South Florida Hospital News
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February 2007 - Volume 3 - Issue 8

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South Florida Hospital CEOs Anticipate Many Challenges in 2007

Ask the chief executive officers at many south Florida hospitals what challenges they expect to deal with throughout this year, and you'll get a range of similar answers.

Reimbursements, malpractice insurance, caring for the uninsured, physician issues and the need for sovereign immunity in private hospitals were among the topics raised when several hospital presidents recently spoke with South Florida Hospital News.

Many of the challenges discussed, it would appear, have no easy solution. In fact, although it's a brand new year, most of the concerns discussed were also concerns last year. Although there might not currently be a light at the end of the tunnel where many of the issues are concerned, the good news is that hospital administrators, members of the medical community, government officials and others are diligently working to find solutions for the long term.

"The environment for hospitals today is very challenging," says Alan Levine, president and CEO of North Broward Hospital District. "Really, looking forward toward 2007 and beyond, the problems in our healthcare system generally manifest themselves in several ways, all of which have an enormous impact on the financial stability and health of our hospitals."

The first challenge Levine mentioned was shortages in manpower. "Ten years ago, the average age of a nurse was 35," he notes. "Today, it's closer to 46. This means that younger people are still not entering the nursing profession at a pace high enough to meet the demand. Given the increasingly aging population and the chronicity of the south Florida population, these trends are very concerning. "

Although nursing shortages have been a major concern for the past several years, who would have anticipated a shortage of physicians? Yet, here it is. "Twenty-five percent of physicians now practicing in Florida are over the age of 65," says Levine. "And 18 percent are between 55 and 65. So, nearly half our doctors in Florida are at, or near, retirement age. Almost all the doctors over 55 have already limited their practices and do not cover emergency room call. Thus hospitals now find themselves having to pay enormous fees to the doctors who are willing to cover call--and, we're not reimbursed these costs."

Once source of the problem, according to Levine, is the state of medical school enrollment in Florida. "It's been flat for the last decade," he says. "So, while the population has exploded, there are not going to be enough physicians produced by our educational system to meet the demand." He notes that the state has added two additional medical schools, which will soon begin training additional medical students. "However," he adds, "the problem is that most new physicians practice near where they did their residencies. It really does our state no good to train new medical students, only to have them leave the state and do their residencies in other states. There are not enough residency spots in Florida's hospitals for training these medical school graduates, which would help keep them in Florida. Also, it's difficult to recruit new doctors to south Florida now, particularly because of the medical malpractice climate and the two constitutional amendments that passed." One of the amendments makes peer review public, and the other provides a 'three strikes, you're out' provision in the Florida constitution. What all this amounts to, says Levine, is that Florida is not seen as physician-friendly a state as it used to be.

Then, there are insurance issues, including ever-increasing pressure from HMOs. "As we all saw with United Health's contract dispute with HCA, the environment with the HMOs and the hospitals is somewhat strained," says Levine. "At a time when the cost of providing care continues to escalate, the HMOs strive to minimize the reimbursement to hospitals and doctors. This is being somewhat driven by the frustration faced by employers who are tired of seeing the cost of health care increase at unsustainable rates. And this, in turn, is being driven by the increasing number of people who are uninsured."

That number continues to grow, says Levine. He notes that the uninsured rate in Florida has swelled to more than 20 percent, and to a slightly higher number in south Florida. "But," he says, "when someone comes into a hospital ER, they get treated, regardless of whether they can pay the bill. There comes a point where hospitals cannot continue absorbing this cost. I don't know what that threshold is, but it's certainly there."

Levine says the uninsured people are largely between the ages of 18 and 40, work for employers with less than 50 employees and earn below 250 percent of the Federal poverty level. "Knowing this is the case," he says, "strategies must be developed at the national level to target this population. I'd be concerned if Florida tried to address this problem without Federal involvement, since I don't think states can afford to solve this problem by themselves. It's too big a problem."

Finally, Levine points to Medicaid as a nagging issue. "We need to face the fact that Florida's Medicaid program for the poor, elderly and disabled is growing at a rate that cannot be sustained. When Governor Bush took office, the Medicaid budget was $7 billion. Today, it's more than $17 billion." He says that, although much of the growth in the state budget has gone toward funding the growth in Medicaid, everyone agrees that this is a problem that must be addressed. "The state did that with Medicaid Reform," he says. "The challenge for hospitals is that Medicaid already pays below cost--and the same is true with Medicare. Given these reimbursement pressures, hospitals are facing enormous pressure to focus on our cost structure and to push cost out of the system. That is always a challenge when you are running an institution charged with the mission of caring for people. You want to be efficient, but you also don't want to cut corners."

Generally, Levine perceives these issues as the biggest in the short term. "But I believe they will have long-term consequences," he adds. "However, the good news is that, despite these challenges, South Florida has some of the best hospitals in America, and we are truly blessed to have great doctors and employees. We do need our state leaders to be engaged in solving these problems, and we have all the faith that Governor Crist and his leadership team understand these issues, and will work to make progress on them." At St. Mary's Medical Center in West Palm Beach, CEO Davide Carbone anticipates addressing several areas of concern this year, beginning with malpractice insurance. "That's something that needs to be resolved," he says emphatically. "It would make it easier to recruit doctors to Florida.

One of the things he is most passionate about is finding a way to get St. Mary's emergency department covered by sovereign immunity. This law, which protects emergency physicians from lawsuits while working in a hospital trauma center, limits the amount of damages a plaintiff can recover. The problem, though, is that sovereign immunity is most often identified with government employees and agencies.

"We need sovereign immunity," says Carbone. "If we had it in place, it would encourage physician coverage in the emergency department. Carbone says it's very costly to staff St. Mary's emergency department. "Currently," he says, "prospective staff specialists have three areas of concern when they are approached regarding ED call: how will the malpractice costs be handled, who's going to pay me and how will being on call 24/7 affect my lifestyle?"

In addition to physician staffing, Carbone anticipates another long year of dealing with how to care for uninsured patients. "Other states--for example, Massachusetts and California--now have legislation mandating insurance coverage for all citizens," he says. "I would urge the state legislature to examine how they're doing it. In Florida, we would be limited in the amount of coverage that could be provided since there are so many people who can't pay, are undocumented or covered by Medicare."

Carbone calls attention to a program that's now in place at St. Mary's--the Regional Perinatal Intensive Care Center, or RPICC, which treats the highest risk babies and their mothers. "The center covers a huge geographic area," he says, "so we treat about 1,000 women a year."

In the RPICC, care is provided for babies while in the prenatal state. "This helps ensure a birthing experience that's as safe as possible," he says. "Also, a physician and a midwife are on duty at the center around the clock, seven days a week." He adds that St. Mary's is the third busiest of the 12 RPICCs across south Florida, and was just awarded an "A" rating by the state.

"On the other hand," he says,"while the RPICC addresses serious medical needs for its patients, it's a major drain on hospital finances and resources. It's totally paid for by the hospital, with no state or county funds. We provide millions of dollars in care and receive reimbursement that's only in the thousands."

He adds that, because these are high-risk situations, this type of center can be problematic from a legal perspective. "A problem can occur that's unrelated to the birth itself, and the hospital could be considered liable--even if no liability exists. The center is staffed by a 22-man obstetrics group, and they're totally exposed" Another good case, he believes, for sovereign immunity. "Otherwise, how can a program like this survive?"

Aurelio M. Fernandez, CEO of Florida Medical Center in Lauderdale Lakes, succinctly sums up the major issues he anticipates facing this year. "South Florida continues to be challenged by the malpractice crisis, nursing shortage and uninsured patients," he says. "After being subjected to four major hurricanes in 2004 and 2005, and with the cost of living increasing--for example, property taxes and insurance that are disproportionate to other parts of the country, many healthcare professionals have left the area. Although these challenges will impact all providers, the ability to focus on outcomes and improve technologies should create competitive advantages for comparison by the educated consumer."

He continues, "Those hospitals that are successful in achieving measurable excellence in their patient care system will reap the benefits of favorable arrangements with third party payors and patient referrals. The inability to deliver quality medicine will ultimately result in hospitals experiencing adverse results."

Alan Levine may be contacted at alevine@nbhd.org; Davide Carbone, at davide.carbone@tenethealth.com and Aurelio Fernandez, at aurelio.fernandez@tenethealth.com.
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