How we are working to fund the future of children's health care
Jim Shmerling, DHA, FACHE, President and CEO of Children's Hospital Colorado
A friend once told me that the difference between Democrats and Republicans is that one likes to tax and spend and the other likes to spend and borrow. Obviously reduced spending is critical regardless of the source of funding. Americans are adamantly opposed to higher taxes and our current debt has exceeded our capacity to cover it. For the first time in our history, the credit worthiness of the United States has been downgraded because neither the Republicans nor Democrats have been able to resolve the current fiscal dilemma collaboratively.
What does the debt ceiling increase mean for our hospital?
The most recent Congressional agreement to increase our debt ceiling also included the creation of a bi-partisan Commission charged with cutting our deficit by $1.3-1.5 trillion. In the event they cannot agree or if Congress rejects their recommendations, pre-agreed upon reductions will automatically be made. Neither of these possibilities portend well for the funding of children's health care. Children's Hospital Colorado faces cuts or even the elimination of funding for Graduate Medical Education (GME) as part of the Discretionary budget cuts and reductions or elimination of our Hospital Provider fee which is part of the Federal Entitlement programs. These two sources of federal funding represent nearly $25 million dollars to our organization. Training the next generation of children's doctors and caring for EVERY child regardless of their ability to pay are mission-critical and we will remain committed to them no matter what. So, the $25 million question is how can we do it?
First of all, we have to be absolutely certain that we are not wasteful with our resources. Eliminating waste, which is an unfortunate reality in every hospital, is vital.
Secondly, over the years we have been building an integrated network of care that allows us to serve children in a less intrusive, less expensive environment. We are much more than just a single free-standing hospital. We are an integrated delivery model of care that supports a medical home for children in concert with our medical staff. We are managing chronically ill children by using best practices and working to standardize care protocols from the practitioner’s office to our ambulatory care sites of service to the tertiary/quaternary environment on the main campus. These are all essential strategies as we maneuver through this current economic and health care delivery transformation.
The problem with cutting Medicare and Medicaid payments
So, when Congress suggests cuts in Medicare and Medicaid payments to save money there are no real savings, just payment cuts. Providers will have to decide whether or not to discontinue programs and services to offset those payment cuts or continue providing them by shifting those unfunded costs to the private sector. In our case it probably will be the latter, UNLESS we can figure out, in collaboration with our medical staff and payers a different methodology for what and how we get paid.
There are ongoing negotiations with several of our largest payers who have expressed some initial interest in creatively developing a more value-driven proposition between us. We also have created an Accountable Care Organization (ACO) with nearly 100 of our medical staff which will be working towards eliminating variation in how we collectively provide care by standardizing best practices. These efforts will help transform how we deliver care and how we get paid for our services. We will seek reimbursement not only for the restoration of a child’s health but for preserving it.
Continuing to provide the best care for kids at Children's Colorado
The combination of remaining vigilant about our cost structure and identifying new sources of revenue will allow us to continue with all of our missions, i.e. patient care, advocating for children’s health, education and research. Our ability to ensure safe and efficacious care, vigilant oversight of our cost structure and creating innovative payment mechanisms for keeping children well and safe are essential to our continuing to thrive and remain the best Children’s Hospital in Colorado and one of the top pediatrics hospitals in the United States.
Please do not hesitate to contact me with comments.