Tom Mortell, head of Hawley Troxell’s health law group, has represented Idaho hospitals for over 20 years with a particular focus on rural areas.
He calls rural hospitals “the backbones of their communities,” noting that they are often the town’s largest employer. Many of Idaho’s rural areas still lack access to good care, and incentivizing physicians to come to a small town is always a challenge, Mortell said.
Mortell lent his extensive expertise in the health care field as moderator of the IBR’s Breakfast Series panel “Taking a Pulse on Health Care,” held Aug. 13 at The Grove Hotel.
This interview is taken from IBR’s new Out Loud podcast, which includes a review of recent local business news and an interview with a local leader. Find the audio version here.
Have rural hospitals closed in recent years?
You know we’ve not had a lot of that. Nationwide we’ve seen that. We’ve not had a lot of that in Idaho. What we have had is rural hospitals who are in financially more precarious positions than they’ve been in historically. Ones who are losing a little bit of money every year, wondering how long they can sustain that. Ones who are facing questions of declining reimbursement, increasing regulation and the shift from a fee-for-service model to a population-based model. And in rural areas the population-based models are hard because they depend on pooling often thousands of lives together and treating that group. Well, in small rural communities they don’t always have that many lives to spread the risk around like you might find in Boise or Idaho Falls or Pocatello or Coeur d’Alene.
What’s the difference in the financial investment for a rural hospital versus a rural clinic?
A rural hospital, typically the financial investment is much greater. The infrastructure that you must build to qualify under Medicare in Idaho law to be a hospital requires investment in facility, equipment, staff, administration, all sorts of things.
You have to have certifications?
You have to have licensure. You have to be accredited… Hospitals in rural areas will often own clinics and employee physicians in those clinics, recruit physicians to come to those clinics. And those clinics will often be staffed by a combination of physicians and nurse practitioners or physician assistants and in that way they can provide care under the financial security associated with a hospital but they’re not the same cost as running a hospital. They don’t have the same kind of reimbursement issues. You do get some benefit in some communities if a clinic is affiliated with a hospital. There’s what’s called provider-based reimbursement. Under certain conditions those clinic visits can be reimbursed at a higher rate than what they would be if they were a standalone clinic.
You mentioned something earlier about young doctors coming out of school who practice in rural areas, that there were some state and federal plans for loan forgiveness.
There’s financial incentives at many different levels — often not adequate to attract enough physicians, but there’s efforts being made. Everything from the WWAMI program and the Idaho funded seats to the Idaho College of Osteopathic Medicine — there are lots of things that are attempting to make health care more available to rural areas. Hospitals will often give incentive packages that include loan repayment and there are some limited state programs and federal programs that will help with loan repayment under the right circumstances.
Does it hold true for allied health professionals, people who are drawn to dentistry or physical therapy?
I think so, especially dentists. The costs of getting into dentistry and the equipment, it appears to me, I don’t represent a lot of dentists but when I go to the dentist and see what the dentist is invested in, the multiple pieces of equipment that have to be very expensive, that’s a lot of finacial risk making those investments and if your business doesn’t grow and you can’t support those loan payments, there is more to keep you up at night than the quality of the care you are providing.
Hospital systems seem to really be focusing on having a chain of clinics or out-patient clinics. Is that a pipeline to a higher level of services in many cases?
I think it is one of the foundational bases to then provide good population health. To provide good population health, which is the trend right now under the Affordable Care Act and in other areas, hospitals and others are going to get paid to take care of a group of people, and the healthier you can keep that group of people, the better off it is going to be and the insurance companies and the federal government are going to try to incentivize you to do that.
Instead of just giving an MRI to everyone who walks in the door, and that’s an exaggeration, instead of being incentivized to do more because you are going to get paid more, you are going to be incentivized to do what’s right for the patient, and if you keep them healthy, then you are going to do better financially. Having the hospitals own the clinics gives them the structure to work together — the hospital, the primary care physician, the specialist can all coordinate their care under one corporate umbrella that says these are the best practices, and if we can all work together and not each be ordering different tests and different scenarios because it is in our financial incentives to do so. When St. Luke’s and Saint Al’s are affiliated with physicians, they are really building their population health structure to serve those populations in the future.
In Idaho, are many of these physicians under capitation payment arrangements, and if they are can you explain what capitation is?
That’s the idea that we are going to pay per patient for you to take care of that patient, and you are going to take the risk if the care that you need to provide to that patient is more expensive than what you are being paid. So if you have 5,000 lives in a shared savings plan or capitated plan, we are going to pay you X, capping the payment per life, and you want to keep that group healthy because then you get the payment and you didn’t have to spend it on acute care. If we can keep that payment for that group to something reasonable, financially you are going to do better. Now we are also going to give you standards. You have to take good care of these people. You can’t just cut costs, you can’t just cut the level of care, you have to perform at a high level, but you have to do it prospectively rather than after the fact. You’ve got to do it preventatively rather than treating the disease later after it’s fully developed.
Is the trend toward preventative care rather than acute care holding true across all aspects of health care?
I think it is. It’s been slow to be implemented fully. Our Treasure Valley hospitals are much further along than hospitals in other parts of the state in implementing these kinds of programs where they are going to be paid for the health of a population group. Part of it requires having enough critical mass to get enough lives in one place and to have institutions that have the resources to cover it. In other parts of the state, you have different hospitals and different communities and they are not affiliated with one another and they are actually competitors today. To get them to align with one another and say together we are going to take care of the people in this community is sometimes a pretty heavy lift.
We’re seeing a few more consolidations among providers in the area. Does this mean consumers will have fewer choices moving forward?
I don’t think so. I think what we are seeing actually are some of the health insurance companies wanting to get into the provider business and have affiliations with providers so that together they can reduce the cost of health care because they are working together. Historically there has been a lot of competition between the provider and the health insurance company. The provider says this test is needed and the health insurance company says no it’s not. We are seeing collaborative efforts there. In the last 15 years, St. Luke’s has expanded into many of our rural communities and I don’t think anyone has said, at least that I’m aware of that, that that has reduced competition. That has increased levels of care in those communities.
Do you think that trend of expansion into the rural areas of Idaho will continue?
There hasn’t been a lot of it recently. Whether that was something that happened 10 years ago and isn’t happening so much now remains to be seen.
Was it not penciling out economically?
I don’t have access to those numbers, and if I did it would be through an attorney-client relationship, so I couldn’t share them with you. I think Idaho’s rural communities are better off with the things that have happened over the past 15 years with St. Luke’s going into some of these everywhere from McCall to the Wood River Valley to Twin Falls. I think those communities have better health care today than they did before Luke’s went down that path.
The rise of telemedicine is really affecting rural communities.
Telemedicine is a great tool to hook up specialists to patients in remote locations and to lessen the burden on that patient to have to go see someone when there may be only a couple of those specialists in the state or even for routine matters. Telemedicine from a regulatory standpoint kind of took a rough path to being approved in Idaho, and it is still not as implemented as some would like it to be. The reimbursement for telemedicine isn’t fully flushed out and developed yet, but there is good progress being made in all those areas, and telemedicine allows, in certain circumstances, reimbursement to both the physician and the facility where the patient is to provide care over a distance, and what a great thing that is.
Similar to telemedicine, Idaho State University has a program called Bengal Pharmacy, and they can provide remotely pharmacy services to communities that don’t have pharmacies, and that is really a big deal. If you have a small rural hospital in a town with no pharmacy and you can’t afford a pharmacist at your hospital, having an alliance with Idaho State University can really benefit everyone.
So it’s not creating competition, it is actually relieving some of the burdens on the rural hospitals.
It is. It’s allowing collaboration, sometimes public-public partnerships, sometimes public-private partnerships to bring skillsets together. I think ISU has done a really good job with that in many aspects and so has the College of Western Idaho who is providing much of the training for, at least in the Treasure Valley, many of the technical employees that hospitals need.