0:00:16.340,0:00:18.600
>> Thank you, everybody,

0:00:18.600,0:00:21.420
for [APPLAUSE].

0:00:21.420,0:00:22.800
Don't clap yet.

0:00:22.800,0:00:25.840
See that for. You may[br]want to take that back.

0:00:25.840,0:00:27.760
So first, before we[br]start I just got to

0:00:27.760,0:00:30.415
acknowledge Dr. Frakes[br]in the back here.

0:00:30.415,0:00:33.230
He was my auditing[br]professor

0:00:33.230,0:00:34.780
back in the day[br]when I was at WHU

0:00:34.780,0:00:36.750
so I think he's[br]come to critique or

0:00:36.750,0:00:39.240
take my diploma back,

0:00:39.240,0:00:40.950
I'm not sure. We'll[br]see how this goes.

0:00:40.950,0:00:43.470
So a little nervous now.

0:00:43.470,0:00:45.570
Thank you. Tell[br]you a little

0:00:45.570,0:00:47.610
bit, just horror story.

0:00:47.610,0:00:49.650
So I'm really very young,

0:00:49.650,0:00:51.030
Ruben so the reason

0:00:51.030,0:00:52.630
I got this job, I had[br]to pay off my bill,

0:00:52.630,0:00:53.870
and I'm still trying[br]to pay that off,

0:00:53.870,0:00:56.650
so I relate to[br]everybody's questions

0:00:56.650,0:00:58.370
regarding[br]hospital billing.

0:00:58.370,0:00:59.410
No, not really.

0:00:59.410,0:01:02.530
But I did start the[br]hospital back in 1988.

0:01:02.530,0:01:05.310
It's hard to believe[br]it's been that long.

0:01:05.310,0:01:07.530
Great family to work with.

0:01:07.530,0:01:09.170
I don't know[br]if you or many

0:01:09.170,0:01:12.110
know this in 2002,

0:01:12.110,0:01:13.715
I tried to escape.

0:01:13.715,0:01:16.210
I resigned from Pullman[br]Regional Hospital as

0:01:16.210,0:01:19.050
CFO and moved to[br]Tucson, Arizona.

0:01:19.050,0:01:22.110
I didn't get too far[br]out of town before

0:01:22.110,0:01:24.110
Scott asked if I could

0:01:24.110,0:01:25.070
stay on and we'd work

0:01:25.070,0:01:26.350
out some type[br]of arrangement.

0:01:26.350,0:01:28.585
So I still reside[br]in Tucson.

0:01:28.585,0:01:30.440
I've been doing[br]that for 15 years.

0:01:30.440,0:01:32.660
So half of my career[br]has been living in

0:01:32.660,0:01:34.720
Tucson and still working

0:01:34.720,0:01:35.920
at Pullman[br]Regional Hospital.

0:01:35.920,0:01:36.850
Pullman Regional[br]Hospital is

0:01:36.850,0:01:37.450
dear to my heart.

0:01:37.450,0:01:39.260
I have past board members

0:01:39.260,0:01:40.680
in here tonight and they

0:01:40.680,0:01:42.420
all know once you

0:01:42.420,0:01:44.160
get Pullman Regional[br]into your system,

0:01:44.160,0:01:45.400
it's hard to get it out.

0:01:45.400,0:01:46.860
It becomes a part of you.

0:01:46.860,0:01:48.180
You believe in the[br]community. You believe

0:01:48.180,0:01:49.520
a lot in what we're doing.

0:01:49.520,0:01:51.460
I really appreciate that,

0:01:51.460,0:01:53.860
especially working[br]with fine people like

0:01:53.860,0:01:56.570
Mr. Adams and Mrs. Eiler,

0:01:56.570,0:01:58.420
Dr. Cagiano that have

0:01:58.420,0:02:00.145
really become[br]family members.

0:02:00.145,0:02:02.840
Shauna Patrick, who's[br]my controller here,

0:02:02.840,0:02:04.700
has been with me, Shauna,

0:02:04.700,0:02:06.900
we've been together[br]16, 17, 18.

0:02:06.900,0:02:08.760
I mean, it's been[br]a long time.

0:02:08.760,0:02:09.610
>> Twenty years.

0:02:09.610,0:02:12.540
>> Yeah, it's amazing.[br]You got great people.

0:02:12.540,0:02:15.400
So let me start[br]with a little bit.

0:02:15.400,0:02:17.280
One of the nice things[br]about doing it in

0:02:17.280,0:02:18.720
this environment is I've

0:02:18.720,0:02:19.640
always believed whenever

0:02:19.640,0:02:20.660
I'm talking with anybody,

0:02:20.660,0:02:23.060
you have to give[br]them a takeaway,

0:02:23.060,0:02:25.490
you're investing time here

0:02:25.490,0:02:27.680
and if I failed to[br]do that, I failed.

0:02:27.680,0:02:28.900
The nice thing is[br]we're feeding you,

0:02:28.900,0:02:29.420
so at least you

0:02:29.420,0:02:31.090
give away full, hopefully.

0:02:31.090,0:02:32.620
So at any point,

0:02:32.620,0:02:34.420
if you want more, feel

0:02:34.420,0:02:36.600
free to get up[br]and go get more.

0:02:36.600,0:02:38.180
And so, at least[br]there's one takeaway,

0:02:38.180,0:02:38.990
so I feel good about that.

0:02:38.990,0:02:42.300
But let's start with[br]a little bit here.

0:02:56.050,0:02:59.130
Well, words of[br]wisdom here.

0:03:08.780,0:03:10.940
So being an account,

0:03:10.940,0:03:12.495
the pessimistic side of

0:03:12.495,0:03:14.420
me that really ring true.

0:03:14.420,0:03:15.580
But our goal

0:03:15.580,0:03:16.980
tonight is talk a[br]little bit about

0:03:16.980,0:03:19.440
healthcare and[br]specifically

0:03:19.440,0:03:21.995
healthcare Finance 101.

0:03:21.995,0:03:25.175
We have about an hour so

0:03:25.175,0:03:26.330
I'll hold pretty[br]true to that.

0:03:26.330,0:03:28.950
We'll get you out a[br]little probably early,

0:03:28.950,0:03:30.190
but really, this[br]is your time.

0:03:30.190,0:03:32.670
If there's questions[br]you have specifically,

0:03:32.670,0:03:35.030
I will address those[br]the best I can.

0:03:35.030,0:03:36.250
If there's[br]something I don't

0:03:36.250,0:03:37.690
know, I'll go find out,

0:03:37.690,0:03:39.410
and I'll make[br]sure that you all

0:03:39.410,0:03:42.435
know within a few days.

0:03:42.435,0:03:44.490
But hopefully, you'll find

0:03:44.490,0:03:46.650
this very meaningful in

0:03:46.650,0:03:48.140
terms of a better[br]understanding.

0:03:48.140,0:03:48.810
So that's our goal.

0:03:48.810,0:03:52.250
To do that, we have to have[br]a baseline of knowledge.

0:03:52.250,0:03:54.090
We have to have a[br]working platform

0:03:54.090,0:03:56.130
to communicate[br]effectively.

0:03:56.130,0:03:58.710
Because healthcare,[br]like any industry,

0:03:58.710,0:04:00.610
we have acronyms, and

0:04:00.610,0:04:01.790
I don't know if[br]it's purposeful,

0:04:01.790,0:04:04.035
so nobody else can come[br]in it's like a club.

0:04:04.035,0:04:06.250
Or if it's actually[br]the fact that we just

0:04:06.250,0:04:08.470
try to simplify our lives[br]by having acronyms,

0:04:08.470,0:04:09.550
and we throw them out as

0:04:09.550,0:04:10.995
if they're everyday speak.

0:04:10.995,0:04:12.870
So let me talk about a[br]little bit of things

0:04:12.870,0:04:13.630
just to make sure as

0:04:13.630,0:04:14.810
we're going through this,

0:04:14.810,0:04:16.150
as I mentioned something,

0:04:16.150,0:04:17.535
we're on a common ground.

0:04:17.535,0:04:20.410
So first thing, when we[br]taught gross charges,

0:04:20.410,0:04:23.030
this is what we[br]bill the patient.

0:04:23.030,0:04:24.690
Isn't what we get

0:04:24.690,0:04:27.290
paid but any[br]patient comes in,

0:04:27.290,0:04:28.730
it's going to be[br]whatever they had done

0:04:28.730,0:04:30.370
times whatever[br]quantity of whatever

0:04:30.370,0:04:32.610
they did and that's

0:04:32.610,0:04:34.565
going to be what[br]gets billed down.

0:04:34.565,0:04:37.310
From there, we[br]have contractuals

0:04:37.310,0:04:39.990
or deductions[br]from revenue.

0:04:39.990,0:04:42.200
That consists of[br]things like bad debt.

0:04:42.200,0:04:44.070
We have patients that[br]don't pay their bills,

0:04:44.070,0:04:46.350
hard to believe.

0:04:46.350,0:04:48.310
We also take care[br]of the indigent,

0:04:48.310,0:04:50.210
those that can't[br]pay their bills.

0:04:50.210,0:04:51.950
So we have charity care,

0:04:51.950,0:04:54.930
ways by which they[br]can have services,

0:04:54.930,0:04:56.600
as part of our mission.

0:04:56.600,0:04:59.330
And so they'll come in,[br]and if they qualify,

0:04:59.330,0:05:00.790
parts or all of

0:05:00.790,0:05:02.210
their bill can[br]be written off.

0:05:02.210,0:05:03.210
And then in addition to

0:05:03.210,0:05:04.690
that, we have contracts.

0:05:04.690,0:05:05.990
Now, we have a contract

0:05:05.990,0:05:06.770
with federal government,

0:05:06.770,0:05:08.310
Medicare and[br]Medicaid Services,

0:05:08.310,0:05:10.860
and they tell us what[br]they're gonna pay us.

0:05:10.860,0:05:12.800
You don't get to[br]negotiate that.

0:05:12.800,0:05:14.270
Under that means you get

0:05:14.270,0:05:16.035
told what you're[br]going to get paid.

0:05:16.035,0:05:18.210
However, other insurance

0:05:18.210,0:05:20.955
companies like[br]Primera, Blue Cross,

0:05:20.955,0:05:25.190
now Group Health, Molina,

0:05:25.190,0:05:28.910
any of those we negotiate[br]contracts with.

0:05:28.910,0:05:30.450
We never get 100%.

0:05:30.450,0:05:31.730
Back when I started,

0:05:31.730,0:05:33.170
we had contracts that were

0:05:33.170,0:05:35.910
98% of charges or[br]90% of charges.

0:05:35.910,0:05:37.390
And today, the[br]best commercial

0:05:37.390,0:05:38.890
contract we have[br]is right around

0:05:38.890,0:05:43.415
73.5% of charges so,

0:05:43.415,0:05:46.630
things have changed[br]significantly.

0:05:48.230,0:05:51.210
That was my sign to[br]repeat the question.

0:05:51.210,0:05:53.270
So is Medicare, Medicaid

0:05:53.270,0:05:55.665
around 33, 34% charges?

0:05:55.665,0:05:59.920
The write off is around[br]45% of charges, 50%.

0:05:59.920,0:06:01.990
We'll get into that[br]a little bit of why,

0:06:01.990,0:06:04.875
what that means and[br]how that works.

0:06:04.875,0:06:06.780
And specifically,[br]it means for

0:06:06.780,0:06:08.055
Pullman Regional Hospital.

0:06:08.055,0:06:10.090
So if you take that[br]gross charge and you

0:06:10.090,0:06:12.790
subtract those write offs,

0:06:12.790,0:06:15.050
be it bad debt, be[br]it contractual,

0:06:15.050,0:06:16.930
that's really[br]the net revenue.

0:06:16.930,0:06:19.510
That's what the[br]hospital has to

0:06:19.510,0:06:22.430
be able to fund[br]current expenses,

0:06:22.430,0:06:23.990
which would be[br]salaries, wages,

0:06:23.990,0:06:26.780
benefits, and future.

0:06:26.780,0:06:29.345
Things like capital, etc

0:06:29.345,0:06:30.270
that ends up being part of

0:06:30.270,0:06:32.155
depreciation and the like.

0:06:32.155,0:06:34.550
From there, once[br]you minus all of

0:06:34.550,0:06:36.950
those daily operational[br]expenses out,

0:06:36.950,0:06:38.610
that's what we[br]have in terms of

0:06:38.610,0:06:41.770
our basically[br]operating income.

0:06:41.770,0:06:43.930
Now, I'll tell you,[br]in healthcare,

0:06:43.930,0:06:45.295
margins are small.

0:06:45.295,0:06:47.050
In almost especially

0:06:47.050,0:06:48.750
critical access hospitals,

0:06:48.750,0:06:50.910
most of them don't

0:06:50.910,0:06:53.035
have an operating[br]bottom line.

0:06:53.035,0:06:54.990
The only way they have a

0:06:54.990,0:06:56.790
positive bottom[br]line and many

0:06:56.790,0:06:58.610
don't is the fact

0:06:58.610,0:07:00.715
through non[br]operating means.

0:07:00.715,0:07:02.780
In our particular case,

0:07:02.780,0:07:04.700
we have a great community[br]that supports us.

0:07:04.700,0:07:06.320
We're a public[br]hospital district,

0:07:06.320,0:07:08.160
and we get tax support,

0:07:08.160,0:07:11.080
which has been tremendous[br]blessing to us.

0:07:11.080,0:07:12.620
In addition to[br]that, we have

0:07:12.620,0:07:15.020
some properties[br]in which we rent.

0:07:15.020,0:07:17.000
We get some rental[br]income off of.

0:07:17.000,0:07:17.940
That's a non operating.

0:07:17.940,0:07:19.930
That's not what we're in[br]the business of doing.

0:07:19.930,0:07:21.300
And then other things

0:07:21.300,0:07:23.200
are like foundation[br]donations,

0:07:23.200,0:07:24.800
which are very beneficial

0:07:24.800,0:07:26.080
to us in order[br]to be able to

0:07:26.080,0:07:28.760
provide the spectrum and

0:07:28.760,0:07:31.260
the overall care that[br]we're able to do

0:07:31.260,0:07:34.230
here that many[br]communities can't do.

0:07:34.230,0:07:35.820
So a lot of it is

0:07:35.820,0:07:36.600
the support we've had

0:07:36.600,0:07:38.195
from the community itself.

0:07:38.195,0:07:40.590
So that ends up being[br]the net income.

0:07:40.590,0:07:42.030
And in our business, it's

0:07:42.030,0:07:44.805
almost you can't[br]have a profit.

0:07:44.805,0:07:46.710
We're a nonprofit so you

0:07:46.710,0:07:48.570
can't have profits,[br]but we have excess.

0:07:48.570,0:07:51.110
We have excess of[br]revenue over expenses.

0:07:51.110,0:07:53.350
What does that mean?[br]It's bottom line.

0:07:53.350,0:07:55.450
You call bottom line,[br]call it net income,

0:07:55.450,0:07:56.890
call it anything you want.

0:07:56.890,0:07:58.500
It's really your profit.

0:07:58.500,0:07:59.250
Now, I'll tell you

0:07:59.250,0:08:00.330
a story just for a second.

0:08:00.330,0:08:02.170
I'll just digress[br]for a minute.

0:08:02.170,0:08:04.180
And Al probably[br]appreciate this.

0:08:04.180,0:08:05.830
My wife's a pharmacist,

0:08:05.830,0:08:08.110
and she's probably in

0:08:08.110,0:08:10.410
terms of knowledge[br]and brightness,

0:08:10.410,0:08:12.510
she outshines me by far.

0:08:12.510,0:08:17.440
But last her senior[br]year she had to

0:08:17.440,0:08:19.720
take an online course[br]or one of those

0:08:19.720,0:08:22.320
that just to fill[br]a GR and I said,

0:08:22.320,0:08:23.900
I'll take accounting[br]it'll be simple.

0:08:23.900,0:08:25.540
I'll teach you.[br]I'll help you.

0:08:25.540,0:08:26.520
I thought we were gonna

0:08:26.520,0:08:27.500
get divorce our[br]first year of

0:08:27.500,0:08:28.740
marriage because she

0:08:28.740,0:08:29.840
couldn't understand well,

0:08:29.840,0:08:32.160
what's this net income[br]or profit or excess?

0:08:32.160,0:08:34.640
Why can't you just call[br]it the same thing?

0:08:34.640,0:08:36.845
Oh, it is. It just depends

0:08:36.845,0:08:38.940
what business[br]line you're in.

0:08:38.940,0:08:40.590
Owner's equity is the same

0:08:40.590,0:08:44.805
as the net worth[br]is the same as,

0:08:44.805,0:08:46.920
etc, and she just[br]couldn't get it.

0:08:46.920,0:08:49.800
I finally just said,

0:08:49.800,0:08:52.410
okay, I think somebody[br]else has to help you.

0:08:52.410,0:08:53.660
But we got through it,

0:08:53.660,0:08:54.320
and we're still married.

0:08:54.320,0:08:55.380
It's been 30 years.

0:08:55.380,0:08:56.930
So somehow we made[br]it through that.

0:08:56.930,0:08:59.600
But a lot of these terms[br]are interchangeable,

0:08:59.600,0:09:00.580
and we'll talk about some

0:09:00.580,0:09:02.770
of those so I'll[br]throw those out.

0:09:02.960,0:09:06.060
Here's your first[br]opportunity to have a quiz.

0:09:06.060,0:09:07.770
She said, I can't[br]ask her questions,

0:09:07.770,0:09:10.510
but no, this is for[br]the whole room.

0:09:10.510,0:09:11.550
Let me ask you a question.

0:09:11.550,0:09:13.450
This is your first test.

0:09:13.450,0:09:15.410
These are reimbursement[br]theories.

0:09:15.410,0:09:16.530
These are different

0:09:16.530,0:09:18.830
reimbursement methodologies[br]in healthcare.

0:09:18.830,0:09:22.065
One is diagnosis[br]related groups, DRGs.

0:09:22.065,0:09:23.570
Folks may have[br]remembered those

0:09:23.570,0:09:25.130
came back in[br]the early 80s.

0:09:25.130,0:09:26.880
Medicare came down[br]with that and said,

0:09:26.880,0:09:28.990
we're going to say[br]every patient that has

0:09:28.990,0:09:31.690
a x diagnosis of

0:09:31.690,0:09:33.490
this will be in[br]this grouping,

0:09:33.490,0:09:34.820
then we're gonna pay y.

0:09:34.820,0:09:36.370
So they created this

0:09:36.370,0:09:38.730
in order to control[br]their costs.

0:09:39.580,0:09:43.130
MSDRGs is another[br]methodologies.

0:09:43.130,0:09:45.530
Anybody know[br]what that means?

0:09:45.530,0:09:47.430
What's the[br]difference between

0:09:47.430,0:09:48.940
a DRG and an MSDRG?

0:09:48.940,0:09:50.810
So there's certain things

0:09:50.810,0:09:53.585
Medicare don't[br]typically pay for.

0:09:53.585,0:09:56.410
Pregnancies not[br]very many people in

0:09:56.410,0:09:59.275
the Medicare population[br]are pregnant, etc.

0:09:59.275,0:10:01.250
So commercial payers have

0:10:01.250,0:10:05.430
additional DRGs listed,

0:10:05.430,0:10:06.570
which are the MS side of

0:10:06.570,0:10:08.495
it, medical surgical side.

0:10:08.495,0:10:12.870
Common procedural[br]terminology, CPTs.

0:10:12.870,0:10:15.060
Full charges or percent of

0:10:15.060,0:10:17.445
charges. And also costs.

0:10:17.445,0:10:18.450
Let me ask the question.

0:10:18.450,0:10:21.290
Which of these does Pullman[br]Regional Hospital get paid

0:10:21.290,0:10:27.675
under? Go ahead, Mayor.

0:10:27.675,0:10:28.260
>> All.

0:10:28.260,0:10:30.470
>> Thank you. Good answer.

0:10:30.470,0:10:31.835
Every single one of those.

0:10:31.835,0:10:33.860
Not confusing whatsoever.

0:10:33.860,0:10:35.050
We just got to figure

0:10:35.050,0:10:36.650
out which one and[br]play the game right.

0:10:36.650,0:10:39.030
And by the way, insurance[br]companies love to

0:10:39.030,0:10:40.970
change what's acceptable[br]and non acceptable,

0:10:40.970,0:10:42.300
what's allowable,[br]non allowable.

0:10:42.300,0:10:43.930
We'll get a[br]little of that.

0:10:43.930,0:10:44.970
But we get paid

0:10:44.970,0:10:46.110
under every single[br]one of those.

0:10:46.110,0:10:48.040
So it's really[br]dependent on the payer.

0:10:48.040,0:10:50.310
If we had 100% Medicare,

0:10:50.310,0:10:53.330
it's so much easier[br]to budget we don't.

0:10:53.330,0:10:57.310
We have a variety of[br]various insurers.

0:10:57.310,0:10:59.430
Today, our population[br]in terms of Medicare,

0:10:59.430,0:11:02.385
Medicaid runs about[br]45% of our charges.

0:11:02.385,0:11:04.330
Pullman is in a[br]very good position

0:11:04.330,0:11:06.270
from the terms of the[br]ability to do what we

0:11:06.270,0:11:07.870
do because we[br]have a very good

0:11:07.870,0:11:09.730
pair mix due to[br]the fact that we

0:11:09.730,0:11:12.270
have Washington[br]State University

0:11:12.270,0:11:14.355
here and SEL here.

0:11:14.355,0:11:15.950
Not very many[br]communities of

0:11:15.950,0:11:18.850
our size in rural America[br]have that luxury.

0:11:18.850,0:11:21.265
Most of them typically

0:11:21.265,0:11:23.880
you can think of small[br]farming communities.

0:11:23.880,0:11:25.390
There's a lot of Medicare,

0:11:25.390,0:11:26.630
Medicaid, especially.

0:11:26.630,0:11:28.310
You think of[br]Othello, think how

0:11:28.310,0:11:30.690
heavily Medicaid[br]their population is.

0:11:30.690,0:11:31.830
It's hard to make[br]anything, and

0:11:31.830,0:11:34.340
we'll go into why[br]that is in a minute.

0:11:34.730,0:11:37.490
So again, we're[br]still laying

0:11:37.490,0:11:39.665
some framework about[br]hospital Finance

0:11:39.665,0:11:41.570
101 because[br]some of this is

0:11:41.570,0:11:43.270
meaningful in[br]how you approach

0:11:43.270,0:11:44.790
services you may provide.

0:11:44.790,0:11:46.250
Hospital structures,[br]these are

0:11:46.250,0:11:47.970
really the three[br]types of structures,

0:11:47.970,0:11:50.005
public, which would[br]be federal, state,

0:11:50.005,0:11:53.910
local ran facilities,

0:11:53.910,0:11:58.080
non for profits,[br]and for profits.

0:11:58.080,0:11:59.810
In our geographical area,

0:11:59.810,0:12:02.300
how many of these do[br]you think we have?

0:12:02.850,0:12:06.290
Think of the quad[br]cities here.

0:12:07.890,0:12:10.100
You may not. We have

0:12:10.100,0:12:12.500
two public hospital[br]districts in this area.

0:12:12.500,0:12:13.500
In fact, there are

0:12:13.500,0:12:15.925
three public hospital[br]districts in this area.

0:12:15.925,0:12:17.540
Pullman Regional Hospital,

0:12:17.540,0:12:18.860
we're public[br]hospital district.

0:12:18.860,0:12:20.855
Number 1A of[br]Whitman County

0:12:20.855,0:12:23.260
doing business as Pullman[br]Regional Hospital.

0:12:23.260,0:12:24.440
And then you have

0:12:24.440,0:12:26.520
Public Hospital[br]District Number 3.

0:12:26.520,0:12:28.130
Anybody name who that is?

0:12:28.130,0:12:31.180
Whitman. Can anybody name

0:12:31.180,0:12:33.860
the other public hospital[br]district Garfield?

0:12:33.860,0:12:36.435
Do the hospital[br]in Garfield?

0:12:36.435,0:12:41.700
No, they do a[br]assisted living

0:12:41.700,0:12:44.235
in home health, but[br]that's their district.

0:12:44.235,0:12:46.100
They used to years[br]and years ago,

0:12:46.100,0:12:47.200
there was a hospital,

0:12:47.200,0:12:48.955
but they don't[br]have one now.

0:12:48.955,0:12:50.860
So those are[br]public hospital.

0:12:50.860,0:12:51.960
What about non[br]for profits in

0:12:51.960,0:12:53.485
our region? Think of any?

0:12:53.485,0:12:57.070
You got Gritman down

0:12:57.070,0:12:59.440
the valley, you[br]have Tristate.

0:12:59.440,0:13:01.520
Today, you have[br]a for profit in

0:13:01.520,0:13:02.800
our backyard you never

0:13:02.800,0:13:04.630
had before this last year.

0:13:04.630,0:13:09.515
St. Joe's. That will[br]be a new dynamic.

0:13:09.515,0:13:11.400
>> Steve, does Garfield

0:13:11.400,0:13:12.820
include the EMS system?

0:13:12.820,0:13:14.260
>> It very well could.

0:13:14.260,0:13:16.660
So does Garfield's[br]hospital

0:13:16.660,0:13:18.250
district include the EMS?

0:13:18.250,0:13:20.205
Likely to support that.

0:13:20.205,0:13:22.665
I'm not clear on[br]that, but likely.

0:13:22.665,0:13:25.140
They do have[br]some tax bonds.

0:13:25.140,0:13:27.130
So in our population,

0:13:27.130,0:13:29.190
you can see this[br]is a distribution

0:13:29.190,0:13:31.450
of this across the[br]United States.

0:13:31.450,0:13:32.950
Many are not for profit,

0:13:32.950,0:13:34.310
as you can imagine,

0:13:34.310,0:13:36.480
supported in one[br]way or another.

0:13:36.480,0:13:37.970
Not very many for profits.

0:13:37.970,0:13:39.910
In fact, CHS, which is

0:13:39.910,0:13:43.060
Community Health[br]Systems is one of them.

0:13:44.540,0:13:46.350
Almost all of them run

0:13:46.350,0:13:47.490
out of Tennessee[br]for some reason.

0:13:47.490,0:13:48.770
I don't know if it's[br]a tax advantage or

0:13:48.770,0:13:50.490
that's where they all.

0:13:50.490,0:13:52.270
RHSC, which actually runs

0:13:52.270,0:13:55.510
Tristate is another[br]one of them.

0:13:55.510,0:13:57.600
But many of them[br]are divesting

0:13:57.600,0:13:59.770
so if they aren't making[br]money, they get out.

0:13:59.770,0:14:01.590
I'll tell you,[br]right now, for

0:14:01.590,0:14:02.810
profits typically run

0:14:02.810,0:14:05.030
margins are[br]working towards

0:14:05.030,0:14:06.630
margins in the[br]double digits.

0:14:06.630,0:14:08.250
Non for profits[br]are typically

0:14:08.250,0:14:11.050
around 1-2% across[br]the United States,

0:14:11.050,0:14:13.225
and we're really no[br]different than that.

0:14:13.225,0:14:14.730
You'll have a few that are

0:14:14.730,0:14:16.710
higher than that,[br]but not very many.

0:14:16.710,0:14:18.490
You can see how[br]many are in

0:14:18.490,0:14:21.150
urban settings versus[br]rural settings.

0:14:21.150,0:14:25.130
So not a complicated[br]system at all.

0:14:25.130,0:14:27.060
It's very pretty simple.

0:14:27.060,0:14:29.535
This is one[br]segment of that.

0:14:29.535,0:14:31.930
Remember, under[br]payment methodologies

0:14:31.930,0:14:33.080
we just talked about,

0:14:33.080,0:14:34.730
this is one aspect,[br]and this is

0:14:34.730,0:14:37.140
just the Affordable[br]Care Act, by the way.

0:14:37.140,0:14:39.635
And by the way,

0:14:39.635,0:14:43.695
you're here. This is you.

0:14:43.695,0:14:46.360
So to get paid,[br]there's really pretty

0:14:46.360,0:14:47.580
simple you just got

0:14:47.580,0:14:48.810
to work through all[br]of these means.

0:14:48.810,0:14:50.860
A lot of regulatory issues

0:14:50.860,0:14:52.640
and things so[br]people wonder why

0:14:52.640,0:14:54.880
healthcare is a[br]challenge in terms of

0:14:54.880,0:14:57.160
reimbursement and[br]making profit

0:14:57.160,0:14:58.380
there are so much.

0:14:58.380,0:15:00.900
One of the highest[br]regulated bodies

0:15:00.900,0:15:02.960
in the United States[br]is hospitals.

0:15:02.960,0:15:05.140
This is just[br]to get payment

0:15:05.140,0:15:06.570
under this new[br]healthcare system.

0:15:06.570,0:15:08.680
So there's no[br]additional taxes

0:15:08.680,0:15:09.850
wasted within this at all

0:15:09.850,0:15:11.820
it's pretty seamless.

0:15:11.820,0:15:13.520
And this is changing[br]all the time, so you

0:15:13.520,0:15:15.160
got to learn how[br]to play for it.

0:15:15.160,0:15:16.780
This down here, which

0:15:16.780,0:15:18.880
is the Medicare[br]Medicaid Services,

0:15:18.880,0:15:20.440
it's changed[br]significantly,

0:15:20.440,0:15:21.660
especially under[br]physicians,

0:15:21.660,0:15:23.480
if you recall[br]and how they got

0:15:23.480,0:15:26.060
paid just changed[br]this last year,

0:15:26.060,0:15:30.510
and they are going to[br]now their increases,

0:15:30.510,0:15:36.630
which was budgeted[br]and under the SQR,

0:15:36.630,0:15:38.175
which was the growth.

0:15:38.175,0:15:40.210
That's how they[br]got additions

0:15:40.210,0:15:41.790
every year. Now[br]they've changed that.

0:15:41.790,0:15:43.390
And it's called MACRA, and

0:15:43.390,0:15:45.470
the way physicians[br]will see increases,

0:15:45.470,0:15:47.175
there'll be no new money

0:15:47.175,0:15:48.690
there'll be winners[br]and losers.

0:15:48.690,0:15:49.970
And it's all based on

0:15:49.970,0:15:52.090
quality and what your[br]reporting scores are.

0:15:52.090,0:15:53.270
And if you do it right,

0:15:53.270,0:15:54.570
then your neighbor[br]doesn't do it

0:15:54.570,0:15:55.810
right he loses money,

0:15:55.810,0:15:57.130
and you get some[br]of his money

0:15:57.130,0:15:58.610
because it's[br]budget neutral.

0:15:58.610,0:16:00.570
And that's the payment[br]increases that

0:16:00.570,0:16:02.940
physicians will see[br]moving forward.

0:16:02.940,0:16:04.170
How many physicians like

0:16:04.170,0:16:06.010
to be under that model?

0:16:06.760,0:16:09.350
Not many.

0:16:09.350,0:16:12.680
How many people have[br]felt our struggle

0:16:12.680,0:16:14.090
even here on a local level

0:16:14.090,0:16:15.710
to find a primary[br]care physician?

0:16:15.710,0:16:17.900
A few.

0:16:17.900,0:16:20.060
It's been a challenge.

0:16:20.060,0:16:22.460
We have people retiring,

0:16:22.460,0:16:24.365
and it's hard to recruit.

0:16:24.365,0:16:27.500
Pullman's very attractive[br]from a destination,

0:16:27.500,0:16:28.670
but you can[br]imagine some of

0:16:28.670,0:16:29.900
these rural[br]communities where it

0:16:29.900,0:16:33.080
is really a struggle[br]when we struggle.

0:16:33.080,0:16:35.150
In fact, we were down in

0:16:35.150,0:16:38.180
some of our primary[br]care practices.

0:16:38.180,0:16:41.030
I say our, because it's[br]a community when I

0:16:41.030,0:16:42.770
think half the[br]providers they

0:16:42.770,0:16:45.395
used to have[br]four years ago,

0:16:45.395,0:16:48.350
and they're trying[br]to recruit in.

0:16:48.350,0:16:49.820
It's challenging[br]on the market

0:16:49.820,0:16:51.890
because why would[br]you want to do that,

0:16:51.890,0:16:54.365
especially under the[br]old payment models?

0:16:54.365,0:16:55.880
We're going to talk a[br]little bit about that.

0:16:55.880,0:16:57.320
The revenue cycle.

0:16:57.320,0:16:58.580
So as you think

0:16:58.580,0:17:01.595
about Healthcare[br]Finance 101,

0:17:01.595,0:17:03.470
how we make our money is

0:17:03.470,0:17:05.690
through seeing[br]volume today.

0:17:05.690,0:17:07.490
There will be a[br]point in time,

0:17:07.490,0:17:09.065
I think, years from now,

0:17:09.065,0:17:10.760
in which the less you see,

0:17:10.760,0:17:12.650
the more you make because

0:17:12.650,0:17:14.210
it'll be value-based.

0:17:14.210,0:17:15.800
You want to keep[br]people healthy,

0:17:15.800,0:17:16.820
which should be[br]really our mission.

0:17:16.820,0:17:17.780
Today, we keep people

0:17:17.780,0:17:18.800
healthy that's[br]not good for

0:17:18.800,0:17:19.820
our bottom line,

0:17:19.820,0:17:21.050
but it's the right[br]thing to do.

0:17:21.050,0:17:22.655
And we're doing[br]those things today.

0:17:22.655,0:17:24.380
We have a whole care[br]coordination team

0:17:24.380,0:17:25.565
over here with

0:17:25.565,0:17:28.610
social workers and we

0:17:28.610,0:17:29.780
don't get paid a[br]dime for that,

0:17:29.780,0:17:30.710
but it's the[br]right thing to

0:17:30.710,0:17:32.255
do for our community.

0:17:32.255,0:17:33.890
If I was strictly a

0:17:33.890,0:17:35.510
for-profit, you know what?

0:17:35.510,0:17:38.510
They wouldn't have[br]that. Your Red Sage

0:17:38.510,0:17:40.220
would be open 10:00-2:00.

0:17:40.220,0:17:42.065
It wouldn't be[br]open 7:00-7:00,

0:17:42.065,0:17:44.180
because I would be[br]cutting every cost

0:17:44.180,0:17:45.680
I could out of[br]this organization

0:17:45.680,0:17:47.000
and putting every dollar I

0:17:47.000,0:17:49.280
could to my stockholders.

0:17:49.280,0:17:51.005
There would be things[br]I wouldn't run.

0:17:51.005,0:17:54.020
I would not run[br]7.2 physicians

0:17:54.020,0:17:57.050
in my emergency[br]department, not 24/7.

0:17:57.050,0:17:58.280
I don't have that[br]many physicians,

0:17:58.280,0:17:59.510
but around the clock.

0:17:59.510,0:18:01.820
I'd run a bare[br]bones 4.5 FTEs,

0:18:01.820,0:18:03.380
run them till the bone[br]and fire and hire

0:18:03.380,0:18:05.660
another one coming[br]in two years,

0:18:05.660,0:18:07.235
burn them out,[br]get another,

0:18:07.235,0:18:08.540
because I could save

0:18:08.540,0:18:10.220
hundreds of thousands[br]of dollars.

0:18:10.220,0:18:12.815
But the quality of care[br]wouldn't be there,

0:18:12.815,0:18:14.495
and you'd just burn[br]through people.

0:18:14.495,0:18:15.800
It's not that[br]their quality is

0:18:15.800,0:18:18.320
bad because they still[br]score very well.

0:18:18.320,0:18:19.520
It's the fact that

0:18:19.520,0:18:21.335
the experience is[br]much different.

0:18:21.335,0:18:23.150
I speak from a[br]personal level

0:18:23.150,0:18:23.810
on many of these.

0:18:23.810,0:18:27.335
My wife works for[br]CHS as a pharmacist.

0:18:27.335,0:18:30.960
And I will tell you, it[br]has been a struggle.

0:18:31.450,0:18:33.980
They opened a brand[br]new facility in

0:18:33.980,0:18:37.970
2004, December.[br]Sound familiar?

0:18:37.970,0:18:40.380
We opened ours[br]in December.

0:18:40.380,0:18:44.170
They have been burned[br]through 15 pharmacists.

0:18:44.170,0:18:46.990
They have three[br]at any one time,

0:18:46.990,0:18:48.895
and they've burned[br]through 15 pharmacists

0:18:48.895,0:18:51.175
since she started[br]to today.

0:18:51.175,0:18:53.710
We've had one retire.

0:18:53.710,0:18:55.720
Tells you a little[br]difference of

0:18:55.720,0:18:57.790
the culture because it's

0:18:57.790,0:18:58.660
not about the people,

0:18:58.660,0:19:00.055
it's about the[br]bottom line.

0:19:00.055,0:19:02.140
So when you think[br]about revenue cycle,

0:19:02.140,0:19:05.035
you think zero to zero.

0:19:05.035,0:19:06.400
You'll all be experts.

0:19:06.400,0:19:07.500
You can start consulting

0:19:07.500,0:19:09.125
businesses after tonight,

0:19:09.125,0:19:11.750
because not very many people[br]really understand this.

0:19:11.750,0:19:13.940
Zero to zero. How[br]much do you owe when

0:19:13.940,0:19:14.750
you come in and do

0:19:14.750,0:19:16.925
registration or you[br]come in for a lab?

0:19:16.925,0:19:18.380
Before you have that down,

0:19:18.380,0:19:19.460
how much do you[br]owe the hospital?

0:19:19.460,0:19:20.000
Nothing.

0:19:20.000,0:19:22.250
You come in, you have[br]that service when

0:19:22.250,0:19:23.840
you have that surgery,

0:19:23.840,0:19:25.790
whatever, you go[br]through a process.

0:19:25.790,0:19:27.335
You hit registration.

0:19:27.335,0:19:29.240
Within that[br]registration process,

0:19:29.240,0:19:29.990
there's things[br]that should have

0:19:29.990,0:19:31.070
happened either before or

0:19:31.070,0:19:33.845
happened during[br]with authorization.

0:19:33.845,0:19:35.900
Does your insurance[br]authorize you to do this?

0:19:35.900,0:19:37.220
Did you have to[br]have a referral?

0:19:37.220,0:19:37.880
If you didn't have to have

0:19:37.880,0:19:38.630
a referral, I'm sorry,

0:19:38.630,0:19:39.290
you'll have to go back to

0:19:39.290,0:19:41.000
your primary care,[br]get the referral.

0:19:41.000,0:19:42.020
Then when you can[br]come back, we'll have

0:19:42.020,0:19:43.355
the procedure after that.

0:19:43.355,0:19:44.930
If not, and they didn't

0:19:44.930,0:19:46.610
require a referral or[br]we had the referral,

0:19:46.610,0:19:48.200
then we have to have[br]authorization because

0:19:48.200,0:19:49.190
if we don't have[br]authorization,

0:19:49.190,0:19:50.210
they won't pay us.

0:19:50.210,0:19:51.995
And if we miss that[br]step, it goes what?

0:19:51.995,0:19:54.500
We're out, or we fight[br]insurance companies.

0:19:54.500,0:19:56.705
We write a few letters.

0:19:56.705,0:19:57.980
I'll tell you this year is

0:19:57.980,0:19:59.000
much better than before.

0:19:59.000,0:20:01.220
We've had 64[br]denied claims.

0:20:01.220,0:20:01.940
Last year, at this time we

0:20:01.940,0:20:03.620
had 250 denied claims.

0:20:03.620,0:20:06.440
Jumping through insurance[br]companies' hoops

0:20:06.440,0:20:08.990
on trying to get paid.[br]That's this process.

0:20:08.990,0:20:10.700
Registration, insurance[br]verification,

0:20:10.700,0:20:12.095
point of service[br]collection.

0:20:12.095,0:20:13.460
We don't do a[br]ton of that here

0:20:13.460,0:20:14.900
because our people[br]are very good

0:20:14.900,0:20:16.310
here in Pullman about

0:20:16.310,0:20:17.795
paying for their services.

0:20:17.795,0:20:18.620
Some places,

0:20:18.620,0:20:19.820
they'll require[br]you to almost pay

0:20:19.820,0:20:20.870
your deductible upfront

0:20:20.870,0:20:22.490
before they'll[br]ever treat you.

0:20:22.490,0:20:24.440
Financial clearance[br]all the way

0:20:24.440,0:20:26.810
through till the[br]very back end of it.

0:20:26.810,0:20:29.045
After we do all of[br]the billing process,

0:20:29.045,0:20:30.430
insurance pays, we go out,

0:20:30.430,0:20:31.600
we collect the deductible,

0:20:31.600,0:20:34.000
we write off the[br]contractual write-off,

0:20:34.000,0:20:36.745
that account goes to[br]zero, zero to zero.

0:20:36.745,0:20:38.995
That's the revenue cycle.

0:20:38.995,0:20:42.850
All of those things[br]have to flow

0:20:42.850,0:20:45.610
very fluidly in[br]order to get there.

0:20:45.610,0:20:47.725
Sometimes they[br]work seamlessly.

0:20:47.725,0:20:50.665
We can get paid 14[br]days and be done.

0:20:50.665,0:20:53.140
On average, Pullman[br]Regional Hospital takes

0:20:53.140,0:20:56.450
34 days to collect[br]zero to zero.

0:20:56.950,0:20:59.930
How's that compare[br]across the nation?

0:20:59.930,0:21:01.880
Across the nation, it's[br]gotten much better.

0:21:01.880,0:21:03.020
It used to be[br]around 50 days.

0:21:03.020,0:21:05.795
Now it's about 48 days[br]across the nation.

0:21:05.795,0:21:07.040
We do very well here,

0:21:07.040,0:21:08.465
and we've got good payers.

0:21:08.465,0:21:10.430
And some of them,[br]you can get

0:21:10.430,0:21:11.645
this whole process done

0:21:11.645,0:21:13.205
within a couple of weeks.

0:21:13.205,0:21:15.635
Sometimes it's[br]not that easy.

0:21:15.635,0:21:16.910
We still have accounts

0:21:16.910,0:21:17.900
that we're working[br]on that are

0:21:17.900,0:21:20.645
almost a year[br]old. Got denied.

0:21:20.645,0:21:22.040
We appealed the denial

0:21:22.040,0:21:23.150
because they didn't[br]tell us they

0:21:23.150,0:21:24.350
changed the rule[br]on what had

0:21:24.350,0:21:25.865
to be authorized[br]beforehand.

0:21:25.865,0:21:27.050
We had the physician write

0:21:27.050,0:21:29.000
that this is appropriate.

0:21:29.000,0:21:30.545
They are in review.

0:21:30.545,0:21:31.880
They deny it. We go[br]back through it,

0:21:31.880,0:21:32.660
and we fight it.

0:21:32.660,0:21:34.610
We finally get it[br]paid, or a patient

0:21:34.610,0:21:36.995
comes in and they[br]say I have Primera.

0:21:36.995,0:21:38.675
Give you the card.

0:21:38.675,0:21:40.010
Come to find out, shoot,

0:21:40.010,0:21:41.615
no, I don't. We changed.

0:21:41.615,0:21:43.070
But you don't get[br]that until you get

0:21:43.070,0:21:44.390
the denial from the[br]insurance company.

0:21:44.390,0:21:45.950
You go back through[br]and they go,

0:21:45.950,0:21:46.565
no, I haven't.

0:21:46.565,0:21:47.150
Then they give you

0:21:47.150,0:21:48.140
a different card[br]and you go through

0:21:48.140,0:21:51.300
that process and[br]it takes time.

0:21:51.610,0:21:54.110
So this is just[br]how this segment

0:21:54.110,0:21:55.745
would work zero to zero.

0:21:55.745,0:21:57.050
You schedule, you come in,

0:21:57.050,0:21:59.390
you check eligibility,[br]you treat, you code.

0:21:59.390,0:22:00.530
The coding aspect,

0:22:00.530,0:22:01.670
that's your[br]medical records.

0:22:01.670,0:22:02.870
Once it gets coded,

0:22:02.870,0:22:04.265
and by the way,[br]do this right.

0:22:04.265,0:22:07.415
So one thing, let's say[br]you had a total hip.

0:22:07.415,0:22:09.230
If the physician didn't[br]write that he put

0:22:09.230,0:22:11.510
the device in[br]and didn't chart

0:22:11.510,0:22:13.790
that he put the device in

0:22:13.790,0:22:16.175
but you are[br]walking around,

0:22:16.175,0:22:17.855
evident that you really[br]had a total hip,

0:22:17.855,0:22:18.590
we don't get paid

0:22:18.590,0:22:20.165
because it wasn't[br]documented.

0:22:20.165,0:22:21.710
So if you didn't document,

0:22:21.710,0:22:24.500
it doesn't matter if[br]you did it or not.

0:22:24.500,0:22:26.330
You didn't do it. So you

0:22:26.330,0:22:27.710
got to document for[br]everything you do.

0:22:27.710,0:22:30.515
So a lot of this is[br]making sure we educate,

0:22:30.515,0:22:32.060
train, and then you

0:22:32.060,0:22:33.440
go through the whole[br]collection process,

0:22:33.440,0:22:34.760
which is active[br]collections,

0:22:34.760,0:22:37.940
insurance billing,[br]post collection,

0:22:37.940,0:22:39.545
which if somebody[br]didn't pay,

0:22:39.545,0:22:40.820
how do you collect that,

0:22:40.820,0:22:41.900
all the way to legal

0:22:41.900,0:22:43.850
where you might do liens.

0:22:43.850,0:22:46.850
Many times, hopefully,[br]it goes very clearly,

0:22:46.850,0:22:49.220
but sometimes it[br]doesn't work as well.

0:22:49.220,0:22:51.350
So this is just[br]another aspect of

0:22:51.350,0:22:53.780
that. This is one bill.

0:22:53.780,0:22:55.580
Fifty percent of[br]everything we

0:22:55.580,0:22:57.635
do is going to be done[br]on the front end.

0:22:57.635,0:22:59.300
And most hospitals in

0:22:59.300,0:23:00.320
the past haven't treated

0:23:00.320,0:23:04.340
the registration staff[br]as a key player.

0:23:04.340,0:23:06.770
Fifty percent of getting

0:23:06.770,0:23:08.465
this right happens there.

0:23:08.465,0:23:09.920
If you don't train[br]those people

0:23:09.920,0:23:12.290
and you don't[br]keep good people,

0:23:12.290,0:23:15.275
you got a 50:50 chance[br]of ever getting paid.

0:23:15.275,0:23:20.330
We do a very good job[br]much better, 2015,

0:23:20.330,0:23:21.500
we wrote off almost two

0:23:21.500,0:23:23.165
point some million dollars

0:23:23.165,0:23:24.800
in process errors and

0:23:24.800,0:23:27.320
things because the[br]front end was bad.

0:23:27.320,0:23:29.435
Now, much of[br]that we denied.

0:23:29.435,0:23:31.205
We got denials and stuff.

0:23:31.205,0:23:33.725
We had to fight to get[br]every penny of it,

0:23:33.725,0:23:35.120
and we do very[br]well at that.

0:23:35.120,0:23:36.590
But if we fix it[br]on the front end,

0:23:36.590,0:23:38.270
we don't have to fight[br]it on the back end.

0:23:38.270,0:23:40.370
And so we did a[br]tremendous amount

0:23:40.370,0:23:41.915
of effort to clean this[br]up on the front end.

0:23:41.915,0:23:44.465
And today, it's[br]basically gone.

0:23:44.465,0:23:46.475
Fifteen percent is in

0:23:46.475,0:23:47.960
the actual[br]medical records,

0:23:47.960,0:23:49.550
so the coding[br]aspect of this.

0:23:49.550,0:23:51.125
This is when it[br]goes through

0:23:51.125,0:23:53.645
our coders, inpatient[br]outpatient.

0:23:53.645,0:23:55.160
They read the documents.

0:23:55.160,0:23:56.450
What was documented?

0:23:56.450,0:23:58.895
What should that CPT be?

0:23:58.895,0:24:00.680
Make sure they code[br]all of that out

0:24:00.680,0:24:03.305
that DRG, that's[br]their job.

0:24:03.305,0:24:04.820
If they do very[br]well at that,

0:24:04.820,0:24:05.930
we get paid well.

0:24:05.930,0:24:07.880
And then 15% is on

0:24:07.880,0:24:10.355
the charge entry[br]now charges.

0:24:10.355,0:24:12.410
So this happens here.

0:24:12.410,0:24:13.610
I've talked to nurses.

0:24:13.610,0:24:15.425
I've talked to staff[br]many times saying,

0:24:15.425,0:24:17.270
don't make the decision on

0:24:17.270,0:24:19.355
what should be charged[br]to the patient or not.

0:24:19.355,0:24:22.670
Document[br]effectively so that

0:24:22.670,0:24:24.335
we can bill appropriately.

0:24:24.335,0:24:25.730
Because if you document

0:24:25.730,0:24:27.080
what we did, then[br]we can bill.

0:24:27.080,0:24:28.460
If somebody can't[br]pay, I have

0:24:28.460,0:24:29.975
all ways to be[br]able to help them,

0:24:29.975,0:24:34.010
charity care[br]payment terms.

0:24:34.010,0:24:37.100
Let's pay it over[br]12 months, etc.

0:24:37.100,0:24:37.880
Those types of things I

0:24:37.880,0:24:38.975
can help patients with.

0:24:38.975,0:24:40.310
But if the nurse upfront

0:24:40.310,0:24:42.275
decides the poor[br]college student,

0:24:42.275,0:24:44.270
they're probably only[br]eating Top Ramen.

0:24:44.270,0:24:45.650
Let's not bill them.

0:24:45.650,0:24:46.550
I won't charge[br]them for that.

0:24:46.550,0:24:47.930
They don't look like[br]they should be.

0:24:47.930,0:24:50.540
Then I have to[br]raise charges

0:24:50.540,0:24:51.950
somewhere else to cover

0:24:51.950,0:24:53.195
that. That's a[br]loss leader.

0:24:53.195,0:24:54.785
So we aren't pricing

0:24:54.785,0:24:57.215
effectively for[br]everybody else.

0:24:57.215,0:24:59.480
We have means by[br]which to handle that.

0:24:59.480,0:25:00.920
So let's just bill[br]appropriately.

0:25:00.920,0:25:03.290
So that's part of that[br]charge entry side.

0:25:03.290,0:25:04.490
That's what they do.

0:25:04.490,0:25:06.125
And then the[br]billing aspect,

0:25:06.125,0:25:07.340
which is your financial

0:25:07.340,0:25:08.900
services component to it.

0:25:08.900,0:25:09.770
So a little bit

0:25:09.770,0:25:10.970
about Pullman[br]Regional Hospital.

0:25:10.970,0:25:11.960
We'll get a little[br]more specific.

0:25:11.960,0:25:13.880
Those are some high-level[br]aspects of it.

0:25:13.880,0:25:14.690
We're going to[br]drill down a

0:25:14.690,0:25:15.950
little more about[br]who we are,

0:25:15.950,0:25:18.110
what we do and[br]how it works.

0:25:18.110,0:25:20.030
So today, most people

0:25:20.030,0:25:21.815
know Pullman[br]Regional Hospital.

0:25:21.815,0:25:23.570
But I don't know[br]if very many

0:25:23.570,0:25:24.590
people know or[br]how many people

0:25:24.590,0:25:25.730
know we have

0:25:25.730,0:25:27.425
Pulman Regional Hospital[br]Clinic Network.

0:25:27.425,0:25:31.640
We own today three clinic[br]practices directly,

0:25:31.640,0:25:32.990
which are wholly[br]owned means

0:25:32.990,0:25:34.850
Pullman Regional[br]Hospital is 100% owner.

0:25:34.850,0:25:35.870
They're as an LLC,

0:25:35.870,0:25:37.820
but really they're 100%

0:25:37.820,0:25:38.840
owned by the hospital.

0:25:38.840,0:25:43.535
That includes[br]Palouse Pediatrics,

0:25:43.535,0:25:47.135
Palouse Psychology &[br]Behavioral Health, and today,

0:25:47.135,0:25:49.040
Pullman Family[br]Medicine, who just

0:25:49.040,0:25:52.070
joined that clinic[br]network as of April 1st.

0:25:52.070,0:25:54.200
So we go back and we[br]talk just a little

0:25:54.200,0:25:55.430
bit as to why

0:25:55.430,0:25:57.140
we might get into[br]some of these.

0:25:57.140,0:25:59.825
In addition to this,[br]we have joint ventures

0:25:59.825,0:26:03.005
with really three[br]groups today.

0:26:03.005,0:26:05.015
One is Palouse Surgeons.

0:26:05.015,0:26:08.195
The other is under[br]Palouse Specialties,

0:26:08.195,0:26:11.540
which is Palouse ENT[br]and Palouse Urology.

0:26:11.540,0:26:14.030
Those are owned[br]40% by Pullman,

0:26:14.030,0:26:15.485
40% by Gritman,

0:26:15.485,0:26:17.225
and 20% by Whitman.

0:26:17.225,0:26:18.800
Three hospitals[br]came together.

0:26:18.800,0:26:20.780
Why would we do that?[br]That's craziness.

0:26:20.780,0:26:23.375
Let them Let them[br]sink or swim.

0:26:23.375,0:26:27.800
You're on your[br]own. Dr. Cagiano,

0:26:27.800,0:26:29.300
would we have an emergency[br]department if we

0:26:29.300,0:26:31.925
had no general[br]surgeons there?

0:26:31.925,0:26:34.700
>> It wouldn't be a full[br]emergency services.

0:26:34.700,0:26:35.555
>> You couldn't even

0:26:35.555,0:26:36.770
offer an emergency[br]department

0:26:36.770,0:26:38.075
without having a[br]general surgeon.

0:26:38.075,0:26:39.980
You could offer[br]an urgent care.

0:26:39.980,0:26:41.690
But by rule and[br]regulations,

0:26:41.690,0:26:43.790
you couldn't offer an[br]emergency department.

0:26:43.790,0:26:46.100
You wouldn't be a[br]hospital without him.

0:26:46.100,0:26:48.185
Well, we had that[br]situation facing us.

0:26:48.185,0:26:49.820
We had one general[br]surgeon on

0:26:49.820,0:26:52.040
the Palouse[br]running 365 days,

0:26:52.040,0:26:54.650
we're doing three[br]hospitals who said enough.

0:26:54.650,0:26:56.240
If the hospitals[br]didn't jump in,

0:26:56.240,0:26:57.590
we wouldn't have[br]had anybody.

0:26:57.590,0:27:00.140
And we said, what[br]do you need?

0:27:00.140,0:27:05.405
I will only take call[br]one week every four.

0:27:05.405,0:27:08.930
We got to have three[br]other general surgeons.

0:27:08.930,0:27:10.340
That's the standard, so

0:27:10.340,0:27:11.465
the three hospitals[br]come together.

0:27:11.465,0:27:14.705
We have four general[br]surgeons today.

0:27:14.705,0:27:16.850
Do they make enough[br]money within

0:27:16.850,0:27:18.485
their practice to[br]pay for themselves?

0:27:18.485,0:27:21.515
No. Because, really,

0:27:21.515,0:27:24.290
for this community,[br]you probably need 3.5,

0:27:24.290,0:27:26.480
but it's hard to[br]get a half a doc.

0:27:26.480,0:27:28.760
They usually come[br]in wholes for

0:27:28.760,0:27:31.040
some reason. I don't[br]want a half a case.

0:27:31.040,0:27:32.915
But no, they[br]come in wholes.

0:27:32.915,0:27:36.440
And so there's a subsidy.[br]There's a support.

0:27:36.440,0:27:37.760
But the services[br]they brought into

0:27:37.760,0:27:39.275
the hospital offset that.

0:27:39.275,0:27:41.900
That's not always true[br]within primary care.

0:27:41.900,0:27:43.490
But without primary care,

0:27:43.490,0:27:45.755
we wouldn't have[br]a hospital again

0:27:45.755,0:27:46.970
because they had so many

0:27:46.970,0:27:48.620
additional tests[br]that they order.

0:27:48.620,0:27:49.940
But under that model,

0:27:49.940,0:27:51.200
if we go back and look and

0:27:51.200,0:27:52.430
how many people[br]want to be under

0:27:52.430,0:27:54.080
that payment models that

0:27:54.080,0:27:55.490
they were physicians[br]especially?

0:27:55.490,0:27:58.040
Physicians coming out[br]of training today,

0:27:58.040,0:27:59.840
they want to take[br]care of patients.

0:27:59.840,0:28:01.235
They don't want to run[br]their own business.

0:28:01.235,0:28:03.380
They want out of the[br]insurance world.

0:28:03.380,0:28:05.060
Who would want to[br]do that anyway?

0:28:05.060,0:28:07.880
It's a pain. They[br]want to come in.

0:28:07.880,0:28:09.320
And by the way,[br]if they come into

0:28:09.320,0:28:11.135
Pullman and[br]under our model,

0:28:11.135,0:28:14.750
no, you have to[br]be a partner.

0:28:14.750,0:28:15.980
And by the way,

0:28:15.980,0:28:17.720
your pay is[br]going to go down

0:28:17.720,0:28:19.970
25% next year compared[br]to this year.

0:28:19.970,0:28:21.155
Now, where do I sign up?

0:28:21.155,0:28:22.640
That sounds really[br]good to me.

0:28:22.640,0:28:24.305
I have no security

0:28:24.305,0:28:25.370
for me and my family.

0:28:25.370,0:28:26.675
It's not going to happen.

0:28:26.675,0:28:28.490
When you can go to[br]Spokane and have

0:28:28.490,0:28:30.050
an income guarantee

0:28:30.050,0:28:32.330
that's out of the gate 30,

0:28:32.330,0:28:34.250
40% higher and you know

0:28:34.250,0:28:35.180
you're going to get[br]paid that every

0:28:35.180,0:28:36.950
year plus[br]probably a raise.

0:28:36.950,0:28:39.500
You wouldn't come.[br]That's part of

0:28:39.500,0:28:41.030
the challenges

0:28:41.030,0:28:42.500
Pullman's facing[br]with recruitment.

0:28:42.500,0:28:44.390
So today, that's why

0:28:44.390,0:28:45.770
physicians coming[br]out of school,

0:28:45.770,0:28:47.150
they want an[br]employment model.

0:28:47.150,0:28:48.470
And we have met that.

0:28:48.470,0:28:50.780
We have adjusted our[br]practices to meet

0:28:50.780,0:28:53.510
those things[br]because access

0:28:53.510,0:28:56.100
to care is really[br]important on the Palouse.

0:28:56.260,0:29:01.805
So we have here about[br]almost 450 employees,

0:29:01.805,0:29:04.460
of which 274[br]are full-time,

0:29:04.460,0:29:07.880
174 are part-time.

0:29:07.880,0:29:10.940
We have a great[br]volunteer in

0:29:10.940,0:29:12.710
auxiliary team that helps

0:29:12.710,0:29:14.645
support our services[br]at Pullman.

0:29:14.645,0:29:15.905
Some are here[br]tonight, and I

0:29:15.905,0:29:17.330
really appreciate that.

0:29:17.330,0:29:20.285
And then we have a very[br]active medical staff.

0:29:20.285,0:29:22.250
And the nice thing[br]is, we've been fairly

0:29:22.250,0:29:24.260
successful on recruiting,[br]which is good.

0:29:24.260,0:29:25.490
It continues to[br]be the case.

0:29:25.490,0:29:27.170
So I'm happy to say

0:29:27.170,0:29:29.420
that folks haven't[br]heard we have

0:29:29.420,0:29:30.530
successfully recruited our

0:29:30.530,0:29:32.120
fourth orthopedic[br]surgeon to

0:29:32.120,0:29:33.890
the Palouse who will

0:29:33.890,0:29:35.870
be joining the Inland[br]Orthopedic Group.

0:29:35.870,0:29:38.420
That's awesome.[br]Those guys will

0:29:38.420,0:29:39.920
be thrilled because that

0:29:39.920,0:29:40.760
will make their quality

0:29:40.760,0:29:42.110
of life that much better.

0:29:42.110,0:29:44.180
On an annual basis,[br]if you go back to

0:29:44.180,0:29:47.090
our knowledge base,[br]we gross build.

0:29:47.090,0:29:48.440
This is when we collected.

0:29:48.440,0:29:49.760
I'd love it if we did.

0:29:49.760,0:29:51.530
Life would be so[br]much easier for me.

0:29:51.530,0:29:55.250
But we build out 116,[br]almost $117 million.

0:29:55.250,0:29:56.540
Pullman Regional Hospital

0:29:56.540,0:29:57.545
isn't a small business.

0:29:57.545,0:29:59.720
We have a pretty[br]substantial footprint.

0:29:59.720,0:30:01.880
Of that, do you know[br]how much we have at

0:30:01.880,0:30:04.115
the end of the day[br]last year to work with

0:30:04.115,0:30:06.140
to pay future bills

0:30:06.140,0:30:08.960
like new equipment[br]technology?

0:30:08.960,0:30:11.645
A million dollars.

0:30:11.645,0:30:15.720
Not a very high[br]margin in healthcare.

0:30:15.850,0:30:18.665
Not a lot to work with.

0:30:18.665,0:30:20.510
And that is after we had

0:30:20.510,0:30:23.310
donations from the[br]foundations, etc.

0:30:23.350,0:30:26.840
We've got to then[br]reinvest in the future,

0:30:26.840,0:30:28.520
and that's the[br]way to do it is

0:30:28.520,0:30:30.500
by having some type[br]of bottom line.

0:30:30.500,0:30:33.980
>> Steve, with[br]the robotics,

0:30:33.980,0:30:36.275
I can't remember[br]how much that cost,

0:30:36.275,0:30:38.150
but we wouldn't have

0:30:38.150,0:30:40.130
been able to all do that.

0:30:40.130,0:30:40.820
We'll stick with that.

0:30:40.820,0:30:44.135
[NOISE] That's[br]your profit.

0:30:44.135,0:30:46.350
Now there's you[br]million dollars.

0:30:46.540,0:30:51.230
>> So the question was[br]and the comment was,

0:30:51.230,0:30:52.880
in terms of robotics,

0:30:52.880,0:30:55.115
and many may or may[br]not know we have

0:30:55.115,0:31:00.275
a da Vinci surgically[br]assisted device

0:31:00.275,0:31:03.350
in our OR used primarily

0:31:03.350,0:31:07.085
for single site incisions,

0:31:07.085,0:31:10.640
laparoscopic procedures[br]when the recovery

0:31:10.640,0:31:12.560
is so much better[br]because you don't

0:31:12.560,0:31:14.210
have the open incision

0:31:14.210,0:31:15.260
and you don't have all of

0:31:15.260,0:31:19.565
the after recovery time.

0:31:19.565,0:31:22.130
It's pretty seamless.

0:31:22.130,0:31:23.300
That's probably[br]a wrong word

0:31:23.300,0:31:23.990
for an accountant really,

0:31:23.990,0:31:25.070
but it seemed to fit.

0:31:25.070,0:31:26.990
[LAUGHTER] So[br]it is seamless.

0:31:26.990,0:31:28.970
It's pretty much a[br]stitch, and they're done.

0:31:28.970,0:31:30.050
But it's amazing what

0:31:30.050,0:31:31.190
they can do within that.

0:31:31.190,0:31:33.500
That machine alone[br]was over $1 million.

0:31:33.500,0:31:34.760
And we had a lot of

0:31:34.760,0:31:35.960
people in the[br]community saying,

0:31:35.960,0:31:37.835
man, why would you[br]buy such a thing?

0:31:37.835,0:31:39.800
We were successful,

0:31:39.800,0:31:41.135
and our main[br]reason to do it

0:31:41.135,0:31:42.500
wasn't because we'd[br]have an edge in

0:31:42.500,0:31:43.940
a market and drive a lot

0:31:43.940,0:31:45.725
of business. It[br]was recruitment.

0:31:45.725,0:31:47.090
Folks coming out of

0:31:47.090,0:31:49.250
urology school today are

0:31:49.250,0:31:50.960
trained on a da Vinci.

0:31:50.960,0:31:52.040
Are they going to come to

0:31:52.040,0:31:53.345
a market that has none,

0:31:53.345,0:31:54.800
and that's the only[br]thing they've known?

0:31:54.800,0:31:57.410
No. So we were[br]successful in that,

0:31:57.410,0:32:01.220
and Dr. Keizur has a[br]partner now, Dr. Smith.

0:32:01.220,0:32:03.680
And that was a[br]great value.

0:32:03.680,0:32:05.630
Dr. Smith, by the way,

0:32:05.630,0:32:06.920
the two of them combined

0:32:06.920,0:32:10.490
today are doing[br]twice the volume.

0:32:10.490,0:32:13.415
The volume was there.[br]We didn't get it all.

0:32:13.415,0:32:18.160
So now Moscow also[br]valued from that,

0:32:18.160,0:32:20.805
but the whole community[br]value from that.

0:32:20.805,0:32:23.040
And so it was[br]really important as

0:32:23.040,0:32:26.350
a part of our services[br]that we offer.

0:32:26.350,0:32:29.670
We're going to switch

0:32:29.670,0:32:30.710
gears a little bit here,

0:32:30.710,0:32:31.910
and that's a lot of this.

0:32:31.910,0:32:33.810
If you want more, come

0:32:33.810,0:32:35.505
to board meetings,[br]Stephan.

0:32:35.505,0:32:38.220
It's an[br]ever-evolving thing,

0:32:38.220,0:32:39.360
and it'll be[br]different next year.

0:32:39.360,0:32:40.990
This presentation would[br]be different than it

0:32:40.990,0:32:43.110
is this year because[br]it's changing every day.

0:32:43.110,0:32:45.810
But how does Pullman[br]Regional Hospital

0:32:45.810,0:32:47.110
develop its prices?

0:32:47.110,0:32:49.095
Because that's an[br]important question.

0:32:49.095,0:32:52.530
Do we price higher[br]than our competitors?

0:32:52.530,0:32:54.070
Do we price[br]differently than

0:32:54.070,0:32:56.420
our competitors?[br]How do we do it?

0:32:56.420,0:32:57.800
I will tell you[br]when I first

0:32:57.800,0:33:00.790
took over in 1995,

0:33:00.790,0:33:03.210
I struggled with[br]how hospitals,

0:33:03.210,0:33:04.590
especially the ones I was

0:33:04.590,0:33:06.210
involved with because[br]I came out of

0:33:06.210,0:33:08.330
trying to combine[br]Pullman Regional

0:33:08.330,0:33:09.590
and Gritman Medical Center

0:33:09.590,0:33:10.990
and ran the[br]corridor for three

0:33:10.990,0:33:12.795
years in a joint venture.

0:33:12.795,0:33:13.980
I was assistant CFO.

0:33:13.980,0:33:15.430
And Gritman did exactly

0:33:15.430,0:33:17.150
the same way we did it.

0:33:17.150,0:33:21.180
And what you do[br]and what we did,

0:33:21.180,0:33:23.670
ashamed of it[br]back then, is

0:33:23.670,0:33:25.120
you developed[br]a new service.

0:33:25.120,0:33:26.310
You went out and[br]figured out what

0:33:26.310,0:33:27.770
the pricing was[br]on many of those.

0:33:27.770,0:33:29.530
Let's say it's X-ray[br]and you wanted to

0:33:29.530,0:33:31.890
do MRs. What's the[br]average price?

0:33:31.890,0:33:32.970
What are other[br]people charging

0:33:32.970,0:33:34.850
for this service?

0:33:34.850,0:33:36.200
That's how you[br]developed your prices.

0:33:36.200,0:33:37.430
What is CMS[br]going to pay us?

0:33:37.430,0:33:39.750
Well, CMS pays this and[br]you two times that.

0:33:39.750,0:33:41.530
Just a rule of thumb.[br]That's what you do.

0:33:41.530,0:33:42.610
And then every year you're

0:33:42.610,0:33:45.050
going in the budget, I[br]think I'll raise it.

0:33:45.050,0:33:47.020
Yeah, 5% sounds good.

0:33:47.020,0:33:48.670
And you do that[br]for 20 years,

0:33:48.670,0:33:53.095
and what do your prices[br]reflect? Nothing.

0:33:53.095,0:33:56.110
They're meaningless.[br]So we said,

0:33:56.110,0:33:57.850
that's not what we want[br]to do in our pricing,

0:33:57.850,0:33:59.290
and we want to be[br]fair and adequate.

0:33:59.290,0:34:01.360
So we go through[br]a structure in

0:34:01.360,0:34:04.345
which we evaluate[br]what are our costs.

0:34:04.345,0:34:05.890
Because we got to[br]cover our cost.

0:34:05.890,0:34:06.670
If we don't[br]cover our costs,

0:34:06.670,0:34:09.640
we aren't here.[br]Pretty obvious.

0:34:09.640,0:34:11.845
What's our[br]required profit?

0:34:11.845,0:34:14.005
Nasty word. That's[br]a four letter word.

0:34:14.005,0:34:15.610
It's actually[br]more than four,.

0:34:15.610,0:34:19.825
No five. No it is[br]six. I can count.

0:34:19.825,0:34:23.500
It's a six-letter[br]word. Profit. We got

0:34:23.500,0:34:24.790
to have excess[br]because we need to

0:34:24.790,0:34:26.320
reinvest back into[br]the facility.

0:34:26.320,0:34:27.670
We have to buy equipment.

0:34:27.670,0:34:28.810
We need technology.

0:34:28.810,0:34:29.950
If not, you're going

0:34:29.950,0:34:31.420
to be obsolete in[br]a little while.

0:34:31.420,0:34:35.530
And then, really, your[br]prices only matter.

0:34:35.530,0:34:37.945
If I was 100% Medicare,

0:34:37.945,0:34:40.540
I'll charge you nothing

0:34:40.540,0:34:41.770
because I get paid

0:34:41.770,0:34:43.270
cost under[br]Medicare program.

0:34:43.270,0:34:44.920
It doesn't matter[br]what I cost.

0:34:44.920,0:34:45.820
I don't matter what I

0:34:45.820,0:34:46.930
charge because[br]they're going to tell

0:34:46.930,0:34:47.650
me they're going to pay so

0:34:47.650,0:34:49.120
why do I matter anyway.

0:34:49.120,0:34:51.505
But that's not true[br]across the board.

0:34:51.505,0:34:52.750
It does matter.

0:34:52.750,0:34:55.405
So prices have to[br]reflect your pair mix.

0:34:55.405,0:34:57.355
What are the[br]insurance companies?

0:34:57.355,0:34:58.990
We go through[br]that process,

0:34:58.990,0:35:00.235
and then we evaluate on

0:35:00.235,0:35:02.860
every single price[br]down to the CPT level,

0:35:02.860,0:35:05.125
which is by procedure.

0:35:05.125,0:35:07.645
What's our cost[br]compared to the market?

0:35:07.645,0:35:11.095
What's the market? If[br]our costs are too high,

0:35:11.095,0:35:14.440
is it fair for me to[br]raise my prices 5%?

0:35:14.440,0:35:16.165
Probably not.

0:35:16.165,0:35:18.410
I should probably[br]control the cost.

0:35:18.660,0:35:21.670
If my costs are[br]within reason,

0:35:21.670,0:35:24.790
then is it okay to[br]raise 5%? Well, maybe.

0:35:24.790,0:35:26.725
But if I have $45 million

0:35:26.725,0:35:29.110
in the bank or[br]$150 million,

0:35:29.110,0:35:30.670
and I want to[br]charge 10% more,

0:35:30.670,0:35:32.050
because as a CFO,

0:35:32.050,0:35:33.730
I'd like to have[br]180 million.

0:35:33.730,0:35:35.125
That's probably not fair,

0:35:35.125,0:35:37.075
either 'cause I have[br]too much cushion.

0:35:37.075,0:35:38.590
Now, I'm gouging.

0:35:38.590,0:35:40.645
So we look at[br]that as well.

0:35:40.645,0:35:42.715
So we want to be[br]fair and equitable.

0:35:42.715,0:35:43.690
And I don't want to charge

0:35:43.690,0:35:44.530
more than the market.

0:35:44.530,0:35:46.555
And in our market, we[br]look at six hospitals.

0:35:46.555,0:35:48.475
We have to do blended[br]because it would be

0:35:48.475,0:35:51.040
collusion if I was to[br]call Tricity and say,

0:35:51.040,0:35:53.365
what do you pay?[br]What do you charge?

0:35:53.365,0:35:55.600
I wouldn't be Ryan, I'd go

0:35:55.600,0:35:57.130
jail and I don't[br]look good in orange.

0:35:57.130,0:36:00.550
So we do a compilation[br]of six hospitals,

0:36:00.550,0:36:02.410
and we have an external[br]group do this.

0:36:02.410,0:36:04.495
And we say, what[br]is the price

0:36:04.495,0:36:06.835
on an average[br]in the market?

0:36:06.835,0:36:08.680
Now, in some areas,[br]I will tell you,

0:36:08.680,0:36:10.150
specifically an MR,

0:36:10.150,0:36:12.280
we were too high[br]two years ago.

0:36:12.280,0:36:14.395
I had the orthopods[br]call me and

0:36:14.395,0:36:17.380
say they're getting[br]a lot cheaper,

0:36:17.380,0:36:18.940
and people are starting[br]to shop because

0:36:18.940,0:36:20.710
of the fact of high[br]deductible plans,

0:36:20.710,0:36:22.240
where they have $1,500 out

0:36:22.240,0:36:25.030
of pocket,[br]they're shopping.

0:36:25.030,0:36:27.760
We need to look at

0:36:27.760,0:36:30.235
our market a little[br]tighter than broader.

0:36:30.235,0:36:32.440
When you pull Spokane[br]hospitals in,

0:36:32.440,0:36:33.580
Tricity hospitals

0:36:33.580,0:36:34.690
in they're probably[br]too broad.

0:36:34.690,0:36:36.745
So we narrowed that[br]market and say,

0:36:36.745,0:36:38.890
what should we charge[br]for that service?

0:36:38.890,0:36:41.680
And that's how we[br]established our prices.

0:36:41.680,0:36:44.635
So now getting into

0:36:44.635,0:36:46.435
just reimbursement[br]and how we get paid.

0:36:46.435,0:36:48.670
Medicare, Medicaid,

0:36:48.670,0:36:51.655
people remember in 1997,

0:36:51.655,0:36:55.990
the Clinton administration

0:36:55.990,0:36:57.595
balanced the budget.

0:36:57.595,0:36:59.545
And as a result of that,

0:36:59.545,0:37:01.330
there were two[br]hospitals and

0:37:01.330,0:37:03.280
rural communities[br]closing every

0:37:03.280,0:37:05.530
week and people not

0:37:05.530,0:37:07.315
having access to[br]care anymore.

0:37:07.315,0:37:09.430
It's a bad thing. So[br]they came out with

0:37:09.430,0:37:11.110
this determination

0:37:11.110,0:37:13.435
called critical[br]access hospitals.

0:37:13.435,0:37:18.370
It's critical for our[br]weakest population

0:37:18.370,0:37:20.515
in terms of Medicaid,

0:37:20.515,0:37:23.110
people that can't[br]pay in our elders

0:37:23.110,0:37:24.910
to be able to access care

0:37:24.910,0:37:26.275
in these communities,

0:37:26.275,0:37:27.670
we need to do[br]something about it

0:37:27.670,0:37:29.695
because if we,

0:37:29.695,0:37:31.210
federal government[br]not paying them

0:37:31.210,0:37:33.310
enough to stay[br]in existence,

0:37:33.310,0:37:35.380
basically, they're not[br]covering their cost,

0:37:35.380,0:37:36.850
there's not enough volume,

0:37:36.850,0:37:38.260
and they can't survive.

0:37:38.260,0:37:41.485
So that came out. So[br]Medicare pays us today,

0:37:41.485,0:37:45.820
our cost plus 1%. Now,[br]I'll tell you what.

0:37:45.820,0:37:47.440
It's not plus one[br]because we still

0:37:47.440,0:37:49.240
have remember a[br]few years ago,

0:37:49.240,0:37:50.110
sequestration,

0:37:50.110,0:37:51.085
Everybody thought[br]that went away.

0:37:51.085,0:37:53.620
It's still not. We[br]get cost minus 1.

0:37:53.620,0:37:54.580
So we lose money on

0:37:54.580,0:37:56.960
every Medicare[br]Medicaid patient.

0:37:57.270,0:38:00.010
Doesn't mean we shouldn't[br]take care of them.

0:38:00.010,0:38:01.585
We should care for them.

0:38:01.585,0:38:03.475
But we will[br]never make more.

0:38:03.475,0:38:05.290
By the way, I forgot[br]to tell you something.

0:38:05.290,0:38:07.285
It's not truly cost.

0:38:07.285,0:38:09.505
It's allowable cost.

0:38:09.505,0:38:12.520
You know who[br]determines allowable?

0:38:12.520,0:38:14.625
The federal government.

0:38:14.625,0:38:16.320
So you know those[br]same physicians I

0:38:16.320,0:38:18.030
told you about in the[br]emergency department?

0:38:18.030,0:38:19.380
Because physicians can

0:38:19.380,0:38:21.045
bill a professional fee.

0:38:21.045,0:38:23.190
In addition, we build[br]the technical field,

0:38:23.190,0:38:24.540
which is the nursing staff

0:38:24.540,0:38:26.910
and the room board.

0:38:26.910,0:38:28.590
The way Medicare[br]looks at it,

0:38:28.590,0:38:29.940
then that professional[br]fee covers

0:38:29.940,0:38:31.200
that physician cost.

0:38:31.200,0:38:33.330
If there are[br]additional costs,

0:38:33.330,0:38:35.010
like you want them 24/7,

0:38:35.010,0:38:35.970
but there's not a patient

0:38:35.970,0:38:37.815
there, that's[br]your problem.

0:38:37.815,0:38:39.090
That's not our cost.

0:38:39.090,0:38:40.785
So that's non allowable.

0:38:40.785,0:38:43.420
So it's not 100%[br]of your cost.

0:38:43.420,0:38:44.710
It's what Medicare[br]says will be

0:38:44.710,0:38:46.720
100% of your costs.

0:38:46.720,0:38:48.250
And then our[br]commercial players

0:38:48.250,0:38:49.570
have to make up[br]the difference.

0:38:49.570,0:38:50.905
This is the rub.

0:38:50.905,0:38:52.990
This is where[br]commercials are fighting

0:38:52.990,0:38:54.190
back because

0:38:54.190,0:38:55.420
we have employers[br]that are saying,

0:38:55.420,0:38:56.770
wait, I can't have

0:38:56.770,0:38:58.870
double digit[br]increases year

0:38:58.870,0:39:01.075
in and year out[br]on our premiums.

0:39:01.075,0:39:02.275
We say the same thing.

0:39:02.275,0:39:03.490
We provide healthcare, and

0:39:03.490,0:39:04.630
we don't like[br]it either when

0:39:04.630,0:39:07.450
our insurance for[br]our employees

0:39:07.450,0:39:09.370
goes up by 10 or 12%.

0:39:09.370,0:39:10.960
So we start going,[br]okay, how are we doing

0:39:10.960,0:39:12.415
differently? But we're[br]paying ourselves.

0:39:12.415,0:39:14.155
I was like, oh, geez,

0:39:14.155,0:39:16.060
can we do this[br]differently?

0:39:16.060,0:39:18.010
So commercials[br]have really pushed

0:39:18.010,0:39:19.930
back on what they[br]used to pay us.

0:39:19.930,0:39:21.280
That's why I don't get 95%

0:39:21.280,0:39:22.540
of charges anymore.

0:39:22.540,0:39:24.700
And now I get 73.5% of

0:39:24.700,0:39:27.295
charges by some contracts,

0:39:27.295,0:39:28.570
because they're trying to

0:39:28.570,0:39:30.250
drive that price down.

0:39:30.250,0:39:32.215
>> Are those two[br]costs the same?

0:39:32.215,0:39:35.950
>> So are those two[br]costs the same? Yes.

0:39:35.950,0:39:37.570
>> The left and[br]right of diagram?

0:39:37.570,0:39:39.400
>> They are. So it's

0:39:39.400,0:39:42.115
your total cost to[br]provide that service?

0:39:42.115,0:39:45.670
>> Is that a[br]variable cost of

0:39:45.670,0:39:47.050
providing that service as

0:39:47.050,0:39:49.855
opposed to is there an[br]overhead allocation?

0:39:49.855,0:39:52.795
>> Let's go there.[br]Let's talk about that.

0:39:52.795,0:39:54.895
So when are we[br]going to get there?

0:39:54.895,0:39:57.670
So yes, and yes,

0:39:57.670,0:39:59.485
it is a variable.

0:39:59.485,0:40:03.820
But understand in[br]our who we are

0:40:03.820,0:40:06.970
from we being a[br]rural hospital,

0:40:06.970,0:40:08.800
it's semi-variable.

0:40:08.800,0:40:10.750
At only a certain[br]level can you

0:40:10.750,0:40:14.590
go down before[br]you hit a floor.

0:40:14.590,0:40:17.455
We have to by a[br]certain amount,

0:40:17.455,0:40:20.575
if we're going to offer[br]24/7 emergency care,

0:40:20.575,0:40:22.120
and I can't have nobody

0:40:22.120,0:40:23.440
in there when you show up.

0:40:23.440,0:40:24.580
Somebody has to be

0:40:24.580,0:40:25.390
there with the[br]lights on to

0:40:25.390,0:40:27.640
care for you.[br]That's the floor.

0:40:27.640,0:40:29.350
So it's a semi-variable.

0:40:29.350,0:40:31.330
So there is some[br]fluctuations

0:40:31.330,0:40:33.160
in those costs[br]based on volume.

0:40:33.160,0:40:34.825
But it's really hard, and

0:40:34.825,0:40:36.355
I'll share a[br]little bit about

0:40:36.355,0:40:37.930
Pullman's approach to that

0:40:37.930,0:40:39.970
on how you control[br]those variable costs.

0:40:39.970,0:40:40.660
I will tell you

0:40:40.660,0:40:42.700
from a productivity[br]standpoint,

0:40:42.700,0:40:44.455
what's the number[br]one expense

0:40:44.455,0:40:46.270
you have in healthcare?

0:40:46.270,0:40:48.160
What's your highest cost?

0:40:48.160,0:40:49.280
>> People.

0:40:49.440,0:40:53.080
>> People. We're a[br]service industry.

0:40:53.080,0:40:56.650
Sixty percent of our[br]costs relate to people.

0:40:56.650,0:40:57.970
What's the[br]number one thing

0:40:57.970,0:40:59.755
that you try to control?

0:40:59.755,0:41:03.100
People. Because I can cut

0:41:03.100,0:41:06.220
a lot at trying to[br]chisel down utilities,

0:41:06.220,0:41:07.270
but I can't turn off

0:41:07.270,0:41:09.820
enough lights if I[br]was one staff member

0:41:09.820,0:41:12.190
less to cover that cost

0:41:12.190,0:41:13.345
of turn off all the[br]lights every day

0:41:13.345,0:41:14.995
when somebody walked[br]out of the room.

0:41:14.995,0:41:17.020
So there is some[br]variability.

0:41:17.020,0:41:19.660
Now, one of the[br]challenges there is how

0:41:19.660,0:41:23.890
predictable are[br]our services.

0:41:23.890,0:41:25.060
Can anybody tell me

0:41:25.060,0:41:26.080
how many people are[br]going to come into

0:41:26.080,0:41:27.100
the emergency department

0:41:27.100,0:41:30.115
between seven tonight[br]and nine tonight?

0:41:30.115,0:41:32.350
Is there a football game?

0:41:32.350,0:41:34.660
Probably higher[br]predictability that

0:41:34.660,0:41:35.110
I'm going to have

0:41:35.110,0:41:36.700
more admissions into

0:41:36.700,0:41:38.830
my emergency department[br]than I have when?

0:41:38.830,0:41:40.735
>> And more ambulance[br]runs from the city.

0:41:40.735,0:41:44.530
>> Exactly. You can[br]have some of that,

0:41:44.530,0:41:45.895
but it's still variable,

0:41:45.895,0:41:47.650
and it doesn't[br]always come.

0:41:47.650,0:41:51.520
When we had the[br]Apple cup here,

0:41:51.520,0:41:53.380
we staffed a whole[br]unit just in

0:41:53.380,0:41:55.390
case because[br]the year before

0:41:55.390,0:41:56.860
we were inundated

0:41:56.860,0:41:59.530
and we didn't[br]have that many.

0:41:59.530,0:42:01.555
That's the[br]challenge we run.

0:42:01.555,0:42:03.520
We can run on an[br]inpatient unit,

0:42:03.520,0:42:04.780
med surg unit,

0:42:04.780,0:42:09.685
two inpatients to[br]12 inpatients.

0:42:09.685,0:42:11.800
And that can be a[br]difference in hours,

0:42:11.800,0:42:13.660
and it can be a[br]difference in days.

0:42:13.660,0:42:16.300
So we have 25 beds[br]across the board,

0:42:16.300,0:42:18.835
OB, ICU, and med surg,

0:42:18.835,0:42:23.125
and we can have[br]census from 2-25,

0:42:23.125,0:42:24.730
and that can be[br]within the week,

0:42:24.730,0:42:26.200
and then back to[br]five and then to 10

0:42:26.200,0:42:27.490
and it's

0:42:27.490,0:42:29.200
really hard to get[br]that predictability.

0:42:29.200,0:42:31.885
How do some hospitals[br]deal with that?

0:42:31.885,0:42:33.820
I'll tell you, a lot of[br]your for profits etc.

0:42:33.820,0:42:35.695
will say, okay, staff,

0:42:35.695,0:42:37.510
I hired you full time.

0:42:37.510,0:42:39.280
You have a family and[br]kids. That's all right.

0:42:39.280,0:42:40.405
Come on in. Well,[br]we're going to pay you

0:42:40.405,0:42:42.070
full time. I'm sorry.

0:42:42.070,0:42:43.120
I don't have enough[br]patients, go

0:42:43.120,0:42:46.585
home without pay.

0:42:46.585,0:42:47.860
I do that to you

0:42:47.860,0:42:49.585
three or four[br]times this month.

0:42:49.585,0:42:51.490
Guess what? You're[br]going to the hospital

0:42:51.490,0:42:53.290
down the street that[br]doesn't do that to you.

0:42:53.290,0:42:54.700
We don't low census,

0:42:54.700,0:42:55.840
and a lot of[br]it's low census.

0:42:55.840,0:42:57.805
We don't do a lot of[br]that here because

0:42:57.805,0:43:01.075
your actual turnover rate

0:43:01.075,0:43:02.410
increases significantly.

0:43:02.410,0:43:03.280
It's better to retain

0:43:03.280,0:43:04.240
those employees than it is

0:43:04.240,0:43:06.550
to be training new[br]employees all the time.

0:43:06.550,0:43:08.710
That's part of the[br]challenges we have here.

0:43:08.710,0:43:10.190
And that's why[br]Medicare decided,

0:43:10.190,0:43:11.575
we'll pay you at[br]least your cost

0:43:11.575,0:43:13.945
because when you[br]have enough volume,

0:43:13.945,0:43:15.640
you can cover those[br]loss leaders every

0:43:15.640,0:43:17.575
now and then because[br]you have enough volume,

0:43:17.575,0:43:19.360
and your variability[br]is a lot greater.

0:43:19.360,0:43:20.590
Here it's not, so that's

0:43:20.590,0:43:22.180
why Medicare came[br]in and said,

0:43:22.180,0:43:24.055
we'll pay your cost.

0:43:24.055,0:43:27.760
Problem with that is[br]there's no incentive to

0:43:27.760,0:43:31.465
control your costs. I'll[br]give you an example.

0:43:31.465,0:43:33.280
A lot of our total hips,

0:43:33.280,0:43:36.355
total joints are[br]Medicare population.

0:43:36.355,0:43:38.260
No surprise. Hey,

0:43:38.260,0:43:40.700
you had one? Two.

0:43:41.190,0:43:43.090
>> Which your bodies work?

0:43:43.090,0:43:47.035
>> Of course. Does it help

0:43:47.035,0:43:48.670
Pullman Regional[br]Hospital to

0:43:48.670,0:43:50.230
negotiate with Smith[br]and Nephew and

0:43:50.230,0:43:54.085
Depew on those devices[br]and save money?

0:43:54.085,0:43:56.590
Does it help[br]our bottom line

0:43:56.590,0:44:00.200
for especially the[br]Medicare population?

0:44:00.480,0:44:04.360
Thank you. Not one bit.[br]I get paid my costs.

0:44:04.360,0:44:06.895
Where's my incentive[br]to control the cost?

0:44:06.895,0:44:09.790
However, we did[br]go and we do.

0:44:09.790,0:44:12.010
I negotiated[br]with Depew and

0:44:12.010,0:44:14.200
Smith and Nephew a[br]year and a half ago,

0:44:14.200,0:44:18.550
we saved 1.2 Million[br]in our device costs.

0:44:18.550,0:44:20.815
Most of that goes to[br]the federal government.

0:44:20.815,0:44:23.200
It's the right[br]thing to do,

0:44:23.200,0:44:25.690
because that will[br]save eventually,

0:44:25.690,0:44:27.070
if every hospital worked

0:44:27.070,0:44:28.180
hard at doing[br]those things,

0:44:28.180,0:44:29.290
that saves critical access

0:44:29.290,0:44:31.090
hospitals the[br]chopping block.

0:44:31.090,0:44:33.130
If I lost critical

0:44:33.130,0:44:34.690
access hospital[br]reimbursement today,

0:44:34.690,0:44:35.590
remember that $1 million I

0:44:35.590,0:44:36.880
told you we had last year,

0:44:36.880,0:44:39.740
take five million[br]off of that.

0:44:39.860,0:44:43.480
We would have[br]lost $4 million.

0:44:44.180,0:44:46.800
We wouldn't last.

0:44:46.800,0:44:50.010
You would be amputating[br]major services.

0:44:50.010,0:44:51.570
There'd just be[br]things you would

0:44:51.570,0:44:54.135
not do in this market.

0:44:54.135,0:44:56.010
It just would[br]not be there.

0:44:56.010,0:44:57.390
No, ICU.

0:44:57.390,0:44:58.770
You wouldn't have[br]a hospital around

0:44:58.770,0:45:00.510
this area that had an ICU.

0:45:00.510,0:45:03.285
Behavior health?[br]Forget it.

0:45:03.285,0:45:05.265
Those people are[br]on their own.

0:45:05.265,0:45:08.010
Good luck on managing[br]your drugs and

0:45:08.010,0:45:11.755
your problems because[br]you couldn't afford it.

0:45:11.755,0:45:14.275
Positive margin areas.

0:45:14.275,0:45:15.805
These are where[br]we make money,

0:45:15.805,0:45:17.695
especially on a[br]commercial side.

0:45:17.695,0:45:19.600
Imaging, surgery,[br]pharmacy,

0:45:19.600,0:45:21.565
women's health,[br]lab pathology.

0:45:21.565,0:45:23.725
And we don't actually

0:45:23.725,0:45:25.390
have a pathologist

0:45:25.390,0:45:26.470
that is part of[br]the hospital.

0:45:26.470,0:45:27.610
They're actually[br]a group out of

0:45:27.610,0:45:29.110
Spokane that reside here.

0:45:29.110,0:45:31.210
But those are your[br]moneymakers today.

0:45:31.210,0:45:33.325
Your negative things,[br]medical groups,

0:45:33.325,0:45:35.005
physician practices.

0:45:35.005,0:45:38.110
Oftentimes, for every[br]employed physician

0:45:38.110,0:45:39.280
across the nation,

0:45:39.280,0:45:42.055
in primary care[br]costs $110,000.

0:45:42.055,0:45:44.245
That's net.

0:45:44.245,0:45:45.340
That's the bottom line.

0:45:45.340,0:45:47.020
That's the loss.[br]You cover.

0:45:47.020,0:45:50.155
I'm pretty close to that.

0:45:50.155,0:45:52.165
Not quite. I'm[br]pretty close.

0:45:52.165,0:45:54.340
Transitional care units,[br]your home health,

0:45:54.340,0:45:56.305
your ICUs, your[br]emergency department.

0:45:56.305,0:45:58.675
There's so much[br]fixed cost in those.

0:45:58.675,0:46:01.090
Now, my physicians

0:46:01.090,0:46:02.875
would say they make money.

0:46:02.875,0:46:04.720
But they do, in essence,

0:46:04.720,0:46:06.325
because they order tests.

0:46:06.325,0:46:08.185
People end up going[br]to the surgery.

0:46:08.185,0:46:09.790
It's important to[br]have all of them.

0:46:09.790,0:46:12.010
You can't have one[br]without the other.

0:46:12.010,0:46:14.425
So how much did that cost?

0:46:14.425,0:46:16.660
You go to a store and[br]you look and say,

0:46:16.660,0:46:20.950
okay, what's that TV[br]going to cost me?

0:46:20.950,0:46:23.005
You can see exactly[br]what you want.

0:46:23.005,0:46:24.550
No one patient that come

0:46:24.550,0:46:25.570
through the[br]emergency department

0:46:25.570,0:46:27.700
with the same thing[br]is exactly the same.

0:46:27.700,0:46:29.980
You come in, I[br]do your hip.

0:46:29.980,0:46:31.330
Your hip isn't the same as

0:46:31.330,0:46:33.520
your hip and your hip.

0:46:33.520,0:46:35.500
How long it takes[br]that surgeon

0:46:35.500,0:46:37.210
because you had a[br]complication within

0:46:37.210,0:46:39.580
there can be significantly

0:46:39.580,0:46:40.660
different than[br]the person that

0:46:40.660,0:46:42.100
had no complication.

0:46:42.100,0:46:43.930
The resources[br]and intensity

0:46:43.930,0:46:45.310
of services are[br]much different.

0:46:45.310,0:46:47.950
In some areas you're[br]going to get paid more

0:46:47.950,0:46:50.755
because that DRG[br]will reflect that,

0:46:50.755,0:46:52.810
but not always use the[br]way Medicare pays you,

0:46:52.810,0:46:54.175
they pay you off a DRG.

0:46:54.175,0:46:55.510
Now, there are two[br]different DRGs,

0:46:55.510,0:46:57.490
one with complications,[br]one without.

0:46:57.490,0:46:58.720
But you might have been

0:46:58.720,0:47:01.450
the same surgery[br]without a complication.

0:47:01.450,0:47:03.580
But you might have[br]been in the OR

0:47:03.580,0:47:05.470
because when that[br]surgeon was in there,

0:47:05.470,0:47:06.595
it took a lot more time.

0:47:06.595,0:47:08.605
It took him 45 minutes

0:47:08.605,0:47:11.155
where the other patient[br]took 20 minutes.

0:47:11.155,0:47:13.315
The resources are[br]much different.

0:47:13.315,0:47:15.550
But the amount that[br]we're going to get paid

0:47:15.550,0:47:17.920
is the same for that[br]particular insurance.

0:47:17.920,0:47:19.720
But if you go back to[br]those methodologies,

0:47:19.720,0:47:22.000
remember those cost,

0:47:22.000,0:47:25.540
fixed percentage[br]charges, DRG, MSG,

0:47:25.540,0:47:29.365
MSERG, those all have[br]influences within this.

0:47:29.365,0:47:31.300
So those are[br]all different.

0:47:31.300,0:47:32.680
Hey, we're just[br]talking about

0:47:32.680,0:47:33.580
you, by the way.

0:47:33.580,0:47:35.800
We're talking about[br]orthopedic surgeries.

0:47:35.800,0:47:38.935
Not you specifically,[br]just talk prices.

0:47:38.935,0:47:42.580
Welcome, by the[br]way. So again,

0:47:42.580,0:47:44.050
some reimbursement[br]methodologies

0:47:44.050,0:47:44.680
and we've talked about.

0:47:44.680,0:47:45.550
Under the hospital,

0:47:45.550,0:47:46.930
you have percentage[br]charges.

0:47:46.930,0:47:49.645
You have per[br]diems, case rates,

0:47:49.645,0:47:54.355
a mix of the DRG, MSDRG[br]components to it.

0:47:54.355,0:47:58.930
APGs, which is an[br]outpatient payment scheme,

0:47:58.930,0:48:00.895
we have none[br]of those here.

0:48:00.895,0:48:02.680
They do have them, and

0:48:02.680,0:48:04.420
they are significant[br]across the nation.

0:48:04.420,0:48:06.415
We're just fortunate some

0:48:06.415,0:48:08.110
insurance companies[br]want me to go to there.

0:48:08.110,0:48:09.970
Primera wants us[br]to go to that.

0:48:09.970,0:48:12.895
However, in order[br]to do that,

0:48:12.895,0:48:14.485
the system behind that to

0:48:14.485,0:48:16.960
capture all that[br]would cost us 50,000,

0:48:16.960,0:48:18.475
so I asked Primera[br]to pay for that.

0:48:18.475,0:48:19.870
They didn't want[br]to, so they keep

0:48:19.870,0:48:21.565
paying me percent[br]of charges.

0:48:21.565,0:48:23.125
But there's a[br]big investment.

0:48:23.125,0:48:25.090
We're moving towards VBS,

0:48:25.090,0:48:26.755
which is value[br]based purchasing.

0:48:26.755,0:48:29.050
Bundled. Anybody heard[br]of bundle payments,

0:48:29.050,0:48:31.570
especially the joint[br]replacement program

0:48:31.570,0:48:33.730
that CMS has done[br]across the nation?

0:48:33.730,0:48:35.095
That's a movement.

0:48:35.095,0:48:36.220
What that's[br]doing is saying,

0:48:36.220,0:48:37.360
we're going to give you

0:48:37.360,0:48:40.615
this pot of money[br]between your physician,

0:48:40.615,0:48:43.000
hospital, nursing home,

0:48:43.000,0:48:44.410
and everything[br]else in between,

0:48:44.410,0:48:46.900
PT, etc., you[br]divvy it out.

0:48:46.900,0:48:48.130
You've got to[br]deal with only

0:48:48.130,0:48:49.945
that component of it.

0:48:49.945,0:48:51.865
Problem with that is

0:48:51.865,0:48:53.560
if you're not on[br]the same team,

0:48:53.560,0:48:55.885
you got winners[br]and losers.

0:48:55.885,0:48:58.255
So I'll tell you right[br]now a bundle payment,

0:48:58.255,0:48:58.690
we're going to work

0:48:58.690,0:49:00.175
really closely[br]with physicians.

0:49:00.175,0:49:02.230
I'm sorry, nursing home,

0:49:02.230,0:49:04.690
you're out because[br]I don't want

0:49:04.690,0:49:06.190
that patient with[br]nursing home because

0:49:06.190,0:49:07.930
then I have to give them[br]some of that money.

0:49:07.930,0:49:09.370
So we're going to try[br]to do everything we can

0:49:09.370,0:49:10.990
to keep them within[br]this little group.

0:49:10.990,0:49:12.040
That's why you need

0:49:12.040,0:49:13.375
to work collectively[br]together,

0:49:13.375,0:49:15.850
because usually[br]there's winners

0:49:15.850,0:49:17.290
and losers in[br]those things.

0:49:17.290,0:49:18.550
But that's where[br]it's moving.

0:49:18.550,0:49:19.720
These value based things

0:49:19.720,0:49:21.970
are evolving[br]significantly.

0:49:21.970,0:49:23.830
Eventually, a lot[br]of our payments

0:49:23.830,0:49:24.880
will be based on keeping

0:49:24.880,0:49:26.080
people out of the system,

0:49:26.080,0:49:27.820
which ultimately should[br]be what we're doing.

0:49:27.820,0:49:29.605
That's in the[br]business we're is

0:49:29.605,0:49:30.850
taking care of[br]those in needs

0:49:30.850,0:49:32.800
and trying to keep[br]people healthy.

0:49:32.800,0:49:34.975
But you can't make[br]people be healthy.

0:49:34.975,0:49:37.570
So, these are the[br]basic overviews,

0:49:37.570,0:49:38.410
and we've talked[br]a little bit

0:49:38.410,0:49:39.460
of that within that.

0:49:39.460,0:49:40.780
So you've got for us

0:49:40.780,0:49:42.520
we critical[br]access hospitals.

0:49:42.520,0:49:44.755
Other systems[br]outside of that,

0:49:44.755,0:49:48.445
PPS hospital, progressive[br]payment systems,

0:49:48.445,0:49:50.140
those are your[br]typical urban.

0:49:50.140,0:49:54.070
They're going to get[br]this DRG fixed rate.

0:49:54.070,0:49:55.480
And the more[br]they see then,

0:49:55.480,0:49:56.920
the more they're[br]going to make because

0:49:56.920,0:49:58.615
they can cover[br]their overhead.

0:49:58.615,0:49:59.920
Critical access[br]hospitals were

0:49:59.920,0:50:00.670
not able to do that,

0:50:00.670,0:50:01.480
so that's why they came

0:50:01.480,0:50:03.650
up with this methodology.

0:50:06.740,0:50:09.930
I covered that. We will[br]move on from that.

0:50:09.930,0:50:11.985
I probably covered that.

0:50:11.985,0:50:14.640
So hospitals converted to

0:50:14.640,0:50:17.760
these CAH since[br]cost reimbursement

0:50:17.760,0:50:20.640
was and is greater

0:50:20.640,0:50:21.810
than the reimbursement[br]we would

0:50:21.810,0:50:23.640
have received under PPS.

0:50:23.640,0:50:26.325
So that's why it was[br]important to move to.

0:50:26.325,0:50:28.290
There's requirements[br]to stay that.

0:50:28.290,0:50:30.510
Back under Obama, he

0:50:30.510,0:50:33.510
had within his[br]proposed budget plan,

0:50:33.510,0:50:35.940
you couldn't be a[br]critical access hospitals

0:50:35.940,0:50:38.640
within 10 miles of[br]another facility.

0:50:38.640,0:50:40.230
Or you would lose

0:50:40.230,0:50:42.435
your critical[br]access designation.

0:50:42.435,0:50:45.375
Do you know how far[br]we are from Gritman?

0:50:45.375,0:50:48.450
9.2 miles. Why didn't we

0:50:48.450,0:50:50.145
build it up the[br]hill, another.

0:50:50.145,0:50:51.420
But the issue was,

0:50:51.420,0:50:52.890
who cares if it's 10?

0:50:52.890,0:50:55.905
Why not 15? Why was it 10?

0:50:55.905,0:50:58.455
Because it was a[br]budgetary number.

0:50:58.455,0:50:59.610
They looked to see how

0:50:59.610,0:51:00.855
much could they capture.

0:51:00.855,0:51:02.835
That helps our budget.

0:51:02.835,0:51:06.045
Fortunately enough,[br]Congress did not pass that.

0:51:06.045,0:51:07.620
They didn't even[br]entertain that.

0:51:07.620,0:51:09.120
We only had to go a few

0:51:09.120,0:51:11.130
times to DC to fight that.

0:51:11.130,0:51:13.350
But that was[br]the discussion.

0:51:13.350,0:51:16.080
What's the mileage?

0:51:16.080,0:51:17.250
You know what I[br]would have done,

0:51:17.250,0:51:18.390
Mayor, come and say,

0:51:18.390,0:51:20.340
please close down[br]Bishop Boulevard,

0:51:20.340,0:51:22.380
Mike us go around.

0:51:22.380,0:51:25.050
Let us go half a mile.

0:51:25.050,0:51:28.710
Exactly. Something. We[br]just 0.8 of a mile,

0:51:28.710,0:51:31.080
please figure[br]something out.

0:51:31.080,0:51:33.840
So, Irene, part[br]of your question,

0:51:33.840,0:51:35.130
cost typically[br]in hospital.

0:51:35.130,0:51:36.690
Variable cost[br]includes your supply,

0:51:36.690,0:51:38.040
your implants,[br]your staffing,

0:51:38.040,0:51:39.090
your food, your dietary,

0:51:39.090,0:51:40.890
your pharmacy,[br]fixed costs,

0:51:40.890,0:51:42.990
CEO, core staffing,

0:51:42.990,0:51:45.780
utilities, bad[br]your debt service,

0:51:45.780,0:51:47.190
and then your[br]physician compensation

0:51:47.190,0:51:49.425
because many of them[br]have a fixed payment.

0:51:49.425,0:51:50.190
Not all of them.

0:51:50.190,0:51:51.720
So are very[br]productivity based,

0:51:51.720,0:51:53.040
and so the more you see,

0:51:53.040,0:51:53.670
the more you made,

0:51:53.670,0:51:56.190
but that's changing[br]in their environment.

0:51:56.190,0:51:59.940
So really some of

0:51:59.940,0:52:01.980
these really truly[br]are semi variable.

0:52:01.980,0:52:03.960
There's only a[br]certain level

0:52:03.960,0:52:05.370
that we can go down to.

0:52:05.370,0:52:06.930
So this is supposed to[br]be a true and false.

0:52:06.930,0:52:08.685
I'm just going to give[br]you the answers here.

0:52:08.685,0:52:11.550
Generally, in many are

0:52:11.550,0:52:13.200
not sensitive to volume.

0:52:13.200,0:52:17.055
If we saw 15,000 emergency

0:52:17.055,0:52:19.050
department visits or

0:52:19.050,0:52:21.300
5,000 emergency[br]department visits,

0:52:21.300,0:52:22.590
I'm sure hoping[br]the hospital

0:52:22.590,0:52:24.820
still keeps one CFO.

0:52:25.640,0:52:29.310
It's tongue and[br]cheek. So I'm

0:52:29.310,0:52:31.125
hopefully not[br]volume dependent.

0:52:31.125,0:52:32.835
But at some point,

0:52:32.835,0:52:36.360
like even our human[br]resources, at some point,

0:52:36.360,0:52:38.040
we need additional[br]support when we

0:52:38.040,0:52:40.215
have a few years ago,

0:52:40.215,0:52:43.680
we had 300 employees.

0:52:43.680,0:52:45.450
Now we have 450.

0:52:45.450,0:52:46.650
The amount of paperwork

0:52:46.650,0:52:47.820
and processing[br]the payroll,

0:52:47.820,0:52:49.620
etc, is more intensive.

0:52:49.620,0:52:50.910
So we either have to find

0:52:50.910,0:52:53.835
system applications to[br]do that, technology,

0:52:53.835,0:52:56.040
or we have add[br]resources and

0:52:56.040,0:52:59.010
staffing to be able to[br]help support those.

0:52:59.010,0:53:03.645
So cause volume increase.

0:53:03.645,0:53:04.950
What happens to your fixed

0:53:04.950,0:53:06.405
cost per unit of service?

0:53:06.405,0:53:07.710
So volume goes up, and

0:53:07.710,0:53:09.000
I have a fixed cost, me.

0:53:09.000,0:53:10.785
Let's say we have[br]100 patients,

0:53:10.785,0:53:12.660
and we allocate[br]the cost of

0:53:12.660,0:53:15.720
administrator over[br]those 100 patients.

0:53:15.720,0:53:17.430
Now I have 200.[br]What happens

0:53:17.430,0:53:18.705
to that cost per unit?

0:53:18.705,0:53:21.345
It goes down. Same thing.

0:53:21.345,0:53:23.865
If we have 200 and[br]it goes down 100,

0:53:23.865,0:53:26.830
that cost per[br]unit goes up.

0:53:27.050,0:53:30.180
Same with variable cost.

0:53:30.180,0:53:31.410
Units of service equals

0:53:31.410,0:53:33.480
patient days for[br]room and board,

0:53:33.480,0:53:36.315
revenue, and charges[br]for ancillary services.

0:53:36.315,0:53:40.300
Reimbursement under[br]PPS hospitals.

0:53:40.400,0:53:42.525
You decrease your volume.

0:53:42.525,0:53:44.880
What happens to[br]your reimbursement?

0:53:44.880,0:53:46.320
It goes down.

0:53:46.320,0:53:47.835
The less you see,[br]the less you make.

0:53:47.835,0:53:49.875
That's traditional.[br]We all know that.

0:53:49.875,0:53:52.830
You go to Walmart.[br]They sell 1,000 TVs.

0:53:52.830,0:53:55.080
They sold thousand TV.

0:53:55.080,0:53:56.790
They sell 2000 and[br]they mad more.

0:53:56.790,0:53:58.785
The more they sell,[br]the more they make.

0:53:58.785,0:54:01.560
Guess what?[br]Kirklaxs hospitals,

0:54:01.560,0:54:04.185
that's counterintuitive.[br]It's not true.

0:54:04.185,0:54:07.065
If I see less patients,

0:54:07.065,0:54:09.210
what's my reimbursement[br]from Medicare going

0:54:09.210,0:54:12.045
to be? It's higher.

0:54:12.045,0:54:16.515
Catch. Why? Because[br]they pay me my cost.

0:54:16.515,0:54:18.885
My cost per unit went up.

0:54:18.885,0:54:20.580
So, the less I see,

0:54:20.580,0:54:22.710
the more I make,[br]more I see,

0:54:22.710,0:54:24.555
the less I make[br]because I'm

0:54:24.555,0:54:26.535
only ever going to[br]get paid my cost.

0:54:26.535,0:54:28.260
It's counterintuitive.

0:54:28.260,0:54:30.450
And so that's[br]always confusing.

0:54:30.450,0:54:31.380
It doesn't matter[br]if you're sitting

0:54:31.380,0:54:32.580
on the board or[br]not, yes, sir.

0:54:32.580,0:54:36.380
>> But don't Medicare[br]define what I mean,

0:54:36.380,0:54:37.805
they have[br]observation bids,

0:54:37.805,0:54:39.380
which you get[br]paid less for

0:54:39.380,0:54:41.195
versus a regular bid.

0:54:41.195,0:54:43.610
So they're defining[br]your costs going to be

0:54:43.610,0:54:44.690
that observation bid

0:54:44.690,0:54:45.830
that's all I want[br]to reimburse.

0:54:45.830,0:54:47.915
Are they doing those[br]kind of things still?

0:54:47.915,0:54:49.520
>> So the question really

0:54:49.520,0:54:51.560
is under Medicare[br]reimbursement,

0:54:51.560,0:54:53.660
how do they define[br]how they'll pay you?

0:54:53.660,0:54:55.880
Do they drive business?

0:54:55.880,0:54:58.160
I'm phrasing this.

0:54:58.160,0:55:00.470
>> Nursing homes,[br]too. Cheaper over

0:55:00.470,0:55:02.525
there than they are[br]than regular hospital.

0:55:02.525,0:55:03.510
>> So are they driving

0:55:03.510,0:55:05.025
businesses to[br]certain things like

0:55:05.025,0:55:08.160
observation, like[br]inpatient care?

0:55:08.160,0:55:10.320
Is it better to have[br]a Medicare patient

0:55:10.320,0:55:12.315
in an inpatient[br]bed or an obs bed?

0:55:12.315,0:55:14.235
Obs Observation, sorry,

0:55:14.235,0:55:16.725
abbreviation. Which[br]one's better?

0:55:16.725,0:55:18.780
For Medicare, honestly,[br]having them in

0:55:18.780,0:55:19.830
an observation bed is

0:55:19.830,0:55:23.080
better because[br]then Medicare,

0:55:23.720,0:55:26.190
constituents or[br]customers have

0:55:26.190,0:55:27.915
to pay 20% of that charge.

0:55:27.915,0:55:29.520
If they're in an[br]inpatient bed,

0:55:29.520,0:55:30.420
they have a straight

0:55:30.420,0:55:31.860
deductible and it's done.

0:55:31.860,0:55:33.840
And if they met that[br]earlier, it's done.

0:55:33.840,0:55:36.960
So Medicare population has

0:55:36.960,0:55:38.805
to pay for that 20%.

0:55:38.805,0:55:40.920
So having them in an[br]outpatient setting

0:55:40.920,0:55:43.425
makes a lot more[br]sense for Medicare.

0:55:43.425,0:55:44.820
They have requirements, so

0:55:44.820,0:55:47.145
now they have[br]it used to be

0:55:47.145,0:55:52.140
based on certain[br]criteria based driven,

0:55:52.140,0:55:53.970
now it's based on

0:55:53.970,0:55:55.470
how many midnights[br]you're in.

0:55:55.470,0:55:57.060
Are you in two? If you're

0:55:57.060,0:55:58.080
in two, then you're knobs.

0:55:58.080,0:55:58.935
If you're in[br]more than two,

0:55:58.935,0:55:59.985
then you're in in.

0:55:59.985,0:56:01.485
It's based on that.

0:56:01.485,0:56:03.540
So by the way,

0:56:03.540,0:56:05.550
we asked for that,[br]and we all hate it.

0:56:05.550,0:56:06.420
Now, we said, we don't

0:56:06.420,0:56:07.650
like the way[br]you're doing this.

0:56:07.650,0:56:08.730
You got to[br]simplify, and then

0:56:08.730,0:56:10.065
they simply we[br]didn't like it.

0:56:10.065,0:56:13.560
So some of the things

0:56:13.560,0:56:14.790
that are influencing[br]healthcare and

0:56:14.790,0:56:16.200
why it's getting[br]challenging.

0:56:16.200,0:56:17.850
We had a major change in

0:56:17.850,0:56:20.310
our classification ICD 10,

0:56:20.310,0:56:22.320
which is your diagnosis

0:56:22.320,0:56:25.005
and related[br]classifications.

0:56:25.005,0:56:28.920
This changed from[br]ICEC 9 to 10 in 2014,

0:56:28.920,0:56:30.660
actually, in 2015, and

0:56:30.660,0:56:32.505
it really[br]substantially changed.

0:56:32.505,0:56:33.795
The coding aspect[br]went from like,

0:56:33.795,0:56:36.840
8,000 codes to 80,000.

0:56:36.840,0:56:38.700
And so it's got a[br]lot more specific.

0:56:38.700,0:56:41.700
It's really hard to[br]run today to get

0:56:41.700,0:56:45.180
any comparables is[br]almost impossible,

0:56:45.180,0:56:46.950
especially on[br]inpatient care

0:56:46.950,0:56:48.030
or surgeries and stuff

0:56:48.030,0:56:49.680
because of the[br]fact that ICD

0:56:49.680,0:56:50.850
10 is so specific,

0:56:50.850,0:56:53.280
like they literally[br]have some.

0:56:53.280,0:56:56.115
If you hit by a car[br]on a rural road,

0:56:56.115,0:56:57.705
then you code it to this.

0:56:57.705,0:57:00.255
But if you were hit by[br]a dog, it's different.

0:57:00.255,0:57:01.680
I could throw some up,

0:57:01.680,0:57:02.790
and you'd be like, really?

0:57:02.790,0:57:05.820
That's a code. And they[br]are that specific.

0:57:05.820,0:57:06.720
It's really strange.

0:57:06.720,0:57:08.055
Some of them[br]are hilarious.

0:57:08.055,0:57:09.450
I don't know how they[br]came up with them,

0:57:09.450,0:57:10.515
but they are like,

0:57:10.515,0:57:12.930
bit by a shark while scuba

0:57:12.930,0:57:16.680
diving. Did they live?

0:57:16.680,0:57:19.155
Inpatient quality[br]reporting,

0:57:19.155,0:57:20.250
the macro which I

0:57:20.250,0:57:22.350
talked about earlier on[br]physician reporting,

0:57:22.350,0:57:23.625
this is significant.

0:57:23.625,0:57:26.835
You could have[br]upwards of 9%.

0:57:26.835,0:57:29.730
Now, for physicians[br]that can be

0:57:29.730,0:57:32.970
a huge swing in their[br]pay in any one year.

0:57:32.970,0:57:34.845
Yet, on the other side,[br]if you do it well,

0:57:34.845,0:57:37.230
you might gain[br]readmission rates.

0:57:37.230,0:57:38.205
We got to monitor that.

0:57:38.205,0:57:39.030
All of these things are

0:57:39.030,0:57:40.890
reporting requirements[br]that we have to do.

0:57:40.890,0:57:42.825
We don't get any[br]additional money,

0:57:42.825,0:57:43.560
but if you don't do them,

0:57:43.560,0:57:45.490
then you make less money.

0:57:45.830,0:57:51.270
So one of the things[br]in that in summary,

0:57:51.270,0:57:53.130
as we start to[br]wrap this up,

0:57:53.130,0:57:55.230
why does our[br]foundation help us?

0:57:55.230,0:57:58.545
There are many non[br]cost based programs.

0:57:58.545,0:58:03.615
Psych and rehab,[br]don't make money.

0:58:03.615,0:58:07.305
So by providing[br]certain services

0:58:07.305,0:58:09.510
and continue to[br]support those

0:58:09.510,0:58:11.010
across the[br]continuing to have

0:58:11.010,0:58:13.200
the foundation helping[br]us within that so

0:58:13.200,0:58:15.660
that we can be self[br]sustaining and

0:58:15.660,0:58:16.680
self determining in our

0:58:16.680,0:58:19.510
future is really[br]important.

0:58:20.180,0:58:23.055
Skilled nursing[br]facilities, SNIFs,

0:58:23.055,0:58:24.495
home health agencies,

0:58:24.495,0:58:26.775
non reimburseable[br]cost centers.

0:58:26.775,0:58:28.290
It's just certain things[br]that we don't get

0:58:28.290,0:58:29.610
any payment for,

0:58:29.610,0:58:30.690
but we want to continue to

0:58:30.690,0:58:31.740
provide those[br]services because

0:58:31.740,0:58:34.530
it's important to[br]our community.

0:58:34.530,0:58:36.570
That's where the[br]foundation that's where

0:58:36.570,0:58:38.880
being a public hospital[br]district really help.

0:58:38.880,0:58:41.880
Other things within[br]cost reimbursement cost

0:58:41.880,0:58:44.295
per head that are[br]non cost services.

0:58:44.295,0:58:45.570
Things like today are

0:58:45.570,0:58:47.280
care coordination, I[br]mentioned earlier.

0:58:47.280,0:58:49.620
This the right[br]thing to do.

0:58:49.620,0:58:52.695
Honestly, it costs[br]us money to do it.

0:58:52.695,0:58:54.195
We look to grants, and

0:58:54.195,0:58:56.130
that's part of the[br]foundation's efforts

0:58:56.130,0:58:58.320
to bring in those type

0:58:58.320,0:58:59.820
of things to help[br]offset that.

0:58:59.820,0:59:01.335
It doesn't dollar[br]for dollar,

0:59:01.335,0:59:03.210
but it's caring[br]for patients and

0:59:03.210,0:59:05.070
getting them in[br]the right place so

0:59:05.070,0:59:06.300
that their care is better

0:59:06.300,0:59:07.380
so that they[br]don't end up in

0:59:07.380,0:59:08.520
the emergency[br]department with

0:59:08.520,0:59:10.590
a major problem[br]down the road.

0:59:10.590,0:59:12.300
Those are really[br]important things to do.

0:59:12.300,0:59:15.100
Nobody's paying[br]for you today.

0:59:16.580,0:59:18.150
Some of the things

0:59:18.150,0:59:19.650
the foundation has[br]really helped us with in

0:59:19.650,0:59:22.590
their giving[br]the whole hydro

0:59:22.590,0:59:24.240
works pool therapy,

0:59:24.240,0:59:25.620
underwater[br]treadmill, we would

0:59:25.620,0:59:26.865
not have had that.

0:59:26.865,0:59:28.380
The system we had had

0:59:28.380,0:59:30.030
failed and would[br]not be obsolete.

0:59:30.030,0:59:32.370
It'd basically be probably

0:59:32.370,0:59:35.610
a mosquito pond.[br]It'd be gone.

0:59:35.610,0:59:38.265
And that helped[br]us tremendously.

0:59:38.265,0:59:41.610
The 3D mammography unit

0:59:41.610,0:59:42.690
where you have[br]been blessed

0:59:42.690,0:59:45.060
with happened in 2014,

0:59:45.060,0:59:47.495
the 2015, various areas,

0:59:47.495,0:59:49.565
a lot of different[br]areas, services.

0:59:49.565,0:59:53.780
In 2016, the OR project.

0:59:53.780,0:59:55.190
And then now one of

0:59:55.190,0:59:57.755
their major efforts is[br]2017 on the expansion.

0:59:57.755,0:59:59.270
And as we look to that,

0:59:59.270,1:00:00.635
why we needed that.

1:00:00.635,1:00:03.140
In 2004, when[br]we opened this,

1:00:03.140,1:00:05.540
we thought we plenty[br]of space forever,

1:00:05.540,1:00:07.085
and now we're[br]out of space.

1:00:07.085,1:00:10.130
With volume increasing[br]as much as they have,

1:00:10.130,1:00:11.945
as much as 25, 30%,

1:00:11.945,1:00:13.585
we need more space.

1:00:13.585,1:00:15.675
And that will be the[br]case for a while.

1:00:15.675,1:00:17.340
Then there's I've[br]probably got this

1:00:17.340,1:00:19.020
out of order, but[br]the surgery project,

1:00:19.020,1:00:20.190
which is well[br]underway and should

1:00:20.190,1:00:21.960
be done by August,

1:00:21.960,1:00:23.490
end of August and[br]coming online

1:00:23.490,1:00:25.410
by September, which[br]will be perfect.

1:00:25.410,1:00:29.580
So summary Healthcare[br]finances is complicated.

1:00:29.580,1:00:32.400
I mean, we can't do it[br]justice in an hour.

1:00:32.400,1:00:34.110
I hope that you got[br]a little bit of

1:00:34.110,1:00:36.150
taste of the[br]complexity and what

1:00:36.150,1:00:38.295
it means within[br]our institution

1:00:38.295,1:00:40.080
on how we manage that.

1:00:40.080,1:00:42.210
But each input is unique.

1:00:42.210,1:00:44.700
Therefore, care delivery[br]must be flexible.

1:00:44.700,1:00:46.995
It can't be stagnant.

1:00:46.995,1:00:48.720
Everybody we're going[br]to treat you the same.

1:00:48.720,1:00:50.085
We'll put you on[br]a conveyor belt.

1:00:50.085,1:00:51.690
We'll run you through

1:00:51.690,1:00:53.085
because you're[br]all the same,

1:00:53.085,1:00:55.905
and I can then control[br]all my costs that way.

1:00:55.905,1:00:57.705
And we can't do[br]that in healthcare.

1:00:57.705,1:00:59.220
Physician orders drive.

1:00:59.220,1:01:01.740
Physicians still drive[br]everything we do.

1:01:01.740,1:01:04.035
Without physicians[br]in our community,

1:01:04.035,1:01:05.655
we would not[br]have a hospital.

1:01:05.655,1:01:08.220
They still drive[br]everything

1:01:08.220,1:01:09.975
that the care today.

1:01:09.975,1:01:12.345
So orders drive[br]provisions of care,

1:01:12.345,1:01:14.640
adding to the variability.

1:01:14.640,1:01:17.130
Payment is also[br]variable depending

1:01:17.130,1:01:20.040
on who's the[br]insurance payer?

1:01:20.040,1:01:22.125
What coverage do you have?

1:01:22.125,1:01:25.125
Does your insurance[br]company cover that today?

1:01:25.125,1:01:26.745
Not tomorrow? By the way,

1:01:26.745,1:01:28.260
one of those[br]things that we

1:01:28.260,1:01:30.105
want an example of[br]this. What do I mean?

1:01:30.105,1:01:33.540
Primera decided, and[br]I'll say this wrong,

1:01:33.540,1:01:38.250
and please correct[br]me those that, no.

1:01:38.250,1:01:41.640
But Propathol is[br]that the right word,

1:01:41.640,1:01:43.785
the administration[br]of the drug with

1:01:43.785,1:01:46.545
anesthesia drug,[br]especially colonoscopies.

1:01:46.545,1:01:48.225
Doctor Jones likes that.

1:01:48.225,1:01:49.605
It works very[br]well. He wants

1:01:49.605,1:01:51.045
the CRNA in the room.

1:01:51.045,1:01:52.425
>> It's patients[br]wagon too.

1:01:52.425,1:01:53.970
>> Man. I loved it.[br]I had that done.

1:01:53.970,1:01:56.025
It was awesome. I[br]remember nothing.

1:01:56.025,1:01:57.510
But, you know, I[br]got to tell you,

1:01:57.510,1:01:58.650
when I came out of[br]it, I had it done

1:01:58.650,1:02:00.210
here I didn't[br]do it at home.

1:02:00.210,1:02:01.890
And I had John O'Brien,

1:02:01.890,1:02:03.810
my materials manner[br]come in and make

1:02:03.810,1:02:04.770
sure I got to where I

1:02:04.770,1:02:06.570
needed to go after[br]we were done.

1:02:06.570,1:02:09.030
And I told him, Hey,

1:02:09.030,1:02:10.515
call my wife,[br]tell her I died.

1:02:10.515,1:02:11.745
'Cause I thought[br]it'd be funny.

1:02:11.745,1:02:12.600
I don't remember actually

1:02:12.600,1:02:15.240
saying that. I'm glad[br]he didn't call her.

1:02:15.240,1:02:16.500
But I thought it[br]would be funny,

1:02:16.500,1:02:18.030
I guess, apparently.

1:02:18.030,1:02:19.230
He's probably[br]what you tell

1:02:19.230,1:02:20.190
people under that stuff.

1:02:20.190,1:02:22.560
It was awesome.[br]But premier

1:02:22.560,1:02:24.420
decided, we're not[br]paying for that.

1:02:24.420,1:02:26.415
It's an additional cost.

1:02:26.415,1:02:29.175
Even though a physician[br]preference is that,

1:02:29.175,1:02:30.885
they're just not[br]going to pay for it.

1:02:30.885,1:02:34.350
So we help[br]subsidize that for

1:02:34.350,1:02:35.910
the CRNAs because it's[br]really important to

1:02:35.910,1:02:38.655
a physician for that[br]aspect of care.

1:02:38.655,1:02:40.380
That's what insurance[br]companies do,

1:02:40.380,1:02:41.760
so that insurance[br]company is

1:02:41.760,1:02:43.725
part of that negotiating[br]those raised,

1:02:43.725,1:02:46.050
payer mix regulations have

1:02:46.050,1:02:49.260
a big influence of how[br]and what we do here.

1:02:49.260,1:02:50.625
We're going through[br]part of that,

1:02:50.625,1:02:51.690
within the next[br]few months,

1:02:51.690,1:02:53.700
we'll have a review by

1:02:53.700,1:02:55.350
an outside agency[br]that will come

1:02:55.350,1:02:57.030
in and evaluate[br]how we're doing,

1:02:57.030,1:02:58.785
are we meeting the[br]Medicare standards?

1:02:58.785,1:03:00.990
Technology[br]changes rapidly.

1:03:00.990,1:03:02.520
How do we[br]reinvest in that?

1:03:02.520,1:03:04.320
So we need a profit[br]in order to reinvest,

1:03:04.320,1:03:05.790
or the foundation[br]has stepped in in

1:03:05.790,1:03:07.950
many gaps where we[br]didn't have that

1:03:07.950,1:03:09.480
to be able to[br]offset that and

1:03:09.480,1:03:11.400
help us continue to offer

1:03:11.400,1:03:14.070
high quality[br]technology and

1:03:14.070,1:03:15.930
keep our prices[br]reasonable.

1:03:15.930,1:03:17.820
And then many[br]different players in

1:03:17.820,1:03:22.845
healthcare. Yes, sir.

1:03:22.845,1:03:24.840
>> Truly a negotiable rate

1:03:24.840,1:03:27.630
what I hear from

1:03:27.630,1:03:30.510
insurance companies[br]standard here,

1:03:30.510,1:03:31.860
what is the limitation?

1:03:31.860,1:03:33.555
You may want to negotiate

1:03:33.555,1:03:34.710
you're only[br]going to be told

1:03:34.710,1:03:36.000
how much you're[br]going to get.

1:03:36.000,1:03:37.950
>> So the question[br]is, is it

1:03:37.950,1:03:40.830
a truly negotiated[br]rate or you just told?

1:03:40.830,1:03:43.800
Medicare or Medicaid,[br]they're the big boy

1:03:43.800,1:03:46.875
you're told. You[br]don't negotiate.

1:03:46.875,1:03:49.740
Other commercial[br]payers, you do

1:03:49.740,1:03:52.335
have the opportunity[br]to negotiate.

1:03:52.335,1:03:56.880
You're negotiating power[br]is limited by even

1:03:56.880,1:03:59.745
within our community wall

1:03:59.745,1:04:02.115
by who's negotiating what?

1:04:02.115,1:04:04.830
The more players and[br]as we talk about

1:04:04.830,1:04:06.060
fully integrated health

1:04:06.060,1:04:07.260
systems where you have

1:04:07.260,1:04:09.060
physicians and[br]hospital and

1:04:09.060,1:04:10.470
all that working[br]collectively,

1:04:10.470,1:04:12.825
you have more[br]negotiating power.

1:04:12.825,1:04:14.940
So then you do have[br]the ability to

1:04:14.940,1:04:17.070
go and see now,

1:04:17.070,1:04:19.140
at some point, you got[br]to approve outcomes.

1:04:19.140,1:04:20.670
If you're improving,[br]this is what we're

1:04:20.670,1:04:22.440
doing, and we're[br]working on that,

1:04:22.440,1:04:24.165
part of the center[br]of excellence with

1:04:24.165,1:04:26.385
the orthopedic surgeons

1:04:26.385,1:04:27.975
is in developing that.

1:04:27.975,1:04:29.700
At some point,[br]we will develop

1:04:29.700,1:04:31.440
a bundle payment[br]that we can take to

1:04:31.440,1:04:35.625
a Primera or to a[br]uniform and say,

1:04:35.625,1:04:37.410
why would you want to[br]send your patients to

1:04:37.410,1:04:39.285
the West Side to[br]have this done here?

1:04:39.285,1:04:40.710
Here's our outcomes.[br]By the way,

1:04:40.710,1:04:43.080
our prices are half

1:04:43.080,1:04:45.015
of what they[br]are over there.

1:04:45.015,1:04:46.530
So why wouldn't you[br]want to have it done

1:04:46.530,1:04:48.030
here, keep them local?

1:04:48.030,1:04:49.590
But if you can[br]prove that, you

1:04:49.590,1:04:50.895
got to have statistics[br]to do that.

1:04:50.895,1:04:52.350
You got better[br]negotiating power.

1:04:52.350,1:04:54.900
>> How long[br]negotiation look for?

1:04:54.900,1:04:57.000
>> Typically, two[br]to three years.

1:04:57.000,1:04:58.350
So right now I'm

1:04:58.350,1:05:00.465
working on the[br]Primera contract.

1:05:00.465,1:05:02.850
Hospital loan,[br]it's really hard

1:05:02.850,1:05:05.250
because Grandma just[br]signed last year,

1:05:05.250,1:05:09.060
so I'm not going to get[br]any better than that.

1:05:09.060,1:05:12.060
If I had an isolated[br]market, I could.

1:05:12.060,1:05:14.250
So I would take[br]the same contract

1:05:14.250,1:05:16.755
that Tristate can[br]get with Primera,

1:05:16.755,1:05:20.070
but they have one[br]eighth the number

1:05:20.070,1:05:22.800
of covered lives[br]in their arena,

1:05:22.800,1:05:24.900
so they can get 90 plus[br]percent of charges.

1:05:24.900,1:05:27.105
They just don't have[br]the same volume we do.

1:05:27.105,1:05:29.445
Were here, they can[br]drive a lot of that.

1:05:29.445,1:05:32.340
But it's getting more[br]and more challenging.

1:05:32.340,1:05:35.460
Have people heard of[br]what narrow markets are?

1:05:35.460,1:05:37.350
Okay, so we have

1:05:37.350,1:05:40.500
one in our arena. It's[br]a catalyst group.

1:05:40.500,1:05:42.780
They went directly to

1:05:42.780,1:05:44.730
the Blue Cross of Idaho

1:05:44.730,1:05:47.370
to a very isolated market,

1:05:47.370,1:05:48.510
and they said, We'll

1:05:48.510,1:05:50.070
take care of[br]those patients.

1:05:50.070,1:05:52.020
If that patient[br]goes outside,

1:05:52.020,1:05:56.580
so these are self[br]purchased insurance plans.

1:05:56.580,1:05:59.775
If that patient goes[br]outside of the market,

1:05:59.775,1:06:03.105
they have a $50,000[br]deductible.

1:06:03.105,1:06:04.740
So they can go to Gritman.

1:06:04.740,1:06:06.315
They can't come[br]to Pullman,

1:06:06.315,1:06:08.295
because that's how narrow

1:06:08.295,1:06:09.750
they did the market.

1:06:09.750,1:06:13.300
They kept it in Idaho.[br]Those are happening.

1:06:13.480,1:06:16.370
>> [inaudible] for[br]pricing supply and

1:06:16.370,1:06:18.920
demand in theory,[br]determines price.

1:06:18.920,1:06:21.920
So how has the[br]Pullman Hospital done

1:06:21.920,1:06:23.555
in demand growth

1:06:23.555,1:06:25.580
compared to[br]population growth?

1:06:25.580,1:06:28.085
How are we competing[br]with the other guys?

1:06:28.085,1:06:30.605
>> How are we competing[br]on supply and demand?

1:06:30.605,1:06:32.480
>> Are we[br]increasing demand

1:06:32.480,1:06:35.300
as fast or faster as[br]the population growth?

1:06:35.300,1:06:37.070
>> Not in all areas.

1:06:37.070,1:06:41.240
So a lot of that is[br]contingent on providers.

1:06:41.240,1:06:42.710
And can you get a provider

1:06:42.710,1:06:43.970
within those specialties?

1:06:43.970,1:06:45.050
One of the things we're

1:06:45.050,1:06:46.640
actively trying[br]to recruit, too,

1:06:46.640,1:06:49.280
and we have been[br]successful here just

1:06:49.280,1:06:52.115
recently is in non[br]invasive cardiology.

1:06:52.115,1:06:54.485
The other areas in[br]pulmonology and sleep.

1:06:54.485,1:06:56.075
The demands there,

1:06:56.075,1:06:57.410
we have to outsource[br]that today,

1:06:57.410,1:06:59.210
so an outside group[br]does all of that.

1:06:59.210,1:07:00.740
All of those funds[br]go outside of

1:07:00.740,1:07:03.230
our market to be[br]able to do that,

1:07:03.230,1:07:04.880
because we may[br]do the study

1:07:04.880,1:07:07.370
here but the providers[br]aren't here.

1:07:07.370,1:07:08.930
So there's no[br]reinvestment back into

1:07:08.930,1:07:11.615
the community for[br]those like services.

1:07:11.615,1:07:13.085
So in some areas,

1:07:13.085,1:07:14.240
it's a real challenge

1:07:14.240,1:07:15.785
because it's[br]specific on that.

1:07:15.785,1:07:17.510
In other areas now[br]we're keeping up,

1:07:17.510,1:07:18.860
and that's one of the[br]reasons we're looking

1:07:18.860,1:07:21.110
at building the fourth or

1:07:21.110,1:07:23.525
adding same day[br]services expansion

1:07:23.525,1:07:25.700
is because the demand[br]has been there.

1:07:25.700,1:07:27.680
We are at capacity[br]and we have

1:07:27.680,1:07:29.900
just no more room in[br]order to get that.

1:07:29.900,1:07:33.320
Now, I say that almost[br]tongue in cheek,

1:07:33.320,1:07:34.700
because there's a lot to

1:07:34.700,1:07:36.020
do with physician[br]preferences.

1:07:36.020,1:07:39.020
And if you're a physician

1:07:39.020,1:07:41.165
and Dr. Tinsted[br]could speak to this,

1:07:41.165,1:07:43.130
you don't want to start[br]surgery at 6:00 at

1:07:43.130,1:07:45.275
night unless it's[br]an emergency.

1:07:45.275,1:07:47.150
You prefer to get[br]in and get out,

1:07:47.150,1:07:48.230
and so you get back[br]to your clinical

1:07:48.230,1:07:49.580
care for your patients.

1:07:49.580,1:07:51.800
And so most[br]physicians have

1:07:51.800,1:07:52.940
blocked schedules[br]because then

1:07:52.940,1:07:54.125
they can control[br]their life.

1:07:54.125,1:07:55.040
They don't want to just,

1:07:55.040,1:07:57.050
what do you have today?

1:07:57.050,1:07:58.340
We'll call and see if we

1:07:58.340,1:07:58.940
can get them in today.

1:07:58.940,1:08:00.665
That doesn't work very[br]well in their life.

1:08:00.665,1:08:03.095
So you have to have[br]that capacity.

1:08:03.095,1:08:04.820
But in order to do that,[br]sometimes you have

1:08:04.820,1:08:05.990
those downsides[br]because nobody

1:08:05.990,1:08:06.670
wants to start 2:00,

1:08:06.670,1:08:07.820
3:00, 4:00 in[br]the afternoon.

1:08:07.820,1:08:09.665
If we could run 24/7

1:08:09.665,1:08:12.545
in those areas and[br]people willing to do it,

1:08:12.545,1:08:15.230
you could control the[br]cost much better.

1:08:15.230,1:08:16.670
But you can't today

1:08:16.670,1:08:18.050
because a lot of it's[br]best off preface.

1:08:18.050,1:08:19.580
>> Practical areas[br]you'll be dealing with.

1:08:19.580,1:08:21.300
>> You might.

1:08:21.910,1:08:23.510
>> [OVERLAPPING][br]What you have in

1:08:23.510,1:08:24.590
this market is, well,

1:08:24.590,1:08:26.390
I can go 9.2

1:08:26.390,1:08:27.650
miles and I can

1:08:27.650,1:08:28.895
start at 7:00 so[br]I'll take it there.

1:08:28.895,1:08:30.530
Oh, no, wait you[br]stop. We want

1:08:30.530,1:08:32.105
them here we don't[br]want you to do that.

1:08:32.105,1:08:33.830
So some of that[br]predictability

1:08:33.830,1:08:34.820
and stuff is very

1:08:34.820,1:08:36.350
challenging in[br]our markets just

1:08:36.350,1:08:38.510
based on providing[br]healthcare.

1:08:38.510,1:08:40.640
So I don't know[br]if that totally

1:08:40.640,1:08:42.815
answered it[br]adequately or not.

1:08:42.815,1:08:44.255
We can talk more[br]if it didn't,

1:08:44.255,1:08:47.490
no. Other questions?

1:08:49.000,1:08:51.845
>> You must have[br]figures too.

1:08:51.845,1:08:54.230
>> I have a good figure.

1:08:54.230,1:08:56.420
>> [OVERLAPPING] who's[br]top of the game.

1:08:56.420,1:08:58.040
But even a surgeon

1:08:58.040,1:08:59.705
knows that they're[br]only good for

1:08:59.705,1:09:02.465
so many hours of[br]solid surgery

1:09:02.465,1:09:04.310
before they get a

1:09:04.310,1:09:05.840
little punch drunk,[br]too, a little bit.

1:09:05.840,1:09:08.615
So they know that[br]you can commit

1:09:08.615,1:09:12.005
a surgery unit for how[br]long and of course,

1:09:12.005,1:09:14.000
that affect[br]your price too.

1:09:14.000,1:09:17.075
>> Well, yeah, and[br]that's really dependent.

1:09:17.075,1:09:19.040
You're exactly right.

1:09:19.040,1:09:24.710
The quality of care[br]of your providers,

1:09:24.710,1:09:26.810
be it your[br]nursing staff to

1:09:26.810,1:09:29.300
your physicians[br]diminishes greatly

1:09:29.300,1:09:32.000
if you don't give them[br]enough rest time.

1:09:32.000,1:09:35.540
And so one of the[br]key importances

1:09:35.540,1:09:38.120
of recruitment[br]is to provide,

1:09:38.120,1:09:41.180
and especially physicians[br]break in between,

1:09:41.180,1:09:44.345
so they aren't on[br]call all of the time

1:09:44.345,1:09:45.965
because you will[br]burn them out

1:09:45.965,1:09:48.695
and in short order.

1:09:48.695,1:09:52.220
Same goes for your nursing[br]and support staff.

1:09:52.220,1:09:53.300
If they don't have rest

1:09:53.300,1:09:54.770
between shifts, and[br]we used to do this.

1:09:54.770,1:09:56.000
So you'd be done,

1:09:56.000,1:09:56.975
and you had to go late

1:09:56.975,1:09:58.325
because the[br]case went late,

1:09:58.325,1:09:59.750
and you were on call,

1:09:59.750,1:10:00.740
and you got called back,

1:10:00.740,1:10:02.240
and then you had[br]to come back in at

1:10:02.240,1:10:03.170
7:00 in the morning to

1:10:03.170,1:10:04.190
start it all over again.

1:10:04.190,1:10:06.980
The quality goes down.

1:10:06.980,1:10:10.595
Now what we do is we[br]have a call shift.

1:10:10.595,1:10:12.395
And then when they're

1:10:12.395,1:10:13.925
not on call, then[br]they're off.

1:10:13.925,1:10:15.200
So they don't[br]come in the next

1:10:15.200,1:10:16.910
day that's a[br]different group.

1:10:16.910,1:10:18.425
So you have to have staff,

1:10:18.425,1:10:20.555
which adds some cost,

1:10:20.555,1:10:23.000
but it provides a[br]better quality of care.

1:10:23.000,1:10:24.350
Plus rest between shift,

1:10:24.350,1:10:25.370
we guarantee a[br]certain amount

1:10:25.370,1:10:26.720
of rest between shift

1:10:26.720,1:10:30.155
so that they aren't[br]only getting eight,

1:10:30.155,1:10:31.370
that they're[br]getting 10, so

1:10:31.370,1:10:32.720
they get a full[br]night's sleep.

1:10:32.720,1:10:34.550
>> You're speaking[br]of staff, there's

1:10:34.550,1:10:35.630
a difference in cost

1:10:35.630,1:10:37.280
too depending on if you

1:10:37.280,1:10:40.025
have your own staff[br]versus travelers.

1:10:40.025,1:10:42.350
We have allowed travellers

1:10:42.350,1:10:43.520
here from time to time.

1:10:43.520,1:10:44.795
>> Yeah, occasionally.

1:10:44.795,1:10:46.280
>> [inaudible][br]Swedish in Seattle.

1:10:46.280,1:10:48.320
>> Yeah, 2.5 times[br]the cost for

1:10:48.320,1:10:51.005
traveling compared to[br]what you can keep here.

1:10:51.005,1:10:53.315
You're typically[br]doing that in areas.

1:10:53.315,1:10:56.765
Most of the time here[br]in our market now,

1:10:56.765,1:10:58.310
not when you were[br]on the board,

1:10:58.310,1:10:59.600
we had a problem back then

1:10:59.600,1:11:01.370
just turnover because you

1:11:01.370,1:11:03.260
were doing a lot of[br]low senses, etc.

1:11:03.260,1:11:04.550
Today, if we have

1:11:04.550,1:11:06.380
a travelers generally do

1:11:06.380,1:11:08.255
to somebody that's[br]on maternity leave.

1:11:08.255,1:11:09.485
It's a planned event

1:11:09.485,1:11:10.370
you know they're[br]going to be out

1:11:10.370,1:11:12.620
for 12 weeks.[br]It makes sense.

1:11:12.620,1:11:13.880
You're going to[br]pay a little more,

1:11:13.880,1:11:15.860
but you wouldn't want[br]to hire because you

1:11:15.860,1:11:18.035
made a commitment to[br]employ them forever.

1:11:18.035,1:11:19.775
So you do short term[br]stuff like that.

1:11:19.775,1:11:22.310
We don't have nearly[br]the travelers we

1:11:22.310,1:11:26.130
used to. It's[br]typically that.

1:11:28.690,1:11:32.810
>> Do you think the[br]value based system

1:11:32.810,1:11:34.175
will survive if

1:11:34.175,1:11:37.025
the Affordable Care[br]Act went away?

1:11:37.025,1:11:39.380
That was in the[br]Affordable Care Act,

1:11:39.380,1:11:42.365
meaningful use, etc.

1:11:42.365,1:11:43.610
>> So, will the value

1:11:43.610,1:11:47.000
based payment[br]system continue

1:11:47.000,1:11:52.775
to exist if the Affordable[br]Care Act changes?

1:11:52.775,1:11:54.680
The Affordable Care[br]Act will change,

1:11:54.680,1:11:56.870
inevitably, it'll[br]change somehow.

1:11:56.870,1:11:58.385
It doesn't matter[br]what administration,

1:11:58.385,1:12:02.120
it will change. I do.

1:12:02.120,1:12:05.330
Health care at[br]the rate it was

1:12:05.330,1:12:09.005
going is non sustainable[br]it has to change.

1:12:09.005,1:12:10.565
You can't continue to have

1:12:10.565,1:12:13.310
escalating payments[br]and expect

1:12:13.310,1:12:14.330
anybody to be willing

1:12:14.330,1:12:17.945
to do and be able[br]to pay for it.

1:12:17.945,1:12:19.310
So what does[br]have to change.

1:12:19.310,1:12:22.130
How we deliver healthcare[br]needs to change.

1:12:22.130,1:12:23.510
We're reactionary,

1:12:23.510,1:12:25.595
but America has done[br]that to himself.

1:12:25.595,1:12:27.110
We've done to ourselves.

1:12:27.110,1:12:28.520
We don't want[br]anybody telling us

1:12:28.520,1:12:29.870
what to do we[br]just want to make

1:12:29.870,1:12:31.790
it better when we[br]didn't do it because

1:12:31.790,1:12:35.225
that's a lot of[br]how we live.

1:12:35.225,1:12:38.075
I didn't take care of[br]myself, but fix me now.

1:12:38.075,1:12:40.055
So some of that[br]needs to change.

1:12:40.055,1:12:42.710
That getting in front[br]of that and changing

1:12:42.710,1:12:44.075
our culture and how we

1:12:44.075,1:12:46.325
respond to that[br]needs to change.

1:12:46.325,1:12:48.215
So, yeah, I do believe

1:12:48.215,1:12:49.850
in some sense, it will.

1:12:49.850,1:12:50.900
There's demonstrations[br]that are

1:12:50.900,1:12:53.930
showing how it will be.

1:12:53.930,1:12:55.655
I don't know[br]what it'll take.

1:12:55.655,1:12:57.380
But today,

1:12:57.380,1:13:00.080
part of the problem is[br]the fragmentation in

1:13:00.080,1:13:02.000
healthcare and the lack of

1:13:02.000,1:13:03.170
communication between

1:13:03.170,1:13:04.805
even us and our providers.

1:13:04.805,1:13:05.780
You think you're all on

1:13:05.780,1:13:06.710
the same page,[br]but you're really

1:13:06.710,1:13:08.510
not in all sense.

1:13:08.510,1:13:11.915
So streamlining that,

1:13:11.915,1:13:14.000
integrating a[br]lot of that will

1:13:14.000,1:13:16.220
have a lot of[br]impact on that.

1:13:16.220,1:13:18.080
And I do believe that

1:13:18.080,1:13:20.195
it will take[br]such a foothold.

1:13:20.195,1:13:23.420
It started out at 20%[br]demonstration expecting

1:13:23.420,1:13:24.455
two years value based

1:13:24.455,1:13:25.505
purchasing will represent

1:13:25.505,1:13:28.190
80% of the payments[br]in two years.

1:13:28.190,1:13:29.720
They originally[br]thought it would be

1:13:29.720,1:13:31.580
five but that's how

1:13:31.580,1:13:33.560
quickly it has[br]broadcast it out.

1:13:33.560,1:13:35.165
So it's here to stay,

1:13:35.165,1:13:37.565
and we've got to learn[br]how to deal with it.

1:13:37.565,1:13:39.395
The problem will be

1:13:39.395,1:13:41.900
is we're under this[br]payment model,

1:13:41.900,1:13:43.910
which the more we do,[br]the more we make,

1:13:43.910,1:13:44.870
in some sense, I just

1:13:44.870,1:13:46.130
contradicted something[br]else like this.

1:13:46.130,1:13:48.500
But that's the[br]healthcare system

1:13:48.500,1:13:51.575
today, fee for service.

1:13:51.575,1:13:54.575
Tomorrow, when we[br]finally get there,

1:13:54.575,1:13:56.000
I don't know what[br]it'll look like.

1:13:56.000,1:13:58.490
When it's value based and

1:13:58.490,1:13:59.690
you're providing value

1:13:59.690,1:14:01.580
and keeping[br]people healthy,

1:14:01.580,1:14:03.500
how do you[br]bridge that gap?

1:14:03.500,1:14:05.225
That'll be the challenge.

1:14:05.225,1:14:07.460
And hopefully you[br]have enough to

1:14:07.460,1:14:10.700
survive that[br]period of time.

1:14:10.700,1:14:12.290
And so it's[br]really important.

1:14:12.290,1:14:13.730
Now, we utilize again,

1:14:13.730,1:14:15.740
I'm promoting Ruben[br]and his staff.

1:14:15.740,1:14:17.600
But that's what[br]we've determined

1:14:17.600,1:14:20.240
as part of that[br]pathway there to

1:14:20.240,1:14:24.170
survive those time[br]periods so that

1:14:24.170,1:14:26.210
we aren't falling behind[br]in technology and

1:14:26.210,1:14:28.280
other things so that[br]when you get there,

1:14:28.280,1:14:29.480
you can't provide[br]it because you're

1:14:29.480,1:14:31.370
too far behind[br]the curve anyway.

1:14:31.370,1:14:33.830
>> When will it come[br]that you're going

1:14:33.830,1:14:35.720
to be dictated that I

1:14:35.720,1:14:37.820
don't need to have[br]another MRI just

1:14:37.820,1:14:40.760
because I had one here[br]for the specialist.

1:14:40.760,1:14:42.440
And the insurance[br]company is going

1:14:42.440,1:14:44.060
to say you already[br]have one MRI

1:14:44.060,1:14:45.800
for that particular injury

1:14:45.800,1:14:47.180
you don't need to[br]have another one

1:14:47.180,1:14:52.070
or they won't approve[br]the second one.

1:14:52.070,1:14:54.410
>> So the question is,[br]when will that happen?

1:14:54.410,1:14:56.030
When will that occur?

1:14:56.030,1:14:59.000
Meaning, will[br]insurance companies

1:14:59.000,1:15:00.215
dictate the fact that

1:15:00.215,1:15:02.630
somebody else ordered[br]a secondary test

1:15:02.630,1:15:05.645
that has already been[br]done? Is that fair?

1:15:05.645,1:15:07.340
I'm doing this for her.

1:15:07.340,1:15:08.900
She's told me I got[br]to repeat these,

1:15:08.900,1:15:12.170
so I'll get paid tonight.

1:15:12.170,1:15:14.960
No, I'm not getting[br]paid anyway.

1:15:14.960,1:15:17.270
It's cost, I'm[br]going to paid cost.

1:15:17.270,1:15:20.990
So the question is,[br]when will that happen?

1:15:20.990,1:15:25.730
It's happened, that[br]happens today.

1:15:25.990,1:15:29.180
Insurance companies,[br]if you had an MR,

1:15:29.180,1:15:30.410
they aren't going[br]to approve.

1:15:30.410,1:15:33.560
That's part of that[br]whole pre authorization.

1:15:33.560,1:15:36.140
If they see you had[br]this test done,

1:15:36.140,1:15:38.885
they're not approving[br]one for another one.

1:15:38.885,1:15:40.940
They'll deny it, so you

1:15:40.940,1:15:42.770
won't get it. So[br]that happens today?

1:15:42.770,1:15:48.890
[inaudible] Exactly.

1:15:48.890,1:15:50.420
So some of that's[br]happening today.

1:15:50.420,1:15:52.550
Now, is there[br]duplication of services?

1:15:52.550,1:15:54.440
Yes. That still[br]happens in some sense,

1:15:54.440,1:15:56.750
but more and more[br]that's changing.

1:15:56.750,1:15:58.460
So one of the things that

1:15:58.460,1:16:00.710
is when you[br]start looking at

1:16:00.710,1:16:02.210
an integrated[br]model and you

1:16:02.210,1:16:04.640
start looking about[br]coordination,

1:16:04.640,1:16:06.380
it's when you're all[br]on the same team.

1:16:06.380,1:16:08.930
Well Dr. Joe is

1:16:08.930,1:16:10.430
much better at[br]this than I am.

1:16:10.430,1:16:11.510
I'm going to[br]send my patient

1:16:11.510,1:16:12.590
there because

1:16:12.590,1:16:13.955
I know that patient[br]will come back,

1:16:13.955,1:16:16.415
and we're not competing[br]against each other.

1:16:16.415,1:16:19.310
That'll be important[br]to control costs.

1:16:19.310,1:16:20.390
Because today we compete

1:16:20.390,1:16:21.170
against each other for

1:16:21.170,1:16:24.050
the same patient for[br]many different services.

1:16:24.050,1:16:27.035
We have a few more[br]minutes. Yeah, Pat.

1:16:27.035,1:16:28.430
>> Steve, what do you see

1:16:28.430,1:16:31.040
as the overriding benefits

1:16:31.040,1:16:33.515
of acquiring other[br]medical practices.

1:16:33.515,1:16:35.270
That's the first[br]part of my question.

1:16:35.270,1:16:36.695
And the second part is,

1:16:36.695,1:16:40.940
do you see us acquiring[br]more in the future?

1:16:40.940,1:16:42.590
>> So the question[br]is, what are

1:16:42.590,1:16:43.985
the advantages[br]of acquiring

1:16:43.985,1:16:45.425
other medical practices,

1:16:45.425,1:16:48.500
be it physician[br]practices or anything?

1:16:48.500,1:16:50.840
And will we look

1:16:50.840,1:16:52.475
to acquire more[br]in the future?

1:16:52.475,1:16:53.690
I will tell you[br]this Pullman

1:16:53.690,1:16:54.800
Regional Hospital has not

1:16:54.800,1:16:55.940
aggressively ever gone

1:16:55.940,1:16:57.395
out and tried to buy any.

1:16:57.395,1:17:02.180
We have reactionarily[br]responded to requests.

1:17:02.180,1:17:06.005
So Plus Pediatrics[br]as an example, 2009,

1:17:06.005,1:17:10.535
remember, Al, Dr.[br]Frosted, and Mike.

1:17:10.535,1:17:13.940
When Al decided he[br]was going to retire,

1:17:13.940,1:17:16.250
Mike realized I'm[br]going to be basically

1:17:16.250,1:17:17.630
the only pediatrician

1:17:17.630,1:17:18.950
on the blues, I[br]don't want it.

1:17:18.950,1:17:20.345
And I don't want[br]this headache.

1:17:20.345,1:17:21.860
And by the way, I[br]can make more money

1:17:21.860,1:17:23.330
by being a locum and

1:17:23.330,1:17:24.590
traveling and[br]getting out of here

1:17:24.590,1:17:27.260
and making a[br]lot more money.

1:17:27.260,1:17:30.500
So they realized that

1:17:30.500,1:17:31.700
in order to[br]have pediatric,

1:17:31.700,1:17:33.230
which Al had[br]established on

1:17:33.230,1:17:35.600
the Palouse and[br]continued to be here,

1:17:35.600,1:17:36.950
they needed[br]something different.

1:17:36.950,1:17:38.690
They came to the[br]hospital and said,

1:17:38.690,1:17:41.315
would you be willing[br]to look at this?

1:17:41.315,1:17:43.910
And for the sake[br]of the community,

1:17:43.910,1:17:45.215
we responded and say,

1:17:45.215,1:17:46.865
yeah, we'll look at that.

1:17:46.865,1:17:48.710
Most of everything we've

1:17:48.710,1:17:50.870
done has been in[br]response, too.

1:17:50.870,1:17:53.120
So many providers today,

1:17:53.120,1:17:54.620
when they look[br]at the model

1:17:54.620,1:17:55.730
of reimbursement[br]and trying

1:17:55.730,1:17:56.510
to recruit into it,

1:17:56.510,1:17:58.400
are facing challenges[br]and saying,

1:17:58.400,1:17:59.975
people don't want to[br]come to that model,

1:17:59.975,1:18:01.070
they will come to the[br]hospital and say,

1:18:01.070,1:18:02.480
can we look at[br]something different?

1:18:02.480,1:18:03.650
We'll always look and say,

1:18:03.650,1:18:05.105
what does that look like?

1:18:05.105,1:18:07.340
So there's no future plans

1:18:07.340,1:18:09.605
right now to continue,

1:18:09.605,1:18:12.590
but we would respond,[br]being the thing.

1:18:12.590,1:18:14.660
Some have decided to[br]stay independent,

1:18:14.660,1:18:17.000
the advantages that we're

1:18:17.000,1:18:19.835
starting to see[br]that are coming.

1:18:19.835,1:18:21.590
I talked about[br]care coordination,

1:18:21.590,1:18:23.195
I mentioned a couple[br]of different times.

1:18:23.195,1:18:25.730
There are new[br]reimbursement models that

1:18:25.730,1:18:28.445
will pay you per member[br]per month to do that.

1:18:28.445,1:18:30.635
Most all that resides[br]in primary care.

1:18:30.635,1:18:31.910
We had no access

1:18:31.910,1:18:33.515
because we had[br]no primary care.

1:18:33.515,1:18:36.230
Under our clinic[br]network provider

1:18:36.230,1:18:38.060
that to get to

1:18:38.060,1:18:39.650
the new revenue[br]streams that are

1:18:39.650,1:18:42.710
emerging under these[br]value based models,

1:18:42.710,1:18:44.405
that's one of[br]the advantages

1:18:44.405,1:18:47.285
of coordination[br]and integration.

1:18:47.285,1:18:49.595
So that's coming,

1:18:49.595,1:18:51.935
and we're getting[br]ahead of some of that.

1:18:51.935,1:18:54.365
Contract negotiation[br]because you're all going

1:18:54.365,1:18:55.490
to the same[br]person and you're

1:18:55.490,1:18:56.870
not divide and conquer,

1:18:56.870,1:18:58.970
you're going[br]jointly, we'll

1:18:58.970,1:19:01.415
also have some[br]advantages there.

1:19:01.415,1:19:03.500
>> You just took[br]over Pullman

1:19:03.500,1:19:05.045
Family Medicine[br]as of April.

1:19:05.045,1:19:05.855
>> Correct.

1:19:05.855,1:19:06.365
>> So how do

1:19:06.365,1:19:10.560
those competing[br]practices recruit?

1:19:12.880,1:19:14.705
>> Well,

1:19:14.705,1:19:16.400
I'm sure I understand[br]your question.

1:19:16.400,1:19:17.420
>> Do they recruit[br]separately?

1:19:17.420,1:19:18.095
>> No.

1:19:18.095,1:19:19.310
>> If they were[br]asked to recruit

1:19:19.310,1:19:24.920
a general physician[br][inaudible]

1:19:24.920,1:19:27.485
>> So I see your[br]question now.

1:19:27.485,1:19:30.395
So the question[br]is, is today

1:19:30.395,1:19:32.090
Pullman Family[br]Medicine may

1:19:32.090,1:19:34.625
have an opening. How[br]do they recruit?

1:19:34.625,1:19:36.890
How's the hospital[br]involvement with

1:19:36.890,1:19:38.495
that compared to like[br]Palouse Medical Group?

1:19:38.495,1:19:40.010
Today we're[br]working closely

1:19:40.010,1:19:41.090
with Pullman[br]Family Medicine,

1:19:41.090,1:19:42.140
identifying what the needs

1:19:42.140,1:19:43.175
are of the community,

1:19:43.175,1:19:46.085
what type of provider[br]should be there?

1:19:46.085,1:19:49.220
We work with them jointly.

1:19:49.220,1:19:50.630
Palouse Medical Group[br]because they're

1:19:50.630,1:19:53.645
independent are out[br]doing their thing.

1:19:53.645,1:19:55.595
They're trying[br]to recruit in.

1:19:55.595,1:19:58.980
There's still a[br]competitive model.

1:19:59.110,1:20:01.670
The nice thing is,[br]in our market,

1:20:01.670,1:20:03.770
I'll tell you[br]today, we work

1:20:03.770,1:20:04.730
closely with them and

1:20:04.730,1:20:05.870
have a lot of[br]communication.

1:20:05.870,1:20:08.240
So thankfully enough, it

1:20:08.240,1:20:11.870
isn't eat what[br]one can and kill.

1:20:11.870,1:20:15.740
It's whatever I do for[br]me is just my thing,

1:20:15.740,1:20:17.570
and it's that tragedy[br]of the commons,

1:20:17.570,1:20:18.200
which we're all going to

1:20:18.200,1:20:19.430
fish out of the same pond.

1:20:19.430,1:20:21.260
The more fish I[br]make or catch,

1:20:21.260,1:20:22.190
the better off I am

1:20:22.190,1:20:23.645
until we're all[br]out of fish.

1:20:23.645,1:20:25.925
That doesn't happen[br]today. We do coordinate.

1:20:25.925,1:20:27.350
So there's some[br]communication

1:20:27.350,1:20:29.525
which is nice[br]in our market.

1:20:29.525,1:20:31.475
It's not a stream[br]line, though,

1:20:31.475,1:20:32.990
because we don't have[br]that involvement.

1:20:32.990,1:20:34.070
Yes, sir.

1:20:34.070,1:20:37.055
>> When you talk[br]about coordination,

1:20:37.055,1:20:39.290
you see changes in

1:20:39.290,1:20:42.005
the hospitals,[br]for example,

1:20:42.005,1:20:44.585
with all of the[br]hospitals in this area,

1:20:44.585,1:20:47.720
some of them might[br]end up closing.

1:20:47.720,1:20:49.325
>> That's a[br]great question.

1:20:49.325,1:20:50.840
So the question is,

1:20:50.840,1:20:52.640
in this area will

1:20:52.640,1:20:55.775
all hospitals[br]exist, long term?

1:20:55.775,1:20:57.530
Will some in danger of

1:20:57.530,1:21:00.960
closing or is there[br]better models?

1:21:02.800,1:21:05.780
I couldn't[br]professionally tell you

1:21:05.780,1:21:09.155
that all will exist[br]and should exist.

1:21:09.155,1:21:11.660
There's a lot of[br]duplication of services.

1:21:11.660,1:21:16.265
And I lived the cord[br]run for three years.

1:21:16.265,1:21:20.120
It doesn't make sense[br]to have three RMRIs in

1:21:20.120,1:21:22.550
a basically 20[br]mile radius when

1:21:22.550,1:21:25.880
they're almost[br]$2 million each.

1:21:25.880,1:21:27.665
Now, you still[br]may need two

1:21:27.665,1:21:28.520
because of volume,

1:21:28.520,1:21:29.675
but it should be[br]volume driven.

1:21:29.675,1:21:33.380
I do eventually[br]believe for this area,

1:21:33.380,1:21:36.200
there has to be[br]coordination of that.

1:21:36.200,1:21:38.600
You could have a very

1:21:38.600,1:21:43.850
effective and[br]inpatient care unit.

1:21:43.850,1:21:45.200
And they focus on that

1:21:45.200,1:21:46.865
and they do it very well.

1:21:46.865,1:21:49.055
And still in communities,

1:21:49.055,1:21:50.540
I'm pointing[br]outside because

1:21:50.540,1:21:51.335
I think Pullman[br]ought to be

1:21:51.335,1:21:53.630
central because they are.

1:21:53.630,1:21:57.065
They're the middle.[br]And then outside that,

1:21:57.065,1:22:00.590
you could have outpatient[br]surgery centers

1:22:00.590,1:22:02.780
or support or urgent[br]care centers,

1:22:02.780,1:22:05.630
etc, but you work[br]collectively.

1:22:05.630,1:22:07.010
I believe long term,

1:22:07.010,1:22:08.285
that's where it'll get to.

1:22:08.285,1:22:11.120
I think until[br]reimbursement dictates

1:22:11.120,1:22:12.455
that, it won't change.

1:22:12.455,1:22:14.615
And under a critical[br]access model,

1:22:14.615,1:22:16.175
because we get[br]paid our costs,

1:22:16.175,1:22:18.320
what advantages is[br]there to do that?

1:22:18.320,1:22:22.140
So, today we have a[br]fake glass bottom,

1:22:22.540,1:22:24.350
there's not a lot of

1:22:24.350,1:22:25.310
incentives to[br]control class.

1:22:25.310,1:22:26.615
There's some.[br]There's not a lot.

1:22:26.615,1:22:28.460
But if that[br]model went away,

1:22:28.460,1:22:30.470
problem is, could you[br]react quick enough?

1:22:30.470,1:22:32.645
I think that some of[br]that's happening,

1:22:32.645,1:22:34.790
we are partners in

1:22:34.790,1:22:36.440
the general[br]surgeon practices,

1:22:36.440,1:22:38.150
the specialty practices,

1:22:38.150,1:22:40.460
medication oncology[br]coming on board.

1:22:40.460,1:22:41.780
That will be collective.

1:22:41.780,1:22:44.495
More and more that[br]communications happening.

1:22:44.495,1:22:47.015
I think that'll evolve[br]long term. How long?

1:22:47.015,1:22:50.480
I have no idea. I[br]realize at some point,

1:22:50.480,1:22:51.200
if that happens, and I

1:22:51.200,1:22:52.730
think that[br]ultimately needs

1:22:52.730,1:22:55.145
to I don't know if you.

1:22:55.145,1:22:56.810
>> That was going on in

1:22:56.810,1:22:58.970
Reagan's time when they

1:22:58.970,1:23:00.530
had if you wanted

1:23:00.530,1:23:04.295
a MRI and Gritman[br]wanted one,

1:23:04.295,1:23:06.695
there was a committee[br]that determine

1:23:06.695,1:23:08.750
whether you ought[br]to have one

1:23:08.750,1:23:11.525
because of the[br]population and the size.

1:23:11.525,1:23:14.030
And that went away.

1:23:14.030,1:23:15.710
>> I think[br]eventually you'll

1:23:15.710,1:23:16.880
come back to some of that.

1:23:16.880,1:23:17.990
I do believe[br]they'll drive.

1:23:17.990,1:23:19.160
>> Some of us[br]remember there was

1:23:19.160,1:23:29.090
a vet school that[br]also [inaudible].

1:23:29.090,1:23:30.470
>> >> That was my love of

1:23:30.470,1:23:31.760
working for two[br]facilities.

1:23:31.760,1:23:33.305
That was awesome.[br]By the way,

1:23:33.305,1:23:35.195
it is a little after 7:00.

1:23:35.195,1:23:37.370
I do want to be[br]respectful of your time.

1:23:37.370,1:23:39.245
I have nowhere to go,

1:23:39.245,1:23:40.190
I will stick around if

1:23:40.190,1:23:41.120
there are other questions.

1:23:41.120,1:23:42.860
But I appreciate the fact

1:23:42.860,1:23:43.990
that you all team[br]out. Thank you.

1:23:43.990,1:23:44.000
[APPLAUSE]

1:23:44.000,1:23:45.365
>> Thank you, Steve.

1:23:45.365,1:23:48.390
>> Yeah, Ruben.[br]Thank you very much.