Monday, October 3, 2011

Healthcare Reform: One Year Later

Ever since the Affordable Care Act was officially signed into law in March 2010, the industry has been abuzz with speculations as to how the largest anticipated restructuring of the U.S. healthcare system in recent history will ultimately shake out. While most of the broader market reforms won’t be rolled out until 2014, a number of initiatives are already in place. However, looming large is the million-dollar question: Does the industry have any more clarity about how reform will reshape the world of healthcare than we did a year ago?

“We are basically at square one, with a little more clarification,” suggests Brian Allamby, director, strategy and operations, healthcare and life sciences, AECOM, Washington, D.C. “We do know that cost reduction initiatives, declining reimbursement, and quality initiatives will be the hallmarks of any serious reform.”

At the same time, a number of big questions remain unanswered. For example, from where will hospitals—particularly smaller facilities—find the resources to fully transition to an electronic medical record (EMR) system? And will demand for primary services in outpatient clinics significantly increase or will emergency departments continue to shoulder the load?

Another uncertainty is what reform’s accountable care organizations (ACOs) will ultimately look like. This issue, in fact, is already in the works with the recent release of proposed rules for the creation of ACOs, together with companion documents from a number of federal agencies. Although voluntary, federal incentives are expected to motivate healthcare providers, physicians, and insurance agencies to consider partnering up to create an ACO. As defined by the recently released proposed rules, an ACO must provide primary care for at least 5,000 patients and meet 65 quality standards.

“The formation of ACOs is not a hypothetical scenario, and healthcare organizations and institutions need to begin formulating, as well as implementing, this strategy today,” Allamby says. “Organizations may decide that they’re not nearly ready or able to deliver healthcare through an ACO structure. Conversely, the shared savings program may be the perfect catalyst to help achieve the things that will have to be done anyway through the reform decade.”

Bringing the discussion to reform’s evolving impact on facilities, contractors and designers are observing an increase in planning activities as healthcare providers slowly break free from the wait-and-see mentality that has prevailed since the economic downturn, coupled with healthcare reform uncertainties.

“We are starting to see that ‘need’ is beginning to outweigh ‘uncertainty,’” Allamby confirms. “The tide is starting to turn, and we will see a renewal and initiation of healthcare facility projects over the next 18 months. These projects will consist of ambulatory care development, expansion of acute care facilities—especially in tertiary diagnostic and treatment services—as well as a flexible solution to a 20-year growth in inpatient beds.”

Similarly, Brian Garbecki, healthcare division leader, Gilbane Building Co., Boston, is seeing an upturn in planning activities and anticipates an increase in approved projects by year-end.

Although economic and reform uncertainties remain, some healthcare providers have been forced to expand simply because they don’t have the capacity to serve their clientele and therefore cannot afford to wait any longer. Incidentally, Mark Stevens, president, Stevens Construction, Ft. Myers, Florida, points out that those who are moving forward will reap financial benefits from the currently depressed construction market.

At the same time, the EMR mandate is forcing hospitals to begin allocating funds for their IT infrastructure, which is diverting potential financing for larger capital projects. In fact, Allamby has seen IT account for between 40 and 50% of current facility projects.

While the promise of EMR is significant in that it will greatly enhance provider’s ability to more efficiently, and cost-effectively, manage health services across the full continuum of care, it will require a massive investment of financial resources.

“The EMR mandate has become very problematic for the large practices, but almost impossible for the small practitioners to comply with,” Stevens observes. “I think this will ultimately create consolidation of providers, and many providers will simply not comply.”

Similarly, Mark SuavĂ©, senior healthcare strategist, Gresham, Smith and Partners, Nashville, observes, “Many of the larger facilities or those within a larger healthcare system have assigned senior level staff and supporting resources to manage this transition. Smaller hospitals without a dedicated staff are relying on federal funding, but without a dedicated staff are pressed for time and resources to try and get their transition efforts off the ground.”

One route that some of the smaller providers are exploring is outsourcing to third-party IT providers. Because many organizations do have contracts with these IT professionals for emergency network backup, this is not uncharted territory, Garbecki explains. However, bringing in IT groups to help implement EMR systems will make healthcare providers much more dependent on these outside IT organizations.

Continuum of care

Another big paradigm shift beginning to occur is the move away from episodic care toward providing service throughout the continuum of care. As emerging reimbursement formulas begin to drive this change, SuavĂ© suggests, “The future of healthcare is pretty clear in terms of how it will change from being focused on treating sick patients toward a responsibility for the wellness of the community.”

“We’ve jokingly said the hospital of the future may be an iPhone app—something that tracks and perhaps incentivizes healthy behavior with an open enough architecture that it could engage the grocery store, the gym, pretty much anywhere where behavior influences health,” says Stanley Chiu, AIA, LEED AP, vice president, RTKL, Los Angeles.

In practicality, ACOs are considered to be the working strategy for evolving toward a system that optimizes health, as opposed to treating sickness, and those that jump on the ACO boat now can start cashing in on incentives. Meanwhile, others will eventually be “forced” into the model, once reimbursement changes with reform’s full rollout.

Essentially, this new system promotes a collaborative approach to healthcare where, ideally, “physicians, nurses, pharmacists, dieticians, therapists, etc., coordinate the care each individual patient receives within a single visit,” explains Gary Nyberg, AIA, vice president, HGA Architects and Engineers, Minneapolis. “Currently, this usually requires many separate visits over a long period of time with repetitive information-gathering at each visit.”

But in order to support this healthcare delivery model, new facility design solutions must be developed and implemented.

Another question, as noted earlier, is where the millions of newly insured Americans will end up seeking healthcare services.

“While the initial idea of reform was to increase the number of insured, there still remains a question as to whether that will increase demand for primary services, or is it already accounted for in some of the free care patients in emergency departments?” Garbecki wonders.

Ultimately, the goal is to reroute non-urgent care seekers, but as Nyberg explains, “This is another area that is unfolding and will require a major education initiative to direct uninsured patients to go to outpatient clinics for care instead of emergency rooms.”

However, it’s not clear how quickly and successfully this will play out, so hospitals will have to remain focused on keeping their ERs equipped to handle continued demand, while strategizing about more efficient ways to deliver non-urgent care.

Thinking outside the box, Chiu suggests there’s a big opportunity within this conundrum that could involve co-locating an ER with clinic-type functions, such as lightweight imaging and stage-two recovery. “If this is combined with cross-trained staff, it’s pretty powerful—a chassis that can handle changing needs. A room that serves as cardio exam space at 10 a.m. on Monday can be an ED station at 9 p.m. on Saturday,” he says.

Stepping up to the plate

Chiu’s brainstorm is an example of the kind of innovation and ingenuity designers, facility managers, and contractors can bring to the table, particularly at this time, when such creative solutions are very much needed.

In fact, Dale Woodin, CHFM, FASHE, executive, director of the American Society for Healthcare Engineering, was quoted as saying that engineers and facility managers now have a big opportunity to break out beyond construction design and technology, and engage with actual patient care improvement solutions.

“I think we could play a strikingly large role [in this process],” Chiu agrees. “Space is our wheelhouse and we are trained to design for people, process, and technology.”

But in order to accomplish this, building professionals will need to keep with the different models being developed to address healthcare reform, Nyberg advises.

“It is the role of designers, builders, and facility managers to act as technical advisors to support the strategic initiatives and mission of the healthcare institution,” Allamby explains. “In healthcare, form drives function and the importance of understanding how healthcare will be delivered in the future is what makes a successful partnership with providers.”

Part of this whole equation will involve coming up with more efficient, cost-effective, and flexible designs to free up some much-needed capital for the kinds of investments that healthcare reform will require.

For example, more flexible, modular building designs may help capture efficiencies and assist providers as they restructure their medical spaces to better accommodate the disease management formula.

Putting it bluntly, Stevens predicts that the future of healthcare will require providers to demand more usable space at a cheaper cost. But as for how this will all shake out, Stevens admits that he’s very much in the dark: “Who knows what the future of healthcare holds?”

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