Archive for November, 2009

Learning Together in a Spirit of Improvement

Monday, November 30th, 2009

Our leadership team spends time working along side our people in an effort to learn more about what our customers value.  It is helpful for each one of us as we work on improvement projects to have an ‘on-the-job’ perspective of the process.  Some refer to this as ‘going to the Gemba.’  It involves examining the process of our work on behalf of our patients.  Hands-on or ‘going to the Gemba’ creates a better context and perspective for what really happens in the process we know as medical care. 

The word ‘Gemba’ in improvement language is used by the Japanese to describe this notion of examining closely.  It is derived from two Chinese words for which there is not an English equivalent.  ‘Gem’ or ’specific work’ … and ‘ba’ or ‘the place.’  The Gemba is any place where critical resources assemble and the flow of work contributes to those efforts that directly add value for the customer.  So we are looking closely and learning by observing those systems and processes directly related to a flow of work that adds value for the customer.

Recently in these blog postings, we have been sharing some of the experiences about this learning opportunity or ‘going to the Gemba.’  Below is a note from Bob Hinshelwood, Vice President of Patient Services.


This is a note about a recent Monday I spent job shadowing with Craig Larrimore, RN, in the Radiology Department to learn more about the work that he and his team do every day.  I spent most of the day with the team in Special Procedures and in the Pre- and Post-Procedure Recovery Areas.  Both patient care areas were busy that day performing a variety of radiologic procedures for patients.  I observed Dr. Lewis perform a ‘De-clot’ procedure and was impressed with the teamwork and the knowledge the team displayed working with Dr. Lewis, anticipating what supplies and instruments she would need to complete the procedure.  I saw Dr. Hill help a child who needed an invasive procedure. The young patient  was accompanied by his mother, who also appeared a bit apprehensive. Despite the crying and fear that any child would have, the procedure was successful and both mom and child were pleased.  Craig was also needed across the street in the McLeod Plaza in CT to help with a catheter that was clogged.  With his past experience and strong fingers he unclogged the catheter and the patient was relieved. 

Bob in Radiology

McLeod Radiology Staff Members Johnny McGee and Craig Larrimore indicate on a monitor for Bob Hinshelwood what is occuring during a patient's procedure.

Overall, it was just a great day to see people work together to help patients who really trusted them to do their job well.  Thanks to everybody who put up with me that day.  I had a fun time.  I learn each time I work in direct patient care with our team.  A special thanks to Craig.

Bob Hinshelwood
Vice President of Patient Services

Customers have the final say as to the quality of our output.  If you want to know if you are doing a good job, ask the customers.  They alone know.  The output of our services is the only output of which our systems, processes and methods are currently capable.  In the ‘Spirit of Improvement,’ we want to have the best possible outcome for patients … so we must continue to create better systems, processes and methods. Learning directly from our team and our customer is an important part of improvement.


‘Brief and DeBrief’

Tuesday, November 24th, 2009

 For Patient Rounds on Tuesday morning, I joined Dr. Mike Rose and the Leadership Team for a visit to the Operating Room.  We had an opportunity to learn about the safety work that is ongoing in the OR with the Safety Checklist, particularly with a pilot project in Orthopaedics.  This pilot project extends the Safety Checklist to a ‘Brief and DeBrief.’

During the walk-through by the team on Tuesday,  we saw a great deal of transparency, some emotional, as the record of events and improvement ideas from the ‘Brief/DeBrief’ are posted on the OR walls. In talking with Dr. Rose, he remarked, “I think it demonstrates a couple of things. First, that as safe as we are and have been, there is more to do. Secondly, the difference between being just safe, and exceptionally safe is likely to be the many individuals engaged in a case holding each other accountable to insure that their specific tasks are completed, but more importantly, feeling accountable together for the patient’s result. Folks are accustomed to a task orientation–’I do what I am supposed to’–but less to ‘we all have done what is necessary.’ The latter is the key to the cultural change and it will be transformative.”

OR Dunlap Marie

Dr. Joe Dunlap provides the team with insight on OR work from a physician perspective.


I had a moment this morning to compare notes on the ‘Brief/DeBrief’ with Dr. Pat Denton who is one of the physician leaders of this pilot work.  He explained the benefit of the ‘DeBrief’ as the team identifies at the end of the case those areas of improvement that would have allowed the operation to go better.  A simple question at the close of the case, ‘what could we/I have done differently to make things smoother, better?’ 

Denton OR

Dr. Pat Denton pauses for a patient "briefing" with the OR Team before surgery.


It is important work and there will be benefits as it spreads to all Operating and Procedure rooms. I want to thank Dr. Mike Rose, Carolyn York and Emily Harsh for giving us this opportunity to see how this work shows our ’spirit of improvement’ in the OR.


Response to Service Excellence and Patient Needs at McLeod

Monday, November 23rd, 2009

A service expansion program will soon be underway at McLeod Regional Medical Center to respond to the issue of parking limitations, convenience and demands for easier access to the wide range of health care services offered to the region by McLeod Health.

New Construction

Construction of a new parking deck is planned for the coming year. McLeod Parking Deck East breaks ground in January, 2010 and is set for completion by mid-summer. The location of this three-story parking facility, which will provide approximately 350 parking spaces for patients and visitors, will face Cheves Street, between the McLeod Pavilion Tower and McLeod Tower.


Preparation for patient parking will begin in early December. The three-story building will have 350 spaces for patients and visitors to park their cars while receiving care at McLeod. It will face Cheves Street and will be situated between the McLeod Tower and the McLeod Pavilion, in front of the hallway that connects the two buildings.

Response to Patient Needs

While McLeod’s patient satisfaction survey scores remain above the national average, parking has been identified as an issue for patients and visitors.

“We are pleased to respond to the issues of ease of entry to patient care areas with this new parking. To better serve our patients and visitors, the parking improvement will provider quicker access to patient care destinations and entrances,” stated Marie Segars, Administrator of McLeod Regional Medical Center.

No Disruption in Services During Construction

Current parking in this area will be redirected during the seven-month construction period. There will be minimal disruption to patients and visitors and the availability of valet parkers will be increased for the convenience of McLeod guests at both the McLeod Tower and McLeod Pavilion.

Funding Plans and Lowest Construction Costs at This Time

McLeod is applying for a Federal Transportation Authority grant to help fund this construction. The funding of this approximately $ 3.5 million project, anticipated and prepared for during the last five years, is financed from reserves and savings, not current operational budgets.

We are investing in the physical plant now, meeting the need for patient parking, during a period of time when construction costs are much lower because of the recession.


Additionally, the new patient parking has been designed to protect trees and setbacks on the McLeod property.

The new patient parking will be a safe design, offer ease of use and navigation for patients and visitors, as well as durability and low maintenance.

Protective fencing for the construction will begin to go up during December, following the McLeod Hospice Tree Lighting festivities.

More Growth Anticipated in the Future

It is expected that patient and visitor traffic will continue to increase, and as one of the four anchor medical systems in the state, McLeod continues to be blessed with an outstanding staff and dedicated patients. Health care decision makers continue to seek our services and to make McLeod their choice for medical excellence.

I want to thank you all for your part in the continued growth and development of McLeod Health.


The Face of Commitment

Tuesday, November 17th, 2009

Much has been said or written recently in the current national debate on health care.  At times it has been both disheartening and a bit confusing to hear some of the explanations or issues of complexity explained in such simplified terms.  In my opinion, things said by leaders in our government and in healthcare have missed the mark or have been so generalized as to be misleading.  Many of the solutions are directed at secondary rather than primary causes.  I have wondered who was advising our leaders or preparing them for remarks.

One group that has been misunderstood and under-appreciated in this debate is our physicians.  They say you have to ‘walk a mile in someone’s shoes’ to fully understand.  Those of us who work along side our physicians know the schedules they keep, the stress and expectation placed upon them, and the requirements from every level of government.  We see the impact on their personal lives and upon their physical well being.  For me, they represent the ‘Face of Commitment’ as they daily go about their work of serving others.

We are recognizing these leaders on the team for their devotion and hard work.  It brings a sense of nobility and compassion to our work with them as we serve on the patient’s behalf.  Even if the public does not fully understand, we can support them in this national discussion. For six weeks, we are sharing the “Face of Commitment” in print opportunities through area newspapers and periodicals. At McLeod, we want to thank them for their dedication and service which remains steadfast and part of their calling to serve others. Despite the confusion and contradictions during this year’s heated national attention on healthcare reform, the focus of our physicians continues to be on patient needs and improving the health of our community. Please join me in thanking them.



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Meeting Needs, Giving Blood, Saving Lives

Tuesday, November 10th, 2009

I am a routine blood donor for the American Red Cross. I keep my Donor Card on my desk so I can participate whenever the American Red Cross is here at McLeod. In South Carolina, the American Red Cross needs to collect 500 units of blood each day to meet the needs of hospital patients across the state. You can help patients and you can help others. Please, donate blood, the Gift of Life, at McLeod Regional Medical Center in Florence at the McLeod Plaza Mobile Unit or the McLeod Trauma Waiting Area, behind the Emergency Department from 10 a.m. until 3 p.m. Wednesday, November 11, 2009 or at McLeod Health Darlington in the lobby also on Wednesday from 11 a.m. to 4 p.m.

Our local drives are important ways that we can serve our patients and our community. I appreciate the teams involved in this valuable effort. The American Red Cross also helps with the cost of health care by providing a discount on blood products based on the amount of blood that we as a hospital donate each quarter. Last quarter we saved $5,500 on blood products. I am also appreciative of the coordination by our Community Education team, lead by Erin Faile in our Public Information Office.

This is the last scheduled blood drive of the year for MRMC and McLeod Darlington.

The Red Cross advises with these informational points …

- Donating blood is good for your cardiovascular health. According to University of Kansas Hospital, blood donors have a reduced risk of heart disease.

- Research done by Dr. David G. Meyers, a clinical professor of cardiology, showed that, over a 10-year period, people between the ages of 43 and 61 who donated frequently had fewer heart attacks and strokes and reduced their risk of heart disease by more than 50 percent.

- According to a report on, a study involving 2,682 men from Eastern Finland showed that donors who gave blood a minimum of one time a year decreased their risk of heart attacks by 88 percent, compared to those who did not donate.

- Giving blood may even help prevent cancer. In an article at, Dr. Ed Zimney talks about a study that was reported in the on-line version of the Journal of the National Cancer Institute. The study indicates that men who donated frequently had a decreased risk of lung, liver, colon, stomach and esophagus cancer.

- It will also help burn additional calories. According to the Mayo Clinic, you burn 650 calories every time you donate.

The following patients face the reality of death if enough donors can not be found who are willing to offer up just a single pint of blood:

Premature babies, cancer patients, children and adults with leukemia, patients with sickle cell anemia, accident and burn victims, trauma patients, patients facing critical surgeries.clip_image002

Thousands of patients as well as disaster and accident victims face the reality of imminent death if there is not enough blood to replace the blood that their body has either lost, or can’t replace. Every single blood donor offers the ultimate gift anyone could ever offer another person – the gift of life. One donation can save up to three lives!

If you would like to schedule an appointment at MRMC, please call 777-2005; for an appointment at McLeod Darlington call 777-1100. Walk-ins are welcome.

Again, thank you for your work on behalf of our community.

Rob Colones

Putting the Word ‘Health’ Back Into the Discussion on Health Reform

Monday, November 9th, 2009

On Saturday I visited with the McLeod Diabetes Team at our 11th Annual Diabetes Fair.

Diabetes Health Fair 2009 028

Pictured here is the information booth area and participants at this educational event. More than 300 people attended the 11th Annual McLeod Diabetes Fair.


While some of our political leaders were in Washington on Saturday working to pass a version of ‘health reform’, members of the McLeod Diabetes Team were offering ‘health reform’ to friends, family and the community.

Diabetes is a health problem in which the body does not produce enough insulin or does not properly respond to insulin.  Insulin is a hormone produced in the pancreas and it helps cells to produce energy by allowing them to absorb glucose.  Diabetes affects this natural process and causes an accumulation of glucose in the blood stream.  Over periods of time this causes health complications for the person with Diabetes.  For the last twenty years, the incidence of Diabetes has increased in North America. It is estimated that 24 million people in the United States have Diabetes and 57 million have pre-Diabetes.

The Centers for Disease Control has called this condition in our country an epidemic.  It is estimated that 132 billion dollars are spent each year in the United States on the treatment for Diabetes.

The free Diabetes Health Fair on Saturday at the McLeod Plaza and Conference Center included blood sugar screening, blood pressure screening and eye screening.  In addition, foot checks were offered along with information about oral hygiene, nutrition and medication.

The good news here is that with proper diet, exercise and education and treatment from the medical team, this disease can be managed.  However, it requires active, informed and engaged compliance from the individual, family and community. 

I want to thank Marilyn Henderson, Coordinator of the McLeod Diabetes Center and the Diabetes staff of professionals: Sonda Jett-Clair, Anita Longan, and Deborah Thomas as well as Tavy Smalls, AHEC Health Careers Program Coordinator; Ben Battle, McLeod Health Executive Chef and the McLeod Nutrition Services team; Levina Brown, Cardiac Rehab Nurse; Sandy Carlson, McLeod Health and Fitness Center Personal Trainer; Dr. Jason Lee, Palmetto Vision Center; Leah Fleming, McLeod Marketing and Francis Marion Student Nurses who supported this effort.

Thanks for all you do to improve the health of our community.


Learning Together by Listening

Friday, November 6th, 2009

I wanted to share with you a note I received from Leanne Huminski, Vice President of Patient Services and Chief Nursing Officer for McLeod Regional Medical Center.  Leanne joined the team in Trauma Surgical to listen and learn from their service to our patients.  Over the last few weeks, I have been sharing with you the insights our leaders are learning by listening and working along side the team in a variety of departments.  Please take a moment to read what Leanne discovered and shared with me about her experience.


Linda Harwell, TSCU Patient Care Supervisor, shares information with Leanne Huminski.

Last Thursday I had the great pleasure of putting on my nursing uniform and shadowing the nursing staff in the Trauma Surgical Care Unit. This was a truly humbling experience.  As I watched the staff go about the work of caring for seriously ill patients and their families, I was impressed with their compassion, their professionalism, their technical competence and their team work. I could tell that what I witnessed was every day and common place for this staff. They went about their work with a natural grace.

I spent a good deal of time working with Stacie Johnson, the PCS on duty on Thursday.  If I had to choose one word to sum up my impression of Stacie it would be professionalism.  Stacie was cool, calm and collected as she went about her responsibilities.  Stacie explained what a normal day for her would look like and I was tired thinking about her duties.  Stacie gave me a report on every patient in the unit that day and she was very knowledgeable of the patient’s challenges, special needs, goals and discharge plan.  She knew how long every patient had been in the unit, what their nutritional status was, their family situation and what the plan for recovery was.  In addition, she made sure that every staff member had completed the service recovery CBT and took over patient care so that staff could accomplish this.  We were called away from the unit to assist the staff in the radiology department with a difficult IV stick and Stacie took it all in stride.  I would say that Stacie is a model PCS.

I observed Chaquita Morris care for both a patient and his family.  The patient was unresponsive and unaware of the kind and respectful way that Chaquita managed his care … and what was truly impressive was the way that Chaquita included his family in the care and kept them informed of what was happening and what they could expect.  I observed that, when a patient is severely compromised, it is not possible to deliver good news, but allowing the family to ask questions, being as honest as possible and offering the family time to adjust to the situation, is as important as the care delivered to the patient.  Chaquita was serving as a preceptor for Leslie Cooper, a new employee on the unit.  I am sure that Leslie learned more about the ‘art of nursing’ while working with Chaquita.

As I observed Howard Brigman, Andrea Dunbar, Rebecca Gibson, Tammy McPherson, Catherine Allen, and Jennifer Hughes go about their work,  I saw teamwork in action.  All of the staff worked together, and helped each other to get patients out of bed, turn patients, feed patients, extubate patients, change dressings and perform the many tasks that are necessary to move patients forward on their journey to wellness. I thought of a well oiled machine as I watched the work of the unit progress through the day.  It was obvious that the staff cares about each other as well as the patients.

I spent some time with Linda Harwell as she spoke with the staff and reviewed every patient’s chart to assure that education was being performed, that every ventilated patient was receiving the vent bundle care, and as she counted up central line days.  Linda made sure that the staff was competent to care for the patient and advised and served as the clinical expert in their care.

I would like to thank Brenda Raynor and all of the staff who were working in the unit for making me feel welcome and comfortable and for showing me why TSCU is helping McLeod Regional Medical Center to earn the reputation as “The Choice For NURSING Excellence.”

Warm Regards,

Each morning, at all three hospitals, leaders from across the organization gather for a quick huddle and a visit to a specific department or patient area.  We go to these areas each day as a group in order to begin our day with why we are here … the patients and the staff.  We spend about twenty minutes in the area and then huddle again to see what we learned or who we might help.  It is another way or place to listen and learn about the work.  However, the experience like the one described above by Leanne, is also another important way we can learn by listening and observing.  Thanks for your help in this effort to continue to improve our service.


Leaders from Canada Visit McLeod Health

Wednesday, November 4th, 2009

On Monday and Tuesday, six leaders from Trillium Health Centre, Toronto, Canada, visited McLeod Health as part of a program sponsored by the Centre for Healthcare Quality Improvement in Ontario.

“Our initiatives, the trusted relationship we have developed with many stakeholders in Ontario, and our strategic partnerships with leading-edge organizations … Are stepping stones on our collective journey to performance excellence.” Centre for Healthcare Quality Improvement Annual Report

Hospital Tour-Tracy Stanton 11-2-09 022

Tony Derrick, Director of the McLeod Emergency Department, discusses the ED Patient Tracking System with the visitors from Trillium Health Centre.


Visiting from Trillium:  Janet Davidson, President and CEO; Ruby Brown, Executive Vice President and Chief Operating Officer; Patti Cochrane, Vice President – Patient Services and Quality and Chief Nursing Officer; May Chang, Vice President Corporate Services and Chief Financial Officer; Dr. Gopal Bhatnagar, Chief of Staff; and Scott McLeod, Vice President – Strategy and Business Transformation.

Trillium Health is one of several hospitals in Ontario selected to participate in a 16-month program in Ontario.  Building on lessons from high performing physicians and hospitals around the world, the program aims to assist organizations to achieve break-through results in quality outcomes. 

McLeod Health was selected as one of seven hospitals in the United States to participate in a mentorship program.  Partnered with Trillium, this program provides physician and hospital leaders with the opportunity to participate in action-based learning initiatives.

I received a note this morning from Scott McLeod with Trillium.  I wanted to share their thoughts with you.

Good Morning Rob – Thank you ever so much for your generous hospitality and time that you and your team spent with us – we have many, many “take aways” – our team was very impressed with your organization and operation and were struck by the similarity of challenges and initiatives that our respective organizations have – despite the fundamentally different health care systems.


A gift from our Canadian visitors, this soapstone miniature of a traditional Inuit guide post – called an Inukshuk is a symbol of a guidepost - reflecting the efforts to help guide travelers down "the right path."

This is a gift from our Canadian visitors, a symbol of a guidepost – reflecting the efforts to help guide travelers down “the right path.”

The small gift we left is a soapstone miniature of a traditional Inuit guide post – called an Inukshuk – it is the official symbol of the 2010 Winter Olympics in Vancouver Canada – these are usually quite large constructed of stone and usually in the general shape of a man – they have been used for thousands of years to provide a guidepost for Inuit travelers to keep them on the “right path” – so we thought it was an appropriate symbol of our organizations’ respective quality journey.  Thank you for sharing your experiences and insights – we have learned a lot from our visit and it has been a helpful guidepost on our quality journey.

Thank you again for your wonderful hospitality and we look forward to the opportunity to reciprocate in 2010!

Take Care,

I wanted to thank each one of you at McLeod Health for your service to others and your faithfulness to our patients. 


House Leaders Announced their Health Care Reform

Monday, November 2nd, 2009

The House Democratic Leaders announced their health care reform package last Thursday.  The three House committees working on health care reform  merged three bills into one legislative package during the last few weeks.  At this time, the cost is estimated to be $894 billion over 10 years.  The House bill will extend insurance coverage to about 36 million Americans who do not have insurance today.  Which version of a public option plan to include in the bill has been part of the delay as the merging of three bills searched for the 218 votes necessary for approval.  The final version of the House bill released last Thursday has a more moderate public plan.  There is the possibility that this version would have the government negotiate rates with providers instead of the Medicare rate payment option.  Since Medicare is currently paying provided below actual costs, many providers have been concerned about the effect of the public option and the payment rate.  The current House bill does not include a proposal to fix the Medicare payment formula for physicians.  Unless this changes as the House Bill merges with a Senate version, physicians would be scheduled to receive a twenty-one percent reduction in payment for Medicare patients.

In the next few days, the House bill will be posted on-line for 72 hours.  After that time, the House could begin debate which may be as early as the end of this week.  Once the House bill is approved, then it will have to be merged with the Senate bill which has yet to be released or approved at this time.   At various point along the way we will keep you updated as we have more information.

Please don’t hesitate to contact me if you have suggestions about reform or questions about this update.

From the American Hospital Association … summary of the House Bill on Health Care Reform.

Thursday, October 29, 2009
House leaders today released H.R. 3962, the “America’s Affordable Health Choices Act of 2009.” The blended bill is the merger of the products of three key House committees: Ways & Means, Energy & Commerce and Education & Labor. While we are still awaiting formal numbers from the Congressional Budget Office, the bill is expected to expand coverage to approximately 96 percent of those legally residing in the U.S. and cost slightly less than $900 billion. Responding to concerns from AHA and its members, the bill’s public insurance option would reimburse providers using negotiated rates within parameters (rather than Medicare rates) and would extend Medicaid to 150 percent of the federal poverty level (FPL).

We’re still working through the almost 2,000-page bill, and will get you additional details as necessary. Meanwhile, here are some of the key provisions that affect hospitals. (For the AHA Advisory on the previous draft version of the bill, click here )

Hospital Payment Update: Market basket reductions over 10 years. Reduces Medicare payment updates by a measure of productivity growth for inpatient hospital, outpatient hospital, long-term care hospital, inpatient rehabilitation facility, psychiatric hospital, skilled-nursing facility, hospice, ambulance, home health agency, ambulatory surgical center and laboratory services beginning in 2010.

Physician Payment: The legislation does not include a fix to the Sustainable Growth Rate (SGR) formula as proposed in an earlier version of the House bill. Physician payment rates will be addressed through separate legislation.

Public Option: Provides a public insurance option as part of a national exchange. The commissioner of the exchange has discretion to expand the exchange to large employers (100 employees or more) in year three, thus making the public option available to employees of large entities. Provider payment rates would be negotiated within corridors, with a floor of no lower than aggregate Medicare rates and a ceiling of no greater than aggregate average rates paid by plans within the insurance exchange. Allows Medicare providers, including hospitals, to opt out of participation in the public option.

Medicaid Expansion: Beginning in 2013, Medicaid is expanded to 150 percent of FPL, up from 133 percent FPL. The federal government will fully finance the first two years of the expansion. In 2015, federal funds will drop to 91 percent with states paying 9 percent for the newly expanded populations.

Medicaid DSH: Beginning in 2017, federal spending is reduced $10 billion over three years ($1.5 billion in 2017, $2.5 billion in 2018, $6 billion in 2019). No later than 2016, the Secretary must report to Congress with recommendations on the appropriate targeting of DSH payments within states, and the appropriate distribution across states. The methodology for cuts would depend on state rates of uninsurance, and use of DSH money, which would be measured by uncompensated care and hospital Medicaid volume.

Medicaid Graduate Medical Education (GME) Payments: The costs of GME are recognized in statute as legitimate Medicaid costs with state-level reporting requirements.

Medicare Disproportionate Share Hospitals (DSH): Beginning in 2017, would gradually reduce Medicare DSH payments to hospitals if there is a reduction in the number of uninsured between 2012 and 2014. Medicare DSH payments could be partially restored for some hospitals based on the amount of uncompensated care the hospital provides.

Readmissions: Reduces payments in 2012 to hospitals, including critical access hospitals, with actual readmission rates higher than their expected 30-day readmission rates for three conditions. Beginning in 2013, expands the policy to other conditions. Reduces payments to post-acute providers as well. Does not differentiate between unplanned readmissions that are related to the initial admission and all other readmissions.

Bundling: Calls for the HHS Secretary to develop a plan to reform Medicare payment for post-acute care services. The legislation also would convert the current Acute Care Episode (ACE) demonstration to a pilot program by January 1, 2011, and expand the pilot program to include post-acute care and other services. If the ACE bundling program is found to improve quality and reduce costs, the Secretary is directed to expand the pilot broadly to other providers on a voluntary basis.

Value-Based Purchasing: The legislation does not include a provision related to value-based purchasing for hospitals. However, value-based purchasing can be utilized by Centers Medicare & Medicaid’s (CMS) newly created Innovation Center.

Accountable Care Organizations (ACOs): Establishes voluntary pilots where groups of qualifying physician practices could form ACOs and share in Medicare cost savings. The legislation does not allow hospitals to take a leadership role in the formation of ACOs, but they may be included as part of an ACO.

Geographic Adjustment: Calls for two Institute of Medicine (IOM) studies. The first IOM study on geographic variation is to determine the accuracy of the geographic adjustment factors in the hospital and physician payment systems. Provides $8 billion over two years (FY 2012-FY 2013) to implement IOM’s recommendations. Beginning in FY 2014, adjustments to the payment systems would be budget neutral. The second IOM study would examine growth in intensity and services in per capita health spending and whether payments systems should be modified to incentivize “high value” care. Mandates a fast-track process through Congress for implementation.

Innovation Center: Creates a center for Medicare and Medicaid Innovation (CMI) within CMS by January 2011 to test innovative payment and service delivery models to improve coordination, quality and efficiency of health services.

Self-Referral: Eliminates the exception for physician-owned hospitals under the whole hospital and rural provider exceptions under the Stark law, but grandfathers those with a Medicare provider agreement in place by January 1, 2009. Existing facilities are subject to growth restrictions.

Healthcare-Associated Infections (HAI): Requires hospitals and ambulatory surgical centers to report data on HAIs to the Centers for Disease Control and Prevention.

Healthcare-Acquired Conditions: State Medicaid programs are required to include policies that do not allow higher payments to a hospital if a patient gets a HAI during the hospital stay, similar to the Medicare hospital-acquired conditions policy.

Medicare GME: The legislation does not include cuts to indirect medical education. Makes the following changes to Medicare GME: redistributes unused residency slots, increases training in nonprovider settings, changes the rules for counting resident time and improves the accountable of approved medical residency training.

Rural Providers: Extends Section 508 reclassifications, the outpatient hold-harmless provision, the floor on the work geographic practice cost index for physician payment, the rural ground ambulance add-on, and the grandfathering that allows independent laboratories to continue to directly bill, under the physician fee schedule, for pathology technical component services.

Comparative Effectiveness: Creates a new Center at the Agency for Healthcare Research and Quality to conduct, support and synthesize comparative effectiveness research. The Center will be supported by a combination of public and private funding.

340B: Expands the 340B program to outpatient drugs for children’s hospitals, cancer hospitals, critical access hospitals, Medicare-dependent hospitals, sole community hospitals and rural referral centers. Does not expand the 340B program to inpatient drugs for any hospital type as in previous versions of the legislation.

Long-Term Care: Creates a new, voluntary long-term care insurance program financed by payroll deductions to provide a cash benefit to help individuals with community-based services.

Medicare Commission: The legislation does not include the creation of a Medicare Commission.

Revenue: The bill imposes a 2.5 percent tax on the first taxable sale of any medical device. “First taxable sale” means other than for resale after production, manufacture, or importation. Hospitals purchasing directly from a device manufacturer would pay this tax in addition to the purchase price.

Among other provisions, H.R. 3962 would impose a 5.4 percent tax on individuals with adjusted gross incomes in excess of $1 million (married filing a joint return) and $500,000 (single), and imposes an excise tax of 2.5 percent on medical devices used in the United States.

NEXT STEPS: House leaders hope to hold a floor vote on the bill in the near future. The AHA will continue to work for improvements in this bill.

Copyright 2009 by the American Hospital Association. All rights reserved.

House Reform Bill Final 10-29-09