Hillsdale Hospital News

Minisode: Payment Reform: The Time is Now

After an illuminating conversation last week with Harold Miller, CEO Center for Healthcare Quality and Payment Reform, we talk this week about our thoughts and reactions to the interview. We also discuss ways that rural hospitals can come together to help sway both public opinion and public policy regarding sufficient payment and reimbursement.


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Audio Engineering & Original Music by Kenji Ulmer




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Rachel: So, this goes in the outtakes or somewhere that our taxi driver in Washington, DC. Thought that you I was so, Tressa, your wife, our former chief nursing officer, our taxi driver was like, oh, is she your daughter? Referring to me, which I thought was hilarious and amazing. Yeah, because you all are way too young to be my parents.

JJ: However, Tressa is doing the math. It’s possible. I’m like, she’s 32. 32. You would have been.

Rachel: I don’t think you can actually ask kids when you’re four.

JJ: No, I said no.

Rachel: Yeah, but she doesn’t look a day over 36.

JJ: Yeah, exactly.

Rachel: I don’t know what he was thinking, but I appreciated the compliment, but then I immediately felt bad for my parents who’d just been insulted by the tax advisor.

JJ: Exactly.

Rachel: Oh, my gosh. Okay, so here we go. For real, though, we should start this little minisode. All right. Hello and welcome to another minisode. Today we are talking about last week’s episode, so it’s a little bit of Rural Health Rising, inception, if you will, because we really have been thinking a lot about the conversation that we had with Harold Miller last week, and we wanted to discuss some of that today on a minisode. So, I’m Rachel Lott.

JJ: And I’m JJ Hodshire.

Rachel: And this is Rural Health rising. So, JJ. I was, I will say, illuminated and invigorated by last week’s episode in our conversation with Harold Miller from the center for healthcare quality and payment reform, for a couple of reasons, but before I get into some of those, what was your initial kind of reaction and feeling after we had that episode with him, after we had that conversation?

JJ: Well, I’m just going to tell you, the word that came to my mind was validated, because everything that we have been talking about on this podcast and advocating for in Lansing and Washington really was validated by third party independent. It wasn’t a CEO of a rural hospital, because oftentimes that’s what we have to talk about, but it was someone who has looked into the industry from a different perspective. And the word that I just use is that he has, in the stroke of his articulate write up and that he spoke to us. He validated everything that we’ve been attempting to accomplish in our conversations over the course of the last few years, including conversations with congressional leaders, state leaders, policymakers, and RHA, you name it. It all leads back to this road. And what’s remarkable is that a lot of the and I don’t want please understand this is not an insult by any measure, but a lot of the principles he talked about where, if you just analyze them, they’re common sense. It’s not like he’s proposing a total transformation of the healthcare industry. He’s talking about very simple concepts. But the underlying is that you’ve got to understand what’s going on in rural America. And I think having set that stage and then having him validate it. To me, that was great. I mean, there was an understanding of, all right, so we have this problem. The other issue was, all right, there’s some solutions, right?

Rachel: And what I think for me you call it validation and I call it validation and also almost like a realization. To me it was almost like an AHA moment of all of these things that we’ve always been talking about and everything kind of coming together in one point because what he really emphasized that I had not really again, it’s common sense, but it’s not what I had been focused on or had in the forefront of my mind. When I’m thinking about the financial sustainability of rural hospitals, even though we know it’s the root cause, which is what are we getting paid for patient care services? That is our core competency as we take care of patients, we provide health care to our patients, and there are a lot of other things that we do and benefits that we have to our community outside of that. But that is our core competency, right? And so, if we’re not getting paid what it costs us to provide our core competency every time that we’ve talked about, like, well, we have to get creative in rural healthcare, we have to think outside the box, we have to do things differently. We have to come up with fee for service type of offerings that we can provide to our community, or where can we get grant money to start programs that we didn’t already have and things like that. Those are good things. However, we shouldn’t have to do that.

JJ: Rachel, to be able to stay open. You’re right. You’re absolutely right.

Rachel: And that’s what I had never really, I mean, obviously that’s underlying the entire conversation about, well, we have to get creative, we have to do things differently. But the thought of getting creative and trying to find a way to make ourselves sustainable when the design of the way rural healthcare functions is not set up to be sustainable, that really cannot get lost in the conversation. It’s like the difference between what can we do right now, right in front of us? What’s our next best step to survive? Versus how do we fix the real problem? How do we get to the root of the issue? And the way Harold and the data he put together is presented, it’s like, oh yeah, we got to make sure we don’t take our eye off the ball.

JJ: Is the eye off the ball or.

Rachel: Eye of the prize?

JJ: Both.

Rachel: Okay, well, we need to make sure we don’t take our eye off the ball or the prize, because that’s the real, true big issue. And we do spend a lot of time looking at all these other things because we have more control over them in the near term. But in the long term, it’s like we have to fix that problem of we’re not getting paid even at 100% of the cost of what the care we provide. And by and large, as a whole.

JJ: In real health care, well, Rachel, consider this. Let’s take a grocery store, all right? What other industry in America can purchase a product from the supplier and sell it for a lower price than they.

Rachel: Purchased in what you paid for it? Yeah.

JJ: No one can that is not a sustainable model. And so we are, we are getting purchased services from CMS, from the government, and we are selling those services right at a lower reimbursement that we get for that product. Now, for what it cost.

Rachel: I mean, we’re our, our cost reports are based on what? 2016?

JJ: 2016. So, consider this to factor in the cost of doing business with rising nurse wages, supply chain cost, you name it. It has highlighted in the last year that this system is broken because we cannot afford to provide health care in rural communities, because we are not getting reimbursed at a level that can cover the cost now in our personal lives. We know that at some point you’re going to have to file bankruptcy as a household if you continue to do that.

Rachel: Exactly.

JJ: Or you have to cut expenses by giving up maybe your second car, or you have to not go out to eat and those things, or go get another job. Or you go get another job. So isn’t it a shame that across America, you and I are sitting down talking about fundraisers for the hospital, right, fundraisers to raise money to provide baseline services for our patients in this community because the government, the payers don’t reimburse us enough to cover the cost of doing business and providing that health care. So, we’re talking about it’s not as ridiculous as a car wash, but it’s similar. Our skilled nursing facility has a bake sale to help fund, to help fund.

Rachel: Activities and fund things for our residents.

JJ: Absolutely. We have our auxiliary that has to have three or four auctions and or fundraiser, fundraiser every year to be able to support the operations of this hospital so we can buy equipment and in what other industry? The grocery store, the factory is having bake sales and is having fundraisers to support the baseline operation. They would just simply close. We know we cannot simply close. If we close, the loss of services in our community equals poor health care outcomes up to and including death. That’s what happens when hospitals rule. Hospitals close. So, knowing currently that it costs more to provide the service and we’re reimbursed, we know the model has to change.

Rachel: Right.

JJ: Now, someone may say, Rachel, well, how do the big cities do it? There’s hospitals in big cities in Indiana and other places that have money on Wall Street, and they have lots of money, right.

Rachel: Billions on Wall Street. Nonprofit health systems that have billions of dollars on Wall Street. That’s another and minis another episode b.

JJ: With a billion, right? Like billion, right?

Rachel: Waterfalls at one point more than the state of Indiana had in surplus.

JJ: No, but they have waterfalls in there. Okay, that’s great. But look at it. Their payer mix is much different than rural America. Rural America is primarily comprised of the working poor, the indigent, and the elderly. And what we find is, in cases like Hillsdale, 70% of our payer mix, those people that pay for our services are government payers, Medicaid and Medicare. Commercial insurance is not even on the double-digit list, okay? And here we find ourselves in much different position than the big systems find themselves because we are serving that population that historically is underinsured because they do not have a healthcare product for which we get reimbursed to cover the cost. So, for example, in many modalities, when a Medicaid patient comes through my doors, it is a loss for the organization. So how do you make that up, Rachel? If the percentage was small, and if you’re talking about a 5% population of Medicaid like some larger communities have, that have a great commercial insurance, you can absorb that cost. But when it was your primary provider and payer, you have to find money somewhere else. So, the presentation that we received was the concept of this is why it needs to change. No other business, no other industry, no other service can provide a service to the customer that is less than they’re paying and purchasing the product for. But we do. And at some point, it has to end.

Rachel: Yeah. And the point that I like, the analogy that Harold used of the fire department is not being paid based on how many fires they put out. They’re paid to be there so that they’re available, trained, ready to go when the fire starts.

JJ: Absolutely.

Rachel: And with healthcare, we’re not in that position, especially in rural. And I think we really need to have Harold back on if he’s willing to talk about more about the patient centered payment model that he’s proposed and what all goes into that. But it is designed to fix that problem. But I think that is a good analogy. A lot of times, and you’ve heard me say this before, and people who listen to the show have heard me say this before. The fact that we expect healthcare hospitals in particular, to operate under free market economics when we actually don’t live in a free market for healthcare, because we are told by the government, literally, the opposite of the definition of free market economics is that the government tells you what you can and cannot get paid.

JJ: Right.

Rachel: So, the fact that we expect hospitals to be told what they get paid, particularly rural hospitals to be told what they get paid by the government and are somehow shocked that, oh, my gosh, all these rural hospitals have closed. Of course, they have.

JJ: Yes.

Rachel: Why are we surprised by that? We shouldn’t be surprised by that. And as a country, we should be more concerned with that. But is it not morally wrong for our government and for private payers? Because the other thing we learned from Harold that I had never considered, just thinking about Hillsdale and even the other hospital that I’ve worked at, Harold shared with us that a lot of the rural hospitals in this country that struggle, the private payers are their problem. It’s not Medicare and Medicaid for us, Medicare and Medicaid are the biggest problem.

JJ: Because they’re the biggest chunk of our patients.

Rachel: But some of these hospitals, even smaller than us, what they’re getting paid by the private payers is absolutely morally wrong. It is not covering up to their cost. And so, no wonder we’re seeing closure after closure after closure. And for big hospital systems, that’s not necessarily a bad thing because for them that means consolidation, which means better covered lives in terms of their numbers, which means more negotiation. Which is also why which, again, I never really fully thought this thought through, but as soon as Harold said it, I was like, well, of course the big health systems are making more for the services they provide than we are from the private pay.

JJ: Absolutely.

Rachel: So, they might pay this is completely made-up number, obviously, but for a blood draw, they might pay us $15 and they pay some big health system $20. So now we’re adding insult to injury. And the other thing that we maybe have not talked about yet on this show is that while hospitals, including the big systems right now, are struggling financially, historic financial challenges in healthcare, the private payers, the insurance companies are booking record profits.

JJ: Have you opened up picture of Becker’s report?

Rachel: Right.

JJ: To see who some of the richest leaders on the board yeah, they’re wealthiest.

Rachel: CEOs and health care list or whatever. I think you have to get down to like 75 or something before you get to someone who actually is involved.

JJ: In healthcare system, in delivery services.

Rachel: Now, some of them are tech companies and pharma companies and whatever that are in a totally different ballgame and situation, but it’s totally sick that a lot of those in the top 1020, they’re insurance companies.

JJ: Absolutely. And so, let’s consider a few things from what you said. Number one, someone says to me, will you just tell the commercial insurance company in this particular case here, tell me what I need to tell Blue Cross Blue Shield that they’re going to pay me? And I said to this person, really, have you ever been involved in a negotiation ever in your life?

Rachel: Right?

JJ: Because you don’t go in with that.

Rachel: Kind of this is not Harold we’re talking about, by the way. Yeah, it’s another conversation because Harold did suggest we need to start talking about it publicly.

JJ: Rural hospitals, I had someone who told me that I should go and demand from the insurance company, that they pay us more and that we’re not going to accept it. Now I have no bargaining authority, right? But Rachel, what if, what if the rural hospitals in America got together and said much like bargaining units and unions work, there’s strength in numbers. It may not be Hillsdale numbers and it may not be even Michigan numbers, but there’s strength in rural America, in the rural hospitals who all have a division of that product. What if, just what if these hospitals were to assemble together state by state on a national basis and have a conversation about what could we do differently to position ourselves? So, a greater conversation with the community, a greater conversation with stakeholders, a greater conversation with fellow CEOs of hospitals. Historically, big systems have not ever found themselves in the position that we’re in today, right now. Ironically, they’re elevating themselves now because they’re having significant financial losses and are scratching their head. Welcome to our club. When an economy is headed in the direction of potential downfall and people lose their jobs and they get on Medicaid.

Rachel: They lose their insurance, they lose their.

JJ: Insurance, they get a state payer, then the big system starts scratching their head because now they’re no longer talking about a four or percent five. Now it’s becoming a significant millstone for them, right? And so now they’re elevating the conversation. But what if just what if the bargaining authority for primary when we look at let’s just talk about commercial insurance. What if the rural hospitals came together? What are your thoughts on that, Rachel?

Rachel: Well, I think we take it one step further. Instead of a what if. I am proposing, and I’ve already proposed to you that we work on an effort to come up with some level of letter or commitment or message to the world, including private payers and the federal government, that we get every single rural hospital in the United States of America to sign their name, to them say yes. This is not acceptable. Because absolutely, for one, I think from a PR perspective, we have to get attention around the issue. This can’t be back channeling, closed door conversations. This has to be very public to say what’s happening is morally wrong. What is produced by rural America so that the rest of America can function? Right? Think of agriculture. Rural America feeds the rest of America, yet we are not willing to pay them what it costs for their hospitals to provide them health care. It’s ridiculous.

JJ: Absolutely.

Rachel: What I would like to do is to put together and it would be great to work with a couple or several, however many different rural hospitals to try to craft a message and some letter or something that we can all sign on to individually, not just as because we have our associations, which, as you all know, we love our associations. They’re amazing. Michigan Hospital Association, Michigan center for Rural Health and National Rural Health Association.

JJ: Amazing.

Rachel: We love them. We also know that there is another element of comprehension and understanding and sense of urgency that our lawmakers get when they hear from us directly as boots on the ground. And that’s part of why we started this podcast in particular, was because while our associations are doing an excellent job carrying our message and carrying our interests forward, there’s also a need for that message to come from the perspective of a rural hospital. So, I would like for anyone who is listening to this that is part of a rural hospital, and if you want to be involved in trying to come up with a way that we can all band together as hospitals as rural hospitals, not just as an association, but as, like every single one of us put our check, Mark. We put our John Hancock to this right. Like the Constitution, to say, this is not okay. We are going to pursue a solution and you’re going to be a part of the solution. And if you don’t want to be a part of the solution, we’re going to keep talking about it.

JJ: Yeah, we have to.

Rachel: So, I would say if you’re part of a rural hospital and you’re listening to this and you want to be involved in that effort, in that process.

JJ: We’re going to do it.

Rachel: Yeah. Please reach out to us. You can email me at our lot@hillsdalehospital.com because I would love to get some folks together who are passionate about this and want to help lead the way. Because it’s not like I’m going to get on the phone and call all I mean, I will if I have to call all 1600 rural hospitals in the United States, but if we’ve can kind of get a task force together to get this message moving forward agree. I think this is the focus on we are getting paid less than what it costs us to provide patient care. That is the zeroing in on what is the most important, crystal-clear message that we can get across. And that and thank you to Harold for putting this forward in the way that he did because it has made it so much easier for us to narrow our focus when it comes to advocating for rural hospitals to get to the root of the problem. Not all these side programs and grants, we love all of those things, too. But we can’t be expected to beg, borrow and steal. So that farmers have health care. So that the elderly who live out in the country where they were born and raised and lived their entire life have health care where young people who are trying to reinvigorate the rural communities they live in and small business owners are not able to get the health care they need.

JJ: Or Rachel. Consider this. We serve a community here where we have the Amish population who do not have vehicles, right? We have to care for every human life in this community, in our catchment of services, in the service area that we have. When you talk about a moral dilemma, this is why it’s a moral dilemma. We have individuals in our community that cannot physically travel because of the condition or they lack the wherewithal to own a vehicle to travel.

Rachel: Right?

JJ: It is a moral crisis in rural America right now that we’re experiencing, and we must do something. So, I absolutely agree with you. If there is a CEO listening, a COO, I don’t care what your level is, C suite, whatever it is, and you’re listening to this podcast, I charge you that we have to join forces together. It is our only last-ditch effort to save our community hospitals. Scott Becker has been on this program; others have been on this program. We’ve had the originator of the original study that talked about hospital closures that we’re talking about in that conversation. And the reality of it is hospitals will continue to close unless we find a viable solution. When those hospitals close in those respective communities, healthcare is gone forever. It never returns. We know that hospitals don’t reinvigorate. They turn to nasty areas of the community, typically where they’re tearing the hospital down ten years later, or they’re turned into homeless shelters or drug places or parking lot across America. They don’t reinvigorate, they do not come back. And so, when you lose it, it is gone forever. There is no temporary suspension of it. And so, we are fighting to sustain health care like we have never thought before. We are begging, borrowing and pleading with our community to have fundraisers. And it’s most inappropriate. And we must lean on those individuals who are responsible for the lack of proper payment to sustain this health care model. They need to be held accountable. And I know that’s not pretty, especially as I go into negotiations with healthcare payers right now, that it’s hard to hear that, but it’s hard to watch executive pay climbing double digits while poor Americans in rural communities are lacking health care services in their hospitals are at risk of closing. It’s unacceptable.

Rachel: And with that, I will once again reiterate. If you want to be involved in some sort of task force that we can put together to drive this conversation, reach out to me directly. My email is r Lott, as in Rachel Lott@hillsdalehospital.com, the time is now. Thank you for joining us for today’s minisode. If you have a topic or issue you want us to cover on a future minisode, shoot us an email at marketing@hillsdalehospital.com. You can also find Hillsdale Hospital on Facebook and Instagram.

JJ: And with that, don’t forget to subscribe wherever you get your podcast. And if you like what you hear, leave us a five-star review on Apple podcast and tell others why they should listen to your feedback helps more listeners find rule health rising. You can also find us now on Twitter, I’m at HillsdaleCEOJJ Rachel’s at RuralHealthRach, and you can also follow our podcast at rural health pod. Until next time, stay safe, stay healthy and stay strong.

Rachel: Rural Health Rising is a production of Hillsdale Hospital and Hill, Michigan and a proud member of the Health Podcast Network, hosted by JJ Hodshire and Rachel Lott. Audio, engineering and original music by Kenji Olmer. For more episodes, interviews and more information, visit rural healthrising.com.