Managing expectations

Tarwater talks Medicaid expansion, initiatives

Editor’s note: As CEO of Carolinas HealthCare System, Charlotte, N.C., Michael Tarwater leads one of the largest public hospital systems in the U.S. and faces carrying out its mission in two states that have shunned the coverage expansions of the Patient Protection and Affordable Care Act. With $4 billion in operating revenue last year, the organization owns, leases or manages 19 hospitals in North Carolina—including the 874-bed Carolinas Medical Center in Charlotte—and another four in South Carolina. Modern Healthcare reporter Maureen McKinney spoke with Tarwater about the federal healthcare reform law, other changes afoot in North Carolina’s Medicaid program, and the system’s participation in new payment models and quality initiatives. Here is an edited excerpt:

Maureen McKinney: North Carolina blocked the Medicaid expansion that is part of the healthcare reform law. Tell me how your facilities and the patient populations that you serve will be affected by that?

Michael Tarwater: I think it is pretty clear that that means there is money that is going to be left on the table, not available for the expansion of Medicaid in North Carolina. It is going to be more than $4 billion over the next 10 years. With the passage of the ACA in 2010, provider payments from Medicare began to be cut and that’s continued. And what we see from this point going forward is that’s another $7.4 billion for North Carolina Hospitals.

McKinney: Last month, Gov. Pat McCrory of North Carolina also proposed sweeping changes to the state’s Medicaid system that incorporate the use of these comprehensive-care organizations that will manage care for Medicaid beneficiaries. Tell me how it might affect your healthcare system.

Tarwater: The governor, first of all, has goals that he has set, which we all agree with. And they would be the things that you might guess: That we would do a better job of managing the care of the people who are under the Medicaid program and try to make the program more efficient, more predictable. The plan that he proposes to put in place is that you would have out-of-state investorowned, managed-care companies come in and take responsibility for that care. But we put an alternative on the table that we believe meets the stated goals that the governor has for Medicaid in North Carolina and it is through a community care network, a

primary-care driven, provider-driven network that would manage the care of those patients. It is a program that was piloted in North Carolina. There is infrastructure already in place.

McKinney: You recently announced a collaborative agreement with Aetna.

Tarwater: We are doing more and more to work with third-party payers, and Aetna is one example that rather than just the traditional provider role that we play as a system— and because of the depth and breadth of the continuum of care that Carolinas HealthCare System has—we are able to play a closer role in really managing the care with the payer. And there are incentives for the payer, the

patient and the provider in a partnership like this to really try not to just fix people when they are sick, but to try and keep them healthy and keep them from needing those services that we typically associate with healthcare providers.

McKinney: Are there other accountable care organization-like shared-savings models that you are looking at within your healthcare system right now?

Tarwater: I wouldn’t put necessarily an ACO label or a shared-savings label on them, but in terms of innovative ways to work with both payers and engage patients and engage the community with the goal of improving the overall health and reducing utilization and lowering costs, there are a number of other things going on. We have a similar venture with Coventry, a different group. One is a large employer group, and one is a small employer group, and I think you’ll see us do more and more of those types of things. From an ACO perspective, we look at ourselves in terms of readiness to perform the generic ACO functions, and we think we are in pretty good shape to do that. We think we have all the parts and pieces.

McKinney: And how is Carolinas HealthCare participating in the Partnership for Patients? Are you part of a hospital engagement network?

Tarwater: We actually are a hospital engagement network. We thought that with the size of our system and the geographic distribution and density of our system that it made sense for us to apply. We were one of just a handful of systems that were awarded a HEN contract. And we’ve made good progress looking at our performance against the average of the others.

McKinney: Do you think that the HEN targets—a 40% reduction in hospital-acquired conditions, 20% reduction in readmissions by the end of this year—are realistic?

Tarwater: It’s hard to say because I think that HENs across the country are approaching this differently. They are certainly sharing best practices and everybody will be exposed to new and better ideas. I think on the readmission rates we are going to come close. Hospital-acquired conditions, I think it would be better to set an aspirational goal that you might come close but not quite get there, than it would to set goals that are a cakewalk. This really stretches the industry to do something important and dramatic.