INNOVATIONS IN HEALTHCARE

GLENN E. PEARSON, FACHEGEORGIA HOSPITAL

ASSOCIATIONEXECUTIVE VICE PRESIDENT

MARCH 27, 2014

Update on Georgia’s Hospitals

Outline

About GHAHospitals’ Positive Economic ImpactThe Payment Situation

Medicare Medicaid The Uninsured Supplemental Payments The Need to Shift Costs What’s Coming Under Affordable Care Act

The Impact of the Financial ClimateThe Regulatory ClimateQuality and Patient SafetyHealthcare Personnel SupplyElectronic CommunicationsOpportunities

About GHA

About GHA

Founded in 1929Represents Georgia’s 170 acute-care hospitalsPromotes the health and welfare of Georgia’s

citizens by supporting hospitals in their missions to provide the most cost-effective and highest quality of care possible through: Representation at the Georgia General Assembly and U.S.

Congress Assistance with regulatory compliance Educational programs Quality initiatives Data services Programs and services to assist hospital operations

Hospitals’ PositiveEconomic Impact

The Payment Situation

Medicare11%Medicaid

14%

Employer/Private Insurance

52% Uninsured19%

Other Pub-lic3%

Georgia Health Insurance Coverage Status

SOURCE: 2011-2012 State Health Factswww.kff.org

Medicare37%

Medicaid14%

Employer/Private Insurance

40%

Unin-sured5%

Other3%

GeorgiaSources of HospitalNet Patient Revenue

SOURCE: 2012 AHA Annual Hospital Survey

Health Insurance Coverage

Medicare

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

Georgia HospitalsMedicare Operating Margins

2000 - 2011

Medic

are

Marg

in (

%)

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

$(1,000.0)

$(750.0)

$(500.0)

$(250.0)

$-

-$171

-$302

-$475

-$540

-$645 -$636

-$737

-$789

-$842

-$791

-4%

-6%

-9%

-10%

-12%-12%

-13%-14%

-14%

-13%

Losses in Medicare Revenue Due to Federal Budget Reductions

2013 - 2022

Medicare Revenue Reduction % Reduction Over Baseline

% R

educti

on o

ver

Base

line R

eve

nu

e R

edu

ction

s (in m

illion

s)

Medicaid

FY 2012 Georgia Medicaid Cost Coverage

Hospital Service Type

Payment Arrangement

Percent of Cost Covered by Payment

Inpatient Services FFS 92%

  CMO 85%

Outpatient Services FFS 80%

  CMO 81%

TOTAL 87%

The Uninsured

The Uninsured

1 in 5 Georgians (19% or 1,859,00) is uninsured

Georgia ranks fifth highest in the nation in the number of uninsured

1 in 8 children in Georgia (12% or 320,000) is uninsured

Supplemental Payments

Medicaid Disproportionate Share

Federal Funding ACA Reductions (in millions)

Year National Allotment Georgia DSH Allotment

2013 $11,544 $282

YearAnnual ACA

Reduction (National)

Annual ACA Reduction

(Est. Georgia)

2014 ($500) ($11)

2015 ($600) ($13)

2016 ($600) ($13)

2017 ($1,800) ($40)

2018 ($5,000) ($111)

2019 ($5,600) ($124)

2020 ($4,000) ($89)

The Need to Shift Costs

What’s Coming Under theAffordable Care Act

Platinum Gold Silver Bronze0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10%

20%

30%

40%

90%

80%

70%

60%

Health Insurance MarketplaceCost Sharing based on Plan Type

Paid by the Consumer Paid by the Insurer

Health Insurance Marketplace Plan Type

Perc

ent

of

Healt

h C

are

Cost

s P

aid

The Impact of theFinancial Climate

Georgia Hospitals with Negative Margins2011

Number Percentage

Patient Care Margin

All Hospitals 89 51%

Rural Hospitals 43 66%

Total Margin

All Hospitals 67 38%

Rural Hospitals 36 55%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

-1.48%

-0.66%

0.36%

0.91%

0.06%0.23% 0.23%

1.03%1.21%

0.91%

2.49%

1.92%

2.94%3.20%

2.61%

2.09%

1.41%

2.56%

3.03%2.71%

Trends in Hospital Margins

Patient Care Margin Total Margin

Year

Marg

in

The Regulatory Climate

Quality, Patient Safety and Regulatory Oversight

Financial:

IRS – Internal Revenue Service

MAC – Medicare Administrative Contractor

PERM - Payment Error Rate Measurement

PRRB – Payment Reimbursement Review Board

SEC – Securities & Exchange Commission

Oversight:

NRC – Nuclear Regulatory Commission

EPA – Environmental Protection Agency

FCC – Federal Commerce Commission

FTC – Federal Trade Commission

CMS - Centers for Medicare and Medicaid Services

HFR – Georgia Healthcare Facility Regulation

DCH - GA Department of Community Health

Legal:

CON – Certificate of Need

DEA – U.S. Drug Enforcement Agency

DOJ – U.S. Dept. of Justice

FBI – Federal Bureau of Investigation

Quality:

DNV - DNV Healthcare

HEN - Hospital Engagement Network

QIO – Quality Improvement

Organization

TJC – The Joint Commission

Medical:

CDC - Centers for Disease

Control

HRSA – U.S. Health Resources

& Service Administration

UNOS – United Network for

Organ Sharing

USPTO – U.S. Patent and Trade

Office

SOS – Georgia Secretary of State

Licensing Boards

FDA – Food & Drug

Administration

ONC - Office of the National

Coordinator for Health

Information Technology

Personnel:

OCR – Office of Civil Rights

NISOH – National Institute

for Occupational Safety &

Health

NLRB - National Labor

Relations Board

OFCCP - Office of Federal

Contract Compliance

Programs

OSHA – Occupational Safety

& Health Administration

DOL – U.S. Dept. of Labor

YOUR

HOSPITAL

Program Integrity:

CERT - Comprehensive Error Rate Testing

MFCU – Medicaid Fraud Control Unit

MIC – Medicaid Integrity Contractor

MIP – Medicare Integrity Program

OIG – CMS Office of Inspector General

RAC – Recovery Audit Contractor

SMRC - Supplemental Medical Review

Contractor

SUR – Medicaid Surveillance & Utilization

Review

ZPIC – Zoned Program Integrity Contractor

Transportation:

DOT – U.S. Dept.

of Transportation

FAA – Federal

Aviation

Administration

Quality and Patient Safety

GHA established the Partnership for Health and Accountability (PHA) in 1999 to provide education and data-driven tools for facilitate quality improvement

PHA works with hospitals to eliminate preventable healthcare-associated infections

In 2011, GHA became one of only 26 organizations designated as a Hospital Engagement Network to improve patient safety

Healthcare Personnel Supply

PhysiciansGeorgia ranks #41 in number of active

physicians per capitaGeorgia has 21% fewer physicians per capita

than the national average2 million Georgians live in primary care

personnel shortage areasNursesBy 2020, Georgia will need an additional 4.550

nursesThe number of new nurse graduates is not

projected to be adequate to meet this demand

Electronic Communications

Electronic Medical Records have the potential to improve care quality and reduce costs Clinicians have the information needed at the point of

care Duplicate tests can be reduced

GHA is a founding member of the Georgia Health Information Network (GaHIN), a statewide group connecting various local electronic communications networks

The first transactions through GaHIN have already occurred, and many large providers are queuing up to join

Opportunities

Care delivery is being transformed Greater coordination of care Greater alignment of incentives Both clinical and patient care management technology

Population health management is the key to the future

We are experiencing unprecedented financial stresses Services to improve care delivery and efficiency are

critical