Download - Payers & Providers – Issue of August 12, 2010

8/9/2019 Payers & Providers Issue of August 12, 2010

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The legacy of Sacramento-based SutterHealths management of district hospitals inthe Bay Area has been controversial enoughto spur legislation placing closer scrutiny

on how such arrangements are structured.SB 1240, authored by Sen. Ellen

Corbett, D-San Leandro, and sponsored bythe California Nurses Association, wouldforbid private entities from transferring anyfunds or assets out of hospital districts. Itwould also require annual and publicized audits of both the hospital operator andthe district. Losses incurred by a privateoperator of a district hospital would also bebarred from use as credits in purchasing adistrict hospital or any of its assets.

The bill was approved by the Senate onJune 1 by a 22-12 vote, and passed the

Assembly Health Committee on June 22. Itis currently awaiting a vote in the AssemblyAppropriations Committee.

CNA officials say the legislation is inresponse to the way not-for-profit SutterHealth has operated hospitals in the MarinHealthcare District in Greenbrae and EdenTownship Healthcare District in CastroValley.

Both CNA and Marin HealthcareDistrict officials claim Sutter transferred asmuch as $200 million in assets out of thedistrict, which operates 235-bed MarinGeneral Hospital. Sutter officials have

claimed that it had invested some $235

million in Marin General during the 14years it managed the hospital, and wasentitled to recoup the funds.

Control of the hospital was returned

to the district in late June. However, thetransfer did not occur until the districtwaged an acrimonious lawsuit againstSutter over which entity would pay forseismic retrofitting at the facility.

Sutter settled the suit in 2006,agreeing to terminate its lease of MarinGeneral five years prior to its 2015expiration. But the same year it settledwith the district, Sutter transferred nearly$50 million alone from Marin General toits corporate entity.

Just before the transfer of the hospitalback to the district, more than 30 Marin

County officials signed a full-page ad thatappeared in the San Francisco Chronicleand other Bay Area newspapersdemanding Sutter return assets to thedistrict. The Marin County Board ofSupervisors also demanded Sutter do thesame.

Sutter used Marin as a corporateATM, said CNA spokesman Nato Green.

In the case of Eden Township, whichincludes Eden Medical Center and SanLeandro Hospital, the CNA claimed thatSutter negotiated a lease of San Leandro

District Scrutiny Could Get TougherBill Would Impose More Rules On Hospital Leases

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Payers & Providers

in 2008 that allowed it the right of firstrefusal to purchase the facility, as well asuse operating losses as credits against the

purchase price. Green claimed the dealnot only prompted Sutter to run SanLeandro into the ground, but that it usedclaimed losses to try and purchase thehospital for virtually nothing.

The Eden Township district has suedSutter over the agreement, claiming aconflict-of-interest.

Sutter officials declined comment onthe legislation, which is supported byboth the Marin and Eden Townshipdistricts.

The California Hospital Associationopposes SB 1240. CHA believes existing

healthcare district law already provides

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for adequate protections and publicreview prior to a district entering into amajor contract, stated correspondence

from the hospital lobby to lawmakers.State law prohibits transfer of more

than 50% of a hospital districts assetswithout approval of district voters. In2011, legislation that allowed for-profitentities to transfer assets from a districtexpires, allowing such transfers only tonot-for-profit entities.

Green noted that the legislationwould affect only a handful of districthospitals in California that are leased oroperated by private entities.

But we want to guarantee that assetsare reinvested, he said.

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In Brief

Kaiser Reports LowerNet Income For Quarter

Kaiser Permanentes hospitals andhealth plans reported a 35% dropin net income for the secondquarter ending June 30, although

its year-to-date profit is about thesame as it was in 2009.

The Oakland-based and not-for-profit Kaiser reported netincome of $404 million for thequarter, down from $620 million ayear ago. Year-to-date net income isapproximately $1.1 billionconsistent with the same period in2009, according to a preparedstatement.

Revenue for the first sixmonths of 2010 was $22 billion, up4.1% from the $21.1 billionreported during the first half od2009.

Despite the dip in net income,

Kaiser reported spending $576million on capital expenditures, up3.1% for the year-ago quarter.

Through our financialperformance we are able to supportour capital expenditures as well asour ongoing efforts to deliver high-quality, affordable healthcare, saidKaiser Chief Financial Officer KathyLancaster.

Kaiser does not report thefinancial results for its Permanentemedical groups, which are for-profitoperations.

.

Tougher RescissionRules To Go Into Effect

New regulations championed byCalifornia Insurance CommissionerSteve Poizner that tighten the ability ofinsurers to rescind individual healthinsurance policies go into effect onAug. 18.

Districts (Continued from Page One)

Continued on Page 3

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L.A. Care Grants $529K For Health ITFive Community Clinics in Region Receive Funding

L.A. Care Health Plan has granted $529,000to ve Los Angeles-area clinics to help theminstall electronic medical record (EMRsystems).

The grants, which ranged from $99,000to $115,000, went to Asian Pacic HealthCare Venture; St. Johns Well Child andFamily Center; the Venice Family Clinic andthe Family Health Care Centers, all in LosAngeles. The fth recipient was NortheastValley Health Corp. in the city of SanFernando. All treat primarily low-incomeuninsured and Medi-Cal patients.

The grants are enough to outt theclinics with full EMR systems, according toRoland Palencia, L.A. Cares director ofcommunity benets. Installation is expectedto be completed within two years.

A total of 45 clinics throughout Los

Angeles County were approached to submitgrant applications, L.A. Care ofcials said.Twenty-ve initially participated inconferences about the grant process, butonly 12 submitted formal applications.

Some had already received (EMR)grants, and others felt they were not yetready to go through the process, Palenciasaid.

The recipients may receive technicalassistance from L.A. Care in installing thesystems.

The grants were intended to close thegap between federal stimulus funding toclinics for purchasing EMR systems, and theactual cost for installation.

To date, L.A. Care has given 27 health ITgrants totaling about $3.8 million.


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NEWS

In Brief

The regulations streamline andclarify insurance applications; requireinsurance agents to disclose whetherthey helped a policyholder apply forcoverage. They also impose a 15-daytime limit on opening an investigationonce an insurer receives informationthat suggests contradictory

information on an insuredsapplication.

Keeping your health insurance canliterally be a matter of life and death,and I have zero tolerance for insurerswho use pretexts to illegally rescindpolicies," Poizner said. These toughregulations embody my commitmentto enforce the law and to protectconsumers who buy medicallyunderwritten insurance coverage.

Health Net Pledges$7M To Keep SJV

Clinics Open

Woodland Hills-based insurerHealth Net and its charitablefoundation have pledged $7million in interest-free loans tokeep community health clinics inthe San Joaquin Valley afloatduring the current state budgetimpasse. The loans will beavailable should the state haltMedi-Cal and other payments tothe clinics.

Health clinics are the mainsource of primary and specialist

care for millions of Californians,said Dave Meadows, vice presidentof State Health Programs for HealthNet of California. Clinicshutdowns could have terriblehealth implications for residents.

The loan offers would markthe fourth year in a row Health Netand the Health Net Foundationhave extended such aid tocommunity clinics.

Long Beach-based Medicaid managed careinsurer Molina Healthcare reported a 27.4%decline in net income for the second quarterending June 30, impacted in part by rate cutsimposed the state of Michigan. However,company ofcials say the plan is well-positioned for the long-term.

Net income for the quarter was $10.6million, compared to $14.6 million for thesecond quarter of 2009. Revenue was $999.3million, up 7.2% from the year-ago quarters$927.6 million.

Revenue for the rst six months of 2010was $1.97 billion, up 9.7% from $1.78billion for the rst half of 2009.

Our second quarter results reectimprovement across our business despite avery difcult premium rate environment,said Molina Chief Executive Ofcer J. MarioMolina, M.D. Although a few states haveprovided rate increases, most states remain

burdened by their budget shortfalls.Michigan, for example, cut premiums by

$5.5 million, retroactive to October 2009. Thtotal rate cuts for the rst six months of theyear was $8.7 million, Molina reported.

Molinas medical cost ratio, underpressure in recent quarters due to high rates opatients who contracted the H1N1 swine u,declined to 86%, compared to 86.8% duringthe second quarter of 2009. The year-to-dateratio is 85.9%, down from 86.4% for the rsthalf of 2009.

Overall plan membership was up 8.7%,to just under 1.5 million, compared to 1.4million a year ago.

In addition to its nancial results, Molinaannounced a public offering of 4 millionshares of stock at $27 a share. The paid-incapital from the stock offering will be used toreduce Molinas revolving credit debt.

Stanford Hospitals and Clinics performscores of kidney and pancreatic transplantson its Palo Alto campus. However, residentsof the Monterey Peninsula region have had tocommute hours each way to receive crucialpre-operative and post-operative care.

Such treks which can be particularlydebilitating to patients with chronic illnessesor recovering from major surgery will endas part of a new pact with Salinas ValleyMemorial Healthcare System.

Although transplants will continue totake place on the Stanford campus, Stanfordphysicians will be provided ofce space on

the Salinas Valley campus in Salinas. Startingat the end of this month, they will use thathospitals facilities to provide the extensivepreparatory and post-operative care to thetransplant patients.

Ofcials with both hospitals say nothaving to travel the approximately 150-mileround trip between Salinas and Palo Altocould improve outcomes. Patients whoqualify for organ transplants have to undergoa battery of pre-operative tests to qualify forthe transplant waiting list, and years of

ongoing monitoring after a transplant isperformed.

(This) will provide patients greaterconvenience in terms of location to non-surgical transplant care, said Eric Williams,Stanfords administrative director of its solidorgan transplant service line. Williamsestimates about 40 to 50 patients in the regiowill use the services at Salinas Valley everyyear.

Although Stanford is underwriting the coof providing care at Salinas Valley includingthe rental of ofce space Williams did notdisclose the annual budget for the program.

The deal between Salinas Valley andStanford is part of an ongoing agreementbetween the two hospitals, the former a 269-bed community hospital in a fast-growing butstill rural community, and the other a 630-bedworld-class teaching and research facility. In2008, Stanford began providing cardiacsurgical care on the Salinas Valley campus,and later began providing on-site neonatalintensive care in conjunction with its pediatrifacility, Lucille Packard Children's Hospital.

Earnings Down At Molina HealthcareRevenue is up, But YTD Numbers Are Similar to 2009

Stanford, SVMHS In Transplant DealSalinas-Area Patients Will Receive Local Care


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Payers & Providers Page

The healthcare industry is abuzz about thefinal regulations released by theDepartment of Health and HumanServices on July 13th that define theMeaningful Use of Electronic HealthRecords (EHR).

The final Meaningful Userules incorporate changesdesigned to make therequirements moreachievable. Although theguidelines are 800-pluspages, the principles

contained in them are notthat complicated; theypromote 10 key changes inhow health care providersdeliver care.

Most of us would agreethat these changes aresensible and needed andthat the federalgovernment is movingmedical practice in the rightdirection. For example, givingpatients their own clinicalinformation will help them become

real partners in their care.!Sharingclinical information, such as lab results

and prescribed medications, with otherhealth care providers will improve carecoordination and reduce wastefulduplication.

The real controversy is about how fastthese objectives can and should beachieved and whether existing systemscan support them. An April 2010 HealthAffairs study found that many of theMeaningful Use rules align with howphysicians are already using basic EHRsystems. This suggests that Meaningful Use

is achievable with existing technology.Providers at Kaiser Permanente aredemonstrating that the technology isusable, and their early studies are showingthat they support better care.

The final Meaningful Use rulesincorporate changes designed to make therequirements more achievable. For Stage1, which begins in 2011, the rules call onphysicians and other eligible professionalsto meet 15 objectives to qualify asMeaningful Users of EHRs. The rulesinclude a core group of 10 required

objectives and a menu set of 15 objectiamong which providers can choose. This track approach ensures that the basicelements of meaningful EHR use will be mby all providers qualifying for federalincentive payments, while allowing flexib

to accommodate differenneeds and capabilities.The elegance of MeaninUse is that its about mothan health informationtechnology; its abouttransforming health care

delivery.!

The biggestchallenge is not thecapability of the technobut the capacity of peopto change. Meaningful Ucalls on providers tosignificantly change howthey deliver care. And wall know that change ma

most people anxious. Yes,will be hard work, and it will beuncomfortable at times. But, puttingoff to some future date is not sensibgiven the urgency of the challenges

facing our health care system. Its wwe need to expeditiously move forward inorder to create health care that is efficienaffordable and high quality. !

To help health care providers implemthe changes promoted by Meaningful Usefederal government is establishing regionextension centers covering the entire couThese centers will provide onsite assistanproviders to help them purchase, implemand meaningfully use electronic health resystems to provide better care. For a regioextension center in your area, visit: http:/healthit.hhs.gov/portal/server.pt/communi

healthit_hhs_gov__rec_program/1495.

OPINION

Finding Meaning In Meaningful UseAlthough Lengthy, Regs Pave Clear Path For EHRs

By

Elaine

Batchlor,

M.D.

Elaine Batchlor is the chief medical officer o

L.A. Care Health Plan. She is a member of t

Payers & Providers Editorial Board.

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