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Issues & Legislative Committee Report

June 8, 2006

JCAHO/Gainsharing Update

Gainsharing Agreements

A recent article in the Medical Device Link reported on a study conducted by Market Strategies Inc. of Livonia, MI, suggests that Gainsharing could be both good news and bad news for medical device manufacturers. Gainsharing appears to have the potential to deliver increased levels of sales exclusivity, with a resultant increase in market share for individual companies. However, an associated cost: a reduction in the average selling prices of devices may result.

Those participating in Gainsharing arrangements share the belief that change within the healthcare industry is imminent and hospitals need to prepare for more-challenging times ahead. The survey results suggest that hospital administrators participating in Gainsharing perceive these arrangements as being less about standardization of product use and more about standardization of patient care.

One administrator participating in a Gainsharing arrangement said, "While we're not standardizing the products necessarily, we are standardizing how the care is delivered. And what has come out of a lot of this are changes in physician practices, standing orders, and more standardization of treatment." Additionally, most Gainsharing physicians said they have not felt pressured or been required to make significant changes in the way they practice.

The study results suggest that the concerns by manufacturers of lower average selling prices are well founded due to a focus on cost reduction. Hospital administrators, both those experienced with Gainsharing and those who are not, perceive there is great disparity of pricing for like devices from one hospital to
the next

Based on findings from the MSI study, Gainsharing appears to be well accepted by those participating to date. Medical device manufacturers that understand the details of Gainsharing and what it can mean for their businesses will not only be better positioned to compete, but may actually uncover opportunities to leverage Gainsharing to bolster market share and business growth.

Source: www.devicelink.com/mx/archive/06/05/prodger.html

JCAHO

Recent surveys by JCAHO revealed RFI’s related to printed forms with unacceptable nomenclature or abbreviations. Organizations should be looking to review standard forms to ensure proper information as well as removal of outdated forms from work areas. The official “Do Not Use” list can be found at www.JCAHO.com.

Disaster Preparedness Issue − Funding

In Case of Emergency

This article discusses the discrepancy in instructions on how to plan for a pandemic emergency. The various recommendations range from the AHRMM recommendation to maintain normal supply level; two to three weeks stockpile as recommended by the latest information released by the Office of Homeland Security. This is in conflict with the November 2005 HHS flu pandemic plan which recommended hospitals stockpile for six to eight weeks.

Many in the industry have questioned the wisdom of stockpiling supplies due to space constraints as well as the cost of the added inventory. Additionally many organizations have benefited from logistic efficiencies of low unit of measure deliveries direct from distributors and no longer warehouse goods.

In all cases however it has been made clear that organizations will need to work individually of collaboratively to maintain services during a pandemic. They will not be able to rely on local, state or federal resources to sustain them in such an emergency situation.

Source: Modern Healthcare, May 8. 2006.

Quality, Medication Errors and Safety Issues

Studies Report Excess Complications Surrounding Blood Transfusions

“Surgery associated red blood cell transfusion is the single largest factor associated with increased risk of post-surgical complications following coronary bypass” Colleen Gorman Koch, MD., M.S. from the Cleveland Clinic Foundation” Transfusions are associated with transmission of infectious agents, wound infection, post-surgical pneumonia and many other complications. This is the first large-scale study to examine heart surgery-related transfusion and outcomes closely. 11,963 patients were studied.

Source: Critical Care Medicine, Journal of the Society of Critical Care Medicine, Healthcare Purchasing News, June 2, 2006.

IHI Says 100,000 Lives Campaign Exceeds Goal

“The Institute for Healthcare Improvement estimated that 122,342 patients’ lives, plus or minus 2,000, have been saved as a result of the “Campaign.” The numbers were extrapolated from the reporting hospitals to date. 14% of participating hospitals had yet to report prior to early June, 2006.

Source: Andis Robeznieks, Modern Healthcare Daily Dose, June, 2006.

Consumer Driven Healthcare

CMSPosts HospitalReimbursement Data for More Than 30 Procedures

CMS posted amounts Medicare reimburses hospital for 30 elective procedures and other common, non-surgical hospital treatments in an attempt to create greater transparency in healthcare cost and quality. The report includes prices paid and hospital specific information on the number of cases.For more information, visit www.cms.hhs.gov.

Source: Advisory Board Daily Briefing, June 2, 2006.

Low Medicare and Medicaid Rates Raise Costs for Employers, Consumers

A report by Premera Blue Cross shows people with private health insurance are paying higher prices than Medicare and Medicaid. Hospitals cost shifted 14.3% of their revenue and physicians cost shifted 12% of their revenue. A full report is available at www.premera.com.

Source: Advisory Board Daily Briefing, June 1,2006.

Survey: Consumer-Driven Health Plan Cost Growth Significantly Slower than Other Plans

The premium cost of consumer driven health plans increased 2.8% from 2004 to 2005. During the same time period total premium costs rose 8% for HMOs, 8.5% for POS plans, 7.2% for PPOs and 6.4% for indemnity plans. Businesses expect the same increases in 2006. 40% of employers said consumer driven plans offer the most effective method of managing cost and quality. The report is available at www.deloitte.com.

Source: White Paper by Deloitte, January 24, 2006.

Group Purchasing Organizations (GPOs)/Code of
Conduct Principles

Update on Aspen Healthcare Metrics and Guidant Sales Corporation

The day before the trial was to start, Aspen Healthcare Metrics and Guidant Sales Corporation reached a settlement, avoiding a potentially lengthy and costly court proceeding. The terms of the settlement are confidential."We are satisfied with the settlement in that its terms allow Aspen to continue to provide the highest quality clinical service line and physician preference item consulting which includes all cardiac rhythm management products," stated Eileen McGinnity, president, Aspen Healthcare Metrics.

For specific details on this case, visit http://www.jhconline.com/article-marapr2006-lawsuit.asp and download the March/ April Issue of Journal of Healthcare Contracting.

Most Wired Survey and Benchmarking Study

There are some articles now appearing in the media that relate certain characteristics and outcomes (such as reduced mortality, increased patient safety) associated with the “most wired hospitals”. In order to evaluate these outcomes, it is important to first understand the criteria that hospitals must meet to be named to the top 100 list and then how they measure up to other U.S. hospitals.

The annual Hospitals & Health Networks “Most Wired Survey and Benchmarking Study” asks hospitals to report on their use of IT in five key areas: business processes, customer service, safety and quality, workforce and public health and safety. The following activities are evaluated for naming hospitals and health systems to the list.

Business Processes

Customer Service

Safety and Quality

Workforce

Public Health & Safety

Top 100 Most Wired Hospitals vs. the Typical U.S. Hospitals

According to an article written by Josh Fishmann in the “US News and World Report” on July 25, 2005, several differences exist between the top 100 wired hospitals when compared with the typical U.S. hospital. First, wired hospitals tend to put more technology in the hands of patients, allowing them to find out more about their health. Second, wired hospitals make sure their technology was widely used by physicians. And third, they keep tabs on more patients using electronic alerts, tied into patients' records.

Online Patient Services

Typical Hospitals

Wired Hospitals

Review Test Results

7%

30%

Prescription Renewal

12%

32%

Appointment Scheduling

15%

42%

Request Doctor's Advice  

17%      

44%

 

Wired Tools Frequently used by Doctors*

Typical Hospitals

Wired Hospitals

Clinical Guidelines

38%

59%

Order Entry − Lab

34%

52%

Order Entry − Radiology

32%

48%

Order Entry − Pharmacy  

27%      

41%
*At least 61% per hospital      

Alert System Using Electronic Surveillance

Typical Hospitals

Wired Hospitals

For Critical Care Units

52%

77%

For Step-down Units

33%

56%

For Surgery/General Medical

24%

34%

No Surveillance System

45%      

21%

                                                            

The Good and the Wired

Josh Fishmann also reports that 47 of the top wired hospitals also made the list of “America’s Best Hospitals” in U.S. News & World Report's ranking of hospitals based on their expertise, their ability to save lives, their reputation among specialists, their commitment to nursing excellence, and several other factors.

There is another study that appeared in www.marketer.com that compared the most wired hospitals against the least wired hospitals and the variances were much greater than what is reflected in the above tables. One of the interesting findings in this study is that 30% of “The Most Wired Hospitals” provide clinicians with access to CPOE functions from more locations (physician offices, ambulatory settings, or other remote locations) as compared with only 5% among the least wired

According to an article in July, 2005 “Information Week”, Maryanne McGee reports that an American Hospital Association study found that a 7.2% lower mortality rate was reported for the 100 "Most Wired Hospitals” when compared to other hospitals.While the study did not prove a direct cause-and-effect link between lower patient death rates and higher IT adoption at those hospitals, the findings "do prove that advanced clinical IT and lower mortality rates are present at the same hospitals," says Alden Solovy, executive editor of Hospitals & Health Networks.

Some unique technological examples from the top 100 include: