Archive for February, 2009

Under the Magnifying Glass

February 27th, 2009

Hospitals and health professionals rate as some of the most highly scrutinized organizations and businesses in the United States. Hospitals and physician’s offices, durable medical equipment companies, and home health agencies are under the magnifying glass of federal, state, and local government inspectors.

Some would say that this is with good reason as we scrutinize the numbers behind the analysis. As annual health care costs continue to ascend toward a projected $2.4 trillion (16.6% of the GDP*) and with health coverage a major political issue this year, the potential of a $72 – $240 billion annual loss (3% – 10%** of the total health care outlay) to health care fraud and abuse and mistakes, remains a major issue for private citizens, corporations and government agencies.

In order to put this in perspective, the overall numbers at play relative to the $2.4 trillion healthcare budget are significant. The monies estimated to be consumed inappropriately reach a staggering $236 – $787 loss per capita, or enough money to insure up to 30.5 million Americans, or 65% of today’s total uninsured population of 47 million.

The pendulum swings both ways in this scenario, however, as these issues occur on both sides of the provider and healthcare user coin. The Centers for Medicare and Medicaid began RAC audits utilizing Medicare Recovery Audit Contractors (RACs) to recoup $980M from Providers in demonstration projects in California, Florida and New York. To say that this system is fair, equitable, and was well conceived would be an exaggeration because the auditors employed to do these audits are paid a percentage of their findings, and that inherent conflict alone stresses the validity of this arrangement on many levels.

A few specialty healthcare finance based organizations like my new employer, SunStone Consulting, concentrate in preparing hospitals for these inevitable visits by the RAC auditors. When these specialty companies do their work appropriately there is no reason for the RAC auditors to destructively move through the billing and medical records departments of each hospital.

The very essence of the problem is that, no matter what the intent, any time federal dollars are involved, these investigating authorities appear to have already made a determination that the problem or mistake was a purposefully fraudulent act whereas, in fact, it is quite possible that it was an oversight, an honest mistake, or an inappropriate key stroke.  To determine the validity of these situations in which fraud, abuse, and overpayment are suggested, research through organizations such as HealthCare Insight specialize in identifying, preventing, and investigating both provider and patient fraud health care claims.

Companies like this typically provide private and public sector health care claims payors (Health Plans, MCOs, Insurance carriers, TPAs, Medicaid, Medicare, etc.) with a comprehensive suite of clinically validated fraud and abuse surveillance solutions designed to maximize claims administration accuracy and minimize payment waste.

Interestingly, with the bailout bills from both the Bush and the Obama administrations being activated on an ongoing basis, one must stop and ask how much each one of those nearly trillion dollar initiatives will cost to audit, investigate, and qualify. It’s obvious that the hands off theories did not work, and now we will see the pendulum swing back as far as it will to attempt to  over correct the sins of the past.

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A Proactive Approach to Ecology

February 22nd, 2009

The Greening of America is here.

Despite the fact that the Clinton and Bush administrations determined that we would not be legally bound by the Kyoto Agreement, President Obama has a more proactive view on the nation’s environmental policy.

The following is a short list of Obama administration initiatives that will be funded for greener solutions to clean, efficient, American energy: Smart grid, advanced battery technology, energy efficiency:

  • $30 billion for such initiatives as a new, smart power grid, advanced battery technology, and energy efficiency measures, which will create nearly 500,000 jobs.
  • Help state and local governments make investments in innovative best practices to achieve greater energy efficiency and reduce energy usage.

Tax incentives to spur energy savings and green jobs:

  • Provides $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.
  • Provides a tax credit for families that purchase plug-in hybrid vehicles of up to $7,500 to spur the next generation of American cars.
  • Includes clean renewable energy bonds for state and local governments.
  • Establishes a new manufacturing investment tax credit for investment in advanced energy facilities, such as facilities that manufacture components for the production of renewable energy, advanced battery technology, and other innovative next-generation green technologies.

The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change.

The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. The Kyoto Protocol was adopted in Kyoto, Japan, in December 1997 and entered into force in February 2005; 184 parties have ratified its protocol to date.

Although the United States did not ratify the Kyoto Protocol, voluntary efforts were made to reduce GHG emissions here, even as 132 of the nation’s mayors pledged to meet Kyoto-like emission targets in 2005.

In 2003, some U.S. companies and cities agreed to participate in a legally binding voluntary carbon market – the Carbon Credit Exchange.

The CCX, like other cap-and-trade programs, set limits or caps on allowable emissions.

The CCX issued allowances for trading among the members that correspond to the emission cap. CCX members have agreed to reduce their emissions by 6 percent below their baseline for 2007 to 2010.

The publically traded CCX is about a $70 billion business that previously was somewhat limited to power producers and large industries.

A recent article in the New York Times indicated that within the next four or five years, this market is expected to grow to $500 billion as the country begins to work toward green and a cleaner environment.

Currently, the European Union has the largest and most famous carbon trading system.

The European Trading Scheme is a cap-and-trade system in which the government sets national emission caps based on its Kyoto and national targets.

Allowances, totaling the caps, are then distributed to individual firms for trading throughout the EU. If emissions are capped, for example, at 200 million tons a year, there are 200 million allowances distributed to firms for offsetting emissions.

These firms can then use the allowances to offset their own emissions, reduce their emissions and sell the allowances to other parties, or bank the allowances for future use.

If a firm does not have adequate allowances to offset its emissions, the firm must purchase allowances or pay a significant financial penalty.

The cost of allowances, if available, is generally less than the financial penalty. The buying and selling of allowances, trading, creates a market, thus the cap-and-trade program designation.

Due to the financial challenges companies face on an ongoing basis, recent studies have shown that Sector 3 organizations will have the most difficulty dealing with this metamorphosis.

Consequently, schools, churches, hospitals, and local government will be struggling to find the means to make the green transitions such as retrofitting lights, more efficient use of demand meters, voluntary curtailment, and the installation of efficient energy supplies utilizing renewable fuels, i.e. biomass combined heat and power systems.

E-CCAP is one possible solution to this nonprofit problem, an initiative that is funded through two prominent Pittsburgh Foundations led by the Pittsburgh Gateways Corp. and its partner in this project, World-Class Industrial Network.

They are working together to capture opportunities in the developing financial markets associated with energy and carbon reduction and general sustainable practices such as switching to renewable resources or investing in energy efficiency methods.

E-CCAP is working on a set of developmental and applied activities designed to define and demonstrate that nonprofit organizations, serving industrial, commercial and institutional based stakeholders, can leverage relationships with its constituents to both promote and financially share in the benefits of sustainable business activities.

In so doing, the nonprofit organization can better meet its core mission by exploiting new revenue streams not previously available.

E-CCAP is targeting a pilot project with industrial, commercial, and institutional based stakeholders, to aggregate the financial benefits of energy efficiency and renewable energy projects through the emerging markets for energy efficiency credits.

These green credits will be aggregated and traded to support the partnership and serve the participating third sector organization and their constituents.

They will specialize in the development of credit generating projects, have those green savings validated by an independent third party, and broker the credits.

(This blog post is also published as a feature article in the 2/21/09 edition of The Tribune-Democrat.)

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The Marketing Enigma

February 15th, 2009

As the economy continues to present its myriad of challenges nationwide, hospital executives are embracing a variety of cost-cutting measures at a very high rate of implementation. Delays or discontinuation of capital projects, employee layoffs, and a variety of other broad-based measures are currently dominating the healthcare environment.

Departments without direct patient contact are usually perceived to be the easier layers to peel in these expense reduction activities. Areas such as marketing, community, and public relations often become prime targets as they are significantly scaled back or even disbanded.

Historically, hospitals have implemented fluctuating sequences from one extreme to another as they have decreased and increased marketing department sizes and budgets through the various economic cycles. Unmistakably, in challenging economic times, marketing is nearly always more important than ever. Without knowledge concerning the various services available, the patients will not be aware of the nuances of each and how they could impact their health and wellness.

Having said this, however, many hospital executives are not experts in this area, and consequently, they simply move in lockstep with those individuals who see these programs as non-patient expense centers that merely drain the organization of its valuable resources even further.

BusinessDictionary.com aptly describes marketing as the management process through which goods and services move from concept to customer. As a philosophy, it is based on thinking about the business in terms of the customer, or in healthcare, patient needs and their satisfaction. As a practice, it consists of the coordination of four elements:

  • identification, selection, and development of a product
  • determination of its cost
  • selection of a distribution channel to reach the patient, and…
  • development and implementation of a promotional strategy designed to reach these goals

In order to avoid erroneous decisions that could lead to disastrous business consequences for the organization, marketing evaluations might be performed by professional marketing assessment companies specializing in this arena. Some of these firms can provide this service in economically viable risk-reward agreements that do not further complicate the financial challenges being addressed. They specialize in the evaluation of services that detail which marketing functions need to be continued and which functions should be restructured, and/or outsourced. The goal of these marketing evaluation firms is to:

  • help preserve the existing positive effects created by marketing
  • build better marketing practices, and…
  • cut the unnecessary associated costs

In two decades of observing the yo-yo phenomena described above, we have worked with numerous individuals and firms along the way, but none have been more valuable than the firms that specialize specifically in this area of marketing department analysis.

Firms that provide this specific service can be found through the American Association of Healthcare Consultants, The American Marketing Association, and the Society for Professional Marketing Services.

In our work, however, we have found at least one company that has continuously provided the necessary analytic and evaluation components required to complete this sensitive task. Corathers Health Consulting is a unique organization because it utilizes luminaries and unique specialty consultants through a team approach for most of their highly customized projects. What we observed when we worked with Corathers was that their distinguished consultation supplied an unparalleled differentiating factor over the other consulting companies with whom we had previously worked, but they are one of many such firms.

Regardless of the organization chosen, the concept is the key, and that is that you owe it to yourself and to your organization to understand exactly what can or should be eliminated or outsourced before the cuts are irreversibly implemented. The future of your organization may lie directly under that hatchet, and once the decision has been made, reverse is a costly gear to find on a very bumpy road of lost business, missing publicity, and absent advertising. The answer lies in cutting wisely and appropriately as you attempt to keep patients informed and to grow your business.

Linking a patient-Centered Approach to Quality Improvement & HCAPS

Nick Jacobs, FACHE addresses the 2008 Healthcare CEO Summit, co-sponsored by the Picker Institute and Planetree. Chicago, IL USA – Fall, 2008

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How Do You Keep the Music Playing?

February 9th, 2009

When civilizations are evaluated, there are numerous indicators that are used to demonstrate their relevance, their contributions to the world, and their donations to the future. As a young musician, one of my college professors predicted that our culture would begin to decline as a military, economic, and artistic world power. He pointed toward what he described as primary indicators of this decay, and he saw the decline of music in our schools as one of those indicators.

Overall, this professor was more than concerned about the role of public education in the future of our country and once described our form of public education as an experiment that would eventually prove to be ineffective. He saw the effort as a misguided attempt to squeeze all different shapes, sizes, and types of personalities, intellects, and skills into a single classroom, which he called a “melting pot of mediocrity.”

That professor also used to teach us about the writings of Marshall McLuhan from the University of Toronto who indicated that television would change the manner in which we lived our lives. His book The Medium is the Message made us all begin to look at the influence of television on society.

McLuhan described the fact that in visual space we used to think of things as continuous and connected. In either the auditory senses or the sense of touch, there are only resonances. There is no real continuity in our other senses. The fact that we have become the visual wo/man, through television, and that visual orientation has produced a collage that is neither continuous nor connected, has resulted in the reality that even our visual perceptions have lost their continuity.

It is well-known that music nurtures both the right and left sides of the brain, and that those who study music have intellectual opportunities that literally may not exist for those who don’t. The challenge is not just one of music as entertainment, but music as part of our intellectual training. So the question is, as in the James Ingram song lyric, “How do we keep the music playing?”

Young music teacher Nick Jacobs meets musical hero Maynard Ferguson What does this all mean? In 1972, my professor indicated that we were leaning toward a different type of society that would learn, participate, and act in a different way. One of his greatest fears though was that, due to this lack of continuous connection, those who would take charge of our educational systems would not recognize the importance of music as part of education and that music would begin to be downgraded, minimized, and even dropped from public education. Thus reading, writing, arithmetic, and the arts became reading, writing, and test scores.

If we look at the dramatic decline in participation in music education over the past 30 years, he was not far from wrong. The answer to the question of how this has impacted us as a society may not be totally clear for a few decades, but as we look across the overall educational landscape and see these chasms of deprivation from exposure to the arts that already exist, it seems relatively obvious that we have and will pay the price for ignoring those subjective, intellectually stimulating programs that spawn creativity and lead to new and better ways to form our futures.

Remember, from science fiction comes science, from dreams come creations, and from fertile minds come our professional careers. The high-quality drama teacher, vocal instructor, or orchestra director who helped many of us find our way to where we are today is many times not employed anymore, and last week we saw the arts cut once again from the stimulus package. In 1987, I read that more physicians had studied music as a discipline than any other single concentration in both high school and undergraduate work. Will tomorrow’s physicians be nurtured by music, and if not, at what cost to society?

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Like Deep Sea Fishing

February 2nd, 2009

Being a little older or just more chronologically mature makes this new life of consulting somewhat like snorkeling or even deep sea fishing for me. It’s a whole new world out there. If the total culmination of all of my experiences were listed on an 8½” x11″ sheet of paper in order of interest, category, and complexity, it would have to be written in 4 pt. type.

When it comes to prioritizing, cataloging, and quantifying my consulting practice desires, skills, knowledge base or just interests, this gets somewhat crazy at times.

For example: Planetree and the Samueli Institute have both captured my imagination and, I’m sure that over the years, I’ve captured theirs as well. Optimal Healing and Patient Centered Environments are my forte, my passion, and my love.

Do you know all about Web 2.0 …or 3.0, as some are calling it now? I’ve presented all over the United States and been featured on podcasts and webinars for years. How should you use Twitter, YouTube, and other streaming video platforms, Facebook, Blogs, Podcasts, Webinars, and other new technologies to move your business forward, to publicize your specialities, and to get your company’s name out there?

The actual science of microbiology is NOT necessarily one of my passions or deep skill sets, but running a research institute for nearly a dozen years that specialized in proteomics, genomics, biomedical informatics, and histopathology while interacting with the Department of Defense and Military medicine community certainly is a skill base developed through massive amounts of tears, sweat, and blood (my own). This information alone should be something that someone needs to know about on a regular basis.

The world of small and rural hospitals you say? My goodness, name someone who has had more “edgerunning” experience in this area than I have, and I’ll personally send them flowers. The growth, nurturing, care and feeding of a hospital that is smaller than 100 beds takes special stamina and a very positive mental outlook, because limited resources require unlimited creativity.

Economic Development through technology, healthcare, small businesses, and even tourism seems to have been a recurring theme in my world for decades. Jobs, Jobs, Jobs.

How about OC-48 dark fiber, telemedicine, teleradiology, telepharmacy, telecritical care, and teledermatology? Been there, done most of that, and have been working with groups and contacts who can add electronic medical records, disaster recovery/business continuity, data fusion centers, and other areas of specialty to your needs.

Interested in being an all-GE shop? Going completely digital? Having a 3T MRI with a breast coil? How about mobile PET/CT or the latest in mammography, and data repository technology? Okay, I’m not an expert, but I sure do have some interesting knowledge and amazing contacts here, and when it comes to breast care centers, we constructed one of the finest in the world.

Green? Wanna be green? Well, unlike Kermit’s song, it can be easy being green, and one of my current assignments involves everything green for schools, churches, and, most importantly, hospitals. How to get there, how to save, and most importantly, how to MAKE money from going green is currently something that we understand.

The Dean Ornish Coronary Artery Disease Reversal Program that we established is one of the best in the country, and we know how to set them up, run them, and help them prosper.

What about the World Health Organization? Work in the Netherlands, Croatia, Bosnia, Serbia, Montenegro, England, Italy, Greece, and even Africa interests me deeply, and my contact lists from those areas are very long indeed.

Construction? How to afford it? Alternatives to traditional methodologies, traditional financing, and Planetree design? Yep, we have that knowledge base, too.

Of course, there are things that you probably haven’t even considered: Wellness or EQ education, Patient Centered Care models, employee centered care to get you to patient centered care, the use of Markeking to grow your organization and to protect your position, and don’t forget: board relations, strategic planning, employee education, and, of course, nutrition.

Now, add to that this list of skills that SunStone brings to our table as well: the CDM, charge process, Compliance, Documentation Accuracy, Inpatient Coding and Compliance, Outpatient Charge Process Analysis, Outpatient Billing Maintenance, Pharmacy Revenue Cycle, Pricing, Recovery Audit Contractor Readiness, Reimbursement and Financial Analysis, Revenue Cycle, Transfer DRG’s and Workers’ Compensation Recovery.

IF YOU NEED US… Remember:

F. Nicholas Jacobs, FACHE
International Director
SunStone Consulting, LLC
1411 Grandview Avenue,
Suite. 803
Pittsburgh, PA 15211
nickjacobs@sunstoneconsulting.com

Home Office: 412-381-3136
Mobile: 412-992-6197
Fax: 866-381-0219

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