2010 Leadership Summit

Daunting challenges ahead, Kirby tells members

SCHA President and CEO Thornton Kirby kicked off this year's SCHA Executive Leadership Summit by emphasizing that the future has never been less certain. "Hospitals have to prepare for a new way of doing business—one we don't even fully understand yet. We have to convert to new IT systems and improve the quality and safety of patient care while reducing the cost of providing care. We have to find new and better ways to align the interests of hospitals and physicians without inviting the ire of the Justice Department. We have to continue delivering care under the existing model even as we try to leave it behind," he said.

"These would be daunting challenges for any industry under the best economic and political conditions. In a treacherous economy and an unstable political environment, the likelihood of success on all fronts falls off dramatically," he told hospital CEOs and COOs from across the state during the Summit, which was held in Charleston, July 28 and 29.

Since the 1960s, the health care industry has fought some of its most significant battles over relatively modest expansions or contractions of Medicare and Medicaid rates, never contemplating that the very existence of one of these programs might be threatened. Now for the first time in our careers we hear whispers about the end of Medicaid as we know it. "At the center of the political turmoil is health care policy, a new federal law that seeks to afford health insurance coverage to 30 million Americans who don't have it. It's a bitter irony that the long-awaited health care reform law may be the catalyst that leads America to retract its commitment to Medicaid," Kirby said. "As a hospital industry, our future success depends on the stability of government."

Calling the Leadership Summit "the most important statewide meeting you"ll attend this year," Kirby outlined the topics to be addressed over the next two days: the future of the Medicaid program, the state budget, liability reform, federal health information technology requirements, implementation of federal health care reform, the Department of Justice's view of hospital/physician relationships, regulatory barriers to reform and the race for Governor.

HITECH must be a leadership project, not an IT project

Each hospital's success under health care reform will depend on the executive leadership's willingness to embrace technology as a critical resource. But each hospital board and CEO must go much further, insisting on systemic changes that will create new possibilities for improving quality, efficiency and effectiveness of care, according to two national experts who spoke at the SCHA Leadership Summit.

The HITECH Act sets federal requirements for hospitals. There are incentives to meet those requirements and long-term financial consequences for those hospitals that do not meet targets.

"This is a clinical transformation project," Rod Piechowski told the audience. "It needs to be owned, driven and supported by the board.
"HIT goals are not just hurdles to jump over to keep government off your back. They are hospital leadership's chance to influence the major changes that are coming to health care delivery. If systemic change is cast as something ‘the IT department wants," you will fail," he warned. "Embrace technology as a resource, not as the solution."

"Hospitals have no realistic choice but to implement electronic health records by 2015," according to Dan Stewart, who also addressed the hospital executives gathered for the Summit. "Do not wait. If you are not already aggressively working on the HITECH requirements, you are behind."
"The incentives are helpful, the penalties are frightening. The longer term reality is that meaningful use is an absolute requirement for the future in order to survive under health care reform," Stewart said.

Following his presentation, Piechowski posted an article to his blog regarding the SCHA Leadership Summit. You can read that blog, "The Art of Medicine and Technology," at http://www.blog.rodpiechowski.net.

Re the state budget: "We will all take it on the chin"

If anyone arrived at the Leadership Summit thinking that traditional advocacy efforts would solve the Medicaid funding crisis in South Carolina, that misconception was quickly corrected when Howell Clyborne, who serves on the State Board of Economic Advisers (BEA), told them that "Money for Medicaid just is not there" because state revenues have severely dried up during this economic recession. The BEA is responsible for forecasting economic conditions in the state for the next fiscal year and certifying the total state revenue available for budgeting.

His perspectives are particularly insightful on matters related to state budget, state government and the implications for hospitals. In addition to serving on the BEA, Clyborne is a former member of the SC House of Representatives and currently serves as vice president for community and governmental affairs for the Greenville Hospital System.

Praising the professionalism and effectiveness of SCHA's advocacy team, led by SCHA Senior Vice President Allan Stalvey, Clyborne said that our past success is no guarantee of future success. No matter how professional and effective our lobbying team, we can't expect them to produce something that doesn't exist, and "money for Medicaid just is not there.

"To demonstrate the fact that state revenues have severely dried up during this economic recession, Clyborne went through a sobering series of charts and graphs that showed nosedives among important economic factors in South Carolina such as jobs, individual income tax revenue, corporate income tax revenue, sales tax revenue, and construction starts.

He also predicted a very slow recovery based on the number of jobs our state creates in a prosperous year and the number of persons currently unemployed. In a "good year" South Carolina can create a net 50,000 new jobs, but with somewhere between 250,000 and 500,000 people unemployed, we are between five and 10 years away from a recovery.

"We will all take it on the chin and health care probably more than most" since it makes up such a large portion of the state budget, he concluded.
Following his presentation, members of a special panel shared their thoughts and answered questions from the audience. The panel included Clyborne, along with former Department of Health and Human Services Director Robby Kerr, SCHA President Thornton Kirby and Allan Stalvey.

Highlights of the panel discussion included the following points:

  • As state budget decisions are made in the future, severe deficits make strong grassroots advocacy even more important. We must not give up in our efforts to make legislators understand the importance of funding the Medicaid program.
  • Cutting Medicaid eligibility and rates won't make up the deficit Medicaid is facing. Program cuts are possibilities, and South Carolina could end up without a legal Medicaid program if additional revenue is not made available.
  • Unpaid Medicaid costs could be passed on to employers providing insurance coverage, hindering business development and job growth.
  • Recently Medicaid expenditures have grown from about $3,000 per eligible to about $4,000 per eligible. At the same time the number enrolled in Medicaid managed care has grown from 7,000 to 700,000, while the total number of Medicaid recipients has dipped. Therefore, before any policy decisions regarding Medicaid are made, there should to be a close look at the impact managed care is making.
  • It is critical that our next governor and legislature understand the implications of not funding Medicaid and are willing to work together for rational solutions to the dire situation our state faces.
  • Health care reform relies heavily on Medicaid expansion in 2014.
  • With states facing difficulties funding Medicaid, the outlook is very volatile.
  • The public mood is against increasing deficits and debts.

SCHA leaders talk with the next governor

Republican candidate for governor Nikki Haley and Democratic candidate Vincent Sheheen visited with the SCHA leadership during the Summit. Each shared their vision for the state and why they felt they would be the best choice for governor and answered questions from the audience.

When asked what she would do as governor to address the Medicaid deficit, Haley said that she would audit all cabinet agency budgets and incentivize agencies not to spend money. She expressed her opposition of the FMAP extension passed as part of the stimulus as an unfunded promise. "All federal dollars aren't good," she said, explaining that accepting federal money can lead to increased financial obligations the state simply can't afford. Her case in point is an added state expense of $910 million for a federally-mandated Medicaid expansion by 2014. She believes that Medicaid should be reformed by eliminating the fraud and abuse in the program.

Although Haley opposed the cigarette tax revenue, she said that if federal health care reform is repealed, the cigarette tax revenue could be used to help fund Medicaid and tax credits and incentives could help encourage persons to buy health insurance. She also believes that faith-based organizations should have a bigger role in helping relieve the burden providers have for caring for the uninsured.

Haley supports tort reform to help control the cost of health care and observed that something must be done to provide needed services to the mentally ill. "The state mental health budget has been cut to the bone," she said.

Following Haley, the group met with Sheheen who stressed his vision of a South Carolina where once again the governor and lawmakers work together to move South Carolina forward. It has happened before and it can happen again, he promised, reminding his audience that South Carolina made progress under past governors Dick Riley, a Democrat, and Carroll Campbell, a Republican, in economic development, education and health. Both Riley and Campbell worked with and got along with legislators in both parties, and we have not had that for the last eight years. Sheheen said that as a senator he works with anyone who is interested in what is best for the state. He said that his record proves that and he invited voters to ask their own state senators about Vincent Sheheen and his record for working with others.

A practicing attorney who represents the hospital in Camden, the candidate said that in his travels across the state, he explains to voters that job creation is critical to the future of our state and that the health care industry is a primary source of good-paying jobs. With as little as one year's training, South Carolinians can earn good incomes while providing a critical service, but we must make sure that our higher education system is ready to train the number of South Carolinians needed to fill those positions, he said.

As a member of the Senate, Sheheen has voted for fully funding Medicaid and for increasing the state cigarette tax. He is a strong advocate of maximizing the use of federal funds whenever possible to reach goals such as extending health care coverage to all South Carolinians, assuring each child a quality education, and modernizing the Port of Charleston to attract more business opportunities.

AHA's Pollack talks politics

No one offers a more entertaining and informational insider's view on the making of health care policy in Washington than the American Hospital Association Senior Vice President Rick Pollack, who heads up our national association's government relations program. As one of this year's key speakers at the Leadership Summit, he did not disappoint.

Opening his remarks with a discussion of the nastiness that has infiltrated today's extremely partisan political process, he said that we yearn for the more dignified days when the great statesmen who founded this nation debated and decided issues based on their shared vision for what was best for the new republic. Our images are of the founding fathers rising to express their views in language that would become the famous quotes we continue to call on for inspiration.

Not so fast, Pollack advises. He suggests that everyone read the Wall Street Journal's recent article on "The Feuding Founding Fathers," which includes this correction of that image.

However hard it may be to picture the founders resorting to rough-and-tumble tactics, there was nothing genteel about politics at the nation's outset. For sheer verbal savagery, the founding era may have surpassed anything seen today. Despite their erudition, integrity, and philosophical genius, the founders were fiery men who expressed their beliefs with unusual vehemence. They inhabited a combative world in which the rabble-rousing Thomas Paine, an early admirer of George Washington, could denounce the first president in an open letter as "treacherous in private friendship…and a hypocrite in public life." Paine even wondered aloud whether Washington was "an apostate or an imposter; whether you have abandoned good principles, or whether you ever had any."

Need more evidence? Pollack shared some not-so-often cited quotes by founding fathers. About John Adams, Benjamin Franklin once said, "His whole life has been one continued insult to good manners and decency." Franklin returned the favor by saying that Adams is "sometimes and in some things absolutely out of his senses." Adams" criticism was not limited to Franklin. He once called Alexander Hamilton "the bastard son of a Scotch pedlar." And Hamilton referred to Thomas Jefferson as "a contemptible hypocrite." Certainly, if 24-hour cable news had existed in those days, these quotes would have taken the place of the more famous sayings attributed to each of these great men.

With this message that we should not become overly concerned over the war of words between the parties, Pollack looked to the midterm elections and predicted that whatever happens, there are strong implications for the country. Whether the Democrats lose control of the House, as many predict, or maintain a marginal control that gives the conservative Blue Dogs more power, look for new key players, a greater focus on deficit reduction, a different dynamic on labor issues, and the Republicans having a greater stake in governance.

Republicans are reassembling the coalitions they lost in 2008, which includes the independents, seniors, blue-collar workers, suburban women, and rural voters. But these people are not leaning toward Republicans because they have greater faith in them. They just have so little faith in incumbents of both parties, and most incumbents today are Democrats. Faced with the elections and the wrath of voters, incumbents are suffering fatigue and political pressure over health care and spending issues, Pollack explained.

Regarding health care reform, Pollack says that the AHA's support is a controversial issue among some members, but insists that AHA supported only one of several versions of the proposal. In the end the AHA leadership, with input from the members, agreed that covering 32 million of America's uninsured while achieving important insurance reform provided a good foundation for working toward universal coverage. They also understood that no stakeholder or legislator got everything they wanted and that without reform the health care industry would face major payment cuts without the benefits of reform. He said the long implementation period also provides opportunities to correct what needs to be corrected in the act.

In the meantime, the hospital industry will need to remain vigilant as regulations are written to implement the act and as opponents of health care reform work incrementally to repeal individual provisions of the law.

08-24-2010 12:00 (EDT)