Plan of Action

More than five years ago, leaders of the American Hospital Association took what they called "a hard look" at health care in this country—what worked well and what could be improved. In discussions with hospital members, as well as individuals and organizations inside and outside health care, the AHA developed Health for Life, a framework for change built on five so-called pillars: coverage for all paid for by all, a focus on wellness, most efficient and affordable care, highest quality care and best information. Health for Life helped guide the AHA as it participated in the year-long national discussion about health care reform. AHA President and CEO Rich Umbdenstock recently talked with Hospitals & Health Networks' Managing Editor Bill Santamour about the health care law signed by President Obama in late March.

Why did AHA support the legislation?
We've been in favor of reform actually since the 1970s. The AHA has been very consistent, in the '70s, '90s and now in this most recent discussion. We felt that we were able early on, through discussions with the White House and the Senate Finance Committee, to shape the beginnings of this bill in a way that was very consistent with Health for Life. There were many details to be worked out but we've been hopeful that we could affect some major pieces of reform right from the beginning. There is more to be done.

What are the law's best attributes?
I think everybody who has been in favor of it would look at the 32 million Americans who now will have coverage. Yes, it is expensive to provide, but we are already providing care for those individuals. They don't bring payment with them so the expense is cost shifted, cuts into a hospital's reserves and is provided pro bono by physicians. It gets covered—every dollar of care gets covered, but not in a very efficient way and not in a way that brings those individuals into the system early for the best care at the right time and the right place. We're hopeful that this big step forward on coverage will help us move toward a better system of care not only for those individuals but for everyone because of the ripple effects that the uncompensated care phenomenon has caused.

What would you say are the most problematic aspects of the law?
Well, it's a huge bill. When I had a chance to meet with [Health & Human Services] Secretary Sebelius about two months ago, I think she summed it up well. She said she was fearful of every other paragraph that started with "the Secretary shall." There will be a lot by way of implementing regulations. Any time you open up the issue of health care and change in the system, everybody has an aspect they want to see changed. I don't think there was any escaping the size of the bill given how complex health care is and how many different important points each party or each individual sees in health care. So the sheer volume will be a challenge for the federal government. It will be a challenge for the AHA to try to affect those regulations. It will definitely be a challenge for our members in the field to implement them.

What are the most immediate aspects that hospitals have to deal with?
There are a couple of things. There will be changes early on in health insurance and largely, I think, for the better—certainly for the individuals involved, but also for hospitals. Hospitals will need to know what those changes are and how to get more people enrolled in the new insurance as it becomes available. So there's that area of change. But we've said all along that there is also a series of changes already under way. The field is integrating more, we are more at risk financially and we are being held to a higher standard in terms of public accountability. Those changes are already under way and this bill builds on them.

Are there things that hospitals should do now to prepare for the cuts that are coming with the law?
The last two years have been really difficult economically for hospitals. So they have been focused on cost control, whether it is in redesigning work, using human resources more efficiently, looking at the cost of goods and services purchased—really looking at entire programs. The economic downturn has put everybody into a very dramatic cost-reduction mode. Even if the economy comes back somewhat in the coming year, it will be very important to hold those gains because whether or not we had health reform, the financial pressures were coming at us. In a sense, hospitals are already well into that mode and ahead of anything brought into effect because of the new law.

There is a push for clinical integration. Does this law address that?
Yes and no. The way we've used the term clinical integration, we've been thinking about the handful or so of major laws and regulations that inhibit hospitals and physicians from working more closely together and integrating their efforts—the private inurement from the IRS, antitrust laws, the Stark law, etc. This law does not change those laws and regulations, so we have to continue that effort. But the law does put into place demonstration projects around accountable care organizations and it lets the secretary lower the legal and regulatory barriers in order to do these tests and demos that will teach us where to go in the future. So in that sense it starts that process. We'd like to see more immediate relief, but we're happy that we're headed down that path.

There are lots of demonstration projects under the law. How do hospitals get ready to participate in those?
The regulatory process will be key to telling us exactly how they are going to use those provisions, exactly what those tests and demos will focus on, what the rules of engagement will be, when they'll be ready to open them up and start to take either state participation or provider or network participation. So the regulatory process will be key to understanding that role.

What's the role of the hospital board in implementing this?
That's a fascinating question. The board clearly has to see its central role as keeping the institution in sync with the environment in which it operates. Somebody once told me that mission is the intersection between the founding principles and the real world of that year. I think that's a terrific understanding. Well, the real world has now changed yet again because of this bill. So the board has to start to rethink, not the mission itself, not the fundamental principles that they stand for or their fundamental purpose, but rather how you express [the mission] in the changing environment—in an environment that is more integrated. If you are not part of an integrated system or multihospital system, you might have to think about how you will interface with a more areawide accountable care organization of some sort. If you are not linked up with physicians, if you don't employ physicians, how are you going to do that if the world is moving that way?

What should rural hospitals specifically be alert for in this law?
First of all, the payment changes don't affect critical access hospitals. There are some good provisions around rural issues and rural programs, particularly extending some of those that were due to expire. That's a good thing for the rural hospitals. Probably the biggest question will be, how will some parties in each geography understand the accountable care organization strategy and deploy that in a given region? Rural hospitals will have to decide, particularly those that are freestanding, how they interface with one or more of those in their market. So it will start to raise organizational relationship and functional issues that haven't had to be addressed before.

Does the law effectively address the shortage of primary care doctors?
The law takes some really important steps in terms of boosting the payment of primary care physicians for calendar year 2013-2014. It also reallocates some existing but unfilled residency slots with a lean toward primary care, rural areas and other underserved areas. So in that sense I think it has taken some important steps. One of our disappointments was that we didn't get an increase in the total number of graduate medical education slots. We fell short there.

What resources will the AHA provide over the coming months?
We've been for the last year trying to turn all our efforts toward one of three major domains on behalf of our members. Of course, advocacy is always an ongoing priority. Second is long-term reform, the first phase of which culminated in this bill. There are things we still have to address down the road. We will continue to work on that. But then the third is performance improvement. That's our No. 1 priority for our members day in and day out. How do they get better in terms of quality, safety, operations, and efficiency and the like? We're turning all of our education programs, meeting agendas, the work of our personal membership groups toward more of an emphasis on how do we support that ongoing effort out in the field. We do that in a couple of ways. One is certainly to identify the best practices that are being deployed out there and showcase those as kind of a knowledge transfer strategy across the membership. The AHA is not going to develop those best ideas, the field does. We help transfer that information, but also we have greatly expanded our research capabilities through HRET [Health Research & Educational Trust] to learn what works best in the field and to actually quantify the impact of different strategies and the success of different strategies. So we will be working on that as well.