Minnesota Hospital Association

Newsroom

November 16, 2017

Health Care Leader: Nov. 16, 2017

In this issue 

Winter Trustee Conference scheduled for Jan. 12-14

The MHA Annual Winter Trustee Conference, themed “Connecting Care and Communities,” will be held Jan. 12-14 at the Marriott Minneapolis Northwest in Brooklyn Park. Conference highlights include presentations from health care consultant Karma Bass; recording artist, physician and champion disabled athlete Dr. Ronan Tynan; and author and co-star of MTV’s “The Buried Life” Ben Nemtin. 

  • Karma Bass will discuss the important role individual leaders at the board and executive level can play in determining the success or failure of efforts to partner in the community, whether for population health or increased market presence. 
  • Reflecting on his life and career thus far, Dr. Ronan Tynan will share what it means to be resilient and identify recurring characteristics that, when faced with adversity, make bouncing back possible. 
  • Ben Nemtin closes our conference with a thought-provoking, funny and moving inspirational story sharing the goals and dreams of the four Buried Life guys, which vividly depicts the timeless themes that every generation faces growing up. 

Eight general sessions and 15 breakout sessions will focus on issues of mental and behavioral health, finance, patient safety and the future of health care. For more information or to register, download the conference brochure or visit the MHA website. The Marriott sells out quickly so reserve your room online now. return to top  

Karma Bass to lead annual Training Camp for Rookies at Winter Trustee Conference

Health care consultant Karma Bass will lead the annual Training Camp for Rookie Trustees at this year’s Winter Trustee Conference. 

This extended session, scheduled for Friday, Jan. 12, will help newer trustees: 

  • Understand fundamental issues and expectations of health care boards and trustees 
  • Understand the challenges of governance in leading through reform 
  • Learn about basic board and trustee roles and responsibilities 
  • Gain an overview of basic finance and reimbursement 

The session is designed for any trustee who has served less than three years on his or her hospital board. 

The Winter Trustee Conference is scheduled for Jan. 12-14 at the Marriott Minneapolis Northwest in Brooklyn Park. Click here for more information. return to top 

New educational videos for board meetings available on MHA’s website

MHA has developed a series of board education videos designed as short introductions on specific health care topics to be shared during hospitals’ board meetings or for individual use. MHA recently filmed eight new videos. These videos, as well as previously recorded videos, are available on MHA’s website. Topics and speakers include: 

  • What the Board Should Know to be Ready for Any Investigation 
    • David Glaser, attorney, health law group, Fredrikson & Byron, P.A., Minneapolis, MN 
  • 340B – Background and Key Compliance Issues 
    • Renee Gravalin, partner, health care practice, Eide Bailly LLP, Fargo, ND  
  • 5 Facts to Know About Donation/5 Questions to Ask About Donation 
    • Sara McFee, manager of donor development, Minnesota Lions Eye Bank, Saint Paul, MN 
  • Cybersecurity – What Questions Should Management and the Board Be Asking About Cybersecurity Risks and Controls 
    • Karen Andersen, manager, risk advisory services, Eide Bailly LLP, Minneapolis, MN 
  • The 2017 Legislative Session in Review and 2018 Session Preview 
    • Mary Krinkie, vice president, government relations, Minnesota Hospital Association, St. Paul, MN 
  • HIPAA Risk Analysis – Does Your Assessment Adhere to the OCR Guidelines? 
    • Janice Ahlstrom, FHIMSS, CPHIMS, CCSFP, RN, BSN, director, Baker Tilly Virchow Krause, LLP, Minneapolis, MN 
  • Compensation for Physician Executive Roles: A Case Study 
    • Cathy Kibbe, principal consultant, physician services, Arthur J. Gallagher & Co., Minneapolis, MN 
  • Health Care Disparities 
    • Tania Daniels, vice president, quality and patient safety, Minnesota Hospital Association, St. Paul, MN 

MHA adds additional videos annually. If you find other topics that you would like MHA to explore, please contact Peggy Westby, MHA vice president of education and member services, 651-603-3518. return to top   

Helipad safety: Training and maintenance Helipad safety training video available from Life Link III

Now you can conveniently provide timely training on safe operations for your staff members around your hospital helipad. Providing consistent reproducible training in a 24/7 environment can be challenging, especially with the added complexities of an aircraft landing on your hospital property. Life Link III’s Hospital Helipad Safety Video provides instructions for staff assigned this responsibility, whether your facility has a ground or rooftop helipad. To procure a helipad safety video version specific to your organization, please contact Life Link III’s safety manager at 1-800-283-4025 or [email protected]. There is no charge for the video. 

The video is available for immediate download at www.lifelinkiii.com

Winter weather helipad safety reminders
During the winter weather season, we encourage you to review of your facility’s helipad snow and ice management plan. Active and robust plans are essential to the safety of patients, crews and operations. 

The most successful plans designate a hospital security or facilities representative to check the condition of the helipad on a scheduled basis, especially during times of recent precipitation or high winds, to ensure the pad is kept clear of contaminants. Slips and falls are a leading cause of injuries to crews. Flying snow and ice resulting from rotor wash decreases pilot visibility during a critical phase of flight and can damage the aircraft and hospital property. 

Life Link III recommends following the guidelines set forth from the National EMS Pilots Association: 

  • Snow should be clear of the pad and as much of the surrounding safety area as practical. Snow that has been removed from the area should be placed far enough from the helipad as to not become an obstruction hazard to main rotor or tail rotor systems. 
  • All helipad paint and markings should be completely cleared of snow so pilots can adequately visualize the information presented during landing. 
  • Avoid using rock salt (sodium chloride) or sand to remove snow and ice. Despite the small size, it can become a projectile and cause serious injury. Rock salt is also extremely corrosive and damaging to helicopters. Use a product containing urea or other noncorrosive aviation friendly alternatives. 
  • Snow melt systems utilizing steam, heated glycol or electrical heating coils may be the best course of action for rooftop helipads and are also a viable option for ground-based helipads. 

With other safety‐related questions or concerns, email [email protected] or contact the Life Link III safety manager at 1-800-283-4025. return to top   

Ten Minnesota trustees receive MHA board certification

Ten Minnesota hospital trustees were recognized for completing the MHA board certification process at the Summer Trustee Conference on Friday, July 14. They are:  

  • Carol Anderson, North Suburban Hospital District, Fridley 
  • Tom Anderson, Swift County-Benson Health Services 
  • Linda Dietrich, Lakewood Health System, Staples 
  • Joseph Fagnano, Granite Falls Health 
  • Sally Grove, Lakewood Health System, Staples 
  • Michelle Knutson, Ortonville Area Health Services 
  • Robert Mueller, Lakewood Health System, Staples 
  • Brenda Sather, LifeCare Medical Center, Roseau 
  • Nathan Schmidt, Chippewa County-Montevideo Hospital 
  • Kathy Sterk, Fairview Range Medical Center, Hibbing 

For those interested in becoming certified, information can be found here or on the trustee section of the MHA website under “Board Certification.”  

You can also check your progress toward certification at any time here or on the trustee section of the MHA website under “Board Certification.” 

More information about the MHA Advanced Certification Program can be found here. Complete this form to let MHA know of your intention to complete the advanced board certification process. return to top   

QAPI: What it means and why it matters

By Elizabeth Winchell, CHPC, attorney, Nilan Johnson Lewis, Minneapolis, MN   

Hospitals have long devoted significant attention and resources to quality, but evolving regulatory requirements mean hospitals now need a formalized approach to quality assessment and performance improvement (QAPI). To discuss QAPI, we need to define our key terms:  

  • Quality assessment is looking back at what happened to understand current outcomes, using tools like root cause analyses. 
  • Performance improvement is working to systematically improve upon current outcomes, using tools like performance improvement projects. 

This discussion focuses on Centers for Medicare and Medicaid Services (CMS) requirements applicable to Medicare-participating hospitals, but the standards of hospital accreditation organizations, including The Joint Commission, contain similar requirements.   

QAPI basics
Since 2003, CMS has required hospitals to develop and maintain QAPI programs as a Condition of Medicare Participation (CoP). The CMS Interpretive Guidelines to the Medicare Hospital CoPs now refer to QAPI throughout, from governing body requirements to patients’ rights to physical environment.   

What does a QAPI program actually entail? Under current regulations, a QAPI program is data-driven and hospitalwide, involving all hospital departments and services. It focuses on indicators related to improved health outcomes and the prevention and reduction of medical errors and adverse events. Hospitals must have ready evidence of their QAPI programs for review by CMS.   

Sometimes hospitals design impressive quality plans, but still fall short under CMS QAPI requirements. This might happen, for example, when the hospital fails to concentrate its quality efforts on high-risk, high-volume or problem-prone areas. Or the hospital might not undertake a range of performance improvement projects proportional to the scope and complexity of its services and operations. Both are CMS QAPI requirements that surveyors are actively assessing.   

Areas to watch
As CMS surveyors scrutinize hospital QAPI programs more closely, they are increasingly citing deficiencies in this area. Because QAPI is both the focus of a specific CoP and referred to within the interpretive guidelines for many other CoPs, having trouble with QAPI can expose a hospital to multiple deficiencies for exactly the same issue or situation. Here are two areas to watch carefully: 

Contracted services. Surveyors are highly focused on contracted services right now, making it a major QAPI risk area. To be hospitalwide, QAPI programs must include services furnished under contract or arrangement (think dialysis, infection control and environmental services, as examples). Hospitals sometimes overlook contracted services when developing their QAPI programs, but surveyors are specifically directed under the CMS State Operations Manual to request copies of a hospital’s service contracts and review them for evidence that they have been incorporated within the hospital’s QAPI program. 

A CMS surveyor worksheet last updated in 2015 suggests that CMS expects a contracted service to be part of a hospital’s QAPI program unless the contract is for “exclusively administrative contractual services, e.g., payroll preparation.” This is important guidance because it offers hospitals a sound basis for potentially carving out at least a subset of contracts from their QAPI programs (those for “exclusively administrative” services). It’s helpful to note, too, that while this particular worksheet was developed for use by surveyors assessing hospital compliance with QAPI requirements, CMS has encouraged hospitals to use it as a self-assessment tool.    

Executive responsibilities. At the end of the day, the hospital’s governing body bears ultimate responsibility for QAPI. Under the QAPI CoP, the governing body is expressly accountable for the hospital’s QAPI program and its priorities, as well as for determining the number of distinct improvement projects the hospital conducts annually and devoting adequate resources to QAPI.  

Surveyors often look for evidence that QAPI efforts are being appropriately rolled up through leadership to the hospital’s governing body. This can be challenging if a hospital’s quality work stalls within a department or stops at the medical staff committee level. Hospitals will be better prepared for CMS surveyors if they effectively document (such as through meeting materials and minutes) that quality assessment and performance improvement efforts are both directed by and timely reported to the governing body.  

For more information contact Elizabeth Winchell at 612-305-7703. return to top   

Innovation in the revenue cycle

By Michael L. Duke, principal, Healthcare Consulting Practice, Baker Tilly, Clemmons, NC 

Not too long ago, “revenue cycle” and “innovation” would have never been associated together, but that is changing quickly. There are a variety of companies looking at leveraging several point solutions to solve specific problems in revenue cycle processes that will have a significant impact in performance. While the awareness is growing, there is an inherent lack of knowledge about what is innovative and will drive significant results.   

In order to proceed, it is appropriate to define “innovative” in these terms from the book “Innovation Navigation” by Kurt Baumberger: “In order for something to be truly innovative, it must be a radically new idea, method or device.”   

Now, to apply this to revenue cycle operations, it should be modified to: “In order for something to be truly innovative, it must be a radically new idea, method or device that has a significant impact on cash flow, net revenue improvement or cost reductions.”   

With this in mind, there are four considerations necessary to drive innovation throughout the revenue cycle. 

  1. The “Most Valuable Pilot” approach. Too many organizations pick small pilots to solve small problems to safely determine if the solution will work. Don’t we owe our organizations more than that? Anyone can play it safe, but to drive maximum value, organizations should assess total operations, rank initiatives by their financial value and then select the highest value-driven project. Once complete, move to the next project and continue.  
  2. Overdependence on core vendors. Organizations often place too much dependence on few vendors who do not provide proactive solutions for some of the more prevalent issues in health care today. Most of the big-box vendors have reactionary solutions (e.g., place a rejection in a work queue and have a person review it). While the desire for single-vendor solutions is admirable, in reality organizations are not going to effectively solve all issues with a single-vendor approach. Imagine going to the same physician no matter what the diagnosis. Heart problems? I’ll go see my general physician for a stent. Cancer diagnosis? My general physician should know the protocol to follow. Organizations can and should do better. Don’t stop exploring solutions just because they may be in addition to your core vendor. If there is a ROI, then another vendor should be seriously considered.   
  3. Use of internal resources to solve complex problem. If the issues have a high impact on performance, your organization should consider hiring outside help. The challenge with an internal approach is most staff already have a day job and lack experience with innovation and complex transformation implementation. Taking on a significant change initiative requires a unique set of skills and content knowledge. When you have a major plumbing problem, do you say, “Well, I have a pipe wrench, let’s give this a go,” or do you call a plumber? Experts are available! Not to mention, using internal resources can cost your organization more between delays and hidden expenditures. 
  4. Lack of proper analytics to make adjustments and measure success. This is critical. There will be times when the original estimate of a future state requires adjustments. If the right baselines and measurements are not in place, it is tough to make modifications. Operational or process analytics that ingest large volumes of transactional data and prebuilt analytics to measure performance and progress are crucial to success and must be timely. It would be challenging to make changes if you only receive data analytics on a monthly basis. These analyses must also have the ability to change on the fly so that anomalies can be explored and trends evaluated in a variety of scenarios as they occur. Best case, you would also have “what if” capability so as adjustments are identified, analyses can be performed on the impact of making specific changes. 

If you can safely navigate the four components that are necessary to drive innovation, then your organization has a chance at doing something significant with material impact on your revenue cycle performance.   

For more information contact Michael L. Duke at 336-416-0568. return to top   

Financing during uncertain times: What is best for your hospital?

By Michael Haines, vice president, First American Healthcare Finance, Fairport, NY 

Health care finance professionals do not have it easy today. A combination of sequester cuts, transitions toward value-based reimbursements and legislative uncertainty have created a complex maze for finance leaders. Most spend an increasing amount of time looking for new ways to bend the cost curve. 

A focus on your organization’s capital structure will be increasingly important over the next few years, as adaptability and flexibility are essential to the long-run success of an organization. This article explores the challenges and opportunities of two sources of capital available to health care providers: 

  • Bond financing 
  • Equipment leasing and financing  

Current economic factors
Capital markets continue to see increased volatility. The positive signs in economic growth and employment will likely lead to change in current monetary policy sooner than originally forecasted. The Federal Reserve has expressed intentions to taper permanent open market operations that have been providing $85 billion in liquidity each month to the treasuries and mortgage-backed securities market (i.e. QE3). This has been the driver behind historically low interest rates. The move has begun to increase short- and long-term interest rates. Finance leaders are feeling pressure to lock in low rates as soon as possible.   

Bond financing
Bond financing will always be the primary debt product in health care. The low-rate environment we have experienced over the past few years has helped fuel new debt issuances throughout the industry. Hospitals around the country have looked to debt markets as an attractive source of long-term fixed rate financing. The low rate of return on treasuries has also led investors to seek higher-risk debt products, which resulted in spread compression between risk ratings. This too has helped hospitals with higher-risk ratings issue debt at very competitive rates.   

Challenges:
There are several downsides to issuing debt. In general, they come with material issuance costs and can be administratively burdensome. Time is a critical component that is necessary when issuing debt, as it can take anywhere from three months to two years, depending on the amount and structure. 

Traditional credit enhancements that have helped hospitals access lower rates are becoming scarcer. Enhancements such as bond insurance are challenging and costly. Financial reform aimed at transparency and risk mitigation is going to challenge vehicles like letters of credit in the near future, making banks less willing to secure riskier borrowers. 

Depending on what the capital will be used for, bond financing is generally not a good source for short-term projects or equipment that has a useful life of less than seven years. Issuing long-term debt to finance short-lived assets is a costly strategy, even at low rates. The most significant negative issue with debt is the restrictive covenants and blanket liens that limit future flexibility. During the next few years, flexibility to adapt to changes will be one of the most important aspects of a hospital’s capital structure. 

Debt has been an attractive source of capital for many years. As rates continue to increase, new issuance will likely decrease. The current economic changes will make it challenging to lock in the low rates with bonds, given the lead time necessary for an issuance. Lastly, the biggest risk in debt financing today is the limitations it imposes on an organization’s capital structure. The uncertainty surrounding health care reform in the Patient Protection and Affordable Care Act stands to be the biggest risk if an organization is not able to be nimble and adapt to changes.   

Equipment leasing and financing
Like bond financing, the low-rate environment has fueled equipment leasing and finance products over the past few years. Health care financial professionals have strategically used this source of capital to help prepare for the uncertainty that lies ahead. Equipment leasing has provided attractive and flexible capital to hospitals for many years.

Here is why: Time equals real money
Lease financing products are intended for specific equipment or projects that have a useful life of seven years or less. Hospitals are able to take advantage of the low, fixed rates, without the issuance burdens or costs typical of the bond debt. The lead time is measured in days, not months or years. This is a convenient and flexible source of capital that will be essential to hospitals as they navigate the pending changes. 

The shorter terms allow hospitals to strategically fund projects and equipment with a financial product that is closely aligned with the useful life with the same low – if not lower – all-in rates than the bond market. 

Finally, as the leases and loans are collateralized by the equipment being financed, these products do not come with blanket liens or debt covenants that restrict a hospital’s flexibility in the years to come. Each project can be evaluated independently for appropriate term and structure. These products also provide hospitals with the option to use off-balance sheet financing. This can help increase efficiency metrics such as ROA, but more importantly navigate around existing covenants the hospital might have due to prior debt issuances. 

Utilizing lease financing as part of a hospital’s capital structure can be a strategic, cost-effective and timely source of capital. Health care organizations seeking flexibility and stability in the coming years should look to these products as a complement to their existing capital structures. 

For more information contact Michael Haines at 585-643-3318. return to top