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Issues & Legislative Committee Report

March 9, 2006

JCAHO/Gainsharing Update

Gainsharing Agreements

According to an article in the February issue of The Week in Healthcare, HCA retracted comments it made during a recent investors' conference that indicated HCA would be able to achieve volume discounts in an orthopedic implant contract that included a gain-sharing component after a complaint from one of the vendors. HCA's gain-sharing program is apparently under review by the Office of the Inspector General (OIG). Gainsharing here refers to payments that go directly to the physicians as opposed to the spending of money within a facility to make the facility more appealing to the physician.

HCA's contract is apparently structured on a month-to-month basis that gives the company's hospitals discounts if they purchase 95% of their orthopedic implants from three vendors: Zimmer, Johnson & Johnson, and Stryker. It is reported that HCA had been recruiting surgeons to join its gain-sharing program, but the effort did not work as well as expected. There are no published OIG opinions to this regard, however, a spokesman said the hospital company will continue to recruit physicians into the program and if it gets the OIG favorable opinion, it may be able to pay the physicians retroactively if savings are achieved.

The spokesman indicated that HCA chose the three orthopedic vendors after polling a panel of orthopedic surgeons and that quality was the main driver behind the choices although surgeons still can use other vendors’ products.

Darren Lehrich, an analyst with Deutsche Bank Securities, said he was surprised to learn that the target that triggered the discount on implants was 95%, and that HCA said it was negotiating to lower the rate to 90% and based comments about the contract during a February 1 conference call on the belief that it could get a lower rate. This is where the rub occurred, apparently during the call. HCA indicated that they ”have now met our target and are anticipating pricing discounts for the remainder of 2006." Zimmer then sent a letter to the president of HCA's GPO, HealthTrust Purchasing Group, that requested a retraction or proof of compliance. The letter said that HCA asked Zimmer to exempt 23 of the 170 hospitals from the pricing agreement. The fact that HCA has so many hospitals also makes it more difficult for HCA to reach the target for the discount, said David Ricker, chief operating officer for Broadlane, a healthcare procurement company.

Source: Joseph Mantone, The Week in Healthcare.

JCAHO/Safety Issues

According to a recent report released by the United States Pharmacopeia, the time that inpatients are transferred from their room to the radiology department is one of the most dangerous in the hospital for patients. Medication errors that harm patients are seven times more frequent in the course of radiological services than in other hospital settings, said the report. John P. Santell of the organization's Center for the Advancement of Patient Safety, helped prepare the study. He said, "Our report shows this is when the risk is particularly great."

Harmful errors are much more likely in the radiology suite, because patients often receive potentially dangerous drugs such as dyes, sedatives, and blood thinners, and their care is being handed off from one department to another creating the opportunity for communication failures, said researchers. Santell agreed, "The errors often occur in the transfer of information."

Santell and his colleagues reviewed 823,268 medication errors that were voluntarily reported by 315 hospitals between 2000 and 2004. The researchers identified 2,032 errors that occurred in radiology departments. Of those, 12% resulted in some kind of harm to patients, which is seven times higher than the percent age of hospital medication errors that caused harm overall, or 1.67%. Note that this is an error rate of 0.25% overall and 0.06% that resulted in some kind of harm to the patient, or 1 every 1,400 procedures.

According to Santell, "Even though the volume of errors is low, the risk of harm is high." The most common errors were also patients getting the wrong dose or drug; failing to get the drug they should have had or having the drug administered incorrectly. He said the findings, based on voluntary reporting, probably underestimate the problem.

Sources:
(1) Bob Stein, WashingtonPost Staff Writer, Error Rate Greatest In Hospital Radiology, January 18, 2006, Page A03.
(2) United States Pharmacopeia, http://www.usp.org.

JCAHO to Treat Hospital Data as a Public Utility

JCAHO dropped a plan to sell performance data to third-party payers in November, 2005 and will make the data free to any organization or individual wanting it.

JCAHO Board Acts on Quality Performance Information

At its March 3-4 meeting the Board took a series of actions that will enhance the depth and transparency of the publicly available, quality-related performance information already provided by the Joint Commission. Read more at www.jcaho.org

Disaster Preparedness Issue − Funding

Federal Government Working to Ensure Communities are Ready to Respond to a Pandemic Outbreak

Unlike other natural disasters, a pandemic can happen simultaneously in hundreds, or even thousands, of locations simultaneously. A pandemic can continue spreading destruction in repeated waves that can last for a year or more. All levels of government must be prepared for a pandemic.

Source: US Department of Health and Human Services, http://www.hhs.gov/pandemicflu/plan/sup3.html#app2.

Pandemic Influenza Preparedness Checklists

The website, www.Pandemicflu.gov, contains a comprehensive overview of response to a flu pandemic, including a hospital preparedness checklist and a home healthcare organizations pandemic planning checklist.

Quality & Medication Errors

Quality groups have officially merged. The National Quality Forum and the National Committee for Quality Healthcare merged at the end of February, 2006. The leader of the new organization is Janet Corrigan, President and CEO of NCQHC.Quality awards will continue and its mission is to develop consensus standards for performance measurements.

Source: Andis Robenznieks, Modern Healthcare Daily Dose, 2/28/06.

Consumer-driven Healthcare

Consumer Health Plans: Time to Pay Attention

Currently three are 3 million enrolled in HSA and number doubles every six months. All the major carriers now have an HSA offering. Because of world economics and America’s competitive position, trends are shifting the center of healthcare away from the hospital because of:

Source: Richard Reese, M.D. Hospital and Health Network.

Terminate the Healthcare Financing System

The main reasons to terminate the healthcare financing system include:

Source: Joe Fowler, Hospital and Health Network.

Radio Frequency Identification (RFID)

RFID in healthcare seems to be moving at a faster pace in other nations when compared to the United States. Many specific healthcare applications trials have been mentioned in articles this month (see highlighted articles below). The other RFID topic that has been highly profiled is the security of privacy.

Solihull and Birmingham Expand RFID Tag Trials

Birmingham Heart of England and Solihull NHS Trust are expanding its trial of tagging patients about to undergo surgery with RFid wristbands. Patients are given RFid tags, which are linked to an electronic patient record. Surgeons have to scan the tags and verify identity using a digital photograph of the patient stored on their electronic patient record. The tag can also be used for recording pre-operative checking and making sure that risk assessment has been doe before the patient enters theatre. For full story, go to http://www.e-health-insider.com/news/item.cfm?ID=1747

German Hospital Uses RFID to Track Blood

Blood bank supplies at Saarbruecken Clinic from now onwards will be equipped with RFID chips to prevent any confusion or mix ups in regard to blood transfusion and blood treatments. In a joint effort, Siemens, Intel, Fujitsu, and IMP Computer Systems will continue with the research at Saarbruecken Clinic. In the first phase, almost a thousand bags of bloods are being labeled. This solution makes sure that the correct blood type is given to each patient. Siemens is acting as the project's major contractor. For the full article, go to http://www.rfidjournal.com/article/articleview/2169/1/1/

RFID Must Address Security Issues

Attendees discussed RFID security in detail in the recent RFID World Show held in Grapevine, Texas. The benefits of RFID are well known. The tags are faster and more efficient than bar codes, but critics of the technology say that the wireless data transmissions may cause theft of consumer’s personal data.

Many companies plan to introduce RFID cards and phones for “contact less” payment services. These services must utilize data encryption and other security measures to deal with users' security fears. Prevention is the best medicine. A workable balance must be found between privacy protection and the appropriate use of data. For the complete story, go to http://www.belleville.com/mld/belleville/business/14054914.htm

Group Purchasing Organizations (GPOs)/Code of
Conduct Principles

The Healthcare Group Purchasing Industry Initiative (HIGPII), created in May 2005 by nine founding participants, Amerinet, Broadlane, Child Health Corporation of America, Consorta, GNYHA Ventures, Healthtrust Purchasing Group, MedAssets, Novation and Premier, held their first Best Practices Forum from January 12-13, 2006.This group, unlike the previous HIGPA group, does not have suppliers among their voting members. According to Al Lobiondo,this is buy-side rather than sell-side.

The main focus of the discussions was the six core principles required of each participant.

Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights Hearing

The hearing will be held on March 15, 2006. It is believed, at that time the HGPII will be discussed.Members of GPO’s as well as medical device manufacturers will be asked to testify about the industry’s efforts to monitor and police themselves.

The Subcommittee said in a recent statement that, "This hearing is another step in
the Senators' ongoing effort to protect consumers, competition, and innovation in
the hospital supply market. The hearing will consider the extent to which the reforms embodied in the industry's new voluntary guidelines ensure those goals, and will revisit the current rules to determine whether any legislation is needed."

Source:http://www.medicaldistribution.com/daile/current.htm

Transportation Issues

Trinity Health Celebrates Possibility of Financial Gain from the Supply Chain

A million dollars, straight to the bottom-line. What hospital CEO doesn’t love the sound of that? At Trinity Health, executives are celebrating the possibility of such financial gain. But these funds aren’t coming from a wealthy benefactor or a research grant. They’re coming from inside − from the health system’s own supply chain.

Innovation has always been at the heart of healthcare. It’s the quality that has pushed continuous improvement in clinical care over the years. And it’s now the driver of major cost savings in operational areas previously overlooked. At Michigan-based Trinity Health, innovation in supply chain management is paying off handsomely.

Source: http://www.hpnonline.com/inside/2006-02/0602WhatWorks.html

Special Transportation Requirements

The healthcare industry is unlike any other. Today, healthcare companies are faced with some of the most severe regulatory and legal issues in business. Add to that the special transportation requirements including: clean and temperature-controlled environments, management of hazardous materials, or returns management programs.

As healthcare companies pour millions into research and development, product integrity is the lifeblood of all healthcare companies. The spotlight, it seems, is squarely on logistics − both in how to keep products safe while in the pipeline and how to add cost savings to thin bottom lines.

Source: http://www.baxworld.com/CorporateSite/industry/healthcare.aspx

Leading Economic Indicators Jump in January

The index of U.S. leading economic indicators rose for a fourth month in January, as signals pointed to faster economic growth, Bloomberg reported. The 1.1% increase gain followed a revised 0.3% gain in December that had originally been reported as a 0.1% uptick, the New York-based Conference Board recently reported. The LEI index, which measures the likely performance of the U.S. economy over the next three to six months, is closely watched by trucking companies because it forecasts business activity for the next three to six months. Six of 10 segments that make up the LEI rose, the Conference Board said. A decline in jobless claims contributed the most to the increase.

Source: Transport Topics

Ethics/Pharmaceutical and Vendor Gifts

In September 2003, AdvaMed, the Advanced Medical Technology Association, published their “Code of Ethics on Interactions with Healthcare Professionals”. Additional FAQ’s were added to the code on April 15, 2005. This code, which is voluntary, outlines for its members the ethical interactions with individuals who “purchase, lease, recommend, use, arrange for the purchase or lease of, or prescribe members’ medical technology products in the United States”.

While recognizing that there needs to be close interaction between device providers and physicians in order to advance medical technology, enable safe and effective use of technology, and provide research opportunities and education, this code clearly details what is acceptable in terms of consulting arrangements, hospitality and travel benefits, gifts, and grants. It makes clear that the Code of Ethics applies to the interactions of the organization members with licensed as well as administrative and other healthcare professionals. It significantly limits gift value, both in content and context, as well as delineating manner of educational support and charitable contributions.

Despite these guidelines, there have been reports of violations or implied violations. The United States Attorney in Newark is actively investigating five orthopedic vendors, Stryker, Depuy, Zimmer, Biomet, and Smith & Nephews, for possible unethical physician compensation. Grant Medical Center of Columbus, Ohio sued Biomet and one of its distributors for taking advantage of an important physician’s loyalty to the vendor by raising pricing to the hospital by 35%. The physician had strong ties to the vendor as a consultant. The case was settled and the parties involved have declined to comment.

According to an article in the New York Times, allegations of ethics violations have been levied at Medtronic Sofomor Danek by a whistle-blower, a former employee. This suit was filed in Memphis two years ago and since amended, accusing Medtronic of giving spine surgeons “excessive remuneration, unlawful perquisites and bribes in other forms for purchasing goods and medical devices.” Medtronic records report expenditures of $50 million to physicians over the past 4 years. The lawsuit alleges that Medtronic hosted physicians at medical conferences with the primary objective of “inducing the physician, though any financial means necessary to use its devices.” This lawsuit remains in the court system.

References:
(1) AdvaMed Code of Ethics on Interactions with healthcare Professionals; Code, 2003, FAQS, April 2005.
(2) Bogdanich, Walt: “Possible Conflicts for Doctors are Seen on Medical Devices’” New York Times, 9/22/05.
(3) Abelson, Reed: “Whistle-Blower Suit says Device Maker Generously Rewards Doctor,” New York Times, 1/24/06.