SalemNews.com, Salem, MA

January 10, 2013

Hospital chiefs outline health care strategies

BY ETHAN FORMAN
STAFF WRITER

---- — DANVERS — The heads of the region’s major hospital systems outlined yesterday what they are doing to lower costs, increase value, improve quality and keep people healthy with the coming of the Affordable Care Act next year.

Their remarks came during a North Shore Chamber of Commerce executive breakfast in the main ballroom of the Danversport Yacht Club.

The event featured Lahey Health System President and CEO Dr. Howard Grant, who oversees the combined former Lahey Clinic and Northeast Health System organizations, including Beverly Hospital, and North Shore Medical Center President and CEO Robert Norton, which operates Salem Hospital and other medical facilities on the North Shore.

“The challenges are profound,” Grant said, “but I’m really optimistic about what lies ahead, the progress Bob has demonstrated in his organization, and we are tracking many of the same initiatives right now. We are all on the same wavelength.”

North Shore Chamber of Commerce Chairman Robert Lutts, president and chief investment officer of Cabot Money Management of Salem, said the nearly 2,500-page Affordable Care Act comes with new tax provisions that are already in effect, and more are on the way. Just as important, Lutts said, the law changes the way health care will be delivered, and the hospital CEOs have an insider’s view of how they plan to control costs and improve the quality of care, something that has an impact on businesses.

With some new initiatives triggered by the law, Norton said the quality of care appears to be up at North Shore Medical Center, which is a subsidiary of the nonprofit Partners HealthCare and includes Salem Hospital, Union Hospital in Lynn and Mass General/North Shore Center for Outpatient Care in Danvers, among others.

Efforts at cutting costs also appear to be paying off, Norton said. The increases that Partners is seeing from third-party payers “are the lowest they have been in 10 or 15 years.” The double-digit increases are down to 3 to 4 percent.

Norton said the state, which has about 97 percent of people covered by health insurance, has gotten off to an early start on these health care reforms, so it may be “buffered” from some of the costs associated with the Affordable Care Act and expanded coverage.

Not even Norton could say how much these reforms might impact premiums.

“It’s still a mystery to me, and I’ll bet it’s a mystery to many of you,” Norton said, “of how that ties back to what you pay in terms of your premiums ... and that’s beyond my pay grade.”

While the state has excellent health care and costs are coming down, Grant said the Bay State offers some of the most expensive medical care in the nation. The problem, Grant said, is that 30 percent of Bay Staters head to expensive teaching hospitals in downtown Boston, compared with 15 percent of those who head to teaching hospitals in other states. Keeping care close to home will keep costs down, Grant said.

Grant urged employers and employees to be actively engaged in controlling costs and improving quality, and that Lahey would be eager to work with employers to contain costs through “wellness strategies.”

Notable during yesterday’s talk was the fact there were only two hospital chiefs on the dais instead of three, as had been the case in the past. The former president of the old Northeast Health System, Ken Hanover, resigned this past fall. Last year, Lahey Clinic, which has hospitals in Burlington and Peabody, merged with Northeast, the parent of Beverly Hospital, Beverly Hospital at Danvers, Addison Gilbert in Gloucester and Northeast Behavioral Health services, among other facilities and programs. Grant said he is no longer supposed to refer to Northeast Health.

“It is Lahey Health, effective this week,” said Grant, who said the local hospitals will retain their identities.

Norton said the debate about the federal health care law over its constitutionality and the individual mandate to buy health insurance missed what is important about the law.

What will make more of an impact will be the move to a global payment system.

Presently, the contracts the hospital system is signing with local insurers and the federal government “is having more of an impact than the individual mandate,” Norton said. This new payment system will replace the so-called fee for service model, as hospitals will be paid a fixed amount for an individual’s care, no matter what happens to that patient.

“We will be incented to keep an individual healthy, as opposed to the current perverse incentives in which we get paid more when that individual gets sick,” Norton said.

North Shore Medical Center is streamlining care, creating “patient-centered medical homes,” which means hospitals will reach out to those with chronic conditions like diabetes, and investing in care managers to coordinate care for the sickest patients. Partners is making “a significant investment” in this approach, Norton said, at a time when the global payment system has not yet fully been in place.

Staff writer Ethan Forman can be reached at 978-338-2673, by email at eforman@salemnews.com or on Twitter at @DanverSalemNews.