- Monthly Review & Commentary On Health Policy Issues From A Rural Perspective - April 1st, 1998
1st Annual Wisconsin Rural Health Conference, April 22 and 23, 1998
Call 1-800-385-0005 for Information
- Health Care Competition Is Also About Jobs
Grant County is a large rural county in the southwest corner of Wisconsin whose local health care is increasingly threatened by the competitive forces coming across the Mississippi from Dubuque, Iowa. In response, the Grant County Economic Impact Study Steering Committee was formed to "promote the local economy by raising the community's awareness of the impact of their local health care choices." Funding for the study by the University of Wisconsin's Center for Community Economic Development was obtained from the Wisconsin Department of Commerce, the Wisconsin Health and Educational Facilities Authority and the Southwest Wisconsin AHEC.
- Just completed, The Economic Value of the Health Care Industry, The Grant County Economic Impact Study by Connie Bodeen and Ron Shaffer "evaluates and quantifies the importance of the health care sector on the economic well-being of Grant County." The study estimate's health care's economic value in three ways:
· "Every job created or lost in the healthcare industry will cause the number of jobs in other industries to increase or decrease by one job."
- · "Every $1 of revenue generated by the healthcare industry will generate an additional $1.30 of revenue in other industries in the Grant County economy."
- · "Every $1 of personal income created in the healthcare industry creates 80 cents worth of personal income in other industries."
- "The analysis presented in the study concludes that a strong healthcare industry is vital to the economic stability of Grant County. Changes in healthcare service delivery not only impacts the quality and quantity of services available to local residents, it has economic implications for almost all other industries in the county. Healthcare providers, county officials and local residents alike need to re-evaluate their healthcare decisions in light of the role the healthcare industry plays in their economic well-being."
- "In this study, we evaluate and quantify the importance of the healthcare industry on the economic well-being of Grant County, WI. We have estimated that the healthcare industry alone currently employs 1500 people and generates $62.5 million in total annual revenues and $33.4 million in personal income. By examining the relationship between the healthcare industry and the rest of the county economy, we have concluded that the importance of the healthcare industry is indeed much greater." (see chart above)
- "Additionally, the study examines three healthcare industry scenarios to evaluate how they would impact the economic health of the county. The first scenario examines the effect of a 15 percent increase in local healthcare service utilization. The second examines the possibility of declining hospital utilization in the county. Finally, the age structure and pending retirement of local physicians and dentists are examined."
- According to the study, a 15% increase in the use of local health care would create 362 new jobs and $17 million in additional revenue for the county as a whole. A 50% reduction in local hospital services would leads to a loss of 350 jobs and $17 million revenue. Pending health care provider retirements may lead to a loss of 58 jobs and $3.3 million revenue.
- According to Cathy Clark from the Southwest AHEC, "The next step for the Steering Committee is to develop a balanced plan of action that community leaders can use to retain health care dollars in Grant County and improve their local economy. With technical assistance from the Center for Community Economic Development, the project will develop a set of specific tools and indicators that local communities and businesses in Grant County can use to reach more informed and rational decisions about how to maintain local health care delivery systems." The next step for all of us, is to expand this work across the rural counties of Wisconsin.
- USA Today Weighs In for the Uninsured
- Last year Congress passed the Health Insurance Portability and Accountability Act, making it easier to continue being insured when you went from one job to another. Individuals becoming self-employed or unemployed were assured access to insurance but no limits were put on the price they could be charged; it now seems that price matters. While the characterization of insurers as "breaking" the law seems on the extreme side, it does reflect one paper's read of the law's shortcoming and resulting public opinion. From "Insurers' sleazy tactics invite congressional crackdown," an editorial in USA Today, 3/19/98:
- "...the law isn't performing as promised because health insurers appear intent on breaking it. They've erected outrageous new barriers that prevent people from keeping their medical coverage."
- "Offering someone an insurance policy at a cost of more than one-third the average family's income is the same as offering no coverage at all."
- "And requiring that coverage must be offered to people with previous medical problems is no protection when insurers can rewrite policies to exclude the most common and expensive illnesses."
- "The insurers had a year to prove they could be trusted. They abused that trust. Congress and the administration should waste no time imposing the legal and regulatory restraints the industry insisted were unnecessary."
- Rural Kept Uninsured Three Times Longer
- From Research Activities, Agency for Health Care Policy and Research, 1/98:
- "About 40 million Americans are without health insurance coverage. Spells of uninsurance have increased in length for all citizens, particularly rural residents. Uninsured individuals visit their physicians less often than those with insurance. Keith Mueller, Ph.D., of the University of Nebraska (and immediate past president of the National Rural Health Association) and his colleagues examined the relationship between insurance status and number of physicians visits; they also looked at spells of uninsurance among a sample of 1,235 Nebraska residents."
- "The researchers found that the median length of uninsurance spells was fourteen months, with three-fourths of the spells lasting at least six months and one-fourth lasting longer than 34 months. Median uninsurance were about three times longer among rural (16 months) and frontier (22 months) residents compared with their urban neighbors (6 months), who are more apt to have employer based insurance." More details are in the Winter 1997 issue of The Journal of Rural Health.
- Ron Kind (WI) to Monitor Medicare Reform
- From the "Rural Health Care Agenda for 1998" by the Rural Health Care Coalition in the U.S. House of Representatives:
- "The Rural Health Care Coalition (RHCC), in the House of Representatives, was created in 1986 to focus attention on how federal policies affected the quality and accessibility of health services in rural America. The RHCC has had a number of recent legislative successes. However, it is important to ensure that these recent gains are implemented correctly. It is also important that the Coalition be able to monitor health care developments that may impact the provision of health care in rural areas."
- "The National Bipartisan Commission on the Future of Medicare is expected to review all aspects of Medicare policies. Because Medicare is the largest federal health program, any changes advised by the Commission may have profound effects on the provision of care in rural areas. The RHCC Steering Committee has asked Representatives Peterson (PA) and Kind (WI) to monitor the Medicare Commission's actions and provide useful input from the RHCC to the Commission."
- Perspective Of A Medicare Commissioner
- Bruce Vladeck, Ph.D. is a professor of health policy at Mt. Sinai School of Medicine in New York. More to the point, he has just ended four years as the Administrator of the federal Health Care Financing Administration and is now a Presidential-appointed member of the National Bipartisan Commission on the Future of Medicare, which held its first meeting this month.
- The 1997 Balanced Budget Act directs the newly created Commission to consider a fundamental redesign of the Medicare program, something not considered by Congress since Medicare's initiation thirty years ago; in particular the Commission will:
- · review and analyze the long-term financial condition of Medicare;
- · identify problems that threaten the financial integrity of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund including:
- - the financial impact on the program of the significant increase in the number of Medicare eligible individuals which will occur beginning approximately during 2010 and lasting for approximately 25 years, and
- - the extent to which current Medicare update indexes do not accurately reflect inflation;
- · analyze potential solutions to the problems identified under the above paragraph that will ensure both the financial integrity of the Medicare program and the provision of appropriate benefits under such program, including methods used by other nations to respond to comparable demographic patterns in eligibility for health care benefits for elderly and disabled individuals and trends in employment-related health care for retirees;
- · make recommendations for establishing the appropriate financial structure of the Medicare program as a whole;
- · make recommendations for establishing the appropriate balance of benefits covered and beneficiary contributions to the Medicare program;
- · make recommendations regarding the financing of graduate medical education (GME), including consideration of alternative broad-based sources of funding for such education and funding for institutions not currently eligible for such GME support that conduct approved graduate medical residency programs
- · make recommendations on modifying age-based eligibility and on the feasibility of allowing individuals between the age of 62 and the Medicare eligibility age to buy into the Medicare program
- The following are remarks from a lecture Bruce Vladeck gave during a recent visit to the University of Wisconsin-Madison and the Wisconsin Network for Health Policy Research. His renown blend of scholarship and political awareness was very evident. He clearly demonstrated his belief that the "future of Medicare has become a recurring and dominant issue on the American political horizon."
- The Commission will address five basic issues:
- · Who should be covered?
- · What should the benefits be?
- · Who should pay?
- · Do we need trust funds?
- · What happens to the rest of the system?
- Given the lack of a political consensus on what is the "Medicare Problem," Vladeck predicts that the initial fight among the 17 Commission members will be on the very fundamental and politically divisive issue of defining the problem. He spoke about eight contending definitions--the four most prevalent from inside the Washington beltway and four more prevalent outside:
- As Seen INSIDE the Washington D.C. Beltway:
- · the budget problem--slowing Medicare's contribution to the deficit and/or displacement of other desired expenditures;
- · the baby-boom/entitlement problem--today there are 4 workers for every beneficiary; by 2030 there will be only 2 workers for every beneficiary (as someone on the leading edge of the baby boomers, this gets personal real quickly);
- · the government waste/inefficiency problem--Medicare reform as part of the overall political philosophy de jour of down-sizing the federal government;
- · the inter-generational problem--a variation on #2 above but with focus on current "reported" problem of the younger generation resenting their current support of their elders (feed by perceptions that they are better off).
- As Seen OUTSIDE the Washington D.C. Beltway:
- · the out-of-pocket problem--Medicare only pays 60% of the costs incurred by the elderly;
- · the benefits design problem--for example the lack of a drugs benefit when that is the major cost growth area;
- · the problem(s) of poor beneficiaries--access, outcomes is a problem, not for the poorest who are generally covered by Medicaid but by those in the range of 100% to 150% of poverty;
- · the providers aren't paid enough problem--the primary lobbyists both in a generic sense that providers are under paid or in sense that "overall is fine but we particular providers are underpaid."
- From his upcoming book with a working title Facts About Medicare You May Not Know (Or Want to Know):
- · over time, Medicare costs grow no faster then private sector ('93-'97 was an anomaly)
- · Medicare loses money on HMOs (HMOs attract disproportionately healthier enrollees leaving the sicker than average for government to pay)
- · since 1965, the federal treasury has "made" $100 billion on the net flow of cash going into the hospital trust fund ($100 billion is the current positive balance)
- · Medicare revenues are income related (current Medicare payroll tax has no upper limit)
- · Medicare beneficiaries are not affluent (fewer are poor but their average income is half that of the younger population)
- · Medicare beneficiaries pay more out of pocket than you or I
- His bottom line: "Will our kids be willing to finance our care in the manner to which our parents have become accustomed."
- Special Historical Note For Rural Advocates:
- Warning-don't read any further if you have a low tolerance for cynical comments. In a small seminar preceding his formal lecture, without naming the usual suspects, Dr. Vladeck made clear one of the basic systemic barriers faced by rural advocates trying to obtain greater Medicare equity--the politics within national trade associations when a "zero sum game" requires reallocating a fixed pot of money. It plays out as follows: those who would be better off by the change see it only as finally receiving their due and give little credit to their trade or "professional" association, but those who would lose get real angry at the same association. As an example, Dr. Vladeck told the story of how HCFA's internal attempt to reform the Medicare wage index was blocked by those who would be disadvantaged by a more equitable and accurate model to adjust for variations in regional wage markets. No wonder that we often feel that come hell or high water, the status quo prevails, even when government recognizes and is promoting a change to improve the equity/creditability of the system.
- Acceleration of Buyer Demands
The following is from "1998 Market Forces Forecast" by Howard Veit, Stephen Wood and Daniel Zismer in Integration Advisor, published by Towers Perrin, 1/98 :
- "Employers are generally disenchanted with managed care performance. Service problems and publicity surrounding alleged managed care abuses have fueled skepticism as to whether managed care will ever live up to its promise. Although buyers have not given up on managed care, they want to make it better and more responsive to their needs. Those who choose to be aggressive, perhaps a small minority, will seek new care models that will more effectively control costs, while at the same time improving consumer access and service delivery."
- "Cost management will continue to dominate large employers' agendas. The concern about rising premium costs will result in scaling back benefits to employees and retirees, the potential assumption of less risk, and a continuing attempt to exercise clout over health plans. Large employers will continue to join forces and undertake coalition activity to meet their needs for improved costs and accountability to their employees."
- "Look for a few employers to begin redefining the expected outcomes of managed care to include cost management, health status outcomes and increased employee productivity. Companies such as Digital Equipment Corporation, AT&T, Johnson and Johnson and 3M are considering bold steps toward merging health benefits, disability management and, in some cases, workers compensation. They will seek innovative partners to achieve their objectives."
- W.W.II Freeze Effects Competition Today
- From an editorial, "Break Insurance--Employment Link
- Patients or Profits?" in The Economist, 3/7/98:
- "HMOs are hugely unpopular, so Mr. Clinton is politically astute to attack them. But he is wrong. The evidence shows that managed care has curbed medical inflation without compromising the quality of care. The trouble is, HMO's drawbacks are more visible than their benefits. Under the old fee-for-service system, insured Americans could demand almost any treatment they wanted, with little regard for cost or efficacy. Under managed care, they cannot. Understandably, they resent this. What they fail to see is that without the savings brought by HMOs, they might by now have no insurance at all. Before managed care came on to the scene, premiums were rising so steeply that smaller employers had begun to drop health coverage altogether. Many of the ones that retained it cut pay instead... Mr. Clinton's latest stab at health reform is essentially a watered-down version of the disastrous plan his wife devised in 1994 to have the government take over the whole sector."
- "Rather than imposing rules, it would be better to stimulate competition. The place to start is the tax code. Currently, health benefits provided by employers are tax-free; insurance taken out in any other way is not (although the 20m self-employed get a partial deduction). This anomaly dates back to the 1940s , when it provided a loophole to let firms reward staff without violating the wartime wage freeze. Now, its effect is to force workers to accept whatever health packages their employers offer. A typical American earning $25,000 a year and receiving $2,000 worth of health insurance from his company would have to pay an extra $500 if he tried to buy the insurance himself. This reduces choice: half of insured workers report that their employers contract with only one health plan. And since insurers are answerable to employers, rather than to the people who actually enjoy or endure their services, their incentives are skewed."
- "HMOs have made admirable efforts to cut costs (so deeply in some cases that they have seriously offended Wall Street). This pleases the payers. But they have not made such a good job of providing prompt, convenient and ungrudging service to their patients. Equalizing the tax code, so that people could get similarly tax-deductible health insurance as individuals or through their unions, churches or whatever, would force HMOs to compete as fiercely on quality as on price. A more market-friendly approach offers no panacea for America's healthcare system--but it would be a useful shot in the arm."
- The Struggle for Power in Managed Care
- The following is from "The Struggle for Power in Managed Care" by Cindy Grahl, Managed Healthcare, 1/97:
- "As the millennium comes to a close, the always volatile market forces that fund healthcare delivery continue to evolve in new and mysterious ways. Health maintenance organizations, now responsible for almost 80 million American lives, are under attack by other forces struggling to gain or to regain control of the market, according to an analysis by Scott-Levin, a healthcare consulting firm based in Newtown, PA."
- "Among the challenges to the HMO hegemony are vertically integrated networks, physician group practices, and employer groups and coalitions, says Scott-Levin CEO Joy Scott. These, she says, are "new forces trying to influence the healthcare market to serve their interests," as well as 'old forces seeking to recapture control that skipped away during the rise of managed care in the 1980's and 1990's.' These emerging power players in the managed care marketplace each have their own power base and a strategy that makes it a contender."
- · "The corporate integrated care giants, have the ability to influence both delivery and financing, either through ownership or through their bargaining power. This gives them the potential to move market share, and they quickly adapt to changing market conditions. Integrated systems now encompass 24.3 million people, or 30% of all lives covered by HMOs and their level of integration increased by 20% last year."
- · "Physician group practices are growing in strength as they are able to pool insurance risk, share resources, streamline administration and offer doctors greater bargaining leverage with HMOs. Scott-Levin now counts more than 500 group practices with more than 10 physicians in them in this country, representing more than 32,000 doctors."
- · "Employer groups and coalitions now are banding together to increase bargaining power and negotiate more cost-effective care for their employees, while they move to form regional coalitions that extend this clout even further, Scott says. Research has uncovered 125 coalitions nationwide, representing 40 million employees and their dependents. According to Scott, "almost 60% of them actually purchase healthcare in some form for their group," affecting almost 13 million lives."
- "HMOs in the future will be forced to respect and learn to deal with the increasing bargaining power of these three growing factions."
- Closed Neighbor Doesn't Help the Survivors
- From "The Effect of Rural Hospital Closures on the Financial Performance of Neighboring Rural Hospitals" by Niccie McKay & Fred Dorner in Inquiry, Fall, 1996:
- "This study investigates how the closure of rural hospitals affected other rural hospitals. The empirical analysis examined whether being the neighbor of a closed rural hospital affected financial performance variables during the periods before and after closure. Before and after comparisons of surviving rural hospitals were made between 1985 and 1989 for closures in 1987 and between 1986 and 1990 for closures in 1988. The study showed that neighbors of closed rural hospitals typically did experience increased volume in comparison to non-neighbors, but the increased volume did not lead to reductions in average cost or to improved profitability, after controlling for other factors."
- "The health policy conclusions of our results are somewhat ambiguous. Although rural hospital closures may have had negative effects on employees of the closed facilities and residents of the rural communities in which the hospitals formerly operated, neighboring rural hospitals did benefit by gaining additional patients. However, because closures of neighboring hospitals did not result in improved financial conditions for nearby rural hospitals that remained open (all else equal), maintaining access to medical services in rural areas may require public assistance programs for surviving rural hospitals."
- "The fact that increased patients did not translate into increased profits also suggests that rural hospitals will have to keep a close watch on changes in reimbursement. That is, if rural hospitals cannot make more profits when they gain additional volume, they will be especially vulnerable to undesirable changes in reimbursement or cost conditions. From a public policy perspective, the implication is that reduced reimbursements could lead to reduced profitability or even closure for some rural hospitals."
- "Although the results show that increased numbers of patients did not lead to lower average cost, rural hospitals nevertheless might benefit from the development of rural networks or cooperatives. For example, the increased volume for neighboring hospitals may not have resulted in lower average costs or improved profits simply due to the small scale of operation at rural hospitals. By combining purchasing efforts or quality-assurance programs, a group of rural hospitals might be able to reach the critical mass necessary to obtain the benefits of increased scale."
- Annual Meetings--Not Just Cheesehead Hats
- Written by Tim Size for the Spring, 1998 edition of Connections, the newsletter of the Illinois Rural Health Association:
- Not too long ago, the role of an annual conference was for guys (and then it was almost always guys) to have the opportunity to get to the big city, to explore and rediscover adolescence in as many ways as time, wallet and a wavering conscience permitted. Of course it's all different now--both men and women now make the pilgrimage. Actually, I'm half joking, but I do believe that what we look for in our conferences hasn't really changed.
- For better or worse, I had a 50th birthday last year, which will make the math in the following illustration easy. When I was in college, a hundred years was five of me, now it is only two. Or put differently, the happenings of a century feel very close and personal in a way that used to seem foreign and personally irrelevant. My father traveled as part of the great southern migration to Chicago, his father had come to the same city by steamer, an illegal immigrant from Canada. Both looking for opportunity and probably a chance to break out of their daily grind back home.
- It is a cliché to talk about the pace of change in our technology, the tools we use to do our work. While I mostly just use them, I am still enough of an engineer to marvel at the changing technologies that have been made available to us. My son's watch now does calculations that once took me days with punch cards and a mainframe computer; we've gone from the mimeograph machine's blurry purple sheets to crisp in-house Xeroxing/publishing; mail that used to take weeks by ship now goes instantly from my Macintosh Powerbook at the kitchen table. The real challenge is how to most cost and time effectively chose and use these tools.
- Career and technology are important but so is that kitchen table, a solid reminder of our need for family, friends and stability. Our ongoing churning of place, our migration for work and opportunity is a significant part of the richness of our culture, both urban and rural but it comes with a cost. The aforementioned technology has made it easier now than ever to meet our need of staying in touch. Many of us have reconnected with lost friends and relatives through the explosive expansion of the world wide web site. Via daily email, I check in more with some friends a thousand miles away than I do my next-door neighbors. (Check out <www.switchboard.com/> to experience an incredibly powerful tool to find lost addresses.)
- Through all of this, America has become a pretty small country; ironically the ease of keeping in touch electronically increases the need to see each other face to face, as relationships are maintained and enhanced, not lost. As part of my volunteer work with the National Rural Health Association (NRHA) I've been promoting NRHA becoming more of a virtual organization, doing collaborative work less bound by a single organizational structure, place or time, making better use of current communication technologies. But none of this is intended or can replace the need we all have to spend time with each other, face to face.
- If you haven't asked yourself, what does this all have to do with the initial question, you may have been too polite. My answering of this question reflects a deliberate focus and bias, not on what a conferences can offer but what we are seeking from the critically useful ritual of annual meetings. Planes take us farther more quickly, hotels are generally more upscale and presentations (some of them) are slicker, but we go to conferences for the same reasons we always have--to engage in some of the basic activities we need to grow and thrive, both professionally and as individuals; as noted above we seek:
- · to explore/learn new ground
- · to rediscover/recharge
- · to seek new opportunities
- · to break out of a daily grind
- · to learn the use of new technology/tools
- · to create/maintain individual networks
- Donna Williams, NRHA Executive Vice President, sums it up more succinctly: "Annual conferences of any membership organization provide an excellent opportunity for the members, staff and organizational friends to come together to meet, learn, and network together. Its a way to re-connect and re-charge." [The NRHA Annual Conference is May 12th-16th in Orlando, Florida, call 816-756-3140 for details.]
- Act Now to Reduce Rural Telehealth Costs
- If you are a rural, not-for-profit health care provider you should have just gotten a letter from the Rural Health Care Corporation (RHCC) in Washington, D.C.. The Federal Communications Commission set up this corporation to manage a congressionally mandated program for eligible providers to receive discounts on their line charges related to telehealth services or accessing the internet (the annual national total of such discounts is capped at $400 million). The general purpose is to expand rural use of telehealth services by reducing rural rates to levels comparable to those paid in the nearest urban area. If you have not been contacted by the RHCC, call and request a copy of their March letter and initial contact form at 800-229-5476 (8:00 am to 8:00 pm, EST).
- National Quality Expert Here On April 22nd
- "Why do Medicare enrollees in Miami receive about twice as many surgical procedures and tests as enrollees in Minneapolis?"
- "It's not because they're older.
- It's not because they're sicker."
- "It's because health care varies and
- where you live matters."
- Dr. Wennberg, one of the county's most respected researchers on the issue of geographic variation in health care, will be in Wisconsin at the invitation of The Alliance, Employer Health Care Cooperative. "His pioneering research has proved that health care varies based on physician practice style more than patient needs. It has shown when patients are actively involved in treatment decisions, health status and satisfaction increase while surgery rates and costs decrease." Questions to be addressed will include:
- · What is variation in health care?
- · What are the implications of variation on the quality of care?
- · What variations have been identified nationally?
- · Are there local examples of variation?
- John E. Wennberg, M.D., M.P.H., is the Director of the Center for the Evaluative Clinical Sciences at the Dartmouth Medical School.
- Date: April 22, 1998 Program: 8:15 - 10:00
- Registration & Breakfast Buffet: 7:30 - 8:15
- Location: Marriott Madison West, Middleton
- To register, call Pat Shannon at The Alliance (608-276-6620); one complimentary admission per organization, then $20 per person.
- Cost Effective Capital for Small Projects
- From the newsletter of the National Council of Health Facilities Finance Authorities, March, 1998:
- "The usage of the Wisconsin Health and Educational Facilities Authority small project program doubled in 1997 with 10 borrowers utilizing this process to obtain competitive financing proposals."
- "A borrowers first step is to determine eligibility by discussing the project with the Authority. Next, a borrower profile, including information on the borrower and its projects is completed. The Authority will then redistribute this package to as many as 10 possible financing alternatives. All interested parties then submit their proposals to both the borrower and the Authority. The borrower then chooses the financing plan it prefers by working off the proposals received and summaries provided by the Authority. The result is a plan of finance which provides the best terms, lowest costs, and the assurance that comes with looking at several alternatives."
- For more information contact Larry Nines at WHEFA:
- whefa@execpc.com or 414-792-0466