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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. —

Andis Robeznieks

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.

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