Kevin E. Lofton is president and CEO of Denver-based Catholic Health Initiatives, the third-largest Catholic Healthcare system in the nation, with $9 billion in annual revenue and 73 hospitals. Here Mr. Lofton explores key issues for hospitals such as healthcare integration, EHR installation, telehealth, the future of healthcare reform and geographic variations in costs.
Q: How far along is CHI in building an integrated healthcare system?
Kevin Lofton: This is not being done on an overall organizational level. We do it at the market level. Several markets are in the process of developing new systems. But, if you said integrated health system to one person, that's just one definition. I would say that CHI is integrated from the standpoint of the provider sector of the continuum of care.
Q: Are any of your markets planning accountable care organizations?
KL: Four CHI markets are developing ACO pilots. Each is a little different because there are different ways to align with physicians. In the pilots, we look at what it would take to be an ACO and then model it. We can take learnings from those four markets and try to help inform ourselves on the kinds of changes and preparatory things we need to do to make sure CHI is a strong system going forward. With ACOs, there will be a change of incentives as to why people get healthcare. If we can't readjust the incentives, we're stuck.
Q: Are you installing electronic health record systems?
KL: From 2010 to 2015, we plan to invest $1.5 billion in EHRs and other IT systems to enhance patient care quality and outcomes. We are not installing EHRs to become an ACO. You need to have them in place for the highest quality of care possible. We'll have a few EHRs up and running in just a few months. As to vendors, we're using Cerner EHR systems for the larger markets and Meditech for the smaller markets.
Q: Can you explain CHI's use of telehealth?
KL: Telehealth is important to us because two-thirds of our communities are rural and one-third of our hospitals are small or critical access facilities. Introducing telehealth in different forms helps us bring the best technology into these communities. For example, in Kentucky, an interactive screen connects specialists with primary care physicians and advanced practice nurses. Again due to telehealth, we have 24/7 coverage of pharmacy in the Dakotas, which is practically unheard of at small hospitals. A small hospital might have one nurse for a night shift for 2-4 patients. In this case we can have virtual nursing, in which a nurse practitioner consults for specialized nursing care. CHI has received two grants to upgrade telehealth for a total of $3 million.
Q: Earlier in your career, you were an administrator of an emergency department. What do you see as the future role of EDs?
KL: I was the administrator of an ED in Jacksonville, Fla., with 137,000 visits a year. I don't see very much changing for EDs in the short run. ED volume could be reduced through expanded coverage under the healthcare reform law, but it will take 3-4 years for that to take effect. Until then, EDs will be in great demand. The number of uninsured has been rising and now it's something like 50 million. ED volumes were growing in the past two years, while inpatient volumes have declined.
The aim should be to end the cycle of episodic care through the ED. ED volume can be reduced by developing a medical home approach. This would enable us to align patients with a practice, where they have regular visits and regular checkups. This is particularly important for people with chronic diseases, such as hypertension and diabetes, whose numbers continue to increase. The rule of thumb is that 20 percent of these people account for 80 percent of healthcare utilization. Even cancer care could be labeled a chronic disease and dealt with in the same way. (Mr. Lofton himself is a cancer survivor, five years past surgery.)
Q: Will healthcare reform survive?
KL: It can't possibly be repealed in the next two years, with President Obama in office. But a lot of the debate on healthcare reform is just rhetoric and posturing, and there are areas of the law that people do agree on, such as portability of coverage, coverage of children up to age 26 and coverage of people with preexisting conditions.
Q: What will change for hospitals in the next few years?
KL: There are many uncertainties. We're trying to prepare for whatever changes come. Reimbursements could change, but you can't just keep cutting expenses. Organizations like the AHA have been strong advocates for hospitals, but to make sure your system prospers, you really have to look internally. You can only control what is yours. Our focus is on quality of care. We are trying to implement more evidence-based practices. Install portals to connect with physicians. We may, in the end, be losing some money on the table from HITECH.
Q: What do you think about the wide variations in costs reported by authorities like the Dartmouth Atlas of Healthcare?
KL: We want to reduce the variation of costs. Since we are a large organization operating in 19 states, we can detect differences in reimbursements and costs from market to market. While one market is barely getting by financially, you move to another city with a higher reimbursement model and its hospitals are flush with profitability. That doesn’t make sense.
There is also a tremendous amount of variation in terms of the supply chain side of healthcare. For implantable hips, for example, the same manufacturer will have significantly different prices. We've seen a 400 percent variation for the same manufacturer. We’ve instituted a practice called "fair payment" at CHI. Instead of our people going to a physician and saying, "We're no longer going to order that hip that you want because the price is too high." The doctor says, "But we're going to sacrifice quality." Our reply to that is, "We want to get you the hip that you want, but here's the most we're going to pay for it. And here's the evidence why that's as much as we should pay for it, because this is all we’re paying for it in other places in the country." Everybody in the country is looking to reduce cost to become more productive and provide higher value to the people that we serve.
Learn more about Catholic Health Initiatives.
Read other coverage of Catholic Health Initiatives:
- 8 Points on Hospital-Physician Integration From Stephen Moore at Catholic Health Initiatives
- The State of Catholic Hospitals: Q&A With Catholic Health Initiatives COO Michael Rowan
- Denver-Based Catholic Health Initiatives Names New CFO
Q: How far along is CHI in building an integrated healthcare system?
Kevin Lofton: This is not being done on an overall organizational level. We do it at the market level. Several markets are in the process of developing new systems. But, if you said integrated health system to one person, that's just one definition. I would say that CHI is integrated from the standpoint of the provider sector of the continuum of care.
Q: Are any of your markets planning accountable care organizations?
KL: Four CHI markets are developing ACO pilots. Each is a little different because there are different ways to align with physicians. In the pilots, we look at what it would take to be an ACO and then model it. We can take learnings from those four markets and try to help inform ourselves on the kinds of changes and preparatory things we need to do to make sure CHI is a strong system going forward. With ACOs, there will be a change of incentives as to why people get healthcare. If we can't readjust the incentives, we're stuck.
Q: Are you installing electronic health record systems?
KL: From 2010 to 2015, we plan to invest $1.5 billion in EHRs and other IT systems to enhance patient care quality and outcomes. We are not installing EHRs to become an ACO. You need to have them in place for the highest quality of care possible. We'll have a few EHRs up and running in just a few months. As to vendors, we're using Cerner EHR systems for the larger markets and Meditech for the smaller markets.
Q: Can you explain CHI's use of telehealth?
KL: Telehealth is important to us because two-thirds of our communities are rural and one-third of our hospitals are small or critical access facilities. Introducing telehealth in different forms helps us bring the best technology into these communities. For example, in Kentucky, an interactive screen connects specialists with primary care physicians and advanced practice nurses. Again due to telehealth, we have 24/7 coverage of pharmacy in the Dakotas, which is practically unheard of at small hospitals. A small hospital might have one nurse for a night shift for 2-4 patients. In this case we can have virtual nursing, in which a nurse practitioner consults for specialized nursing care. CHI has received two grants to upgrade telehealth for a total of $3 million.
Q: Earlier in your career, you were an administrator of an emergency department. What do you see as the future role of EDs?
KL: I was the administrator of an ED in Jacksonville, Fla., with 137,000 visits a year. I don't see very much changing for EDs in the short run. ED volume could be reduced through expanded coverage under the healthcare reform law, but it will take 3-4 years for that to take effect. Until then, EDs will be in great demand. The number of uninsured has been rising and now it's something like 50 million. ED volumes were growing in the past two years, while inpatient volumes have declined.
The aim should be to end the cycle of episodic care through the ED. ED volume can be reduced by developing a medical home approach. This would enable us to align patients with a practice, where they have regular visits and regular checkups. This is particularly important for people with chronic diseases, such as hypertension and diabetes, whose numbers continue to increase. The rule of thumb is that 20 percent of these people account for 80 percent of healthcare utilization. Even cancer care could be labeled a chronic disease and dealt with in the same way. (Mr. Lofton himself is a cancer survivor, five years past surgery.)
Q: Will healthcare reform survive?
KL: It can't possibly be repealed in the next two years, with President Obama in office. But a lot of the debate on healthcare reform is just rhetoric and posturing, and there are areas of the law that people do agree on, such as portability of coverage, coverage of children up to age 26 and coverage of people with preexisting conditions.
Q: What will change for hospitals in the next few years?
KL: There are many uncertainties. We're trying to prepare for whatever changes come. Reimbursements could change, but you can't just keep cutting expenses. Organizations like the AHA have been strong advocates for hospitals, but to make sure your system prospers, you really have to look internally. You can only control what is yours. Our focus is on quality of care. We are trying to implement more evidence-based practices. Install portals to connect with physicians. We may, in the end, be losing some money on the table from HITECH.
Q: What do you think about the wide variations in costs reported by authorities like the Dartmouth Atlas of Healthcare?
KL: We want to reduce the variation of costs. Since we are a large organization operating in 19 states, we can detect differences in reimbursements and costs from market to market. While one market is barely getting by financially, you move to another city with a higher reimbursement model and its hospitals are flush with profitability. That doesn’t make sense.
There is also a tremendous amount of variation in terms of the supply chain side of healthcare. For implantable hips, for example, the same manufacturer will have significantly different prices. We've seen a 400 percent variation for the same manufacturer. We’ve instituted a practice called "fair payment" at CHI. Instead of our people going to a physician and saying, "We're no longer going to order that hip that you want because the price is too high." The doctor says, "But we're going to sacrifice quality." Our reply to that is, "We want to get you the hip that you want, but here's the most we're going to pay for it. And here's the evidence why that's as much as we should pay for it, because this is all we’re paying for it in other places in the country." Everybody in the country is looking to reduce cost to become more productive and provide higher value to the people that we serve.
Learn more about Catholic Health Initiatives.
Read other coverage of Catholic Health Initiatives:
- 8 Points on Hospital-Physician Integration From Stephen Moore at Catholic Health Initiatives
- The State of Catholic Hospitals: Q&A With Catholic Health Initiatives COO Michael Rowan
- Denver-Based Catholic Health Initiatives Names New CFO