The NY Times on Wednesday published a much needed and fairly adulatory story about the Maryland healthcare system, focusing much of its praise on Western Maryland Health System – a long time MEP partner. The story rightly pointed out two key differences between Maryland’s healthcare system and all the other states. One is the “Total Patient Revenue” system that allots a single payment to hospitals for all patient care and allows them to keep any profits it makes below that amount. The other is Maryland’s so-called Medicare waiver. This waiver essentially allows a state regulatory commission to set hospital prices statewide so long as the growth in cost per hospital patient is kept under the national average. In others words, cost controls.
Here’s what the NY Times story missed: the role that physician groups like mine play in helping hospitals prosper under this system, mainly through the creation of innovative programs that move patients out of the costly hospital environment and into more efficient care programs like observation care and transitional care. In fact, my group has been integrally involved in two areas that have contributed to Western Maryland Health System’s success, which the NY Times so prominently featured – the emergency department and the observation unit.
At Western Maryland’s emergency department, we have seen volume fall over the last several years as more resources are pushed into the community. This has meant a significant decline in revenue for our emergency physician group. Rather than bemoan the loss of patient volume in the emergency room, we have embraced the opportunity to be part of the solution. We have welcomed the presence of care managers in the emergency department to help us decide appropriate levels of care and access resources in the community to prevent hospital admissions in the first place.
Additionally, in partnership with Western Maryland, three years ago we began providing observation care services to the hospital. This has contributed to the dramatically reduced readmissions by taking what was a 40 hour inpatient stay in the hospital down to a 20 hour observation stay, now classified as an outpatient status. This makes hospital beds more efficiently utilized, and lowers cost of care.
I discussed the NY Times article with the Chief Medical Officer at Western Maryland, Dr George Garrow, and here is what he told me: “You are absolutely correct that the successes seen at WMHS would not have been possible without the alignment of goals and values” between us and them.
That is what the NY Times missed: an alignment of goals between hospital systems and the physicians groups that partner with them, in addition to the patients receiving care and the government agencies that regulate the whole shebang.
And since healthcare regulation is so on front and center these days, I offer two final thoughts on the Maryland policies that played so prominently in the story. The first is the Total Patient Revenue (TPR) system, which essentially rewards hospitals for lowering the cost of patient care. TPR is a great policy, one that should certainly be kept in Maryland and looked at more closely as an option around the country. In fact, Accountable Care Organizations work on a similar principle, in that these organizations get a flat rate for providing care to a given patient population, and if they spend less than that, they get to divvy up the profits. It will only work with strong partnerships between all those organizations, who have historically been more used to competing than cooperating. It will require the sort of strong partnership MEP has with Western Maryland.
The second policy is the Medicare waiver, which is based on a formula – cost per hospital patient – that is increasingly irrelevant. When more lower acuity patients are moved out of the hospital, that means only the sickest of the sick remain, and the cost per hospital patient goes up, when in fact the hospital system and physicians groups are providing lower cost care overall. I.e., the hospitals will get punished for their success if that formula persists too much longer, and that’s not an alignment of goals.
Ultimately, though, it’s the innovation and cooperation of disparate care providers and physicians groups, forward thinking hospital systems, appropriate government support, alignment of payment systems, and increased patient responsibility that will come together to fix our healthcare system. Each component is critical to changing our healthcare delivery system and achieving the best long term success.