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Healthcare Reform and What It Will Mean for Clinical Engineering

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As the impact of healthcare reform on the U.S. delivery system comes into focus, there is little doubt that it is a “game changer” for clinical engineering and biomedical equipment technology. Carol …

As the impact of healthcare reform on the U.S. delivery system comes into focus, there is little doubt that it is a “game changer” for clinical engineering and biomedical equipment technology. Carol will describe and discuss the future of the CE and BMET professions under new regulations and a new payment system. She will address why medical devices will cost much more, why equipment must have longer life cycles, why CEs and BMETs will and must have more involvement in IT-related activities, how CEs’ and BMETs’ responsibilities in regulatory compliance will expand and how you can prepare for this new environment.



About Carol Davis-Smith, CCE


Career Summary


Carol Davis-Smith is a Director in Premier’s Consulting Solution Division with responsibility for the development and deployment of capital lifecycle management processes and tools to Premier staff and owners.


Education and Affiliations


Ms. Davis-Smith received a B.S. in bioengineering technology

from the University of Dayton and an M.S. in engineering from the University of Arizona. She is a certified clinical engineer and a member of the Association for the Advancement of Medical Instrumentation (AAMI). Over the past 20 years, she has presented and published papers on a variety of clinical engineering and capital contracting topics. In 2009, Ms. Davis-Smith received the AAMI Clinical Engineering Achievement Award.


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  • 1. Healthcare Reform andWhat It Will Mean for Clinical Engineering Carol E. Davis-Smith, CCE Director, Premier Performance Partners The Premier healthcare alliance Intermountain Clinical Instrumentation Society Salt Lake City, UT November 3, 2011
  • 2. “Unsustainable trends tend not to be sustained” ~ Herbert Stein Economist & Presidential AdvisorSTATE OFHEALTHCARE 1
  • 3. National Health Expenditures per Capita National Health Expenditures per Capita and Their Share $9,000 of Gross Domestic Product, 1960-2009 $8,086 $7,845 $8,000 $7,561 $7,198 $6,827 $7,000 $6,458 $6,098 $6,000 $5,682 $5,240$ In Billions $4,878 $5,000 $4,000 $2,853 $3,000 $2,000 $1,110 $1,000 $356 $147 $- 1960 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NHE as Share of GDP 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6% Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://w w w .cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). 2
  • 4. United States to Other Country ComparisonHealth Expenditures Per Capita and Life Expectancy Data submitted to the Organisation for Economic Co-operation and Development U.S. ranks highest in cost per capita, at nearly 2.5 times the average, and ranks 20th in life expectancy, 1.2 years lower than the average. Total Health Expenditures Per Capita and Years Life Expectancy, 2008 $8,000 84 U.S.= $7,538 Life Expectancy (yrs) $7,000 82 USD Purchasing Power Parity Years Life Expectancy $6,000 80 $5,000 78 $4,000 76 OECD= $3,010 $3,000 74 $2,000 72 $1,000 70 $0 68 Source: Organisation for Economic Co-operation and Development (OECD) Statistics 3
  • 5. Additional Multinational Comparison June 2010 a study by the Commonwealth Fund United States ranks last Safe Care Efficiency Access Equity Healthy Lives CostsSource: The Commonwealth Fund, June, 2010 4
  • 6. Healthcare Spending Concentration Concentration of Health Care Spending in the U.S. Population, 2007 97.0% Nearly 50% 100% of U.S. health care spendingPercent of Total Health Care Spending 90% is concentrated in 81.2% 80% 74.6% 5% of the population 70% 65.2% 60% 50% 49.5% 97% 40% of U.S. healthcare spending is 30% concentrated in 22.9% 20% 50% of the population 10% 3.0% 0% Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom 50% (≥$44,482) (≥$15,806) (≥$8,716) (≥$5,798) (≥$4,064) (≥$786) (<$786) Percent of Population, Ranked by Health Care Spending Note: Dollar amounts in parentheses are the annual expenses per person in each percentile. Population is the civilian noninstitutionalized population, including those without any health care spending. Health care spending is total payments from all sources (including direct payments from individuals, private insurance, Medicare, Medicaid, and miscellaneous other sources) to hospitals, physicians, other providers (including dental care), and pharmacies; health insurance premiums are not included. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2007. 5
  • 7. The Uninsured Average Percent Uninsured by State, 2008 – 2009 US Average, 2009 = 16.7% RI 12.1% DE 12.2% DC 11.2% < 10.0% 10.0% - 14.9% 15.0% - 19.9% 20.0%Source: Kaiser statehealthfacts.org - Urban Institute and Kaiser Commission on Medicaid and the Uninsured estimates based on the Census Bureaus March2009 and 2010 Current Population Survey (CPS: Annual Social and Economic Supplements). 6
  • 8. Healthcare ReformAre we confused yet? How „bout now? 7
  • 9. Healthcare Reform Patient Protection and Affordable Care ActPublic Law No: 111-148 – Patient Protection and Affordable Care Act 8
  • 10. Payment Cuts • Approximately $148 billion in Medicare reimbursement cuts over 10 years. • Market basket update reductions and productivity adjustments begin in FY2012. • Medicare and Medicaid DSH cuts begin in FY2014. • Independent Payment Advisory Board to recommend cost reductions starting in 2020 9
  • 11. Aligning Payment with Outcomes • Value-based purchasing (VBP) to tie 1% of Medicare reimbursement to performance on quality and outcomes measures (scales to 2% in 2017); AMI, heart failure, pneumonia, SCIP, patient satisfaction. • Readmissions policy to cut up to 3% of all inpatient Medicare reimbursement based on excess readmissions (cuts payments by $7.1 billion over 10 years). Initially AMI, CHF, PN; expands to COPD, CABG, PTCA and other vascular in 2015 • Reduced Medicare payments by 1% for hospitals in the highest quartile of hospital-acquired infections starting in 2015 (cuts payments by $1.5 billion over 10 years). HAIs, CL-BSI, Cdiff, MRSA, CA-UTI, VAP, SSI 10
  • 12. Delivery System Reforms• Accountable Care Organizations (ACOs) – Department of Health and Human Services (HHS) to establish shared savings program that promotes accountability and encourages high quality and efficient service delivery – Program must be in place by Jan 1, 2012 – Risk for a population’s health – CMS may give preference to ACOs already contracting with the private market• Bundled Payments – Acute care, physicians, post-acute – Voluntary Medicare pilot bundled no later than 2013 – Episode of care: 3 days prior to admission and 30 days following patient discharge for 10 conditions 11
  • 13. Healthcare ReformPatient Protection and Affordable Care Act Timeline 12
  • 14. The Pillars of Success in the Era of Reform Address the Transforming Align With Optimize Value the System Physicians Revenue Equation of Care Clinical Integration Reduce variability & Clinical Excellence via employment & resource virtual models consumption Revenue cycle Medical Staff Reduce Service Excellence Education readmissions Service portfolio Physician lead PI Operational teams to address Lower LOS Effectiveness VBP At the lowest cost Pricing strategy EMR Implementation Care continuum position Accountability for Care Move from transaction- Become “accountable” for Coordinate episodes of oriented to outcome- outcomes and costs for a care and providers oriented population 13
  • 15. Accountable Care OrganizationsCMS proposed rule – March 31, 2011What is an ACO?Accountable Care Organizations (ACOs), while still evolving, are expected toconnect groups of providers who are willing and capable of acceptingaccountability for the total cost and quality of care for a defined population. -- Premier healthcare alliance “A group of providers and suppliers of services (e.g. hospitals, physicians and others involved in patient care) that will Payer Partners work together to coordinate care for the ► Insurers Medicare fee-for-service beneficiaries they serve.” ► CMS -- CMS proposed rule definition ► Employers 14
  • 16. Complete view of accountable care AC Leadership addresses the strategic leadership and operational infrastructure necessary to support a successful High Value Network delivers AC that is organized around Triple ACO CEO provider networks that will Aim goals.optimize care delivery within and across the continuum and COO CFO CMO CNO CQOensure that care is coordinated. Health Home redesigns primary care to create a new PCP model Population Health Data Managementthat provides people centric care as facilitates the flow and analysis of well as care guidance to the clinical, financial, and patient related data practice population. and information across all components of the AC system. People Centered Foundationwill ensure that the first principle for Payer Partnerships - focused on theAC design and ongoing operations is framework necessary for an ACO to to enable all people within the AC develop and maintain mutuallycommunity to meet their needs and advantageous relationships with AC desires for good health. Payer Partners payer partners (plans and employers). 15
  • 17. Models of Accountable Care Premier healthcare alliance – Accountable Care Implementation Collaborative “Early Adopters”As of 1/27/2011 WA MT ND ME MN OR VT NH ID WI MA SD NY WY MI RI IA PA CT NV NE NJ OH IL IN DE UT CO WV MD KS MO MO VA KY DC CA NC AZ TN OK AR SC NM MS AL GA TX LA FL 16
  • 18. Models of Accountable Care Premier healthcare alliance – Accountable Care Readiness Collaborative “Building for the Future”As of 1/27/2011 WA MT ND ME MN OR VT NH ID SD WI MA NY WY MI RI IA PA CT NV NE IL NJ IN OH UT DE CO WV DC MD CA KS MO VA KY NC AZ NM TN OK AR SC MS AL GA TX LA FL 17
  • 19. Healthcare Reform In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed. ~ Charles Darwinwww.brainyquote.com/quotes/authors/c/charles_darwin.htmlPhoto: Carol Davis-Smith, CCE 18
  • 20. What it means for Clinical Engineering Hospital & Health System Administrators Physicians Nurses Clinical Technologists/Technicians Therapists IT Engineers/Technicians Facilities Engineers/Technicians And yes, Clinical Engineers / Biomedical Equipment Technicians 19
  • 21. A System of SystemsHuman anatomy & physiology – A system of systems – Independent actions resulting in interdependent reactions Image from http://needfornurse.wordpress.com/2010/03/16/all-about-human-anatomy-and-physiology/ 20
  • 22. A System of SystemsHealth care – A system of systems – Independent actions resulting in interdependent reactions • Federal & Local government and regulatory bodies • Public & Private payers • Acute & Non-acute care centers • Clinicians & Non-clinician caregivers • Ancillary support services • Medical supply & device industry • Patients & Families Image from http://partnersinexcellenceblog.com 21
  • 23. Clinical Engineering & Technology ManagementAppropriate application of technology• Preventive care (e.g. prenatal care, screening exams)• Primary care• Acute care• Outpatient care (e.g. surgery centers, rehab centers)• Long-term care © 2011 Premier, Inc A Systems Approach to medical technology and healthcare delivery 22
  • 24. The 5 “rights”... of Medication Mgmt ... Right patient ... Right time and frequency of administration ... Right dose ... Right route of administration ... Right drug... of Technology Mgmt ... Technology is used in the right PLACE, at the right TIME, in the right MANNER, with the right PEOPLE, COMMUNICATING in the right way. Just because we can, doesn’t mean we should. 23
  • 25. Technology‟s Impact – financially & operationally Old Technologies Old Applications New Technologies New Applications Introduction of Medical Devices and Rise of Healthcare Spending 20% Drug-eluting stents 18% Healthcare Spending as a % of GDP Neuro 16% Less-invasive 14% surgery ICDs 12% MRIs Biventricular pacing 10% Hips and knees Insulin pumps 8% Stents Open-heart 6% Prefabricated Surgery Balloon angioplasty 4% Bandages Sutures Pacers 2% Kidney 0% dialysis 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2009 Source: Adapted from Futurescan, Healthcare Trends and Implications, 2007-2012; % GDP Data From CMS, Office of the Actuary, January 2011. 24
  • 26. Electronic Health Record Incentive Program CMS/HHS final rule – July 28, 2010 Implementation of electronic medical records (EMR) and electronic health records (EHR) EMR = The electronic record of health-related information on an individual that is created, gathered, managed, and consulted by licensed clinicians and staff from a single organization who are involved in the individual’s health and care. EHR = The aggregated electronic record of health- related information on an individual that is created and gathered cumulatively across more than one health care organization and is managed and consulted by licensed clinicians and staff involved in the individual’s health and care.National Health Alliance for Health Information Technology (NAHIT) – Organization disbanded in August 2009, stating “mission accomplished” as HIT had moved to the forefront to reinvent andreinvigorate the US health system. 25
  • 27. Electronic Health Record Incentive Program CMS/HHS final rule – July 28, 2010  STAGE 1– Data Capture & Sharing, effective 2011 • STAGE 2 – Advanced Clinical Processes, to be published in 2013 • STAGE 3 – Improved Outcomes, to be published in 2015CMS / HHS Electronic Health Record Incentive Program – Final Rule Federal Register / Vol 75, No 144 / Wednesday, July 28, 2010 / Rules and Regulations 26
  • 28. Interoperability:A popular buzz word with many interpretations• A good definition for interoperability is…“the ability of a system or a product to work with other systems or products without special effort on the part of the customer.” -- Bridget Moorman, CCE (Bmoorman Consulting, LLC)• Successful implementation of interoperability requires defined objectives and measurable goals as well as a complete and well maintained physical inventory of the applicable equipment items to include networking, device driver and infrastructure environment characteristics for each device. FACILITY: Facility Excellent Good Avg Poor None A 0.00% 100.00% 0.00% 0.00% B 100.00% 0.00% 0.00% 0.00% C 0.00% 12.86% 57.14% 30.00% D 13.43% 28.89% 15.64% 42.04% Grand Total System 12.22% 26.06% 14.80% 46.92% DEVICE CATEGORY: Device Excellent Good Avg Poor None AED 0.00% 37.35% 46.99% 15.66% ALARM/CENTRL/PATIENT 4.00% 12.00% 84.00% 0.00% ALARM/REMOTE/PATIENT 1.46% 94.89% 2.55% 1.09% ANALYZER/BLOOD 0.00% 1.64% 10.66% 87.70% ANALYZER/BREATH 0.00% 0.00% 100.00% 0.00% ANALYZER/GAS/ANESTH 0.00% 0.00% 0.00% 100.00% ANESTHESIA 98.15% 0.00% 0.00% 1.85% 27
  • 29. How can you find out how Interoperable you are?
  • 30. Medical Device Interoperability:Standards Promulgation Organizations• The Continua Alliance – Focuses on personal health and wellness market • Use of IEEE 11073 PHD standards; IHE-PCD-01 for WAN• Integrating the Healthcare Environment – Patient Care Devices Domain (IHE-PCD) • Use of IEEE 11073 standards; several profiles defined in healthcare environment using medical devices
  • 31. IEC 80001 – October 2010 IEC 80001 - Application of risk management for IT-networks incorporating medical devices - Part 1: Roles, responsibilities and activities Consideration of the potential safety impacts in the design & implementation of IT-networks incorporating medical devices  AAMI 2011 annual conference educational sessions http://www.aami.org/meetings/aami2011/sessions.html  ANSI/AAMI/IEC 80001-1:2010 standard document http://www.aami.org/publications/ITHorizons/2010/18-20_StandardsRegs_Cooper.pdf  AAMI IT Horizons (2010) http://www.aami.org/publications/ITHorizons/2010/18-20_StandardsRegs_Cooper.pdf  AAMI IT Horizons (Fall 2011) 30
  • 32. Alarm Mgmt & Remote Alerts• Integrated communication via integrated communication devices• Data/Alarms distribution (e.g. mobile devices)• Closed-loop technology thenerdynurse.com © Vocera AAMI Medical Device Alarm Mgmt keepintech.com Summit sdnn.com http://www.aami.org/hott opics/alarms/index.htmlnewsitem.com -- Geisinger Health System AAMI LinkedIn discussion - Clinical alarms --- What are hospitals doing for primary and secondary alarm management ? And what role does CE/BMET have in it? Please share your experiences. 31
  • 33. Advancing (Disruptive)Technologies Everything is changing. Are you changing too? Mini MRI Utilizing nuclear magnetic resonance spectroscopy, German researchers have developed a magnet that could lead to a pocket-sized MRI machine. This technology could revolutionize medical testing and research in other The Skin Gun scientific fields.Dr Jorg Gerlach has developed a www.smartertechnology.com spray-on skin gun that operates much like an airbrush. Healthy Withings Blood Pressure Monitor stem cells from the victim’s skin The cuff connects to an iPhoneare combined with a solution and charge/sync port and the app gives thesprayed directly onto the wounds. BP and pulse rate. The app can also The new skin begins growing store readings to be compared over (healing) almost immediately, time and/or shared with a physician. eliminating the need to grow http://www.slashgear.com/witlings-sheets of skin prior to application. blood-pressure-monitors-plugs-into- http://www.slashgear.com/skin- your-iphone-05123278/ gun-is-star-wars-level-medicine- 02130324/#entrycontent 32
  • 34. Partnership for PatientsDepartment of Health & Human Services (HHS) initiative – April 12, 2011 Partnership for Patients is aimed at improving the quality, safety and affordability of healthcare for all Americans • At any given time, about 1 in 20 patients has an infection related to their hospital care. • On average, 1 in 7 Medicare beneficiaries is harmed in the course of their care, costing the government an estimated $4.4 billion annually • Nearly 1 in 5 Medicare patients discharged from the hospital is readmitted within 30 days – approx 2.6 million seniors at $26 billion annually HealthCare.gov Implementation Center – Special Programs – Partnership for Patients... ... http://www.ceoconversation.com/ 33
  • 35. Partnership for PatientsDepartment of Health & Human Services (HHS) initiative – April 12, 2011• Hospitals joining the partnership are asked to ... – Make achieving the harm and readmission goals a priority among senior leaders and the board of directors – Support clinicians, staff, patients and families in efforts to make care safer, improve communication and increase coordination by implementing proven systems and processes – Learn from and share successes with others• GOALS to achieve by the end of 2013: 1. Reduce preventable harm in hospitals by 40% • ~1.8 million fewer patient injuries • 60,000+ lives saved over 3 years 2. Reduce 30-day readmission rates by 20% • Preventable complications during a transition from one care setting to another • 1.6 million patients would recover without preventable complications• Over the next 10 years ... – Reduce costs to Medicare by ~$50 billion – Could provide billions more in Medicaid savings 34
  • 36. The C-Suite ... and all your other customers ... Communication is key “The mind of an executive is going in multiple directions simultaneously. They have to think about all of the stakeholders involved, not just one set.” --Tony Montagnolo, EVP/COO at ECRI Know Your Stuff • Prepare ... Then prepare for the unexpected • Know the benefits & challenges – technical, clinical, & business Know Your Audience • Tailor your presentation – language & interests Know Your Organization • Collaborate with other departments – healthcare is a team sport! • Exhibit leadership, not arrogance or indifference Know Your Finances • Know the financial impact • Leverage the expertise of your CFO and other Finance department resourcesAAMI News: August 2010, Vol 45, No 8 – Sharpen Skills Before Meeting C-Suite ... http://www.aami.org/publications/AAMINews/Aug2010/c.suite.html 35
  • 37. Healthcare Reform We can’t solve problems by using the same kind of thinking we used when we created them. ~ Albert Einstein http://www.brainyquote.com/quotes/authors/a/albert_einstein.htmlPhoto: Carol Davis-Smith, CCE 36
  • 38. Premier healthcare alliancewww.premierinc.comPremier Performance Partners Carol Davis-Smith, CCE - Director carol_davis-smith@premierinc.comSpecial thanks and acknowledgement to the following Premier staff members whoassisted with the development and delivery of this session.Brent Hardaway, FACHE, Vice President, Premier Performance PartnersSonia Greer, Sr. Consultant, Premier Performance PartnersPremier Advocacy Team (Washington, DC)Premier Corporate Communications Team (Charlotte, NC) 37