In Conversation With Jeff Golden; Roy Vinyard - CEO - Asante Health

War war. It's. We've we've had rationing the state of Oregon for a long time through the Oregon health plan and the services that are covered and not covered and it's a matter of fact that is really what has caused the downfall of the Oregon Health Plan. That is as the finances have gotten tighter and tighter the line that is the things that are covered have become fewer and fewer. Now at some point those issues might manifest themselves in an emergent case. I want to make the point that hospitals don't ration. That is everyone who comes in the hospitals doors get service. And that's regardless whether it's Rogue

Valley Three Rivers Providence they come in the doors they get service regardless of their ability to pay or their need. With the exception of what I would call elective types of cases. But if you come in with some sort of an emergent case you are going to be treated. For its size and population southern Oregon has a network of health care facilities you'd be hard pressed to find anywhere else. Two of the cornerstones of this network are Rogue Valley Medical Center in Medford and three rivers community hospital in Grants Pass. They share a common owner a Sunday health systems a nonprofit community own system that also owns and operates Genesis Recovery Center for Alcohol and drug addiction and hard stone Manor. A skilled nursing and Alzheimers treatment facility for the last six years assigned to his chief executive officer has been Roy Vineyard. Roy knows something about health care. He came to the Rogue Valley from Portland where he was chief administrative officer of both Oregon

Health Sciences University and Darren Becker Children's Hospital. Join me in conversation with Roy Vineyard. Number Six golden is made possible by the patrons in producer society. Thank you for joining us in conversation. My pleasure. Jeff tell us about a health system we just described it is a community own nonprofit system. Functionally what does that mean and how does it differ from the model of a profit making hospital. Well the health system is as you mentioned is a small health care system based in Southern Oregon. The corporate offices are in

Medford off Oregon. So it is not part of a larger system based in some other city or or some other state is a not for profit system which basically means that any money that is accumulated let's say at the end of the year any profit that is made goes back into the organ revenue over expense revenue over expenses would go back into the organization back into the community. That differs slightly from investor own are for profit hospitals which by the way they're only a couple I think two that I know of in the state of Oregon the other 59 are not for profit. There is a shareholder element in a for profit facility that is shareholders will want to be satisfied that they're making a good return on their investment. And that said I would still venture to guess that the majority of the bottom line are the profit at the end of the day in a for profit system still goes back into the hospital and into the community. But should we be able to expect that a not for profit should cost less for an

equivalent service simply because there is one slice of the pie return to shareholders that you don't have to worry about. Well logically you would you would think so that is not always the case because it could be that a for profit hospital maybe operating a little bit more cost consciously than a not for profit hospital. So I don't want to suggest that they're cutting corners but that they may lower their cost as much as they can and they have a little just a slightly different mindset because there are investors involved. So for that reason I would say the not for profit probably doesn't have an edge in charging less over for profit. Now if there's an area of consensus in the whole health care debate it's probably that costs are very high and increasing at an unacceptably fast rate. What elements are you able to focus on at the santé in terms of cost control and what are you doing about them.

OK well there are a number of things that led to the current I would say crisis that we're in right now in health care. The costs that tend to be out of control. A big part of the problem would be medical malpractise insurance costs. That is a big element used to be a portion that you wouldn't think much about. It's now a considerable portion of the health care bill. We live in a society that is pretty quick to put out a lawsuit for lots of purposes some legitimate obviously. Others less so but they all cost money to defend. That's that's part of it. Another part of it and what we're doing about it maybe I should do that one of the time we actually one of the things that we very much focused on is what I would call risk management services. That is we were looking at every area that we could be in potential jeopardy for for risk problem whether that be a patient getting out of bed and falling down whatever we were

concentrating on the elements of risk and then working in groups to say OK how can we take what we've learned transfer that across our system make this a safer environment lower premiums for you. That does lower premiums because as you know insurance companies look at your risk and the risk of insuring you and they make decisions based upon that so it can and should. And we've gone a step further and created our own captive insurance company. So in essence we are our own insurer. And we've done that for cost savings purposes because you eliminate a middle person and that's not a revenue center the way it would be for a private health insurance cut that's directed Stephanie to Marilyn it's correct but it would also in terms of cost control are you involved with. Well there are a number of things. Again leading to the increasing cost of care and. Part of that is that the government reimbursement that is Medicare and Medicaid which make up about half of our patient

population reimburse is at a much lower rate than our overall costs. So unfortunately that causes this cost shift that so many people have heard about. On to the rest of the population that is businesses individual success. We've worked very hard nationally and also at a state level to help legislators understand what is happening and that we can't continue to shift this cost. And so we try to work with them to bring a more equitable reimbursement formula to the health care system. I have to ask if you make any progress on that front because at least anecdotally I'm hearing about individuals who aren't covered by insurance who do have some resources who are getting billed very very high for costs their costs and other people's costs as well. Yes Jeff I wish I could say we're making a lot more progress the progress is very very slow because you have a system that currently eats of about 17 to

18 percent of gross national product. It needs overhauling. And what we're doing is tweaking so the tweaks are very few and far between. We make slow progress but the progress that we're making isn't enough to keep up with the increase in cost and the cost shifting has to come from that. One of the targets of critics of the high cost of health care is the pharmaceutical industry and one looked to be for the most part healthy profits and big margins between the retail cost of a medication and what it costs to produce. Is that an area that deserves a lot of attention. I believe it deserves some attention. Pharmaceutical cost probably account for maybe 10 to 15 percent of overall health care costs. I could be wrong on that figure but it's not the majority of health care costs. Having been a pharmacist and in the past I I see a lot of areas now that look a little suspicious in terms of

pricing. For example generic drugs. It's interesting that as generic drugs have become more popular as a way to save money the price of generic drugs have come closer and closer to the price of the formulary or the name brand drug. So I think that can and should be looked at there is definitely a profit motive there for profit companies and they're entitled to profit I think the question is how much of a profit and who's paying for that. Now you have to work pretty closely with pharmaceutical companies or should you be saying things like this you're going to get in trouble with some of your business associates here. Well I don't think so I mean I don't make it a secret how I feel about the industry and I'm certainly not singling out the pharmaceutical industry as the culprit. There is some culpability culpability on everyone's part for this. That the hospitals physicians pharmacists the public everyone has a piece in this.

Let's talk about your elements without you know understanding that there is no one problem no one magic bullet but another thing that gets a lot of discussion is the private health insurance industry and profits there and kind of regulations they are on in it that has fueled an interest in single payer health insurance one of the things we hear about is a colossal amount of paperwork and administrative work meeting the requirements of many different insurers. What do you think about that. And is single payer health insurance a promising direction to look at reducing those costs. Well single payer health insurance has been something that's been talked about now for many many years. And in our national association we spend a fair amount of time looking at is that the best answer moving forward. I would say that some sort of a single payer is going to have to come out of this. And I believe that there is an element of basic care an element of catastrophic care that must be available for everyone. It is

available for everyone now at least the catastrophic end. But oftentimes that is the most costly piece of health care. And had there been more available on the basic end the primary care services that are needed then you might be able to cut down expenses on the catastrophic side. So that plays out in your facilities are we with a very busy emergency room seeing people who may not have emergencies but have no place else to go. And I'm betting that you don't balance the books in the emergency room when you need to look to fees elsewhere and in order to run your emergency reserve right there that's a very good observation our emergency department has increased in poppet patient population dramatically over the years. We were seeing 6 and 7 percent annual increases in the volume. Right now we're seeing probably more like a 3 or 4 percent increase. The volume however we're seeing some thirty seven thousand people a year coming through each of our emergency department said at Valley Medical Center at Three Rivers community hospital.

And I would say the majority of the of those visits are non emergent or true emergency visits they are not. Now I know one of the targets of criticism as you said is hospitals and a group called Oregonians for health security came out with the figure quite recently saying last year Oregon hospitals whatever they're whatever species they belong to collectively took in two hundred seventy four million dollars more in revenues and they needed to operate and their costs were. What was the story in the Ashanti system or rogue rogue medical and three rivers to you know in rough numbers what whether you took in more than you needed operating. Sure. And what were what happened there. Yes. Yes. Did we have a bottom line or net income or a profit at the end of the year. We did as a matter of fact most health care systems maintain all health care systems our hospitals would need a bottom line a positive one over time in order to continue to operate what we look for is about four to

seven cents for every dollar. So if we can in revenue or expense revenue over expenses. Okay when you realize that. How is it distributed. Who decides where it goes. But actions remain the axis. Well most of that is decided head of time. Just because the needs in health care are so great. I'll give you a few examples. Technology is increasing probably doubling every year the ability of equipment to do more and more. C.T. scanners are great a great example of that. You know you have the AIT sly Cty then 16 then 32. And that technology allows you to do more and more see more and more non invasively but each time that changes you're looking at an expense maybe 1.5 to 2 million dollars per scanner to get the new technology. That's a very expensive thing for one piece of technology. So generally speaking the demand for those 4 5 6 cents

each year is far stripped by the needs health care salaries. Another issue that are health care salaries have gone up dramatically much higher than the industry average. Doctors nurses just about everybody in the world. Yes I'm primarily speaking of the employed staff nurses pharmacists imaging techs except So now that means your community board members who have been with you come from the community who are volunteers. Has an interesting decisions they need to make about any excess revenue. And I think you told me in another time that these people came together with a mission that had to do with serving the community the best possible way in terms of health. So I'm imagining as you speak there could be some very real choices between buying that new piece of technology and reducing cost shifting trying to bring down rates for uninsured individuals that kind of thing. And my rate and how does that process work. You're absolutely right as a matter of fact our board is made up of community members many of

whom are business owners many of whom are feeling that very pension of increasing premiums to take care of their employees. So they are in a bit of a conundrum if you will to decide how much new technology how much increase in salaries etc. can we take because we know that a lot of that cost will be shifted back onto us in terms of higher premiums. It's a very difficult situation. The overriding factor I believe is a need to serve the community. That is to do the things that are in the best interest for the health of our community. Would it be viable for a board member at this point to say something look like I understand the need for new technology and progress and. And how that can serve individual nations but a greater need right now it seems to me are the levels of fees for uninsured people and cost shifting. And I want to put all our excess revenue there. Could someone intelligently make that argument.

Logically that argument can and and has been made. I think practically speaking it becomes relatively difficult. And now we're going to get into the whole issue of competition and who does what. In a community it could but I believe that does make it very difficult just to make that blanket statement. Now I want to explain that by saying often times we make decisions not to go with new technology because we have greater needs in our community that are needing to be met. Mental health is a wonderful example of that. I can tell you we lose between two and three million dollars a year on our behavioral health unit. That is we could we could save as an organization two to three million dollars by closing down our mental health unit. The board isn't going to allow that and I don't want to that to happen either because we have a great need for mental health services and we're the only provider in the community. So we do make these tradeoffs all the time. So talk about competition there in the mid February there's another major provider that also nonprofit.

Yes. And for some people say you know should these people be competing factor one person ask you how come I read your ads in the newspaper why are you spending money on ads when you're a nonprofit community service. Where does competition come into this. Well there are two schools of thought about about competition in not for profit entities. And I think they both have some merit. One is that competition is good for a community because it sharpens the skills and makes people sharpen their pencils if you will. And the end product you get is a better end product for less money. The other side of it says well if you have competition that means you probably have excess capacity and you're spending more money on duplicative services then you need to spend. The reality is is that both are right to a certain extent. There are cases where I believe the competition. It is helpful to a community because it makes you really work harder to provide the highest quality service at the lowest

cost. There are other instances where I believe just the opposite is the case that the community suffers in the long run because you're spending money that could have been spent on something else. To duplicate an otherwise very good service. Let me ask you a little bit about health rationing. That's a dirty word we would like to think that we don't do that for McGovern kids however you'd like to point out that we've always done that. Every health system rations some know it and do it consciously and more often we don't. But we are told we hear a lot about high technology and there are large costs there mostly are a great deal of that goes to end of life care. The carer in the last few months of life. Talk a little bit about that and about what is essentially a rationing decision we have a finite amount of resources in the system and we continue to vote to vote what some people argue is a very large percentage of that to extending the life of usually elderly people. A few months. Is

that a determinative sort of threshold decision. That needs to be re-examined. Well let me back up just a moment. And first of all agree that we've we've had rationing in the state of Oregon for a long time through the Oregon health plan and the services that are covered and not covered and as a matter of fact that is really what has caused the downfall of Oregon health plan that is as finances have gotten tighter and tighter. The line that is the things that are covered have become fewer and fewer. Now at some point those issues might manifest themselves in an emergent case. I want to make the point that hospitals don't ration. That is everyone who comes in the hospitals the wars get service. And that's regardless whether through a valley through rivers Providence they come in the doors they get service regardless of their ability to pay for their needs. With the exception of what I would call elective types of cases.

But if you come in with some sort of an emergent case you are going to be treated well. I guess I would say we still ration to an extent because a doctor might see a patient. US might deal with the emergency right and might determine that this particular patient could use some more stabilizing or preventive care and in the best world would get it right but that may not happen because your resources are finite. So I'm wondering you know that's what the former governor's point was whether we say it or not there are more needs overall than we have resources for so we in some fashion consciously or not we're going to ration before the Oregon Health Plan. But but one of the critiques is we have a certain social decision that we have been making in favor of end of life care very expensive end of life care. And this goes beyond the intentions or practices of any particular hospital or facility but that we have to grapple with and we either have to realize that if our goal is going to be to extend life as far as we

can and we're probably going to come up short in other areas areas of prevention. Other areas of Community Health that kind of thing is that is that a correct analysis. It is that that is we spend a large portion of our health care resources on end of life care. There's no doubt about that. You get into a real issue of ethics as you began talking about that particular topic. I would go right to one area that I think could be a better solution to that not a full solution but at least partially. And that has to do with end of life care decisions advance directives and those sort of things. Vance directive is something that someone fills out that says this is the kind of care that I want or don't want. Should I become incapacitated or unable to make that decision for myself. And you've tried to make all your patients very much aware that absolutely when you come in when you're admitted one of the things that we do is ask if you have an advance directive. If so can we have a copy of it. If you don't here's the form would you like to fill

it out would you like some help in filling it out. Are you seeing increased interest and use of those forms. Absolutely. But we have a lot of people come into our hospital through the emergency department where you don't have time to have those questions and so if someone does not have an advance directive in their chart from a previous visit. Physicians medical staff everyone is going to do everything possible to to keep that person alive regardless whether they're what their wishes might have been otherwise. When you get to a particular story that's been in the news in the week that we're talking and that is a report issued by the group we're going as for health security. That said most hospitals in Oregon are charging twice what it costs to deliver children at childbirth and it mentioned your two main hospitals Three Rivers and rogue medical not at the top of the list as charging more than twice a little more than twice the cost. And that's a criticism they intended that as you criticize us and a

patient might say I see the need for revenue beyond expenses I just don't expect to pay not a penny more but can I pay 20 percent more instead of twice please because this is a big bill for me. What would you say to that patient. Well what that article did not do was break down the types of patients that come into the hospital for deliveries. So I'm going to break it down a bit to help you. All of the cases that we have the normal deliveries without complications I believe that's that was the number they were talking about over half of those patients are Medicaid patients. Every Medicaid patient that comes through our door for normal delivery we lose money on not just a little money but about roughly speaking twelve hundred dollars per patient. Now that's going to vary depending on the patient what their needs are. But about twelve hundred dollars. We also have self pay patients for which we get almost no

reimbursement and I believe the latest figures about about 7 percent of what we charge we actually get in as as Cash who's paying $20 to call the commercial payers everyone else the other 45 percent of our patient population. So that is why you see a charge That's way higher than we actually collect. I believe one of the numbers they said was like forty six hundred dollars and it was our average charge. That's true. Our average collection is less than half of that. So when you say the commercial patients do you mean people with or without additional insured insured people by private insurers. Yes we're going to insure people when it's over how to charge to an insured person compared to the charge to a patient covered by a large private insurer. Well it could be it could be in some cases more. However when I mention the self-pay patients we collect. Single digit percentage of the total charge as a whole group for self pay patients.

So pay uninsured uninsured Oh so the charge may be high but you have trouble with collection. Correct. Well is there a certain kind of spiral going on here in that you know a reasonably honest responsible person can look at a bill and say I want to pay for the costs I want to pay a little more than the cost. But you're asking me to pay for those who aren't paying. Right. And I'm not willing to do that which is going to increase the amount of underpayment. Yes is there a downward spiral world now as a result of cost shifting. I believe absolutely there is and and it's got to the point where it's noticeable if you notice in the paper you see articles all the time about that people are looking at double digit increases each year and the cost of health care that's unsustainable over the long term. They're absolutely paying for the cost of an reimbursed care from governmental sources. No question. What can we do about this what are some positive steps you'd like to see taken. You're willing to participate in more that you're willing. You're urging others to do. That. I'm

now looking for the silver bullet but I'm looking for progress here. Well first of all I think of few things need to happen very very difficult the fundamental things the Medicare and Medicaid. Programs need to be revamped and some decisions need to be made just how much we're willing to spend on health care. As a society right now everyone wants the best that they can get and should be entitled to that. That cost a lot of money whether or not we're willing to pay that tab is the big question and that what needs to be discussed. Right now it's in the form of cost shifting if it's revamped it might be through the form of higher taxes. I think if the government's paying the money is coming from from somewhere one way or the other it's coming from the public. So reimbursements from the public trough are not meeting the demand for health care essentially reimbursements are too low in this program has you. That's correct. Now you may say well we're spending an inordinate amount of

money and health care overall but there's also an and an end of all demand for these health care services and for the latest and greatest technology the best drugs etc.. Ruben your disses been interesting and helpful person in your standing this stuff issue. Thank you very much for joining us tonight in conversation. Thank you Jeff. My pleasure. It covers Asia with Jeff Gold and is made possible by the patrons in producer society. Thanks.