HAC scores will have their total Medicare patient payments reduced by 1% beginning October, 2014.  (It is my understanding that a HAC score of 7 or more receive the deduction.). Attached is a list of the elements that are included in these actionable HAC scores. Note that some of the elements previously included in Hospital Compare such as retained object in surgery have been left out, much to the distress of some proprietary organizations. Infections resulting from intravenous lines and urinary catheters alone contribute to the majority of the overall HAC score

I think the idea is great, I think the execution is difficult. Having examined the quality and safety scores of Kentucky hospitals by different organizations over time, I am concerned that there is excessive lability of scores. Using essentially the same Medicare data with different twists, different proprietary agencies will give the same hospital different rankings (occasionally drastically so) at the same time. Conversely, the same organization might give the same hospital a different score over a relatively short period of time. I also have concerns about the reliability of self-reported data. Although I expected that objective measurements might differ from my own perceived evaluations of hospital quality, I was quite surprised at the magnitude. I was concerned about the financial implications to both hospital and rating organizations. Therefore, at every opportunity over the last year, I shared my belief with experts that available measures of quality and safety were not ready for prime time. I was told my concerns were reasonable. Continue reading

Board of Trustees to Address Accountability of University of Louisville.

It has become clear that Board of Trustees of the University of Louisville is not always fully briefed about important matters. Most recently, it was reported, without denial or rebuttal by the University, that the administration withheld the non-public results of a recent external review of the University’s financial accounting system even when requested by board members. At least one Board member requested that he be permitted to resign in protest over the withholding of information and failure to allow meaningful Board discussion of important University issues. Following the controversy related to the recent departures of high-ranking University officials, I became one of many asking the UofL Board to step up to the plate. Apparently that was happening already! Continue reading

Standard & Poor Downgrades Catholic Health Initiatives Bond Rating.

Operating losses recalculated as greater than reported.

[See also Addenda of Dec 19 & 20 below]

Perhaps it was predictable, but Standard & Poor’s bond rating service downgraded its rating of Catholic Health Initiatives from A+ to A with a negative outlook based on large and unexpected losses in first quarter FY 2015, and an inability to meet the financial targets needed to deal with last year’s losses. The downgrade effects the $7 Billion of existing CHI debt for which Kentucky’s operations are also on the hook. CHI pointed to challenges in a few of its markets (particularly Kentucky) investments in capabilities, and costs in implementing computerized medical record systems.

CHI’s own “unaudited” financial report declared a $134.7 Million operating loss, but S&P recalculated this to $641 Million. Expenses were up 11% while revenues grew only by 8%. As reported by Modern Healthcare, S&P’s analyst predicted that plans by Catholic Health Initiatives to turn around its operations likely won’t be enough to avoid losses for fiscal 2015 based in part on poor performance last year— “It’s just a big hole to dig out of… They missed on their targets last year. We didn’t feel like there was a strong track record to show they will do well.” Continue reading

Catholic Health Initiatives Loses $198 Million in First Quarter.

Kentucky operations show improvement.

CHI’s corporate first quarter financial update for the months July through September of 2014 was made public last Friday. The report was not good. There was a loss in patient care services of $122 Million that increased to $132 Million after “restructuring, impairment and other losses’” and was magnified further by non-operating losses to a total loss of $198 Million. This represents 5.4% of total operating revenues and is therefore meaningful. In the same quarter last year, there was a profit of $401 Million— a $599 Million swing in the wrong direction.

Last year CHI’s KentuckyOne operation was generating the greatest losses for the organization. This year its first quarter results showed a positive $1.7 Million profit. Of course, this is before “restructuring” or covering its share of national non-operating losses. I think it is safe to assume that KentuckyOne Health and any other Kentucky operations were paying out more money than they were bringing in. The KentuckyOne region remains at the bottom of the list of CHI regions in terms of operating income. Kentucky contributes substantial operating revenues, but its operating earnings margin is only 0.3% before all the adjustments. Continue reading

Progress Report and Recent User Improvements to KHPI Policy Blog.

khpi-logo• Subscription and notification function.
• Spam protection & secure public comments.
• Confidential email to KHPI.
• Facebook and social media.
• Friendly URLs.

History of Health Policy Blog.
Although since the 1990s I had been informally using the name Kentucky Health Policy Institute for my first health policy research efforts, I registered the name as a Kentucky non-profit corporation in 2005. My first public internet presence was a relatively crude website in early 2007. Once I added a blog function to present material, I did very little with the homepage that functions today only to hold “About Us” material and a Vision for Healthcare that I wrote in 1997 that still drives my thinking today. The old homepage also contains a button to enable PayPal contributions in support of our initiatives. (Except for my own initial “test” contribution, no one else has done so!)

As I learned more about maintaining a website, I discovered WordPress, a widely used open-source blogging and content-management software package. I installed the it on my own server and published my first policy blog in 2009. It was not until 2012 that things caught fire. Over the last three years alone I posted 275 articles containing research, analysis, and opinion on a variety of subjects. The signature matter that got me in the habit of writing was the attempted sale by the University of Louisville of its hospital to Catholic Health Initiatives. The (continuing) failure of that initiative has led to many articles since. I also like to analyze public databases. Playing with pivot tables and spread sheets satisfies the old scientist in me and seems more productive than Sudoku. Continue reading

Firing of a UofL Vice President— Further Revelations.

An involuntary separation turns ugly.

Connally_thmbThings lay quiet following a pair of stories on December 4 in the Courier-Journal and the Louisville Cardinal about the firing of University of Louisville Vice President for Human Resources, Sam Connally. As was to be expected, the University had little to say about such “personnel” matters other than than the “separation did not involve suspected illegal conduct” on the part of Mr. Connally. Naturally many heads turned given the background of separation or retirement of several other University executives in 2013, and of UofL’s corporate attorney in April 2014. These very high ranking University officers were paid hundreds of thousands of dollars in exchange for signing non-disclosure/non-disparagement agreements. Those agreements were considered unusual for a public institution and raised suspicions among the public that there was something to hide. Mr. Connally provided the voice of the University defending those agreements. Because there is ample evidence– documented in this series of articles over the last two years– that UofL plays fast and loose with rules, I too was concerned that there was more going on than meets the eye.

Great credentials.
Mr. Connally served as Vice President for HR at UofL since Feb 2010 and came with excellent credentials. His resume is impressive. He attended the U.S. Airforce Academy and graduated from Boston University with a Master of Divinity. He was an Army Chaplain. He earned his degree in Business Administration from Duke. He worked in human resources at other Colleges and Universities, most recently at Washington College in Maryland.  A personal profile on the UofL website was upbeat— the kind of boss I might like. Continue reading

More Layoffs In Store for Catholic Health Initiatives.

  Kentucky unlikely to be spared.

Tamara Chuang of the Denver Post reported yesterday of an announcement by CHI confirming the 1500 additional job cuts planned for January 2015. Laura Ungar of our own Courier-Journal was ahead of the game in reporting this considerable reduction.

From Denver: “As a result of lower-than-expected operating and financial performance in the first quarter of the 2015 fiscal year, Catholic Health Initiatives and its market organizations will take action to reduce expenses across the system,” said spokesman Michael Romano. “The losses were due to a number of external and internal factors, including reduced utilization of services.”

The positions to be cut will be announced in mid-January are said to focus on administrative and support staff and to affect the entire national enterprise. Given that KentuckyOne Health is one of the larger of CHI’s regional operations and continues to produce the largest financial losses, it must be assumed that additional job cuts will follow the 500 or so lost last March in Kentucky.

This unfortunate news is not a complete surprise. CHI’s financial report for FY 2014 released last month showed a slowing of recent losses, but KentuckyOne was the only region of CHI losing money.  The profit from operations nationwide was razor-thin.  I am unaware of how the earlier job cuts were spread out around the state, but I am told that the cuts hurt, and even led to decreased clinical capacity in some facilities. The required formal financial report for the first quarter of FU 2015 will not be available until the end of the month. It should contain more specifics.

Peter Hasselbacher, MD
President, KHPI
December 7, 2014

Ebola Treatment Centers Established Nationally.

No Centers designated in Kentucky.

Earlier this week, the Center for Medicare and Medicaid Services (CMS) announced that 35 U.S. hospitals have been designated as Ebola Treatment Centers. More are said to be announced soon. These hospitals were designated by state or local public health officials as having both the physical and staffing capability to care for these very ill patients. The CDC has published interim guidance outlining the capabilities every Ebola treatment center should have. They are pretty rigorous. Certainly not every hospital is up to the clinical demands, including the many Medicare Critical Access Hospitals in rural or small population centers that must by regulation transfer their sicker patients elsewhere. [The CDC website provides an excellent source of information about Ebola virus disease for professionals and laypeople alike.]


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