MISSION CRITICAL. Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery

Transcription

1 MISSION CRITICAL Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery February 2011

2 MISSION CRITICAL: Any activity, device, service or system whose failure or disruption will result in the failure of business operations. That is, it is critical to the organization s mission. 2

3 MISSION CRITICAL: Over the last decade, Michigan and its residents have struggled through massive budget deficits, high unemployment, home foreclosures and large-scale loss of health insurance. Though Michigan remains in a state of economic uncertainty, signs of recovery are apparent, and the state s community hospitals are helping lead the way. The hospital is the heart of its community an institution necessary for all other elements of the community to function. Michigan hospitals are lifesavers; job creators; prevention and wellness centers; and national leaders in high-quality, cost-effective care that save patients and businesses money. In the effort to improve the health of the state s finances and its residents, Michigan hospitals are mission critical. Health care and hospitals are now the largest private-sector employer in the state, providing goodpaying jobs and benefits to more than 1 million people. At the same time, Michigan is among the national leaders in health care safety and quality improvement. By participating in voluntary collaborative efforts led by the Michigan Health & Hospital Association (MHA) Keystone Center for Patient Safety & Quality, Michigan hospitals have substantially reduced the frequency and severity of medical errors occurring statewide, while pioneering new ways to improve upon award-winning care. Not only do Michigan hospitals lead the nation in quality; they also outperform the region and much of the nation in efficiency measures, such as cost of care. As a result, Michigan hospitals are providing high-quality care at lower cost, saving patients, families and businesses hundreds of millions of dollars each year. Michigan hospitals care for all who walk through their doors, regardless of ability to pay. In accordance with their mission, hospitals in this state provided more than $2.6 billion in community benefits, such as charity care, education and more, to citizens in This commitment to caring has been especially crucial during Michigan s recent recession, as hundreds of thousands of residents have lost their health insurance and state government has cut payments to providers who care for Michigan s most needy populations. The state s Medicaid caseload is nearing 2 million people at the same time that 1.6 million residents rely on Medicare meaning services to Medicaid and Medicare recipients account for 35 percent of the health care delivered in Michigan. Lawmakers must acknowledge that inadequate payment rates are unsustainable and damaging to all Michiganians patients, hospital employees and others not just those relying on government programs. Without viable Michigan hospitals, communities suffer and the state cannot rebound economically. Michigan community hospitals are already taking significant action to improve quality and reduce costs. Now, elected officials and state leaders must recognize the crucial role that community hospitals play in the future well-being of this state, and ensure that an environment persists in which hospitals and other providers continue to provide high-quality services to patients and good-paying jobs to Michiganians. Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery 3

4 MISSION CRITICAL: Health Care Jobs Benefit Michigan s Economy In the last decade, Michigan lost 1 million jobs, experienced 15 percent unemployment, saw its Medicaid caseload near 2 million people and witnessed its ranks of uninsured residents rise to more than 1.35 million. Thirty-three percent of Michigan is now uninsured or relies on Medicaid. However, one sector has provided growth and stability and helped drive Michigan toward recovery: health care. Hospitals, physicians and other providers not only care for the sick and create a healthier state, they employ Michigan workers. Now this state s largest private-sector employer, health care directly employs more than 546,000 Michigan residents 1 such as physicians, nurses, administrators, custodians, home health, and technical specialists. Direct health care employees earn more than $30 billion in wages, salaries and benefits and pay $6.6 billion in federal, state and local taxes that help support other community needs, like public safety and schools. Michigan hospitals alone employ more than 219,000 people in this state, who earn more than $13 billion in wages, salaries and benefits and pay more than $2.7 billion in federal, state and local taxes. 2 The economic impact of hospitals extends far beyond the people they employ, the salaries that are paid and the taxes generated. The business and household needs of hospitals and their employees create a multiplier effect that supports a wide range of other businesses, services and amenities, such as laundry services, food, housing, automobiles, etc. Hospitals must also ensure that their 4 Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery

5 facilities accommodate the needs of their patients and meet federal standards, requiring building renovation and construction. These needs of hospitals and other health care providers for outside goods and services support countless other local businesses. Furthermore, health care jobs are less likely to be outsourced, and new health care employment opportunities are being created in biotechnology research, information technology and other health-care-related fields. Direct, indirect and induced 3 health care workers, of which there are more than 1 million, earned $51 billion in wages, salaries and benefits in 2009, while also paying more than $15 billion in federal, state and local taxes. In addition to the direct economic impact of health care jobs in Michigan, the state s Medicaid program brings hundreds of millions of federal funds into the state. Through the federal medical assistance percentage (FMAP), the state receives a federal Medicaid matching rate of percent. Every dollar Michigan invested in its Medicaid program in fiscal year (FY) 2011 generated an additional $2.48 in federal matching funds. This means that a $100 million investment in Medicaid by the state brings $248 million to Michigan s program. Conversely, if the state government cuts $100 million from Medicaid, it loses an additional $248 million in matching funds, for a total loss of $348 million. These are funds that are not reaching community hospitals for the services they are providing to Medicaid patients, which can result in job losses and service reductions that affect all patients. Cutting Medicaid during an economic downturn damages the state economy, while reducing access to needed health care services for the state s most vulnerable populations. MISSION CRITICAL: Community Benefits A Michigan hospital is the heart of its community, acting as a safety net for the uninsured and underinsured, a learning institution for future medical professionals, and a local resource for citizens trying to improve their wellness and businesses looking to better the health of their workforce. The critical role of community hospitals is enhanced during these difficult times, when state Medicaid caseloads are at a record high of 1.9 million people nearly one in five residents and the number of uninsured is climbing, with more than 1.35 million Michiganians now without health care coverage. In FY 2009, Michigan hospitals responded to the needs of local residents, the uninsured and underinsured, and provided more than $2.6 billion in community benefits. This includes more than 1 Fiscal year 2009 Implan V.3 data, the most recent available. 2 Fiscal year 2009 American Hospital Association data, the most recent available. 3 Indirect and induced jobs are those created by health care organizations and employees needs for goods and services. Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery 5

6 $673 million in health improvement programs and other services that helped nearly 9 million Michiganians, such as free/discounted clinics, immunizations, prescriptions, counseling, family support, nutrition services, home care, losses on research and education, and financial and in-kind contributions. Michigan hospitals suffer financial losses on patient care, largely due to increasing uncompensated care and poor reimbursement from government programs, which do not cover the cost of patient care. As a result, hospitals are forced to make difficult choices to ensure their doors remain open for all patients. In 2009, Michigan hospitals provided more than $882 million in uncompensated care $317 million in charity care 4 and $565 million in uncollectible funds (bad debt) an increase of $85 million from They also provided $276 million in unreimbursed Medicare services and $60 million in unreimbursed care to patients of other means-tested 5 government programs. In addition, in 2008, Michigan hospitals patient margin was negative 2.6 percent 6, which has contributed to the layoff of more than 3,300 hospital workers during the last three years. As a result of the economic downturn, Medicaid enrollment, consisting mainly of children, elderly and disabled residents, increased approximately 77 percent from January 2000 to May Unfortunately, despite this dramatic increase in enrollment, the Legislature has slashed funding for Medicaid hospital patient care by more than $1.1 billion since FY In FY 2009 alone, Medicaid payment shortfalls to Michigan hospitals totaled more than $608 million. Due to painful provider reimbursement cuts and inadequate payment levels, many Medicaid patients do not have access to a primary care physician. Instead, they tend to access care in the most expensive way possible through hospital emergency rooms, which by law 7 must and do care for all patients who walk through their doors. When the cost of care for Medicaid recipients is not fully covered, hospitals are forced to shift those costs to the privately insured, businesses and others. Michigan hospitals mission is also supported by a strong Certificate of Need (CON) program. CON helps balance cost, quality and access issues, and ensures that only needed health care services and facilities are developed in Michigan. Maintenance of a strong CON program is imperative to ensuring access to appropriate health care services for communities statewide. 4 Charity care is health services a patient is unable to pay and results from a provider s policy to provide health care services on a free or discounted basis to individuals who meet certain financial-need criteria. 5 Government-sponsored health programs where eligibility for benefits or coverage is determined by income or assets AHA Annual Survey data 7 Emergency Medical Treatment and Active Labor Act 6 Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery

7 Michigan Community Hospitals 2010 Community Benefits (FY 2009) Voluntary Community Benefit Services and Programs People Served Gain or (Loss) Community Health Education 4,445,297 ($22,985,935) Self Help 136,768 ($1,578,828) Support Groups 100,300 ($1,603,094) Health Screening 172,512 ($2,981,268) Immunization 39,110 ($340,874) Nonbilled/Reduced-fee Clinics 384,668 ($50,992,810) All Other Health Care Support Services 56,290 ($4,979,853) Counseling 69,108 ($4,089,572) Family Support Services 359,857 ($23,307,866) Free or Discounted Prescriptions/Supplies to Patients 138,352 ($4,861,995) In-home Services 3,942 ($833,452) Meals/Nutrition Services 169,616 ($2,004,367) Transportation Services 132,837 ($4,229,858) Total Community Health Improvement Services 6,208,657 ($124,789,772) Other Voluntary Community Benefits People Served Gain or (Loss) Loss on Health Professions Education 52,575 ($348,230,660) Loss on Research (community health and clinical) 50 ($157,873,739) Financial and In-kind Contributions 1,486,872 ($22,367,187) Community Building Activities 1,152,223 ($12,220,234) Community Benefit Operations 120 ($8,508,311) Total Other Community Benefits 2,691,840 ($549,200,130) Community Benefits Resulting from Unpaid Costs of Patient Care Gain or (Loss) Medicaid Payment Shortfall ($608,508,609) Charity Care at Cost ($317,086,264) Bad Debt at Cost ($565,264,980) Medicare Allowable Payment Shortfall ($276,076,118) Other Means-tested Government Programs ($60,691,723) Subsidized Health Services ($109,514,666) Total Unpaid Costs of Patient Care ($1,937,142,360) TOTAL COMMUnITY BEnEFITS ($2,611,132,263) Based on a total of 132 hospitals data submitted via the Michigan Health & Hospital Association Community Benefits Survey. Michigan hospitals provided more than $2.6 billion in community benefits

8 MISSION CRITICAL: Patient Safety and Quality The voluntary, collaborative efforts adopted by Michigan hospitals over the last several years, many under the leadership of the MHA Keystone Center for Patient Safety & Quality that launched in 2003, have allowed hospitals to share patient safety and quality improvement ideas that have resulted in breakthroughs that experts previously considered impossible. By creating and implementing MHA Keystone Center programs, Michigan hospitals are saving more lives and preventing harm, while also saving millions of dollars for patients, families and businesses. Voluntary MHA Keystone Center collaborations, which allow for sharing of evidencebased best practices, are now present in Michigan hospital intensive care units (ICUs), operating rooms, obstetrical units, emergency departments and beyond. Each MHA Keystone Center project is designed to be replicated by other hospitals, allowing facilities to adapt processes to address individual circumstances. Because of their success, MHA Keystone Center programs are becoming the model for improved care in states nationwide. The MHA Keystone: ICU collaborative, with more than 70 Michigan hospital participants, remains the most successful regional partnership of ICUs ever assembled in a single patient safety initiative, achieving significant, measurable improvements. From March 2004 to March 2010, MHA Keystone: ICU resulted in more than: 1,830 lives saved 140,700 excess hospital days avoided $300 million in health care dollars saved Michigan hospitals are also voluntarily reporting serious adverse events to the MHA Patient Safety Organization (PSO), an organization made possible by state law in By allowing clinicians to confidentially report mistakes, the MHA PSO can collect meaningful data from Michigan hospitals that enable the identification and reduction of risks and hazards associated with patient care. 8 Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery

9 MHA PSO member hospitals have developed internal systems for gathering patient safety data and are actively submitting adverse event data for analysis. Advancements have been made to streamline the data submission process and create a more efficient method of analysis for the MHA PSO and its member hospitals. The MHA PSO is now exploring ways to expand to include health care providers in addition to hospitals, further enhancing patient safety and quality in Michigan through voluntary initiatives. Michigan hospitals are also adopting initiatives to improve the overall health and well-being of employees, patients and their families, visitors, and others. Michigan hospitals recently launched a Healthy Food Hospitals effort to model exemplary food service choices and nutritional selections to support the health of hospital patients, employees and visitors, and have already eliminated trans fats from patient food services and banned smoking from hospital campuses. The MHA Keystone Center, MHA PSO and Michigan hospitals look forward to maintaining and expanding their voluntary efforts, which have resulted in Michigan leading the nation in improved health care quality, decreased instances of patient harm, lower costs, and most importantly, lives saved. MISSION CRITICAL: Making Care Affordable Michigan hospitals are proving that high-quality care does not have to be the most expensive care. In fact, higher quality actually helps lower costs. To that end, Michigan community hospitals have spent the last decade voluntarily implementing improved methods of care that save patients, businesses, insurers and other health care providers hundreds of millions of dollars. In FY 2009, Michigan hospital costs were 3.43 percent below the national average. Michigan businesses alone would have paid at least $538 million more per year if Michigan hospital payments were at national averages. With more employers struggling to maintain employee health benefits and the ranks of the uninsured rising, hospitals efficiency improvements are a key element in ensuring access to affordable care for the people of Michigan. These gains in efficiency have been made at the same time that quality of care at Michigan hospitals has surpassed (based on four common conditions: heart attacks, heart failure, pneumonia and preventing infections for patients who have undergone selected surgeries) other Great Lakes states and much of the nation. Of the 30 process-of-care measures established by the U.S. Centers for Medicare & Medicaid Services, Michigan hospitals perform better than or equal to the nation on 25. In addition, a recent State Snapshots report by the Agency for Healthcare Research & Quality shows that, across all measures in hospital care, Michigan performs best. Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery 9

10 As a result, Michigan hospitals are continually honored for their significant and lasting contributions to improving patient safety and health care quality. In spring 2010, the Thomson Reuters 100 Top Hospitals : national Benchmarks list, an annual, quantitative study that identifies the best hospitals, named 11 Michigan hospitals to the list, more than any other state. Michigan community hospitals quality improvement achievements have also been lauded by state and federal lawmakers, the World Health Organization, and the nation s top-ranking health care executive, U.S. Health and Human Services Secretary Kathleen Sebelius. Conclusion As 2011 welcomes new and returning faces to Lansing, the MHA and Michigan community hospitals stand ready to face the challenges that lie ahead. At the same time, elected officials have the opportunity to create a climate in Michigan that allows for economic growth and healthier communities. Michigan hospitals, the beating heart of nearly all of this state s communities, are creating jobs and healing the sick, all while voluntarily improving quality. These community stewards are providing Michigan residents and businesses with paths toward greater wellness at a tremendous value. They are saving families money and treating those who cannot pay. Without the existence and viability of Michigan hospitals, jobless rates would skyrocket; critical health services would be unavailable to our parents, children and friends; the vulnerable would go without treatment; and families and businesses would not stay, or relocate, in our communities. As Gov. Rick Snyder and our new and returning lawmakers begin to reinvent Michigan, they must recognize that, if protected, health care s role as an economic engine and community steward has the ability to be a stabilizing force, using high-quality, efficient and low-cost care to support economic recovery. To successfully achieve a fiscally and physically healthy state, Michigan community hospitals are mission critical. 10 Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery

11 MISSION CRITICAL: Furthermore, as a rule in crisis management, if a triage-type decision is made in which certain components must be eliminated or delayed, the mission critical ones must not be among them. Michigan Hospitals: The Heart of Our Communities, the Key to Our Recovery 11

12 Contact For more information about this report, contact Peter Schonfeld, senior vice president, Policy and Data Services, at the MHA at (517) Media questions should be directed to Kevin Downey, senior director, Public Affairs, at the MHA at (517) Photo Credits: Beaumont Hospitals: Cover, pg. 6 left; MidMichigan Health: pg. 2 right; Portage Health: pg. 2 left, pg. 5, pg. 6 right; Sparrow Health System: Back cover left; Spectrum Health: pg. 2 right; St. John Providence Health System: pg. 9, pg. 10 right; University of Michigan/Creative Commons License: pg. 4 (517)