Health care changes in the U.S. are dramatically impacting businesses and communities as more consumers gain access to care. This dynamic is a constant challenge for providers like Mercy Health, but one the non-profit is attempting to meet as it continues to invest in technology, clinics and other services in demand.
Over the past three years Mercy Health has invested $90 million in Northwest Arkansas, aided by several philanthropic donors within the local community to fund new clinics in Bella Vista, Centerton and downtown Rogers, and ongoing additions of services within the flagship hospital in Rogers.
Mercy executives hosted a community roundtable dinner in Rogers on Thursday (June 26) to discuss the challenges and opportunities they see in today’s changing environment. Eric Pianalto, CEO of Mercy NWA, said 41 new doctors have joined Mercy NWA and the number of nurse practitioners used in primary care clinics has risen to 42 from just 16 two years ago. Visits to the Mercy system in Northwest Arkansas have risen from 355,000 a year to 401,000 in the most recent year.
Pianalto said Mercy NWA still has plenty of work to do despite the regulatory and other difficulties faced by the entire industry.
Mike McCurry, chief operating officer of Mercy Health, said the margins have become razor thin for the entire industry and the needs have never been greater as the number of Medicaid patients have grown and the full-pay insured pool continues to shrink.
Under the new federal health care law, medicare payments are shrinking 2% annually, making these patients unprofitable customers for carriers like Mercy. McCurry said more large employers such FedEx Corp., Home Depot and Walgreens as are making radical changes to their plans, eliminating health care options for retirees and non-spouses and raising the minimum deductibles to keep costs down.
“The biggest growth area impacting Mercy’s charity care fund are insured people who can’t afford the deductible. We are seeing $5,000 deductibles and higher among people who need to have a procedure but are not able to cover that on the front-end. Mercy has had to help patients set up payment plans to payout the deductible after the procedure has been performed,” McCurry said.
The other dynamic at play is that insured individuals are being advised to have tests and procedures but do not have them because they can’t meet the deductible.
“This of great concern, because it will likely come back to haunt everyone,” McCurry said. “Patients are also shopping services like never before, looking for lower cost alternatives. As Mercy moves more of the diagnostic testing and procedures out to its primary care clinics the cost for customers will go down.”
He estimates that will sting Mercy’s annual budget by $30 million a year. McCurry said Mercy’s systemwide budget is operating on $120 million less revenue coming into this year as a result of the Affordable Care Act and the reduced payments.
The cost of treating the uninsured is expected to be $17 million this year for Mercy Health. Another $40 million in Medicaid payment remains in jeopardy and McCurry estimates federal sequestration costs will run up to $33 million.
McCurry said Mercy won’t sit idle because it must find ways to improve access and quality of care while lowering the cost and it must do so without going broke. He outlined several new sources of revenue potential, the largest between $400 million and $600 million linked to virtual care, telemedicine and care management services.
Mercy NWA is already in the virtual care business, having all of its medical records kept electronically. McCurry said the use of virtual care can provide high quality services at lower costs.
Lynn Britton, CEO of St. Louis-based Mercy Health System, said there 3.2 million patients in Mercy’s record system with more than 9 million electronic records on file.
He said doctors are using this as a diagnostic tool, to help study and predict certain health patterns. One study group helped to reduce the provider’s mortality rate from Sepis by 50% buy coming up with an early warning detection system based on learnings gleaned from studying patient records.
Britton said Mercy is becoming a leader in virtual care usage. He said a local resident diagnosed with a heart condition that required a specialized procedure in St. Louis was then able to get his follow up care locally via virtual care. He said pediatric psych care is being delivered by a local doctor to patients in Joplin.
Not only is Mercy using virtual care within its own network to provide more access with lower costs, but McCurry said the provider is also able to outsource those services to areas and communities that lack certain specializations. Selling those virtual services is another way Mercy plans to recoup revenue lost in other areas.
Areas of concern raised by local residents who took part in the discussions include some study and focus on mental health issues and well as working to reduce the high rates of child abuse and child hunger in the prosperous Northwest Arkansas region.
Boomer aged residents said they chose their health care provider based on trust and they like knowing their doctor. Younger residents said they need convenient and affordable models that fit better with their busy lifestyles.
Other residents challenged Mercy to think about ways to leverage social technology platforms to reach out to patients for ongoing dialogue.