Business Roundtable 2010: Health care reform. Panel: It's much needed, but current legislation won't help

Andy Heintzelman, moderator; editor of The News-Item: I've given you a little idea why we're here: the topic is health care. That's a broad topic, I know. And as I look around the room, there are a lot of elements of that industry represented here, and that's exactly what we wanted. I suppose two hours isn't even the tip of the iceberg in terms of how long we could discuss this issue, but we'll try to keep it narrowed down to how we can help educate the community on what we're facing. I was hoping someone would have an example from our local community that clearly demonstrates the need for health care reform, or perhaps demonstrates that we don't need it, or that it's way off track with what's been proposed.

Dr. Mary Stout, owner, Central Penn Physical Therapy, Elysburg, Shamokin, Ashland: I see that every day in my clinic, where people are referred for physical therapy or they come of their own volition. Once they find out what their current health care plan covers or does not cover, many of them who are in dire need of the service cannot afford the service. And they'll say, "Well, I cannot afford my co-pay." We see people with some co-pays of $45 out-of-pocket expense. And these are people that, their incomes, you know, are obviously not anywhere near where they can meet that co-pay of two to three times a week for a six-week time period. That's a lot of money, and people, I find, are not aware of what their plans cover or do not cover. And when we explain that to them, it's like they're finding out for the first time what's available.

Heintzelman: So where does that problem begin? Is it just the complicated nature of health care insurance?

Stout: I think it begins with health care coverage and what the insurances are offering. This is dating myself a little bit, but, back in the day when health care covered 100 percent, and employers paid 100 percent for employees and their families, everyone had health care and there were no problems; people got what they needed. But now, it's a different story. And I do; I see many people that can't get the care they need and that's very frustrating. We've tried to come up with alternative ways that they can afford it. If they're paying out of pocket a $45-a-visit amount, we came up with a rehab fitness program where we will give them the program, and they can pay $25 a month and come on their own time and at least get the exercises in that are set up by the professionals.

Charles Prentiss, owner, Assist Home Care, Shamokin: Part of it is education, too; getting the information out there where people can clearly understand and identify what their coverage is. And that's always a big one with any insurance - what coverage that you have.

Tom Bradley, owner, Medicine Shoppe Pharmacy, Shamokin: I would agree. In the pharmacy business, I think, especially the senior citizens, the Medicare-eligible people have greatly benefited by the new Medicare Part D, the drug program started back, I believe, in 2005. But I would agree with the education part of that, especially with the elderly. They don't understand their benefits, they don't understand their co-pays, and I spend a good amount of my day, rather than dealing with drug questions, dealing with insurance questions. So I would agree that the Medicare Part D program has been, in my opinion, a great benefit. But it can be very confusing because there are so many plans out there. Education's a big part of it.

Heintzelman: Explain quickly, if you would, what Part D means.

Bradley: Part D is drug. I believe A and B was the original Medicare, the hospitalization and doctor visits.

Heintzelman: This is prescription then, right?

Bradley: Part D is prescription drug coverage. It was added to Medicare, I believe it was back in 2005, and it greatly expanded pharmacy coverage to seniors across the nation. Now, in Pennsylvania, our seniors already had a great program in the PACE program. And not a lot of states have the state pharmaceutical benefit package that Pennsylvanians do. But the Medicare D plan added onto that. In a way, like I said, it's good. But it's very confusing because now you're dealing with two programs. A lot of the seniors, they'll have the PACE program. They also have Medicare D.

Heintzelman: I don't suppose there's any legislation that would ever come along that's going to make it a whole lot less complicated. Can these problems be solved through legislation.

Prentiss: Well, you run into a problem with this, too, because Medicare technically is competing against private insurance companies. When Medicare comes out with their Advantage plan and people opt out to go with, say, a Health America plan instead of Medicare, a lot of times the coverage is not the same. We run into issues with that, where people switch from Medicare and go to a different insurance and they automatically think the coverage is the same, and it's not.

Heintzelman: I wanted to go back to something Mary mentioned, in terms of the old days where everything was covered 100 percent. I mean, is that something that is possible anymore, and how long ago were you talking?

Stout: We're talking in America in the late '70s into the '80s. Well, before the DRGs came into effect. And then from then on, it was a domino effect.

Heintzelman: And for the record: DRGs?

Tom Harlow, CEO of Shamokin Area Community Hospital: Diagnosis Related Groups. It's a payment methodology predominantly for hospitals, but it's perspective, so it's a predetermined fee, not just for hospitals. But it's really gone to outpatient and everything else. It's basically a fixed fee for a defined service; that might be the simplest terms.

Stout: What happens with that is, the insurance company begins to tell the doctors and the medical professionals how to treat. They're saying, "Well you need to get this patient better in 10 visits," when patient A is not the same as patient B and C and so on. You would have to look at all the demographics of a patient. And that creates a large problem on the treatment side for us, because we have to try and get this patient well. And I just wanted to say this very quickly, too: I feel that health care reform needs to look more into preventative medicine. If we prevent and educate early on - I do some grade school education - if we start there, we will have less people requiring medical attention. Thus, the price will go down, the costs will go down for what they're putting out. It makes a lot of sense to me.

Heintzelman: I wanted to, with this base, talk a little bit about the legislation at the federal level. I know that since we put this invitation out, things have changed a little bit in the political dynamics. But, is there anything that you folks have read or seen that is encouraging in terms of what could come out of that as it applies to some of these problems?

Harlow: I'll say no. I think the legislation that's out there, both on the House and the Senate side, I think somewhat to Mary's point, misses the point. I believe we need to reform the health care system - not only the financing of it, but the delivery - and to refocus the priorities back to prevention; having people taking ownership for their own health, and education and everything else. I don't believe that the proposals that are out there today really are getting to the heart of the cost issues and the problems we have in the system. Quite honestly, and this is opinion, I think the wrong people are at the table. You don't have physicians that are in the trenches day in and day out, and I hear this from my medical staff ... What they see and experience every day, what's being discussed from a reform perspective, doesn't address those basic issues of chronic disease management - people that are coming in routinely that have diabetes and all these other conditions that, through better education and prevention, you may be able to reduce hospitalizations and the more expensive care. I guess I should say that the views represented do not necessarily represent the views of Shamokin Area Community Hospital. I would like to see us start over, quite honestly.

Heintzelman: You say about reforming the system as opposed to your view that they're only reforming the financial part of it. It's just not a broad-enough reform proposal?

Harlow: I think even if you just go back, just from a logical perspective - we talked about how complex things are. When you have a 2,000-plus page bill, that's not simplifying things. I'm just thinking, "How many people are we all going to have to hire to figure out what you have to do?" So I think we just need to start over, and I think we just need to get back to basics. And again, I'm not criticizing academia, but, physicians and providers that are seeing patients day in and day out: What are the issues? What are the frustrations? Because I think their voice has been lacking in this. It's been, apologies to Susan and Congressman Carney, I think this has been a political process from the beginning, and I don't believe it's a political solution. … I think you should be paid based on your efficiency, based on your quality, based on your outcomes.

Susan Mathias, of Lewisburg, regional coordinator for U.S. Rep. Chris Carney: I guess the question becomes, when is it going to start? Health-care reform has been a point of discussion since Teddy Roosevelt. You know, what's going to get us moving drastically is the question.

Prentiss: I know, for example, with us - and we're just a small part of this. We deal with the end result, when a patient sees a physician. But we have a nightmare with Medicare requirements now to qualify for a piece of equipment that the physician's not aware of. Medicare, for example, with a hospital bed: The doctor writes out a prescription for a hospital bed. Medicare doesn't pay for a full electric bed. They consider it a luxury. Semi-electric beds - the doctor's notes have to now show why they ruled out a wedge pillow before you're going to prescribe a semi-electric bed to raise the head. Why do you need the adjustable height? And the doctor's not interested in that. All they're interested in is, this patient needs a piece of equipment. … And how do you get yourself in between the doctor and the patient now, and say, "Listen, because your doctor did not confer with us, or did not know the regulations for qualifying for the equipment, I have to send you a bill?" That's not a good position to be in.

Heintzelman: Susan, I wanted to give you a little bit more opportunity to respond to some of the things Tom said, and the legislation, where it's at, where it may be going, Congressman Carney's feelings on what's happening.

Mathias: It's a real pleasure to come sit with the people delivering services, and hearing you talk. I understand (Tom's) point. I guess it's confusing to understand what you're saying and how to solve this problem. It is hugely complex. We've created this enormous animal in America with how we have free enterprise operating in our health-care system, and it's a good thing. But we've decided to take care of our elderly with Medicare, and we've improved it with prescription coverage, at which we did in a hugely costly benefit that we gave to seniors in the mid-2000s. Those were real improvements, as we look at taking care of people in our society that need to be taken care of. In fact, elderly people are the wisest people about health-care coverage any more because they have to; they have to understand. They come in and try to solve Medicare problems in our office, and I'm blown away sometimes at the level of detail they're managing. And I think about all the people that aren't able to do that, in younger ages and in the senior community. … I worked in private industry for 10 years, and we were in those transformation years when the costs were killing businesses. Then we went to cost-sharing, and all of a sudden we had to educate employees about now picking up the co-pay. And then we went to HMOs, and HMOs were managing doctors too much. So those progressions all happened in the '90s, So we backed off of HMOs and managed care, because we don't want to interfere with the doctor-patient relationship. We've created this animal, it was complicated back when businesses were paying for employee care, but now the costs have gotten so high, employees have to share in the costs.

Heintzelman: Which further complicates things.

Mathias: Unsustainable is the perfect way to describe the problems that we have. That's why we've embarked on health-care reform with a real effort this time, because it's unsustainable. You've got 60 percent of bankruptcies being the result of families not being able to afford health-care bills. So, middle-class families are really breaking under this.

Heintzelman: So, give us the good part of what is out there so far. Where is there a bright spot or two?

Mathias: I would love to say that it's all going to be incredibly simple, but it's very difficult to read the wording, and I don't disagree with that. The congressman started out with saying, basically, he hadn't seen the bill. He wants to make sure we have no pre-existing condition restrictions being placed by insurers. The pre-existing condition issue is a huge one in the quality of care we're getting. I don't disagree on preventative care. Preventative is a big part of that huge bill. There's a lot of preventative care, especially for prenatal care and healthy babies and a focus on early families. There's good prevention in it for seniors in Medicare. There are huge improvements in Medicare in the House bill. Now, the congressman likes the House bill; it does address pre-existing condition restrictions. It has portability. In the long term, would people be able to carry their health care from job to job in the plan put forward in this health care bill, which is an important position: that people not be held hostage to our jobs because of our health care. I've been there. I know that. The other really important point is that we have to have it affordable and have quality. Affordability is the big one. I guess what I wanted to say is, he supported the health-care bill because we have to see some progress forward. … And the Senate bill, the congressman cannot abide by what happened with the Senate bill. It was back-room deals and there are elements of it that are special treatment for certain things, and that is going to be unacceptable in a plan.

Heintzelman: Any thoughts on how long?

Mathias: You know, that is a perfect question. What are the directions going to be, given recent developments? But it's still in conference. There still has to be a resolution between the House bill and the Senate bill.

Warren Altomare, owner, Family Home Medical, Mount Carmel: I'll go out and say right now that whatever comes out of Congress will benefit none of us. We'll see no benefit from that bill, from anybody's bill. They're going about it the wrong way. They started fundamentally wrong; they'll never get it right, never. And this is not against Congressman Carney, obviously. I like the man. And he's doing the best he can. It's the whole system; it's wrong, and it's wrong from the start. We're all sitting here knowing exactly what's wrong. Now, we may not know the exact way to fix it; we have some good ideas how to fix it. We know what works, we know what doesn't. We know what makes money, what doesn't make money and we know where patients are. They don't; they have no clue, none. Their decisions are made, like you just said, among themselves with special interest groups, lobbyists and big money. And nothing will change that, no matter what it is. I'll say it on the record: That bill, whatever it is, without reading it, will not benefit me as a home health provider. It'll add layers and layers and layers of garbage that I'm already fighting my way through, that I'm already hiring extra people to try to do, that I can't afford to begin with, and why 40 percent of home care in Pennsylvania is in the red right now, and will probably fail in the next year and a half. I'm going to give you an example: Home health care took the biggest hit on both sides. They were just going to demolish home care. Right now, in Pennsylvania today, this minute, there are more people being seen by home care than in all the critical care hospitals in Pennsylvania. That's how big home care is, yet home care is gong to be gutted. At the time when they're saying, "Bring people from a hospital, get them into the home, where it's cheaper, where we can manage, where we can then work with the hospital on chronic care and not have them re-admitted." At the same time that they say that sentence, you cannot have the next sentence say, "But, we're going to take all the role add-ons off. We're going to take the 5 percent off. We're going to cut you 10 percent for the next three years and you'll be OK." That's just ridiculous. … You can't start where they start and say, 'We're going to fix this,' and then have Wellpoint, for example, be the major player in the back room.

Heintzelman: Do you have any, not that it's this simple, but do you have any suggestions of where do you start? We've talked about a clean slate.

Altomare: Again, I don't want to say the government doesn't know how to do things. Let's look at PACE, for example. Somehow, they managed to get PACE right, and they did it really well. They helped people. It was a direct benefit. They didn't hurt anybody, it didn't cost anybody any money. "Here's a benefit we're going to give you. We funded it, we know how it works, take it." And to say the government doesn't care isn't right, either, because you separate government, meaning your office, you, and the people that we go to that we need something from, and we say to them, "You gotta help me." They'll find a way, if they can. It's not that government isn't working; it's the whole idea of how government does work. An example: Multiply this a thousand ways. Home health is basically a Medicare-funded operation. It used to be, five years ago, 94 percent of my patients were Medicare. Now it's about 75, because now we have the Advantage plans. In 2005, I dealt with seven plans. Today, probably 56, all of them with a different idea, all of them with a different way to do business, all of them with different criteria, all of them with different paperwork. Yet all of them, somehow related into Medicare at the same time. Now they want to do quality outcomes. They want to start understanding how you're doing. Since my company was in business, we sent out questionnaires. We thought that was the smart thing to do, find out what people are thinking about you after you discharge. Now, and this is how this works, because half the people never did that; either they didn't care or they didn't want to know. So government says, "We really think you should start asking that." I said, "Okay, I've always asked it. I've got 15 questions. We go through a PI. We'll report them, we'll show them, we'll do everything." I worked on that piece of paper probably more than I worked on anything in five years, because people don't want to send it back, because the more questions you ask, the less they get it. I had to make the questions so they understood exactly what I was asking them. So, you know, we gave them fair, good, excellent, all the things. Medicare said to us in November, "We're going to change that. We're going to make you send out the questionnaire." I thought, "Well, fine, now we're all going to do it." Except you're not going to do it yourself any longer. It's 31 questions in a booklet. You must contract with another company to do it, which we'll tell you which companies it'll be because they're the ones who got the contracts to do it. So now it's $3,000 a year to do the same thing I did. I will get nothing back.

Prentiss: And that's part of the problem is, too, you're looking at two things here. You're looking at, number one, the welfare of the person. And that should be up front.

Mathias: Absolutely paramount.

Prentiss: The other problem you run into is, unless you go to socialized medicine, is you're running for-profit organizations. That we have to be able to make a profit to take care of the people. And when you start cutting, what happens? Quality suffers; you cut back on how often you see people. There's only so much you can do. And you want to provide the benefits for your employees and give them a raise. How do you do that?

Heintzelman: Great discussion. We may not solve the problem, but ...

Altomare: I can see the headline: "Focus group solves health care problem. Sends idea to Congress and expects answer anytime soon."

Prentiss: The sad thing is with this, too, most of the doctors have practices, and they're small business. They're running a small business. They have to make a profit.

Bradley: I think that, for all of us - pharmacy, home health care, nursing home, hospital - it warrants that no one would benefit from the plan. People, maybe, that don't currently have health care coverage would benefit from the plan. But, they may not have providers to go to if, you know, if reimbursements are constantly being cut to the bone. You can only work anymore on volume. You have to do volume, because you can't spend the time. Just for example: In pharmacy, there's medication therapy management that's before Congress. They're trying to get some pharmacists that would get paid for actually spending time with patients, customers and explain their medicine, making sure they're taking their medication the right way, which in the long run sort of goes toward the preventative-type care. But no one's talking about paying for that.

Heintzelman: It's not an industry where volume should be the focus. I want to switch gears just a little bit. Tom, when you called to confirm your attendance, we talked about how we tend to talk a lot about the elderly, which we have already today, and, of course, children. But we spoke a little bit about the lost group, or in-between, which is a huge group, obviously, from say 25 to 60.

Prentiss: Well, a lot of people wind up going with Medicare if they can't qualify for anything. They'll go to Access in Pennsylvania. That has its own set of problems. And I'll give you an example. I had a woman sitting in our store the other day with her two kids, in tears, bawling. She had a small fracture in her leg, and it needed some orthotics from us and what we do is, we go right online with the prescription and we bill and we'll tell if it's approved or not. It was denied, and it said it needed prior approval. Now, in order to do that I have to send an MA-97 form to the doctor. He has to mail it back to me, give me the documentation on why its needed, and I have to mail it into the state and then they'll give me, within four to six weeks, a determination. This woman will be back to see the doctor before she gets her piece of equipment.

Bradley: I think, what I've seen in my business, in my store, most often any more, are not the senior citizens that don't have any drug coverage. Virtually all of them do, through one way or another: Medicaid, or the PACE program or Medicare Part D. Most kids have coverage through their parents' plans or through Medicaid or through the CHIP program. It's the, as you call them, the in-betweeners … they don't have prescription drug coverage. They may not have any health-care coverage at all. And they're the ones who are asking for prices on prescriptions and making their decisions whether they can afford to get their prescriptions filled. You know, those, to me, are the people that would most benefit from the health-care reform, from a national health care program.

Mathias: And the health-care bill does address the needs of people like that, where it's set against their income. But they would have access to coverage and care that they didn't before. So there's that element in it. People that can afford coverage that don't have it would be expected to have it, to broaden the pool so that costs get shared. Trying to get everybody doing the right things preventively, and getting everybody covered, is what we need to spread cost out.

Heintzelman: Tom, I take it you've seen that number of people increasing, that are making these decisions. I mean, is that kind of risen with the decline of the economy? Or was rising before that?

Bradley: I think maybe the decline of the economy had something to do with it. Obviously, people have maybe lost their jobs, and maybe someone that maybe in the past would have been able to afford the prescription maybe now cannot. They're trying to weigh whether they can or not.

Stout: Health care is a broad spectrum, and they're trying to fix everything at once. Let's take prevention, for instance. You want to set something good on prevention. Who's to decide what's included in prevention? I personally see some plans coming through with prevention, but they'll pay for a membership in a fitness center. … OK, we have prevention, just because we have something on prevention so we're good. But each of those areas needs to be fine tuned. It has to go back to allowing the doctor, the pharmacist, the physical therapist to do what they've gone to school for and do what they do best. You cannot have an insurance company or government telling me that patient with X diagnosis has to get better within 10 visits. Well, who are we to control human life and the healing process? We are not. We are not.

Heintzelman: Tom, I wanted to allow you to weigh in as well on the issue of individual coverage - in particular, the middle group that we're talking about.

Harlow: The group that concerns me the most, really, is those that their incomes don't qualify for Access and don't have health insurance. So, you might have a family that has an income, doesn't have health insurance, maybe has two or three kids. That's a huge burden. And I think what it does, long term, is people make choices. And they decide, you know, "I've had this pain in my belly for six weeks. I'm just going to live with it." Well, is it just, you know, the start of something minor, or the start of something more significant where the cost down the road is going to be astronomical? God forbid it would be cancer. Then you're dealing with chemo, radiation. And I think what it does, unfortunately, is forces people to make those choices that they really shouldn't have to make. I support universal coverage. I think people should have, at a minimum, some type of basic coverage. I don't think they have to have the Cadillac, but I think to cover, at a minimum, to prevent that catastrophic incident where it's like, "Well, I've got to sell the house to pay the bills." I think that's a given. I think you put some of the responsibility back to preventative stuff. People, you know, there are things that people should have some out-of-pocket costs for, because I think we've swung the other way from the old days when Mary said, where everything was covered. I think we need to come back where there's responsibility back on the consumer to make that decision.

Heintzelman: But that's been a key element of the new legislation, some kind of universal coverage. And you think that's a good thing?

Harlow: I just think some level of coverage, especially if they've lost their job, or those 'tweeners. I think it is hard for people to make those choices, those decisions, and I think it is wrong. You know, the wealthiest nation on earth, we should be able to figure out a way to do that. That being said, I would tell you I would not necessarily be telling you that's the government's role. There may be other ways to look at that, and how do you get that incentive within the health care industry to get that done. I guess philosophically, and I don't want to go down this road, but I've often wondered philosophically, if you think about it, you have health care as part of the private sector where it's a profit industry. But, then you have the government as the largest consumer driving the health-care agenda. And are we trying to put the government sector and mesh it seamlessly into a for-profit sector? I'm not sure that would ever work.

Prentiss: Correct me if I'm wrong, because I'm still a young pup, but I thought Medicaid was designed to take care of those people that fell into those cracks?

Harlow: Well, there's income criteria.

Prentiss: I wish the government would get out of the business and just drive Medicaid and provide insurance for people that can't afford it, and let the private sector take care of the rest.

Heintzelman: Warren mentioned layers a while ago, and we'll put another one on here. I wanted to go to Steve and that whole world, which is probably even larger than even some of the other segments of the industry that we've been talking about. What's your number one concern from the standpoint of a nursing home and assisted living center in terms of health care?

Steve Wetzel, assistant administrator, Mount Carmel Senior Living Community: The nursing home industry's challenged and committed to providing the best possible care to our residents. This will become more challenging, because the health-care reform bill actually reduces the Medicare payments to nursing homes. I've seen reported as much as $24 billion over 10 years. This comes at a time when the population is growing older and the need for long-term care is becoming greater. Providing sub-standard care is not an option, and if operating expenses aren't covered, we will continue to see a decline in the number of nursing homes. There's actually 1,000 less nursing homes today than there were 10 years ago nationwide. One of the results of the poor economic condition of this country is many states' budgets are in such bad shape, many states are cutting into Medicare and Medicaid to balance their budgets. One of the things is, you know, in the time of economic trouble, it is well known that health care is one of the leading industries that's providing jobs. And therefore, fundings to nursing homes should be increased, not decreased. It's estimated that the cuts in the reform bill could jeopardize as many as 50,000 jobs in 2010 alone. One of the things that is looked at in the reform bill includes a new approach called bundling of Medicaid support services, which means that nursing homes no longer directly bill the government for services, such as the test of wheelchairs, oxygen, physical and occupational therapies, over-the-counter medications and transportation. Transportation is a big cost in nursing homes; sending residents out to hospitals, physicians' appointments. In place of doing that, they propose adding $3.91 per patient each today to pay for the services. This potentially can be significantly less than the actual cost, depending upon the number of residents and the high acuity level. For example, if we have a resident that's on dialysis, and we need to send them to a clinic three times a week, $3.91 per day that we would get under the health-care reform would be absorbed in one week in transportation costs alone.

Heintzelman: If anyone could weigh in on this, what's the thinking behind those drastic cuts that are proposed in the legislation?

Harlow: Getting back to Warren's comment, there's nothing in the legislation that benefits us. We're looking at substantial cuts in the hospital industry. I think the mantra of "do more with less" clearly is going to be a challenge, and there's going to be survivors and those that don't survive, quite honestly.

Heintzelman: Is that supposed to be passed off in some other way? By cutting here, someone gains elsewhere? Is that the thought behind it? Is there any explanation?

Altomare: The question would be, who's gaining? Show me the person who's gaining in all of this, because I want to do what he's doing.

Mathias: The long-term reality of a growing, aging population in the Medicare community with people requiring coverage is going increase. We've got 45 cents on the federal tax dollar spent on health care already. We've got to turn that curve, and that is what we're setting up to do with this bill. So, to bend the curve on health care costs is enormous. The reality is we've got really good quality health care in this country and we don't want to give that up. No one does. And we've got to figure out a way to get real smart about how to do it. It can be done within a bill that gets us to an outcome system.

Stout: Talking about outcomes, in our profession, that's already started. We do outcomes, and again, the outcomes that they want us to do are going to cost thousands to set up. Capital Blue Cross has already started that. They have taken our history and looked at how long we treat patients and the costs to that Capital Blue Cross, the cost of that treatment. And they categorize us in three categories. If you come up in the top category, which is category A, that means you've done a great job and you do not have to ask for visits; they'll automatically give you your first 12 visits. We're fortunate that we're in category A. There are those who are in category B, who have not done so well with their visits and their treatment, and they will get the first six visits. And after that, they have to reassess the patient and ask for more visits. Those in the bottom category, unfortunately, must ask. They do an evaluation and they have to ask for everything they get. So, I believe in payments for outcomes because I am one that tells myself about quality care and great outcomes in our facility, and I think you should be reimbursed. However, the reimbursement is not there. To get $82 dollars per a visit, and the cost to a visit could be $200 if you have a patient that requires two hours of therapy. Now, we do not cut the therapy; we do the therapy because the patients need it. Where do you draw the line? Another statement on outcomes: Medicare has set up an outcome program with us, just physical therapists. They want us to do these outcome services. They want us to check every Medicare patient for balance in case they fall. The information they have given us is a waste because the test they want us to do has no evidence. It's not sound. It's not accurate. There's a better test that can be done to check for balance, but they have us doing a test that does not have the documented evidence to say it's a valid and reliable test measure. I, as a doctor, base all my treatment on evidence. I can't base my test on evidence, so why are they having us do something that you can't back up with evidence?

Heintzelman: Tom, how influential is the status of Medicare and the payments and the amounts; how does that influence the hospital on a daily basis?

Harlow: Specifically in Shamokin hospital's case, pretty dramatically. We're a Medicare-dependent hospital, which is a designation of the Medicare program. If at least 60 percent of your in-patients are Medicare, you get that designation. And on the plus, it means you get a little more money, I think in recognition of that Medicare does not pay the cost of care. So they do give you a bump, because we can't shift that to commercial payers. So, I think that's why that program got started. So, I would tell you any time Medicare makes a change, either in payment rates or from a regulatory perspective, it has a direct impact on our organization. From a regulatory perspective, if their new criteria put in place, new surveys, there's typically a cost. Either a direct cost, where we have to hire a vendor to do our surveys, which we did, or an indirect cost, where, how do you comply with this regulatory requirement? So now you have to hire additional staff. So some could argue that's a direct cost. It really is, but, so, it hits us from both sides. And the issue, quite honestly, for Shamokin hospital, over the years, and we've graphed this, and our board's been aware of it for some time is, the gap between the cost of doing business: pharmaceutical costs going up 8 percent a year; people want paid decent wages, so 3 to 4 percent a year, whatever; all of those costs that go into your expense line item, over the past, really, three to five years, has averaged anywhere from 6 to 8 percent. Medicare Market Basket updates typically are 3.2 to 3.5. So right there, the math doesn't work. So, that's a challenge and a concern for us.

Heintzelman: Would you be able to elaborate on anything that you've had to do within your operation because of that?

Harlow: We've been very fortunate that we've not had to cut services at this point. I would love to tell you that day's not going to happen, but we are concerned. And I don't want to get into the whole details, but I would tell you that has led to why we're discussing with a large organization. We're taking the long-term view that we cannot survive on our own long-term period. Especially when you're looking at the Medicare cuts that are proposed over the next 10 years. We've done the math, and it doesn't work. So we're trying to figure out how can we continue to provide service in the local community, high-quality care. Andy, I think one of the benefits, and this pre-dates me, but, I think to this day, we continue it, this is a very efficient, well-run organization, and that's not just bragging rights. Within the hospital industry, and I don't mean to go on about it, but within the hospital industry, we have a metric that we track called cost-per-adjusted-discharge. We average, year to date, really over the past number of years, bout $,4600 per adjusted discharge. That's what it costs us to provide that care. The national average, and you can certainly look it up on the Web, is between $7,000 and $8,000. So I think that's an indication of how efficient this organization is. With health care, it's complex. So, for us just to say we're going to close X, Y, Z service. It's all interrelated.

Heintzelman: And I was going to bring up the agreement you have with Geisinger to study the possibilities; and you've already answered that, it's indicative of the trouble we're in. And forgive my ignorance if this isn't a good question; but, at what point does that reach Geisinger's level? And then what happens?

Harlow: It does, and it will impact. They're going through a lot of the same processes. Much larger organization, but they're going to have to look at reducing costs as well. The big difference is the payer mix. And what I mean by that is, between Medicare and Medicaid, for our in-patients that we treat at Shamokin hospital, that's about 80 to 85 percent of our payer. So, we're stuck with the governmental program. Geisinger, last time I saw some of theirs, was probably 25 to 30 percent Medicare. So what they can do is spread that around. They can offset that loss, if you will, from Medicare and Medicaid, to their other payers, so they go to the Blue Crosses and everything and say, "I want to be paid this much." And it makes up that gap. But that gap for them is probably going narrow, too.

Heintzelman: Especially if they merge with an organization like yours, because then they're going to acquire those percentages that you have.

Harlow: Sure, and that's where you have to figure out, "OK, how does this work?" From our perspective, it's a matter of scale. And you know, their purchasing power for supplies, for example, is much greater than ours.

Wetzel: In the nursing home, approximately 70 percent of our residents are under Medicaid. Medicaid funding barely covers our costs. Or, in most cases, it doesn't. That's offset, actually, by what we receive from Medicare. So, reducing our Medicare payments obviously is going to put a financial strain on the nursing home industry. You had mentioned about the Medicare Market Basket. That's basically a tool that's used to give, in our case a nursing home, an inflationary adjustment, a cost-of-living adjustment. The new health-care reform bill actually phases that out. So that inflationary cost-of-living adjustment will go away. So again, it's just another thing that puts a financial strain on the nursing home industry.

Heintzelman: Any dramatic examples of changes you've had to make within your operation because of what's been going on?

Wetzel: Well, we're looking at things to make our facility more efficient with our labor force, such as moving toward electronic health records, rather than doing things more manual. So we are looking at efficiencies there.

Heintzelman: It's a daily challenge, I'm sure. One other area I wanted to touch on is how the region is positioned in terms of services, facilities, so forth with the aging baby boomers. And I think it's accurate to say that even though we have what we always deem as an elderly population locally, it's probably going to become even more so in the next 20 to 30 years. Is that a real issue? If we're sitting here 15 years from now, is that going to somehow further complicate this matter?

Wetzel: I noticed in the health-care reform bill, I guess you would consider this a positive thing - at least it's promoted as a positive thing in the bill - is the establishment of what's called a Community Living Assistance Services Support Act, or a CLASS Act. And that provides a trust fund where workers through payroll deduction can contribute to this fund. And if they were to become disabled they could draw from this fund to help pay for their medical expenses or even long-term care needs. So, it also actually says that it would also offer some relief to Medicaid because this trust fund would actually pay for their long-term care needs or disability expenses before Medicaid would actually kick in.

Heintzelman: Are we saying there's a positive? (Laughter.)

Mathias: I could break out my 30-page summary and walk you through where the positive pieces are. If we could reduce the Medicaid to the patient, that helps your costs because that's where you're really getting hit. It's all intended to balance out. I know that you're saying there's nothing in it for you in the bill. But what we're looking at is long-term expansion of people in Medicare, and the bill does specifically look to the future for how to manage it into the future. The other part to it is just taking the responsibility to educate ourselves once we pass this bill. Am I doing the job I need to do to get out and educate people how to access the services? That's what I did when I was in private industry. I was in HR and I educated my brain out to get employees to understand.

Heintzelman: We probably overlooked. And I think Tom alluded to it earlier. There's a certain responsibility on a consumer's part to understand these things. But it certainly doesn't make it any easier when things seem to be just more complicated by the day and you have to hire people to even understand these things, and Tom has to spend his day, you know what I mean? Warren?

Altomare: I think you're looking at the baby boomers group, which, yeah, is the largest retiring group of people in history; but I think you're right, they are not the same consumer we know now, by a long shot they're not. The consumer we know now, the 75- and 80-year-old widow, whose husband was a miner, who never had a lot of money, never had a lot of education, and didn't care. It wasn't what the world was about. They took Medicare, and Medicare works. It's not like it doesn't. It's just that now they're going to, when they see Medicare coming and they see all these people coming, the only thing they think is, "We have to fix Medicare, which means we won't be able to fund it all the way. We'll find other ways to do it." Medicare itself will work, and if they can figure to make Medicare continue to work, it'll be fine. It's not perfect, but would you go anywhere else in the world and be elderly than here? No, it does work pretty well. Medicaid, well, it's tough on us. We take everybody in my agency. But I take a Medicaid patient and I'm pretty much going to lose some money. But the baby boomers, they're a whole other story, because first they come out mostly educated, they know what they want, they're retiring somewhat earlier than the last group did, a little bit younger, so they hit 62, they're retired, but they're younger. But they also know what they're paying for, and they know what they want, and they're a little more demanding in what they want. And I think a lot of them have insurance, a lot of them have long-term care insurance, for example, which is unheard of 10 years ago. Some people actually have home-health insurance, that says, "Oh yes, I have a portion of my insurance that's home health. It pays me 90 visits a year. So, bring it on, I'm ready." So, yeah, I think it's going to be a little bit easier in the fact that we're not treating such an elderly population.

Wetzel: That's a very good point. It's kind of one of the things we're doing in the nursing home industry. It's called a culture change, and it's exactly what you're talking about. The baby boomers coming up are expecting different things in the nursing home: wireless Internet, for example. They want to have laptops in their rooms. They want flat-screen TVs. They don't want rooms that have three people, two people to a room. They want private rooms. All of that costs a lot of money to make those changes.

Heintzelman: Do these people also seem to have the funds to pay for that? Or are they any better off?

Wetzel: Well, we'll see.

Altomare: That remains to be seen, whether they have a wallet or not.

Prentiss: Well, the other thing with the baby boomers: What's their condition? When you look at the group that we're dealing with now, because they had a different lifestyle. Are we going to have the kind of costs and the kind of health issues that we're presently encountering?

Heintzelman: Are you guessing that maybe they'll be a healthier generation?

Harlow: Probably. Compared to the group Warren was talking about, I think so, because I think they focused a little bit more. Because you're having some of this generation is looking at cosmetic more than maybe their predecessors a little bit, so I think they're a little bit better educated, more demanding in things and probably a little healthier. Certainly living longer, which is part of the issue, too. You know, we're fixing things a lot better today. I mean, just look at President Clinton: chest pain, this and that. Just throw in a couple of stents, he's walking out the next day. Years ago, it didn't happen.

Heintzelman: The long-term care.

Harlow: Yeah.

Heintzelman: And yet we do hear a lot of concern about, particularly with children and obesity, sedentary lifestyles, people aren't up and about like they used to. It's interesting, the dynamic there, of possibly a healthier generation coming in, but wanting or needing more services anyway.

Wetzel: Well, along those lines anyway, too, is, with medical technology you have today, a lot of the residents we're seeing now, more and more have a higher acuity level. They require more skilled care, which costs more money. We're seeing more and more of that.

Altomare: When you look at home care, you think about who goes home on home care now. We have had patients in the last year that have come home on full vents, the machinery and the technology. Their family wanted them to come home. And they lived for months with a vent in their home. It was unheard of 10 years ago; it could never have happened.

Heintzelman: It would have required three, four people in the hospital.

Altomare: Technology is just amazing now. To be able to go home like that. And that's where the change with the nursing home was. The government made a real issue of nursing homes. They really were trying to shift nursing homes from "sit you in a bed to die," to "Well, you go home and do that, and we can probably do it just as well, because we can give you all the technology you would have gotten anyway." And now we shift the money away and you become assisted living. Look at every nursing home you run across now. Yours is a perfect example; how it's morphed over the years into what it is now. And even Mountain View Manor is no longer the manor. It's now an assisted-living wing. It's a whole concept of how things have changed. It's what people wanted.

Bradley: It's rehabilitation.

Altomare: People would kill to get into Mountain View Manor 10 years ago. It was full, and you had to know a politician to get in, just to lay in a bed. And let's face it; it didn't have the best reputation in the world, but it was a place, because there was nothing else you could do. There was no support for you anywhere else.

Stout: I bet the baby boomers are going to offer a great window for health-care reform because they know what they want, they ask questions. I see it right now. Our organization is really open to the baby boomers because they're going to seek out alternative services. They don't want to take drugs. They want to stay younger longer; they want to stay fit. They're into their bodies. "I have an ache in my ankle, is this going to affect me in my 60s and 70s? I want to know and I want to take care of that know and I want to access whoever's going to give me the result." The baby boomers are willing to do what they need to do. So, it's a great window of opportunity to take this on and reform health care back to the constituent or the patient or the person taking on self-responsibility for their health and well being. So this, I feel, is a great chance.

Mathias: And legislation can be improved. I mean, Medicare has been improved, largely, over time. Social Security was improved from the original bill that was passed. Moving forward is what we need to do.

Heintzelman: One other main topic I wanted to throw out: If we're sitting here five years from now, could there be an issue that we're not talking about today that could be going to be present then? Or will there just be a new manifestation of something we've already discussed today?

Altomare: That's a great question.

Mathias: Going from what Mary said: I mean, the hope that we improve education and improve technology and what technology is doing is phenomenal. I've been reading these articles about amputees and how they like their artificial limbs better than what they had before. I mean it's pretty phenomenal to think about the kind of changes, improvements in technology.

Heintzelman: We touched on that;, just the amazing things that are happening today. From things like that to being able to take a ventilator home, and so, there are great things happening. People are living longer. There are definitely some positives.

Mathias: And if you have a good preventative care program, maybe these children that are being dragged to McDonald's, their parents are understanding more about how much better they're feeling because they're getting health care. The talk can be positive.

Heintzelman: You also mentioned the notion that legislation can be improved. And let's say that it does pass within the next year or so; are you saying that those tweaks could come, not waiting for another generation, but within a short time frame?

Mathias: I think everyone around the room could talk about bills that are in the works to improve these professions' lives. I know that I've talked to each of these industries about things that are in the works, too. So, sure, absolutely, that's how it's all set up.

Altomare: The given here is that we have the greatest health care in the world. We do. I mean, we don't want to lose sight of that. The problem now is we're trying to figure out how to give everybody the same access to it. That's really what it boils down to: How does everybody benefit from it?

Harlow: I think where the conflict comes in, really, though, is between the concept of market justice and social justice. And I think that's what Warren's talking about. In a market system, there are winners and losers. People will have it, people won't. And are we transitioning from that to more of a social system where everybody has it? And that's where I think you see some of the conflict between political parties, between individuals, between providers and everything. There are those who believe in the market system and believe that should ultimately determine what's provided, what's the cost. It's winners and losers. There will be people that have better than others, versus a system where the playing field's level. And everybody has their own philosophy on that, wrong, right or indifferent. … So can you balance those two between the social good and still having health care as a free market system? That's where I think we'll continue to see tussles.

Heintzelman: That may be forever, because that's a really fundamental, philosophical, emotional divide there of an inalienable right. Because of this animal we created, it's now applying that conflict to something as critical as health.

Mathias: And it is a democratic process; that's the beauty of it.

Prentiss: Does it go the same direction as the auto industry? At some point, is there a bailout needed?

Altomare: No. I never see that happening, I don't. … Again, with special interest groups and the money being passed around and the lobbyists and all, you lost sight of what it is you're doing, because you don't see us anymore. You see them. And man, they're private industry. They're just as wrong about it. When you have in home health, you have Family Home Medical in Mount Carmel. Then you also have Gentiva and Amasis, the two largest corporations in the country for home care, who are making 18 percent profit. You don't want them to come to your house, because the same visit that I'm making and the same visit they're making are wildly different. But my congressman doesn't hear me because I'm not there.

Heintzelman: It certainly ties into the way of the world, if you will, or the function of government.

Prentiss: We've run into this with, in particular, with oxygen. Somebody in the government has a real thorn in their side about respiratory. With Medicare, they've continuously cut the reimbursement with that every year. We are down right now to, I think the reimbursement rate is $173 and some cents to take care of an oxygen patient. Well, Medicare came in and they decided they're capping it after 36 months. After 36 months, for the next two years, I do not get a cent. I still have to take care of that patient. Now this is what I've run into: I have a lady in Florida that moved up to Pennsylvania. She had six months left on her cap. Nobody would pick her up. I did, but nobody would service this poor woman. Where's the welfare and the care of the patient when you make a decision like that?

Heintzelman: I thought we'd just go around the table quickly, a yes or no: Would you rather see this legislation pass with its flaws, with its inherent compromises, or would you rather not see it? Mary?

Stout: No.

Heintzelman: I think I know Tom's but, for the record?

Harlow: (shakes head no).

Wetzel: (shakes head no).

Prentiss: No.

Heintzelman: Warren?

Warren: No.

Bradley: No. I think it needs improvement.

Mathias: No. I'd have to see the bill. And I'd have to wait for the congressman.

Heintzelman: And I'm not sure you're in quite the same position.

Harlow: I don't want to speak for everybody, but I think there is consensus: Yes, we need reform. What we're seeing now is not, from the proprietor perspective, real reform. So, I don't think anybody is saying not that we don't need it. (Nods of agreement.)

Mathias: It's hard for me not to jump in and tell you what Congressman Carney is doing for rural providers, because there's good stuff in the bill. He's fought very hard to improve reimbursement rates for rural providers, and we've got some good incentives to get general health practitioner education in more rural doctors. There's those kinds of things in the bill that not everybody needs to know about, but it is one of those ... it's about 20 pages in the bill.

Heintzelman: Well, if anyone deserves a last word today, maybe it's you. I don't think you were beat up too much, but I know it ended up a lot of focus coming at you, and that's good. And that's why I was so happy you could come today and be part of it. … Did we miss anything major?

Harlow: Andy, maybe to answer your earlier question about the future. And again, I certainly don't have a crystal ball or any more extraordinary insight, but I think history is a lesson, in many respects. And I think if you looked back, and it was kind of touched on earlier, if you looked back 15, 20 years ago how health care was, think of something simple like cataract surgery. The patient was in the hospital three or four days. Now they come in, they're in the hospital maybe two to three hours. And I think, over the next five to 10 years, we're going to see a similar transformation within health care. I think we have to - back to Susan's point about the cost curve - because we'll go bankrupt as a country if we don't. I would tell you from the hospital industry, unfortunately, what I see in the next five to 10 years is most of your hospital in-patient care will be delivered by large regional centers. People will travel, which is unfortunate. But I believe that as we try to shrink that cost curve, there will be people who will no longer be able to sustain a financial model made in small community hospitals. There will be some, but I think there's tremendous pressure, and obviously I'm just speaking from the hospital industry. I think there's tremendous pressure on all small community hospitals today. And I don't think they'll survive. It's unfortunate to say that. I would just ask that you be cautious, because I don't want people to be alarmed. I just think that's the reality, and I think you can see some of that developing already within Pennsylvania. Take the western part of the state - Pittsburgh University Medical Center is a behemoth, and moving east into Johnstown-Bedford. If you look at Lehigh Valley. Large systems will have the scale and the resources to be able to survive and do the things they need to do in that different environment. I mean, right, wrong or indifferent, Geisinger is the same way, with the northeast and Danville, moving out to State College. I think you're starting to see more of a regional presence.

Mathias: Specialty care. I mean, for me ... give me Evangelical Community Hospital if I'm hurt, every time.

Harlow: I would tell you, I can see the Evangelical Hospital not being the same type of organization as they are today. I think what you may find in the small communities, you'll have primary-care physicians. You may do some ambulatory surgery and some diagnostics, so people don't have to travel for simple blood tests, but if you need in-patient care, or things that require overnight stay, I think people will end up traveling for that. I think there will be a lot more that will be done out-patient. And I think this maybe bodes well for people in Warren's business, because I think eventually they're going to try to push more back to not having hospital stays, but people treated in the home. The technology's there. You guys have it now with the monitoring, where you can do a lot more than you could two, three, five years ago. So that's just the hospital perspective. I hope I'm wrong, but I think you're starting to see some of that, and the financial dynamics will just almost make that a necessity, that you're just going to have these large institutions.

Heintzelman: OK. Again, we didn't solve the problem. We didn't come anywhere close to that, I'm sure, but I do appreciate your input. I think it'll be interesting for people to get this perspective.