But declining reimbursements will pose stern challenge

by charlie Mathews
Herald Times Reporter

MANITOWOC — No matter what form of federal health-care reform eventually emerges from Congress, Mark Herzog believes Holy Family Memorial is on the right path for future success.

"We have spent eight-plus years systematically preparing our structure, processes and culture to perform well in the sort of environment most envision for health-care reform," said Herzog.

He is the president and chief executive officer of the health-care network that includes a medical center and associated physician and care clinics at Harbor Town and other sites in Manitowoc County.

The challenge is daunting. "Health-care reform will mean that hospitals and physicians will receive significantly lower payments as reform is phased in," Herzog said.

"The government intends to cover many more individuals, in large part, by simply paying less for each service, in addition to additional taxes," Herzog said.

He said a comprehensive study by the consulting firm KaufmanHall finds Holy Family Memorial, for a smaller organization, is exceptionally well positioned to successfully transition to the reform environment.

Herzog will be the key speaker on Nov. 19 for an educational Webinar where Holy Family Memorial's internal organizational readiness review will be featured.

"We are top of class in areas that are very expensive and hardest to obtain — information systems and physician integration," Herzog said.

He said Dr. Steven Driggers, chief medical officer, has supervised multi-million dollar development of I.T., including electronic medical records accessible across its network.

Herzog said Driggers has done an "awesome job" in areas such as physician accountability and process improvement initiatives to ensure best practice protocols are benefitting patients.

A practical result, Herzog said, is Holy Family Memorial having an excellent track record in avoiding patient re-hospitalization.

He said the network's model of having some 70 physicians as employees, including family practitioners and many specialties, as well as its 1,200 other employees creates an integrated system ideally suited for "bundled payments," a goal of health-care reform favored by President Obama.

Quality will be rewarded

Herzog said reform proposals refer to paying higher reimbursement rates to high quality providers but many models are in the demonstration phase only.

"Hopefully, they will be deployed soon after payment reductions begin being phased in," Herzog said, confident the numerous national patient safety and quality awards Holy Family Memorial has earned will have an indirect financial reward.

But the health network will need to continue to be pro-active to cope with a reform environment that, in the long-term, might include a "public option" plan that could reduce its income between 10 and 20 percent.

Many employers might discontinue private health insurance for its workers and reimbursements under a public option might be at Medicare-like rates, which often fall short of actual costs.

Herzog said Holy Family Memorial has been using lean and Six Sigma process improvement tools for several years.

He said the network benefits from its lay board of directors pushing management for benchmarking and "getting tested" to assess its strengths, weaknesses and opportunities for improvement.

Herzog is buoyed by Kaufman Hall's findings that in areas including care coordination infrastructure and culture, and having accessible primary care with rationalized "upper-level" care, Holy Family Memorial is far better prepared than the typical community hospital.

But increasing competition, local economic conditions and absence of population growth complicate Holy Family Memorial's ability to grow.

"Holy Family Memorial supports health-care reform that is equitable and involves sacrifice and contributions from all stakeholders in the health-care system, including government, health-care providers, insurers and employers," Herzog said.

"We stand ready to do our part and already have begun this journey."

Online: www.hfmhealth.org.