Greatest challenge to model: Affordability

By Tim Charles

Nationally recognized for quality and efficiency, Cedar Rapids' medical community is poised to become a leader in the transformation of our health care system by addressing one of the greatest challenges facing the nation: health care's affordability.

For the better part of the last year, I have reflected on the potential challenges and opportunities of the Medical District and the Medical Mall, while maintaining the integrity of the model system currently in place.

The Medical District helps create a nationally competitive medical hub along 10th Street that complements existing medical service providers, including independent medical providers Physicians' Clinic of Iowa (PCI), Mercy Medical Center and St. Luke's Hospital.

The Medical District provides a unique mechanism enabling investment in the infrastructure that will lead to a convenient, attractive zone for medically related economic development. The superb quality coupled with significantly lower costs than those of surrounding states is a competitive advantage as we work to attract new companies and retain those already in place.

The Medical Mall, PCI's proposed project located within the medical district, would create a third campus in a community that has seen virtually no population growth. A recent study commissioned by Mercy by ACCENTURE concluded sufficient capacity exists in both hospitals to accommodate our needs for years to come. The Medical Mall has the potential of threatening the community's substantial investment in two superb hospitals. Data shows irrefutably that the addition of excess or unnecessary facilities and technology drives up costs.

It may be surprising to learn that charges for inpatient services do not cover the cost of care. Hospitals are able to provide essential, mission-driven and uncompensated care almost entirely due to the reimbursement received from outpatient services like X-rays, MRIs, labs and surgery. Dividing the volume of these outpatient services with a third entity will have consequences.

A recent column by PCI offered a glimpse into the Medical Mall's function in addressing the staggering rise in health care costs. It asserts that this project will neither duplicate services, nor harm or compromise our local non-profit hospitals' abilities to fulfill their missions.

However, the suggestion that reimbursement is fixed and the consumer won't be impacted is not entirely the case. All employers are subject to premium increases, and employees with high deductibles and health savings accounts are paying more out-of-pocket, rendering us all vulnerable to escalating costs.

The source of volume and revenues for the Medical Mall are difficult to determine from discussions to date. However, it is modeled after a facility located in Huntington, W.Va., and we can look there for insight. The latest four quarters of CMS MedPAR data from The Delta Group show clinically-adjusted costs per case are 40 to 45 percent higher than in Cedar Rapids.

The value of the proposed Medical Mall depends on whether it will:

1) Improve the health of the community

2) Improve the quality of the patient experience

3) And now, never more importantly, reduce costs.

These comprise the Institute for Healthcare Improvement's Triple Aim. Since 2003, Mercy has been utilizing the Triple Aim guidelines (www.ihi.org/IHI/Pro

grams/StrategicInitia

tives/TripleAim.htm) as an additional guide to shaping its growth and evolution.

Together, our medical community has already demonstrated the capacity to achieve quality with access to the finest medical practitioners and facilities. We must now tackle affordability.

Our best hope is to have all parties, including not only the medical community but the purchasers of services, engaged in earnest effort to achieve these aims. Our community's past recognition as a national leader will be the prologue to an even more impressive future as Cedar Rapids differentiates itself as role model for a medical destination.

Tim Charles is president and CEO of Mercy Medical Center, Cedar Rapids. Comments: TCharles@mer

cycare.org