LIVONIA, Mich.— Blue Cross and Blue Shield of Michigan and Trinity Health-Michigan have signed a three-year reimbursement contract that gives Trinity’s 12 hospitals in Michigan financial incentives for improving care with affiliated physicians. Blue Cross has similar contracts with Warren-based St. John Providence Health System and Royal Oak-based Beaumont Health System in Southeast Michigan, but the Trinity contract is the first one that applies statewide. “The current fee-forservice approach to paying hospitals is failing to improve care and lower its cost,” Michigan Blues CEO Daniel Loepp said in a statement. The contract will begin first at the four Mercy Health Partners hospitals and St. Mary’s Health Care in western Michigan. In July, the other seven Trinity Health hospitals that are affiliated with Ann Arbor-based St. Joseph Mercy Health System will move under the new reimbursement arrangement. Under the contract, hospitals will share savings with Blue Cross through closer care coordination. Savings will come by eliminating redundant tests and procedures and unnecessary hospitalizations and re-hospitalizations, and by preventing medical errors. Blue Cross also is funding improvements to Trinity’s information technology system to better track patient care between hospitals and physicians. “Insurers pay for most every treatment, no matter how effective. But we don’t pay physicians and hospitals for some things that really improve patient health, like proactively contacting people about their follow-up care or medication compliance,” said Susan Barkell, Blue Cross’ senior vice president for Health Care Value.
— Crain’s Detroit Business DETROIT—
Henry Ford Health System, a six-hospital system based in Detroit, reported a 15% decrease in net income last year to $53.1 million from $62.9 million in 2011. The net income decline came primarily from a $23 million increase in uncompensated care and $36.4 million in expenditures for the installation of a systemwide electronic health-record system, Chief Financial Officer James Connelly said. Total revenue increased 13% to $4.46 billion in 2012, an increase of $490 million from $3.97 billion in 2011. “We had some growth in patient volume, but most of the revenue increase is from a full year of revenue from Midwest Health Plan (acquired in November 2011)” and continued growth of Health Alliance Plan, said CEO Nancy Schlichting. Connelly said $300 million in new revenue came from Henry Ford’s health insurance operations and about $100 million from increased patient revenue. Of the $233 million in uncompensated care last year, an 11% increase from 2011, Connelly said $82 million was in bad debt, $61 million was in charity care and the remainder was in unpaid costs of Medicaid and Medicare. Schlichting said the increase in bad debt, which rose 28% in 2012, was driven by the increase in copayments and high-deductible health plans. “This market is swinging away from first-dollar coverage to high deductibles and it is making it more difficult to collect” from patients, Connelly said. Schlichting said Henry Ford leaders knew 2012 and 2013 would be tough years because of the Medicare cuts and technology costs, and she predicted the system “will start to see improvement in 2014.” Last year, Henry Ford announced plans to merge with three-hospital Beaumont Health System, Royal Oak, Mich.
— Crain’s Detroit Business
PALO ALTO, Calif.—
Stanford Hospitals & Clinics embarked on the four-year construction of a state-of-the-art and seismically sound hospital. The hospital broke ground on a facility that will add 824,000 square feet to the existing hospital and expand inpatient capacity to 600 beds. The project is part of a $5 billion renewal project at the medical center, which also includes expansion of the Lucile Packard Children’s Hospital. The organization is paying for the upgrades with hospital funds—including cash and about $600 million in bond debt—and philanthropy. A group of Silicon Valley companies, including Apple, eBay, Intel Corp., Intuit, Oracle and NVIDIA, has committed $175 million so far. Construction is scheduled to wrap up in 2017, with patient care beginning in 2018. California lawmakers imposed new seismic-safety standards on hospitals after the 1994 Norridge earthquake in Los Angeles, which rendered several Los Angeles hospitals unable to care for people injured in the quake. The Legislature has allowed a series of extensions on the deadlines for the work, allowing compliance as late as 2020.
—Gregg Blesch LOS ANGELES—
The Medical Board of California is backing measures to combat prescription-drug abuse in the wake of a report that found a link between physician-prescribed narcotics and overdose deaths. The board, meeting in Los Angeles, voted to support legislation requiring coroners to report prescriptiondrug overdose deaths to the board and to give the panel new power to halt a doctor’s prescribing in some cases, the Los Angeles Times reported. The board also voted to create a task force to develop guidelines for prescribing painkillers. The medical board is charged with overseeing more than 100,000 physicians in California, but its president said in March that it lacks the power to identify those who might be overprescribing. Dr. Sharon Levine told a joint legislative committee that the board lacks the authority to use the state’s tracking system, the Controlled Substance Utilization Review and Evaluation System, to identify doctors who may be purposely overprescribing unless it is acting in response to a specific complaint. A Times investigation last year found that between 2006 and 2011, doctor-prescribed drugs caused or contributed to nearly half the accidental deaths involving prescription drugs in four Southern California counties. In its review, the newspaper reported that at least 30 Southern California patients died while their doctors were under investigation. While the board sanctioned all but one of those 12 doctors, in most cases, doctors are allowed to continue writing prescriptions after they are sanctioned. —
Associated Press DENVER—
The Mental Health Center of Denver’s new Recovery Center, which opened last July, was recently awarded LEED platinum certification—the highest level of recognition under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. The center is the first
healthcare institution to earn LEED platinum certification in Colorado. Based on sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality, a building can earn basic LEED certification or achieve three higher levels of recognition: silver, gold and platinum. LEED-certified buildings are designed to lower operating costs and increase asset value; reduce waste sent to landfills; conserve energy and water; be healthier and safer for occupants and reduce harmful greenhouse gas emissions. The Recovery Center is part of the old Colorado University Health Sciences District that was vacated when new facilities were opened on the Anschutz Medical Campus in Aurora, Colo., on the site of the former Fitzsimons Army Medical Center. The Recovery Center building was constructed in 1952 as the Mount Airy Psychiatric Center. The retrofit cost $15.5 million, and LEED points were earned for recycling 72% of construction waste, generating more than 10% of its own energy through a rooftop solar array, landscaping with the use of native plants that have low water requirements, and taking steps to reduce indoor air pollution. —
This artist’s rendering shows Stanford Hospitals & Clinics’ state-of-the-art and seismically sound facility that will add 824,000 square feet to the existing hospital and expand inpatient capacity to 600 beds. Construction is scheduled to end in 2017.