At face value, Columbia, Missouri, has the standard makeup of a true college town with education serving as its economic backbone. Contributing to this narrative are several factors, including a major public university belonging to one of the nation’s premier athletic conferences, additional public and private colleges and a thriving secondary education system. This seemingly justifiable presumption certainly contains elements of truth, but below the surface, there is another industry whose economic dominance in the market is undeniable: healthcare.
Inside Columbia magazine publisher and former 14-year member of the Boone Hospital Center Board of Trustees and five-year chairman, Fred Parry, maintains that no other local industry is quite comparable to healthcare, noting its multibillion-dollar impact and declaring it a chief revenue driver in Columbia’s community. Still, however positively trending the numbers may be, issues surrounding healthcare are often responsible for eliciting notoriously negative responses, particularly in the political realm.
So, just hours after the previous day’s midterm elections, an event that left an abundance of healthcare-related issues hanging in the air, Parry invited local physicians and leaders from the area’s two medical behemoths, MU Health Care and Boone Hospital Center, along with others closely tied to the field, to join at the winter CEO Roundtable and weigh in on the hot topic that is, quite literally, at the heartbeat of the community.
The eight roundtable members were welcomed to Zimmer Radio and Marketing Group by Zimmer Strategic Media President John Zimmer, and general manager of both Zimmer Radio Group and Inside Columbia properties, Carla Leible.
The Broadway Hotel’s award-winning chefs Jeff Guinn and Ben Randolph took their talents on the road to cater the meal that would accompany the conversation. Throughout the discussion, dishes full of fall flavors were served: A Bibb salad containing celery, apples, dried cranberries and a yogurt citrus dressing to start; grilled chicken atop a truffle and mushroom risotto, complemented by roasted sweet potatoes and pancetta for the main course; and a white chocolate cheesecake paired with a chocolate-filled cannoli to finish.
The State Of Healthcare
To begin, Parry opens the discussion by inviting each of the roundtable members to share their stance on the current state of healthcare affairs in the mid-Missouri market. Jonathan Curtright, CEO of MU Health Care, starts on a positive note, putting into perspective the uniqueness of the region.
“My first comment would be that we’re just blessed to have the services that we have here,” he says. “Mid-Missourians can get 98 percent of the clinical services that they need right in our own community and they’ll get outstanding quality service and cutting-edge technology. There’s hardly any need to go to Chicago or Kansas City or St. Louis or Mayo to get the care that you need. You can get it right here. So, I think that state of affairs is excellent.”
Reiterating Parry’s earlier statements, Curtright continues by describing the dominance of the healthcare field in Columbia. “More and more, Columbia is becoming a healthcare town and that we are collectively, if not the dominant employer, one of the dominant employers in town. So, we are an economic engine that needs to be going at 100 miles an hour for our greater community.”
While an economic responsibility of that nature is certainly worth celebrating, Curtright also points out the challenges that this recent growth presents. “With more people choosing to get their healthcare here, we do have massive growth challenges that are out there.” He continues by issuing an analogy that he frequently tells his children when describing his work. “When my children ask me, ‘How do you spend your time, Dad?’ I jokingly say, ‘Well, I am constantly trying to figure out how to put 10 pounds in an 8-pound sack.’” Intimidating as it sounds, he still acknowledges that this is a great problem to have, as it further signifies the booming nature of the industry.
But, just how booming is it?
Curtright reports that for the last fiscal year, MU Health Care generated an overall revenue of $101 million, which equates to a total profitability margin of around 10 percent. He solidifies that these numbers indicate a “very good year” profitability-wise; however, he is also quick to troubleshoot the situation. He foresees more challenges on the horizon, such as the need to renovate and expand hospital and clinic space, as well as the need to fund long-term investments.
“Each year,” Curtright says, “I think it’s going to be more and more of a challenge and I think that our margins are going to continue to be constrained. Every single year, we’re going to have to figure out how to do more with less.”
Randy Morrow, former Boone Hospital Center administrative employee of 38 years and current member of the hospital’s Board of Trustees, concurs with Curtright’s comments. “I would echo really almost everything Jonathan mentioned,” he says. “I do think we are blessed in central Missouri to have the healthcare facilities that we do. There’s a drawing of patients from all over. We’ve always said that if people are going to have a higher level of care, they’re going to come to Columbia.”
Morrow also speaks to the booming economic impact of healthcare in the community, offering insight into Boone Hospital’s net revenue earned in the last fiscal year. “$300 million was generated through the hospital,” he says. “So, that doesn’t even include our employed physicians and all of the private practicing physicians we have. So, if you add that revenue together, we know that it’s considerably more than $300 million.”
Similar to Curtright, Morrow believes that Columbia’s healthcare-centric economy will steadily grow in the coming years, which he credits, in part, to the Baby Boomer generation. “I do think that healthcare in Columbia will continue to grow,” he says. “As Columbia becomes more of a retirement community, healthcare is probably the number one issue here.”
“Also, there are 10,000 Baby Boomers turning 65 every day,” he continues. “That’s going to be true for a number of years. But the way we are currently structured, there are just not enough resources to pay for that. So, we’re going to have to work together. We’re going to have to be better and more efficient.”
Dr. Lana Zerrer, chief of staff at Columbia’s Harry S. Truman Memorial Veterans’ Hospital (VA), joins in to discuss the current state of veteran-specific healthcare. She draws attention to the Mission Act, a recent piece of legislation designed to significantly improve veteran access to healthcare. This law is expected to be implemented in June of 2019. “We’ll see what happens with it,” she says. “We’re working through those issues now and we’ll see what the administration wants to do with that.”
Zerrer then recognizes the relationships developed and the resources obtained by the VA as a result of being located within Columbia’s robust medical community. “We have a very strong academic affiliation with the university,” she says. “We have worked more and more with Boone over the last few years and we hope to increase that.”
While there are undeniably positive opportunities that Columbia’s saturated healthcare market has provided to the VA, Zerrer also discloses a significant negative impact of this unevenly dispersed pattern. “Our rurally-located veterans are being impacted by the loss of hospitals and physicians out in their areas,” she says. “Everything seems to be consolidating to Columbia and other big cities and that has really impacted them.” She follows this up with the VA’s recent responses to these issues, reporting that they have increased the sizes of their clinics located in communities like Sedalia, Marshfield and Lake of the Ozarks, and have also broadened their use of various technologies, such as telehealth.
Next to offer insight on the topic, Dr. Mark Adams, president of Columbia Orthopaedic Group and an orthopedic surgeon himself, remains grounded concerning the successes that Columbia has achieved, acknowledging the challenges facing the current healthcare landscape as a whole. “Really when you look at it,” he says, “most of the communities that have this nucleus of medical care are typically bigger than ours. So, for Columbia, we’re extremely grateful that that exists. However, we don’t want to congratulate ourselves too long because everybody knows there are challenges nationally in healthcare.”
Adams references the previous night’s midterm elections, which clearly exposed the public’s general uneasiness surrounding the future of healthcare. His approach to this challenge is a call for more proactive thinking. “We’re going to have to be innovative. We’re going to have to be entrepreneurial. We’re going to have to be looking ahead and trying to solve these national issues that confront us, or else we won’t be the preeminent healthcare site that we are right now.”
Concluding his thoughts, Adams recognizes the attention that must be given to the overall cost of healthcare. “The public, the government and the payers, but especially the public, are all clamoring for different costs of medicine,” he says. “There’s no doubt that everybody wants high-quality healthcare, but now there’s a newer term called, ‘value-based medicine,’ which just means that people want high quality healthcare at a lower price.”
Brian Neuner, current chairman of Boone Hospital’s Board of Trustees, joins the discussion by identifying similarities between today’s healthcare and banking industries, noting the drastic changes that banks have endured over the last couple of decades. These changes have all stemmed from an effort to extend service interactions to more conveniently located settings.
“I see a direct parallel between the banking and healthcare industries,” Neuner says. “It’s a path of convenience. The big brick and mortar banks are no longer being built, but you’re getting all of these ancillary locations. Then, banks went in grocery stores for a while and I don’t mean this disrespectfully, but healthcare is also in grocery stores now. So, to what Dr. Zerrer was saying, these smaller communities are going to have a hard time keeping up.”
Introducing a differing perspective to the conversation, Dr. Don Delwood, an internal medicine physician and vice president of NueHealth Medical Group, speaks to the concept of preventive healthcare. “So, I’m a primary care physician and I’m also concierge physician,” he says. “The idea of concierge medicine is to focus on health and to prevent disease. So, I have a pretty radically different perspective. When it comes to Boone Hospital, I love being able to get my patients in, efficiently get them worked up, then get them on their way; however, what is better than that, is not to need to get them in at all.”
“This is where the IPN comes in,” Delwood continues. The IPN, or Integrated Provider Network, is a group of private physicians who have banded together with the goal of bringing an insurance product out of the local market. Delwood has worked closely in heading up the creation of the organization’s new product, the Priority Access Healthcare Plan, which is expected to roll out in January 2019.
Having worked in the employee benefits field for over 30 years, Tom Kayser, vice president of Sundvold Financial, offers his viewpoint from the insurance side of healthcare. He begins by comparing today’s insurance costs with costs from 30 years ago, a dramatic contrast which ends in unanimous amusement from the roundtable members.
“I reflect back on the very first employer I insured in 1987 in St. Louis,” Kayser recalls. “It was a $100 dollar deductible, a 100 percent plan, and a two-year rate guaranteed. The employee rate was $39 and the family rate was $85. To put those numbers into perspective, I went on healthcare.gov today to look at what it will cost to insure my family. For a $7,900 out-of-pocket, it would cost me in $51,000 a year in premiums. So, that’s the state we’re in.”
Kayser then issues a call for action. “I think it’s incumbent upon the folks in this room to try to figure out a way to save costs and I think one of those ways is some kind of risk-sharing arrangement,” he says. “Doctors have got to have a skin in the game and hospitals have to have a skin in the game on the financial side. We can’t continue to pay providers based on the number of services they provide. I’d rather pay a provider to keep somebody out of the hospital and keep them well.”
Diagnosing Challenges And Prescribing Solutions
Diving deeper, Parry presses for the discussion to turn to more specific examples of some of healthcare’s greatest challenges, as well as proposed solutions to remedy them. He starts the conversation by presenting the concept of bundled payments, a method of reimbursement in which providers and healthcare facilities are compensated with one, single payment per service performed. This newer pay structure replaces older models that compensate various amounts to each provider involved in separate aspects of care. Parry invites the roundtable members to share their opinions on this medical model.
Adams is first to weigh in on the topic. “Right now in my group, we have bundles in total joint replacements and are starting to look at bundles in some of the spine care aspects,” he says. “I’m sure every field has their own segments where they can identify certain procedures that they can get comfortable with bundling.”
While proven to be beneficial for Columbia Orthopaedic Group, Adams also speaks realistically to the challenges associated with bundled payments. “It’s a risk-sharing on the physicians’ part or the institution’s part to do a bundle,” he explains. “You would not bundle unless you can assure that you do have some element of control; however, I do think bundles are very good for the physician and for the institution. More importantly, they’re good for the patient. The patient can work with whoever their payer is and know what that episode of care is going to cost them.”
“I’m a big fan of bundles,”
Curtright agrees. “I think it will work for most high volume procedures. It incentivizes the right behavior to ensure you get the highest quality and highest safety, as well as great service at an affordable cost and in a very straightforward manner.”
Curtright then reveals the state of bundled procedures at MU Health Care. “We are a part of the bundle for hips and knees and we’ve done fairly well in this particular area. I think it’s incredibly predictable that this will be done for cardiovascular in the not-too-distant future and I can see how certain oncology care could be associated with this as well.”
While confident in the benefits to the bundling system, Curtright is also realistic in refusing to view this method as a final, all-encompassing strategy. “I’ll say this: Bundles are an answer, but they are not the only answer. So, as a set of healthcare system providers, we have got to get really, really good at providing the highest quality care at the lowest price we can and we have to [be open to] multiple payment mechanisms in the future.”
Bringing another healthcare challenge to the light, Curtright speaks to the need to decrease patient hospital stays. “We’ve got to figure out a way to improve access,” he says. “I think we must decrease overall length of stays. [One example of that would be] Dr. Adams’ work with outpatient procedures that have traditionally been inpatient. Those are all things that are really great. We’ve got to figure out how we can improve access and decrease, believe it or not, utilization.”
Zerrer agrees with Curtright’s argument. “We have to move care into the home, for sure. We can’t have people in the hospital for a hangnail anymore and we can’t keep people in the hospital for 10 days after a total joint. That isn’t going to work.”
She continues by offering examples of the current ways that the VA has addressed some of their overcrowding issues. “For us, we have a fixed budget. We’re backwards,” she explains. “They send us money and we have the year to spend it and we can’t run out. So, we have to figure out a way to manage that over the course of the fiscal year and it really is tough with increasing costs in health care. One thing that we do at the VA, and I think may have to be done elsewhere as well, instead of just managing capacity and increasing capacity, we have to manage demand.”
“So, not every patient gets to go to a pulmonologist if they have a certain variety of COPD because an internist can take care of that,” Zerrer continues. “That, to me, would be an inappropriate consult and an inappropriate use of that pulmonologist’s time. That’s part of managing demand that we do at the VA that I think really everyone’s headed towards that, especially with the bundles.”
Morrow enhances the discussion, stating that current issues will lead to an even greater increase in outpatient facilities in order to reduce the need for extensive hospital stays. “I think you’re going to see more and more services shifted to the outpatient side,” he says, “because that’s a lower cost thing. I think one of these days, we will see where hospitals are reserved for just a very high level of care. But in order to do that, you’ve got to have better communication and better coordination of care and we’re just not there yet.”
Delwood raises another topic of concern that is currently puzzling physicians and patients alike. “I have my finger on the pulse of electronic medical records (EMR), which are a real problem,” he says. “The flow of information is a huge problem right now in that I can’t get my notes to Dr. Adams and he can’t get his notes to me. I can’t get my notes through to Boone or even through the University. The EMRs just don’t talk well to each other and patients absolutely don’t understand that.”
“As a trustee,” Neuner adds, “I would agree that this is one of the biggest issues physicians have brought to my attention.” He goes on to identify what he believes to be a fundamental flaw in the way Boone Hospital’s electronic medical records are currently structured. The software that Boone uses for their EMR system is supplied through Epic Systems, a company that Neuner claims caters far better to St. Louis-sized healthcare organizations.
“Epic has the ability to customize,” Neuner continues, “However, it’s built for St. Louis. It’s not built for Boone Hospital in Columbia, Missouri, and it’s not ‘one-size-fits-all’ in this case. So, our physicians are having to basically modify and what should be a more efficient approach has now become more labor intensive and is taking them away from their patients. So, it hasn’t been a solution. What we’ve learned through the physicians is that if they build it for your needs and they customize it, it can be great. It can be everything they say it is. But if it’s not, then you’re basically putting in a Ferrari engine in a Chevy. It may not sync up.”
Employer Healthcare Considerations
The conversation turns to the perspective of the local business owner. Parry acknowledges that seeking out healthcare options for a large group of employees can be quite the daunting task, especially for those employees who require heftier treatments and wide-ranging pharmaceutical needs. Kayser, the resident insurance expert present at the roundtable, opens the discussion.
Kayser begins by identifying the average increase in premiums passed on to companies in the last year. “’Average’ is a loose term because of the large range,” he prefaces, “but I’m in the midst of renewing about 70 employers for January 1st and I have a range anywhere from a 4.5 percent to 37 percent increase. The 37 percent increase would be for a multi-location employer with around 130 employees. That’s coming off getting a 22 percent increase the year prior.”
Kayser then follows up with a specific example illustrating the negative effects of overall pharmacy costs. “I know of a business who hired an employee who’s on an $81,000 per month hemophilia drug,” he says. “It’s a self-funded employer, so the insurance companies will insure that person, but you’re going to have a $1.2 million deductible, which is kind of a budget buster.”
Continuing, Kayser cautions, “If a prescription is on TV, you can pretty much guarantee it’s about $50,000 per year and you’ll be on it for life. So that is just going to crush our industry. I urge you, doctors, when you’re writing a script, have some understanding as to what the cost of that prescription is before sending the patient out the door.”
Adams continues by voicing his apprehensions surrounding pharmaceutical costs. “My concern stems from what happened with EpiPen and the legalities that came out of that,” he says. “With Obamacare, there was such an intense lobbying effort by the hospital associations and by the pharmaceutical players, that the government almost gave them a free license to do this to us. Whether that’s true or not, I don’t know. That will come out politically at some point, but they’re going to have to be checked because we can’t afford that.”
“We just have to look and really figure out ways to give people what they want at the cost segment they want,” Adams continues. “We have to try not to break our federal government or our state governments, but more importantly, the patients’ individual budgets. So, we’re going to have to be smarter. We’re going to have to be more experimental and entrepreneurial and try to make sure that we give the best medicine in ways that people can afford.”
Hitting on a previously discussed topic, the conversation shifts to strategies that businesses can implement in hopes of encouraging employee healthiness. Kayser points out a discouraging statistic in this regard. “A lot of employers initiate wellness programs,” he says, “but as they continue to see the premiums go up, there are also a lot of employers who are aborting these programs.”
Morrow relates to this remark. “We started a wellness program in the mid-‘90s, but about three to five years in, the businesses we worked with started dropping out. When we really sat down to see what happened, it was that they had 20-25 percent of turnover per year, just like everyone else. So, they were putting all this money in and they never saw the results of it. That’s one of the challenges that we have: Are you willing to pay for something when you don’t see the benefit?”
“Right,” Kayser agrees. “It’s hard to justify the return on investment.”
Bringing a unique perspective to the table, business owner John Zimmer shares his own experiences with wellness programs, detailing his own efforts to make successful wellness strategies a reality. “Twenty years ago, I sat down with an administrator at a hospital and they talked to me about the changing role of the hospital in the community,” he says. “They talked about hospitals not being places where you went to die, but rather, they would be more like health and wellness monitors. So, we set out on a series of integrated concept strategies of how to help create healthier communities.”
“We started putting together programs and we kept it simple,”
Zimmer continues. “We just started with obesity and smoking programs. We had different programs to reach certain market demographics.” Since being a member of the local market for the last 30 years, Zimmer has both recognized and acted on his media business’ responsibility in communicating important issues with the public. “I think about the role of media, as far as our responsibility to make this the healthiest community we can. I think we all have a role in connecting the dots and helping improve patient education and their responsibility.”
Zimmer highlights ways in which his business has done so, specifically citing his company’s creation of the “Get Moving” program, an initiative that advocates for consumers to participate in more active lifestyles. “If we can reach people and give them knowledge to make better healthcare decisions,” he says, “then we’ve got to strive to do that younger, so we can plant those seeds early and then nurture them. You just have to be zealous and relentless about quality healthcare and individual responsibility.”
The Rise Of Outpatient Facilities
Parry continues the conversation by requesting more detail on a previously mentioned topic. “I want to talk about one of the dynamics in the local healthcare market that has affected our hospitals,” he says. “That is, physicians opening up their own surgery centers and taking some of the services that were lucrative, for lack of a better word, out to surgery centers. Why did this start happening? What has been the overall effect?”
Morrow is first to speak on the issue, shedding light on the motivation behind these medical moves. “There is no question that an outpatient surgery center can do a procedure at less cost than a hospital because they don’t have the 24-hour emergency departments,” he explains. “It’s a completely different dynamic that has started to shift and medicine is going to go that direction.”
In terms of the economic impact of such shifts, Morrow reveals that most likely, 40 percent of Boone Hospital’s revenue has moved to the outpatient side of care. “As hospital administrators,” he continues, “we understand that we need to work with our medical staff on bundled payments and whatever else. We need to try to be part of that movement because the lowest cost locations are the driving factor.”
“The old days of the hospital administrator and the physician battling are so long gone,” Curtright adds. “I think the most progressive health systems in the United States have figured out how to better partner with physicians, so we’ve got to come up with models that make sense. I think that there are creative ways that people can work together to get this done.” According to Curtright, healthcare leaders should find solutions that allow patients to receive high-quality, low-cost care in an outpatient setting and avoid a hospital stay.
Morrow adds to this with respect to the role that the government will play. “The federal government will essentially almost force hospitals to become more efficient and work with our medical staff because as we said earlier, there’s just not enough money to handle this,” he says. “So, whatever the federal government does, normally the insurance products follow in a period of time. The federal government will start dictating more and more on that and we’ve just got to make sure they don’t start rationing care.”
Adams continues by admitting to his orthopedic group’s notoriety in the practice of moving care to outpatient settings. “Well, let me say, my group has been leaders in this,” he says. “Twenty years ago, we found that we were somewhat stifled in regards to getting things done, so we built an outpatient, multi-specialty, surgery center where efficiency went way up. It was a public-private partnership and patients were quite happy with it. We had university physicians and general surgeons with us. The efficiencies were undeniable for everybody.”
“For those like me,” Adams continues, “I’m a sports medicine physician, so the vast majority of my cases are outpatient and we found this as the way to live and take pressure off of the hospitals. It also takes pressure off of the operating rooms and off of buying new equipment. I think this setup has been one of the main reasons that my group is 27 physicians strong now. We have these efficiencies that make us attractive to young doctors who know that this is what is happening in other places.”
On the heels of his positive takes on outpatient care settings, Adams is also quick to acknowledge the necessity for hospital care. “There’s certainly a level of care that needs a hospital. Hospitals are vital to us today,” he reminds. “However, there’s a level of care that can be done very well in an outpatient setting, certainly a lower cost setting, and still create efficiencies and happiness for the patients.”
Next to weigh in, Phillip Smith, co-owner of PEAK Sport and Spine, shares the nature of his business and his experiences with the outpatient world. “We do all outpatient physical therapy and some occupational therapy,” Smith says. “We’ve got 72 clinics between eight states and about 40 of them are here in Missouri going up and down I-70 from St. Louis to Kansas City.”
“I’m fairly biased,” Smith continues. “I like doing outpatient. I had an orthopedic surgeon out of Jefferson City who told me years ago that the only things that should be done in hospitals are lifesaving events and everything else that can be done in an outpatient center should be done there. I never forgot him saying that and I think that if you look at cost and quality across the country, the value of outpatient care pretty much speaks for itself. Every patient should look for a private-based outpatient provider if they are seeking the lowest cost and most efficient care.”
Smith expands on the topic by realistically speaking to some of the challenges that his outpatient practices have encountered along the way. “Things have changed for us,” he reveals. “Insurance companies have a pretty good stronghold on anything that’s done without a hospital there to protect it. You can’t sell insurance in a local market without being part of the local hospitals.”
He then identifies an aspect of the Affordable Care Act that he believes has greatly impacted healthcare in general: the 80/20 Rule. According to healthcare.gov, this “medical loss ratio,” as it’s commonly called, requires insurance companies to spend at least 80 percent of the money they take in from premiums on healthcare costs, then the other 20 percent of the funds may go toward administrative costs.
“So, since 80 percent of your medical premiums have to go towards paying your medical bills, the only way that you can really increase cost is if you know the costs are going up for the medical care itself,” Smith says. “So, in our outpatient world, it’s forced me, just like I’ve seen it do to some local physicians, to seek out partnerships with hospital systems. That’s not always good for the community due to the costs that are associated with it, but something has to change. I think there’s a lot of places that will suffer if outpatient continues to be forced into a situation where they have to seek out partnerships with hospitals, but this is where it has left us.”
Challenges aside, the general consensus of the room was excitement for the future of healthcare, as indicated by Adams: “I’m very excited about the future of medicine,” he assures. “I think anytime that there are challenges out there, bright people will step forward and will solve them for us. I’m also excited because in the last 10 years, I have seen entrepreneurship and innovation come to medicine. Everything is changing.”