Hospitals ill from more bad debt, credit troubles

By LINDA A. JOHNSON, AP Business Writer

TRENTON, N.J. – Gainesville's first community hospital has been on life support since the Shands Healthcare system in northern Florida bought it a dozen years ago.

Now, because of the recession, the plug is being pulled on 80-year-old, money-losing Shands AGH. Next fall, its eight-hospital not-for-profit parent company will shut the 220-bed hospital and shift staff and patients to a newer, bigger teaching hospital nearby as part of an effort to save $65 million over three years across the system.

Like many U.S. hospitals, Shands is being squeezed by tight credit, higher borrowing costs, investment losses and a jump in patients — many recently unemployed or otherwise underinsured — not paying their bills.

All that has begun to trigger more hospital closings — from impoverished Newark, N.J., to wealthy Beverly Hills, Calif. — as well as layoffs, other cost-cutting and scrapping or delaying building projects.

More closings and mergers are on the way, industry consultants predict.

"They'll get swallowed up by somebody else, if they need to exist, and if they don't, they'll just close," said Tuck Crocker, vice president of the health care practice at management consultant BearingPoint.

Most endangered are rural hospitals and urban ones in areas with excess hospital beds and a lot of poor, uninsured patients.

Hospitals, which employ 5 million people, are reporting that donations and investment returns are down, patient visits are flat and profitable diagnostic procedures and elective surgeries are declining as people with inadequate insurance delay care. But those patients are turning up later at ERs, seriously ill, making it tough for hospitals to lay off nurses and doctors.

All those problems are aggravating long-standing stresses: stingy reimbursements from commercial insurers, even-lower payments that generally don't cover costs for Medicare and Medicaid patients, and high labor and technology costs.

Hospital executives and consultants say the growing number of people with high-deductible health plans is boosting unpaid patient bills. Many worry health reform efforts by the Obama administration could bring cuts in Medicare reimbursements, and many cash-strapped states already have begun cutting payments for poor people covered by Medicaid.

In the past few months, patients and insurers have been paying hospital bills more slowly. As a result, some think hospitals will start demanding up-front payments for elective procedures.

In November, Moody's Investors Service changed its 12- to 18-month outlook from "stable" to "negative" for nonprofit and for-profit hospitals, citing "prospects of a protracted recession," bad debt and the credit crunch.

"Looking forward, the cost of borrowing will likely be higher — and may be nonexistent for lower-rated hospitals," Moody's noted, a problem because hospitals borrow for everything from expansions and equipment to payroll and supplies.

Since October, there's been "a dramatic slowdown" in plans for new wings and building upgrades, with many delayed indefinitely, said Paul Keckley of the Deloitte Center for Health Solutions.

"It probably means we won't have as many new things in the hospital," he predicted.

Tim Goldfarb, CEO of Gainesville-based Shands Healthcare, said his system, Florida's second-largest provider of charity care, this year has seen bad debt jump 20 percent from patients with no insurance.

"We write them off," Goldfarb said. "It's a burden that we cannot carry any longer."

Florida started cutting Medicaid reimbursements two years ago, when its economy started to slow, Goldfarb said. He fears another huge cut next year.

Shands already has paid off variable-rate bonds to avoid higher interest rates, deferred roughly $25 million in equipment purchases, shifted management meetings to church halls and adopted employee suggestions to save millions more.

Goldfarb believes closing Shands AGH will save nearly $100 million over seven years, mainly by avoiding costly renovations, but some administrative jobs will go.

Around the country, while some hospitals still are doing well, closings and bankruptcies seem to be picking up.

In New Jersey, where 47 percent of hospitals posted losses in 2007, five of the 79 acute-care hospitals closed this year, and a sixth may close soon. In Hawaii, nearly every hospital is in trouble, with two filing for bankruptcy and one nearly closing recently.

All over, hospitals are cutting costs by outsourcing services like housekeeping and security and trimming staff through layoffs, hiring freezes and attrition. Most are trying not to touch patient care jobs — nurses, pharmacists, therapists and X-ray technicians — as those already have staff shortages.

"The last thing we can do is skinny down our staffing right where we need it the most," said Mike Killian, marketing vice president for the three Beaumont Hospitals in suburban Detroit.

There, auto industry job losses and other factors now equal fewer patients with commercial insurance. The system expects a $22 million loss, its first in at least 40 years, Killian said.

So Beaumont this fall announced a $60 million restructuring program that includes 4-10 percent pay cuts for doctors and managers, reducing overtime for some employees and eliminating 500 jobs, 200 already vacant, mostly outside of patient care. Rich Umbdenstock, chief executive of the American Hospital Association, said some of the hardest-hit hospitals began reducing staffing and services as early as last spring and more will follow. He expects some to eliminate services — money-losers such as behavioral health treatment, or those with high operating costs such as burn units — rather than weaken their entire operation.

An association survey of more than 700 hospitals found two-thirds have seen elective procedures and overall admissions fall since July, and half have seen moderate or significant jumps in nonpaying patients.

An industry database on more than 550 hospitals found their third-quarter investment results amounted to a combined loss of $832 million, down from a $396 million gain a year earlier. During the quarter, those hospitals paid 15 percent more in borrowing costs and swung to a 1.6 percent average loss, from an average 6.1 percent profit margin a year ago.

"They're having serious problems getting the capital they need for needed renovations and upgrading their facilities," said Mike Rock, a lobbyist at AHA, which is seeking increased federal reimbursements from Medicaid and Medicare.

At Exempla Healthcare, with three hospitals in Denver and its suburbs, Chief Executive Jeff Selberg said there's usually a 5-7 percent annual profit margin, but this year investment losses wiped that out. He's scaled back a $200 million plan to upgrade facilities, information technology and clinical equipment and may halt construction of a new maternity unit and operating rooms at one hospital.

Selberg has seen a slight increase in bad debt and expects more problems.

"We feel like the wave is coming, but it hasn't hit yet, and we don't know how big this wave is going to be," he said.

I'm Worried about Healthcare costs, are you?

In Survey, Nearly One in Five People Age 45 and Older Say They're Not Sure They Can Afford Health Care in 2009

By Miranda Hitti
WebMD Health News

Reviewed by Louise Chang, MD

Dec. 24, 2008 -- Health care costs are daunting to nearly a fifth of the people who took part in a recent AARP survey.

The telephone survey, conducted in November by Woelfel Research, included 1,001 U.S. adults age 45 and older. All but 10% of them have health insurance, either from their employer, their spouse's employer, private insurance, or Medicare.

One survey question was, "How confident are you that you will be able to afford medical care next year?"

Most people -- 81% -- said they were at least somewhat confident. That leaves the remaining 19% unsure that they will be able to foot their health care bills in 2009. Here are the details:

• Extremely confident: 26%
• Very confident: 33%
• Somewhat confident: 22%
• Not very confident: 9%
• Not at all confident: 10%

People age 65 and older (and thus eligible for Medicare) were especially confident that they'll be able to afford health care next year. People earning less than $30,000 per year were least confident about being able to pay for healthcare.

Likewise, when asked specifically about affording prescription drug costs next year, most people -- 83% -- were at least somewhat confident. But 9% were not very confident and 8% were not at all confident that they could afford their prescription drugs. Most participants reported spending up to $200 per month for up to six prescription drugs in 2008.

Taking Action

Survey participants were also asked what they had done to try to contain their health care costs.

• 58% said that when a doctor prescribes a new drug, they always ask if there's a generic equivalent.
• 62% said they always pick the generic version, if one is available.
• 49% said they've asked their doctor if there are things they can do (such as physical activity and diet change) to lower their number of medications.
• 77% said they've never been prescribed a brand-name drug that they couldn't afford.
• 85% said they hadn't cut back on medications in the past year because of costs.

The survey has a margin of error of three percentage points.

Case Study: Leveraging Next-Gen Wi-Fi to Transform Healthcare

El Centro Regional Medical Center's Director of IS John Gaede intends to use innovative medical technologies to transform healthcare. "We can attack escalation in healthcare cost by using IT to avoid test duplication, improve communication, and make it easier for physicians, nurses, and clinicians get their work done."

"We've already put in an Electronic Health Care Record system and an operating room nurse charting system. Now we're bringing in Vocera [for hands-free voice] and wireless IV pumps for bedside drug administration. Soon, all new stat orders will go directly to Symbol wireless handheld devices, and we'll have the ability to shoot medical images over wireless," said Gaede.

"We had all of these great new technologies coming at us, but we didn't have a way to support them. We realized that the direction we wanted to go as an organization was going to require a really robust wireless foundation—a state of the art wireless network."

But creating the network that ECRMC needed, at a price this 165-bed acute care facility could afford, was no small challenge. After a five-vendor bake-off, Gaede ripped out his aging Proxim Orinoco WLAN and deployed an extensible cooperative mesh from Aerohive Networks. "We're up to about 60 HiveAPs now. When you roll out something like this, you just know whether or not you made a good decision—and I still think we made the best decision possible."

Spotting the symptoms

Two years ago, ECRMC had several new healthcare applications coming on-line that demanded reliable, secure wireless roaming. At the time, the hospital's WLAN consisted of 40 autonomous Proxim Orinoco APs, mounted throughout the facility.

"Those APs were great back in their day, but they're now eight years old," explained Gaede. "We got a lot out of the money that we invested in them, but we were rapidly catching up in terms of healthcare IT. When we decided to bring up our operating room nurse system for paperless charting, we knew there was no way we could do that with Orinoco."

In fact, WLAN usage had already flat-lined due to issues related to seamless roaming—or lack thereof. "In healthcare, it's a big deal when you can [access and edit] full patient records, live at the bedside. But when we went live with our state-of-the art Electronic Health Care Record system, those applications would just drop dead," said Gaede.

Specifically, when wireless users roamed beyond a single AP's footprint, they found themselves disconnected (at least briefly), requiring PC reboot to bring EHCR applications back up. "Our staff really had to roam to get their work done. When physicians just stopped doing any bedside entry that was a red flag—the catalyst for us to say: We can no longer use this WLAN."

Diagnosing the disease

Nonetheless, before embarking upon a potentially costly rip-and-replace, ECRMC had to be absolutely certain it was choosing the right next-generation wireless architecture and platform.

"We'd already put in one system where we had overlooked the need for very reliable wireless," said Gaede. "I have to stand before the board and tell them that if they spend money on this, we'll be successful. So I spent weeks talking to vendors—I wanted to really understand why they did what they did." Gaede also spoke with CIOs at many other medical centers, small and large, in the US and abroad, quizzing them about their own selection criteria and post-deployment experiences.

The requirements list that emerged set the center's bar pretty high. "We wanted something that would be highly available, highly reliable, and have good performance. Even if we have to start with 802.11a/g APs [to reduce initial cost], we wanted the ability to easily step up to 802.11n because getting near-desktop speed for physicians when placing orders is very important to us."

"We also have many places in the hospital with old thick concrete walls, so we needed a platform with depth," explained Gaede. This not only meant RF technology that could accommodate and overcome attenuation and interference—it also demanded a wireless backhaul strategy to avoid Ethernet drops in hard-to-wire venues.

The center's next WLAN would also need to support a diverse mix of demanding applications, from latency-sensitive wireless VoIP handsets and badges to bandwidth-intensive medical imaging applications. "We needed quality of service controls," said Gaede. "And of course we also had to comply with HIPAA."

But ECRMC still had to implement this ready-for-primetime WLAN on a rural medical center's modest budget. In particular, Gaede took a hard look at the resources the hospital could afford to put into WLAN management and troubleshooting. "I'm not going to get another FTE for wireless—we have ten people on our entire IT staff," he said. "Ease of deployment and implementation were essential; we needed something that we could figure out on our own."

Prescribing the cure

After doing his homework, Gaede had narrowed his candidate list down to five: Aerohive, Aruba, Cisco, Extricom, and Meru. To address its roaming and RF challenges, the hospital initially focused on single-channel architectures.

"Extricom came in first," said Gaede. "I spent about six weeks with them, but they could not make their system work here. It failed over and over—connecting and disconnecting. Finally, they sent an Extricom engineer who was able to fix the problem, but at that point we'd had it."

Gaede issued his next on-site test invitation to Meru. Their tests started well but didn't end that way. "We took them down to our emergency room because we knew that was a tough environment. But we'd watch signal strength on a laptop go from 5 to 3, 5 to 1, and then our applications would just drop dead down there."

Disheartened, Gaede decided to reconsider multi-channel architectures. "Cisco came back with a [price quote] that was 75% higher than anyone else, so we eliminated them. We then conducted [an in-situ] bake-off between Meru, Aruba, and Aerohive."

Gaede and his staff started with the hospital's emergency room application, MEDHOST. They asked each vendor to prove that MEDHOST could run without disruption on a wheeled cart as it moved throughout the hospital. Brief reachability losses were detected by a continuous ping, but the test's objective was to verify seamless AP-to-AP roaming with sufficiently short hand-off delay.

Next, Gaede's team tested resilience, using the emergency department as an RF-hostile testbed. "There are many competing [radio transmissions] down there, including cordless phones and imaging equipment," explained Gaede. "Meru brought in external antennas to overcome that interference, but ended up creating multiple cells using different channels anyway." This test eliminated single-channel architectures, narrowing the bake-off to Aruba and Aerohive.

Tests continued in other parts of the hospital where connections were known to be difficult, looking for stability and non-stop charting when moving into and beyond locations like the ER. In the end, ECRMC selected Aerohive over Aruba based on ease of deployment and technology.

"Aruba matched Aerohive's price, so why should I take a chance and go with this newer company that doesn't have an established healthcare footprint? After careful consideration, I believed that Aerohive's intelligent APs and cooperative control were the superior technology," said Gaede.

"I also felt that we wouldn't be a little fish in a big pond if we went with Aerohive. I needed a real partner so that when we do have a problem—when I deploy that new wireless medical device that nobody else is using yet—[my WLAN vendor] is going to be there for us."

Nursing the network back to health

According to Gaede, the hospital's "wireless guru" spent less than an hour studying Aerohive documentation to configure and install the center's first HiveAP. Another administrator then used that global policy to deploy 56 more 802.11a/g HiveAPs and four 802.11n HiveAPs. All were installed without any on-site assistance from Aerohive.

With Aerohive's cooperative architecture, policies are created on and disseminated by a HiveManager. The HiveManager is not a WLAN controller—it simply serves as a central repository for configuration and monitoring data. As each new HiveAP is connected to the network, it seeks out the HiveManager to initialize itself and "go live" without administrator assistance.

But even plug-and-play configuration cannot answer that essential question: Where should APs be placed for optimum coverage and performance? For the sake of simplicity, the hospital started with a one-for-one swap, replacing old Proxim APs with new HiveAPs. "As we did that, we felt that our coverage density was far more than we needed, so we started to skip spots," said Gaede.

Those extra HiveAPs were used to move beyond the hospital's existing Proxim footprint, supporting wireless patient registration at four outpatient clinics operated by the medical center. "We're planning to bridge over subnets [using GRE] to give our physicians the freedom to roam from clinic to hospital, and we're also starting to [cover] areas of the hospital campus that we didn’t before."

Another factor in the center's relatively kink-free rollout has been Aerohive's cooperative mesh architecture. HiveAPs have been able to relay traffic to each other between floors inside the hospital and in outpatient clinics where no Ethernet drops previously existed. Because medical applications raise the stakes on "mission critical," ECRMC depends upon Aerohive's self-healing adaptive mesh and controller-free architecture to avoid single-point-of-failure.

Pumped about the future

Although Gaede is pleased with performance to date, this new WLAN has yet to be subjected to heavy loads. "In areas that are heavily using [our WLAN], we now have about 15 devices per AP. At the low end, in the OR we have four APs and 24 laptops. But that'll change dramatically when we put Vocera, wireless IV pumps, and bedside phlebotomy in this spring," he said.

"My ER is now using wireless and they love it. We had so much confidence by that point that we put APs in our OR just two days before we went live on a new paperless system in there. We had no blips, no errors, no issues at all—that speaks volumes," said Gaede.

"Our pharmacists have thanked us for putting up the new wireless network, because now they can take a laptop with them as they move through the campus to process their medicine orders. We just received Aerohive's Guest Manager, which we're planning to roll out to give visitors a 24-hour pass to get onto a VLAN to use the Internet. We're going to have Aerohive come out to look at what we've done to make sure that we're prepped to roll out Vocera this February."

In short, Gaede is pleased with progress to date and excited about the future. With this robust foundation now in place, ECRMC can stop plugging leaks in the plumbing and truly focus on delivering better medicine through more creative use of innovative wireless applications.

U.S. Flu Shows Resistance to Flu Drug, CDC Says

WASHINGTON (Reuters) Dec 19 - A common strain of influenza circulating in the United States this winter is resistant to Tamiflu, the most popular drug used to treat it, federal health officials said on Friday.

The situation poses little danger, according to the U.S. Centers for Disease Control and Prevention, because Tamiflu is only used in a minority of cases. It advised doctors to use rival drug Relenza or rimantadine, an older drug.

Forty nine out of 50 samples tested resist the drug, although they can still be treated with other flu medications, the CDC said in a special advisory to doctors.

"It is still very early in the season. There is very little influenza out there," CDC Director Dr. Julie Gerberding told reporters in a telephone briefing.

"This is probably actually not going to affect very many people because we don't use a lot of antiviral drugs in our country," Gerberding said. "Most people with influenza don't get any treatment."

In a normal flu season, three strains of flu circulate called H1N1, H3N2 and influenza B. Flu kills about 36,000 Americans in an average year.

It is the H1N1 strain that is turning up resistant samples, Gerberding said, and comes mostly from Hawaii, Massachusetts and Texas, the states with the most cases of influenza.

Last year, just under 11 percent of the H1N1 samples tested were resistant to Tamiflu. Gerberding said she did not think the virus had evolved, but that the strain that happened to pop up was also resistant to the drug.

"We can't predict whether or not these strains will end up being the most important strains in this year's flu season. This particular H1N1 could fizzle out," Gerberding said.

Tamiflu, known generically as oseltamivir and made by Roche AG and Gilead Sciences Inc., can both prevent and treat flu if taken quickly enough.

A similar drug is Relenza, or zanamivir, made by GlaxoSmithKline under license from Australia's Biota Inc.

The U.S. national stockpile of antivirals is about 80 percent Tamiflu and 20 percent zanamivir, according to the Health and Human Services Department. The CDC's Dr. Tim Uyeki said this season's development illustrated the need to keep a diversified array of drugs on hand.

"But zanamivir... is not approved for those less than 7 years old," Uyeki said. People with asthma are also advised not to use the drug, which is inhaled.

Gerberding noted that this year's flu vaccine matched the three strains circulating so far very well. The CDC says there is still time for Americans to get a flu shot, as the season usually peaks in February.

The CDC and the U.N. World Health Organization are concerned about the threat of a new and deadly strain of flu developing that would sweep the world. That is one reason to keep a stockpile of antivirals handy, CDC says, although this year's flu season appears to be mild.

About 40 pct of docs use electronic records

WASHINGTON (Reuters) - Just under than 40 percent of U.S. doctors use electronic medical records and many say the system they use is only minimally functional, according to federal survey results released on Thursday.

Only 4 percent of the 2,000 doctors surveyed by the National Center for Health Statistics said their systems were fully functional -- a clear indication of just how many U.S. physicians rely on outdated paper records.

President-elect Barack Obama has said he would make electronic medical records a central part of his healthcare reform plan and promised to spend $50 billion doing so over five years.

But Obama, who named former U.S. Sen. Tom Daschle to be his healthcare reform czar and Health and Human Services secretary on Thursday, also said he is not sure how to fund his initiatives given the recession, growing unemployment and other aspects of the economic crisis.

The NCHS, part of the U.S. Centers for Disease Control and Prevention, sent a mail survey to 2,000 office-based doctors between April and August 2008.

"In the 2008 mail survey, 38.4 percent of the physicians reported using full or partial electronic medical record systems, not including billing records, in their office-based practices," the NCHS said in a statement.

"About 20.4 percent reported using a system described as minimally functional and including the following features: orders for prescriptions, orders for tests, viewing laboratory or imaging results, and clinical notes."

Many experts agree that having electronic medical records would improve healthcare, prevent errors and save costs.

The nonprofit Commonwealth Fund found in a report issued in July that 98 percent of doctors in the Netherlands and 89 percent in Britain use electronic medical records, compared to 28 percent in the United States.

Obstacles include creating a system that would work for various doctors' offices and insurers, and that would also protect patient privacy.

Las Vegas' University Medical Center Leverages Long-Term Wireless Strategy With InnerWireless' Converged Wireless Solution

Hospital to deploy new 802.11 WLAN on InnerWireless' distributed antenna system

RICHARDSON, Texas, Dec 08, 2008 (BUSINESS WIRE) -- InnerWireless(R), Inc., the premier provider of Converged Wireless solutions, today announced that the University Medical Center of Southern Nevada (UMC) - the state's oldest hospital and the only Level I Trauma Center serving the Las Vegas Valley - is deploying InnerWireless' broadband Horizon(TM) solution as the platform to deliver its 802.11 (WLAN) services as well as future wireless clinical applications. UMC chose InnerWireless because its Converged Wireless solution Horizon(TM) provides superior total cost of ownership and flexibility to continually add wireless services without redesigning or upgrading the system.

UMC's campus covers nearly 1 million square feet throughout eight buildings including one that's currently under construction. The hospital began looking for a distributed antenna system (DAS) because it needed to replace its aging 802.11 WLAN, and as a public hospital, they wanted to make the best investment possible for the long term.

"We started looking at the DAS alternative because we knew upgrading the existing 802.11 WLAN was going to be a significant investment on its own, so the plan was to find a comprehensive solution that could support all of our wireless needs, both the ones we're planning for today and those that we know will come up in the future," said M.J. Ernie McKinley, UMC assistant chief information officer. "There are so many wireless applications being developed that we needed an extensible solution capable of rapidly delivering new technologies."

UMC's initial wireless deployment will include the ubiquitous delivery of 802.11 a/b/g, utilizing InnerWireless' unique WLAN Traffic Management solution for optimizing mobile EMR applications utilizing clinical carts, laptops and tablet PCS. Plans also include adding additional services such as wireless medical telemetry (WMTS), pagers and two-way radios.

"Having a healthcare leader like UMC leverage both current and future wireless needs by investing in the long-term value delivered by our Horizon Converged Wireless solution is the ultimate compliment and motivation for us," said Ed Cantwell, InnerWireless CEO. "InnerWireless is proud to support a visionary organization like UMC as they continue to evolve their wireless strategy."

A growing number of hospitals in the U.S. are choosing to deploy Horizon to solve their wireless challenges. Supporting a broad spectrum of WWAN and WLAN services, including cellular/PCS, two-way radios, paging, 802.11 a/b/g/n, voice over IP and whole-house medical telemetry, Horizon ensures seamless integration with advancing technologies and applications while providing a secure wireless future for the hospital.

About InnerWireless

InnerWireless is the premier end-to-end in-building wireless solution provider for healthcare, enterprise, hospitality/gaming and government markets. With Horizon(TM) - a broadband, Converged Wireless platform - InnerWireless ensures the delivery of Wireless Wide Area Networks (WWAN) and Wireless Local Area Networks (WLAN) services including cellular/PCS, fire/life/safety, Wi-Fi and medical telemetry - guaranteed. Designed expressly for mission- and life-critical wireless applications, Horizon's comprehensive, single antenna infrastructure enables pervasive coverage and optimized capacity with an eco-friendly "green" design and an industry leading warranty. InnerWireless also collaborates with key industry partners to enable the delivery of turnkey solutions. As a Cisco Premier Certified Partner, specializing in Wireless LAN technology, InnerWireless provides and supports Cisco WLAN solutions. As an AeroScout Gold-Level Value Added Reseller, InnerWireless can deliver the latest in location-based solutions. With a complete end-to-end solution, InnerWireless helps achieve a new and lasting degree of wireless freedom. For more information about InnerWireless, visit www.innerwireless.com.