On Sept. 26, I participated as part of a panel discussion for the Drug Shortage Workshop presented by the FDA Center for Drug Evaluation and Research. The objectives of the workshop were to update the status of drug shortages in the U.S. including trends over time and a discussion of the impact on patients and the health care system; describe the FDA’s role in and regulatory authority related to drug shortages; hear perspectives from the health care sector, patient representatives and the industry, and seek perspectives on solutions to alleviate or prevent drug shortages.   

As part of the professional group panel offering recommendations, I shared the particular vulnerability of our children’s hospital patients — pediatric dose substitutions and different strengths; severity of medication errors on vulnerable patient population, and higher use of injectables to name a few.  In addition, I outlined our specific drug shortages — hematology and oncology, electrolytes and trace elements used in TPNs for neonates and nutritionally at risk patients; specialized agents for diagnostic procedures such as intravenous Arginine, and controlled substances such as Morphine and Fentanyl in small dose forms to avoid overdoses.  I shared our efforts to date to diminish the effects of the shortages such as close contact among pharmacy personnel, vendors, buyer groups and directors. We’ve also worked with Premier on education about the risks and costs associated with gray marketers.

Among our CHCA recommendations:

• Improve communications to end users and distributors of pending and existing drug shortages;
• Allocate remaining supplies by drug wholesalers or directly by the manufacturer;
• Create CDC-like, federally controlled repositories of critically needed drugs similar to pandemic and disaster supplies now in place;
• Review the effects of Regulatory Action by FDA with drug manufacturers; and
• Provide an incentive/stimulus to drug manufacturers by federal, state or local entities to maintain and improve or build new factories for manufacturing critical drugs in the U.S.

The FDA stated they would take more accountability and vowed to be much more effective in the future. They cited 100 drug shortages prevented by FDA intervention. For several of the drugs in limited supply, five vendors are expanding their plants in the next three to four years. Three tactics outlined are as follows:

• Better communication among vendors, distributors, hospitals and the FDA about shortages;
• Asking vendors to know who they are selling to, to avoid gray marketers or problems with drug pedigree; and
• Protecting the supply chain particularly for the most vulnerable patients, e.g. oncology, small unit production, low volume and high expense drugs.

Children’s hospitals were also represented as part of a ASHP Drug Shortages Summit Regulatory-Legislative Work Group by Michael P. Link, M.D., President-elect of the American Society of Clinical Oncology and a pediatric oncologist at Lucile Packard Children’s Hospital at Stanford.

The CHCA Pharmacy Team is working on multiple fronts to counter drug shortage issues including legislative efforts, advance warnings and connecting available supplies to Owner Hospitals with an acute shortage of a drug product or unusually high demand. Specifically, we are working with partners on the following efforts:

• Premier Pharmacy Drug Shortage group for latest updates on their activities on supply availability and failure to supply refunds;
• Contracted Pharma vendors who can supply small quantities of short supply drugs for critical needs of patients e.g. chemotherapy treatments or other treatment regimens;
• CHCA Pharmacy Buyers and CHCA Pharmacy Directors who through networking and utilization of various legitimate drug wholesalers, expedite supplies of drug to their colleagues location in need of the drug in short supply; and
• Advocacy efforts through Healthcare Supply Chain Association (HSCA), HSCA Pharmacy Committee and Premier, and by talking directly to key decision makers on Capitol Hill.

Recently, I discussed drug shortages and their impact on children’s hospitals with Sen. Herb Kohl’s (D-WI) legislative aides and the Chief Investigator of the Special Committee on Aging. They are very interested in the gray market issues that have become a source of concern in our industry. I am supplying them information on gray market sources and examples of solicitation of our Owner Hospitals.

We are also in discussions with our current vendors to determine if we have any looming shortage issues we may not be aware of at this time. This is especially vital concerning drugs for special needs that are truly small market products.

Please contact me with any questions. (john.vaneeckhout@chca.com).

Ben Melson and Dan May will present an update via a webcast scheduled for Fri., Nov. 4. They will share information on the GPO presentations to the Task Force with key observations, a summary of proposed deal models with associated financial projections, and Advisory Committee and Board input and feedback. There will be time for discussion and audience participation. (See below for time and links to participate.)

The Task Force will visit GPO corporate offices between mid-November and early December, and begin final deliberations to select a recommended partner for the CHCA Board to consider at their February meeting. 

Note that, although the current agreement with Premier runs through the end of 2012, CHCA may exit that agreement and implement the new agreement (assumed to provide greater value) earlier in 2012, based on the final decisions of the Task Force, Advisory Committee and Board.

Please direct any questions that you may have to Dan May, CSC (678-576-0408, dmay20@csc.com) or Jeff Primovic, CHCA (913-981-4130, jeff.primovic@chca.com).

Webcast:      GPO Due Diligence 11.04.11
Date:                Friday, November 4, 2011
Time:               11:00am PT|12:00pm MT|1:00pm CT|2:00pm ET (60 minutes)
Audio:             800-289-5126 call-in | 616343 participant passcode
Web Link       
Please RSVP by 11/02

On a personal note, my time as President and CEO of CHCA has been tremendously rewarding. We’ve gone through a period of change—with more to come—and I’m truly grateful for the support of all CHCA staff and the staff’s ability to remain focused on the needs and priorities of CHCA Owner Hospitals. As the CEOs of these wonderful institutions, I want to thank each of you (and will do so personally when I have the chance to see you) for the support and guidance you’ve provided me. More importantly, I want to thank you for entrusting me with this important interim stewardship role and hope that you have found your trust was well founded.

I would be remiss if I did not recognize the CHCA Senior Team – Barbara Spreadbury, Craig Fischer, David Spizman, Jeff Primovic, Kassandra Jensen, Nancy Vasto and Sandra Tillman. They accepted me wholeheartedly and provided significant guidance, direction and support throughout the process. I also need to recognize Angie Leondedis and Sharon Smith who have been with me throughout, almost daily, to help facilitate open, transparent communications.

I am also thrilled to report that on August 31, we received notification from the Kansas City Business Journal that CHCA was selected as one of the winners in the annual Best Places to Work awards program. CHCA is one of 10 companies in the medium company (50 – 249 employees) category. With Mark’s selection as the new CEO, I’m confident this tradition will be sustained and the future will be exciting.

Warm regards,

JR

Our Future

Mark Wietecha, President and CEO, CHCA and NACHRI/N.A.C.H.

Thank you for the opportunity to work with you to advance the success of your institutions through our new organization. It is truly a privilege for me. I look forward to meeting you and better understanding the needs of your institutions over the coming months. Together, we will make great progress in advancing our mission and your success, and most importantly, the health interests and future of children.

Our immediate priorities are to keep the current work initiatives moving and to accelerate the process of bringing our new organization together. It is critical we achieve the best possible impact on the direction of public policy as it relates to the financing of children’s health care, medical education and research. The political process is in full swing, and we are working thoughtfully to fully mobilize our strategy and influence to make a difference. There is much activity underway, and you can expect continued updates over the coming days and weeks.

To accelerate the integration of our new organization, I am working with Peggy Troy and the Interim Management Committee (IMC) to begin the leadership transition. My time commitment will steadily increase over the coming months as I conclude my current duties, and we will continue to rely on Peggy and the IMC’s continuity over this period. Our immediate priorities are to bring together the legacy plans of CHCA, NACHRI and N.A.C.H., to assess how we can be more effective in meeting your needs, and to begin aligning our operating organization and finances. It is our goal to move these processes along on a timely basis, and ensure you – our members – are providing your input on our direction and priorities. This is your organization. We will be working through Jim Mandell and the new Board to reach out to you and define how we expect these initiatives to unfold over the balance of 2011 and over the course of 2012.

Thank you again with warmest personal regards, 

Mark

Any CHCA Owner Hospital can access supply chain help in regardless of whether they are a Premier member. The Premier team has been busy shoring up resources and checking in with suppliers. Specfic disaster readiness and supply and service access plans have been shared with Supply Chain Directors from AmerisourceBergen Pharmaceutical, Cardinal Pharmaceutical, McKesson, MedLine, U.S. Foods (including sourcing emergency supplies, e.g. bottled water), Owens and Minor, and Clean Harbors disaster and emergency response products and services. Standard disaster plans and other useful links are located on Premier’s web site. 

CHCA is also available to help your hospital with other types of support. In the aftermath of  Hurricane Katrina, we helped Children’s Hospital in New Orleans by hiring a security force to secure their hospital, evacuating patients to other CHCA hospitals, and setting up temporary facilities after the storm. It is our greatest hope the devastation and impact of this storm will be minimal but we are available if you need us.

Please reach out to Jennifer or Arvil if the need arises during or post storm.

Jennifer: jennifer.gedney@chca.com or 913-226-9369 (cell)
Arvil: arvil.minor@chca.com or 816-769-0899 (cell)

Editor’s Note: See the previous blog entry on drug shortages.

The current drug shortage situation — the highest in a decade — is a case study of supply and demand principles. Costs are rising exponentially as the drugs become harder to attain. There is also a growing trend of price gouging by “gray market” vendors.  Also known as parallel market,  “gray market”  refers to the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.

A few weeks ago, Premier publicly released recommendations as a part of analysis which shows the average markup on many drugs in short supply is 650 percent. Even higher markups were seen in certain critical care areas including cardiology and oncology; so the sickest patients are most at risk.

In addition to the astronomical costs, the quality of the drugs cannot be assured since you don’t know how the  “gray market” vendor gained access to the product. The drugs could be counterfeit and since pedigrees aren’t officially documented and tracked, you assume a huge liability risk when dealing with these distributors.

CHCA and Premier both recommend using recognized distributors who have a documented chain of custody, and we’ve been in close contact with your pharmacy directors.

We are working on multiple fronts to counter drug shortage issues including legislative efforts, advance warnings and connecting available supplies to organizations in high demand. I’ve been asked to participate as a panel member at an upcoming Drug Shortage Workshop presented by the FDA Center for Drug Evaluation and Research on Sept. 26.  The workshop will focus on the causes and impact of drug shortages and strategies for addressing shortage issues. I will report back to you the outcomes of the workshop.

We are working in close partnership with your pharmacy directors to address drug shortages in all Owner Hospitals. In addition to your  pharmacy team, you may contact me (johnvaneeckhout@chca.com) or Ben Lizak (ben.lizak@chca.com) with an urgent drug shortage issue, and we will do our very best to help you attain the necessary drugs without disruption of care.

In the accountable care arena, Colorado has been very progressive. On the July ACO call, Bruce A. Harma, FACHE, Director, Managed Care, Children’s Hospital Colorado, provided an overview of the state’s Medicaid accountable care collaborative as well as his hospital’s accountable care initiatives for the commercial sector. Additionally, he profiled several quasi-governmental agencies working on reform initiatives in Colorado. 

I welcome your comments and suggestions as well as your questions. Please feel free to contact me directly.

Jacqueline Kueser, Vice President, CHCA
Jacqueline.kueser@chca.com

• CEO Interview Series: Poised for Change
• Colorado ACO Strategies 

Interview with Peggy Troy, RN, MSN, President and CEO, Children’s Hospital of Wisconsin

Peggy Troy

1. Regional independence;
2. Meaningful relationships across the state to create necessary infrastructure and reduce costs, and
3. An understanding of the implications of leveraging our health plan knowledge to expand our medical risk-taking beyond the Medicaid population.

Benefiting from Reform
The good news: The post reform policies of “no lifetime limits” and not excluding pre-existing conditions have resulted in additional annual revenues for our organization.  

The challenges: To focus our efforts in this complex environment, we recently hired a new Advisor on Health Reform. We consider ourselves well positioned to pilot payment reform  projects with 44,000 Medicaid HMO lives, 67 primary care physicians, distributed urgent care centers and hospital relationships and a foster care/ adoption program with 3,000 lives. In addition to focusing on payment reform, we are looking at what it takes to become a medical home. We also plan to transition from serving as an episodic and acute care center to a system of integrated care delivery with a high degree of accountability.
 
In terms of wellness and prevention, we continue our aggressive work in asthma care. Asthma represents 9.5 percent of our admissions, and we’d like to never admit another kid with asthma. We’re working on this through medical homes, case managers and our region’s school systems.

In terms of a payment model, we are working with the new Wisconsin Secretary of Health on ideas for proving a medical home for populations such as foster care children, of which there are 2,000 in Milwaukee County and 6,500 in the state. We’re also evaluating opportunities to expand our program for medical homes for children with special health care needs.
 
We’re developing an asthma pilot with an insurer in our market, which will share the expenses of a dedicated asthma case manager and share in savings from avoiding unnecessary hospitalization and ED utilization. I’d like to build on this idea and five years from now have different payor relationships and reimbursement structures than today.

This being said, we still must perform heart transplants and we need financial resources for these highly specialized services.
 
Adult Market Activity and Competition
In terms of pediatrics, I’m messaging to our large adult systems that our organization plans to remain a “Switzerland” among regional health care providers. We’re collaborating with several adult systems and making moves such as agreeing to put our neonatologists and nurse practitioners into adult hospitals. This makes good business sense when close in geography.

Health Plan and Positioning with Payers
We currently have a medical health plan covering pregnant women, children and families. We are evaluating the implications of the reform legislation for expansion particularly in light of the coming 2014 health insurance exchanges. We are gathering information to help us understand the implications of developing a broader insurance product for children. For example, we are reviewing regulations defining pediatric specialists and how they get paid particularly for multi-system conditions. We are concerned about the possibility of Medicaid moving to a block grant which, if not done carefully, could cause real erosion in coverage for children.

Market Positioning into the Future
No road map exists; we are working as an architect in an uncertain world. We need to start thinking differently than bigger is better. We need to adopt new capabilities in care management across settings. We need to switch from episode-centric care–and somehow protect ourselves in the transition–to managing a child’s health needs throughout childhood.
 
We are studying pediatric data to evaluate why kids come to our hospital. We need to understand our costs and efforts in complex care, secondary care and primary care to better position ourselves with adult providers and employers. We will need to be cognizant of the path as a high-end tertiary provider with a reimbursement base that erodes our ability to fund research and education.  
 
One option for children’s hospitals in general may be to regionalize services to get to the required scale to compete. Only five percent of children need high-end services. This begs the question of how many high-end programs are needed across the country particularly with the shrinking talent pool and the costly infrastructure of these programs. Is regional alignment an option?  This could be a great advantage to achieve the necessary scale. In this model, would we be able to create a superstructure that would benefit research, provide for concentration of high-end services, decrease costs and attract talent?

Notes from July 21, 2011

Presenters:
Bruce A. Harma, FACHE, Director, Managed Care, Children’s Hospital Colorado

Dave Anderson, BDC Advisors

Presentation
Appendix – Medicaid ACC
Value Based Payment Models Grid — UPDATED

CHCA hosts a monthly conference call series highlighting Owner Hospitals’ movements in the evolving post-reform and ACO marketplace. During the July call, Bruce A. Harma, FACHE, Director, Managed Care, Children’s Hospital Colorado, provided background about the state’s Medicaid accountable care collaborative, shared one of his hospital’s accountable care initiatives for the commercial sector, and highlighted several quasi-governmental agencies working on reform initiatives in Colorado. Attached are the handouts from this conference call and the audio recording.

Overview
Colorado is very proactive in the area of health care reform. The political arena around health care is very active and the state is lock-step with federal reform initiatives. (Editor’s Note: this call updates previous information present in ACO Update on Colorado’s Medicaid Accountable Care Collaborative.)

State’s ACO Plan
Colorado’s Accountable Care Collaborative project was created in response to failed attempts at capitated managed care in the state. In addition, 85 percent of Medicaid is in an unmanaged Fee-For-Service (FFS) system. The current economic situation is unprecedented and Medicaid caseload is at an all-time high. The goal of the collaborative is to reduce costs and improve health, not just utilize more services.

There are three program components: statewide data and analytics contractor (SDAC), regional care collaborative organizations (RCCOs) and primary care medical providers.

The SDAC vendor, Treo Solutions, Inc., is responsible for data repository, data analytics and reporting, web Portal and access, and accountability and continuous improvement.

The PCMP provides a medical home with focus on primary care, general practice, internal medicine, pediatrics, geriatrics, or obstetrics and gynecology. Services are provided by a physician, advanced practice nurse or physician assistant. They are also responsible for the appropriate referrals.

The role of the RCCOs is to provide network and regional strategy, provider support, medical management, accountability and care coordination. Currently two RCCOs are up and running—Colorado Access and Rocky Mountain Health Plan. Enrollment for each RCCO will be expanded In July of 2012.

In terms of performance measures, in the initial year the collaborative will calculate monthly utilization measures and quarterly cost savings analyses. In subsequent years, there will be hybrid of utilization and quality outcomes measures.

Payment for the collaborative is collected through stakeholder participation—fee-for-service (FFS) reimbursement to PCMPs for medical services, a per member per month (PMPM) fee to PCMP for medical home services, and a PMPM fee to the RCCOs for PCMP support and care coordination. The collaborative will be eligible for incentives after documented savings.

The initial enrollment goal is 60,000 total Medicaid clients (40,000 adults and 20,000 children). Expansion enrollment goals include the approximately 400K remaining Medicaid FFS clients. Clients for the collaborative are selected from claims history—FFS and primary care patients—dual eligibility and institutionalized patients are excluded.

The access to care is client-centered. The PCMP serves as the medical home and refers to specialists. Referrals are not needed for emergency care, early prevention screening and diagnostic testing, anesthesiology, transportation, family planning, behavioral health, obstetrics and dental and vision care.

Colorado Pediatric Collaborative (CPC) – Children’s Hospital Colorado’s Accountable Care Initiative
The CPC is a three-organization partnership between Children’s Hospital Colorado, Colorado Pediatric Partners (a multi-specialty IPA of over 200 physicians) and Physician Health Partners (multiservice center providing quality improvement, EHR support, clinical reporting, care coordination strategies, contracting, etc.).

The model of the collaborative includes evidence-based guidelines and clinical education, clinical quality improvement, and HIT and data analytics. The CPC’s Triple Aim approach to clinical integration includes population health, patient experience and per capita cost.  

We are collaborating with payers to move several initiatives forward. One of our current clinical initiatives is Pediatric Respiratory Care (ABC program) treating asthma, bronchiolitis (home oxygen program) and croup.  There is strong evidence that our initiative is driving some savings in addition to reducing length of stay and admissions. Two other projects are focused on immunizations and an obesity pilot. Taking these types of quality initiatives straight to payers can be powerful. We’ve seen lots of interest from payers in our discussions.

There are myriad reimbursement models we’re discussing for the collaborative. We’re not closing any doors on possibilities. Some of the options include shared savings, PMPM case management fees with or without shared savings and global risk sharing/episodes of care bundling. One out-of-the-box financing idea is at-risk deductible capture or direct monthly member pre-pay.

Center for Improving Value in Health Care
CIVHC is one of the quasi-governmental state agencies providing state directed reform initiatives. This Colorado managed care collaborative has been up and running for some time and offers macro integration with long-term goals. CIVHC’s unique role includes identifying and supporting initiatives to break down silos and scale up solutions. It also provides data to allow the market to measure and purchase services based on value. The group is getting some traction in helping to channel resources to support transformation and our hospital has a participating work group. The organization’s long-term goals include specific targets in four focus areas—consumer-centered experience, improved population health, bending he cost curve and increased transparency. For more information, visit www.civhc.org.

Colorado Regional Health Information Organization (CORHIO)
Sponsored by the government and private sector, CORHIO is designated by the state to facilitate HIE. The organization collaborates with health care stakeholders including physicians, hospitals, clinics, mental health, public health, long-term care, laboratories, imaging centers, health plans and patients. The goals are to have HIE deployed in every CO community by 2015 and establishing 85 percent of all primary care and safety net care providers as well as all providers statewide are meaningful users of HER by 2015. For more information, visit www.corhio.org.

CO Health Insurance Exchange
Colorado is one of the states moving on this federal initiative. The Exchange has a nine-member oversight board appointed by the governor of Colorado and in now active. They have had their first meeting and operational leadership is in place. Public interest has been overwhelming. The Exchange has four main work groups: date analysis, simulations, and demographics; small Employers Focus; IT solutions, and marketing, education and outreach. The deadline for federal certification is Jan. 1, 2013.

Q&A
Dave Anderson asked Bruce some follow up questions.

Q: There is good work going on in Colorado but several groups are in slightly different stages. It is obvious that some kind of managed care is needed to manage Medicaid costs. Will RCCOs manage entire populations including children? Will it be more difficult for them to access children’s hospitals and does this make force you to contract with large, integrated adult systems?

A: We decided early on what our role would be. We didn’t want to tie ourselves to any single RCCO. We will work with and collaborate with all of them via our specialists. We’re working closely with the state and it’s our best approach. We have good relationships with RCCOs in our service area. We have to focus on pediatric care as much and possible and try to change the mindset.

Q: Are different RCCOs treating you differently?

A: We have seen some RCCO patients in our facility. We currently have good relationships and communications with them. We might be able to contract more in the future.

Q: How are you approaching value based payment models or incentives around traditional FFS savings?

A: The data repository and analytics are different for pediatrics. You will want to have an impact on contractors doing this work and potentially engage a pediatric subcontractor. Case management for children is different as well. We’re facing this battle on several fronts. We’re collaborating with commercial payers to measure us on a playing field for pediatrics.

Q: How much will the CO Health Insurance Exchange affect you?

A: The underlying notion is reimbursement from participants will be low. Colorado Medicaid reimbursement is one of the lowest in the country. Exchange reimbursement is expected to be in aggregate closer to Medicaid reimbursement that that of commercial payers.  Of course, our concern is that it will drive down revenue stream.

Q: Do you how many patients will come from the Exchange and how much it is like to affect children?

A: There hasn’t been any analysis or numbers we’ve seen.

INTRO:
Given the current goings-on in Washington and concern over the impact on CHCA Owner Hospitals’ VRDBs, we thought it would be very timely to hear from Bob Muller, Managing Director – J.P. Morgan Chase & Company. During the webcast, Bob shared his take on the U.S. debt crisis and the potential impact on the bond market and children’s hospitals. (You may access the webcast and PowerPoint or PowerPoint only below.)

NOTES:
The last few weeks in the financial industry and in Washington have been stunning to say the least. There is a new normal over the last few days with bouts of intense volatility in the market. What does it mean for you going forward?