A "HealthTweep" Pulse Check

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Health Care ‘Texas Style’: A Model for the Nation?

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In the aftermath of Atul Gawande’s landmark piece ‘The  Cost Conundrum‘ and the selective emergence of the ‘Mayo v. Mc Allen‘ mantra, I’ve been tweeting of late on the ‘irony’ of certain Texas health markets, particularly given the concentration of hospital assets in non profit health systems, and the timely question of whether such consolidations produce the ‘community benefits’ proffered by their leadership. The recently published Commonwealth Fund study ‘Aiming Higher: Results from a State Scorecard on Health System Performance, 2009‘ has supplied certain metrics to further contextualize the conversation.


First some background: I spent 13 years in the Lone Star state, initially advising a major national proprietary hospital management company’s implementation of its managed care strategy in the Houston market, followed by implementation physician networks for a 140,000 member global risk Medical Group, and finally managing payor and provider contracts for a joint venture ‘Super PHO’ affiliated with a dominant faith based hospital system in Dallas/Fort Worth.

Now mind you, everything in Texas is big – especially its delivery system players who have literally architected quite beautiful (and very expensive)  ’cathedrals of medicine’. Examples include: the Texas Medical Center (an NIH like cluster of some 12+ competing institutions), Memorial Hermann Health SystemBaylor Health Care System and Texas Health Resources to name a few of the trophy properties. Yet, years after the roll out of the strategic plans of these health systems, and the fulfillment of their market share objectives, certain of the state’s health care indicators look quite grim when contrasted to other parts of the country.


One might wonder why? Afterall, the typical pre-merger or alliance argument in favor of consolidation, acquisition or market expansion, was typically framed as follows, it will:

· Improve quality

· Improve access

· Increase operating efficiencies; and

· Lower costs

Yet according to the Commonwealth Fund study, and now years after these consolidations, here’s how Texas ranks on key metrics of health status compared to all 50 states, and the District of Columbia.

· Overall: 46

· Access to care: 51

· Prevention & Treatment: 43

· Avoidable Hospital Use & Costs: 42

· Equality between rich and poor: 50

· Equality between non-Hispanic white and minority: 48

· Healthy lives: 21

· Children with medical and dental check-ups in past year: 40

· Adults with a regular doctor: 49

· Medicare reimbursements: 46

· Infant mortality: 19

· Breast-cancer deaths: 18

· Colorectal cancer deaths: 15

· Adults who smoke: 17

· Overweight or obese children: 32


Not exactly ‘best in class’. So why not ask, where is the ostensible and promised ‘community benefits’ and not just those codified in IRS code, to justify the tax exempt status for most of the entities above? How is this ‘return’ (to the community) being measured; (is it via Medicare or Medicaid ‘shortfalls‘, or charity and bad debt write-offs; or some tangible real world contribution); or is it even accurately measured? The IRS 990 filings are somewhat ‘fluid’ on the specific reporting of activities that count towards community benefit.


Most, if not all, of these institutions are primarily ‘non profit’ (with some affiliate JV exceptions) yet they are aggressively managed to generate a surplus of revenue over expenses; after all ‘no margin, no mission’. While they do not have stock holders or investors per se, they do have bonds that require adequate debt service coverage in order to maintain favorable credit ratings and competitive access to capital.


This is where the ’story’ for the consolidations and, for some, the unspoken truth of the matter emerge, IMO. While perhaps stated in the vision for some, most of the benefits of consolidation are to be found in the pricing leverage that comes from asset concentration. Hospitals want higher rates, and payors (health plans and insurance companies) can tell you how difficult it was, and likely remains today, to extract material discounts from these massive institutions given their scale and market dominance.


So the question remains open: have they delivered, or are they just plain ‘doin’ it wrong’? Is the promised value proposition a reality today for the Texas residents they purport to serve? Based on these, and other metrics, many would say no. Rather than more of these Texas sized giants, why not refocus the Lone Star state on their one home grown version of a ‘Mayo Clinic’ model domiciled in Temple, Texas aka ‘Scott and White‘.


In the next blog post, i’ll touch on the physician role in the Texas market, and the historical rise and fall of physician driven integrated delivery systems in particular.

Here’s how Texas ranked in key areas compared to all 50 states and the District of Columbia.
• Overall: 46
• Access to care: 51
• Prevention & Treatment: 43
• Avoidable Hospital Use & Costs: 42
• Equality between rich and poor: 50
• Equality between non-Hispanic white and minority: 48
• Healthy lives: 21
• Children with medical and dental check-ups in past year: 40
• Adults with a regular doctor: 49
• Medicare reimbursements: 46
• Infant mortality: 19
• Breast-cancer deaths: 18
• Colorectal cancer deaths: 15
• Adults who smoke: 17
• Overweight or obese children: 32
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Written by 2healthguru

October 22, 2009 at 8:43 AM

4 Responses

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  1. Social comments and analytics for this post…

    This post was mentioned on Twitter by 2healthguru: New blog post on Texas Health Care: http://bit.ly/1va7pj #healthreform #healthcare #hospitals…

    uberVU - social comments

    October 22, 2009 at 4:04 PM

  2. Thanks for the perspective,let me share some info that brings another set of data and perspective in.

    All this information is publicly available at http://www.baycare.org/

    From: http://www.baycare.org/body.cfm?id=6
    By the Numbers, 2008

    Year Founded 1997
    Hospitals 10
    Ambulatory/Outpatient Centers 31
    Heart Surgeries 1,663
    Beds 2,677
    Births 12,991
    Team Members (employees) 17,400
    Outpatient Surgeries 53,929*
    Discharges 119,911
    Emergency Room Visits 373,626
    Home Health Visits 547,681
    Lab Tests 7.6 million
    NOTE THIS LAST #: Total Community Benefit $158 million**

    The breakdown for community benefit can be retrieved from: http://www.baycare.org/body.cfm?id=884

    And this doesn’t count the high level of volunteerism in the system for everything ranging from blood drives to United Way participation.

    BayCare’s sinks it’s profits not into pockets but right back into community benefits – ranging from covering the costs as listed above to purchasing new equipment, expanding facilities and improving, improving, always improving services. You count up how often folks focus on lesson’s learned and improving processes (eg who care’s if it’s 97.1% we can make it 98.1% at leasat) and you would have a rather sizable stack of pennies 🙂

    It’s driven top down and ingrained and adopted by all of our team members – we do what we do for the folks in the community we live, eat and play in.

    My two sestertii 🙂

    Sam Adams

    October 22, 2009 at 11:57 AM

  3. Here’s a comparison I would like you to consider – all facts and figures publicly available from http://www.BayCare.org/

    http://www.baycare.org/body.cfm?id=6
    Year Founded 1997
    Hospitals 10
    Ambulatory/Outpatient Centers 31
    Heart Surgeries 1,663
    Beds 2,677
    Births 12,991
    Team Members (employees) 17,400
    Outpatient Surgeries 53,929*
    Discharges 119,911
    Emergency Room Visits 373,626
    Home Health Visits 547,681
    Lab Tests 7.6 million
    NOTE THIS PART —> Total Community Benefit $158 million**

    The community benefit breakdown is at:
    http://www.baycare.org/body.cfm?id=884

    This doesn’t count the volunteerism BayCare employee’s exhibit through-out the year – everything from sponsoring blood drives and heart walks to united way drives. It’s a pretty long list.

    Personally, I think it has as much to do with Quality of Care metrics as it does with personal accountability, something that’s scarce on the ground these days.

    Thanks for the article, it’s very informative, hope I was able to bring another perspective.

    Sam Adams

    October 22, 2009 at 11:26 AM

  4. […] Health Care ‘Texas Style’: A Model for the Nation? « A "HealthTweep" Pulse Check 2healthguru.wordpress.com/2009/10/22/health-care-texas-style-a-model-for-the-nation – view page – cached In the aftermath of Atul Gawande’s landmark piece ‘The Cost Conundrum‘ and the selective emergence of the ‘Mayo v. Mc Allen‘ mantra, I’ve been tweeting of late on the ‘irony’ of… (Read more)In the aftermath of Atul Gawande’s landmark piece ‘The Cost Conundrum‘ and the selective emergence of the ‘Mayo v. Mc Allen‘ mantra, I’ve been tweeting of late on the ‘irony’ of certain Texas health markets, particularly given the concentration of hospital assets in non profit health systems, and the timely question of whether such consolidations produce the ‘community benefits’ proffered by their leadership. The recently published Common Wealth Fund study ‘Aiming Higher: Results from a State Scorecard on Health System Performance, 2009‘ has supplied certain metrics to further contextualize the conversation. (Read less) — From the page […]


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