Pensacola, Florida
Thursday November 27th 2014

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The Buzz 12/05/13

Rumblings in Health Care The federal government has changed how it pays hospitals for their Medicare patients, and that shift could have a negative impact on our local economy while the hospitals adjust to the revenue model and modify their financial forecasts.

Sacred Heart Health System CEO Susan Davis explained, “The biggest change is the shift in how we’re being paid.”

The Medicare will no longer pay on a fee-for-services basis when a patient is discharged from the hospital.  Instead reimbursements will be based on the overall quality of care, both inside and outside of the hospital, which will be taken into account in the final payments made by Medicare.

The hospitals, doctors and other providers will be paid a flat fee for their services. If the patient improves, doesn’t have to be readmitted and there is an overall cost savings, the hospitals and the other providers will share in those savings.

“The objective is to improve the quality of health care,” said Davis, “and to make sure the continuum of care—the community, doctors’ offices, acute care, long-term care and hospice—are working together to provide the care the patient needs.”

Health care costs have tripled over the past two decades. Hospital charges represent the biggest single segment and are the largest driver of medical inflation, according to a new study in The Journal of the American Medical Association.

The theory behind the reimbursement shift is for hospitals to partner with their doctors to reduce hospital stays and the numbers of readmissions—which is a good thing. However, for hospitals that have built their capital expansions, debt and return on investments on a fee-for-service revenue stream, the change can be, in the short-term, financially challenging.

For the Pensacola area that has five hospitals—Sacred Heart, Baptist, West Florida, Gulf Breeze Hospital and Santa Rosa Medical Center, the change in reimbursement could have a negative impact on the local economy as the institutions shift personnel around. The area has already seen some layoffs in the health care sector.

“I think as we move along this new continuum of care that there will be less hospital admissions so there will be empty hospital beds,” said Davis, “and care will most likely happen outside of the hospital.”

However, she sees opportunities in the change. “I’m a nurse; my background is ICU (Intensive Care Unit). The skill set I have will still be needed, but there will be many more opportunities today because the care will be provided in an environment that is perhaps better for the patient and less costly.”

Sacred Heart was approved as an Accountable Care Organization (ACO).  According to the Centers for Medicare & Medicaid, the goal is to offer coordinated care that ensures that patients, especially the chronically ill, receive the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

Davis said, “The idea is the payment system will be based on how accountable we—
the doctors, hospitals and home health care—are, as providers. We will be paid a fixed amount for those services. If we’re able to provide some savings, we then share in those savings.”

The Sacred Heart CEO said she personally had trouble understanding Gov. Rick Scott’s decision to opt out of the expansion of Medicaid under the Affordable Care Act.

“The state not participating in ACA is going to cost $55 billion in revenue over a 10-year period,” said Davis. “The citizens of Florida pay taxes to the federal government. The states who do participate will get the benefits of our tax dollars.”

“Meanwhile we still have patients who need care.”

Wine Walk, Not Festival Downtown Improvement Board (DIB) may have a more creative replacement for its Pensacola Wine Festival, which had to eventually cancel for 2013 after Tropical Storm Karen threatened its scheduled date in October.

“Wine festivals may be a dying breed because the vendors themselves don’t really like them,” said Jane Birdwell, who handles the DIB’s marketing, at the board’s regular meeting on Dec. 3.

Joe Abston, who owns Hopjacks and The Tin Cow on South Palafox, suggested replacing the festival with a smaller, more exclusive wine walk that would initially accommodate 100 participants and gradually grow to 150 people for subsequent walks.

“The walk would be two hours, 4 – 6 p.m., on a Saturday afternoon focusing on four retail—non-food and beverage—establishments,” said Abston, who had also organized the Pensacola Wine Festival for the DIB.

He has commitments from retailers Susan Campbell Jewelry, Elebash’s, Jewelers Trade and is looking for one more establishment.

“It’s four locations, four vendors and probably no more than four wines per stop. We are looking at having the wine tiered in three price points—low, middle and high.”

Customers won’t have to carry their wine purchases to their cars or from shop to shop. Instead they can place orders with the vendors and have select wines delivered to their homes by the following Tuesday.

“These are such small events, the vendors are willing to do them every two months,” said Abston. “Instead of enlarging the number of participants, we look at a higher dollar mark so that six or 12 months down the road this is a coveted $50 or $60 ticket.”

He hopes that vendors will see the event being more than a “drink fest.” Instead, he hopes they will come to view it as a way to market their boutique wines to an exclusive clientele.

Councilman Brian Spencer liked the proposal. “Joe, I think your business plan is much more consistent with the way wine vendors, the higher-end and more boutique ones, expect to reach customers. They measure success by the number of orders they get.”

He pointed out the success of the wine festivals in the Sandestin area. “I think Pensacola can capture something that we’ve overlooked. What you describe is right on target.”

Abston is tentatively looking to hold the first wine walk on Saturday, Jan. 25, but the event is still in the planning stage.