Roughly 2,000 miles southwest of the California coastline sits a pocket of islands that, all things considered, has its healthcare costs in a somewhat manageable state. Hawaii has one of the lowest uninsured populations in the country at 8 percent, less than half of the national average, and in 2008, the average cost of $23,832 per hospital discharge was roughly $2,300 less than the national average.
Hawaii, in a way, has also experienced a type of healthcare reform before the Patient Protection and Affordable Care Act came to fruition. In 1974, the Prepaid Health Care Act required all non-federal, state and city government employers to provide employees who work at least 20 hours per week healthcare coverage. By the time the PPACA's insurance stipulations take full effect in 2014, Hawaii will have handled a healthcare coverage mandate, at least in regard to employers, for four decades.
Ginny Pressler, MD, MBA, executive vice president of strategic business development at Hawaii Pacific Health in Honolulu, gives some insight on how HPH has prepared for President Barack Obama's healthcare reform law in conjunction with the state's current legislation, what challenges the health system and other similar systems in the state are currently facing and how healthcare in the archipelago state differs from the mainland.
Q: Healthcare reform has obviously started to ripple throughout the country. How has it affected Hawaii Pacific Health and the entire state, and how do you see it impacting the health system in the future?
GP: At Hawaii Pacific Health, we anticipated the changes that were coming down with healthcare reform. We invested in electronic health records over eight years ago, and we just started collecting Medicare meaningful use [incentives] for three of our hospitals, so we are well-positioned there.
We are working aggressively around patient-centered medical homes. We are NCQA-accredited for PCMHs for two of our facilities. We're doing all the things we need to do, and we've been doing this well before healthcare reform went into law.
For the state as a whole, a lot of hospitals in Hawaii, in general, are still wondering what hit them. The hospitals in Hawaii as a whole are pretty much the same as hospitals across the county in terms of their level of preparedness. A lot don't have fully implemented EHRs, and a lot don't have measures in place for accountable care organizations, but I don't think it's much different than what I read about anywhere else in the nation.
Q: What are some of the bigger challenges the health system has had to overcome in the past year or so?
GP: The biggest challenges are getting physicians onto the EHRs. All of our employed physicians are online, but trying to get private practice physicians integrated into our electronic system is a major challenge. Not all of the hospitals in the state are linked up yet. We have a statewide effort to form a health information exchange to link up all healthcare providers in the state electronically. We need everyone at the table statewide, but it will take some number of years before that's implemented.
Another major challenge is getting our payors to change their approach and attitudes toward reimbursement so we can move toward accountability and quality metrics. Specifically, this involves getting paid to provide PCMHs so that primary care physician practices can provide patient education, outreach, care coordination, follow-ups and other patient care coordination. We are trying to get extra payments per member per month to cover the costs of the higher expense of a comprehensive PCMH because you have to pay for the extra time physicians spend on electronic communication and other areas that they don't get reimbursed for right now.
We've made major progress. But that's been a major challenge, trying to get all major insurers aligned for all of the same quality metrics and value-based purchasing so we can move from volume-based to value-based care.
Q: What are some challenges that Hawaii Pacific Health has to face — regardless of the healthcare reform law and national deficit — that people may not realize?
GP: It's more expensive to provide care in Hawaii. Everything is shipped in, and there's high costs across the board. The cost of living is significantly higher than the mainland, but our reimbursements don't cover that, so we're getting squeezed. Hospitals in Hawaii have been getting squeezed before healthcare reform, but we are managing our costs effectively. And the exciting part is the focus has been on quality metrics, so we're pleased to see some compensation for providing quality outcomes because that's where reimbursement is heading.
When it comes to our islands' geography, people can't drive 150 miles if they want to. They'll have to be transported via air. We also have a shortage of physicians on neighboring islands. That creates opportunities to make better use of things like telehealth and health IT, but we need to change the reimbursement structure so we get paid for some of the things to make it work.
We have the Prepaid Health Care Act passed in 1974, which is an employer mandate to provide health insurance for all employees that work more than 19 hours a week. Because of this, we've had a very low uninsured rate for many years. The challenge for us now is how to bring together our existing Prepaid Health Care law and its requirements and combine it with the national healthcare law.
[Our state has] about 8 percent uninsured, even with the downturn in economy, but we've had a huge increase in Medicaid enrollment, about 30 percent, in past few years. The payor mix has gotten worse for everyone. The increase in numbers under Medicaid is leaving states a shortfall for funds, and commercial insurance rates are not commensurately higher to compensate for our low government reimbursement as well.
Overall, everything is more expensive here. Electricity, land, buildings, construction, housing, food. Our commercial premiums are the second-lowest in the nation even though our cost of living is one of the highest. We see other states were commercial payors pay 160 percent of Medicare. Here it's closer to 120 percent of Medicare, so the commercial payments to providers do not compensate for the government payment shortfall as they do for hospitals in other states.
Q: What are some of the innovative ways the health system deals with those challenges?
GP: Our focus on quality has certainly paid off. We started investing in EHRs and quality measures years ago before they became a part of healthcare reform. That has certainly positioned us well for the changes we are seeing now.
Also, six years ago, we realized that we needed to be more cost effective and we weren't going to see any improvements in reimbursement. With our merger of four hospitals, we were able to create shared resources for all of our overhead, human resources, accounting, billing. All of those things are consolidated at the corporate level. We've been able to save in excess of $20 million, and we've been able to keep those costs out across the four hospitals. Years ago, we bit the bullet before others did so we could be cost-effective.
Q: What are some of the health system's upcoming goals and exciting developments?
GP: We're very excited about the focus on quality metrics and creating more accountable care. We're well-positioned to become a part of an ACO, and we're working with our payors and looking forward to these transitions in care. We're really leading the charge in Hawaii for the better focus on quality and patient safety. We're also putting quite a bit of energy into employee and physician engagement so that our employees, physicians and patient are all more satisfied. We are working with the Studer Group and their proven methodologies to work with employees and physicians to get them to be more engaged.
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Hawaii, in a way, has also experienced a type of healthcare reform before the Patient Protection and Affordable Care Act came to fruition. In 1974, the Prepaid Health Care Act required all non-federal, state and city government employers to provide employees who work at least 20 hours per week healthcare coverage. By the time the PPACA's insurance stipulations take full effect in 2014, Hawaii will have handled a healthcare coverage mandate, at least in regard to employers, for four decades.
Ginny Pressler, MD, MBA, executive vice president of strategic business development at Hawaii Pacific Health in Honolulu, gives some insight on how HPH has prepared for President Barack Obama's healthcare reform law in conjunction with the state's current legislation, what challenges the health system and other similar systems in the state are currently facing and how healthcare in the archipelago state differs from the mainland.
Q: Healthcare reform has obviously started to ripple throughout the country. How has it affected Hawaii Pacific Health and the entire state, and how do you see it impacting the health system in the future?
GP: At Hawaii Pacific Health, we anticipated the changes that were coming down with healthcare reform. We invested in electronic health records over eight years ago, and we just started collecting Medicare meaningful use [incentives] for three of our hospitals, so we are well-positioned there.We are working aggressively around patient-centered medical homes. We are NCQA-accredited for PCMHs for two of our facilities. We're doing all the things we need to do, and we've been doing this well before healthcare reform went into law.
For the state as a whole, a lot of hospitals in Hawaii, in general, are still wondering what hit them. The hospitals in Hawaii as a whole are pretty much the same as hospitals across the county in terms of their level of preparedness. A lot don't have fully implemented EHRs, and a lot don't have measures in place for accountable care organizations, but I don't think it's much different than what I read about anywhere else in the nation.
Q: What are some of the bigger challenges the health system has had to overcome in the past year or so?
GP: The biggest challenges are getting physicians onto the EHRs. All of our employed physicians are online, but trying to get private practice physicians integrated into our electronic system is a major challenge. Not all of the hospitals in the state are linked up yet. We have a statewide effort to form a health information exchange to link up all healthcare providers in the state electronically. We need everyone at the table statewide, but it will take some number of years before that's implemented.
Another major challenge is getting our payors to change their approach and attitudes toward reimbursement so we can move toward accountability and quality metrics. Specifically, this involves getting paid to provide PCMHs so that primary care physician practices can provide patient education, outreach, care coordination, follow-ups and other patient care coordination. We are trying to get extra payments per member per month to cover the costs of the higher expense of a comprehensive PCMH because you have to pay for the extra time physicians spend on electronic communication and other areas that they don't get reimbursed for right now.
We've made major progress. But that's been a major challenge, trying to get all major insurers aligned for all of the same quality metrics and value-based purchasing so we can move from volume-based to value-based care.
Q: What are some challenges that Hawaii Pacific Health has to face — regardless of the healthcare reform law and national deficit — that people may not realize?
GP: It's more expensive to provide care in Hawaii. Everything is shipped in, and there's high costs across the board. The cost of living is significantly higher than the mainland, but our reimbursements don't cover that, so we're getting squeezed. Hospitals in Hawaii have been getting squeezed before healthcare reform, but we are managing our costs effectively. And the exciting part is the focus has been on quality metrics, so we're pleased to see some compensation for providing quality outcomes because that's where reimbursement is heading.
When it comes to our islands' geography, people can't drive 150 miles if they want to. They'll have to be transported via air. We also have a shortage of physicians on neighboring islands. That creates opportunities to make better use of things like telehealth and health IT, but we need to change the reimbursement structure so we get paid for some of the things to make it work.
We have the Prepaid Health Care Act passed in 1974, which is an employer mandate to provide health insurance for all employees that work more than 19 hours a week. Because of this, we've had a very low uninsured rate for many years. The challenge for us now is how to bring together our existing Prepaid Health Care law and its requirements and combine it with the national healthcare law.
[Our state has] about 8 percent uninsured, even with the downturn in economy, but we've had a huge increase in Medicaid enrollment, about 30 percent, in past few years. The payor mix has gotten worse for everyone. The increase in numbers under Medicaid is leaving states a shortfall for funds, and commercial insurance rates are not commensurately higher to compensate for our low government reimbursement as well.
Overall, everything is more expensive here. Electricity, land, buildings, construction, housing, food. Our commercial premiums are the second-lowest in the nation even though our cost of living is one of the highest. We see other states were commercial payors pay 160 percent of Medicare. Here it's closer to 120 percent of Medicare, so the commercial payments to providers do not compensate for the government payment shortfall as they do for hospitals in other states.
Q: What are some of the innovative ways the health system deals with those challenges?
GP: Our focus on quality has certainly paid off. We started investing in EHRs and quality measures years ago before they became a part of healthcare reform. That has certainly positioned us well for the changes we are seeing now.
Also, six years ago, we realized that we needed to be more cost effective and we weren't going to see any improvements in reimbursement. With our merger of four hospitals, we were able to create shared resources for all of our overhead, human resources, accounting, billing. All of those things are consolidated at the corporate level. We've been able to save in excess of $20 million, and we've been able to keep those costs out across the four hospitals. Years ago, we bit the bullet before others did so we could be cost-effective.
Q: What are some of the health system's upcoming goals and exciting developments?
GP: We're very excited about the focus on quality metrics and creating more accountable care. We're well-positioned to become a part of an ACO, and we're working with our payors and looking forward to these transitions in care. We're really leading the charge in Hawaii for the better focus on quality and patient safety. We're also putting quite a bit of energy into employee and physician engagement so that our employees, physicians and patient are all more satisfied. We are working with the Studer Group and their proven methodologies to work with employees and physicians to get them to be more engaged.
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