Healthcare Challenges and Your Career

1. Healthcare Challenges and Your Career Presenter: Ernie Schmid, MSHP 97, FACHE October 29, 2010

2. Part One • Environmental Observations

3. TEXAS YearTotal Population 2010 25,409,530 2040 45,388,036

4. 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.

5. AND What Does the Future Hold? Poverty growing in Texas schools More than half of state’s students disadvantaged, report finds By ERICKA MELLONHOUSTON CHRONICLE 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.

6. 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.

7. US Income Distribution

8. 2010-2011 Texas Budget all Funds-$182B

9. Reform and State Budget Over Ten Years • Adds 2.3 M Texans to Medicaid rolls • Cost $27 B in GR

10. Current Government Sponsored Health Care • 6.4 million uninsured • 3.2 million Medicaid Beneficiaries • 2.7 million Medicare Beneficiaries • .537 million CHIP Participants At a minimum halfthe state’s population relies upon government for health care

11. 600 TEXAS Hospitals

12. 81,000 Hospital Beds

13. 42% of Texas Hospital Net Patient Revenue from Medicare and Medicaid

14. 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 hospitals.” “A key question is whether Medicare payments are adequate to cover the costs of efficient providers.” Reports to Congress: Medicare Payment Policy.

15. Medicaid Payments to Texas Hospitals 2007 Medicaid Hospital Payment Sources All Funds

16. Government does not pay for all services it mandates In 1986, Congress enacted the Emergency Medical Treatment & Labor Act (EMTALA) to ensure public access to emergency services regardless of ability to pay. • 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.

17. Private or Public? Government sees hospitals/providers as private enterprises but treat them like public utilities. 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

18. Part Two • Reform in Texas

19. REFORM: Quality-Price-Access

20. Case for Reform 17.5%

21. Access: Senate Finance

22. Access • Medicaid Expansion • State funding • Eligibility systems • Insurance Subsidy computation—need and subsidy always unsynchronized • Funding during gaps in coverage

23. Access Continued • Coverage goals • Will goals be reached in Texas? • What if they are not? • Rural provisions support current favorable provisions but they are not transformative

24. Price • US administrative costs 31% of health care expenditures (16.7% in Canada) • Stimulus invests $19 B for HIT • Uninsured cause cost shifting? • 1.6 m undocumented and others who will remain uninsured in Texas • 25 million uninsured in US-----cost shifting still necessary, but is it possible? • Future of disproportionate share and UPL payments? • Unsustainable price increases • Demand will increase in short run

25. Price Continued • Payments • Super MedPac or (IMAC) Independent Medicare Advisory Commission---base closing model • Exchanges; negotiated rated or rate setting? • US per capita spending highest among industrial nations • Spending disparities • Physician referral and ownership • Liability reform • End of life care

26. Price: Contributions in Billions—TaxesRoll Downhill RX $ 80 Medical Device Tax $ 40 Hospital cuts $ 155 Insurance tax $ 60 Lab Tax $ 8 Medicare Advantage $120 Individual Mandates $150 Employer mandates $200 Other $100 Total $900

27. Quality: US Vs Organization for Economic Cooperation and Development

28. 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? • Bundling pilots • State laws adequate? • Accountable Health Care Organizations • How does the $ move? • Control

29. 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.

30. And what will the future hold????

31. Speaker Ernie Schmid, FACHE ernie2010@sbcglobal.net