Challenges Facing Health Care in Louisville

by Stephen Williams, President and CEO Norton Healthcare

Publisher's Note: Robert Shircliff, President and CEO of Jewish Hospital & St. Mary's HealthCare and Stephen Williams, President and CEO of Norton Healthcare, presented Meeting Tomorrow's Challenges Today- Healthcare Innovation at the GLI Business at Breakfast meeting on Thursday September 14. Bob Shircliff discussed health care achievements in Louisville in the November issue of KHF. Steve Williams discussed some of the many challenges facing health care which are published in this issue. Because of the pertinent content of the material covered, we asked both of them if KHF could publish their speeches. Some of the greeting remarks were not included however.

It is important that citizens and leaders in our community understand challenges in the world of health care -- if we as a society are to responsibly address the real issues that are getting more serious by the year. You are greatly affected by what happens with our ability to provide safe, quality patient care when you and your family, friends, and employees need it, at a cost affordable to you as a consumer, an insurance premium-payer, and as a taxpayer. 

Let's start with the quality of care:

We have available in this nation the best health care on the planet.  Quality health care is about applying the best available medical training and technology – to one patient at a time.  Our challenge is to provide the most appropriate, highest quality care: whether the best outcome can be a full recovery, helping a patient through a life-changing health event, or compassionately helping a patient and family through end-of-life issues.

At Norton Healthcare, we are proud of our state and national leadership position in measuring and reporting our quality scores, compared to state and national averages, on over 400 clinical quality indicators. Most important, we use the data to determine where we should focus the efforts of our 9300 employees and the nearly 2000 physicians on our medical staff in making improvements to our patient care processes, to protect patient safety and enhance patient outcomes.

The next challenge is outcomes and health status; the so-called value equation.  In this nation, we're spending approximately 15 percent of our Gross National Product on health care, among the highest in the world, yet our health status is far from the best.  And, in Kentucky , it gets even farther from the best.  The incidence of heart disease, Kentucky 's biggest killer, is 19 percent higher than the national average.  Cancer overall is 16 percent more prevalent than the nation's average – with prostate cancer 22 percent over the average, lung cancer 34 percent higher, and pancreatic cancer 50 percent above the national average.  So, while the quality of specific care given is great in this nation, and in our state and city, the value equation of overall health status compared to the expenditures for health care, is not nearly where it should be.

One of the reasons for these bad statistics is that some citizens make lifestyle decisions that put them at much greater risk:  Smoking and lung cancer, for example. But when we look more closely, just as Dr. Adewale Troutman of Louisville Metro Health Department reported from a recent study, we find that there is significant disparity among segments of our populations and geographic sections of our community that have to do with access to care.  The truth is, every person in this nation, and in this city, has access to health care, because every hospital emergency room, by law, has to examine a presenting patient and address the needs. But the real problem in the value equation, and the access issue, is that an unacceptably large percentage of our citizens do not have routine access to primary care medicine, which includes education, prevention, early detection and early intervention.  It is only with those components intact and working that we can ever improve the overall health status of the population and, commensurately, reduce the huge financial burden placed on society and taxpayers to pay for those who didn't get the right care when they needed it.  

As the richest nation on earth, and as a city, we must accept nothing less than every citizen having access to a well coordinated system of basic health care including primary care. Nearly 16 % of our nation, over 47 million, and about 14% of Kentuckians did not have insurance for at least part of 2005, and in 53% of those uninsured households, at least one person was working full-time.  They just couldn't afford insurance. 

Is access to basic health care a right for every person, and considered a responsibility of society, like public education, or police and fire protection, or safe water to drink?  Virtually everyone says it should be a right, yet we haven't addressed how to implement that right.  Costly?  Of course.  But the cost of not having such a system is choking our economy.

Let me add a footnote of admission:  we as providers must share the blame as well as be leaders in the solution.  For example, as the areas largest cancer care provider, I would suggest that to confront the daunting cancer statistics in our city and region what we don't need is more costly hospital beds dedicated to cancer -- what we do need is more collaboration with one another, more partnerships, and more of our resources spent on getting prevention/early screening, detection and intervention to all citizens so that we can save more lives. We need more resources directed to prenatal care, so we won't have to have more costly resources spent on neonatal care for avoidable premature babies.

At Norton Healthcare we're beginning a strategic planning process to provide a roadmap for the next five-plus years for our organization, and we will be looking earnestly at what we should do as the largest healthcare provider to help address these opportunities.  And we will look at how we can align with existing and new partners in our community, and beyond, who want to make a difference. 

Now, let's talk more specifically about healthcare financing system. I believe the healthcare financing system in this nation is inefficient, uncoordinated, and unacceptably costly to administer. Add to that the exponentially huge costs to society, and ultimately to us as premium payers and taxpayers, of paying for those who don't get coordinated care soon enough.

Examples abound of our dysfunctional system with mis-aligned financial incentives.  For example, hospitals get paid in a variety of ways, such as by the case, or by the day, or through widely varying discounts from charges.  These financing mechanisms give varied and inconsistent financial incentives, and often have very different financial incentives for the physicians and the hospitals that treat the same patients.   

At Norton Healthcare, we have more than 60 different payment arrangements for our more than 60,000 hospital admissions and over 1.2 million occasions of service annually.  The infrastructure costs of administering such a non-system, nationwide, is ridiculous and wasteful, not to mention that it adds no value to the patient or payer. No one is satisfied….the employer, the insurer, the government, the provider, or the consumer/patient.   

Forty-two states are in a Medicaid crisis; and more than 50 million baby boomers are on the way to Medicare in the next ten years.  In the average Kentucky hospital well over 50 percent, and frequently as much as 70-80 percent of patients are paid by the government through Medicare or Medicaid.  And, in Kentucky , on the average, hospitals get paid about 70 percent of the costs of caring for Medicaid patients. 

Shifting the deck chairs, using the same dollars, won't overcome the challenge.  Providers will appropriately be expected to keep up with replacement of aging facilities, state of the art technologies, adequate medical workforce, and so on, but the math simply won't work. 

That takes me to the issue of “capacity.”  In health care, the general rules of economics -- supply and demand -- simply don't work as well.  There are lots of reasons, but the reality is that in healthcare, volume and hence the costs to society, can be increased by simply increasing the supply -- needed or not.

To prevent unneeded proliferation and duplication, Kentucky has Certificate of Need laws.  We, as providers, have to prove “community need” before we're allowed to build or create certain services or go over certain thresholds of capital expenditures. States without CON have seen incredible amounts of waste and duplication.  CON is a pain in the neck for the state to administer, and most providers would prefer to keep it if it just applied to competitors. But I believe certain elements of CON are critical to avoid runaway construction, duplication, and unnecessary inflation of healthcare costs.  I would suggest you support retention of CON in Kentucky .  The bottom line is that, without CON, it is likely that your bottom line healthcare costs will increase even more. 

Let me quickly mention several other challenges in healthcare:

One key challenge is the shortage of healthcare caregivers and physician workforce.  An alarming percentage of nurses and other caregivers are retiring in the next 10 years, just as the baby boomers are reaching our peak demand years for healthcare services.  Locally, we have problems, but not nearly as severe as elsewhere, because we have tremendous educational partners in the local universities and colleges.  At Norton, we have instituted several programs that have received local, state and national attention as “best practices,” including our Norton Scholars program, which has over 500 students on full scholarships preparing for caregiver careers. 

But the prospect for physician shortages is more daunting. The physician workforce is aging, and it's mal-distributed by geography and specialty in Kentucky . More physicians leave our state each year than start practices.  Numbers of medical school applicants in Kentucky are declining and productivity of graduates is less and less – 60 to 70 hour weeks are not attractive any longer, especially with reduced earning capacity. We need a state “business plan” for physician and healthcare caregivers.

A closely related challenge is with the professional liability environment. Unfortunately, medical errors do occur, and we can all agree that when they do, the affected should be treated fairly with appropriate reparations.  But the direct and indirect costs created by out-of-control litigation and the practice of so-called “defensive medicine” in health care are a huge challenge. And there are alarming ramifications.  For example, Kentucky is seeing a rapid decrease in obstetricians willing to deliver babies.  They're leaving the state, or just doing gynecology to avoid the prohibitively high premiums.  I hope you will support reasonable tort reform initiatives.

Ethical issues are always a challenge – but especially in health care.  In a world of Sarbanes/Oxley, we all have a new environment for business ethics.  But the challenges of  keeping pace ethically with the quantum leaps in healthcare technology, pharmaceuticals and so on sometimes seems impossible. 

Closely related to the issue of ethics is the challenge and opportunity of accountability and credibility of healthcare providers.  No organization is without faults, but for those of us who are faith-based, governed by volunteers representing the community, with the mission of meeting the needs of the community in a responsible way, it is distressing to see news across the nation about ethical lapses, fraud, abuse, or just poor judgment in setting policy. 

Norton Healthcare strongly supports the policy of greatly enhancing transparency for healthcare providers, especially those with not-for-profit, tax-exempt status. That's why we have taken a leadership role in the state and nation by publicly reporting our financials, our patient satisfaction scores, and our clinical quality scores. We think that is being accountable to our community, and that it will make us a better organization. Issues of accountability and transparency should be among our priorities. 

Lest anyone feels overwhelmed by the number and severity of the challenges, there are many ways to address them -- in whole or in part. We need the community to become informed and engaged in seeking solutions.  The issue of health care is far-reaching – far broader than just providers.  It will take business and government and individuals inside and outside health care to overcome the challenges and make good on the opportunities.  Each of us, our families, and our employees have a huge stake in the discussions.  I am absolutely convinced that if we can have the best quality of health care in the world, as we do, we can also overcome the challenges and attain the opportunities. Here in Louisville , we are blessed with great healthcare providers.  With your continued support, we can get even better.