a magazine for arkansas healthca i 1 · 2010. 4. 5. · a magazine for arkansas healthca winter...

Winter 2010 I Arkansas Hospitals 1A M A g A z i n e f o r A r k A n s A s h e A lt h c A r e P r o f e s s i o n A l sA M A g A z i n e f o r A r k A n s A s h e A lt h c A r e P r o f e s s i o n A l s

Winter 2010 www.arkhospitals.org

Arkansas Medicaid Plan Amendments Approved

Arkansas Hospitalsreceive Governor’s Awards

2009 Annual Meeting roundup

2 Winter 2010 I Arkansas Hospitals

Winter 2010 I Arkansas Hospitals 3

Arkansas Hospitals

PAGE 38PAGE 8 PAGE 13 PAGE 16

2009 Annual Meeting Roundup8 Tim Hill Receives Weintraub Memorial Award8 Distinguished Service Awards Honor Kordsmeier, Fale 9 Stubblefield is Young Administrator of the Year10 Governor, Leaders Receive Statesmanship Awards10 AHAA Names its Administrators of the Year10 2009 Regent’s Awards Presented11 2009 Membership Satisfaction Survey Results12 AHA Trade Show 2009 Exhibitors

Features14 New Chairman of the AHA Board of Directors15 Morse Named Chairman-Elect16 Leaders Contribute to Trustee Education 16 Hospitals Receive Governor’s Awards18 Mid-Management Series Graduates19 Audit Trax Manages RAC Process 20 Reminder of AHA Strategies for Fiscal Year23 Medicare 2010 OPPS and ASC Final Rules 23 2010 Home Health Payment Changes Announced 24 Paper Examines Healthcare Cost Drivers 25 Warning Signs of a Distressed Hospital26 New, Three-Year Strategic Plan Released28 2010 Top Issues in Healthcare

Legal Notes22 OPPS Physician Supervision Requirements

Healthcare Reform29 The Cost of Reforming – or not Reforming

29 Weekly Health Reform Webcasts Continue30 46.3 Million Americans Uninsured in 2008 30 Medicaid Spending, Coverage and Policy30 Liability Claims Rising for First Time in 10 Years31 Hospitals and Communities Feel Recession’s Impact 32 Arkansans Satisfied with Health Insurance33 HHS Revises Calculating Improper Payments 33 Tougher Standards in Calculation of Improper Rates

News StAt35 AHA Member Hospital Named #3 in Nation 35 BABs Combine with HUD Mortgage Insurance37 HHS Updates HIPAA Enforcement Regulations

Medicare/Medicaid37 Surgical Error Billing Policy Reqires Two Claims37 Outpatient Payment Data Updated37 Integrity Program Audio Conference Follow-Up 38 Medicaid Readies FY 2010 IQI Program38 Medicare IRF Rule Clarification

H1N1 (Swine) Flu Update39 Implications of H1N1 as National Emergency 39 Section 1135 Waiver Request Details 40 AHA Delivers Pandemic Crisis Communication Kit 40 Health Department Ranks at Top for Preparedness 40 H1N1 Vaccine Ordering Instructions 41 FDA Warning About Tamiflu

Hospital Quality42 Building Improvement into Trauma System44 Top U.S. Hospitals Identify Causes, Develop Solutions

Emergency Preparedness46 Crisis Team Response Training46 Hospitals Need to Perform Radio Assessment

Departments4 From the President5 Education Calendar7 Arkansas Newsmakers and Newcomers

Cover Photo Ice-encapsulated pines bring quiet winter beauty

Photo courtesy of Arkansas Dept. of Parks and Tourism

7 Arkansas Medicaid Plan Amendments Approved 16 Arkansas Hospitals Receive Governor’s Awards 23 Build American Bonds Combine with HUD Mortgage Insurance to Provide Exceptional Borrowing Option

is published by

Arkansas Hospital Association419 Natural Resources Drive • Little Rock, AR 72205

501-224-7878 / FAX 501-224-0519www.arkhospitals.org

Beth H. Ingram, Editor

Nancy Robertson Cook, Copy Editor/Contributing Writer

BoArd of directorsJames Magee, Piggott / Chairman

Larry Morse, Clarksville / Chairman-ElectDavid Cicero, Camden / Treasurer

Ray Montgomery, Searcy / Past-ChairmanKirk Reamey, Clinton / At-Large

Robert Atkinson, Pine BluffDarren Caldwell, DeWitt

Jamie Carter, West MemphisKristy Estrem, BerryvilleRandy Fortner, Benton

Bob Gant, ConwayCarolyn Hannon, Mountain Home

Tim Johnsen, Hot SpringsJeff Johnston, Fort SmithEd Lacy, Heber SpringsJim Lambert, Conway

Ron Peterson, Mountain HomeDoug Weeks, Little Rock

executive teAmPhil E. Matthews / President and CEO

Robert “Bo” Ryall / Executive Vice President

W. Paul Cunningham / Senior Vice President

Elisa M. White / Vice President and General Counsel

Beth H. Ingram / Vice President

Don Adams / Vice President

distriButionArkansas Hospitals is distributed quarterly

to hospital executives, managers, and trustees throughout the United States; to physicians,

state legislators, the congressional delegation, and other friends of the hospitals of Arkansas.

To advertise contactGreg Jones

Publishing Concepts, Inc.501/221-9986

[email protected]

www.thinkaboutitnursing.com

Edition 69


Arkansas Medicaid officials informed the Arkansas Hospital Association December 17 that the inpatient and outpatient amend-ments to the Arkansas State Medicaid Plan (SPA – State Plan Amendment) have been approved by Health and Human Services Secretary Kathleen Sebelius! Medicaid can now move for-

ward with implementing the assessment program approved in Arkansas’ 2009 legislative session.

As you will recall, AHA worked diligently with the governor and both legislative houses during the 2009 session of the General Assembly to find better Medicaid reimbursement funding mechanisms for hospitals. Our goal was to pass legislation establishing a Medicaid hospital provider assessment to raise the state matching funds needed to draw down an additional $100 million federal dollars for hospital inpatient and outpatient payments.

Both the Senate and the House passed legislation calling for the assessment, and Governor Mike Beebe signed it into law as Act 562. The law creates an assessment on Arkansas hospitals’ net revenues. Assessment dollars will be utilized to match federal Medicaid funds, returning more than $100 million in new Medicaid hospital payments to Arkansas hospitals.

The added payments will help to offset annual losses that have been accruing to Arkansas hospitals for many years. The most recent study conducted by the Arkansas Hospital Association showed that hospitals lost about $100 million on Medicaid inpatient and outpatient services in 2006 and nothing has occurred since then to reduce the amount.

Immediately after the bill was signed into law, the AHA began work with Arkansas Medicaid officials to prepare Arkansas’ official SPA, including the amendments called for by the legislation.

The final SPA was sent to Washington’s Centers for Medicare & Medicaid Services (CMS) during the week of December 7, and less than 10 days later, we received the news that the plan’s amendments had been approved. Since this process can often take up to six months for review and approval, we are delighted with the fast response, and greatly pleased that Health and Human Services Secretary Sebelius so quickly approved the plan!

We want to thank Medicaid officials for working with us and for pushing the feds as hard as possible to achieve this fast turnaround.

A meeting for Arkansas hospital CFOs will be held after the first of the year to make sure everyone understands the procedures (state and federal) that must be followed to bring the extra reimbursement dollars into each hospital.

The last state procedure required before implementation will be for the Rules and Regulations Subcommittee of the Legislative Council to “sign off” on the program. This can happen in late January or early February.

This is an outstanding result for our hospitals! It is greatly needed and will allow new dollars to begin flowing in February or March.

Phil E. MatthewsPresident and CEO Arkansas Hospital Association

F r o m t h e P r e s i d e n t

Outstanding News for Arkansas Hospitals


EduCationCalendar

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January 20-22, Tunica, MississippiHealthcare Financial Management Association (HFMA) Quarterly Education Meeting

January 22, Little Rock2010 OPPS Update Workshop

January 22, Little RockArkansas Association for Healthcare Engineering (AAHE) Winter Meeting

January 28-29, Little RockArkansas Crisis Response Team Training

February 26, Little RockArkansas Healthcare Human Resources Association (AHHRA) Conference

March 4, Little Rock2010 Hospital General Medicare Update Workshop

March 21-25, ChicagoAmerican College of Healthcare Executives Congress on Healthcare

March 31, Little RockMedicare Conditions of Participation Workshop

April 7, Little RockCrisis Communications Workshop

April 8, Little RockHospital Emergency Preparedness Workshop

April 7-9, Hot SpringsHealthcare Financial Management Association (HFMA) Quarterly Education Meeting

April 25-28, Washington, D.C.American Hospital Association Annual Meeting

May 5-7, Hot SpringsSociety for Hospital Purchasing and Materials Management Annual Meeting and Trade Show

May 13-14, Little RockArkansas Association for Healthcare Engineering (AAHE) Annual Meeting and Tradeshow


This maTerial was prepared by The arkansas FoundaTion For medical care inc. (aFmc), The medicare QualiTy improvemenT organizaTion For arkansas, under conTracT wiTh The cenTers For medicare & medicaid services (cms),an agency oF The u.s. deparTmenT oF healTh and human services. The conTenTs presenTed do noT necessarily reFlecT cms policy.

Protect your Patients.

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Creating a Culture of safety: that’s the goal of the centers for Medicare & Medicaid services’ (cMs) national Patient safety initiative (nPsi).

as the cMs Quality improvement organization in arkansas,

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ArkAnsAs Newsmakers and Newcomers

Governor Mike Beebe has named the following Arkansas hospital executives to the Trauma Advisory Council: Robert Atkinson, FACHE, president/CEO emeritus, Jefferson Regional Medical Center, Pine Bluff; Jamie Carter, CEO, Crittenden Regional Hospital, West Memphis (reappointed); R.T. Fendley, senior associate hospi-tal director, UAMS, Little Rock; and Ron Peterson, FACHE, CEO, Baxter Regional Medical Center, Mountain Home. All have terms expiring July 1, 2011.

Margaret West has been named CEO of Magnolia Hospital, suc-ceeding Terry Amstutz. West joined the hospital as director of nutrition services in 1986 and assumed the position of chief ancillary officer in 1998. She has served as interim CEO since June while a search for a permanent CEO was underway.

Governor Mike Beebe has appointed James M. Lambert, FACHE, president/CEO of Con-way Regional Health System, to the State Board of Health. He will fill the unexpired term of Russ Sword, who resigned the position upon his retirement in July. Lambert’s term will expire Dec. 31, 2011. By virtue of his appointment, he will serve on the Arkansas Hospital Association Board of Directors.

Russ Sword, FACHE, has been named interim administrator at Chicot Memorial Hospital in Lake Village. He succeeds Bruce Bennett. Sword, former CEO of

Ashley County Medical Center in Crossett until his retirement in July, will fill the position for several months while a search is underway for a permanent CEO.

Greg Stubblefield, administra-tor, Baptist Health Medical Center – Arkadelphia, was named the 2009 recipient of the C. E. Melville Young Administrator of the Year Award during the Arkansas Hospital Association Annual Meeting. Stubblefield has been administrator of the Arkadelphia facility for three years and is active in professional and civic affairs.

Phillip K. Gilmore, FACHE, administrator of Ashley County Medical Center in Crossett and Arkansas’ ACHE Regent, presented two Regent’s Awards during the Oct. 8 ACHE/AHEF Annual Breakfast. Brian Barnett, FACHE, COO, The Myeloma Institute for Research and Therapy at UAMS in Little Rock, received the ACHE Early Career Healthcare Executive Award, and Dr. John Baker, professor in the graduate program in health at the UAMS College of Public Health, received the ACHE Leadership Award.

Melody Trimble, FACHE, has been named CEO of Sparks Regional Medical Center in Fort Smith, effective Dec. 1 following the hospital’s transfer of ownership to Health Management Associates. She succeeds Ted Woodrell. Trimble has served as CEO of Venice Regional Medical Center in Naples, Florida, since 2005. •

Arkansas hospitals that have been getting edgy to hear positive news regarding implementation of the state’s hospital Medicaid assessment program received a much-wanted present days before Christmas. Kathleen Sebelius, Secretary of the Department of Health and Human Services, gave her final approval for two state Medicaid Plan amendments that will allow the program established by the Arkansas General Assembly during the 2009 legislative session to move forward. Sebelius’ signature marks the culmination of more than 18 months of work by the Arkansas Hospital Association (AHA) and the state Medicaid officials to secure additional Medicaid funding for hospital services.

Under Act 562 of 2009, eligible hospitals will be assessed one percent of their annual net revenues to raise the state dollars necessary to draw down additional federal Medicaid match-ing funds. Public hospitals are exempt from the assessment, as are a few other select facilities.

While all federal approvals have been secured, the state must still fulfill certain obli-gations under the Arkansas Administrative Procedures Act and Act 562. The final step will be a review the Medicaid policy changes needed to enable implementation by the legis-lative Rules and Regulations committee. That should occur in early February.

Medicaid officials are currently working on hospital-specific information related to quarter-ly assessment and payment amounts. Hospitals’ supplemental payments will be based on sepa-rate formulae for inpatient and outpatient care. The information will be distributed to hospitals as soon as possible. Initial payments and due bills should be sent in February and will cover the first quarter of State Fiscal Year 2009, July 1-September 30. That will be followed within a few weeks by a payment and assessment for the October 1-December 31, 2009 quarter. The Arkansas Hospital Association will host a membership meeting in January to discuss implementation issues affecting the program now and into the future. •

Arkansas MedicaidPlan AmendmentsApproved


A h A A n n u A l m e e t i n g

Timothy E. Hill, newly-named CEO of the Arkansas Heart Hospital in Little Rock and the immediate past (11 year) president and CEO of North Arkansas Regional Medical Center (NARMC) in Harrison, was the recipient of the Arkansas Hospital Association’s (AHA) A. Allen Weintraub Memorial Award for 2009. The award was presented during the Association’s Awards Dinner held in conjunction with the 79th Annual Meeting Oct. 7-9 at the Peabody Hotel in Little Rock.

Each year since 1974, the AHA has honored a hospital chief execu-tive officer who stands apart from all the rest; one who is active in state and national hospital and healthcare affairs, and who is a dedicated civic worker and an inspiration to all with whom he or she works. Hill was selected by the AHA Board of Directors to receive the 2009 Weintraub Award, the highest award granted to individuals by the AHA.

Among his many achievements during his 11 years with the Harrison hospital, Hill secured financing for and completed a $25 million building project that includes a new 71-bed patient tower and enhancements

for rehabilitation services, medical/surgical, critical care and obstetrics/gynecology. This is the most significant improvement to the NARMC facility in its 59-year history.

He also recruited several pri-mary and specialty care physicians and added clinical enhancements, including medical imaging, radiation therapy and rural health services.

Hill has long been an active member of the AHA Board of Directors. He is the immediate past-chairman of the AHA Board and has chaired both the Metropolitan and Northwest Hospital Districts. He recently served as delegate to the American Hospital Association’s Regional Policy Board 7.

In 2008, he was named by the American Hospital Association as recipient of both the Partnership for Action Grassroots Champion Award and the Most Valuable PAC Player Award for his work in chairing the Arkansas Hospital Association PAC.

Hill has been very active in Harrison civic and community groups. He served as chairman of the Harrison Chamber of Commerce and was a member and former board member of the Rotary Club of Harrison, where he was honored as a Paul Harris Fellow.

He served on the boards of direc-tors of Arvest Bank in Harrison, the North Arkansas Partnership for Health Education, and the Northwest Arkansas AHEC Advisory Board.

He served for many years as a sports broadcaster for the local Harrison television station.

Before becoming administrator of NARMC, Hill served in that role at Southwest Regional Medical Center in Little Rock.

The Weintraub award is named for the late A. Allen Weintraub, long-time beloved administrator of St. Vincent Infirmary Medical Center in Little Rock. •

Tim Hill is 2009 A. Allen WeintraubMemorial Award Recipient

Ray Kordsmeier, president and treasurer of Kordsmeier Furniture Company in Conway and a trust-ee for Conway Regional Health System since 1994, and Randall J. Fale, recently retired hospital administrator and 18-year CEO of St. Joseph’s Mercy Health Center in Hot Springs, were hon-ored as dual recipients of the Arkansas Hospital Association’s

Distinguished Service Award as a part of the 2009 AHA Annual Meeting Oct. 7-9.

Ray KordsmeierIn addition to taking an active

role in shaping healthcare initia-tives and state healthcare policy, Kordsmeier has served as regional trustee delegate and alternate del-egate to the American Hospital

Association’s Regional Policy Board 7, a member of the American Hospital Association’s Committee on Governance, a member of the Arkansas Governor’s Roundtable on Healthcare, president of the Arkansas Association of Hospital Trustees, and a member of the Arkansas Hospital Association’s Board of Directors.

Ray Kordsmeier, Randall Fale Honoredwith Distinguished Service Awards

Ray Montgomery and Tim Hill


continued on the next page



He also is a past president of the Arkansas Furniture Association’s Health Insurance Board.

In Conway, Kordsmeier has served as president of the Rotary Club, Conway Public Facilities Board and the Conway Chamber of Commerce, and as chairman of the St. Joseph School Endowment Foundation.

In addition, Kordsmeier has served on the boards of Worthen Bank, Boatmen’s Bank, and the advisory board for the University of Central Arkansas’ College of Business.

Randall FaleFale’s retirement in 2008 ended a

40-year career in healthcare where his visionary style led St. Joseph’s to network with providers in Hot Springs and throughout Garland County to create a system of integrated services.

He developed St. Joseph’s Hot Springs Village Advisory Board and served as a member of that Board. He also was instrumental in forming

a partnership between St. Joseph’s Catholic-sponsored hospital and Jewish-sponsored Levi Hospital, making this partnership one of a kind in the state.

During his hospital career, Fale served on the boards of the Arkansas Foundation for Medical Care and the Arkansas Hospital Association.

Fale currently serves as a Court Appointed Special Advocate (CASA). His civic and community activities include serving on the boards of the

Hot Springs Chamber of Commerce, local Rotary club and a local bank. He has supported Habitat for Humanity, Fifty for the Future, the Boy Scouts, Race for the Cure, Ouachita Children’s

Shelter, Meals on Wheels and numer-ous other organizations and events.

The Distinguished Service Awards, which recognize individuals who have promoted a cause of the healthcare industry, were presented during the AHA Awards Dinner at the Peabody Hotel in Little Rock Oct. 8. •

Arkadelphia’s Greg Stubblefieldis Named Young Administrator of the Year

Greg Stubblefield, vice president and administrator, Baptist Health Medical Center – Arkadelphia, was named the 2009 recipient of the C. E. Melville Young Administrator of the Year Award during the Arkansas Hospital Association Annual Meeting, held Oct. 7-9 at the Peabody Little Rock.

Stubblefield has been admin-istrator of the Arkadelphia facility for three years and is active in professional and civic affairs, including the Clark County Strategic Plan Committee, where he serves as co-chair of the healthcare subcommittee.

Stubblefield is a Pine Bluff native, and was a prominent linebacker for the Pine Bluff Zebras. After high school, he attended the University of Arkansas, then transferred to the University of Central Arkansas, where he earned his undergraduate degree.

He became interested in hospital administration and moved to Fort Worth to attend the University of North Texas Health Science Center, where he earned his master’s degree. He joined the Baptist Health system in Little Rock as an administra-tive resident in 2002, and he has remained with Baptist Health for his entire career.

Prior to being named administra-tor at Baptist Health – Arkadelphia, he served as night administrator for Baptist Health – Little Rock. He was named interim administrator at Baptist Health – Arkadelphia after the death of longtime administrator Dan Gathright, a position Stubblefield held for several months. He was then named full-time administrator of the hospital in 2007.

In his nomination of Greg for the award, Russell D. Harrington Jr.,

FACHE, president and CEO of Baptist Health, said, “He has accepted his leadership role with great enthusiasm and is always eager to do what is best for Baptist Health and the patients we serve, whether they are in Arkadelphia or at one of our other institutions in the state. •

Ray Kordsmeier and Ray Montgomery Randall Fale and Ray Montgomery

Greg Stubblefield




AHAA Administrators of the Year are Perkins, EstremBetty Spencer, immediate past president of the Arkansas

Hospital Auxiliary Association, presented two awards honoring hospital administrators during the opening session of the Arkansas Hospital Association’s Annual Meeting.

Given in two categories based upon hospital size, the awards are voted upon by auxiliary members.

The Administrator of the Year award for Hospitals with More Than 100 Beds was presented to Mike Perkins, vice president, patient services, Baptist Health – Little Rock.

Kristi Estrem, president, St. John’s Hospital – Berryville was named Administrator of the Year for Hospitals with Less than 100 Beds. •

Governor Joins State Senatorial and House Leaders in Receiving Statesmanship Awards

Mike Perkins Kristi Estrem

Phillip K. Gilmore, FACHE, administrator of Ashley County Medical Center in Crossett and Arkansas’ ACHE Regent, presented two Regent’s Awards during the Oct. 8 ACHE/AHEF Annual Breakfast.

Brian Barnett, FACHE, COO, The Myeloma Institute for Research and Therapy at UAMS in Little Rock, received the ACHE Early Career Healthcare Executive Award.

Dr. John Baker, professor in the graduate program in health at the UAMS College of Public Health, received the ACHE Leadership Award.

The ACHE/AHEF annual breakfast is a part of the Arkansas Hospital Association’s Annual Meeting. • Brian Barnett, FACHE, COO Dr. John Baker

2009 Regent’s Awards Presented

Governor Mike Beebe Senator Bob Johnson Senator Tracy Steele Senator Larry Teague




This year, for the second year in a row, an Arkansas Hospital Association Membership Satisfaction Survey was conducted during the association’s Annual Meeting.

The computerized survey was conducted Oct. 8.

Overall, results were highly posi-tive. Troy Collins, who conducts the survey, said the AHA’s survey generat-ed the highest satisfaction percentages of any association his group surveys across several states and industries.

A larger number of people partici-pated in the survey this year over last year, with the largest participation com-ing from the North Central District.• 93percentsaidtheAHABoard

of Directors represents their best interests in developing policy

• 92percentreportedtheAHA’seffectiveness as an advocate

• 91percentpreferredtheAHA’seducational programs over other organizations

• 92percentreportedtheAHAstaff’sresponsiveness to be above average

• 95percentagreedthattheAHApublications met or exceeded their needs

• 93percentindicatedtheAHA’sedu-cational programs provide opportu-nities for respondents’ improvement in their particular fields

• 85percentindicatedAHAwouldmeet their needs and be relevant into the foreseeable future

• 89percentratedAHAmembershipabove average in value received

• 99percentoftheexhibitorsrated the venue above average

• 91percentoftheexhibitorsindicated their company would exhibit in the 2010 trade show

Citing a significant increase in sat-isfaction, AHA Services Inc. gained strength among the membership in recognition, relationship, overall performance and importance. •

The Arkansas Hospital Association recently honored several of our state’s elected officials for their longtime support of Arkansas’ hospi-tals, particularly during the 2009 session of the Arkansas General Assembly. Governor Mike Beebe and several lead-ers of the Arkansas General Assembly were honored with Statesmanship Awards at the AHA’s annual Awards Dinner held at the Peabody Little Rock Oct. 8.

The awards were presented in recognition of the governor’s and so many legislators’ staunch assistance with legislation affecting Arkansas hospitals. This year in particular, passage of legislation creating a tobacco tax that funds the creation of Arkansas’ first statewide trauma system was a highlight.

For their outstanding contributions

to the health and welfare of the people of Arkansas in their capacity as governor, members of the Arkansas Senate and the House of Representatives and for their leadership in the creation of the new statewide trauma system, the AHA bestowed 2009 Statesmanship Awards upon Governor Mike Beebe, Senator (and Senate president pro tempore) Bob Johnson (Bigelow), Senator Tracy Steele (North Little Rock), Senator

Larry Teague (Nashville), Speaker of the House of Representatives Robbie Wills (Conway), and Representative Gene Shelby (Hot Springs).

For his leadership in the passage of the tobacco tax and his sponsorship of the Medicaid Hospital Provider Assessment legislation, the AHA bestowed a Statesmanship Award upon Representative Gregg Reep (Warren). •

And the Record Shows:2009 Membership SatisfactionSurvey Ratings Results

America Farrell, CEO of Medical Center of South Arkansas in El Dorado, participates in AHA’s member satisfaction touch poll during the annual meeting.

Representative Robbie Wills Representative Gene Shelby Representative Gregg Reep




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AHA Trade Show Filled to Capacity:ExHibitoRS GivE EvEnt HiGH RAtinGS

It was another sold out Trade Show for the 2009 Arkansas Hospital Association Annual Meeting. This year’s trade show, held at the Statehouse Convention Center connected to the Peabody Little Rock, drew 130 exhibitors and vendors. Included as a part of this year’s computerized satisfaction survey, 99 percent of the 2009 exhibitors rated the trade show venue as above average, and 91 percent indicated their company would be back for the 2010 trade show!

The Arkansas Hospital Association would like to thank all of the many companies exhibiting in this year’s annual Trade Show. Special appreciation goes to the 18 corporate sponsors of this year’s Annual Meeting, listed below in red.




2009-2011 Chairman James Magee, CEO of Piggott Community Hospital, closes out the AHA Awards Dinner with his plans for the future.


The annual Trade Show was at capacity with over 100 companies and sponsors supporting the Arkansas Hospital Association and its member hospitals.

Keynote speaker John Foley, former lead solo with the U.S. Navy Blue Angels, enthralled the audience with his awe-inspiring video, patient safety discussion, and his encouragement that hospital team members should focus on the Blue Angel’s motto “Glad to be here!”

Maj. General David A. Rubenstein, FACHE, past-chair of the American College of Healthcare Executives, discussed with ACHE members the healthcare role of the military and medical advances now being used in civilian medicine.

AHA Chairman James Magee presents a gift to Rebecca Montgomery of Searcy for her support of her husband Ray during his two-year tenure as AHA Chairman.

Arkansas Surgeon General Dr. Joe Thompson (left), Speaker of the House of Representatives Robbie Wills (center), and moderator Roby Brock discuss healthcare, politics and economics during the AHA Annual Meeting’s Executive Leadership Luncheon.

An audience of approximately 650, half of which were members of the Arkansas Hospital Auxiliary Association (AHAA), filled the Peabody Ballroom for the keynote address and special AHAA awards.


James Magee, chief executive offi-cer of Piggott Community Hospital, has been seated as chairman of the Arkansas Hospital Association Board of Directors. He will serve a two-year term in this leadership role.

Magee began his career as a hos-pital CEO 12 years ago, after serving for some time on the community hospital’s board of directors. Prior to his move into healthcare adminis-tration, he was a banker who worked diligently in bringing significant business improvements to his home community.

He earned his bachelor’s degree from the Louisiana State University of Banking, and began his banking career while still in college. During this time, he worked as assistant bank examiner for the state of Arkansas, a position that included assisting the state examining board with regulatory examinations, ratings and certification of all state banks.

“That experience helped me gain insight into a wide range of management techniques,” he says. It was valuable information that helped him form his own uniquely positive leadership style.

He returned to his hometown of Piggott after graduation, and began a 20-year career at Piggott State Bank, where he was named chairman and CEO in 1981. One of his hallmarks while serving the bank was his ability to establish strong ties with community businesses.

Piggott State Bank merged with Farmers Bank and Trust in Blytheville, a result of Magee’s leadership plan-ning.

In 1984, he was named president and CEO of Farmers Bank and Trust in Blytheville. During this time, he also chaired the Arkansas Industrial Development Commission under then-Governor Bill Clinton.

Magee served on the Piggott Community Hospital’s Board of Directors for a number of years, and in a rare move, he agreed to leave banking and become administrator of the hospital in 1997.

During his tenure at Piggott Com-munity Hospital, a 25-bed critical access hospital, Magee has acquired funding for and led a $2.5 million hospital expansion, added new services, increased specialty clinic services, advanced telemedicine, and led his team to achieve top rankings in the area of quality.

“Monitoring patient care is not something he leaves to others,” says Tonny Dement, APN, and clinical administrator at Piggott Community Hospital. “He rounds on patients regularly.” Dement believes this is one reason the facility consistently maintains high scores in the Arkansas Foundation for Medical Care’s quality standards program.

When asked about his philosophy of hospital administration, Magee says that it is his goal “to make the patient experience the best that it can be – where quality and courtesy are combined.”

A charter member of the Board of the Mississippi River Delta Health Association (MRDHA), a coalition of rural hospitals, clinics and commu-nity health centers, Magee is active

in critical access and rural hospital affairs.

He is a great believer in staff devel-opment, and makes certain his staff members have educational, train-ing and development opportunities. His hospital team members say he is “always cognizant of self-esteem among his employees. He appreciates (us), and expresses it openly.”

For many years, Magee has been active in the Piggott community’s civic groups. He has served as past president of both the Chamber of Commerce and the Lion’s Club, and as chair of the Industrial Devel-opment Committee.

When his community and hospital were among those hardest hit by the Northeast Arkansas ice storm of 2009 and forced to operate without power for weeks, he stayed at the hospital 24/7 to help in every way he could. His employees have twice honored him for his heroic response to the difficult challenge the storm and its aftermath brought, both to the community and to the hospital itself.

Long active in the Arkansas Hospital Association, Magee has served as chairman of the Northeast District, and most recently as a member of the Board of Directors, serving on the Finance and Executive Committees. He also serves on the AHA Services Inc. (AHASI) Board of Directors.

About the AHA, Magee says, “The Arkansas Hospital Association ranks highly with our hospital – the ongoing dedication that the AHA staff devotes to improving the status of all Arkansas hospitals is tremendous. The importance of the association to Arkansas hospitals cannot be overstated.”

The AHA staff and Board of Directors welcome him as their new Board chairman. •

James Magee

Welcome to the new Chairman of theAHA board of Directors: JAmes mAgee


Larry Morse, administrator of Johnson Regional Medical Center in Clarksville, an 80-bed acute care hospital located in the Arkansas Valley District, was elected to a two-year term as chairman-elect of the Arkansas Hospital Association

during the AHA’s Oct. 8 House of Delegates meeting in Little Rock. He will assume the office of chairman of the Association in October 2011.

Hospital CEOs Jeffrey Johnston, Jim Lambert and Ron Peterson were elected to serve terms on the AHA Board of Directors.

Jeffrey A. Johnston, president and CEO of St. Edward Mercy Medical Center in Fort Smith, will

succeed Larry Morse as the Board delegate representing the Arkansas Valley District, with a term to expire October 2012.

James (Jim) M. Lambert, FACHE, president and CEO of Conway Regional Medical Center, will rep-

resent the AHA on the State Board of Health. Appointed by Governor Beebe, Lambert

succeeds Russ Sword, who retired in July. Lambert’s term expires Dec. 30, 2011.

Ron Peterson, FACHE, presi-dent/CEO of Baxter Regional Medical Center in Mountain Home, was elected alternate del-egate to the American Hospital Association’s Regional Policy Board 7. He succeeds Robert Atkinson, FACHE, president/CEO emeritus of Jefferson Regional

Medical Center in Pine Bluff, who will serve as the delegate to RPB 7, succeeding Tim Hill. Both will serve for one year.

The House of Delegates also rati-fied the election by the AHA Board of David Cicero, president/CEO of

Ouachita County Medical Center in Camden, as treasurer, succeeding Luther Lewis who resigned in May, and Tim Johnsen, president/CEO of St. Joseph’s Mercy Health Center in Hot Springs, as the Southwest District representative. He succeeds David Cicero. Cicero’s term expires in October 2011 and Johnsen’s in October 2010.

Carolyn Hannon of Mountain Home, 2009-2010 president of the Arkansas Hospital Auxiliary Association, also will serve a one-year term on the AHA Board. •

Larry Morse

Carolyn Hannon

James M. LambertJeffrey Johnston Ron Peterson David Cicero

Tim Johnsen

Larry Morse Named Chairman-Elect;New Members of AHA Board of Directors Announced

Larry Morse, administrator of Johnson Regional Medical Center in Clarksville, an 80-bed acute care hospital located in the Arkansas valley District, was elected to a two-year term as chairman-elect of the Arkansas Hospital Association during the AHA’s oct. 8 House of Delegates meeting in Little Rock.


On Friday, Nov. 6, Arkan-sas hospital trustees and executives attended the day-long seminar, “Essentials of Healthcare Governance,” at Little Rock’s Crowne Plaza hotel. The program was sponsored by the Arkansas Association of Hospital Trustees and the Arkansas Hospital Association.

The seminar was a pilot for the course developed by Best On Board, a new firm created to provide compre-hensive trustee education and certification services for the nation’s healthcare leaders.

Attendees received a content-rich, six-part course on the essentials of governing, complete with a test to certify their mastery of the material.

“We are enormously grateful to the attendees, the Arkansas Asso-ciation of Hospital Trustees and the Arkansas Hospital Association,” said Dr. Connie Curran, Best On Board CEO, and one of the course’s presenters.

“They made a significant contri-bution to other trustees and hospital

and medical staff leaders around the country by allowing us to pilot this course with them. This program will have resounding impact on the nation’s hospitals, and, ultimately, on their patients,” she added.

The course, which received high marks and praise from the attend-ees, will officially launch in January 2010 with both onsite and online formats.

Several attendees mentioned that they felt every trustee, experienced or not, should take the course.

Other participants commented that the course enables trustees to fully understand their leadership role and responsibilities, and serve their communities with greater compe-tence and confidence.

Mary Totten, Best On Board president, also a course pre-senter, commented on the attendees’ contribution to development of the course. “We have closely analyzed and scrutinized our course and test as a result of this pilot. We have made revisions based on the attendees’ comments and responses. We are grateful to them for their very thoughtful input.”

Beth Ingram, vice president of the Arkansas Hospital Association, said, “We were very pleased to have had Connie Curran and Mary Totten, two of the most respected thought leaders in board governance, present their comprehensive course. The program scored very highly with attendees, who also viewed it as a valuable offering from their state association to assist them in meeting their expanding respon-sibilities in this environment of healthcare reform.” •

Governor Mike Beebe in October recognized four Arkansas hospi-tals for their efforts to improve the health of area residents by pro-viding quality, efficient healthcare services.

White River Medical Center (Batesville), Drew Memorial Hospital (Monticello), Saline Memorial Hospital (Benton) and St. Anthony’s Medical Center (Morrilton) were among 15 busi-

ness organizations statewide that were presented Arkansas Governor’s Quality Awards dur-ing an Oct. 19 ceremony in Little Rock.

White River Medical Center received the Governor’s Quality Award for Performance Excellence, making it the third Arkansas hospital in recent years to receive Arkansas’ highest quality recognition.

Drew Memorial Hospital earned the Achievement Award; Saline Memorial Hospital received a Commitment Award, and a Challenge Award went to St. Anthony’s Medical Center.

The Governor’s Quality Award program provides opportunities for Arkansas companies to measure their progress in the areas of quality, productivity and financial effectiveness.

Arkansas’ Hospital Leaders Contributeto Advance in Trustee Education

Arkansas hospital trustees and executives were tested on materials mastery as a part of a November education and certification pilot course developed by Best on Board.

Arkansas hospitals receive governor’s Awards


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The Arkansas Hospital Asso-ciation offered its fourth annual Mid-Management Leadership Series from April through October of 2009. The AHA congratulates 17 Arkansas hospital representatives on their achievement of earning the 2009 Mid-Management Leadership Certificate.

The AHA-sponsored series fea-tured individual programs targeted specifically for individuals new to hospital supervisory or mid-level management positions. Other indi-viduals attended the programs as a refresher course.

The series was designed to educate employees for middle-management positions or toward advancement along their career paths. Course topics included leaping from staff to management, the legal aspects of management, dealing with conflict, building influence and credibility, improving productivity, means and methods for quality improvement, and “Friday Night in the ER.” Participants also were required to take an online careLearning course on either time management or managing meetings effectively. Fifteen additional individuals have

completed the face-to-face education and are completing the online portion of the series.

Those individuals earning the cer-tificate by attending at least five of the seven programs and a careLearn-ing program are:

Lisa Bates-Dubrow, Ph.D.Scientific Director, Clinical ChemistryArkansas Children’s Hospital

Frances SoderbergSupervisor, Metabolic Genetics LabArkansas Children’s Hospital

Mark Stephen SanfordER SupervisorBaptist Health Medical Center

David HennesseeDirector of RadiologyBaptist Health Medical Center – Arkadelphia

Ron EstesEMS InternCentral Arkansas Veterans Healthcare System

Jacqueline McKeeverEMS InternCentral Arkansas Veterans Healthcare System

Kristie Branscum, RNDirector of NursesCommunity Medical Center of Izard County

Karen HolcombClinical Nurse ManagerJefferson Regional Medical Center

Ashlea Kennedy, RNClinical CoordinatorJefferson Regional Medical Center

Wanda Suggs, RNPatient Care CoordinatorJefferson Regional Medical Center

Thomas Turner, RNPatient Care CoordinatorJefferson Regional Medical Center

Jackie HefleyMaterials ManagerUAMS Medical Center

Penny TalbertLandscape ManagerUAMS Medical Center

Jerry PetersApplications ManagerWashington Regional Medical System

Robin Anderson, RNInterim Director of QMWhite River Health System

Lerizza Nunag, RNPatient Care CoordinatorJefferson Regional Medical Center

Geraldine Moore, RNNurse ManagerJefferson Regional Medical Center •

Mid-Management Series Graduates Seventeen


On Aug. 1, 2009, the Recovery Audit Contractor (RAC) program became a reality in Arkansas.

To help facilities prepare for the operational and financial impact of this process, AHA Services Inc., a subsidiary of the Arkansas Hospital Association, has endorsed the New Jersey Hospital Association’s Audit Trax workflow management system, a powerful and cost-effective Web-based application to put you in control of your RAC process.Audit Trax can:• Centralize the facility RAC

response process with work queues and task dashboards for all members of the RAC Team

• Ensure that your hospital willnever miss a deadline: E-Mail

prompts and color-coding of RAC audit deadlines are provided

• Capture and store scannedmedical records, EMR and all RAC correspondence

• Provide built-in letter templatesto speed up facility appeals

• Permitauthorizedstafforconsul-tants to work remotely on appeals on your facility’s behalf

• Customize Outcome Reportsfor a) wins and losses by denial reason, DRG, coder, physician; b) audit and appeal volume by type of denial; c) facility or system level audit status reporting.To learn more about Audit Trax

and what it can do for your facility, contact Tina Creel, AHA Services Inc., 501-224-7878. •

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The Arkansas Hospital Asso-ciation (AHA) each year sets forth strategies for the coming fiscal year, designed to benefit Arkansas hospitals and focusing on the AHA’s four major foundational tenets: Advocacy, Education, Data Collection and Analysis, and Communication. (You may note that some of these strategies have already been accomplished, as the fiscal year runs July-June.)

Strategies designed to benefit AHA member hospitals during fis-cal year 2009-2010 include:

Advocate – Actively Advocate for Arkansas’ Hospitals

• Ensure that the governor, leg-islators, Department of Health officials and others continue their work in building a statewide trauma care network, and that hospitals are assisted in becom-ing a part of this new and vital network.

• Buildonthecurrentpositiverela-tionships with officials of the state Departments of Health, Human Services and Insurance to ensure that hospitals’ con-cerns are heard and addressed in relation to programs, rules and regulations proposed and imple-mented under their authority.

• Work with state Medicaidofficials to finalize and implement the Arkansas Medicaid Plan provision for an increase in payment rates for hospital out-patient services retroactive to Jan. 1, 2008.

• EnsurethatfutureexpansionsofMedicaid-specific quality mea-sures for use in the state’s Quality Incentive Payment Program are reasonable and subject to input and agreement by the state’s hospitals.

• Continuetoadvocateforstateandnational legislative, regulatory and judicial actions in support of accessible, cost-effective, high-quality healthcare.

• Meet directly with members ofthe state’s congressional delega-tion and/or their chief health aides as needed to assure that Arkansas hospitals’ needs and the effects of proposed legis-lation are known as definitive healthcare reform is discussed nationally.

• Maintain positive relationshipsand communications with the members of Arkansas’ congres-sional delegation to continue their near 100 percent support for leg-islative and regulatory issues that are developed and pursued dur-ing the 111th Congress as part of hospitals’ national advocacy agenda.

• Actively oppose any attemptsby the Centers for Medicare & Medicaid Services to effect chang-es in federal rules and regulations that would adversely affect the state’s Medicaid UPL program.

• Increase contributions to theAHAPAC over the 2008-2009 total.

educate – Provide Education Resources and Opportunities

• Publish an electronic version ofArkansas healthcare laws and regulations.

• Provide educational programmingand opportunities designed to assist members with marketplace challenges and compliance with constantly changing regulatory requirements in the healthcare arena. Many of these educational events will be held in the AHA’s new classroom.

• Assist member hospitals tobetter equip them to respond to natural and/or man-made emergency situations related to weather, disease outbreaks, chemical/nuclear/biological ter-rorist attacks and other forms of emergency situations.

• Intensifyeffortstoeducatemem-bers on potential union activities in the state.

• Create an online manual forhospital governance leaders.

• Encourage Arkansas hospitalsto continue 100 percent par-ticipation with the Institute for Healthcare Improvement’s 5 Million Lives Campaign as a

As the New Calendar Year Begins:A Reminder of Arkansas Hospital Association Strategies for this Fiscal Year

Strategies designed to benefit AHAmember hospitals during fiscal year2009-2010 include informing all AHAmember hospitals on an ongoing basisabout issues, concerns, activities and actions affecting hospitals and healthcare at the state and federal levels, and ensuring their knowledge about and involvement with those matters.


way to improve patient safety and quality of care.

• Implementa“StopBSI”programaimed at reducing the number of bloodstream infections in Arkansas hospitals.

• Continuetodesign,facilitateandsupport projects to improve the quality of hospital care delivered in member institutions.

• Complete the implementation ofa statewide wristband standard-ization quality and patient safety initiative.

• Provide in-state educationalopportunities for member hos-pitals, their employees and trustees, covering such issues as quality reporting, medication errors, patient safety, EMTALA, compliance, governance, emer-gency readiness, HIPAA, reim-bursement, coding and other topics.

• Educatethepublicontheimpor-tance of their local community hospitals and the medical and support staff members who serve their health needs.

Anticipate data needs – Seek, Explain and Provide Healthcare Data; Address Data Reporting Issues

• Continue active participation inthe development of Department

of Health rules and regulations implementing the Arkansas Health Facility Infection Dis-closure Act to ensure that appropriate national guidelines are followed in establishing the

voluntary reporting of hospital infection data, and promote hospital compliance with those reporting standards.

• Develop and implement amem-bership survey to be conducted during the October 2009 annual meeting.

• Enhance the value of AHAmembership by creating new services, expanding the types of and access to information on issues including, but not limited to, reimbursement, quality and outcomes measures, and increasing the political power of the association.

• Monitor, address and resolveongoing legislative, regulatory and policy issues concerning requirements for public reporting of hospital data. Communicate results to member hospitals.

communicate – Inform, Communicate, Provide Networking Opportunities

• Expand and improve AHA’srelationships with private third-party payors in the state in order

to facilitate better communica-tion between AHA’s members and private payors, and provide education to member hospitals to assist them in their individual negotiations with private payors.

• Continue to improve ongoingcommunications with officials of CMS’ Regional Office and develop a positive relationship with the newly designated Medicare Administrative Con-tractor, as well as the state’s new Medicare Recovery Audit Contractor, and assist hospitals in preparing for and managing RAC audits.

• Inform and educate Arkansashospitals about the Medicaid Integrity program and the state’s Medicaid Integrity Contractor.

• Improve relationships with thestate’s business community and reposition hospitals as large employers that pay excellent wages and strongly influence economic development.

• Revise and update the AHABylaws to better assist the AHA Board and staff in carrying out their respective duties, and revise AHA policies in order to address the requirements of the new IRS Form 990.

• Continue to work with AHAServices Inc. to provide and develop programs and services to benefit Arkansas hospitals.

• InformallAHAmemberhospi-tals on an ongoing basis about issues, concerns, activities and actions affecting hospitals and healthcare at the state and federal levels to ensure their knowledge about and involve-ment with those matters.

• Provide printed, online, andface-to-face resources for AHA member hospitals so they may keep abreast of current issues, legislation, and communication needs in the hospital field.

• Promote networking and com-munication through sponsor-ship of 12 Affiliated and Allied Healthcare organizations. •


L E g A L N o t E Sby Elisa M. White, Vice President and General Counsel, Arkansas Hospital Association

In addition to covering all of the usual payment changes, the 2010 Outpatient Prospective Payment System final rule (2010 OPPS Rule), which was released as a display copy by CMS Oct. 30th, addresses super-vision requirements for out-patient services.

The 2009 OPPS Rule included a provision that seemed to require direct physician supervision of diagnostic and therapeutic services furnished in hospital outpatient departments. The rule stated that a physician must be present on the premises and immediately available, and it defined “present on the premises” to mean actual physician presence in the outpatient department.

In responding to widespread criti-cism of this requirement, CMS stated in the 2010 OPPS Rule that it is “revis-ing or further defining” its policies for supervision of outpatient services.

The 2010 OPPS Rule defines “direct supervision” of an on-campus hospital outpatient therapeutic service to mean the presence of a physician “anywhere on the hospital campus” and “immediately available to furnish assistance and direction throughout the performance of the procedure.”

(Note that this rule is applicable only to hospital outpatient services that are covered as “incident to” a physician’s service. Certain hospital outpatient services that have their own benefit category are not subject to these supervision rules.)

Being “anywhere on the hospital campus” includes on-campus loca-tions that are not provider-based departments, such as a physician office, an on-campus skilled nursing facility, rural health clinic or other non-hospital space.

However, it is important to note that the physician also must be “immediately available,” so from a practical standpoint, there is a limit as to the appropriate location for a physician who is directly supervising outpatient services.

CMS has said that a physician “could not be immediately available while, for example, performing another procedure or service that he or she could not interrupt.” A physician also is not immediately available if he or she is “so physically far away on the main campus from the location where hospital outpatient services are being furnished that he or she could not intervene right away.”

For off-campus hospital outpa-tient departments, actual presence is required for direct supervision.

In this setting, the supervising physician “must be in each provider-based department of a particular off-campus outpatient location, but that does not mean that the physician must be in the room when the procedure is performed.” Therefore, a physician cannot supervise more than one off-campus provider-based department at the same time.

The 2010 OPPS Rule also makes a change to supervision requirements related to non-physician practitioners. Previously, CMS did not allow non-physician practitioners to supervise outpatient services, even if the outpatient service was billed as the non-physician practitioner’s service and not as a physician’s service.

In calendar year 2010, CMS will allow certain non-physician practitio-ners – specifically physician assistants, nurse practitioners, clinical nurse spe-cialists, certified nurse-midwives and

licensed clinical social workers – to provide direct supervision for all hos-pital outpatient therapeutic services that they are authorized to personally perform according to their state scope of practice rules and hospital-granted privileges.

However, the expansion of super-vision to non-physician practitioners does not apply to pulmonary, cardiac and intensive cardiac rehabilitation services, as these services continue to require supervision by a physician.

In addition, non-physician prac-titioners cannot supervise diagnostic tests in hospital outpatient settings. These must be supervised by a physician according to the supervision levels for individual diagnostic tests listed in the Medicare Physician Fee Schedule Relative Value Unit file.

If “direct supervision” of the diag-nostic test is required, this has the same meaning as for a therapeutic service.

The display copy of the 1,936-page final rule is available in PDF format at http://federalregister.gov/OFRUpload/OFRData/2009-26499_PI.pdf, with the physician supervi-sion discussion beginning on page 931. The final rule was printed in the Nov. 20 Federal Register and is in effect as of Jan. 1, 2010. •

oPPS Physician Supervision Requirements

This Legal Note is provided solely for informational purposes and do not constitute legal advice. Readers are encouraged to consult with their own attorneys about any legal issues, including those discussed in these articles.

CMS stated in the 2010 OPPS Rule that it is ‘revising or further defining’ its policies for supervision of outpatient services.


The Centers for Medicare & Medicaid Services (CMS) in late October issued a final rule updating payment policies and rates for hospital outpatient departments and ambulatory surgical centers (ASC) in calendar year 2010.

The Outpatient Prospective Payment System (OPPS) final rule includes important changes about physician supervision of outpatient therapeutic and diagnostic services.

Starting in 2010, certain non-physician practitioners may directly supervise hospital outpatient therapeutic services that they are able to personally perform within their state’s scope of practice and

hospital-granted privileges.Responding to comments from

the American Hospital Association, CMS further revised its definition of “direct supervision” to allow the supervising physician or non-physician practitioner (in the case of outpatient therapeutic services) to be located anywhere on the same campus as the hospital, as long as he or she is immediately available to furnish assistance and direction throughout the performance of the procedure.

Among other provisions, payment rates under the outpatient prospec-tive payment system will increase 2.1 percent, with hospitals projected

to receive a total of $32.2 billion for outpatient services in 2010.

Also, CMS does not add any new quality measures for 2011 report-ing purposes, but does finalize a data validation process. See http://www.federalregister.gov/OFRUpload/OFRData/2009-26499_PI.pdf to find the rule.

(For more detail, see the Legal Note on the opposite page in this issue of Arkansas Hospitals.)

Editor’s Note: The AHA will host a 2010 OPPS Update Workshop on Jan. 22, 2010. Information is avail-able at http://www.arkhospitals.org/calendareducworkshops.htm. •

Medicare 2010 OPPS and ASC Final Rules

The Centers for Medicare & Medi-caid Services (CMS) announced on Oct. 30 a 2.0 percent market basket update, along with modifications to the home health outlier policy, as part of the Medicare home health prospec-tive payment system (HHPPS) final rule for calendar year (CY) 2010.

For 2010, CMS will cap home health outlier payments at 10 percent per home health agency (HHA) and target total aggregate outlier pay-ments at 2.5 percent of all HHPPS payments. The 2009 target for aggre-gate outlier payments was 5 percent of total HHPPS expenditures.

By lowering the total outlier pay-ment target to 2.5 percent, the final rule increases home health base rates by 2.5 percent for CY 2010.

In the final rule, CMS continues its current policy of a 2.75 percent reduction to national standardized 60-day episode payment rates and non-medical supply factors into CY

2010. Retention of this policy will help offset the increase in the home health case-mix that is not associ-ated with any underlying change in the actual clinical conditions of home health patients.

This CY 2010 reduction is the third year of a four-year phase-in of HHPPS rate adjustments, which were made final in the HHPPS Refinement and Rate Update for the CY 2008 final rule.

The rule also implements new reporting requirements. Home health agencies, which currently submit Outcome and Assessment Information Set (OASIS) data as a condition of participation in Medicare, must submit the OASIS data as a condition of payment, too, beginning Jan. 1, 2010.

And, CMS will publicly report 12 nationally accepted and approved quality measures plus 13 new process measures on its CMS Home Health

Compare Web site (http://www.Medicare.gov/HHCompare).

Reporting the data is required to receive payments based on the full home health market basket update. The home health market basket index percentage will be reduced by 2 per-centage points to 0.0 percent for CY 2010 for those HHAs that do not submit the required quality data.

For CY 2012, CMS will require HHAs to report, as part of the required home health quality measures, the Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Home Health Care Survey for Medi-care and/or Medicaid beneficiaries.

This final rule was published in the Federal Register Nov. 10, 2009. Click on http://www.cms.hhs.gov/HomeHealthPPS/HHPPSRN/itemdetail.asp?filterType=none&filterByDID=0&sortByDID=3&sortOrder=ascending&itemID=CMS1230142&intNumPerPage=10 to access the rule. •

Calendar Year 2010 Home Health Payment Changes Announced


A new white paper report by Thomson Reuters takes a look at wasteful healthcare spending, estimated to be between $600 billion and $850 billion per year, and concludes that the most significant drivers are administrative inefficiency, unnecessary treatment, medical errors and fraud.

The report is based on a review of published research and analyses of proprietary healthcare data.

Robert Kelley, vice president of healthcare analytics at Thomson Reuters and author of the white paper, said that the study identifies areas in the healthcare system that can be targeted to generate game-changing savings. Among the study’s key findings are:• Unwarranted treatment, such as

the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.

• Healthcare fraud costs $125billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.

• The large volume of redundantpaperwork in the U.S. healthcare system accounts for $100 billion to $150 billion in spending annually.

• Medical mistakes and providererrors account for $75 billion to $100 billion in unnecessary spending each year.

• Approximately $25 billion to$50 billion is spent annually on hospitalizations to address chronic conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.

• The lack of communicationbetween providers during the patient hand-off process, includ-ing lack of access to medical records when specialists inter-vene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 bil-lion annually.For more information, see:

http://www.thomsonreuters.com/content/press_ room/tsh/waste_US_healthcare_system. •

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DAyS CASH oN HAND:Trend Analysis

The number of days of cash a hospital has on hand is a classic solvency metric. Astute analysts will track long-term trends, as well as review individual instances. Analyzing multiple-year and/or monthly trend lines can add clarity to assessing hospital performance. Further investigation can help determine if large movements resulted from a favorable change, such as an increase in net patient revenue; a neutral change, such as an influx in cash from a real estate divestiture; or an unfavorable change, such as an investment loss.

Benchmark: Simply stated, decreasing cash from year-to-year or month-to-month is a sign of finan-cial distress. In addition, an interim snapshot that reveals the number of Days Cash on Hand at a point mate-rially lower than historical patterns or bond covenant requirements may well be cause for immediate review, concern and follow-up.

CURRENt RAtio:Trend Analysis

Just like Days Cash on Hand, reviewing a hospital’s current assets compared to its current liabilities can be more instructive as a trend than as a single snapshot, especially

for early detection of financial dis-tress. Developing a Current Ratio trend line for multiple years supple-mented by a cycling of the most recent 12 months will likely provide compelling predictive value.

Benchmark: In general, a trending decline that has reached 1.5 is an early sign of financial distress. Any single instance that is 1.0 or less warrants timely investigation.

ACCoUNtS RECEivAbLE (AR) DAyS:Trend Analysis

An increase in AR Days is often indicative of a hospital with poorly negotiated managed care contracts,

unfavorable market changes, or ineffective collection practices. The challenge of reducing AR Days is both critically important and exceptionally challenging in the healthcare industry due to highly complex and unorganized payment systems. Reviewing a 12-to-18-month trend of AR Days can indicate a hospital’s ability to meet these challenges. Poor revenue cycle management will quickly exacerbate hospital financial distress.

Benchmark: Any trend of increas-ing AR Days is a sign of trouble; however, an average of 55 days paired with a trending increase is especially concerning. This is even more concerning when coupled with growing bad debt, a relevant consideration as increasing numbers of American workers find themselves unemployed and uninsured. The quality of the AR aging file is another relevant factor when evaluating the revenue cycle management process. That is, if AR aging categories by payer are worsening over time, the probability

The typical hospital’s business model and revenue stream are so markedly different from other businesses, its level of financial distress can be difficult to diagnose. The following early warning signs will help hospital leaders more clearly identify and proactively react to financial distress. While no single metric can accurately identify early-stage distress in all hospitals, the following financial indicators can offer helpful insight into the outlook of a hospital that might be in trouble.

by Bob Vento

Warning Signs of a Distressed Hospital

continued on page 26


that liquidity will suffer is high – an obvious indicator of distress.

CAPitAL ExPENDitURES vs. ANNUAL DEPRECiAtioNCapital improvements are critical for hospitals to recruit

physicians, attract patients and deliver quality care. A hospital that does not upgrade its facility and equipment to offset the depreciation of its capital assets, especially in revenue-generating areas of the hospital, is headed for trouble over the longer term. The effect of delayed expen-ditures is compounding, and the cost to “catch up” on postponed improvements can be far greater than an initial investment. A hospital’s capital expenditures and annual depreciation should be calculated for each of the past 10 years to determine if it is keeping pace.

Benchmark: If depreciation has outpaced capital improvements in more than three of the past 10 years – or if this is the case for the most recent two years – the hos-pital is likely experiencing distress. In addition, if the facil-ity’s next scheduled capital project relies on funds exposed to market performance (investment income, grants from foundations or charitable donations), more serious finan-cial issues may exist. This is especially true for hospitals nationwide that are facing challenges in accessing debt financing due to today’s tight credit markets.

iNtERNALLy PREPARED FiNANCiAL StAtEMENtSClear financial statements are critical for sound

decision-making. A hospital that prepares a confusing, inadequate, or poorly organized set of financial statements may be unable to analyze data, look beyond the numbers, or make informed decisions. Reviewing several hospital monthly financial statements can show data being used to make routine and strategic decisions. A fundamental benefit of financial statements is predictive value.

Benchmark: General-purpose financial statements that do not contain some narrative, lack compelling financial information (e.g., key statistics and cash flow data), and generally lack substance may be indicative of a hospital that is making decisions based on incomplete or erroneous information. Left unchecked, this can lead to unfavorable financial outcomes and, ultimately, financial distress.

The challenges are great for our nation’s hospitals and health systems. Many need immediate intervention to prevent crisis situations. Early detection and swift inter-vention can help ensure that: (a) communities maintain access to the healthcare services they need, and (b) risk is mitigated for financial stakeholders in the hospital.

Bob Vento is a senior vice president for QHR Intensive Resources. For additional information on QHR’s consulting solutions, con-tact vice president Susan Hassell at (866) 371-4669. This article first appeared in the Fall 2009 edition of Lancaster-Pollard’s The Capital Issue, and is used with permission. •

Making educated guesses about what’s coming our way and how best to prepare ourselves is vital to every hospital and business. Management gurus everywhere say, but that doesn’t mean we shouldn’t make educated guesses about what’s coming our way and how best to prepare ourselves. Management gurus everywhere say that business organizations must regularly make those assessments to stay ahead of the curve and be in position for future success.

The American Hospital Association (AHA) recently completed such a process, culminating in a three-year strategic plan. Hospital execs and trustees in Arkansas who haven’t yet reviewed the association’s Strategic Plan for 2009-2011 ought to invest a little time in it for the benefit of their own organizations.

The plan, a product of hours and hours of thoughtful deliberations and input by the AHA’s Board of Trustees, gover-nance committees and executive staff, can be found at http://www.aha.org/aha/con-tent/2009/pdf/2009-2011-aha-strategicplan.pdf?group=hospital&oamfd=t.

Do yourself a favor and have a look.Like most strategic plans, it focuses on an

array of current issues critical to the hospital field and plots a course to guide the AHA in navigating those turbulent waters in the form of priorities, goals and objectives.

Fortunately, the plan is straightforward enough to recognize the nature of the busi-ness, setting sights on proactive measures while retaining the flexibility to respond quickly to the unexpected. That’s important, especially for hospitals, since twists and turns created by governmental programs, legisla-tive and regulatory groups, private payer and review organizations and others – not to mention the whims of nature – always seem to lurk around the next blind corner and can be more surprising than the latest darkened

by Paul Cunningham,Senior Vice President,

Arkansas Hospital Association

New, Three-Year Strategic Plan Released by American Hospital Association


indoor thrill ride at Disney World.The best part of the 81-page

Strategic Plan may be its Environmental Scan that takes a look at the healthcare landscape of the future. It’s where AHA’s educated guesses are contained.

Built on an analysis of current and emerging trends, the Scan yields a crystal ball view of factors that are likely to hold influence over the delivery and financing of healthcare over the next three years.

The major qualifiers are that it doesn’t capture the economic tsunami that has recently had worldwide impact on everything, including healthcare, nor does it account for the yet unknown impact of probable health reform legislation. Talk about potential twists and turns lying in wait!

AHA’s Environmental Scan sum-marizes the challenges related to issues like consumers and demographics, economy and finance, information technology and e-health, insurance

and coverage, and the hat trick combo of quality, patient safety and perfor-mance improvement, among others.

In addition to painting a reason-ably realistic picture of a futuristic healthcare landscape, it’s also an excellent tool for community educa-tion purposes.

Information in the Environmental Scan won’t guarantee that you’ll be able to go out and immediately get everyone from Joe Six-Pack to Business and Industry Moguls to understand the particulars of health-care economics and why healthcare is somewhat immune to the more tradi-tional rules of supply/demand/pricing.

That can be frustrating, at best, and success may not be possible.

But it does offer solid evidence to support hospitals’ predictions about a bleak future if certain needed changes aren’t made, citing chapter and verse, complete with footnotes.

For those who don’t expect to make the rounds of local civic clubs or mid-day news programs intent on winning support for changes that are needed to make hospitals more viable for their communities, there’s an equally valid reason for reading through AHA’s Strategic Plan and its Environmental Scan: long-term survival.

Iconic comedian George Burns hit the nail on the head when he said, “I look to the future because that’s where I’m going to spend the rest of my life.”

On the other hand, examining the current chaos surrounding healthcare too closely could leave one thinking in circles, like Yogi Berra, who once stated, “The future ain’t what it used to be.” •

The best part of the 81-page Strategic Plan may be its Environmental Scan that takes a look at the healthcare landscape of the future.


The Estes Park Institute conduct-ed six surveys at conferences from late 2008 to mid 2009 to determine the top 15 healthcare issues/goals as related to each specific, individual hospital, and the degree of difficulty in achieving each goal. It has gath-ered its findings into a report: The Estes Park Institute Top Issues in Health Care 2010.

The report is a compilation of responses from hundreds of senior leaders in community hospitals all across the nation.

The surveys revealed that improvement of patient safety is the most important issue to hospitals going into 2010. This is the fourth year in a row that improving patient safety ranked number one.

The issue most difficult to resolve? Getting adequate reimbursement from Medicare and Medicaid.

When asked to rate the 15 issues on importance to the individual hospital, the top three issues were improving patient safety, getting adequate reimbursement from Medicare, and getting adequate reimbursement from Medicaid.

The rest of the top 15, in descend-ing order, were:• Getting adequate reimbursement

from commercial insurance carriers• Cuttingcostswhiledeliveringcare• Improving communications and

trust between physicians and the hospital

• Findingbetterwaystocarefortheuninsured

• Incorporatingnewtechnologiesinmedicine

• Engagingmoreeffectivelyinchang-ing the health care delivery system

• Resolvingtheon-callproblem• Better coordination of chronic

illness• Gainingaccess tonewcapital for

expansion

• Findingwaystoemployphysicians• Settling competitive issues with

physicians, such as freestanding surgery centers

• Gainingaccesstoworkingcapital.When asked to rate the issues

on “difficulty in accomplishing,” the top three were getting adequate reimbursement from Medicaid, getting adequate reimbursement from Medicare, and finding better ways to care for the uninsured.

The rest of the top 15, in descend-ing order, were:• Cuttingcostswhiledeliveringcare• Engagingmoreeffectivelyinchang-

ing the healthcare delivery system• Getting adequate reimbursement

from commercial insurance carriers• Resolvingtheon-callproblem• Gaining access to new capital for

expansion• Improving communications and

trust between physicians and the hospital

• Bettercoordinationofchronicill-ness

• Settling competitive issues withphysicians, such as freestanding surgery centers

• Findingwaystoemployphysicians• Incorporating new technologies in

medicine• Improvingpatientsafety• Gainingaccesstoworkingcapital.

According to the report, “getting adequate reimbursement...” and “finding better ways to care for uninsured” are seen as the two most important yet difficult issues.

“Cutting costs while delivering care” is also seen as an important issue that poses a challenge.

Most important issues are also typ-ically seen as less difficult to resolve. The report breaks “Importance vs. Difficulty” down according to board members, management, physi-cians, and all groups as a whole. It

then visually compares the various groups’ answers according to each of the 15 issues.

“There isn’t a lot of consensus on what is the most important issue to be addressed,” the report says. “For board members, the top issues are ‘Improving patient safety’ and ‘Getting adequate reimbursement from Medicare.’ For physicians, their top issues for the coming year are ‘Improving communications’ and ‘Finding better ways to

a magazine for arkansas healthca i 1 · 2010. 4. 5. · a magazine for arkansas healthca winter...

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