Hospital CEOs: Big changes in health care coming soon

DANVERS – Chief executives from some of the region?s largest hospitals on Wednesday morning spoke about the rapidly changing health care delivery and payment systems, and factors that contribute to increasing health insurance premiums.Robert Norton, president and CEO of North Shore Medical Center (NSMC); Dr. Howard Grant, president and CEO of Lahey Clinic; Ken Hanover, president and CEO of Northeast Health System; and Sandra Fenwick, president of Children?s Hospital in Boston, each addressed the crowd of about 400 people at the breakfast forum of the North Shore Chamber of Commerce at the Danversport Yacht Club.Norton attributed rising health care premiums to underpayments by state and federal governments for Medicaid and Medicare.?Fifty percent of all our business is made up of payments from state and federal government,” he said.He noted that the programs pay “about 70 cents on every dollar of true cost for providing care.?So you are all paying more in premiums each year than you should be paying to basically subsidize underpayments from the state and federal government. That?s been going on for a period of years and the last few years it has become more challenging,” Norton said.He noted that for 2010, underpayments by Medicaid and Medicare to NSMC totaled about $67 million, and that figure grows each year.?It?s incredibly challenging at this point in time because neither the state government or federal government is flush with cash, but it?s an issue we all need to keep our eye on,” he said. “There?s no way your premiums are going to come (down) to a considerable level if we don?t address the issue of the state and federal government paying their fair share going forward.The leader of NSMC, part of the Partners Healthcare chain that includes Salem and Union Hospitals and The Mass General/North Shore Center for Outpatient Care in Danvers, also described the sea change under way in health care reimbursement.Purely from an economic standpoint and not as a matter of practice, he said, the incentive under the current “fee-for-service” payment system is for doctors and hospitals to encourage illness and inpatient care.? ? It?s a perverse set of incentives when you think about it ? to keep people sick and do more for them when they?re sick,” he said.He quickly added, “Let me be clear, I don?t want to say any one of our institutions has hundreds of people back there trying to make people sick ? 24/7, 365 days a year we?re working really hard to make people well.”The changes, he said, will put the focus of doctors and hospitals on patients? wellness.?Rather than get paid on each individual thing we do every time a person gets sick, we?ll get a single (or global) payment for an individual or family at the beginning of every year to keep that individual or family well over a period of time ? ” he said.Hanover, the CEO of Northeast Health System, parent of Beverly Hospital and Bay Ridge Hospital in Lynn, and Grant, Lahey Clinic?s CEO, spoke about the new partnership between the two hospital groups.?Although (Northeast) is an organization with around a half-billion in annual revenue and we have multiple hospitals ? we didn?t believe we were big enough to deal with the changes that were quickly coming down the pike ? We didn?t have the financial muscle to be able to do it ourselves and we didn?t have the service infrastructure to be able to do it ourselves,” Hanover said.Grant emphasized the partnership is not a merger and that both Lahey and Northeast will continue under a new parent corporation, Lahey Health System, and its board will have equal representation from Northeast and Lahey.?This is not a big fish eating a smaller fish,” Grant said. “It?s a common-value system.”Fenwick said Boston?s Children?s Hospital treated 14,000 kids from the North Shore last year, and is making strides in cost reduction.For example, she said, kids were formerly sedated in order to receive an MRI, a process that took up to four hours and put the child