12 November 2009
California Edition
Calendar
November 16-18
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
OSHPD To Overhaul Review Process
Web-Based System Will Cut Construction Timelines
Often criticized for delays in approving
hospital construction projects, California’s
Office of Statewide Health Planning and
Development has begun an extensive
overhaul of its aging computer database.
OSHPD earlier this week selected San
Ramon-based Accela Inc. to create a Web-
based system that is expected to greatly
streamline the process to obtain approvals
for hospital construction. The system,
which will cost about $1.9 million to
install, is expected to be online by the
second half of 2010.
An OSHPD official says the current
system, a “hodgepodge” of computerized
and paper communications, could no
longer handle the volume of submissions
for construction projects.
“We were running $2 billion to $3
billion a year in terms of project workload.
Now we’re at $23 billion, and it’s no longer
robust enough to handle that volume,” says
Paul A. Coleman, OSHPD’s deputy director
for the facilities development division and
a licensed architect.
Moreover, OSHPD’s retrieval-based
computer system for managing construction
projects – which dates back to the early
1990s – had become fundamentally
unstable, according to Coleman. “When
you run identical queries, you get two
different answers, which makes it very
suspect,” he says.
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Much of the boom in hospital
construction stems from mandates to
seismically upgrade facilities, an
undertaking hospital officials estimate
could eventually cost $40 billion.
Managing such projects has been
particularly challenging for hospital
executives. Construction costs increased
66% between 2003 and 2006, according
to the California Hospital Association.
Hospital officials also say that OSHPD –
which conducts inspections and
approvals through virtually every phase
of a construction project – can drive up
the costs via delays of plan checks and
approvals. Coleman acknowledges that
plans and paperwork gets lost in the
mail, and changes are not always
correctly entered into its database,
creating contradictory data that
compounds delay.
Partly as a result, OSHPD’s average
approval time before construction can
begin is about 16 months, according to
Coleman. Some projects require an
approval process of two years or more
before work can begin.
Accela, which specializes in creating
interactive computer databases for
government agencies, will create a
paperless system that will allow OSHPD
officials and project managers to
Continued on Next Page
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In Brief
Cedars-Sinai Reports
More Radiation
Overexposure Victims
Cedars-Sinai Medical Center
disclosed earlier this week that 54
more victims had been discovered
to have been dosed with high levels
of radiation due to an improperly
calibrated CT brain perfusion
scanner.
The Los Angeles hospital
reported that at least 260 patients
have been dosed with radiation
levels up to eight times higher than
required to perform the scan, which
is used to determine the extent of
internal bleeding after a stroke. The
hospital had previously disclosed
206 victims. The radiation
overdoses were linked to the
hospital’s scanner being improperly
calibrated in early 2008. The error
was not discovered until August of
this year. The Food and Drug
Administration issued an advisory
regarding CT brain perfusion
scanners after Cedars-Sinai reported
the errors.
Hospital spokeswoman Simi
Singer declined to say whether the
victim count might increase in the
future.
The hospital also reported that
about 20% of the victims suffered
radiation exposure in the lenses of
their eyes, which may put them at
risk of developing cataracts at a
higher than average rate.
Cedars-Sinai has sent letters of
apology to the afflicted patients,
and has offered to pay to treat any
medical problems associated with
the overdoses.
“We have a responsibility to
do right by our patients, so we are
committed to addressing their
needs by providing information
and resources as we continue to
investigate the scanning equipment
issues,” says Mark Gavens, Cedars-
Sinai’s chief operating officer.
Continued on Page 3
NEWS
OSHPD (Continued from Page One)
communicate via Internet portals and
continuously update project data.
Hospital managers and building
contractors will also have access to a
“dashboard” that will provide a real-time
status of their projects’ progress with
OSHPD. And OSHPD inspectors will also
be able to wirelessly submit data from
construction sites, rather than have to
input handwritten notes at a later date.
“The future holds some great things
for OSHPD in terms of streamlining
processes and automating plan reviews
and plan checks,” says John Sasson,
Hospital Margins On The Upswing
Fueled By Cuts, The Trend May Only be Temporary
A national study of hospital margins show they
have rebounded dramatically since they were
clobbered by the onset of a steep recession
last year. Those numbers were echoed in
California, but industry observers believe
nancial pressures unique to providers in the
Golden State will make such gains only
temporary.
The study of more than 400 hospitals
nationwide by Thomson Reuters concludes
that overall margins have rebounded from a
low of .37% in the third quarter of 2008 to
8.4% in the second quarter of this year. This
was achieved primarily by slashing labor costs
and other expenses. Cash on hand also rose
from 90 days in the rst quarter of this year to
146 days in the second quarter – an increase
of more than 60%.
“The majority of hospitals are poised for a
strong recovery,” says Gary Pickens, Thomson
Reuters’ chief research ofcer for healthcare.
According to Pickens, Thomson Reuters
has date from 48 hospitals in California, with
their numbers skewed toward larger teaching
institutions. Financial data released late last
Expert Healthcare Communications
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Page 2
director of business development for
Accela’s land management division.
Coleman predicts that the Accela
system will eventually reduce the average
time for building a hospital in California
from seven years to five.
According to Sasson, that time
reduction will also lead to cost reductions
for hospitals.
“They will spending less time paying for
construction crews to be on-site,” he says,
adding that this could shave millions of
dollars off the costs of larger projects.
month by the Ofce of Statewide Health
Planning and Development echo the national
data, with total hospital margins averaging
8.1% in the second quarter, up from -4.9% in
the fourth quarter of last year.
“Hospitals trimmed contract labor,
increased overtime and focused on boosting
productivity,” Pickens says. Investment income
has also rebounded considerably.
According to Jan Emerson, vice president
for external communications for the California
Hospital Association, notes that total
operating expenses for hospitals have only
risen 3.7% over the past year, compared to a
typical increase of 7% to 8%.
“There have been a lot of layoffs, a lot of
service line closures and reductions in non-
essential travel,” Emerson says, adding that
collections were also ratcheted up.
One area where there is a serious
deviation from the Thomson Reuters data is
the number of hospitals operating in the red.
Only 20% of the hospitals nationwide lost
Continued on Next Page
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In Brief
Providence, Crescent
Enter Infusion Pact
Anaheim-based Crescent Healthcare
has entered into a pact with
Providence Health & Services
California Region to provide infusion
therapy to patients at its three
hospitals in the San Fernando Valley
region of Los Angeles.
Crescent will service Providence
patients being discharged from
Providence Saint Joseph Medical
Center in Burbank and Providence
Holy Cross Medical Center and
Providence Tarzana Medical Center,
both in Los Angeles. It will have onsite
clinicians, primarily registered nurses,
to identify patients who would benet
from early discharge and infusion
therapy.
Crescent has opened outpatient
treatment centers in Burbank and
several other locations to
accommodate the patient ow.
Crescent ofcials say the can save
acute care providers money by
facilitating earlier patient discharges
and closely managing their outpatient
care.
“We look forward to applying our
methodologies to Providence's
specic challenges to reduce costs at
their Valley hospitals while providing
smooth transitions into ambulatory
care for their patients,” says Crescent
Chief Executive Ofcer Robert Funari.
Blue Shield Makes
Exec Appointments
Blue Shield of California has
named John Hedberg as chief
financial officer for its individual,
small group and government
business unit. It also named Mike
Sears as vice president of customer
service.
Hedberg was previously a
business finance officer for Cigna.
Sears was senior vice president of
customer care at Vonage.
NEWS
Margins (Continued from Page Two)
money during the second quarter. In
California, the gure for 2008 was 35%, with
41% reporting negative operating margins.
That deviation is more likely to mean that
California’s hospitals will not share in the
nancial largesse predicted by the Thomson
Reuters study, according to industry
observers.
“If you look at the big picture, the
rebound is temporary,” says Shane Passarelli,
a senior vice president for Healthcare
Finance Group, which provides nancing to
hospitals throughout California.
Kaiser Reports Improved Earnings
Quarterly Numbers up, But Enrollment is Down
Kaiser Foundation Health Plan and Kaiser
Hospitals reported improved nancials for the
third quarter ending September 30, but overall
enrollment in its health plans were down.
Kaiser’s nancials reect what has
aficted many other major health insurers
during the recession: better control of
expenses, but lingering doubts about how to
grow membership once a nancial recovery
takes hold.
The Oakland-based Kaiser, a not-for-prot
that operates in California and eight other
states, reported third-quarter net income of
$569 million, compared to a loss of $399
million in the third quarter of 2008. Net
income for the three quarters totaled $1.6
billion, compared to $201 million through the
rst three quarters of 2008. Revenue for the
rst three quarters of the year was $31.6
billion, up from $30.3 billion through the third
quarter of 2008.
Capital expenditures were cut slightly, to
$1.7 billion from $1.8 billion through the rst
three quarters of the year.
Where Kaiser slipped was in enrollment:
it has declined by 68,000 through the rst
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Page 3
Passarelli notes that health plan
enrollment is down signicantly and is not
expected to rebound immediately, meaning
hospitals will have to cope with more
uninsured patients. Access to capital markets is
still challenging, meaning costs for borrowing
are higher than in the past. And an economic
recovery will also pressure hospitals to begin
hiring again.
“Many hospitals have put a freeze on
hiring and capital (expenditures), but you can
only do that for so long,” he says. “If you do it
for too long, you’re out of business.”
three quarters of the year, and stands at just
under 8.6 million.
Kaiser didn’t break out state-by-state
enrollment numbers, but data from the
Department of Managed Health Care
suggests most of the losses are in California.
Kaiser enrollment statewide stood at 6.75
million as of June 30, the most recent date for
which gures were available. That compares
to California enrollment of 6.81 million as of
June 30, 2008 – an overall loss of 58,850, or
85% of its systemwide decline.
However, the enrollment losses in
California were not nearly as steep as some of
its competitors. Anthem Blue Cross lost
nearly 337,000 enrollees during the same
period, according to DMHC data – a drop of
about 8.5%.
Kaiser ofcials made no forecasts about
the upcoming year. “While we are seeing
some positive nancial activity in the
nancial markets, uncertainty in the economy
and healthcare industry continues,” says
Kathy Lancaster, Kaiser’s chief nancial
ofcer.
Payers & Providers
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OPINION
Providers’ Post-H1N1 Threat: MRSA
Migration of The Hospital-Acquired Strain Ups Risks
Hospital emergency rooms are filling up
with flu victims much more quickly than
normal this fall, driven by the H1N1 swine
flu pandemic. Hospital employees are
treating the patients and gritting their teeth
to try and get through the flu season.
But as the weather warms and flu cases
subside, the spring and summer
may hold another new peril,
one just as pernicious and
dangerous as H1N1:
methicillin-resistant
Staphylococcus Aureus, or
MRSA. The bacteria has been a
growing plague over the past
several decades, killing nearly
20,000 people a year – more
than those who succumb to
AIDS. Although the antibiotic
vancomycin is effective against
MRSA in large doses, a
recently reported strain is
resistant to the drug and has a
50% mortality rate.
MRSA is also playing an
insidious supporting role to the
H1N1 pandemic: according to data
in the Morbidity and Mortality Weekly
Report published by the Centers for
Disease Control, MRSA was present in 8%
of the children who died of H1N1 in
August.
Why do I bring MRSA up? It used to be
a mostly hospital-acquired bug among the
severely ill, but that has changed.
Completely healthy people have been
getting infected outside of the hospital
setting for the past decade or so. A recent
study by researchers at the University of
Washington turned up MRSA in the water
and sand on seven beaches in and around
Puget Sound. Most of those strains were
the most dangerous type typically acquired
in hospitals.
The discovery of MRSA may not be
isolated to Washington State beaches.
Researchers tested at least two beaches in
California. Although those results were
negative, testing was also delayed,
potentially degrading the quality of the
samples. The death of a Los Angeles
elementary school principal last year from
MRSA may have been linked to a vacation
he took on the beaches of Cancun.
Why is MRSA showing up on beaches?
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Page 4
There may be a variety of reasons, including
the inappropriate disposal of medical or other
waste into the oceans or other bodies of
water. MRSA is a hearty bug, and it is not out
of the realm of possibility that lax
environmental regulations in one country is
affecting many others.
But if there is a burgeoning of
MRSA on the nation’s beaches,
it is also possible that we could
be confronted by spring and
summertime epidemics of the
bug that mirror the fall and
winter blossoming of H1N1.
Were that to occur, hospital
staff and management would
have to be extraordinarily
vigilant. The use of N-95
respirator masks may have to
become standard. Visitor
restrictions may have to be
imposed. Hand-washing would
become a constant. And the
housekeeping staff would have
By to be indoctrinated into the practices
Jim Lott of disinfecting every single square
inch of a hospital room after a patient
leaves, including the window curtains.
I am not saying that hospitals must adopt
a bunker mentality. The pharmaceutical
industry, so long focused on developing
“blockbuster” products that focus on non life-
threatening quality-of-life disorders, may have
to devote more resources to expanding the
arsenal of available antibiotics.
Moreover, the public awareness
campaigns about MRSA have been extremely
limited. Most health experts agree that
transmission outside of the hospital setting
occurs through unprotected cuts and scrapes.
Sign postings at public beaches asking
patrons to bandage any nicks and cuts they
have before they hit the sand and surf could
make a huge difference.
Jim Lott is the Executive Vice President of the
Hospital Association of Southern California. He is a
member of the Payers & Providers editorial board.
Op-ed submissions of up to 575 words are
welcomed. Please e-mail proposals to
editor@payersandproviders.com, or call
(877) 248-2360, ext. 3.
Payers & Providers EMPLOYMENT/MARKETPLACE Page 5

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