State's health care changes called effective
Photo: Lori Van Buren
Paul Milton, chief executive of Ellis Medicine, says the city and neighboring communities have benefited from medical services that would not have been possible a decade ago, when three of the facilities he oversees were independent and struggling to stay afloat.
Had Ellis, St. Clare’s and Bellevue Woman’s hospitals not consolidated under a legislative mandate driven by a state panel known as the Berger Commission, Milton said there would not have been funds for Ellis Medicine’s $20 million Clifton Park medical campus, $70 million emergency department, or the $19.4 million Center for Surgical & Interventional Medicine, still in progress.
“The Berger Commission was really a gift to this community,” Milton said.
At the time it was happening, however, many disagreed. Some still do.
In fact, it’s tough to measure the effects of the Berger Commission — so called after its chairman, Stephen Berger, but more formally the New York State Commission on Healthcare Facilities for the 21st Century. To know whether it was successful, you’d need something akin to the angel Clarence in “It’s a Wonderful Life” — some mystical way to see if continuing turbulence in the health care industry would have been worse without it.
State support of hospitals continues
Leaders of the Berger Commission estimated in 2006 that implementing the panel’s recommendations for facility closings and mergers would save the state $800 million, less than 2 percent of what was then a $45 billion Medicaid budget.
There’s no way to verify those savings, as Medicaid spending continued to rise to about $63 billion in the last fiscal year for various reasons, including medical cost hikes and growth in the number of New Yorkers covered by the government insurance program over the decade, from about 4.7 million in 2006 to about 6.1 million in 2016.
The state spent $805 million to implement the Berger Commission recommendations across New York, including $83 million to hospitals in Schenectady County. According to the state Health Department, that spending helped create efficiencies in the state’s health care system.
“(T)he Berger Commission’s objective to better align the state’s health care system with the needs of the community did lead to the improved delivery of health care at lower costs,” the state Health Department said in a statement.
The state has continued to provide funds to assist hospitals in transitioning to emerging payment schemes that require them to reduce hospital stays. The shift requires health systems to keep people healthier by managing chronic conditions among those most at risk of landing in the hospital. Under the current system, keeping patients out of their own facilities would make hospitals go broke.
New York in March awarded $1.2 billion to hospitals for capital projects related to this transition in care. The money dovetails with a $7 billion program for non-capital hospital investments, funded through a federal waiver.
More than two dozen hospitals statewide continue to struggle, nonetheless. New York provides those considered essential in their communities with funding assistance. For the fiscal year ended March 31, the total was $333 million.
— Claire Hughes
The hospital closures and mergers it mandated were aimed at reducing the cost of medical care by eliminating waste in the form of excess hospital beds and duplicated services. But they were not implemented in a vacuum. Market forces, including the continuing rise in prescription drug and other medical costs, the Affordable Care Act’s impact on insurance coverage and further government reforms that require radical changes in the way doctors and hospitals provide care and get paid, have also changed the health care landscape.
“It’s not as if Berger happened 10 years ago and that was it,” said Dr. John Rugge, a Glens Falls primary care doctor who sits on the state’s Public Health and Health Planning Council. “It was the beginning of the process, or the middle of it.”
As that process has advanced and hospitals face a new emphasis on community well-being and payments aimed at rewarding value rather than volume, the state has continued to invest billions to support the institutions in the transition.
Yet industry observers say the commission’s tough-to-swallow prescriptions, including nine hospital closures and 48 other reconfigurations statewide, were the right remedy at the time for what the advisory panel termed “a system in crisis.” Berger jump-started a consolidation trend that may have happened anyway, but in a less coordinated, messier and perhaps harmful way, as hospitals essential to their communities went under. It foresaw the departure from hospital-centered medicine and recommended steps forward.
“The commission started stuff happening,” said Stephen Berger, an investment banker whose previous public sector experience includes helping steer New York City out of bankruptcy.
The commission was a nonpartisan panel created by Gov. George Pataki and the state Legislature to review New York’s hospitals and nursing homes. In late 2006, it concluded that excess capacity was fueling overblown costs. When hospitals have beds to fill, unnecessary admissions go up. And hospitals in direct competition with one another spend vast sums to duplicate services and equipment, like pricey MRI machines or cardiac catheterization labs that are available across town. Six advisory committees examined the medical landscape in their areas. In the Capital Region, Schenectady became ground zero for the commission’s recommendations.
Without some intervention, the committee said, further competition among three anemic hospitals in the county would erode care and require an infusion of cash, likely from the state. Over the period 1999-2003, Ellis, St. Clare’s and Bellevue had operating losses ranging from 2.6 percent to 8.4 percent of revenues.
Today, there seems to be some logic in the setup of entities that operate under the umbrella of Ellis Medicine. Ellis Hospital, on Nott Street, has the emergency room and advanced inpatient care. The site of the former St. Clare’s Hospital is now the McClellan Street Health Center, an outpatient campus, and the renamed Bellevue Woman’s Center remains a destination for services like maternity, ob/gyn and breast care.
In fact, St. Peter’s Health Partners several years later followed a similar model for its voluntary merger of facilities in three Capital Region counties and its recent reconfiguration of hospitals in Troy.
James K. Reed, St. Peter’s CEO and a member of the Berger Commission’s Capital Region advisory committee, said both St. Peter’s officials and the Berger Commission were responding to changes in the industry, including less need for acute care beds and a higher demand for outpatient procedures.
“Those forces would have been in play with or without Berger,” Reed said. “Having Berger there, though, was a graphic example that we were interpreting the forces correctly.”
Not everyone interpreted the environment the way health care experts did. The transition in Schenectady was rocky. There were cries of despair and finger-pointing, public protests and petition-signing.
County residents, emotional over the potential closure of familiar institutions where they’d had their babies and saw grandparents through their last days, were pitted against each other in campaigns to keep one or another institution open. A cascade of financial woes facing St. Clare’s prompted its earlier-than-expected closure and thrust rapid transformation on Ellis. The state ended up chipping in more than $50 million to fund St. Clare’s employee pensions and cover other debt, part of a total $83 million provided to the Schenectady County hospitals to help with the transition.
But even early on, there were signs that the “forced marriage” of hospitals was the right thing to do, said Milton, who became Ellis Medicine’s chief operating officer in 2008, as hospital operating licenses were being transferred from St. Clare’s and Bellevue to Ellis. By reducing duplication, particularly in administrative costs, the three hospitals saw a $16 million swing in the right direction in a two-year period — from a combined operating loss of about $8 million in 2006 to an operating surplus of the same amount after coming together in 2008.
That income swing could not be sustained in the face of other factors, notably rising medical costs and tightening payments from government insurers. The Schenectady health system has since maintained operating surpluses ranging from 0.3 percent to just over 2 percent of revenues. Yet Milton said a single health care organization in Schenectady County is better positioned to withstand the next wave of belt-tightening reforms than three entities would be.
“We have a consolidated and unified medical community,” Milton said.
Still, some Schenectady County residents see that unity as a net loss, nearly a decade later. They miss the 166-bed St. Clare’s, a Catholic hospital that Connie Ciervo said had a cozier, more caring feel than Ellis, which has 368 beds.
Eight years ago, Ciervo worked to keep St. Clare’s open as head of the 200-member Schenectady County Citizens for Hospital Choice. She was dissatisfied with the care her parents received at Ellis Hospital, as each battled cancer, not long after the hospitals merged.
“When your family member was at St. Clare’s, you could leave the hospital, knowing they would get good care,” Ciervo said. “At Ellis, it’s the opposite.”
Stephen Berger and David Sandman, who was the commission’s executive director, recalled similar sentiments throughout the state as the Berger recommendations were implemented.
“Everyone was for it, except if it was their district or their hospital,” Sandman said.
In addition to emotional attachments to a local hospital, smaller communities especially were loathe to shutter a major employer, Berger said.
But the bigger-picture problem, Berger said, is that hospitals — the costliest of medical facilities to run — no longer need to be at the center of health care. Americans, however, have been conditioned since World War II to see them that way.
Though hospital closings were the focus of public response to the Berger report, the commission’s sweeping policy recommendations also included a comprehensive review of medical payments, a push to insure more New Yorkers and development of “hybrid” facilities between hospitals and primary care centers. Today, payments are being addressed in state reforms that seek to base fees on quality rather than number of procedures, millions more New Yorkers have insurance coverage through the Affordable Care Act, and Capital Region residents are accustomed to “new” venues for medical treatment, including urgent care centers and medical campuses like Ellis’ Clifton Park facility, with everything but an emergency room. “Somehow we had the right crystal ball,” Sandman said.
The consolidation and affiliation of hospitals that the Berger Commission accelerated has also continued. In the Capital Region, that’s been most visible with the merger of St. Peter’s Health Partners and in partnerships formed to address the aim of improving “population health” by reducing chronic disease in communities. Albany Medical Center has affiliated with Saratoga and Columbia Memorial hospitals with that purpose.
But a lack of competition brings its own problems, as highlighted in a report released last month by the New York State Health Foundation, where Sandman is now chief executive. The report showed that hospital prices were tied not to quality but to market power.
Of equal concern to Sandman is the fact that more than two dozen hospitals statewide are at the brink of failure and dependent on state assistance to the tune of $333 million in the fiscal year that ended March 31, according to the state Health Department. Among them are a number downstate, including several in Brooklyn, as well as those in remote locations, like Moses-Ludington Hospital in Ticonderoga.
The need to prop up failing institutions was one of problems that prompted creation of the Berger Commission in the first place.
“We’ve gone back to keeping some of these hospitals alive,” he said.
Milton suggested there might be need for a “Berger 2,” though no one interviewed for this article thought it would happen, given the political challenges of authorizing such a panel and garnering public support.
Even without it, more hospital consolidations may be necessary for health systems like Ellis to thrive, as payments from Medicare and Medicaid continue to shrink, with rewards for keeping patients well, Milton said. The Schenectady-based health system’s next partner may not be a Capital Region organization, Milton said. Ellis will look to find health systems that have developed methods for surviving in this decade’s brave new health care world.
“Geography is an important component,” he said, “but not the only component.”
firstname.lastname@example.org • 518-454-5417 • @hughesclaire
Source: Times Union
State's health care changes called effective