Subcommittee Report 6: Hospital/Physician Relations and ...obligations for emergency department...

Hospital/Physician Relations and Practice Efficiency

Appendices for Final Report, 2008 73

Appendix 8.6: FINAL SUBCOMMITTEE REPORTS

Subcommittee Report 6:Hospital/Physician Relations and Practice Efficiency

Executive Summary

n The present report represents the work of theSubcommittee on Hospital/Physician Relations &Practice Efficiency, one of six empanelled to advisethe Commission on Rationalizing Health CareResources in New Jersey Commission establishedunder Executive Order 39, promulgated byGovernor Jon S. Corzine on October 19, 2006.

n The Subcommittee on Hospital/Physician Relationsand Practice Efficiency was charged to:

- Identify and characterize the most significantfactors and aspects of the relationship amongNew Jersey’s acute care hospitals andphysicians.

- Focus on high-cost high reward aspects ofphysician practices and performance.

- Evaluate the importance and application ofavailable standards and metrics.

- Report findings and recommendations to the fullCommission.

n The Subcommittee met in plenary session four timeswith additional workgroup meetings, consideredexpert opinion and information, raised issues anddiscussed possible initiatives and action in thefollowing four areas:

- Payment System- Institutional infrastructure- Metrics and Reporting- Regional Coordination

n The Subcommittee’s attention was drawn to severalareas that bear critically on hospital and physicianrelationships but which are too broad to fit within itscharge. Reform and change in these areas is vital tothe long-term improvement of New Jersey’s healthcare system.- Regionalization of health care resource

allocation and utilizations.- Tort reform.

- Medical Malpractice insurance reform and relief.- Alternative concepts for delivery of acute care

services.

n The Subcommittee proposes ten recommendationsspecifically addressed to improving hospital andphysician relations and improving practiceefficiency.

- These recommendations are especially relevantand essential for financially stressed institutions.

- These ideas also have general applicability toand offer value to all acute care institutions.

- These recommendations are summarized belowfor ready reference and discussed in detail in thebody of this final report.

Summary Recommendations

1. Encourage alignment-oriented payment systemsor models for acute hospital care that financiallyimpact, engage and involve physicians.

Structural non-alignment of financial incentivesinvites abuse and rewards medically irrationaland counter-productive decisions.

2. Promote physician accountability through aphysician report card of evidence-based acute careperformance and outcomes measures.

Evidence-based medicine standards are under-utilized and un-enforced in the acute caresetting.

3. Coordinate care from admission through post-discharge with standards and incentives based onquantitative metrics and results.

Coordinated patient care from admissionthrough in-patient treatment to discharge andfollow-up treatment and services is not thestandard of care in New Jersey.

Section I

New Jersey Commission on Rationalizing Health Care Resources74

Appendix 8.6

4. Increase institutional transparency for acute carecosts, utilization and care alternatives to enable costand treatment-effective decisions.

Imperfect knowledge of acute care costs andresources inhibits informed, rational choices,decreases trust and confidence and disablesaccountability.

5. Establish 365 day standards of operation for anexpanded range of services that optimize acute careresources utilization.

Service and coverage reductions on weekendsand off-hours inhibit best practices and cost-effective resource utilization.

6. Set standard and parameters for physician on-callobligations for emergency department serviceregionally and state-wide.

Hospitals cannot impose ED service callobligations on physicians, and often paysignificant fees to secure essential coverage.

7. Make “intensivist model” the standard of ICUcare and a priority for all hospitals, especiallyfinancially distressed institutions.

Intensive Care Units provide patients with life-sustaining medical and nursing care on a 24-hr.basis but are not typically staffed with optimallytrained personnel.

8. Leverage scarce physician services through theexpanded use of practice-extenders and other meansto increase effective access and availability.

Scarcity of key medical specialties can createservice bottlenecks and inefficiencies.

9. Exploit existing IT systems and technology toenhance physicians-hospital interaction, improveaccess to in-patient data, and take greater advantageof information resources.

Hospitals do not to take advantage of IT toincrease interaction with physicians.

10. Create an acute care data warehouse, hospitalnetwork, and uniform data standards and formats.

Comparative hospital performance metrics, datacompatibility and exchange capabilities arelacking in New Jersey.



Subcommittee Membership

Anthony C.Antonacci, M.D., SM, FACS,Co-ChairVice President for Medical Affairs & Chief QualityOfficer, Christ Hospital

Risa Lavizzo-Mourey, M.D.,Co-ChairPresident and CEO, Robert Wood Johnson FoundationMember, Commission on Rationalizing Health CareResources

Fred M. Jacobs, M.D., JD, EX-OFFICIOCommissioner, Department of Health and SeniorServicesMember, Commission on Rationalizing Health CareResources

Henry Amoroso, CEOCathedral Healthcare Systems

Carolyn E. Bekes, M.D.Senior Vice President, Academic and Medical Affairs,Chief Compliance Officer, Cooper Health System

Darlene CoxPresident, CEO, University Hospital

William B. Felegi, D.O.Past President, American College of EmergencyPhysicians, New Jersey Chapter

Linda Gural, R.N.President, New Jersey State Nurses Association

Gary S. HoranPresident, CEO,Trinitas Hospital

John V. Jacobi, J.D.Senior Associate Counsel, Office of the Governor

Michael J. Kalison, EsqKalison, McBride, Jackson & Murphy, P.A.

Fr. Joseph W. KukuraPresident, Catholic Health Partnership of New Jersey

Ira P. Monka, D.O.President, New Jersey Association of OsteopathicPhysicians and Surgeons

Charles M. Moss, M.D.President, Medical Society of New Jersey

Richard G. Popiel, M.D., MBAVice President, Chief Medical Officer, Health Affairs,Horizon Blue Cross Blue Shield

Gregory J. Rokosz, D.O., J.D.Senior Vice President for Medical and Academic Affairs,Saint Barnabas Medical Center

William A. Rough, M.D.President,American College of Surgeons

Michael Shebabb, CPA, COONorth Hudson Comm. Health Center, New JerseyPrimary Care Association

Robert Spierer, M.D.Past President, New Jersey Academy of Family Physician

Virginia Treacy, R.N.Executive Director, JNESO, District Council 1 IUOE

Ann TwomeyPresident, Health Professionals and Allied Employees,AFT,AFL-CIO

Sara Wallach, M.D.President, New Jersey Chapter, American College ofPhysicians

Benjamin Weinstein, M.D., Ph.D.Senior Vice President/Medical Dir, New Jersey HospitalAssociation (CentraState Healthcare System)

Administrative Personnel

Michele Guhl, Executive DirectorThe Commission on Rationalizing Health Care Resources inNew JerseyDepartment of Health and Senior Services

Cynthia McGettiganThe Commission on Rationalizing Health Care Resources inNew JerseyDepartment of Health and Senior Services

Gabriel B. Milton, J.D., LL.M.Staff to the Subcommittee On Hospital/PhysicianRelations & Practice EfficiencyOffice of the CommissionerDepartment of Health and Senior Services

Section II


Introduction

On October 19, 2006, Governor Jon S. Corzinepromulgated Executive Order #39, identifying the needto examine the availability and delivery of health careservices in New Jersey, and develop recommendationstoward the creation of a state wide health plan. TheCommission on Rationalizing Health Care Resources inNew Jersey, chaired by Dr. Uwe E. Reinhardt, Professorof Economics and Public Affairs, Woodrow WilsonSchool, Princeton University was established toimplement the Order.

The work of the Commission was assigned to sixsubcommittees, each addressing a particular topicrelevant to the overall mission. The present reportrepresents the efforts of the Subcommittee onHospital/Physician Relations & Practice Efficiency, co-chaired by Risa Lavizzo-Mourey, MD, Co-Chair,President and CEO, Robert Wood Johnson Foundation,and Anthony C. Antonacci, MD, SM, FACS, Co-Chair,Vice President for Medical Affairs & Chief QualityOfficer, Christ Hospital. Fred M. Jacobs, M.D., J.D.,Commissioner, Department of Health & SeniorServices, also served on this subcommittee.

Charge

The Subcommittee on Hospital/Physician Relations andPractice Efficiency will:• Identify and characterize the most significant

factors and aspects of the relationship between NewJersey’s acute care hospitals and physiciansaffecting institutional viability and financialintegrity, cost-effective use of resources, physicianrelations and practice efficiency, and the delivery ofquality health care.

• Focus on high cost-high reward aspects of physicianpractices and performance. Examine key criteria,including: length of stay, prescription drug charges,procedure charges, consults, etc.

• Evaluate the importance and application ofavailable standards and metrics, e.g., best practices,Leapfrog, “report cards”, etc., paying specialattention to the impact and importance of theseissues to the situation of New Jersey’s mostfinancially stressed acute care hospitals.

• Report findings and conclusions to the fullCommission and recommend institutional,legislative and policy initiatives that will positively

impact the financial and care crisis affecting NewJersey’s acute care institutions.

Membership

The Subcommittee on Hospital Physician Relations andPractice Efficiency consisted of 23 individuals whofreely contributed their time and energy to achieving itsgoals. Candidates were identified and selected througha painstaking process undertaken by the Commission, itsExecutive Director and the Governor’s Office ofAppointments. The membership of the subcommitteenow represents a wide range of interests, backgroundsand perspectives relevant to many of the shared concernsand issue affecting hospitals and physicians. A list ofmembers and administrative personnel appearsimmediately before the introduction to this report.

Meeting Schedule:

The Subcommittee held four meetings in the course ofits operations. The initial meeting was held at theDepartment of Heath and Senior Services, the RobertWood Johnson Foundation provide meeting space,conference facilities and amenities for the second andthird meetings, and the final meeting was hosted by theMedical Society of New Jersey. The Subcommitteegratefully acknowledges the organizations and their stafffor making the required arrangements. The schedule ofmeetings held appears below:

• July 5, 2007• July 24, 2007• August 21, 2007• September 10, 2007

Methodology

The Subcommittee convened its initial meeting underthe co-chairship of Drs. Risa Lavizzo-Mourey andAnthony C. Antonacci on July 5, 2007. Fifteen membersattended in person and 7 by conference call. Themeeting proceeded in open discussion resulting in adecision to develop and circulate a conceptualframework that would guide the work to be done.

A second meeting was held on July 24, 2007 with 20members present and one call-in. The conceptual frameworkwas reviewed and a decision made to divide the work of theSubcommittee among four areas of strategic focus:

Appendix 8.6


• Payment System – addressing issues ofdiscontinuities and disparities among payors,individual providers and institutions, incompensation, reimbursement and their relationshipto abuse and medically irrational and counter-productive decisions.

• Institutional Infrastructure and Support Systems –addressing the unmet needs of acute care institutionsfor systems and procedures that incorporate bestpractices and make optimum use of availableresources to minimize excess costs, delays andwaste.

• Institutional Reporting and Metrics – addressingthe potential for improving adverse event andoutcome reporting and quality metrics throughoutNew Jersey’s acute care facilities.

• Regional Coordination of In-Patient and Out-Patient Care – addressing deficiencies in pre-admission and post-discharge care and follow-up tominimize admissions, maximize clinical progress,and reduce readmission rates.

Each member picked an area of interest and contributedin subsequent work sessions.

Workgroup assignments were as follows:

WG1 - PAYMENT SYSTEMGregory J. Rokosz, D.O., J.DWilliam A. Rough, MDWilliam B. Felegi, D.O.Robert Spierer, MDIra P. Monka, DORichard G. Popiel, MD, MBAMichael J. Kalison, Esq.

WG2 – INFRASTRUCTURE Carolyn E. Bekes, MDLinda Gural, R.N.Benjamin Weinstein, MD, PhD Virginia Treacy Sara Wallach, MD

WG3 - REGIONAL COODINATIONAnthony C. Antonacci, MD, Co-ChairHenry AmorosoAnn TwomeyJoseph W. Kukura, Rev.Michael Shebabb, CPAGary S. Horan

WG4 - METRICS AND REPORTING Risa Lavizzo-Mourey, MD, Co-ChairDarlene Cox Charles M. Moss, M.D.

These work groups each produced a brief report andrecommendations which provided the basis for furtherdiscussion and comment and formed the foundation ofthis report.

On August 21, 2007, the Subcommittee held its thirdmeeting. Sixteen members attended, with three call-insand 4 members unavailable. The work groups sharedtheir discussions, findings and recommendations withthe entire subcommittee. Comments and suggestionswhere noted. Core recommendations were prepared andcirculated prefatory to submission of a draft report to themembership for review and revision.

All input was collected and incorporated in a draft reportsent to the membership in advance of the final meetingof the Subcommittee held on Monday, September 10,2007 at the Medical Society of New Jersey. Twenty-onemembers attended with three call-ins and one memberunavailable. Comments, changes and editorialsuggestion were made and a final report sent by emailfor approval. The present final report represents theend-product of that process.


Section II


Appendix 8.6

General Observations and Comments

The New Jersey Commission on RationalizingHealthcare Resources is focused on the situation facedby New Jersey’s most financially distressed hospitalsand the critical factors contributing to their distress. Thetasks of its subcommittees are aimed at identifyingproblems and issues and developing recommendationsthat will aid institutions in crisis regain a sounderfinancial footing, improve management and efficiency,enhance the delivery of quality health care, and maintainessential services in light of current and future healthcare needs.

The Subcommittee on Hospital Physician Relations andPractice Efficiency has made a number of specificrecommendations which it believes may together orseparately contribute to improving elements of therelationship among New Jersey’s acute care hospitalsand their physicians. While many of theserecommendations will require the agreement andcollaboration of different stakeholders and may takeconsiderable time and energy to implement, thegovernors, trustees and senior management of eachacute care institution bear direct and ultimateresponsibility for the fortunes of facilities under theircollective direction and control.

Management, oversight and direction of the State’s acutecare institutions must start from within, be driven fromthe highest levels of executive authority, and carry theweight of organizational commitment. Each individualholding a senior position of responsibility mustunderstand his or her role as an active and engagedparticipant in the life of the hospital, and understand thatrole as one for which they can and will be heldaccountable.

The Subcommittee is also aware that itsrecommendations cannot be considered apart fromlarger issues affecting health care in New Jersey. Issuessuch as the state’s fiscal crises, medical insurance andtort reform, economic and life-style pressures onphysicians, the needs of New Jersey’s highly diversepopulation, and the growing number of under- or non-insured persons all contribute to and complicate thepresent crisis.

Acute care facilities in New Jersey share a responsibilityto deliver a comprehensive range of care to all persons,

regardless of their ability to pay. Notwithstanding, it isimpossible and irrational, medically, economically andotherwise to maintain identical capabilities at all acutecare institutions. Some form of regional coordination isessential to rationalize the utilization of scarce resourcesand provide essential services to all populations in thestate. Regionalization of scarce health care servicesmust play a key role in rationalizing health care in NewJersey.

Medical malpractice insurance costs and the threat ofcostly, even devastating litigation is a powerfuldisincentive to systemic reform, practice improvement,and innovation. It dissuades physicians from practicingin this state and contributes to shortages in keyspecialties. Tort reform is a politically charged,legislatively challenging but essential component of along term solution to New Jersey’s health care crisis.

Declining revenues are as much a cause of the financialdistress experienced by many of New Jersey’s Hospitalsas rising expenses. In a long-term trend, both privateand public payors have reduced payments andreimbursements for medical services, consumables andresources, and have adopted more restrictiveauthorization standards. The financial squeeze isexacerbated by the growing impact of non-paying users– the uninsured or under-insured.

It is beyond the scope of this report to examine orcomment on the implications, justifications andrationale for the present state of affairs – it may beenough to observe that even as the base of adequatelyinsured, paying patients weakens, the weight ofuninsured care grows unabated. This is a questionablerecipe for a sustainable system of care.

Physician-owned for-profit ambulatory care centershave made significant inroads into the traditional profitbase of many acute care institutions. It is increasinglydifficult for traditional acute care institutions to derivesufficient income from insured patients and high-valueprocedures to offset the costs of uninsured charity care.State charity care payments defray only a portion ofthose costs. While ambulatory care centers undoubtedlymeet a growing market demand and often offer a cost-and quality effective alternative to acute careinstitutions, there are pragmatic as well as ethicallygrounded reasons that argue these centers should sharesome of the charity care burden.



In some localities, the state is now virtually supportingcertain acute care institutions. Close scrutiny andoversight of performance and management are requiredin circumstances where significant public funds arebeing spent. The imposition of these controls, however,is creating something very like virtual public hospitals.This unintended consequence begs the question ofwhether, assuming the prospects of these institutions isunlikely to change, instituting some more formal andexplicit system of public health care ought, in somecases, be examined as an alternative.

Regardless of which recommendations may be selectedfor further study, the Subcommittee strongly urges thatall “stakeholders” be involved from the earliest planningstages through implementation and ongoingmanagement and oversight of initiatives. Only if allparties affected understand the crisis, are assured theirinterests are represented and viewpoints considered, andhave confidence that needed changes and compromisesfurther the common good and not a private or partisanagenda will there be reasonable prospects for success.Private, not-for-profit and public entities can play a vitalrole in the necessary process of public education,discourse and debate.

Much use of the term “stakeholders” is made in thisreport and elsewhere in discussing the healthcaresystem. In the interests of clarity the Subcommitteeoffers its own, non-exclusive list of “essential”stakeholders and potential participants:

New Jersey’s acute care hospitals and health caresystems

Medical Society of New Jersey (MSNJ)The New Jersey Association of Osteopathic Physicians

and Surgeons (NJOAPS)New Jersey Hospitals Association (NJHA)Catholic Health Partnership of New JerseyNew Jersey Council of Teaching Hospitals (NJCTH)State Board of Medical ExaminersNew Jersey State Nurses Association Physicians’ professional associationsPrivate medical insurers and payorsHealth care worker’s unions and associationsPublic Sector payors (Medicaid, Medicare)New Jersey Department of Health and Senior Services

(NJDHSS)New Jersey Department of Banking and Insurance

(NJDOBI)

Issues, Findings and Recommendations

The Subcommittee has selected what, in its view, are themost critical issues for New Jersey’s acute care hospitalsand physicians. While many of the recommendationsmade in this report can be expected to make a significantimpact on financially distressed institutions, they alsohave broad relevance for the relationships among NewJersey’s acute care hospitals, physicians and payors, aswell as the communities they serve.

The relationship among New Jersey’s acute carehospitals and the physicians who provide essential careis complex, and no one factor or solution can beidentified as either the cause or cure for all problems andrisks. Some of the more salient aspects of the situationare mentioned below:

• Hospitals and physicians do not operate on acommon or compatible set of practice-oriented andfinancial concerns with respect to the medicalmanagement of patients and the provision of in-patient services.

• Hospitals have not provided financial details andtransparency on the cost of services or care. It is notsurprising that physicians have little appreciation ofthe cost implications of their care and treatmentdecisions on hospitals.

• Physicians face little accountability for consumptionof hospital resources, consults, length of stay, etc.Over-utilization of medical resources and“defensive medicine” is common practice at manyinstitutions.

• There are no accepted standards of measurement forhospitals and physicians and consequently no meansto compare or evaluate performance, quality,effectiveness and efficiency.

• New Jersey physicians have not, in many instances,been quick to adopt even the most widelyrecognized and accepted evidence-based protocols,guidelines, and best practices.

• There are no financial incentives to coordinate careor assure patients have access to continued care oncethey leave the hospital.

• Economics of small practice groups whichcharacterize the New Jersey market makes broad-based innovation and change more difficult than inmarkets characterized by larger specialty group andmulti-specialty group practices


Appendix 8.6

The Subcommittee on Hospital Physician Relations andPractice Efficiency believes its findings andrecommendations provide insight and guidance for thebetter management of acute care facilities in general andespecially those facing financial challenges.

Payment System

Closer alignment of hospital and physician financialincentives for hospital care almost certainly holdssignificant potential for improving cost efficiency andrationality of health care resource utilization. There areseveral strategies that may be employed to help achievesuch a goal including goal-based incentives,reimbursement systems for physicians based onseverity-adjusted Diagnosis-Related Groups (DRGs) orRelative Value Units (RVUs), or other means of sharinggains in productivity and cost-savings. Detailed studyand evaluation of plans and strategies for improvingalignment of payors1, hospital and physician financialincentives is a key recommendation.

Certain physician practices and behaviors can have asignificant impact on the effectiveness (quality) and theefficiency (resource consumption) of outpatient andinpatient care resulting in waste, inefficiency, delay andunfunded inpatient care. For example, a commercialpayor may deny or downgrade a hospital stay asmedically unjustified, but nonetheless reimburse thephysician responsible for the decision. Medicare payorspay hospitals a fixed rate, but hospitals remain at risk ifa physician is an inefficient user of hospital resources.Presently, hospitals have no effective means available tocorrect, discipline, or exclude outliers and even outrightabusers.

On the other hand, New Jersey physicians receive someof the lowest reimbursement rates in the nation fortreating Medicaid patients, while hospitals are paid atconsiderably higher rates. Such a misalignment ofincentives is regarded as a key reason for lack ofphysician availability in hospitals serving a largeproportion of Medicaid patients.

Better alignment of financial and practice incentivesamong hospital systems, physicians and payors will help

close service gaps, reduce counter-productive attitudes,and encourage more cost-effective practices. Any suchinitiative must take measures to avoid the risk that, asphysicians and hospitals payments are more closelyaligned, patients’ interests may be unduly constrained.For example, patients who, for medical reasons, shouldreceive extended or more intensive care may be facedwith increased or more complex barriers. Safeguardsincluding procedural checks, rights to second opinions,and a swift and straightforward route of review andappeal are essential to assure fairness and protection ofpatient rights as the economic interests of physicians,hospitals and payors are brought into alignment.

Institutional Infrastructure and Support Systems

Hospital infrastructures and support systems are in manycases ill-adapted to present institutional needs, financialrealities and physician practices. Attempts by physiciansand hospital staffs to compensate for these deficienciescan result in practices and behaviors that can weaken theinstitution and diminish the quality of care.

Unlike some hospital resources, sickness, disease andtrauma do not diminish on weekends and holidays. Serviceand coverage reductions on weekends and off-hours impactmore than patient care and convenience. They can result inneedlessly extending hospital stays, may place patients atgreater risk for hospital related complications, and causewaste and delay. New Jersey’s acute care institutionsshould consider the economic feasibility of providing amore comprehensive range of services every day of theweek to ensure timely and effective care, optimize resourceutilization, and control costs.

Physician availability, particularly among certainspecialties and especially in the ED, is a major limitingfactor in improving the overall performance of EDservices and optimizing the use of physical and humanresources on a daily basis. There is a growingdisinclination among some physicians to accepttraditional on-call obligations, an increasing trendtoward limiting care for charity cases to the initial EDencounter, little apparent interest in innovations such asthe increased use of practice extenders, or receptivity toimprovements in practice and practice models.

1 “Payors” as used here refers to public and private third party payers,and excludes self-insured individuals or co-payees.



Reductions in public and private physicianreimbursements, increasing concerns over medicalliability, life-style issues, and increasing numbers ofunder- or uninsured individuals all play some role increating and perpetuating this situation. Physiciansmust become active partners and be convinced of thevalue to themselves and their patients of making practicechanges and working with their institutional partners toachieve desired changes.

Metrics and Reporting

Establishment of standards and measures of quality,outcomes and efficiency for physicians and hospitals isa key to strengthening the acute care system. It is wellestablished that measurement improves performanceamong hospital staff, physicians, and institutions ingeneral. Tracking resource utilization, length-of-stay,end-of-life issues, and performance on key clinicalindicators associated with the most frequently usedDRGs, among other metrics, is a key to raising quality,efficiency and performance.

Lack of confidence in and acceptance of performancecriteria, collection methods, data analysis and reportinghave been major hurdles to agreement on the meaningand interpretation of results, their relevance and validity,identifying problems, and deciding on action steps andsolutions. The logistics, IT resources, expertise andcosts involved in developing establishing andmaintaining state-wide metrics and reporting aresignificant. No one institution can or should bear thiscost. The source of funds to defray expenses andprovide the necessary resources requires serious andcareful consideration. Unless these issues can beresolved, they will mean defeat for any effort toestablish quantitative standards.

The implementation of professionally endorsed,evidence based, and unbiased institutional and physicianmetrics and reporting would be a major step forward inrealizing the benefits of evidence-based medicine on abroad scale in New Jersey. Active engagement of all keystakeholders in the endeavor is essential.

Regional Coordination of Health Care

Regionalization can be an important strategy inachieving a more rational and sustainable health caresystem. Coordination of care on a regional basisinvolves redefining acute care “market areas” within abroadened conceptual framework. Such a frameworkmust take into consideration a range of economic anddemographic factors and an evaluation of the“essentiality” of both institutions and key servicesmodules.

Regionalization is one way hospitals may achieve thegoal of providing a comprehensive range of services onan everyday basis. It is very likely some institutions willfind it impossible to provide all such services in the faceof shortages of key specialists, or simply because it iseconomically unfeasible to do so. In such cases,providing certain services on a regional basis may be thebest workable solution.

The concept of Centers of Excellence is not new in thehealth care field but is one that can be readily adapted toprovide enhanced service and quality, sounder financialmanagement, and improved utilization and efficiency ona regional basis. New Jersey has already made asignificant move in this direction with the establishmentof its Level 1 Trauma Centers. Conditions of a non-emergent nature could be candidates for similarprograms.

The subcommittee is aware this topic is receiving in-depth consideration by other subcommittees advisingthe Commission and is confident their recommendationswill be in accord with its own concerns.

Critical Areas for Structural Reform

Regionalization of health care resources, tort reform,restructuring medical malpractice insurance within NewJersey and consideration of alternatives to traditionalconcepts and patterns for delivering acute care will haveprofound and far-reaching impact in and outside thehealth care system. While specific recommendations forchange and reform in these areas are outside the chargeand scope of this Subcommittee, these issues areregarded as so crucial to the long-term resolution ofNew Jersey’s health care crisis they demands mention


here, even in summary manner. The Subcommittee isconfident these subjects are being thoroughly studied byother subcommittees advising the Commission and thatwell-considered recommendations will be forthcoming.

Regional Coordination of Health Care

Regionalization of scarce health care services offerssome of the most challenging and potentially rewardingopportunities to rationalize New Jersey’s acute caresystem. There is a wide disparity across the state in thescope, quality and availability of acute care services.Acute care facilities in New Jersey vary considerably intheir economic resources, physician and staffavailability, scope of physical plant and in-housecapabilities and services.

Many institutions are essential to their service areas butcannot, for financial or other reasons, provide all neededservices on a sustainable basis. Conversely, there areother institutions with ample physical plant and medicalresources which would benefit from increasedutilization. Nevertheless, they all have an equalresponsibility to deliver a comprehensive spectrum ofcare to all persons, regardless of ability to pay.

Regional coordination will require either regulatory orlegislative action and in any case will not beimmediately attainable. An effective plan ofregionalization must take into account a thoroughassessment of community needs on a local and regionalbasis. Such a plan may need to encompass adding orexpanding essential services where gaps are identified,as well as combining capabilities and eliminating orreducing clinical redundancies. Support will berequired to assist institutions transitioning operationsfrom non-essential to essential services, and relocatingunder-utilized resources and capabilities to more robustinstitutions. Above all, hospitals (and other keystakeholders, such as unions) must be persuaded suchfar-reaching structural changes are in their best long-term institutional and financial interest.

The following points represent some of key issues andconcerns that will arise in considering howregionalization can be realized:

n What is the structure envisaged? Vertical (acute,rehab, LTC, etc.)? Horizontal (new shared serviceentities)? Hybrid?

n Community needs must be balanced againstinstitutional viability and rationality at every point inthe process of regionalization.

n Are physical, intellectual and human resourcesbeing rationalized, re-used, recycled, retooled andrestructured wherever possible?

n Is there a net positive impact on quality care, accessand cost? How does this break down by patients,physicians, communities, payors, and caregivers?

n How well are logistics, transportation, andcommunity needs addressed?

n Does the regionalization plan serve a broad range ofpatient needs efficiently and effectively?

Regionalization should be the initiated on ademonstration or pilot basis, with the involvement andoversight of the Commissioner, Department of Healthand Senior Services. Such an initiative should engageand involve all key stakeholders, including communitygroups, payors, physicians, institutional staff andmanagement and focus on meeting service gaps incritical specialties and redirecting utilization of scarceresources. Hudson County may be especially well-suited for such a demonstration project.

Reformation of Tort Liability Law

There is now a serious lack of key specialties in NewJersey (e.g. obstetrics, neurosurgery, mammographyservices) driven in part by the reputation of New Jersey’scourts as “plaintiff-friendly” and the steep rise inmedical liability insurance rates. Action by thelegislature will undoubtedly be needed if meaningful tortreform is to become a reality in New Jersey.Comprehensive tort reform represents a formidablepolitical and legal challenge but remains one of the keyobjectives for improving the long-term viability andvitality of New Jersey’s health care system.

A crucial objective is ensuring the continued availabilityof essential on-call specialties and reducing the disparityin tort liability between acute care institutions andphysicians providing ED services. This could beaccomplished by raising the tort standard from simplenegligence to gross negligence/willful misconduct for allcare rendered for such services by on-call physicians.

Appendix 8.6



Medical Malpractice Insurance Relief

Increases in medical liability premiums in New Jerseyhave contributed to a crisis in both the availability andaffordability of mandatory medical liability insuranceMoreover, recent court decisions suggest a continuingjudicial bias in favor of plaintiffs, notwithstandingcontractual and other legal barriers. A key long-termobjective should be to ameliorate the burden of medicalliability insurance first on specialists in high riskpractice areas to ensure New Jersey residents continuedaccess and availability to these vital services, and thenmore generally to physicians in all lines of practice.

The state should explore affordable, alternative means ofobtaining insurance at appropriate levels, whilemaintaining the right of injured individuals torecompense for damages. It may also be feasible tocondition such preferred liability coverage to approvedprograms that incorporate compliance with well-validated and widely recognized, evidence-basedstandards of care and treatment.

Comprehensive medical malpractice insurance and tortliability reform must be part of long-term plans torationalize health care resource utilization in NewJersey. Targeted tort reforms aimed at retaining keyacute care specialties and services must at a minimumreceive serious consideration.

n On-call/ER physician servicesn Obstetricsn Neurosurgeryn Critical care and trauma physiciansn Oral/maxillofacial specialists n Primary Care

Alternative Concepts for Delivery of Acute CareServices

For-profit ambulatory care centers are a growingpresence on the health care landscape. Many physicianshave significant financial interests in these centers andoften refer their patients to them in preference tohospitals providing the same services. Procedures doneat these centers are typically high value, and even if not

“cherry-picked,” divert an important revenue streamaway from acute care hospitals. If New Jersey is to havea unified system of care, these centers should berequired to shoulder some portion of the burden ofcharity and uncompensated care which now fallsentirely on the hospitals and the physicians providingthat care.

In other markets, the payer mix, demographics, access,and population density may be insufficient to sustain thenecessary level of care and services, even with the bestmanagement, processes and oversight available. Somehospitals in these areas seem chronically resistant tochange, have persistent issues of fiscal crisis andmismanagement, and suffer from consistently sub-standard quality and patterns of misuse and abuse.

Regionalization, service initiatives, programs andmandates may not be enough to address the problemsthese hospitals face. While these same institutions areoften vital and “essential” to the communities theyserve, they may only continue to operate with massivelong-term financial support from the state.

The necessity for oversight and accountability for publicfunds is creating in some of the most severely stressedinstitutions something approaching a de facto publichospital status. In view of this, it may be prudent toconsider a broader range of options, including but notlimited to the creation of a formal public hospitaldesignation or perhaps a state-funded public hospitalscorporation with the mandated requirements ofperformance, transparency and accountability.Obviously, such a step is not to be undertaken lightly,but it should be borne in mind that such systems canwork and in fact have long records of meeting vitalpublic health needs.


Recommendations

1. Alignment of Hospital and Physician FinancialIncentives

Issue

Structural misalignment among payors, individualproviders and institutions, and inadequatereimbursement invites abuse and rewards medicallyirrational and counter-productive decisions. Inefficientpatterns of practice, misuse of scarce resources, denialsor delays in coverage or payment, unduly burdensomepre-certification processes, and panels with too fewparticipants may serve short-term financial interests, buthave lasting adverse effects on physicians’ willingnessto provide care, institutional strength and patient healthand well-being.

Acute care institutions are often caught betweenconflicting demands for service by physicians andcoverage decisions by payors. The absence of acoherent framework of incentives for providing andcompensating cost-effective medicine and care is at theroot of the problem.

Discussion

Admissions and discharges are typically driven byphysician decisions. However, where such decisions donot meet reimbursement criteria for medical necessity orlevel of services, it is irrational and inimical toinstitutional financial health for payors to denyreimbursement to the hospital while continuing tocompensate for physician services.

There are also instances where a payor may cover an EDvisit, but deny payment for physician services. Forexample, it is common for a payor to require referral toan “in-network” provider for a patient stabilized in theED service. But if a patient cannot locate such aspecialist promptly, and requires subsequent follow-upin the ED, coverage may well be denied for the treatingphysician’s services.

Misuse and overuse of consultants is a significantproblem in many institutions. Presently, hospitals havelittle or no control over this aspect of physician practicewhich can lead to sharply increased expenses without animprovement in patient care. Beyond instances of

outright abuse, there is a large opportunity to improvepractice and reduce costs by eliminating unnecessaryand extended consults.

Examples of irrational decisions and counter-productiveresults could be multiplied, but the lesson to be drawn isthe same. Payment and coverage decision-making isdeeply and often critically disconnected from care-giving and medical decision-making, often to thedetriment of patients and providers. While payordecisions are clearly a major factor, it is a dangerousoversimplification to place the blame entirely oninsurers, or for that matter, any other single player orstakeholder group. New paradigms of care, payment,accountability, and patient involvement andresponsibility are clearly needed.

If a medical or treatment decision, admission, continuedstay or discharge is not medically necessary, both theinstitution and physician should bear similar financialand legal consequences. Both the physician and thehospital should be at risk for non-payment if a medicallyinappropriate decision (i.e. one not supported by anagreed treatment algorithm) is made, and conversely beequally exposed to (or protected from) litigation for theconsequences. Institutions, physicians and patients alikeshould have ready access to review and revision if suchany decision results, or is likely to result, in patientharm. This would stimulate better working relationsamong physicians, the hospital, physician advisors andcase managers to improve overall efficiency inoperations and rational utilization of resources, whileassured patients rights are maintained, protected anddefended.

However, not every medical decision translates readilyinto increased or decreased costs or impacts length ofstay, nor can desired change in all cases be achieved byplacing pressure on the primary care physician. Forexample, if a treatment or test is postponed because aservice is closed or a specialist unavailable, it is bothunfair and ineffective to penalize the primary carephysician for the delay. Thus, an across-the-boardsystem of rewards and correction cannot be applied to allphysician decisions that may result in additional in-patient days.

One solution to avoidable delays and extensions of staysmay lie in achieving seven-day per week operations as

Appendix 8.6



discussed elsewhere. Another approach may involveinnovative ideas regarding compensation of physiciansfor in-patient care that increase alignment of financialincentive among physicians, hospitals and payors.

Alignment-oriented payment schemes that providephysicians appropriate incentives for cost-efficient casemanagement through case-rates or severity-adjustedpayments but that do not unduly impose penalties forunavoidable or unintended consequences should bethoroughly examined. This is an area requiring carefulstudy of alternatives and demonstration projects beforewidespread implementation can confidently berecommended.

Physician education is a key to rationalizing proper useof consultants. The process should begin in medicalschools and continue through training programs andCME. Demonstrating that cost-effective medicine has apositive financial impact and that over-utilizationneither improves outcomes nor reduces lawsuits is anavailable strategy that may reduce the use of non-essential consults.

Public payors and private insurers must adopt uniformstandards of review and consequences so physicians andhospitals can make consistent and rational decisionswithout regard to the source of payment.

Benefits and Risks:

• Educate and incent physicians to practice cost-effective medicine, reward physicians based onsystem cost savings, and eliminate or reduceincentives to over-utilize resources and continuedefensive medicine tactics.

• Rationalize the appropriate use of consultants andconsulting practices through physician and medicalstudent education.

• Align financial interests and liability exposure forhospitals and physicians to improve physicianaccountability for appropriate use of hospitalresources.

• Establish uniform hospital and physician paymentcriteria for all payors (public and private sector.)

• Alignment-oriented payment systems must notactually or apparently improperly incentivizehospitals, physicians or payors to withhold, curtail,or deny medically necessary care.

Recommendation

• Establish, enable or support the implementation ofalignment-oriented payment models or systems foracute hospital care that financially impact, engageand involve physicians.

- Funding for the incentives required to implementsuch a system must come from savingsgenerated within the present scope of paymentsand reimbursements.

- Payor fees schedules should be completely andpublicly disclosed.

- Safeguards must be built-in to protect patientrights to all medically necessary care andprovide percentage-based payment for out ofnetwork services.

- A carefully designed, geographically limited andclosely monitored pilot or demonstration projectwould be a prudent first step.

2. Physician Accountability and Evidence-BasedPractice in Acute Care Institutions.

Issue

The value of evidence-based medicine standards is well-recognized for producing improved case management,better patient outcomes and cost-efficiencies in the acutecare setting. This is especially true for some of the mostcommon and costly diagnoses where such standardshave been extensively researched and promulgated.

Even where such standards are widely recognized,however, New Jersey hospitals and physicians havemade little progress in agreeing how to implement them,measure results, or how to reward, induce or coercecompliance. This has made it nearly impossible toassess the level of practice, identify leaders and outliersand implement any system of evidence-based rewardsand corrective action within a given institution.

Discussion

Though hospitals have a vital interest in physicianspracticing the most cost-effective medicine, their abilityto induce such behaviors is limited. Collection anddissemination of information on physician performance,whether available to the public at large or a more limited


peer group can promote physician accountability andadherence to evidence based practice guidelines.

Many physicians regard such measures with suspicionas unwarranted intrusions into their professionalprerogatives. Some find the mere suggestion ofstandards and the threat of publicity offensive, if notthreatening, and move business to less aggressivelymanaged hospitals. Unless the effort is based regionallyor state-wide, attempts to use metrics and peer-pressurewill put all but the strongest institutions at increasedcompetitive disadvantage and potential financial risk.

Physician report cards can work only if they aredesigned so that the information is valued and used bythe physicians themselves. Standards of measurementmust be widely accepted and validated if ratings andrankings have the desired effect of motivating andmodulating behavior in positive directions.Implementation of such tools demands a cooperativeand collaborative effort, as well as agreement on sharedgoals and outcomes.

Many insurers have access to demographic and clinicaldata that can be used to produce performance metrics atthe physician and patient level. New Jersey insurorsshould be strongly urged to cooperate in developingstandardized quality performance reports for NewJersey similar to those developed in New York(MetroPlus) and Minnesota (HealthPartners). Suchreports could represent an important component of anacute care report card initiative.

Benefits and Risks

• Broad participation in standards developmentencourages buy-in and reduces bias concerns.

• Regional implementation of physician report cardslevels the playing field for weak and stronginstitutions and encourages best practices,especially in key specialties.

• Implementation may disadvantage institutionsdependent on marginal providers and possiblydivert business elsewhere.

Recommendation

• A properly validated, well-accepted, independentlycomplied, and publicly available physician reportcard system that measures performance and

outcomes on critical, evidence-based standards ofacute care practice should be developed andimplemented on a regional or state-wide basis.

- Priority and focus should be first placed on keyspecialties and high-cost, high-risk conditionsand diagnoses.

- Insurors, MSNJ, NJHA and other state-wideorganizations should participate in the study,research and validation required for this effort.

3. Coordinating the Continuum of Care

Issue

New Jersey’s health care system does not adequatelyensure the management of a patient from admissionthrough in-patient treatment to discharge and follow-uptreatment and services. Lack of organizationalstructures and financial incentives for such a continuumof care adversely affects medical outcomes and increasesthe total cost of medical care. Discontinued care or lackof follow-up can result in a readmission which mighthave been avoided by a more timely intervention.

The problem is made worse by the practice of somephysicians who restrict their engagement with charitycare patients to a single ED encounter, limit the range ofservices they are willing to perform, or fail to managethe clinical condition to conclusion. Reimbursement andliability concerns are likely drivers, but fall short ofexcuses, for such behaviors, which in extreme cases canamount to the virtual “abandonment” of the patient. Thisincreases clinical costs, creates liability exposure, mayplace patients at increased risk and degrades health carequality.

Discussion

There are at least three key components to establishing acontinuum of care that are within the existingcapabilities of New Jersey’s acute care facilities.Hospitals can establish guidelines to assure patients areadmitted to the most medically appropriate service,insist ED physicians manage patients to an appropriatepoint of transfer, and ensure discharge proceduresprovide for appropriate follow-up, after-care, oroutpatient services.

Hospitals traditionally do not question admission to aprimary care provider’s service or make an independent

Appendix 8.6



determination whether another service or specialist carewould be more appropriate and efficient. However,procedures that ensure patients are admitted to theappropriate service will increase their likelihood ofreceiving well-managed treatment from the onset of carethrough discharge or transfer. Consultation and/orrecruitment of other providers should be coordinated bythe appropriate admitting physician. In situations wherehospitals lack needed specialty resources, regionalrelationships could fill the gap.

Hospital policies must clarify the scope of physicianresponsibility for all ED cases, and articulateunambiguous professional, ethical and legal standards toensure patients receiving treatment in the ED service aremanaged through to clinical resolution and appropriatelystabilized, discharged or transferred. Strongerinducements, including legislative mandates may benecessary if such encouragements prove insufficient.

Utilization of appropriate post-discharge care can meanbetter outcomes, more compassionate care, and greatercost-efficiency. This may include local or regionalaccess to long term ventilation units, vent/dialysis units,long-term acute care facilities (aka LTACs), nursinghomes, and hospice care. Discharge procedures shouldencourage such choices and efforts should be made toreduce or eliminate any financial barriers that mayinhibit considering such alternatives.

Managing the continuum of care for the highest costdiagnoses (DRGs) may offer the best opportunity forrealizing a measurable benefit from a coordinatedapproach. CHF (congestive heart failure) is a goodexample, representing one of the most common andcostliest DRGs. Coordination of in-patient care andoutpatient support through specialists, anticoagulationand/or CHF clinics is likely to prove a readily available,cost-effective strategy.

In all cases, incentives or other forms of encouragementare needed to achieve better management of patientsthroughout the continuum of care.

Benefits and Risks

• Ensure optimal management of all patients fromadmission to post-discharge treatment to conservesthe benefit of treatment, reduce readmission rates,and forestall clinical deterioration.

• Ensure involvement of the appropriate specialistfrom admission through discharge or transfer.

• Restructuring significant aspects of the physician-patient relationship and ED practice patterns willrequire engagement and commitment by seniormanagement and institutional governance.

Recommendation:

• Encourage coordinated care through a system ofappropriate incentives and standards for achievingmeasurable results, that will at a minimum:

- Assure patients are admitted to the mostmedically appropriate service

- Require ED physicians to manage patients to anappropriate point of transfer, and

- Establish discharge procedures that provide forappropriate follow-up after-care or outpatientservices.

• Study and development of specific guidelines forimplementing coordinated care on an individualinstitutional basis is a likely necessity and stronglyurged.

4. Transparency & Accountability for Acute CareResource Utilization Costs

Issue

Imperfect or non-existent knowledge of the cost of careand resources inhibits physicians and consumers frommaking informed, rational choices, decreases trust andconfidence and disables accountability for decisions.

Discussion

The cost of hospitalization and associated resourceutilization is not widely appreciated by treatingphysicians, much less by the public at large. Withoutsuch information, physicians and patients may makeunwarranted or inappropriate demands for non-essentialservices, over-use or misuse hospital resources, and failto appreciate justified denials or consider alternatives tosuch services. These factors tend to raise the overalllevel of dissatisfaction in and distrust of many aspects ofthe health care system.

Greater financial transparency would increasecomprehension of the financial impact of treatment


decisions and make creation and adoption of quality andcost performance expectations for physicians rationaland equitable.

Benefits and Risks

• Financial transparency engages physicians inresource utilization decisions

• Removes elements of uncertainty contributing tosuspicion and distrust

• Empowers consumer-directed health care choices.• May threaten marginal institutions dependent on

higher cost services to offset uncompensated care.

Recommendation

• Increase institutional transparency for acute carecosts, utilization and care alternatives to enable costand treatment-effective decisions.

- Hospitals should explore ways of publishing andcommunicating accurate, relevant and timelyinformation on the cost of care, resourceutilization and alternatives to inform and helpguide physician decision toward the most costand treatment-effective choices.

5. 365 day Optimization of Hospital Resources

Issue

Hospitals maintain emergency department and otheressential services at all hours of the day or night,providing vital and life-saving resources to theircommunities. However, hospital staffs and ancillary in-patient services are reduced or limited on weekends andoff-hours which, while saving money, can meanimportant diagnostic tests or treatments must bedelayed, sometimes for days.

Consequences of this may include medicallyunnecessary stays, patient inconvenience and exposureto infection risk, and associated waste, delay and cost.While some service capabilities should undoubtedly beprovided on a 365-day basis, it is unclear whether and towhat extent non-essential services would be cost-justified if available on a similar basis.

Discussion

Optimizing hospital resource utilization throughout theyear is not formulaic and will require study, tailoredrecommendations and well-managed implementation foreach institution’s unique situation. The importance androle of institutional governance in such an endeavorcannot be too strongly emphasized.

While it may not be possible for a hospital to provideevery service at all hours throughout the day, there areidentifiable aspects of effective coverage that allhospitals can and should maintain every day throughoutthe year. These include the implementation of speciallytrained coverage for ICU units, physician extenders andactions to address any deficits in on-call coverage.

Benefits and Risks

• Enhanced patient care, improved outcomes.• Incremental implementation can start with highest

cost units.• Spread work load to normally less productive hours.• Reduce unjustified (and unreimbursed) LOS

Recommendation

• Hospitals management should be encouraged todefine and adopt standards of operation for anexpanded range of services that optimize utilizationof physical plant and human resources on a 365 daybasis.

- Where essential in-house resources orspecialized services are unavailable or not cost-justified, management should seek to formand/or par ticipate in regional networks toaddress the identified deficiencies.

- Hospitals should invest in and incent programssuch as Intensivist and physician extenderprograms that are proven to have a measurableimpact on cost-savings, resource optimization,efficiency and effective patient care.

• Funding of such programs must be internally cost-justified. The State should provide assistance indeveloping economic and business modeling forfinancially distressed hospitals.

Appendix 8.6



6. Standardization of Emergency Department ServiceCall Requirements

Issue

New Jersey is one of the few states in the Union that hasforegone creation of public hospitals in favor of a state-mandated requirement that all acute care hospitalsprovide medical care to all persons regardless of abilityto pay – the so-called “Charity Care” system. As apractical matter, this often means the EmergencyDepartment must provide an extensive range ofcomprehensive care and services.

In addition, the Emergency Medical Treatment andActive Labor Act (EMTALA), also known as the patientanti-dumping law, encompasses emergency care in theED (including on-call specialists as required), OB carefor women in labor, and psychiatric emergencies. Thelaw provides for an appropriate medical screeningexamination for any person requesting examination ortreatment for a medical condition at an emergencydepartment. It is the hospital’s obligation to determineif there is an emergency medical condition and if so, tostabilize the patient or arrange transfer him to anotherappropriate facility.

Many hospitals can no longer enforce EmergencyDepartment (ED) service call obligations on physicians,and in a growing trend, must pay significant fees tophysicians in order to secure urgently needed andessential coverage. While this may not be a burden tosome institutions, it is undoubtedly problematic forothers.

In some cases, the lack of ED on-call physicians meanspatients have limited access to needed medical care andlack of appropriate follow-up or continuity. Change isneeded to ensure all acute care institutions have theaccess to critical specialty physicians needed to fulfilltheir obligations.

Discussion

Physicians (specialty physicians in particular) areincreasingly disinclined to accept on-call obligations,resulting in strains on access and availability of keymedical services to the particularly vulnerablepopulations for whom the ED may represent the onlymeans of access to the health care system. "On-call"

physicians are (unlike hospitals and their employees)fully exposed to tort liability and risk not beingcompensated for treating the uninsured (unless, as isincreasingly the case, the hospital has contracted them todo so.)

Historically, ED service obligations were more or lessexpected from physicians in consideration of attendingprivileges. A return to the former “soft” system ofobligation is not anticipated. One option is a mandatoryon-call requirement for all physicians. However,making on-call service “mandatory” for all physiciansvia regulation, legislation or hospital policy raisesdifficult questions of equity, bargaining power, legalityand enforcement.

Fines and licensure actions seem too extreme, whilesuspension or curtailment of privileges is not a realisticoption for many institutions. Moreover, the institutionallandscape is not uniform. Requiring obligatory on-callservice would be far less burdensome on physicians insuburban hospitals due to the relatively small number ofcharity care and Medicaid cases. Urban hospitals, incontrast, would face difficulty recruiting and retainingphysicians who could expect to shoulder a substantialburden of uncompensated care. (There is also awidespread but largely anecdotal perception that charitycare patients pose a higher medical liability risk thanother patients.)

Paying for on-call services is a poor but in some casesnecessary strategy, inasmuch as hospitals are mandatedto provide certain services under EMTALA. Wheresuch arrangements provide for flat fees only and do notpay for each episode of care, there is a built-in biastoward under-delivery and over-payment. Moreover,flat fees are paid independent of any reimbursement orother compensation a physician might receive. A bettersystem might tie payments to services actually renderedon some equitable pre-determined basis.

Initiatives considered elsewhere in this report andperhaps by other subcommittees may provide a partialsolution. Establishment of and participation in acomprehensive system of regionalized care or Centers ofExcellence and expedited transfers may provide amedically responsible and financially sustainable meansmeeting public expectations of the ED service, as well asthe legal demands of Charity Care and EMTALA


mandates. The widespread use of such centers has thepotential to change the current paradigm of ED care andalter the traditional pattern of reliance on on-callservices.

The crisis in on-call service is exacerbated by theproblems and risks, real or perceived, of providing carein the ED setting. The issues of compensation andliability for providing such services need to beaddressed to ensure adequate and consistent on-callcoverage and continuity of care.

Benefits and Risks

• Increasing on-call service will reduce servicebottlenecks and disparities in care for under-servedpopulations.

• Increasing the trend toward payment for “on-call”status is a poor solution that places additional strainon institutional finances.

• Mandating on-call obligations is a controversial andpotentially divisive concept that poses majorobstacle to implementation, may adversely impactcare, and perhaps reduce availability and access.

• Compensation for on-call services is a betterapproach in principle but presents unresolved issuesof funding.

• Regionalization could reduce the need for eachinstitution to have access a wide range of on-callspecialties.

Recommendations:

• Physician obligations and expectations with respectto ED service should be standardized (or at leastrationalized) regionally or even state-wide to ensureadequate medical coverage and fulfillment ofstatutory mandates. However, there is lack ofconsensus on the means to accomplish this end.Several ideas have been proposed:

- Mandatory (via statute or regulation) call andcontinuity of care obligations for all physiciansat all facilities.

- Increased incentives for Medicaid and uninsuredcases, compensation for taking call in urbanareas, and perhaps malpractice premium relief.

- Compensation for EMTALA-related services onan episode-of-care basis rather on a flat feebasis.

- Regional Coordination and Centers of Excellenceshould be examined in light of their impact ondemand for on-call services.

- Lifetime or age cap for on-call service hours.

7. Intensivist Model for ICUS

Issue

Intensive Care Units provide patients with life-sustaining medical and nursing care on a 24 hour basisbut are not typically staffed with specially trainedpersonnel. Typically, ICU patients are among thesickest, highest risk and most expensive cases in thehospital.

Discussion

Quality of care and cost-effective treatment in the ICUsetting are maximized when they are provided by trainedstaff whose only responsibility is the care of patients inthe unit. Such “Intensivist” programs, when properlyexecuted are recognized as cost-savings measures thatalso improves the quality of patient care.

A minimum requirement for such a program wouldprovide service on a 365 day basis for at least eight hoursper day, preferably during hours of greatest risk and/orlimited coverage. In some institutions, telemedicine andremote centers can be a highly effective and cost-efficient means to implement intensivist capabilities inwhole or in part. An “Intensivist Model” of ICU careand case management provides multiple benefits.

Benefits and Risks

• Better utilization of resources and ICU beds,organizational throughput and lower LOS,

• Better adherence to practice guidelines and bestpractices and coordination of care in complex cases

• Better patient outcomes, lower mortality rates,potentially higher patient and family satisfaction,more effective treatment of end-of-life issues,improved organ donation efforts.

Recommendation:

• Adoption or implementation of an Intensivist Modelof ICU Care should be a priority for acute carehospitals statewide and especially financiallydistressed institutions.

Appendix 8.6



- Hospitals should be encouraged, rewardedand/or recognized for implementing intensivistprograms and capabilities.

- The State or other organizations should enableand assist program development whereverpossible.

8. Leverage Professional Resources

Issue

Physician availability is a critical factor that impacts ahospital’s ability to respond effectively to patient needand efficiently utilize its resources. Reduced services,staffs and coverage on week-end and holidays, declinesin on-call physician availability and shortages of keymedical specialties can limit access and availability.

Even where physicians are available to provide in-patient coverage, the pressure to maximize the use oftheir professional hours is often extreme, reducing theamount of time available to each case and each situationdemanding their attention. These factors contribute toservice bottlenecks and inefficiencies, and may result inadded costs and increased risk.

Discussion

While there is no short-term means for increasing thesupply of specialty physicians in under-served localitiesin New Jersey, there are other strategies for leveragingscarce physician resources in the acute care setting thatpotentially offer economic and quality improvements.

In many situations, “practice extenders”, such asIntensivists, case managers, hospitalists, physicianassistants and advance practice nurses have the potentialto provide cost-effective means of achieving quality andefficiency goals in appropriate circumstances.Advanced practice nurses, for example haveindependent practitioner (IP) status which enables themto be independently compensated. Recognition of andcompensation for the services of other practiceextenders, such as Physicians' Assistants (“PAs”), wouldexpand their use, helping to realize more effective andcost-efficient resource utilization.

According a class of practice extenders such asPhysicians' Assistants IP status might facilitate this, andcould allow greater flexibility in matters such as getting

orders co-signed within narrow time constraints. On theother hand, this may raise new issues of practiceautonomy, training and expertise, and liability. It is alsonot clear whether and under what circumstancesPhysicians' Assistants themselves might desire or acceptindependent status. Any such change will requirefurther study and should not distract attention from theneed to expand their utilization through recognition ofand compensation for the value added.

Other capabilities such as telemedicine services could, ifappropriately compensated, help multiply the effectivereach of vital physician services. Financial incentives orsupport from the state or other organizations may berequired to overcome cost barriers to acquiring the ITinfrastructure needed for telemedicine and remotemonitoring.

Extensive implementation of leveraging strategies willimpact and alter the practice model of individualphysicians in important and perhaps radical ways.Institutional priorities must reflect and embody thecommitment of the governing board and seniormanagement to the needed change and establish cleargoals. Practice leaders, staff and employeerepresentatives must be brought into and “buy into” theprocess.

Benefits and Risks

• Reimbursement for the services practice extendersmore generally would expand their use and enablemore cost-effective leverage of scarce physicianresources.

• Patients will receive a net increase in care, hospitalswill gain greater coverage at reduced cost, andphysicians can make better and more profitable useof billable time.

• Various combinations and patterns of practiceextenders, intensivists, case managers, hospitalists,advance practice nurses, remote and telemedicinecapabilities can be combined to augment thedelivery of care and expand physicians’ availability.

• Solutions can and should be tailored to meet theneeds and capabilities of each individual particularinstitution and health care system.

• Initiatives in this area must be undertaken andendorsed at the highest levels of hospitalgovernance in cooperation with payors, physicians


and representatives of the various groups of practiceextenders to succeed.

• Hospitals (and especially financially stressedinstitutions) may need guidance to make cost-effective selections among the wide range ofavailable options.

Recommendation

• Hospital management should explore and expandthe use of practice extenders and other options forleveraging, extending and augmenting theprofessional presence and expertise of physicians.

- Provide enhanced compensation for the use ofselected practice extenders, such as PhysicianAssistants, even if not separately compensatedas “Independent Practitioners”.

- Hospitals should work closely and cooperativelywith its physicians and regional hospitals tooptimize the benefit of such efforts for patients,doctors and the institution itself.

- The State should assist financially-distressedinstitutions in identifying qualified consultantsand solution providers who can help define andimplement such initiatives.

9. Exploit Existing Electronic Capabilities and IT

Issue

Electronic data, communication and informationtechnologies continue to evolve and proliferate throughthe economy and society, but so far these tools areunderutilized by the healthcare system. There aresignificant efforts already underway, notably NJHA’sefforts to enable a Regional Health InformationOrganization (RHIO) in New Jersey which promise todramatically improve connectivity and communicationamong physician, hospital facilities and staff. Theseefforts require long-term commitment, substantialinvestment, support and encouragement. Nonetheless, itmay be possible to realize more modest gains sooner,and with much less effort and cost.

Discussion

There are many ways to make use of advances ininformation technology that are far less complicated andmore readily attainable than the widespreadimplementation of electronic medical records or thecreation of broad-based health information complexes.

The web is an existing resource that could dramaticallyenhance the relationship and communication betweenphysicians and hospital staff without majorreengineering or capital investment. Existing hospital ITsystems could be used to provide physicians’ officeswith the ability to remotely monitor hospital patients toachieve more timely, quality- and cost-effective decisionon interventions, treatment, discharge or otherdispositions.

On-line information, consultation and referenceresources for physicians and hospital staff are withinreach of existing technology and could be implementedat comparatively low cost. Electronic sharing ofinformation, case histories, and best practices could be acost effective means of education and promoting bettermedical and cost-efficient management. Intranetmessaging may prove a useful and readily accessiblemeans of communication as it has in other contexts.

The discharge and transfer process could be betterhandled through electronic means and as discussedelsewhere, may help ensure continuity of care.Electronic means could be used to obtain real or near-time information on discharge and intermediate careoptions, hospice, palliative care, rehab, LTC, etc., toshorten discharge time. The state might be able to offerassistance in locating consultants and solution providers.

Finally, institutions, payors and other stakeholders,perhaps pharmaceutical firms or insurers might be find itin their interest to support aspects of the effort toimprove connectivity and communication among targetgroups of practitioners and selected institutions, even ona limited basis.

Benefits

• Improve physician-hospital communications toincrease efficiency and productivity.

• Near or real-time remote access to patient recordscan improve accuracy and timeliness of clinicaldecisions.

• Distance learning technologies can enhance accessto reference resources, learning and enableinformation exchange.

• Private sector support and/or funding are worthexploring.

Appendix 8.6



• Legal and regulatory issues (HIPAA, Stark, IRS,etc.) must be considered and addressed.

Recommendations:

• Utilize existing hospital IT systems and standardweb access to provide physicians remote, real-timeaccess to clinical monitoring and/or data.

- Institutional and text messaging, physician homepage, etc could be an integral part of such asystem

• Establish on-line practice resources and institutionalphysician information

- Medical references, research, journals and otherlibrary services

- Institutional and/or healthcare system-specificinformation on resources, treatment protocols,best practices and other informational bulletinsand updates.

- State IT and library resources may be availableto help pool resources and reduce subscriptioncosts.

• Explore feasibility of using on-line dischargeinformation systems or providers to shortendischarge wait times and improve patient placement.

10. New Jersey Health Care Data Warehouse

Issue

Quantitative comparative measures of hospitalperformance do not exist in New Jersey. Disagreementover whom and what to measure delays or preventsneeded action, and can have but one outcome for afailing institution. Beyond agreement on the tools andcriteria, there must be confidence in the impartiality andobjectivity of the process.

Discussion

A vital task of the Commission is to help determine theviability of hospitals that are currently operating“marginally,” and recommend incentives forimprovement. The availability of reference standardsand measures of performance would inform and benefitall acute care institutions, but is an absolute necessity forthe effective management of hospitals in crisis.

The mechanics of such a system – the data collectioninstruments and evaluation algorithms and criteria - canbe developed on a regional or state-wide basis, drawingfrom good practices, experience and evidence-basedguidelines and use quality assurance experts, trainedstatisticians and data base development experts asneeded. Data on patient outcomes and institutionalperformance would be submitted by New Jersey’s acutecare hospitals to a central data repository or warehouse.

It is essential that all stakeholders be involved in theprocess of developing metrics and the methodology ofcollection, collation and dissemination of theinformation. The end product should be acomprehensive hospital patient health care andoutcomes data set, collectively designed andindependently maintained, to serve as a publiclyavailable reference standard.

Such a system may well be implemented as a spin-off ofthe RHIO initiative mentioned above. However, as thedata warehouse concept could be implemented at anearlier date and with less expense. It might also beutilized as a precursor to the more ambitious datacollection aims of the RHIO project.

Benefits and Risks• Increase transparency and metrics for New Jersey’s

acute care hospitals and health care system• Wide availability to all payors, healthcare plans,

institutions and physicians will encourage broadlyaccepted metrics and performance standards.

• Serve as the mandatory standard of reference for allinstitutions requesting or requiring extraordinary(beyond currently authorized Charity Care) statefinancial assistance for their operations.

• May impose extra costs on institutions, competewith or made superfluous by other public or privateefforts.

Related initiatives that may further such a project:

New Jersey Hospital Management Data Network

New Jersey acute care hospitals do not presentlyhave the means for real-time exchange of non-proprietary, non-confidential data. Like many


institutions in the state, hospitals tend to be localand relatively isolated, with limited interaction withpeer institutions.

- A hospital management data network, createdby the hospital associations and memberinstitutions, could provide managers of acutecare institutions non-confidential information tobetter assess their performance and progresscompared with their peers.

Uniform Data Standards and Formats

Uniform data standards and formats would enablemuch improved oversight, data and best-practicessharing, as well as transparency, measurement andaccountability among New Jersey’s acute careinstitutions.

- Standard for forms and data capture and entryshould be created and promulgatedimplemented by all hospitals. Immediatecandidates for standardization include a uniformclinical data reporting sheet and a new,customized New Jersey UB Type 04 medicalclaim form.

Recommendations

• Consideration should be given to establishing aNew Jersey Health Care Data Warehouse containingoutcomes and performance data from a widespectrum of participating acute care institutions.

- New Jersey should assist all acute careinstitutions in identifying consultants andsolution providers to develop the required IT andMIS resources.

- Standardization (or at a minimum, agreed waysof normalizing) of admission, char ting,treatment and discharge procedures should bedeveloped to allow comparative assessments ofperformance.

- Contributors must include the Medical Society ofNew Jersey, the hospital associations, healthcare insurers, public payors, appropriateprofessional societies and the final product mustbear their unanimous endorsement.

- The state should explore options to host, supportand maintain the database, to assure compliancewith HIPAA and other applicable laws andregulations, and provide neutrality.

- Funding options should be explored, includinggrants, user fees, subscriptions or subsidies forfinancially distressed institutions.

Conclusion

The crisis in acute care facing many communities andinstitutions in New Jersey is profoundly affected by therelationship between the hospitals that provide access toservices and the physicians who provide the care. Whilethese stakeholders share many interests and goals indelivering effective and high quality medical care, in toomany instances financial pressures, structuralinefficiencies, imperfect information and irrationalpatterns of traditional practice, resource allocation anduse defeat or deflect the achievement of these ends.The recommendations provided in this report ifimplemented in whole or in part, can be part of theanswer to rescuing New Jersey’s most at-riskinstitutions, bringing quality care to underservedcommunities, and raising the level of health careavailable to all persons seeking it within the state.

Appendix 8.6

Subcommittee Report 6: Hospital/Physician Relations and ...obligations for emergency department...

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