Delivery of Care

A short lesson in the economics of population health

If you improve population health and lower future costs for a generation of children, it may result in the current loss of jobs at hospitals. Is that a good thing?

Photo courtesy of video about the NICU produced by Women and Infants Hospital

A mom and her newborn being cared for in the NICU at Women and Infants Hospital. The state will receive an award from the March of Dimes for its successful efforts to reduce preterm births.

By Richard Asinof
Posted 5/1/17
The March of Dimes award being given to the state of Rhode Island for its successful efforts to reduce preterm births by 10 percent between 2010 and 2015 underscores an economic reality: improving outcomes in population health may improve long-term medical and education costs, but it may also result in short-term job losses within the hospital industry.
What are the best metrics to evaluate health outcomes in the new paradigm of population health? How does the concept of health equity become integrated into the equation? How does the innovation being practiced at the local level by community health centers get rewarded in shared savings? When will the development of Neighborhood Health Stations in Central Falls and Scituate become part of the conversation? Is there a way for legislators and policymakers to break free of the old paradigm of economic chauvinism around health care? How can the public become active, aware participants in the discussions around health care?
All health care is personal, and yet there is tendency for the conversation to exclude what patients and consumers are saying they want and need. Instead, the experts prevail. At the most recent House Committee on Oversight hearing about the problems with the rat’s next known as UHIP, there was a fascinating exchange between Virginia Burke, president and CEO of the R.I. Health Care Association, legislators, and the current leadership at R.I. EOHHS and the Department of Human Services.
Burke said: “It would be wise to listen to us, for us to have a seat at the table.” That nugget captured an important dynamic – the need for policymakers to listen to what clients and their representatives are saying, and not to implement systems based upon what the experts are promoting.

PROVIDENCE – On Monday morning, May 1, the March of Dimes will be presenting Rhode Island with its Virginia Apgar Prematurity Campaign Leadership Award at a ceremony at Women and Infants Hospital, honoring the state’s dramatic reduction in the rate of preterm births, a health issue closely tied to brain, lung, hearing and vision issues in newborns.

Rhode Island’s preterm birth rate fell from 9.6 percent in 2010 to 8.6 percent in 2015, a 10 percent drop.

[In 2007, the preterm birth rate in Rhode Island was 10.8 percent, according to the 2017 Rhode Island Kids Count Factbook, which means that the preterm birth rate fell 20 percent between 2007 and 2015, a remarkable achievement.]

That 10 percent drop in premature births between 2010 and 2015 [or the 20 percent drop between 2007 and 2015] has enormous long-term implications for reducing the medical costs and improving educational outcomes in Rhode Island – in health care costs for the baby, in labor and delivery costs for the mom, in early intervention services for children from birth to age 3, and in special education services.

Nationally, the Institute of Medicine reported that the cost associated with premature birth in the U.S. was $26.2 billion each year.

What has driven the decline in premature births? A strong argument could be made that increased access to health insurance played a critical role.

The rate of preterm births among women with private health insurance between 2011 and 2015 was 8.3 percent, compared with a rate of 9.4 percent among women with public health insurance coverage, according to the 2017 Rhode Island Kids Count Factbook. The largest rate of preterm births between 2011 and 2015 was 16.7 percent, among women with no health insurance.

[Note to public health researchers in search of a thesis topic: can you calculate the direct savings in medical costs as a result of the drop in preterm births in Rhode Island, and correlate that with access to health insurance by women and children?]

A health system in flux
The March of Dimes award comes a week after Care New England announced a series of layoffs across its health systems of hospitals, including at Women & Infants.

Mark R. Marcantano, president and chief operating officer at Women & Infants Hospital, will be at the May 1 ceremony to accept the March of Dimes award, along with Dr. Nicole Alexander-Scott, director of the R.I. Department of Health.

In the news release announcing the layoffs, Marcantano said: “At Women & Infants and across Care New England, we have undertaken extensive measures to improve our financial stability while trying to minimize the impact on labor.”

Unfortunately, Marcantano continued, “It has not been enough, as we have continued to experience reduced volumes due to changing demographics, reduced inpatient neonatal care, a declining birth rate, and a decrease in reimbursements.”

Marcantano put the layoffs in the context of changes in demographics and population health. “We must adapt to significant changes in health care delivery and payment, such as decreased population and births, and advances that change the way we provide care,” he said. “Our payer mix is worsening, and the volume in the NICU is likely not going to recover to the levels that we previously experienced, which presents new challenges as this is a trend being seen elsewhere across the country.”

The irony, of course, Marcantano explained, “is that this trend is good news from a public health perspective that there are fewer sick and premature infants. Unfortunately, that good news does have a significant impact on our financial health under our current payment systems.”

What population health means
So, there is the reality, however disliked: improve the overall population health, reduce the number of preterm births, which reduces the volume of patients in the NICU, combine that with the demographics of falling birth rate in Rhode Island as well as the increased access to care through health insurance, and that may result in a loss of jobs for the hospital workforce.

Translated, short-term economic pain will result in long-term economic gain – when you calculate the educational and medical cost savings achieved in reducing the number of preterm births in Rhode Island.

Of course, union leader Patrick Quinn, executive vice president of District 1199 of SEIU New England, doesn’t see the calculation through the same lens.

His union, Quinn said, in a statement issued in response to the announced layoffs, “will fight hard to reverse any layoff notices because our hospitals are already understaffed. Appropriate staffing levels are vital to providing quality care out patients deserve and have come to rely on for decades.”

What happens when the music stops?
The larger context for population health, of course is the current musical chairs of consolidation of health systems in Rhode Island.

Care New England has signed a letter of intent to merge with Partners Healthcare in Boston. At the same time, Care New England announced that it signed a letter of intent to sell Memorial Hospital in Pawtucket to Prime, the owners of Landmark Medical Center in Woonsocket. South County Health, the only unaligned acute care community hospital left in Rhode Island, has reportedly begun preliminary talks with Yale-New Haven Hospital, the owners of Westerly Hospital.

In the meantime, Southcoast Health, headquartered in New Bedford, which had courted both Care New England and South County Health in the recent past, has opted to pursue a system of urgent care centers, the latest which opened in Seekonk, Mass., on May 1. [See story in this week’s ConvergenceRI.]

Lifespan, the apparent odd hospital out, had argued, both before and after the proposed merger between Care New England and Partners was announced, that it would have made more sense to Lifespan and Care New England to merge from a Rhode Island perspective.

Given the past history of failure at attempted mergers between the two largest hospital systems in Rhode Island, the latest being an unsuccessful and unpublicized attempt in 2015 by Gov. Gina Raimondo to arrange a forced marriage between the recalcitrant health systems, the next time you hear pundits, politicians or news commentators talk about such a potential merger, cue up “A Bad Romance” by Lady Gaga.

Are these facts self-evident?
There are a number of facts about the health care delivery system in Rhode Island and in the U.S. that need to be said, again and again:

The current medical costs of the national health care delivery system are unsustainable. In 2025, they are projected to be more than half of the average family’s household income. Despite the escalating costs, the actual health outcomes are terrible, compared to other industrial countries.

The current business model for hospitals no longer works. Hospitals are losing money. The response has been to adopt what is known as bundled reimbursements for a system of accountable care, where the risk is spread to providers to manage a continuum of care.

This new business model, which is being touted as investing in value over volume, is being driven by the federal insurance programs, Medicare and Medicaid, which bankroll much of the health care reimbursements in the nation. It has also become a staple of commercial health insurers.

The critical question is: what will be the metrics upon which the success of population health management analytics be evaluated? And who will be doing the calculations?

While the proposed merger between Care New England and Partners has been criticized because it would allegedly drive up medical costs, the reality is that those medical costs are going to rise, with or without the merger.

A more appropriate question would be: how many hospital beds does Rhode Island need in the next 10 years, given the demographics of a falling birth rate? To answer that question, the state would be well served to develop a statewide health care planning document.

Hospitals and the health care industry sector remain the largest private employers in Rhode Island, but they may no longer be the same kind of job creation engine in the future, a forecast that has not yet been addressed by state policymakers and legislators.

The lowest cost, highest quality system of health care in Rhode Island is being delivered by a network of community health centers. Together, they served roughly one-fifth of the state’s population.

The other context often missing in the conversation around the economics of health care is the role that public health interventions, such as the investment in safe, affordable housing, play in reducing the costs of health care by reducing the incidences of asthma, lead poisoning and a whole category of adverse events that can be combined under the umbrella of toxic stress.

[The recent competitive award from the Centers for Medicare and Medicaid Innovation won by Care New England to develop an Accountable Health Community, focused in large part on addressing health equity issues, may provide some opportunities to develop best practices around population health. See link to ConvergenceRI story below.]

As the nation engages in an existential debate around health care, whether or not to repeal and replace Obamacare, and whether health care is viewed as a privilege or a right, the larger issues around population health and what it means do not seem be a prominent part of the conversation – at least within the Beltway or in Congress.

The forces of resistance, if that’s the right term, have been very vocal at the local level in constituent gatherings about wanting to preserve the health benefits they have under Obamacare, often giving elected officials an earful. But what hasn't been addressed is the larger, more complex issues of population health, which is much more than just access to health insurance.

As Thomas Pynchon once wrote, it they can get you to ask the wrong questions, they don’t need to worry about the answers.


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