In recent years, Rhode Island has passed substantial health insurance, nursing home and assisted-living reforms. Now, amid growing concerns about the cost of health care and hospitals’ financial viability, there’s a movement afoot to take on even larger-scale reforms.
A wide range of people believe that nothing less than the future of Rhode Island’s health care system is at stake – specifically providers’ ability to keep serving everyone who needs them, and consumers’ and their employers’ ability to pay for those services.
Efforts are already under way to create more affordable health insurance products, most notably the “wellness” plans unveiled by Health Insurance Commissioner Christopher F. Koller this month, which could cut small employers’ premiums by an estimated 18 percent.
House Finance Committee Chairman Steven M. Costantino also proposed a stripped-down type of health plan for small businesses that haven’t insured workers for more than a year.
But as Edward J. Quinlan, president of the Hospital Association of Rhode Island, noted in an interview, the uninsured rate in the state has nearly doubled in recent years, and even those who are insured – or those who’d be covered by these new plans – face deductible and co-payment requirements that they often can’t (or don’t) meet.
As a result, bad debt is soaring, even as hospitals increase their charity care. All but three of Rhode Island’s hospitals lost money last fiscal year; Landmark Medical Center recently laid off more than three dozen employees, and Kent Hospital had to cut pay and delay raises.
Last month, the R.I. Department of Health issued a report showing that, while collectively the hospitals have made large capital investments in recent years – $628 million from 2002 to 2005 – that investment was concentrated in the two hospital systems, Lifespan and Care New England, while the independent community hospitals fell far behind.
Given that most of the hospitals’ physical plants are more than 10 years old, that means many are overdue for upgrades. But as Quinlan put it, “you need a [profit] margin to make appropriate capital investments,” and many Rhode Island hospitals have been in the red.
Community health centers are also struggling, with nearly 30 percent of their patients in 2006 lacking insurance of any kind, according to the Rhode Island Health Center Association; nine of the 11 have seen at least double-digit increases in their share of uninsured since 2002, and for some, such as the East Bay Community Action Program, the numbers have tripled. Facing a major deficit, Providence Community Health Centers recently laid off 38 workers.
Enter the reformers.
Last week, in an unusual move in a state where the governor and lieutenant governor are elected separately, Gov. Donald L. Carcieri and Lt. Gov. Elizabeth H. Roberts jointly launched a task force to identify the reasons for community hospitals’ financial difficulties and to recommend reforms – with an initial report due in three months.
“Our hospital system in Rhode Island faces a crisis, and an important step in implementing solutions to the problems of the community hospitals in our state is to bring the necessary problem solvers together at one table,” Roberts said in a statement.
Separately, on April 2, a committee created at the General Assembly’s request issued a report calling for Rhode Island to set up a formal health care planning process to ensure that, from hospital capital improvements to technology to the way providers are reimbursed, the entire system is set up to maximize affordability, efficiency and positive health outcomes.
“The U.S. health care system – and Rhode Island’s health care system – are notoriously fragmented,” the report says. “One consequence of this is that the system costs more without better results in terms of population health. … [A] robust health planning process in Rhode Island should lead to improvements in the health care delivery system through the creation of a unified health care system planned and coordinated in public-private partnership.”
At the heart of that concept is a radical departure from how the U.S. health care system, including in Rhode Island, has operated:
“The health care system must transition from one based on competition to one that is rewarded for collaboration and coordination,” the report says.
What could that mean in practice? Most likely, among other things, fewer specialized facilities offering services that are lucrative for hospitals – whether it’s open-heart surgery, radiation oncology, or high-end imaging – and more “centers of excellence.”
(The report doesn’t actually go that far, however; it just says that “an appropriate capacity and allocation should be identified based on population health needs, rather than through the competitive strategies of providers.”)
It could also mean – and this the report says explicitly – collaborations to share health information electronically and to gather data about how care is delivered.
The report also envisions collaborations to develop “innovative models” of health care delivery that integrate physical and mental health care, encourage home- and community-based long-term care, and better address end-of-life care.
And it envisions changes to the reimbursement system, which it notes has “historically been among the strongest determinants of the supply of health care providers, services and equipment” and should be revised to reflect “the priorities for supply, allocation, quality and health status improvement” set through the planning process.
In an interview, Dr. David R. Gifford, the state health director, noted that the current fee-for-service model “stimulates people to do more things that are particularly well-reimbursed,” even if they are not necessarily the best approach to caring for a patient.
In the 1990s, managed care plans took the opposite approach, what is called a “capitated model,” in which providers were paid a flat fee for all the care a patient with a specific condition might need, and that sometimes left people not getting the care they needed, he said. The goal this time is to find a middle ground.
“I think we need to look at bringing better balance to the system,” Gifford said.
Legislation to implement the report’s recommendations has been heard in both the House and the Senate, and it’s expected to be voted on by the Senate Health and Human Services Committee after the General Assembly returns from its spring break, said Craig O’Connor, lead organizer for Ocean State Action, who was involved in drafting the report.
“We’re really excited about it and think this is a good first step towards making wise decisions about the growth of the health care system and the allocation of resources,” he said.
And the report’s broader vision is already taking hold in the state. A joint news release by Carcieri and Roberts about the community hospitals task force pretty much states it as fact, noting that “a collaborative plan for the distribution, financing and service mix of community hospitals, supported by local payers, will best serve the public’s interest.”
The Hospital Association’s Quinlan also said that he believes it will take a multifaceted approach to solve the hospitals’ problems – involving providers, payers and consumers along with state regulators to ensure everyone benefits.
But while Quinlan predicted that those solutions might require “incremental improvements,” O’Connor sees something bigger in the works.
“Rhode Island exists not only in its own climate, but in a national climate that’s being populated by reform ideas in different states,” he said. Inspired by the bold measures taken by Massachusetts and others, he added, “I think there’s a major appetite” for substantial reforms in Rhode Island as well.
“Many people are saying, ‘If Massachusetts can do something big, if Connecticut is doing something big, when are we going to do our big thing?’ ” he said. “So I think these are the first steps toward that big reform idea. What form that takes – we’ll have to see.”
The health planning report can be downloaded as a PDF at www.health.ri.gov/chp/chp_FinalReport_03302007.pdf.
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