The Shifting Tide The U health care system is preparing for the Affordable Care Act’s many changes.

Expecting a new baby girl in early December, Katina Anthony and her husband, Chris, were both excited and worried. Already the parents of a 2-year-old boy, the couple has no health insurance, and they don’t know just how they’ll pay the hospital bill. “A delivery is like nine or 10 thousand dollars,” says Katina, who works part time as a night janitor for the University of Utah, a job that doesn’t qualify her for insurance benefits.

Her husband had been working for a small company that supports the construction industry, in a job that also lacked insurance coverage. Like many people, the couple found themselves living in an unfortunate financial gap: They couldn’t quite afford to buy private insurance, but still made too much to qualify for Medicaid. Katina says state workers advised her earlier this year that the only way the family could qualify for assistance was for her husband to quit his job. “Before that, they told me I could divorce my husband and live alone, and then I would qualify,” she says. “I was shocked. There’s got to be a better way.”

Katina Anthony and her husband, Chris, walk with their son Daniel in Salt Lake City. The new law would help the Anthonys, who lack health insurance.

By 2014, the young couple likely won’t have to worry so much. That’s when the major reforms in the federal Patient Protection and Affordable Care Act are slated to take effect, expanding access to health care to about 32 million Americans and potentially transforming nearly every aspect of the way health care is paid for and provided. “Overall, I’m happy about the Affordable Care Act,” says Katina, whose family would have access to coverage under the law.

Focusing on Core Values

Passed in early 2010, the Affordable Care Act is considered the most sweeping reform of the health care system since the implementation in 1965 of Medicare, a publicly funded insurance program for seniors over age 65, and Medicaid, the assistance program for low-income Americans. The new federal law’s provisions are intended to expand access to insurance, increase protections for consumers, improve health care quality, streamline care delivery, curb costs, and shift the focus in health care to prevention and wellness.

For providers like University of Utah Health Care and the U’s School of Medicine, understanding and preparing for the law’s reforms isn’t easy. The complex law has many ramifications and will likely have unintended consequences for consumers, providers, insurance plans, and governments. As a paradigm shift, the law is “huge,” says Vivian Lee, the U’s senior vice president for health sciences, dean of the School of Medicine, and the chief executive officer of University of Utah Health Care.

“What we are trying to do is focus on some of the core values and core principles of how we need to deliver care,” Lee says. “We’re working on the things that prepare us for the new world but also enable us to survive in the old world.”

And how exactly does an institution change? “That’s the million dollar question,” says Lee. “It’s a migration.”

A number of factors are driving the way the U’s health care system—and other providers nationwide —will address the law’s countless changes. Those include volatile national and state-level political and philosophical debates and the more practical realities of funding and personnel. Proponents say the law will provide critical relief to the more than 50 million uninsured Americans by providing access to health care at affordable prices. The supporters say tax credits and subsidies will help both businesses and individuals manage costs and that health care will be less expensive for all.

Opponents of the $900 billion law, however, see it as a government takeover of health care that infringes on states’ rights. They contend the law hurts businesses and unfairly meddles in the private financial decisions of citizens. Opponents also argue the law will cost more than projected, raising the federal deficit even while curtailing as much as $500 million in Medicaid spending and imposing new taxes.

Although passed by Congress, no Republicans voted for the law, and since 2010, more than 30 unsuccessful attempts have been made to repeal it. Twenty-six states, including Utah, and the National Federation of Independent Business also sued the government to stop the Affordable Care Act’s implementation, arguing that many of its mandates are too expensive for already strained state budgets. That particular legal battle was lost this past June, when the U.S. Supreme Court upheld the law’s implementation, on a 5-4 vote.

That the debate over the Affordable Care Act is mired in politics is no surprise to Robert Huefner BS’58, a U professor emeritus of political science and former director of the U’s Governor Scott M. Matheson Center for Health Care Studies. Politics and government are in part about making choices between values, Huefner says.

Quinn McKenna, chief operating officer of University Health Care, says that “a redesign of the system makes sense.”

“Government programs tend to be those where you’re having to balance things that you can’t just balance with a cost equation. You get those kinds of concerns in health all the time,” says Huefner, who helped two Utah governors through major changes to public health programs during the 1960s. “A second reason is cost. Health care is now the second biggest cost of state government in the country, behind education, so that means it’s political just in terms of the tradeoff between financing a public service and maintaining acceptable taxes.”

Huefner predicts that even if the Affordable Care Act is ultimately repealed, the U.S. health care system won’t go back to where it was two years ago because the system—from individual doctors to government programs and institutions such as University of Utah Health Care— has already started to change. “Too much has happened, and they are already moving on it,” he says.

Medicaid Expansion

As the law now stands, some of the key—and controversial—provisions include Medicaid expansion to cover individuals with incomes below 133 percent of federal poverty guidelines, and a requirement that individuals, with some exceptions, have health insurance through public or private providers, or face a penalty. Businesses will be required to offer insurance or face a penalty. States must create health-insurance exchanges to allow consumers to easily shop for and compare health-insurance plans and costs. And insurance companies will no longer be able to exclude individuals from coverage because of preexisting conditions, or charge variable premium rates.

How the Affordable Care Act will play out in Utah depends in part on decisions made by Governor Gary Herbert and the Republican-dominated Legislature that controls the state budget. Census figures from 2010 show 411,926 Utah residents without health care. State health-department data project about 111,400 of those people would qualify for Medicaid under the Affordable Care Act. Of those, about 53,000 would be newly eligible. The remainder are people who already qualify but have never enrolled in Medicaid, says Tom Hudachko BA’98, spokesman for the Utah Department of Health. That group of people is also likely to come onto the Medicaid rolls under the new law’s expanded provisions.

Helping the Uninsured

But Medicaid spending, which represents more than 21 percent of Utah’s budget, is already vexing lawmakers. State analysts project expanding the rolls could cost the state as much as $1.7 billion dollars between 2014 and 2022, despite continued federal reimbursements. The Affordable Care Act allows states to opt out of the Medicaid expansion plan, and it’s not yet clear what Utah will do.

At the University, Lee says the state ends up paying for uninsured people’s health care costs anyway, regardless of whether the federal law prevails. Some costs are “baked in” to insurance premiums paid by others, and the rest is covered through so-called charity care, meaning that the University’s health care system picks up the tab, she says. Last year alone, University of Utah Health Care spent more than $80 million of its $1.2 billion budget providing care to uninsured or underinsured patients, says Quinn McKenna, chief operating officer of University Health Care.

Lee notes that it’s far more costly for institutions, and individuals, if patients defer care until they reach a crisis point. “You’d rather have them on Medicaid, managed and seen in clinics, so they don’t come to the ER three weeks later,” she says.

If the new federal law continues on track, just how many of the uninsured would come into the U system as patients in 2014 with either private insurance or as part of expanded Medicaid isn’t clear. Both expanded Medicaid and private insurance rolls have the potential to bring some dollars back to the University, and that could cut the volume of charity care so that those funds could be redirected for medical education, direct care, and other uses.

Another uncertainty is what the rest of Utah’s health care market will do under the new federal law, Lee says. “If the rest of the market is receptive to these patients, then the distribution will be the same. If there are barriers put up for some of these patients, then more of them will come to us, because we take everybody.”

Vivian Lee, the University of Utah’s senior vice president of health sciences and dean of the Medical School, says the school’s class size must grow, to address the state’s physician shortage.

Either way, it seems certain that the demand for health care will grow. That has Lee, as dean of the School of Medicine, focused on making sure that Utah is training enough new doctors to meet the need. The U has the only medical school in the northern Intermountain region and is typically the main supplier of physicians for Utah, Idaho, Montana, Wyoming, and northern Nevada. Nationwide, a shortage is predicted of at least 91,500 physicians by the year 2020. Utah’s own physician shortage is even more severe, Lee says. A 2008 Association of American Medical Colleges study found Utah currently has fewer than one primary-care physician per every 1,000 people. Only three other states have fewer physicians per capita, and it’s hard to close the gap quickly, because it takes nearly a decade to train a physician. “With the Affordable Care Act and the fact we are the fastest-growing state in terms of population, that means that it’s just going to get worse,” she says.

Training More Doctors

To address the shortage, U administrators want to use a two-step process to restore the number of students accepted into the medical school annually from 82 to 102, and then expand the enrollment to 122. In 2008, the school had to reduce its class size from 102 students to 82 due to cuts in federal funding that were not replaced by the Legislature. Increasing the annual class size, however, will require money, and that funding is a top priority for the U with the Legislature in 2013, says Jason Perry, the U’s vice president for government relations.

Lee says that the U Medical School gets about $26.5 million annually in funding from the state. Increasing the number of medical students to 122 will require a projected $12.2 million in annual funding. The U is asking state lawmakers to cover $10 million of those costs. A similar appropriation request was made, but not funded, in 2012.

Raising tuition to help cover expanded enrollment costs just isn’t an option, Lee says. “Our students come out with an average of $158,000 in debt,” she says. “You don’t want to increase tuition more, because then they will have more debt, which forces them away from primary care [careers] and pushes them toward the higher-paying specialties.” Primary care doctors are expected to be in high demand after 2014, because the Affordable Care Act seeks to place more emphasis on wellness care and prevention.

The federal law will also begin to change the way doctors and hospitals get paid, and that has administrators like McKenna concerned about the bottom-line costs of doing business. In addition, the law’s reforms require that more of the health care dollar be spent directly on patient care, and the government will give more scrutiny to care delivery to make sure benchmarks are met.

Chris and Katina Anthony shop for baby items, with their son Daniel.

University Health Care facilities and staff annually handle an average of 1 million outpatient visits and 27,000 inpatient admissions and surgeries, McKenna says. That care gets paid for fairly evenly through private insurance and publicly funded programs. Data from the past three budget years show that on average, Medicare payments make up about 32 percent of the budget, and Medicaid payments total about 13 percent. Commercial insurance and managed care programs represent another 46 percent of the budget, with 5 percent coming from other government programs and 4 percent from patients who self-pay.

Those percentages are bound to change after the new law’s implementation, but no one can yet project what the numbers will look like. “From a philosophical standpoint, no matter what health care reform looks like, we know we are going to get paid less for what we do,” McKenna says. “Our strategy is to ask ourselves, ‘How do we live on less?’ It’s not a bad strategy, and that’s why a redesign of the system makes sense.”

Redesign is what McKenna’s job is all about. For nearly five years, he has promoted initiatives to keep the U ahead of the health care reform curve through staff-driven redesigns of care delivery and the processes needed to support the health care mission. Both on paper and in practice, the initiative seems a match with many of the criteria outlined in the federal law’s reforms. It’s also helping the U health care system meet its own goals of bettering the patient experience, improving care quality and outcomes, and bolstering overall financial strength.

The work is already netting tangible results. One review of patient outcomes for individuals needing ventilator support found that U patients stayed on the breathing machines longer than those in many other hospitals. A performance excellence team—a group of system-management engineers working in concert with doctors and nurses—reviewed the treatment protocols, looking for ways to improve. Under the changes they proposed, the number of patients staying on ventilators longer than 48 hours has dropped by 27 percent. The amount of time patients remain hospitalized has also been cut by 2.7 days, and the number of ventilator-associated pneumonia cases has been reduced by 67 percent.

Overall, that has saved the U health care system $3 million, McKenna says. “That’s what we’re trying to do across the board. We’re looking across the system and asking, ‘Where do we have those kinds of opportunities to redesign the way we do things?’ ”

Poised for Reforms

So far, care redesign has been approached on a project by project basis, McKenna says. The next step will be to up the tempo of change and spread the initiative across the wider health care system—a move that will help the U better prepare for the federal law’s broad reforms.

No matter what changes the law brings, the main goal of the University’s health care system is to provide the highest quality of care, McKenna says. “Our goal, my personal goal, is, whatever we are doing, we’re going to make it better.”

Lee and McKenna believe the institution is poised to weather the reforms well. The proactive work already begun has helped to reduce or flatten costs in recent years. Utah’s smaller and generally healthier populations also play in its favor. “I’d say we’re in a pretty good starting position,” Lee says. “And I hope were a good model for the country.”

To help that happen, Lee has established a health care reform committee to study the law’s reforms and analyze what protocols are already in place to ensure the U system makes the best possible choices for the future on the uncertain road ahead.

“I can picture seven scenarios where we’re doing the right things, and we’re going to be just fine,” McKenna says. “I can also picture two or three scenarios where all bets are off, and we’re going to have to be wildly creative and [think] out of the box, more so than what we are doing now. I think that’s where the nervousness comes. Is it going to be the seven or the three?”

Regardless of which scenario unfolds, uninsured patients like Katina Anthony are hoping the law prevails and provides them with much-needed help. Her husband lost his job this past fall, and the couple hoped they’d qualify for Medicaid in time for the baby’s birth, so the bills can get paid and so Katina and the newborn would have a few months of care. “It’s ridiculous,” Katina says. “We don’t want to the be the ones who are living off the government, and Chris is out looking for a job right now, but this will help.”

—Jennifer Dobner is a former longtime Associated Press reporter and editor who now is a freelance writer based in Salt Lake City.

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