America spends $1.7 trillion a year on healthcare—about a third of that on hospital care. Our per-person healthcare costs are more than double those in other industrialized countries. But we still face shortages of physicians, nurses, medical technicians, rehabilitation therapists, and emergency rooms.
The strains on our medical system will only intensify. Beginning in 2011, 10,000 baby boomers a day will turn 65, and many will live into their eighties and nineties. Experts say we will have too few healthcare workers for too many patients.
Problems with our healthcare system were brought to light by a 1999 report from the Institute of Medicine—the medical-research arm of the National Academy of Sciences—that found up to 98,000 preventable hospital deaths each year. That, the report noted, is the equivalent of “a jumbo jet crashing every day.”
To shed light on the challenges facing healthcare, we talked to CEOs from two leading hospitals—Brian Gragnolati, president and CEO of Suburban Hospital in Bethesda, and Ken Kozloff, senior vice president for the Inova Health System and CEO of Inova Alexandria Hospital.
Is there one thing above all others that worries you?
Kozloff: What keeps me awake at night is getting the appropriate staff to care for our patients. The shortage of nurses nationwide is 150,000, and we’re not immune from this in the Washington area. We all scramble to fill nursing positions. And nursing schools don’t train nurses like they once did. When we hire nurses, we spend 15 to 20 weeks training them so they’ll have the necessary skills.
Gragnolati: It’s much the same with us. Right now our nurse vacancy rate is 10 percent. It’s very costly for hospitals to recruit and hire new nurses. The average age for registered nurses is midforties. This means we’re going to see many nurses retiring at the same time our need for them will dramatically increase.
And hospital nursing has become more stressful?
Gragnolati: Yes. Hospital patients are far sicker today because patients with less-serious medical problems are cared for on an outpatient basis. A floor nurse caring for five or six patients a few years ago may have had some who were not very ill. Today all the patients are seriously ill.
How do you deal with these issues?
Kozloff: Turnover is a major concern. Four years ago we hired a chief retention officer to keep in touch with our staff. We also put in an early-alert system so if someone is thinking of leaving, we get a team of people to see if we can do anything to retain them.
Is there a doctor shortage, too?
Gragnolati: A serious one for some subspecialties. We once had a glut of anesthesiologists. Guess what? Anesthesiology residency programs cut back on the number of people they trained, and now there are too few of them. Neurosurgeons and ICU [intensive care unit] intensivists are in short supply, and I think very soon primary-care doctors will be harder to find. Maryland ranks in the bottom 25 percent of all states for insurance reimbursement for physicians, yet our cost of living is the seventh highest in the country.
Kozloff: Another reason for shortages in subspecialties like neurosurgery is that doctors are getting out before retirement age because they’ve grown disenchanted with the nation’s medical system.
Is there competition among hospitals for doctors?
Gragnolati: Absolutely. And because of the economics, many hospitals in our region are creating group practices and employing physicians because that’s what we have to do to attract them.
What is the impact of the doctor shortages?
Gragnolati: Suburban is a major trauma center, so our doors are always open, and we need to have the right kind of doctors there. That’s why one of my priorities is to find ways to keep doctors from dropping out of the profession.
Have you ever had to close your emergency room and divert patients to other hospitals?
Gragnolati: Yes, we’ve had to “go on divert” at times because our ER reached capacity, and when that happens we are letting the community down. Because of our trauma and stroke centers, we’ve tried very hard to reduce our diversions by making sure we have enough staff, more monitors in place, and are discharging people expeditiously.
What’s pushing doctors out?
Gragnolati: I’ll give you an example. Our pathologists, a highly skilled group, were just given a fee-reimbursement schedule from a private insurer for the five most frequently performed biopsies. The fee barely covers the pathologists’ expenses.
How are doctors coping with the reimbursement situation?
Kozloff: Some of our internists and family practitioners are setting up what’s called a concierge service to get out of this reimbursement mess. They charge patients an annual rate of $1,500 or so, and for that patients may get an annual physical as well as immediate access to the doctor via e-mail or phone. For any other charges, the doctor gives patients an EOB [explanation of benefits] to make their own insurance claims.
Gragnolati: There are some doctors who simply don’t accept insurance anymore. I worry that this is creating an access problem for patients.
Is there a solution to the reimbursement dilemma?
Gragnolati: I don’t know if moving from an employer-based system to a single-payer government system is practical politically or from a business standpoint, but there clearly needs to be a unified health policy to set out how we as Americans take care of one another. We have about 46 million Americans with no health insurance. What gets lost in this debate is that these folks hold jobs, work hard every day, but don’t have access to healthcare insurance because their employers can’t afford to provide it.
Kozloff: We’re the only industrialized country that doesn’t have some kind of national health insurance, and I agree with Brian that the working poor are hurt most. Something has to change or we will see more unnecessary deaths, higher infant mortality, and other harmful consequences.
What do the uninsured do for their healthcare?
Kozloff: They go to emergency rooms because most of them don’t have a primary-care doctor. According to federal law, no one can be turned away from an emergency room because he or she can’t afford to pay. In 2005 Inova provided more than $75 million in uncompensated care. This is care for which we do not receive a dime.
And it doesn’t diminish the demand on ERs.
Gragnolati: No, ERs have become the healthcare system’s safety net. But we’re reaching a breaking point because we’ve had a big increase in demand at the same time ERs are closing around the country—more than 400 in the past ten years. And as more specialty hospitals emerge, they won’t have the same obligation to have an ER department, so we’ll lose even more.
Why don’t hospitals establish primary-care clinics? They could ease the burden on ERs and offer a cheaper way to deliver routine care.
Gragnolati: One reason is the affordability of it, especially for indigent care. Another is the competitive aspect. Historically, when hospitals sponsored primary-care clinics, private-practice doctors opposed them because they saw the hospital as a competitor. We recently sold our urgent-care center because of criticism from private doctors who didn’t like the idea of us competing with them. So there’s a balance you’re trying to strike. I think forming alliances with group practices, like we’re doing at Suburban, will ultimately be the way to go.
The United States has the highest healthcare costs in the world as a percentage of GNP—more than 50 percent higher than our closest competitor, Switzerland. Why is that?
Gragnolati: Our aging population accounts for some of it. I also think it’s because primary care isn’t working for millions of people, so they go to an ER, which is a very costly way to deliver care. There’s also a disconnect between what people think something costs because of insurance and what it actually costs. They are insulated from these costs and sometimes use services unnecessarily.
Kozloff: Technology is pushing up costs. We just bought a $5-million piece of equipment called Trilogy for our cancer center, which cost us only $3 million to build 15 years ago. Trilogy is a major advance because it irradiates cancer cells and spares healthy ones. Our new 64-slice CT scanner cost $2.5 million.
Gragnolati: And we have medications today that are phenomenal but cost a lot of money.
Are we in danger of developing medical technologies we won’t be able to afford?
Gragnolati: The escalation of technology is amazing. The quandary we face is that our reimbursement systems don’t necessarily pay for them, yet consumers expect us to have them. There’s a new, highly effective drug against sepsis, a systemic infection. Not every patient needs it, yet it’s become the standard of care. But the difference in cost between this drug and standard treatments is astronomical.
Kozloff: Consumers are demanding these new technologies, and now that big pharmaceutical companies market directly to patients, patients come to doctors holding an ad in their hands, asking for the latest, often very expensive, advance.
Gragnolati: We also get pressure from physicians to bring in the latest technology.
Is there technology competition among hospitals?
Gragnolati: When one hospital gets an advanced technology, all of us have to get it because patients will want it. So you get this arms race. Take MRI-guided robotic surgery. It replaces a heart valve in two minutes that would normally take a surgeon an hour. And you don’t have to crack open the chest or put the patient on bypass. You need to buy this robot to keep up with the competition, but you need a super-huge operating room and an MRI as well. The cost is mind-boggling.
An estimated 20 to 25 percent of healthcare spending is administrative costs. Why are they so high?
Gragnolati: Because the healthcare financing system is broken. Every health insurer has different reimbursement forms and requirements, and they are complicated. For the doctors and hospitals who actually deliver the healthcare, the amount of time and resources it takes just to get paid is phenomenal.
Kozloff: Some insurance companies also hire people and give them incentives to deny hospital and physician claims as well as the patients they supposedly serve. This just compounds the administrative burden.
The Institute of Medicine reported that hospital errors harm 1.5 million people every year and result in an additional healthcare cost of $3.5 billion. Why so many mistakes?
Gragnolati: Healthcare is inherently risky and complex with many opportunities for mistakes. For a long time as an industry we were not as clear about that as we could have been.
What are you doing to cut down on medical mistakes?
Gragnolati: When bad events happen, it is usually not because of one thing but multiple things that break down. We try to know when something goes wrong. That may sound like a very obvious thing, but I must tell you that you need to create an environment that encourages your staff to tell you when something goes wrong.
People in medicine are reluctant to report mistakes because we’re trained to be perfect. When we’re not, we think we’ve failed, and that can be hard to admit. We need processes and systems to analyze mistakes to prevent them from happening again. One of our objectives is to increase the number of reported errors because if we don’t know about them, we can’t correct them.
Kozloff: We knew people at our institutions were underreporting medical errors, and we brought in a company to help us look at it. The company knew little about healthcare, but it regulated nuclear sites around the country and had zero tolerance for errors.
What did they find?
Kozloff: That there are two major factors involved in hospital errors. As a result we established “red rules” to correct them. The first one is very basic—the ability to identify a patient. That may sound obvious, but in many instances when we started to do something medically for a patient, we realized we had the wrong one. Sometimes a patient switches beds, and this isn’t picked up immediately. We now require two identifiers to positively establish who the patient is before doing anything.
Kozloff: To verify the correct action or procedure before beginning treatment. When a patient comes in for any procedure, we have the patient verify what is to be done. For example, if the patient is having a knee replacement, we have the patient mark the knee that will undergo surgery. That’s a small example, but we are changing the entire culture of the way we run things in the hospital. One way we do this is by having “safety huddles” on every unit, something we didn’t do ten years ago.
According to the Institute of Medicine report, the most frequent causes of harm to hospital patients are medication errors. Studies find at least 5 percent of hospital patients experience them, and twice that many experience a near miss. What are you doing to prevent them?
Gragnolati: We employ people in our pharmacy who look at this from a systems viewpoint to eliminate errors. For example, we don’t store two drugs next to each other that sound or look alike. We also know certain things such as illegible handwriting and the use of abbreviations can cause mistakes. And zeroes at the end or beginning of dosage orders can be confusing for someone trying to decide where the decimal point is.
Can new information technology, which the healthcare industry has been slow to adopt, help prevent errors?
Gragnolati: I think information technology will drive a lot of patient-safety initiatives, but it is expensive. It will run into the multimillions for every hospital.
But couldn’t it also save money in the long run?
Gragnolati: Yes. I’ve been told if the banking industry handled ATM transactions the same way we handle healthcare transactions, the cost would be about $500 per ATM transaction. I don’t know whether that’s true, but it does point to the need for information technology in healthcare.
I was thinking when I was in Scotland not long ago that I could get money out of an ATM, but if I were in a hospital unconscious, they wouldn’t have a clue about my medical history.
Does anyone have a good IT system up and running?
Gragnolati: The Veterans Administration has really made major advances in information technology and quality of care over the past 15 years. It’s a story that isn’t well known, but it stands as a model of what IT can do.
I understand the VA’s electronic patient records allow a veteran to enter any VA hospital in the country and have his full medical record readily available. Where are you with IT?
Kozloff: We’re installing IT in many areas of our hospitals: computerized physician order entry (CPOE) that processes prescriptions through a computer system, electronic patient records, and the eICU, which I think raises the bar on the quality of care to a completely different level.
What does the eICU do?
Kozloff: It provides real-time readouts of ICU patients’ vital signs in all our Northern Virginia hospitals. This is fed to our eICU center in the Verizon building in Falls Church, where it is monitored by trained ICU nurses 24 hours a day. At night we also have a board-certified intensivist there.
How does it help patients?
Kozloff: The system, which was developed by ICU specialists at Johns Hopkins, has software that triggers alerts if a patient’s vital signs abruptly change, such as a drop in blood pressure. The eICU nurse can then activate a video camera in every ICU room to observe the patient and if needed alert the ICU staff on site.
Is eICU replacing floor nurses?
Kozloff: Not at all. We maintain the same number of ICU nurses as before and the same ratio of one nurse for two patients. The eICU provides another set of eyes and ears to monitor our sickest patients and have them attended to in the fastest time possible. It’s a great innovation.
How much does it cost?
Kozloff: Well over $2 million to install across Inova Health System.
Talk about computerized physician order entry.
Gragnolati: We have a CPOE system in part of our hospital. Only 5 percent of hospitals nationally have it. There’s a federal mandate for all hospitals to have it by 2010. It allows doctors to order prescriptions by computer, so it solves the handwriting problem. Also, bar codes on the medication can be matched to a bar code on the patient’s wristband to ensure the right medication is going to the right patient.
CPOE also has a medication-reconciliation program. For example, if you order a drug, but your patient has a lab finding that makes it incompatible, or you order a drug that is known to adversely interact with another drug the patient is taking, CPOE will catch this and alert the staff.
What impact is the Internet having on healthcare quality?
Kozloff: Posting performance information on the Internet will help drive out bad doctors and force hospitals to improve. It’s already happening in Minnesota, where hospitals post all their quality data as well as physician data on the Internet. They name names, and no one wants to be at the bottom of that list. Hospitals in this area have not gotten to this point yet, but in time they will, and I think that will be good for the consumer.
Gragnolati: Some of the information available on the Web is incredible, and you get a much better informed consumer coming into your hospital. The dilemma for many of our staff is they’re not used to patients demanding something because they’ve read about it on the Internet. I think it ultimately makes us better, but not all my colleagues share that feeling.
Suburban opened its new heart center in September. How is it going?
Gragnolati: Very well. We conducted a national search and attracted a large pool of highly qualified candidates in part because of our affiliation with the NIH cardiac program. We chose Dr. Keith Horvath, an acknowledged leader in valve repair, as our director, and the center is up and running.
Historically, the NIH had little connection with the area’s hospitals. Now that’s changed because of the collaboration with Suburban. How is it progressing?
Gragnolati: It continues to grow. We provide a unique resource for NIH’s intramural research program, and in turn it is enhancing our ability to care for our patients.
What kinds of collaborations do you have?
Gragnolati: It began in the cardiac area with cardiac imaging, and our stroke program’s research efforts are expanding. We need to get the state to realize stroke care is highly specialized, like trauma care in that you should go to a place that is fully prepared for it. We’re also working with the National Institute of Mental Health on addictions, and we’ve begun a relationship with the National Cancer Institute. We’re also working with NIH to see how we can use integrative-medicine therapies.
How will this benefit patients?
Gragnolati: Historically, to get into NIH, you had to be the sickest of the sick or have the most unusual illness, be a volunteer or a VIP. With the collaboration program we’re allowing a normal population to have access to these advanced therapies that would not otherwise be available.
How do the two cultures—practicing physicians and researchers—coexist?
Gragnolati: Initially the NIH affiliation threatened our private-practice doctors, but over time I think they’ve seen it benefit their patients. At our core we are still a community hospital, and we can’t forget where our roots are.