WEBVTT

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>> Thank you, everybody,

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for [APPLAUSE].

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Don't clap yet.

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See that for. You may
want to take that back.

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So first, before we
start I just got to

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acknowledge Dr. Frakes
in the back here.

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He was my auditing
professor

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back in the day
when I was at WHU

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so I think he's
come to critique or

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take my diploma back,

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I'm not sure. We'll
see how this goes.

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So a little nervous now.

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Thank you. Tell
you a little

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bit, just horror story.

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So I'm really very young,

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Ruben so the reason

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I got this job, I had
to pay off my bill,

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and I'm still trying
to pay that off,

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so I relate to
everybody's questions

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regarding
hospital billing.

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No, not really.

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But I did start the
hospital back in 1988.

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It's hard to believe
it's been that long.

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Great family to work with.

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I don't know
if you or many

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know this in 2002,

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I tried to escape.

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I resigned from Pullman
Regional Hospital as

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CFO and moved to
Tucson, Arizona.

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I didn't get too far
out of town before

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Scott asked if I could

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stay on and we'd work

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out some type
of arrangement.

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So I still reside
in Tucson.

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I've been doing
that for 15 years.

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So half of my career
has been living in

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Tucson and still working

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at Pullman
Regional Hospital.

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Pullman Regional
Hospital is

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dear to my heart.

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I have past board members

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in here tonight and they

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all know once you

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get Pullman Regional
into your system,

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it's hard to get it out.

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It becomes a part of you.

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You believe in the
community. You believe

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a lot in what we're doing.

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I really appreciate that,

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especially working
with fine people like

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Mr. Adams and Mrs. Eiler,

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Dr. Cagiano that have

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really become
family members.

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Shauna Patrick, who's
my controller here,

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has been with me, Shauna,

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we've been together
16, 17, 18.

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I mean, it's been
a long time.

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>> Twenty years.

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>> Yeah, it's amazing.
You got great people.

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So let me start
with a little bit.

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One of the nice things
about doing it in

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this environment is I've

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always believed whenever

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I'm talking with anybody,

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you have to give
them a takeaway,

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you're investing time here

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and if I failed to
do that, I failed.

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The nice thing is
we're feeding you,

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so at least you

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give away full, hopefully.

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So at any point,

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if you want more, feel

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free to get up
and go get more.

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And so, at least
there's one takeaway,

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so I feel good about that.

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But let's start with
a little bit here.

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Well, words of
wisdom here.

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So being an account,

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the pessimistic side of

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me that really ring true.

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But our goal

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tonight is talk a
little bit about

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healthcare and
specifically

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healthcare Finance 101.

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We have about an hour so

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I'll hold pretty
true to that.

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We'll get you out a
little probably early,

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but really, this
is your time.

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If there's questions
you have specifically,

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I will address those
the best I can.

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If there's
something I don't

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know, I'll go find out,

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and I'll make
sure that you all

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know within a few days.

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But hopefully, you'll find

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this very meaningful in

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terms of a better
understanding.

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So that's our goal.

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To do that, we have to have
a baseline of knowledge.

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We have to have a
working platform

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to communicate
effectively.

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Because healthcare,
like any industry,

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we have acronyms, and

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I don't know if
it's purposeful,

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so nobody else can come
in it's like a club.

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Or if it's actually
the fact that we just

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try to simplify our lives
by having acronyms,

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and we throw them out as

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if they're everyday speak.

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So let me talk about a
little bit of things

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just to make sure as

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we're going through this,

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as I mentioned something,

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we're on a common ground.

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So first thing, when we
taught gross charges,

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this is what we
bill the patient.

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Isn't what we get

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paid but any
patient comes in,

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it's going to be
whatever they had done

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times whatever
quantity of whatever

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they did and that's

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going to be what
gets billed down.

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From there, we
have contractuals

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or deductions
from revenue.

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That consists of
things like bad debt.

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We have patients that
don't pay their bills,

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hard to believe.

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We also take care
of the indigent,

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those that can't
pay their bills.

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So we have charity care,

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ways by which they
can have services,

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as part of our mission.

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And so they'll come in,
and if they qualify,

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parts or all of

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their bill can
be written off.

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And then in addition to

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that, we have contracts.

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Now, we have a contract

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with federal government,

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Medicare and
Medicaid Services,

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and they tell us what
they're gonna pay us.

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You don't get to
negotiate that.

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Under that means you get

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told what you're
going to get paid.

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However, other insurance

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companies like
Primera, Blue Cross,

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now Group Health, Molina,

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any of those we negotiate
contracts with.

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We never get 100%.

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Back when I started,

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we had contracts that were

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98% of charges or
90% of charges.

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And today, the
best commercial

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contract we have
is right around

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73.5% of charges so,

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things have changed
significantly.

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That was my sign to
repeat the question.

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So is Medicare, Medicaid

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around 33, 34% charges?

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The write off is around
45% of charges, 50%.

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We'll get into that
a little bit of why,

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what that means and
how that works.

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And specifically,
it means for

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Pullman Regional Hospital.

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So if you take that
gross charge and you

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subtract those write offs,

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be it bad debt, be
it contractual,

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that's really
the net revenue.

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That's what the
hospital has to

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be able to fund
current expenses,

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which would be
salaries, wages,

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benefits, and future.

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Things like capital, etc

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that ends up being part of

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depreciation and the like.

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From there, once
you minus all of

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those daily operational
expenses out,

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that's what we
have in terms of

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our basically
operating income.

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Now, I'll tell you,
in healthcare,

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margins are small.

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In almost especially

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critical access hospitals,

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most of them don't

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have an operating
bottom line.

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The only way they have a

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positive bottom
line and many

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don't is the fact

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through non
operating means.

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In our particular case,

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we have a great community
that supports us.

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We're a public
hospital district,

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and we get tax support,

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which has been tremendous
blessing to us.

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In addition to
that, we have

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some properties
in which we rent.

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We get some rental
income off of.

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That's a non operating.

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That's not what we're in
the business of doing.

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And then other things

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are like foundation
donations,

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which are very beneficial

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to us in order
to be able to

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provide the spectrum and

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the overall care that
we're able to do

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here that many
communities can't do.

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So a lot of it is

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the support we've had

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from the community itself.

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So that ends up being
the net income.

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And in our business, it's

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almost you can't
have a profit.

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We're a nonprofit so you

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can't have profits,
but we have excess.

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We have excess of
revenue over expenses.

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What does that mean?
It's bottom line.

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You call bottom line,
call it net income,

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call it anything you want.

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It's really your profit.

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Now, I'll tell you

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a story just for a second.

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I'll just digress
for a minute.

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And Al probably
appreciate this.

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My wife's a pharmacist,

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and she's probably in

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terms of knowledge
and brightness,

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she outshines me by far.

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But last her senior
year she had to

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take an online course
or one of those

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that just to fill
a GR and I said,

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I'll take accounting
it'll be simple.

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I'll teach you.
I'll help you.

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I thought we were gonna

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get divorce our
first year of

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marriage because she

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couldn't understand well,

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what's this net income
or profit or excess?

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Why can't you just call
it the same thing?

00:08:34.640 --> 00:08:36.845
Oh, it is. It just depends

00:08:36.845 --> 00:08:38.940
what business
line you're in.

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Owner's equity is the same

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as the net worth
is the same as,

00:08:44.805 --> 00:08:46.920
etc, and she just
couldn't get it.

00:08:46.920 --> 00:08:49.800
I finally just said,

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okay, I think somebody
else has to help you.

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But we got through it,

00:08:53.660 --> 00:08:54.320
and we're still married.

00:08:54.320 --> 00:08:55.380
It's been 30 years.

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So somehow we made
it through that.

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But a lot of these terms
are interchangeable,

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and we'll talk about some

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of those so I'll
throw those out.

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Here's your first
opportunity to have a quiz.

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She said, I can't
ask her questions,

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but no, this is for
the whole room.

00:09:10.510 --> 00:09:11.550
Let me ask you a question.

00:09:11.550 --> 00:09:13.450
This is your first test.

00:09:13.450 --> 00:09:15.410
These are reimbursement
theories.

00:09:15.410 --> 00:09:16.530
These are different

00:09:16.530 --> 00:09:18.830
reimbursement methodologies
in healthcare.

00:09:18.830 --> 00:09:22.065
One is diagnosis
related groups, DRGs.

00:09:22.065 --> 00:09:23.570
Folks may have
remembered those

00:09:23.570 --> 00:09:25.130
came back in
the early 80s.

00:09:25.130 --> 00:09:26.880
Medicare came down
with that and said,

00:09:26.880 --> 00:09:28.990
we're going to say
every patient that has

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a x diagnosis of

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this will be in
this grouping,

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then we're gonna pay y.

00:09:34.820 --> 00:09:36.370
So they created this

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in order to control
their costs.

00:09:39.580 --> 00:09:43.130
MSDRGs is another
methodologies.

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Anybody know
what that means?

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What's the
difference between

00:09:47.430 --> 00:09:48.940
a DRG and an MSDRG?

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So there's certain things

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Medicare don't
typically pay for.

00:09:53.585 --> 00:09:56.410
Pregnancies not
very many people in

00:09:56.410 --> 00:09:59.275
the Medicare population
are pregnant, etc.

00:09:59.275 --> 00:10:01.250
So commercial payers have

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additional DRGs listed,

00:10:05.430 --> 00:10:06.570
which are the MS side of

00:10:06.570 --> 00:10:08.495
it, medical surgical side.

00:10:08.495 --> 00:10:12.870
Common procedural
terminology, CPTs.

00:10:12.870 --> 00:10:15.060
Full charges or percent of

00:10:15.060 --> 00:10:17.445
charges. And also costs.

00:10:17.445 --> 00:10:18.450
Let me ask the question.

00:10:18.450 --> 00:10:21.290
Which of these does Pullman
Regional Hospital get paid

00:10:21.290 --> 00:10:27.675
under? Go ahead, Mayor.

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>> All.

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>> Thank you. Good answer.

00:10:30.470 --> 00:10:31.835
Every single one of those.

00:10:31.835 --> 00:10:33.860
Not confusing whatsoever.

00:10:33.860 --> 00:10:35.050
We just got to figure

00:10:35.050 --> 00:10:36.650
out which one and
play the game right.

00:10:36.650 --> 00:10:39.030
And by the way, insurance
companies love to

00:10:39.030 --> 00:10:40.970
change what's acceptable
and non acceptable,

00:10:40.970 --> 00:10:42.300
what's allowable,
non allowable.

00:10:42.300 --> 00:10:43.930
We'll get a
little of that.

00:10:43.930 --> 00:10:44.970
But we get paid

00:10:44.970 --> 00:10:46.110
under every single
one of those.

00:10:46.110 --> 00:10:48.040
So it's really
dependent on the payer.

00:10:48.040 --> 00:10:50.310
If we had 100% Medicare,

00:10:50.310 --> 00:10:53.330
it's so much easier
to budget we don't.

00:10:53.330 --> 00:10:57.310
We have a variety of
various insurers.

00:10:57.310 --> 00:10:59.430
Today, our population
in terms of Medicare,

00:10:59.430 --> 00:11:02.385
Medicaid runs about
45% of our charges.

00:11:02.385 --> 00:11:04.330
Pullman is in a
very good position

00:11:04.330 --> 00:11:06.270
from the terms of the
ability to do what we

00:11:06.270 --> 00:11:07.870
do because we
have a very good

00:11:07.870 --> 00:11:09.730
pair mix due to
the fact that we

00:11:09.730 --> 00:11:12.270
have Washington
State University

00:11:12.270 --> 00:11:14.355
here and SEL here.

00:11:14.355 --> 00:11:15.950
Not very many
communities of

00:11:15.950 --> 00:11:18.850
our size in rural America
have that luxury.

00:11:18.850 --> 00:11:21.265
Most of them typically

00:11:21.265 --> 00:11:23.880
you can think of small
farming communities.

00:11:23.880 --> 00:11:25.390
There's a lot of Medicare,

00:11:25.390 --> 00:11:26.630
Medicaid, especially.

00:11:26.630 --> 00:11:28.310
You think of
Othello, think how

00:11:28.310 --> 00:11:30.690
heavily Medicaid
their population is.

00:11:30.690 --> 00:11:31.830
It's hard to make
anything, and

00:11:31.830 --> 00:11:34.340
we'll go into why
that is in a minute.

00:11:34.730 --> 00:11:37.490
So again, we're
still laying

00:11:37.490 --> 00:11:39.665
some framework about
hospital Finance

00:11:39.665 --> 00:11:41.570
101 because
some of this is

00:11:41.570 --> 00:11:43.270
meaningful in
how you approach

00:11:43.270 --> 00:11:44.790
services you may provide.

00:11:44.790 --> 00:11:46.250
Hospital structures,
these are

00:11:46.250 --> 00:11:47.970
really the three
types of structures,

00:11:47.970 --> 00:11:50.005
public, which would
be federal, state,

00:11:50.005 --> 00:11:53.910
local ran facilities,

00:11:53.910 --> 00:11:58.080
non for profits,
and for profits.

00:11:58.080 --> 00:11:59.810
In our geographical area,

00:11:59.810 --> 00:12:02.300
how many of these do
you think we have?

00:12:02.850 --> 00:12:06.290
Think of the quad
cities here.

00:12:07.890 --> 00:12:10.100
You may not. We have

00:12:10.100 --> 00:12:12.500
two public hospital
districts in this area.

00:12:12.500 --> 00:12:13.500
In fact, there are

00:12:13.500 --> 00:12:15.925
three public hospital
districts in this area.

00:12:15.925 --> 00:12:17.540
Pullman Regional Hospital,

00:12:17.540 --> 00:12:18.860
we're public
hospital district.

00:12:18.860 --> 00:12:20.855
Number 1A of
Whitman County

00:12:20.855 --> 00:12:23.260
doing business as Pullman
Regional Hospital.

00:12:23.260 --> 00:12:24.440
And then you have

00:12:24.440 --> 00:12:26.520
Public Hospital
District Number 3.

00:12:26.520 --> 00:12:28.130
Anybody name who that is?

00:12:28.130 --> 00:12:31.180
Whitman. Can anybody name

00:12:31.180 --> 00:12:33.860
the other public hospital
district Garfield?

00:12:33.860 --> 00:12:36.435
Do the hospital
in Garfield?

00:12:36.435 --> 00:12:41.700
No, they do a
assisted living

00:12:41.700 --> 00:12:44.235
in home health, but
that's their district.

00:12:44.235 --> 00:12:46.100
They used to years
and years ago,

00:12:46.100 --> 00:12:47.200
there was a hospital,

00:12:47.200 --> 00:12:48.955
but they don't
have one now.

00:12:48.955 --> 00:12:50.860
So those are
public hospital.

00:12:50.860 --> 00:12:51.960
What about non
for profits in

00:12:51.960 --> 00:12:53.485
our region? Think of any?

00:12:53.485 --> 00:12:57.070
You got Gritman down

00:12:57.070 --> 00:12:59.440
the valley, you
have Tristate.

00:12:59.440 --> 00:13:01.520
Today, you have
a for profit in

00:13:01.520 --> 00:13:02.800
our backyard you never

00:13:02.800 --> 00:13:04.630
had before this last year.

00:13:04.630 --> 00:13:09.515
St. Joe's. That will
be a new dynamic.

00:13:09.515 --> 00:13:11.400
>> Steve, does Garfield

00:13:11.400 --> 00:13:12.820
include the EMS system?

00:13:12.820 --> 00:13:14.260
>> It very well could.

00:13:14.260 --> 00:13:16.660
So does Garfield's
hospital

00:13:16.660 --> 00:13:18.250
district include the EMS?

00:13:18.250 --> 00:13:20.205
Likely to support that.

00:13:20.205 --> 00:13:22.665
I'm not clear on
that, but likely.

00:13:22.665 --> 00:13:25.140
They do have
some tax bonds.

00:13:25.140 --> 00:13:27.130
So in our population,

00:13:27.130 --> 00:13:29.190
you can see this
is a distribution

00:13:29.190 --> 00:13:31.450
of this across the
United States.

00:13:31.450 --> 00:13:32.950
Many are not for profit,

00:13:32.950 --> 00:13:34.310
as you can imagine,

00:13:34.310 --> 00:13:36.480
supported in one
way or another.

00:13:36.480 --> 00:13:37.970
Not very many for profits.

00:13:37.970 --> 00:13:39.910
In fact, CHS, which is

00:13:39.910 --> 00:13:43.060
Community Health
Systems is one of them.

00:13:44.540 --> 00:13:46.350
Almost all of them run

00:13:46.350 --> 00:13:47.490
out of Tennessee
for some reason.

00:13:47.490 --> 00:13:48.770
I don't know if it's
a tax advantage or

00:13:48.770 --> 00:13:50.490
that's where they all.

00:13:50.490 --> 00:13:52.270
RHSC, which actually runs

00:13:52.270 --> 00:13:55.510
Tristate is another
one of them.

00:13:55.510 --> 00:13:57.600
But many of them
are divesting

00:13:57.600 --> 00:13:59.770
so if they aren't making
money, they get out.

00:13:59.770 --> 00:14:01.590
I'll tell you,
right now, for

00:14:01.590 --> 00:14:02.810
profits typically run

00:14:02.810 --> 00:14:05.030
margins are
working towards

00:14:05.030 --> 00:14:06.630
margins in the
double digits.

00:14:06.630 --> 00:14:08.250
Non for profits
are typically

00:14:08.250 --> 00:14:11.050
around 1-2% across
the United States,

00:14:11.050 --> 00:14:13.225
and we're really no
different than that.

00:14:13.225 --> 00:14:14.730
You'll have a few that are

00:14:14.730 --> 00:14:16.710
higher than that,
but not very many.

00:14:16.710 --> 00:14:18.490
You can see how
many are in

00:14:18.490 --> 00:14:21.150
urban settings versus
rural settings.

00:14:21.150 --> 00:14:25.130
So not a complicated
system at all.

00:14:25.130 --> 00:14:27.060
It's very pretty simple.

00:14:27.060 --> 00:14:29.535
This is one
segment of that.

00:14:29.535 --> 00:14:31.930
Remember, under
payment methodologies

00:14:31.930 --> 00:14:33.080
we just talked about,

00:14:33.080 --> 00:14:34.730
this is one aspect,
and this is

00:14:34.730 --> 00:14:37.140
just the Affordable
Care Act, by the way.

00:14:37.140 --> 00:14:39.635
And by the way,

00:14:39.635 --> 00:14:43.695
you're here. This is you.

00:14:43.695 --> 00:14:46.360
So to get paid,
there's really pretty

00:14:46.360 --> 00:14:47.580
simple you just got

00:14:47.580 --> 00:14:48.810
to work through all
of these means.

00:14:48.810 --> 00:14:50.860
A lot of regulatory issues

00:14:50.860 --> 00:14:52.640
and things so
people wonder why

00:14:52.640 --> 00:14:54.880
healthcare is a
challenge in terms of

00:14:54.880 --> 00:14:57.160
reimbursement and
making profit

00:14:57.160 --> 00:14:58.380
there are so much.

00:14:58.380 --> 00:15:00.900
One of the highest
regulated bodies

00:15:00.900 --> 00:15:02.960
in the United States
is hospitals.

00:15:02.960 --> 00:15:05.140
This is just
to get payment

00:15:05.140 --> 00:15:06.570
under this new
healthcare system.

00:15:06.570 --> 00:15:08.680
So there's no
additional taxes

00:15:08.680 --> 00:15:09.850
wasted within this at all

00:15:09.850 --> 00:15:11.820
it's pretty seamless.

00:15:11.820 --> 00:15:13.520
And this is changing
all the time, so you

00:15:13.520 --> 00:15:15.160
got to learn how
to play for it.

00:15:15.160 --> 00:15:16.780
This down here, which

00:15:16.780 --> 00:15:18.880
is the Medicare
Medicaid Services,

00:15:18.880 --> 00:15:20.440
it's changed
significantly,

00:15:20.440 --> 00:15:21.660
especially under
physicians,

00:15:21.660 --> 00:15:23.480
if you recall
and how they got

00:15:23.480 --> 00:15:26.060
paid just changed
this last year,

00:15:26.060 --> 00:15:30.510
and they are going to
now their increases,

00:15:30.510 --> 00:15:36.630
which was budgeted
and under the SQR,

00:15:36.630 --> 00:15:38.175
which was the growth.

00:15:38.175 --> 00:15:40.210
That's how they
got additions

00:15:40.210 --> 00:15:41.790
every year. Now
they've changed that.

00:15:41.790 --> 00:15:43.390
And it's called MACRA, and

00:15:43.390 --> 00:15:45.470
the way physicians
will see increases,

00:15:45.470 --> 00:15:47.175
there'll be no new money

00:15:47.175 --> 00:15:48.690
there'll be winners
and losers.

00:15:48.690 --> 00:15:49.970
And it's all based on

00:15:49.970 --> 00:15:52.090
quality and what your
reporting scores are.

00:15:52.090 --> 00:15:53.270
And if you do it right,

00:15:53.270 --> 00:15:54.570
then your neighbor
doesn't do it

00:15:54.570 --> 00:15:55.810
right he loses money,

00:15:55.810 --> 00:15:57.130
and you get some
of his money

00:15:57.130 --> 00:15:58.610
because it's
budget neutral.

00:15:58.610 --> 00:16:00.570
And that's the payment
increases that

00:16:00.570 --> 00:16:02.940
physicians will see
moving forward.

00:16:02.940 --> 00:16:04.170
How many physicians like

00:16:04.170 --> 00:16:06.010
to be under that model?

00:16:06.760 --> 00:16:09.350
Not many.

00:16:09.350 --> 00:16:12.680
How many people have
felt our struggle

00:16:12.680 --> 00:16:14.090
even here on a local level

00:16:14.090 --> 00:16:15.710
to find a primary
care physician?

00:16:15.710 --> 00:16:17.900
A few.

00:16:17.900 --> 00:16:20.060
It's been a challenge.

00:16:20.060 --> 00:16:22.460
We have people retiring,

00:16:22.460 --> 00:16:24.365
and it's hard to recruit.

00:16:24.365 --> 00:16:27.500
Pullman's very attractive
from a destination,

00:16:27.500 --> 00:16:28.670
but you can
imagine some of

00:16:28.670 --> 00:16:29.900
these rural
communities where it

00:16:29.900 --> 00:16:33.080
is really a struggle
when we struggle.

00:16:33.080 --> 00:16:35.150
In fact, we were down in

00:16:35.150 --> 00:16:38.180
some of our primary
care practices.

00:16:38.180 --> 00:16:41.030
I say our, because it's
a community when I

00:16:41.030 --> 00:16:42.770
think half the
providers they

00:16:42.770 --> 00:16:45.395
used to have
four years ago,

00:16:45.395 --> 00:16:48.350
and they're trying
to recruit in.

00:16:48.350 --> 00:16:49.820
It's challenging
on the market

00:16:49.820 --> 00:16:51.890
because why would
you want to do that,

00:16:51.890 --> 00:16:54.365
especially under the
old payment models?

00:16:54.365 --> 00:16:55.880
We're going to talk a
little bit about that.

00:16:55.880 --> 00:16:57.320
The revenue cycle.

00:16:57.320 --> 00:16:58.580
So as you think

00:16:58.580 --> 00:17:01.595
about Healthcare
Finance 101,

00:17:01.595 --> 00:17:03.470
how we make our money is

00:17:03.470 --> 00:17:05.690
through seeing
volume today.

00:17:05.690 --> 00:17:07.490
There will be a
point in time,

00:17:07.490 --> 00:17:09.065
I think, years from now,

00:17:09.065 --> 00:17:10.760
in which the less you see,

00:17:10.760 --> 00:17:12.650
the more you make because

00:17:12.650 --> 00:17:14.210
it'll be value-based.

00:17:14.210 --> 00:17:15.800
You want to keep
people healthy,

00:17:15.800 --> 00:17:16.820
which should be
really our mission.

00:17:16.820 --> 00:17:17.780
Today, we keep people

00:17:17.780 --> 00:17:18.800
healthy that's
not good for

00:17:18.800 --> 00:17:19.820
our bottom line,

00:17:19.820 --> 00:17:21.050
but it's the right
thing to do.

00:17:21.050 --> 00:17:22.655
And we're doing
those things today.

00:17:22.655 --> 00:17:24.380
We have a whole care
coordination team

00:17:24.380 --> 00:17:25.565
over here with

00:17:25.565 --> 00:17:28.610
social workers and we

00:17:28.610 --> 00:17:29.780
don't get paid a
dime for that,

00:17:29.780 --> 00:17:30.710
but it's the
right thing to

00:17:30.710 --> 00:17:32.255
do for our community.

00:17:32.255 --> 00:17:33.890
If I was strictly a

00:17:33.890 --> 00:17:35.510
for-profit, you know what?

00:17:35.510 --> 00:17:38.510
They wouldn't have
that. Your Red Sage

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

00:17:40.220 --> 00:17:42.065
It wouldn't be
open 7:00-7:00,

00:17:42.065 --> 00:17:44.180
because I would be
cutting every cost

00:17:44.180 --> 00:17:45.680
I could out of
this organization

00:17:45.680 --> 00:17:47.000
and putting every dollar I

00:17:47.000 --> 00:17:49.280
could to my stockholders.

00:17:49.280 --> 00:17:51.005
There would be things
I wouldn't run.

00:17:51.005 --> 00:17:54.020
I would not run
7.2 physicians

00:17:54.020 --> 00:17:57.050
in my emergency
department, not 24/7.

00:17:57.050 --> 00:17:58.280
I don't have that
many physicians,

00:17:58.280 --> 00:17:59.510
but around the clock.

00:17:59.510 --> 00:18:01.820
I'd run a bare
bones 4.5 FTEs,

00:18:01.820 --> 00:18:03.380
run them till the bone
and fire and hire

00:18:03.380 --> 00:18:05.660
another one coming
in two years,

00:18:05.660 --> 00:18:07.235
burn them out,
get another,

00:18:07.235 --> 00:18:08.540
because I could save

00:18:08.540 --> 00:18:10.220
hundreds of thousands
of dollars.

00:18:10.220 --> 00:18:12.815
But the quality of care
wouldn't be there,

00:18:12.815 --> 00:18:14.495
and you'd just burn
through people.

00:18:14.495 --> 00:18:15.800
It's not that
their quality is

00:18:15.800 --> 00:18:18.320
bad because they still
score very well.

00:18:18.320 --> 00:18:19.520
It's the fact that

00:18:19.520 --> 00:18:21.335
the experience is
much different.

00:18:21.335 --> 00:18:23.150
I speak from a
personal level

00:18:23.150 --> 00:18:23.810
on many of these.

00:18:23.810 --> 00:18:27.335
My wife works for
CHS as a pharmacist.

00:18:27.335 --> 00:18:30.960
And I will tell you, it
has been a struggle.

00:18:31.450 --> 00:18:33.980
They opened a brand
new facility in

00:18:33.980 --> 00:18:37.970
2004, December.
Sound familiar?

00:18:37.970 --> 00:18:40.380
We opened ours
in December.

00:18:40.380 --> 00:18:44.170
They have been burned
through 15 pharmacists.

00:18:44.170 --> 00:18:46.990
They have three
at any one time,

00:18:46.990 --> 00:18:48.895
and they've burned
through 15 pharmacists

00:18:48.895 --> 00:18:51.175
since she started
to today.

00:18:51.175 --> 00:18:53.710
We've had one retire.

00:18:53.710 --> 00:18:55.720
Tells you a little
difference of

00:18:55.720 --> 00:18:57.790
the culture because it's

00:18:57.790 --> 00:18:58.660
not about the people,

00:18:58.660 --> 00:19:00.055
it's about the
bottom line.

00:19:00.055 --> 00:19:02.140
So when you think
about revenue cycle,

00:19:02.140 --> 00:19:05.035
you think zero to zero.

00:19:05.035 --> 00:19:06.400
You'll all be experts.

00:19:06.400 --> 00:19:07.500
You can start consulting

00:19:07.500 --> 00:19:09.125
businesses after tonight,

00:19:09.125 --> 00:19:11.750
because not very many people
really understand this.

00:19:11.750 --> 00:19:13.940
Zero to zero. How
much do you owe when

00:19:13.940 --> 00:19:14.750
you come in and do

00:19:14.750 --> 00:19:16.925
registration or you
come in for a lab?

00:19:16.925 --> 00:19:18.380
Before you have that down,

00:19:18.380 --> 00:19:19.460
how much do you
owe the hospital?

00:19:19.460 --> 00:19:20.000
Nothing.

00:19:20.000 --> 00:19:22.250
You come in, you have
that service when

00:19:22.250 --> 00:19:23.840
you have that surgery,

00:19:23.840 --> 00:19:25.790
whatever, you go
through a process.

00:19:25.790 --> 00:19:27.335
You hit registration.

00:19:27.335 --> 00:19:29.240
Within that
registration process,

00:19:29.240 --> 00:19:29.990
there's things
that should have

00:19:29.990 --> 00:19:31.070
happened either before or

00:19:31.070 --> 00:19:33.845
happened during
with authorization.

00:19:33.845 --> 00:19:35.900
Does your insurance
authorize you to do this?

00:19:35.900 --> 00:19:37.220
Did you have to
have a referral?

00:19:37.220 --> 00:19:37.880
If you didn't have to have

00:19:37.880 --> 00:19:38.630
a referral, I'm sorry,

00:19:38.630 --> 00:19:39.290
you'll have to go back to

00:19:39.290 --> 00:19:41.000
your primary care,
get the referral.

00:19:41.000 --> 00:19:42.020
Then when you can
come back, we'll have

00:19:42.020 --> 00:19:43.355
the procedure after that.

00:19:43.355 --> 00:19:44.930
If not, and they didn't

00:19:44.930 --> 00:19:46.610
require a referral or
we had the referral,

00:19:46.610 --> 00:19:48.200
then we have to have
authorization because

00:19:48.200 --> 00:19:49.190
if we don't have
authorization,

00:19:49.190 --> 00:19:50.210
they won't pay us.

00:19:50.210 --> 00:19:51.995
And if we miss that
step, it goes what?

00:19:51.995 --> 00:19:54.500
We're out, or we fight
insurance companies.

00:19:54.500 --> 00:19:56.705
We write a few letters.

00:19:56.705 --> 00:19:57.980
I'll tell you this year is

00:19:57.980 --> 00:19:59.000
much better than before.

00:19:59.000 --> 00:20:01.220
We've had 64
denied claims.

00:20:01.220 --> 00:20:01.940
Last year, at this time we

00:20:01.940 --> 00:20:03.620
had 250 denied claims.

00:20:03.620 --> 00:20:06.440
Jumping through insurance
companies' hoops

00:20:06.440 --> 00:20:08.990
on trying to get paid.
That's this process.

00:20:08.990 --> 00:20:10.700
Registration, insurance
verification,

00:20:10.700 --> 00:20:12.095
point of service
collection.

00:20:12.095 --> 00:20:13.460
We don't do a
ton of that here

00:20:13.460 --> 00:20:14.900
because our people
are very good

00:20:14.900 --> 00:20:16.310
here in Pullman about

00:20:16.310 --> 00:20:17.795
paying for their services.

00:20:17.795 --> 00:20:18.620
Some places,

00:20:18.620 --> 00:20:19.820
they'll require
you to almost pay

00:20:19.820 --> 00:20:20.870
your deductible upfront

00:20:20.870 --> 00:20:22.490
before they'll
ever treat you.

00:20:22.490 --> 00:20:24.440
Financial clearance
all the way

00:20:24.440 --> 00:20:26.810
through till the
very back end of it.

00:20:26.810 --> 00:20:29.045
After we do all of
the billing process,

00:20:29.045 --> 00:20:30.430
insurance pays, we go out,

00:20:30.430 --> 00:20:31.600
we collect the deductible,

00:20:31.600 --> 00:20:34.000
we write off the
contractual write-off,

00:20:34.000 --> 00:20:36.745
that account goes to
zero, zero to zero.

00:20:36.745 --> 00:20:38.995
That's the revenue cycle.

00:20:38.995 --> 00:20:42.850
All of those things
have to flow

00:20:42.850 --> 00:20:45.610
very fluidly in
order to get there.

00:20:45.610 --> 00:20:47.725
Sometimes they
work seamlessly.

00:20:47.725 --> 00:20:50.665
We can get paid 14
days and be done.

00:20:50.665 --> 00:20:53.140
On average, Pullman
Regional Hospital takes

00:20:53.140 --> 00:20:56.450
34 days to collect
zero to zero.

00:20:56.950 --> 00:20:59.930
How's that compare
across the nation?

00:20:59.930 --> 00:21:01.880
Across the nation, it's
gotten much better.

00:21:01.880 --> 00:21:03.020
It used to be
around 50 days.

00:21:03.020 --> 00:21:05.795
Now it's about 48 days
across the nation.

00:21:05.795 --> 00:21:07.040
We do very well here,

00:21:07.040 --> 00:21:08.465
and we've got good payers.

00:21:08.465 --> 00:21:10.430
And some of them,
you can get

00:21:10.430 --> 00:21:11.645
this whole process done

00:21:11.645 --> 00:21:13.205
within a couple of weeks.

00:21:13.205 --> 00:21:15.635
Sometimes it's
not that easy.

00:21:15.635 --> 00:21:16.910
We still have accounts

00:21:16.910 --> 00:21:17.900
that we're working
on that are

00:21:17.900 --> 00:21:20.645
almost a year
old. Got denied.

00:21:20.645 --> 00:21:22.040
We appealed the denial

00:21:22.040 --> 00:21:23.150
because they didn't
tell us they

00:21:23.150 --> 00:21:24.350
changed the rule
on what had

00:21:24.350 --> 00:21:25.865
to be authorized
beforehand.

00:21:25.865 --> 00:21:27.050
We had the physician write

00:21:27.050 --> 00:21:29.000
that this is appropriate.

00:21:29.000 --> 00:21:30.545
They are in review.

00:21:30.545 --> 00:21:31.880
They deny it. We go
back through it,

00:21:31.880 --> 00:21:32.660
and we fight it.

00:21:32.660 --> 00:21:34.610
We finally get it
paid, or a patient

00:21:34.610 --> 00:21:36.995
comes in and they
say I have Primera.

00:21:36.995 --> 00:21:38.675
Give you the card.

00:21:38.675 --> 00:21:40.010
Come to find out, shoot,

00:21:40.010 --> 00:21:41.615
no, I don't. We changed.

00:21:41.615 --> 00:21:43.070
But you don't get
that until you get

00:21:43.070 --> 00:21:44.390
the denial from the
insurance company.

00:21:44.390 --> 00:21:45.950
You go back through
and they go,

00:21:45.950 --> 00:21:46.565
no, I haven't.

00:21:46.565 --> 00:21:47.150
Then they give you

00:21:47.150 --> 00:21:48.140
a different card
and you go through

00:21:48.140 --> 00:21:51.300
that process and
it takes time.

00:21:51.610 --> 00:21:54.110
So this is just
how this segment

00:21:54.110 --> 00:21:55.745
would work zero to zero.

00:21:55.745 --> 00:21:57.050
You schedule, you come in,

00:21:57.050 --> 00:21:59.390
you check eligibility,
you treat, you code.

00:21:59.390 --> 00:22:00.530
The coding aspect,

00:22:00.530 --> 00:22:01.670
that's your
medical records.

00:22:01.670 --> 00:22:02.870
Once it gets coded,

00:22:02.870 --> 00:22:04.265
and by the way,
do this right.

00:22:04.265 --> 00:22:07.415
So one thing, let's say
you had a total hip.

00:22:07.415 --> 00:22:09.230
If the physician didn't
write that he put

00:22:09.230 --> 00:22:11.510
the device in
and didn't chart

00:22:11.510 --> 00:22:13.790
that he put the device in

00:22:13.790 --> 00:22:16.175
but you are
walking around,

00:22:16.175 --> 00:22:17.855
evident that you really
had a total hip,

00:22:17.855 --> 00:22:18.590
we don't get paid

00:22:18.590 --> 00:22:20.165
because it wasn't
documented.

00:22:20.165 --> 00:22:21.710
So if you didn't document,

00:22:21.710 --> 00:22:24.500
it doesn't matter if
you did it or not.

00:22:24.500 --> 00:22:26.330
You didn't do it. So you

00:22:26.330 --> 00:22:27.710
got to document for
everything you do.

00:22:27.710 --> 00:22:30.515
So a lot of this is
making sure we educate,

00:22:30.515 --> 00:22:32.060
train, and then you

00:22:32.060 --> 00:22:33.440
go through the whole
collection process,

00:22:33.440 --> 00:22:34.760
which is active
collections,

00:22:34.760 --> 00:22:37.940
insurance billing,
post collection,

00:22:37.940 --> 00:22:39.545
which if somebody
didn't pay,

00:22:39.545 --> 00:22:40.820
how do you collect that,

00:22:40.820 --> 00:22:41.900
all the way to legal

00:22:41.900 --> 00:22:43.850
where you might do liens.

00:22:43.850 --> 00:22:46.850
Many times, hopefully,
it goes very clearly,

00:22:46.850 --> 00:22:49.220
but sometimes it
doesn't work as well.

00:22:49.220 --> 00:22:51.350
So this is just
another aspect of

00:22:51.350 --> 00:22:53.780
that. This is one bill.

00:22:53.780 --> 00:22:55.580
Fifty percent of
everything we

00:22:55.580 --> 00:22:57.635
do is going to be done
on the front end.

00:22:57.635 --> 00:22:59.300
And most hospitals in

00:22:59.300 --> 00:23:00.320
the past haven't treated

00:23:00.320 --> 00:23:04.340
the registration staff
as a key player.

00:23:04.340 --> 00:23:06.770
Fifty percent of getting

00:23:06.770 --> 00:23:08.465
this right happens there.

00:23:08.465 --> 00:23:09.920
If you don't train
those people

00:23:09.920 --> 00:23:12.290
and you don't
keep good people,

00:23:12.290 --> 00:23:15.275
you got a 50:50 chance
of ever getting paid.

00:23:15.275 --> 00:23:20.330
We do a very good job
much better, 2015,

00:23:20.330 --> 00:23:21.500
we wrote off almost two

00:23:21.500 --> 00:23:23.165
point some million dollars

00:23:23.165 --> 00:23:24.800
in process errors and

00:23:24.800 --> 00:23:27.320
things because the
front end was bad.

00:23:27.320 --> 00:23:29.435
Now, much of
that we denied.

00:23:29.435 --> 00:23:31.205
We got denials and stuff.

00:23:31.205 --> 00:23:33.725
We had to fight to get
every penny of it,

00:23:33.725 --> 00:23:35.120
and we do very
well at that.

00:23:35.120 --> 00:23:36.590
But if we fix it
on the front end,

00:23:36.590 --> 00:23:38.270
we don't have to fight
it on the back end.

00:23:38.270 --> 00:23:40.370
And so we did a
tremendous amount

00:23:40.370 --> 00:23:41.915
of effort to clean this
up on the front end.

00:23:41.915 --> 00:23:44.465
And today, it's
basically gone.

00:23:44.465 --> 00:23:46.475
Fifteen percent is in

00:23:46.475 --> 00:23:47.960
the actual
medical records,

00:23:47.960 --> 00:23:49.550
so the coding
aspect of this.

00:23:49.550 --> 00:23:51.125
This is when it
goes through

00:23:51.125 --> 00:23:53.645
our coders, inpatient
outpatient.

00:23:53.645 --> 00:23:55.160
They read the documents.

00:23:55.160 --> 00:23:56.450
What was documented?

00:23:56.450 --> 00:23:58.895
What should that CPT be?

00:23:58.895 --> 00:24:00.680
Make sure they code
all of that out

00:24:00.680 --> 00:24:03.305
that DRG, that's
their job.

00:24:03.305 --> 00:24:04.820
If they do very
well at that,

00:24:04.820 --> 00:24:05.930
we get paid well.

00:24:05.930 --> 00:24:07.880
And then 15% is on

00:24:07.880 --> 00:24:10.355
the charge entry
now charges.

00:24:10.355 --> 00:24:12.410
So this happens here.

00:24:12.410 --> 00:24:13.610
I've talked to nurses.

00:24:13.610 --> 00:24:15.425
I've talked to staff
many times saying,

00:24:15.425 --> 00:24:17.270
don't make the decision on

00:24:17.270 --> 00:24:19.355
what should be charged
to the patient or not.

00:24:19.355 --> 00:24:22.670
Document
effectively so that

00:24:22.670 --> 00:24:24.335
we can bill appropriately.

00:24:24.335 --> 00:24:25.730
Because if you document

00:24:25.730 --> 00:24:27.080
what we did, then
we can bill.

00:24:27.080 --> 00:24:28.460
If somebody can't
pay, I have

00:24:28.460 --> 00:24:29.975
all ways to be
able to help them,

00:24:29.975 --> 00:24:34.010
charity care
payment terms.

00:24:34.010 --> 00:24:37.100
Let's pay it over
12 months, etc.

00:24:37.100 --> 00:24:37.880
Those types of things I

00:24:37.880 --> 00:24:38.975
can help patients with.

00:24:38.975 --> 00:24:40.310
But if the nurse upfront

00:24:40.310 --> 00:24:42.275
decides the poor
college student,

00:24:42.275 --> 00:24:44.270
they're probably only
eating Top Ramen.

00:24:44.270 --> 00:24:45.650
Let's not bill them.

00:24:45.650 --> 00:24:46.550
I won't charge
them for that.

00:24:46.550 --> 00:24:47.930
They don't look like
they should be.

00:24:47.930 --> 00:24:50.540
Then I have to
raise charges

00:24:50.540 --> 00:24:51.950
somewhere else to cover

00:24:51.950 --> 00:24:53.195
that. That's a
loss leader.

00:24:53.195 --> 00:24:54.785
So we aren't pricing

00:24:54.785 --> 00:24:57.215
effectively for
everybody else.

00:24:57.215 --> 00:24:59.480
We have means by
which to handle that.

00:24:59.480 --> 00:25:00.920
So let's just bill
appropriately.

00:25:00.920 --> 00:25:03.290
So that's part of that
charge entry side.

00:25:03.290 --> 00:25:04.490
That's what they do.

00:25:04.490 --> 00:25:06.125
And then the
billing aspect,

00:25:06.125 --> 00:25:07.340
which is your financial

00:25:07.340 --> 00:25:08.900
services component to it.

00:25:08.900 --> 00:25:09.770
So a little bit

00:25:09.770 --> 00:25:10.970
about Pullman
Regional Hospital.

00:25:10.970 --> 00:25:11.960
We'll get a little
more specific.

00:25:11.960 --> 00:25:13.880
Those are some high-level
aspects of it.

00:25:13.880 --> 00:25:14.690
We're going to
drill down a

00:25:14.690 --> 00:25:15.950
little more about
who we are,

00:25:15.950 --> 00:25:18.110
what we do and
how it works.

00:25:18.110 --> 00:25:20.030
So today, most people

00:25:20.030 --> 00:25:21.815
know Pullman
Regional Hospital.

00:25:21.815 --> 00:25:23.570
But I don't know
if very many

00:25:23.570 --> 00:25:24.590
people know or
how many people

00:25:24.590 --> 00:25:25.730
know we have

00:25:25.730 --> 00:25:27.425
Pulman Regional Hospital
Clinic Network.

00:25:27.425 --> 00:25:31.640
We own today three clinic
practices directly,

00:25:31.640 --> 00:25:32.990
which are wholly
owned means

00:25:32.990 --> 00:25:34.850
Pullman Regional
Hospital is 100% owner.

00:25:34.850 --> 00:25:35.870
They're as an LLC,

00:25:35.870 --> 00:25:37.820
but really they're 100%

00:25:37.820 --> 00:25:38.840
owned by the hospital.

00:25:38.840 --> 00:25:43.535
That includes
Palouse Pediatrics,

00:25:43.535 --> 00:25:47.135
Palouse Psychology &
Behavioral Health, and today,

00:25:47.135 --> 00:25:49.040
Pullman Family
Medicine, who just

00:25:49.040 --> 00:25:52.070
joined that clinic
network as of April 1st.

00:25:52.070 --> 00:25:54.200
So we go back and we
talk just a little

00:25:54.200 --> 00:25:55.430
bit as to why

00:25:55.430 --> 00:25:57.140
we might get into
some of these.

00:25:57.140 --> 00:25:59.825
In addition to this,
we have joint ventures

00:25:59.825 --> 00:26:03.005
with really three
groups today.

00:26:03.005 --> 00:26:05.015
One is Palouse Surgeons.

00:26:05.015 --> 00:26:08.195
The other is under
Palouse Specialties,

00:26:08.195 --> 00:26:11.540
which is Palouse ENT
and Palouse Urology.

00:26:11.540 --> 00:26:14.030
Those are owned
40% by Pullman,

00:26:14.030 --> 00:26:15.485
40% by Gritman,

00:26:15.485 --> 00:26:17.225
and 20% by Whitman.

00:26:17.225 --> 00:26:18.800
Three hospitals
came together.

00:26:18.800 --> 00:26:20.780
Why would we do that?
That's craziness.

00:26:20.780 --> 00:26:23.375
Let them Let them
sink or swim.

00:26:23.375 --> 00:26:27.800
You're on your
own. Dr. Cagiano,

00:26:27.800 --> 00:26:29.300
would we have an emergency
department if we

00:26:29.300 --> 00:26:31.925
had no general
surgeons there?

00:26:31.925 --> 00:26:34.700
>> It wouldn't be a full
emergency services.

00:26:34.700 --> 00:26:35.555
>> You couldn't even

00:26:35.555 --> 00:26:36.770
offer an emergency
department

00:26:36.770 --> 00:26:38.075
without having a
general surgeon.

00:26:38.075 --> 00:26:39.980
You could offer
an urgent care.

00:26:39.980 --> 00:26:41.690
But by rule and
regulations,

00:26:41.690 --> 00:26:43.790
you couldn't offer an
emergency department.

00:26:43.790 --> 00:26:46.100
You wouldn't be a
hospital without him.

00:26:46.100 --> 00:26:48.185
Well, we had that
situation facing us.

00:26:48.185 --> 00:26:49.820
We had one general
surgeon on

00:26:49.820 --> 00:26:52.040
the Palouse
running 365 days,

00:26:52.040 --> 00:26:54.650
we're doing three
hospitals who said enough.

00:26:54.650 --> 00:26:56.240
If the hospitals
didn't jump in,

00:26:56.240 --> 00:26:57.590
we wouldn't have
had anybody.

00:26:57.590 --> 00:27:00.140
And we said, what
do you need?

00:27:00.140 --> 00:27:05.405
I will only take call
one week every four.

00:27:05.405 --> 00:27:08.930
We got to have three
other general surgeons.

00:27:08.930 --> 00:27:10.340
That's the standard, so

00:27:10.340 --> 00:27:11.465
the three hospitals
come together.

00:27:11.465 --> 00:27:14.705
We have four general
surgeons today.

00:27:14.705 --> 00:27:16.850
Do they make enough
money within

00:27:16.850 --> 00:27:18.485
their practice to
pay for themselves?

00:27:18.485 --> 00:27:21.515
No. Because, really,

00:27:21.515 --> 00:27:24.290
for this community,
you probably need 3.5,

00:27:24.290 --> 00:27:26.480
but it's hard to
get a half a doc.

00:27:26.480 --> 00:27:28.760
They usually come
in wholes for

00:27:28.760 --> 00:27:31.040
some reason. I don't
want a half a case.

00:27:31.040 --> 00:27:32.915
But no, they
come in wholes.

00:27:32.915 --> 00:27:36.440
And so there's a subsidy.
There's a support.

00:27:36.440 --> 00:27:37.760
But the services
they brought into

00:27:37.760 --> 00:27:39.275
the hospital offset that.

00:27:39.275 --> 00:27:41.900
That's not always true
within primary care.

00:27:41.900 --> 00:27:43.490
But without primary care,

00:27:43.490 --> 00:27:45.755
we wouldn't have
a hospital again

00:27:45.755 --> 00:27:46.970
because they had so many

00:27:46.970 --> 00:27:48.620
additional tests
that they order.

00:27:48.620 --> 00:27:49.940
But under that model,

00:27:49.940 --> 00:27:51.200
if we go back and look and

00:27:51.200 --> 00:27:52.430
how many people
want to be under

00:27:52.430 --> 00:27:54.080
that payment models that

00:27:54.080 --> 00:27:55.490
they were physicians
especially?

00:27:55.490 --> 00:27:58.040
Physicians coming out
of training today,

00:27:58.040 --> 00:27:59.840
they want to take
care of patients.

00:27:59.840 --> 00:28:01.235
They don't want to run
their own business.

00:28:01.235 --> 00:28:03.380
They want out of the
insurance world.

00:28:03.380 --> 00:28:05.060
Who would want to
do that anyway?

00:28:05.060 --> 00:28:07.880
It's a pain. They
want to come in.

00:28:07.880 --> 00:28:09.320
And by the way,
if they come into

00:28:09.320 --> 00:28:11.135
Pullman and
under our model,

00:28:11.135 --> 00:28:14.750
no, you have to
be a partner.

00:28:14.750 --> 00:28:15.980
And by the way,

00:28:15.980 --> 00:28:17.720
your pay is
going to go down

00:28:17.720 --> 00:28:19.970
25% next year compared
to this year.

00:28:19.970 --> 00:28:21.155
Now, where do I sign up?

00:28:21.155 --> 00:28:22.640
That sounds really
good to me.

00:28:22.640 --> 00:28:24.305
I have no security

00:28:24.305 --> 00:28:25.370
for me and my family.

00:28:25.370 --> 00:28:26.675
It's not going to happen.

00:28:26.675 --> 00:28:28.490
When you can go to
Spokane and have

00:28:28.490 --> 00:28:30.050
an income guarantee

00:28:30.050 --> 00:28:32.330
that's out of the gate 30,

00:28:32.330 --> 00:28:34.250
40% higher and you know

00:28:34.250 --> 00:28:35.180
you're going to get
paid that every

00:28:35.180 --> 00:28:36.950
year plus
probably a raise.

00:28:36.950 --> 00:28:39.500
You wouldn't come.
That's part of

00:28:39.500 --> 00:28:41.030
the challenges

00:28:41.030 --> 00:28:42.500
Pullman's facing
with recruitment.

00:28:42.500 --> 00:28:44.390
So today, that's why

00:28:44.390 --> 00:28:45.770
physicians coming
out of school,

00:28:45.770 --> 00:28:47.150
they want an
employment model.

00:28:47.150 --> 00:28:48.470
And we have met that.

00:28:48.470 --> 00:28:50.780
We have adjusted our
practices to meet

00:28:50.780 --> 00:28:53.510
those things
because access

00:28:53.510 --> 00:28:56.100
to care is really
important on the Palouse.

00:28:56.260 --> 00:29:01.805
So we have here about
almost 450 employees,

00:29:01.805 --> 00:29:04.460
of which 274
are full-time,

00:29:04.460 --> 00:29:07.880
174 are part-time.

00:29:07.880 --> 00:29:10.940
We have a great
volunteer in

00:29:10.940 --> 00:29:12.710
auxiliary team that helps

00:29:12.710 --> 00:29:14.645
support our services
at Pullman.

00:29:14.645 --> 00:29:15.905
Some are here
tonight, and I

00:29:15.905 --> 00:29:17.330
really appreciate that.

00:29:17.330 --> 00:29:20.285
And then we have a very
active medical staff.

00:29:20.285 --> 00:29:22.250
And the nice thing
is, we've been fairly

00:29:22.250 --> 00:29:24.260
successful on recruiting,
which is good.

00:29:24.260 --> 00:29:25.490
It continues to
be the case.

00:29:25.490 --> 00:29:27.170
So I'm happy to say

00:29:27.170 --> 00:29:29.420
that folks haven't
heard we have

00:29:29.420 --> 00:29:30.530
successfully recruited our

00:29:30.530 --> 00:29:32.120
fourth orthopedic
surgeon to

00:29:32.120 --> 00:29:33.890
the Palouse who will

00:29:33.890 --> 00:29:35.870
be joining the Inland
Orthopedic Group.

00:29:35.870 --> 00:29:38.420
That's awesome.
Those guys will

00:29:38.420 --> 00:29:39.920
be thrilled because that

00:29:39.920 --> 00:29:40.760
will make their quality

00:29:40.760 --> 00:29:42.110
of life that much better.

00:29:42.110 --> 00:29:44.180
On an annual basis,
if you go back to

00:29:44.180 --> 00:29:47.090
our knowledge base,
we gross build.

00:29:47.090 --> 00:29:48.440
This is when we collected.

00:29:48.440 --> 00:29:49.760
I'd love it if we did.

00:29:49.760 --> 00:29:51.530
Life would be so
much easier for me.

00:29:51.530 --> 00:29:55.250
But we build out 116,
almost $117 million.

00:29:55.250 --> 00:29:56.540
Pullman Regional Hospital

00:29:56.540 --> 00:29:57.545
isn't a small business.

00:29:57.545 --> 00:29:59.720
We have a pretty
substantial footprint.

00:29:59.720 --> 00:30:01.880
Of that, do you know
how much we have at

00:30:01.880 --> 00:30:04.115
the end of the day
last year to work with

00:30:04.115 --> 00:30:06.140
to pay future bills

00:30:06.140 --> 00:30:08.960
like new equipment
technology?

00:30:08.960 --> 00:30:11.645
A million dollars.

00:30:11.645 --> 00:30:15.720
Not a very high
margin in healthcare.

00:30:15.850 --> 00:30:18.665
Not a lot to work with.

00:30:18.665 --> 00:30:20.510
And that is after we had

00:30:20.510 --> 00:30:23.310
donations from the
foundations, etc.

00:30:23.350 --> 00:30:26.840
We've got to then
reinvest in the future,

00:30:26.840 --> 00:30:28.520
and that's the
way to do it is

00:30:28.520 --> 00:30:30.500
by having some type
of bottom line.

00:30:30.500 --> 00:30:33.980
>> Steve, with
the robotics,

00:30:33.980 --> 00:30:36.275
I can't remember
how much that cost,

00:30:36.275 --> 00:30:38.150
but we wouldn't have

00:30:38.150 --> 00:30:40.130
been able to all do that.

00:30:40.130 --> 00:30:40.820
We'll stick with that.

00:30:40.820 --> 00:30:44.135
[NOISE] That's
your profit.

00:30:44.135 --> 00:30:46.350
Now there's you
million dollars.

00:30:46.540 --> 00:30:51.230
>> So the question was
and the comment was,

00:30:51.230 --> 00:30:52.880
in terms of robotics,

00:30:52.880 --> 00:30:55.115
and many may or may
not know we have

00:30:55.115 --> 00:31:00.275
a da Vinci surgically
assisted device

00:31:00.275 --> 00:31:03.350
in our OR used primarily

00:31:03.350 --> 00:31:07.085
for single site incisions,

00:31:07.085 --> 00:31:10.640
laparoscopic procedures
when the recovery

00:31:10.640 --> 00:31:12.560
is so much better
because you don't

00:31:12.560 --> 00:31:14.210
have the open incision

00:31:14.210 --> 00:31:15.260
and you don't have all of

00:31:15.260 --> 00:31:19.565
the after recovery time.

00:31:19.565 --> 00:31:22.130
It's pretty seamless.

00:31:22.130 --> 00:31:23.300
That's probably
a wrong word

00:31:23.300 --> 00:31:23.990
for an accountant really,

00:31:23.990 --> 00:31:25.070
but it seemed to fit.

00:31:25.070 --> 00:31:26.990
[LAUGHTER] So
it is seamless.

00:31:26.990 --> 00:31:28.970
It's pretty much a
stitch, and they're done.

00:31:28.970 --> 00:31:30.050
But it's amazing what

00:31:30.050 --> 00:31:31.190
they can do within that.

00:31:31.190 --> 00:31:33.500
That machine alone
was over $1 million.

00:31:33.500 --> 00:31:34.760
And we had a lot of

00:31:34.760 --> 00:31:35.960
people in the
community saying,

00:31:35.960 --> 00:31:37.835
man, why would you
buy such a thing?

00:31:37.835 --> 00:31:39.800
We were successful,

00:31:39.800 --> 00:31:41.135
and our main
reason to do it

00:31:41.135 --> 00:31:42.500
wasn't because we'd
have an edge in

00:31:42.500 --> 00:31:43.940
a market and drive a lot

00:31:43.940 --> 00:31:45.725
of business. It
was recruitment.

00:31:45.725 --> 00:31:47.090
Folks coming out of

00:31:47.090 --> 00:31:49.250
urology school today are

00:31:49.250 --> 00:31:50.960
trained on a da Vinci.

00:31:50.960 --> 00:31:52.040
Are they going to come to

00:31:52.040 --> 00:31:53.345
a market that has none,

00:31:53.345 --> 00:31:54.800
and that's the only
thing they've known?

00:31:54.800 --> 00:31:57.410
No. So we were
successful in that,

00:31:57.410 --> 00:32:01.220
and Dr. Keizur has a
partner now, Dr. Smith.

00:32:01.220 --> 00:32:03.680
And that was a
great value.

00:32:03.680 --> 00:32:05.630
Dr. Smith, by the way,

00:32:05.630 --> 00:32:06.920
the two of them combined

00:32:06.920 --> 00:32:10.490
today are doing
twice the volume.

00:32:10.490 --> 00:32:13.415
The volume was there.
We didn't get it all.

00:32:13.415 --> 00:32:18.160
So now Moscow also
valued from that,

00:32:18.160 --> 00:32:20.805
but the whole community
value from that.

00:32:20.805 --> 00:32:23.040
And so it was
really important as

00:32:23.040 --> 00:32:26.350
a part of our services
that we offer.

00:32:26.350 --> 00:32:29.670
We're going to switch

00:32:29.670 --> 00:32:30.710
gears a little bit here,

00:32:30.710 --> 00:32:31.910
and that's a lot of this.

00:32:31.910 --> 00:32:33.810
If you want more, come

00:32:33.810 --> 00:32:35.505
to board meetings,
Stephan.

00:32:35.505 --> 00:32:38.220
It's an
ever-evolving thing,

00:32:38.220 --> 00:32:39.360
and it'll be
different next year.

00:32:39.360 --> 00:32:40.990
This presentation would
be different than it

00:32:40.990 --> 00:32:43.110
is this year because
it's changing every day.

00:32:43.110 --> 00:32:45.810
But how does Pullman
Regional Hospital

00:32:45.810 --> 00:32:47.110
develop its prices?

00:32:47.110 --> 00:32:49.095
Because that's an
important question.

00:32:49.095 --> 00:32:52.530
Do we price higher
than our competitors?

00:32:52.530 --> 00:32:54.070
Do we price
differently than

00:32:54.070 --> 00:32:56.420
our competitors?
How do we do it?

00:32:56.420 --> 00:32:57.800
I will tell you
when I first

00:32:57.800 --> 00:33:00.790
took over in 1995,

00:33:00.790 --> 00:33:03.210
I struggled with
how hospitals,

00:33:03.210 --> 00:33:04.590
especially the ones I was

00:33:04.590 --> 00:33:06.210
involved with because
I came out of

00:33:06.210 --> 00:33:08.330
trying to combine
Pullman Regional

00:33:08.330 --> 00:33:09.590
and Gritman Medical Center

00:33:09.590 --> 00:33:10.990
and ran the
corridor for three

00:33:10.990 --> 00:33:12.795
years in a joint venture.

00:33:12.795 --> 00:33:13.980
I was assistant CFO.

00:33:13.980 --> 00:33:15.430
And Gritman did exactly

00:33:15.430 --> 00:33:17.150
the same way we did it.

00:33:17.150 --> 00:33:21.180
And what you do
and what we did,

00:33:21.180 --> 00:33:23.670
ashamed of it
back then, is

00:33:23.670 --> 00:33:25.120
you developed
a new service.

00:33:25.120 --> 00:33:26.310
You went out and
figured out what

00:33:26.310 --> 00:33:27.770
the pricing was
on many of those.

00:33:27.770 --> 00:33:29.530
Let's say it's X-ray
and you wanted to

00:33:29.530 --> 00:33:31.890
do MRs. What's the
average price?

00:33:31.890 --> 00:33:32.970
What are other
people charging

00:33:32.970 --> 00:33:34.850
for this service?

00:33:34.850 --> 00:33:36.200
That's how you
developed your prices.

00:33:36.200 --> 00:33:37.430
What is CMS
going to pay us?

00:33:37.430 --> 00:33:39.750
Well, CMS pays this and
you two times that.

00:33:39.750 --> 00:33:41.530
Just a rule of thumb.
That's what you do.

00:33:41.530 --> 00:33:42.610
And then every year you're

00:33:42.610 --> 00:33:45.050
going in the budget, I
think I'll raise it.

00:33:45.050 --> 00:33:47.020
Yeah, 5% sounds good.

00:33:47.020 --> 00:33:48.670
And you do that
for 20 years,

00:33:48.670 --> 00:33:53.095
and what do your prices
reflect? Nothing.

00:33:53.095 --> 00:33:56.110
They're meaningless.
So we said,

00:33:56.110 --> 00:33:57.850
that's not what we want
to do in our pricing,

00:33:57.850 --> 00:33:59.290
and we want to be
fair and adequate.

00:33:59.290 --> 00:34:01.360
So we go through
a structure in

00:34:01.360 --> 00:34:04.345
which we evaluate
what are our costs.

00:34:04.345 --> 00:34:05.890
Because we got to
cover our cost.

00:34:05.890 --> 00:34:06.670
If we don't
cover our costs,

00:34:06.670 --> 00:34:09.640
we aren't here.
Pretty obvious.

00:34:09.640 --> 00:34:11.845
What's our
required profit?

00:34:11.845 --> 00:34:14.005
Nasty word. That's
a four letter word.

00:34:14.005 --> 00:34:15.610
It's actually
more than four,.

00:34:15.610 --> 00:34:19.825
No five. No it is
six. I can count.

00:34:19.825 --> 00:34:23.500
It's a six-letter
word. Profit. We got

00:34:23.500 --> 00:34:24.790
to have excess
because we need to

00:34:24.790 --> 00:34:26.320
reinvest back into
the facility.

00:34:26.320 --> 00:34:27.670
We have to buy equipment.

00:34:27.670 --> 00:34:28.810
We need technology.

00:34:28.810 --> 00:34:29.950
If not, you're going

00:34:29.950 --> 00:34:31.420
to be obsolete in
a little while.

00:34:31.420 --> 00:34:35.530
And then, really, your
prices only matter.

00:34:35.530 --> 00:34:37.945
If I was 100% Medicare,

00:34:37.945 --> 00:34:40.540
I'll charge you nothing

00:34:40.540 --> 00:34:41.770
because I get paid

00:34:41.770 --> 00:34:43.270
cost under
Medicare program.

00:34:43.270 --> 00:34:44.920
It doesn't matter
what I cost.

00:34:44.920 --> 00:34:45.820
I don't matter what I

00:34:45.820 --> 00:34:46.930
charge because
they're going to tell

00:34:46.930 --> 00:34:47.650
me they're going to pay so

00:34:47.650 --> 00:34:49.120
why do I matter anyway.

00:34:49.120 --> 00:34:51.505
But that's not true
across the board.

00:34:51.505 --> 00:34:52.750
It does matter.

00:34:52.750 --> 00:34:55.405
So prices have to
reflect your pair mix.

00:34:55.405 --> 00:34:57.355
What are the
insurance companies?

00:34:57.355 --> 00:34:58.990
We go through
that process,

00:34:58.990 --> 00:35:00.235
and then we evaluate on

00:35:00.235 --> 00:35:02.860
every single price
down to the CPT level,

00:35:02.860 --> 00:35:05.125
which is by procedure.

00:35:05.125 --> 00:35:07.645
What's our cost
compared to the market?

00:35:07.645 --> 00:35:11.095
What's the market? If
our costs are too high,

00:35:11.095 --> 00:35:14.440
is it fair for me to
raise my prices 5%?

00:35:14.440 --> 00:35:16.165
Probably not.

00:35:16.165 --> 00:35:18.410
I should probably
control the cost.

00:35:18.660 --> 00:35:21.670
If my costs are
within reason,

00:35:21.670 --> 00:35:24.790
then is it okay to
raise 5%? Well, maybe.

00:35:24.790 --> 00:35:26.725
But if I have $45 million

00:35:26.725 --> 00:35:29.110
in the bank or
$150 million,

00:35:29.110 --> 00:35:30.670
and I want to
charge 10% more,

00:35:30.670 --> 00:35:32.050
because as a CFO,

00:35:32.050 --> 00:35:33.730
I'd like to have
180 million.

00:35:33.730 --> 00:35:35.125
That's probably not fair,

00:35:35.125 --> 00:35:37.075
either 'cause I have
too much cushion.

00:35:37.075 --> 00:35:38.590
Now, I'm gouging.

00:35:38.590 --> 00:35:40.645
So we look at
that as well.

00:35:40.645 --> 00:35:42.715
So we want to be
fair and equitable.

00:35:42.715 --> 00:35:43.690
And I don't want to charge

00:35:43.690 --> 00:35:44.530
more than the market.

00:35:44.530 --> 00:35:46.555
And in our market, we
look at six hospitals.

00:35:46.555 --> 00:35:48.475
We have to do blended
because it would be

00:35:48.475 --> 00:35:51.040
collusion if I was to
call Tricity and say,

00:35:51.040 --> 00:35:53.365
what do you pay?
What do you charge?

00:35:53.365 --> 00:35:55.600
I wouldn't be Ryan, I'd go

00:35:55.600 --> 00:35:57.130
jail and I don't
look good in orange.

00:35:57.130 --> 00:36:00.550
So we do a compilation
of six hospitals,

00:36:00.550 --> 00:36:02.410
and we have an external
group do this.

00:36:02.410 --> 00:36:04.495
And we say, what
is the price

00:36:04.495 --> 00:36:06.835
on an average
in the market?

00:36:06.835 --> 00:36:08.680
Now, in some areas,
I will tell you,

00:36:08.680 --> 00:36:10.150
specifically an MR,

00:36:10.150 --> 00:36:12.280
we were too high
two years ago.

00:36:12.280 --> 00:36:14.395
I had the orthopods
call me and

00:36:14.395 --> 00:36:17.380
say they're getting
a lot cheaper,

00:36:17.380 --> 00:36:18.940
and people are starting
to shop because

00:36:18.940 --> 00:36:20.710
of the fact of high
deductible plans,

00:36:20.710 --> 00:36:22.240
where they have $1,500 out

00:36:22.240 --> 00:36:25.030
of pocket,
they're shopping.

00:36:25.030 --> 00:36:27.760
We need to look at

00:36:27.760 --> 00:36:30.235
our market a little
tighter than broader.

00:36:30.235 --> 00:36:32.440
When you pull Spokane
hospitals in,

00:36:32.440 --> 00:36:33.580
Tricity hospitals

00:36:33.580 --> 00:36:34.690
in they're probably
too broad.

00:36:34.690 --> 00:36:36.745
So we narrowed that
market and say,

00:36:36.745 --> 00:36:38.890
what should we charge
for that service?

00:36:38.890 --> 00:36:41.680
And that's how we
established our prices.

00:36:41.680 --> 00:36:44.635
So now getting into

00:36:44.635 --> 00:36:46.435
just reimbursement
and how we get paid.

00:36:46.435 --> 00:36:48.670
Medicare, Medicaid,

00:36:48.670 --> 00:36:51.655
people remember in 1997,

00:36:51.655 --> 00:36:55.990
the Clinton administration

00:36:55.990 --> 00:36:57.595
balanced the budget.

00:36:57.595 --> 00:36:59.545
And as a result of that,

00:36:59.545 --> 00:37:01.330
there were two
hospitals and

00:37:01.330 --> 00:37:03.280
rural communities
closing every

00:37:03.280 --> 00:37:05.530
week and people not

00:37:05.530 --> 00:37:07.315
having access to
care anymore.

00:37:07.315 --> 00:37:09.430
It's a bad thing. So
they came out with

00:37:09.430 --> 00:37:11.110
this determination

00:37:11.110 --> 00:37:13.435
called critical
access hospitals.

00:37:13.435 --> 00:37:18.370
It's critical for our
weakest population

00:37:18.370 --> 00:37:20.515
in terms of Medicaid,

00:37:20.515 --> 00:37:23.110
people that can't
pay in our elders

00:37:23.110 --> 00:37:24.910
to be able to access care

00:37:24.910 --> 00:37:26.275
in these communities,

00:37:26.275 --> 00:37:27.670
we need to do
something about it

00:37:27.670 --> 00:37:29.695
because if we,

00:37:29.695 --> 00:37:31.210
federal government
not paying them

00:37:31.210 --> 00:37:33.310
enough to stay
in existence,

00:37:33.310 --> 00:37:35.380
basically, they're not
covering their cost,

00:37:35.380 --> 00:37:36.850
there's not enough volume,

00:37:36.850 --> 00:37:38.260
and they can't survive.

00:37:38.260 --> 00:37:41.485
So that came out. So
Medicare pays us today,

00:37:41.485 --> 00:37:45.820
our cost plus 1%. Now,
I'll tell you what.

00:37:45.820 --> 00:37:47.440
It's not plus one
because we still

00:37:47.440 --> 00:37:49.240
have remember a
few years ago,

00:37:49.240 --> 00:37:50.110
sequestration,

00:37:50.110 --> 00:37:51.085
Everybody thought
that went away.

00:37:51.085 --> 00:37:53.620
It's still not. We
get cost minus 1.

00:37:53.620 --> 00:37:54.580
So we lose money on

00:37:54.580 --> 00:37:56.960
every Medicare
Medicaid patient.

00:37:57.270 --> 00:38:00.010
Doesn't mean we shouldn't
take care of them.

00:38:00.010 --> 00:38:01.585
We should care for them.

00:38:01.585 --> 00:38:03.475
But we will
never make more.

00:38:03.475 --> 00:38:05.290
By the way, I forgot
to tell you something.

00:38:05.290 --> 00:38:07.285
It's not truly cost.

00:38:07.285 --> 00:38:09.505
It's allowable cost.

00:38:09.505 --> 00:38:12.520
You know who
determines allowable?

00:38:12.520 --> 00:38:14.625
The federal government.

00:38:14.625 --> 00:38:16.320
So you know those
same physicians I

00:38:16.320 --> 00:38:18.030
told you about in the
emergency department?

00:38:18.030 --> 00:38:19.380
Because physicians can

00:38:19.380 --> 00:38:21.045
bill a professional fee.

00:38:21.045 --> 00:38:23.190
In addition, we build
the technical field,

00:38:23.190 --> 00:38:24.540
which is the nursing staff

00:38:24.540 --> 00:38:26.910
and the room board.

00:38:26.910 --> 00:38:28.590
The way Medicare
looks at it,

00:38:28.590 --> 00:38:29.940
then that professional
fee covers

00:38:29.940 --> 00:38:31.200
that physician cost.

00:38:31.200 --> 00:38:33.330
If there are
additional costs,

00:38:33.330 --> 00:38:35.010
like you want them 24/7,

00:38:35.010 --> 00:38:35.970
but there's not a patient

00:38:35.970 --> 00:38:37.815
there, that's
your problem.

00:38:37.815 --> 00:38:39.090
That's not our cost.

00:38:39.090 --> 00:38:40.785
So that's non allowable.

00:38:40.785 --> 00:38:43.420
So it's not 100%
of your cost.

00:38:43.420 --> 00:38:44.710
It's what Medicare
says will be

00:38:44.710 --> 00:38:46.720
100% of your costs.

00:38:46.720 --> 00:38:48.250
And then our
commercial players

00:38:48.250 --> 00:38:49.570
have to make up
the difference.

00:38:49.570 --> 00:38:50.905
This is the rub.

00:38:50.905 --> 00:38:52.990
This is where
commercials are fighting

00:38:52.990 --> 00:38:54.190
back because

00:38:54.190 --> 00:38:55.420
we have employers
that are saying,

00:38:55.420 --> 00:38:56.770
wait, I can't have

00:38:56.770 --> 00:38:58.870
double digit
increases year

00:38:58.870 --> 00:39:01.075
in and year out
on our premiums.

00:39:01.075 --> 00:39:02.275
We say the same thing.

00:39:02.275 --> 00:39:03.490
We provide healthcare, and

00:39:03.490 --> 00:39:04.630
we don't like
it either when

00:39:04.630 --> 00:39:07.450
our insurance for
our employees

00:39:07.450 --> 00:39:09.370
goes up by 10 or 12%.

00:39:09.370 --> 00:39:10.960
So we start going,
okay, how are we doing

00:39:10.960 --> 00:39:12.415
differently? But we're
paying ourselves.

00:39:12.415 --> 00:39:14.155
I was like, oh, geez,

00:39:14.155 --> 00:39:16.060
can we do this
differently?

00:39:16.060 --> 00:39:18.010
So commercials
have really pushed

00:39:18.010 --> 00:39:19.930
back on what they
used to pay us.

00:39:19.930 --> 00:39:21.280
That's why I don't get 95%

00:39:21.280 --> 00:39:22.540
of charges anymore.

00:39:22.540 --> 00:39:24.700
And now I get 73.5% of

00:39:24.700 --> 00:39:27.295
charges by some contracts,

00:39:27.295 --> 00:39:28.570
because they're trying to

00:39:28.570 --> 00:39:30.250
drive that price down.

00:39:30.250 --> 00:39:32.215
>> Are those two
costs the same?

00:39:32.215 --> 00:39:35.950
>> So are those two
costs the same? Yes.

00:39:35.950 --> 00:39:37.570
>> The left and
right of diagram?

00:39:37.570 --> 00:39:39.400
>> They are. So it's

00:39:39.400 --> 00:39:42.115
your total cost to
provide that service?

00:39:42.115 --> 00:39:45.670
>> Is that a
variable cost of

00:39:45.670 --> 00:39:47.050
providing that service as

00:39:47.050 --> 00:39:49.855
opposed to is there an
overhead allocation?

00:39:49.855 --> 00:39:52.795
>> Let's go there.
Let's talk about that.

00:39:52.795 --> 00:39:54.895
So when are we
going to get there?

00:39:54.895 --> 00:39:57.670
So yes, and yes,

00:39:57.670 --> 00:39:59.485
it is a variable.

00:39:59.485 --> 00:40:03.820
But understand in
our who we are

00:40:03.820 --> 00:40:06.970
from we being a
rural hospital,

00:40:06.970 --> 00:40:08.800
it's semi-variable.

00:40:08.800 --> 00:40:10.750
At only a certain
level can you

00:40:10.750 --> 00:40:14.590
go down before
you hit a floor.

00:40:14.590 --> 00:40:17.455
We have to by a
certain amount,

00:40:17.455 --> 00:40:20.575
if we're going to offer
24/7 emergency care,

00:40:20.575 --> 00:40:22.120
and I can't have nobody

00:40:22.120 --> 00:40:23.440
in there when you show up.

00:40:23.440 --> 00:40:24.580
Somebody has to be

00:40:24.580 --> 00:40:25.390
there with the
lights on to

00:40:25.390 --> 00:40:27.640
care for you.
That's the floor.

00:40:27.640 --> 00:40:29.350
So it's a semi-variable.

00:40:29.350 --> 00:40:31.330
So there is some
fluctuations

00:40:31.330 --> 00:40:33.160
in those costs
based on volume.

00:40:33.160 --> 00:40:34.825
But it's really hard, and

00:40:34.825 --> 00:40:36.355
I'll share a
little bit about

00:40:36.355 --> 00:40:37.930
Pullman's approach to that

00:40:37.930 --> 00:40:39.970
on how you control
those variable costs.

00:40:39.970 --> 00:40:40.660
I will tell you

00:40:40.660 --> 00:40:42.700
from a productivity
standpoint,

00:40:42.700 --> 00:40:44.455
what's the number
one expense

00:40:44.455 --> 00:40:46.270
you have in healthcare?

00:40:46.270 --> 00:40:48.160
What's your highest cost?

00:40:48.160 --> 00:40:49.280
>> People.

00:40:49.440 --> 00:40:53.080
>> People. We're a
service industry.

00:40:53.080 --> 00:40:56.650
Sixty percent of our
costs relate to people.

00:40:56.650 --> 00:40:57.970
What's the
number one thing

00:40:57.970 --> 00:40:59.755
that you try to control?

00:40:59.755 --> 00:41:03.100
People. Because I can cut

00:41:03.100 --> 00:41:06.220
a lot at trying to
chisel down utilities,

00:41:06.220 --> 00:41:07.270
but I can't turn off

00:41:07.270 --> 00:41:09.820
enough lights if I
was one staff member

00:41:09.820 --> 00:41:12.190
less to cover that cost

00:41:12.190 --> 00:41:13.345
of turn off all the
lights every day

00:41:13.345 --> 00:41:14.995
when somebody walked
out of the room.

00:41:14.995 --> 00:41:17.020
So there is some
variability.

00:41:17.020 --> 00:41:19.660
Now, one of the
challenges there is how

00:41:19.660 --> 00:41:23.890
predictable are
our services.

00:41:23.890 --> 00:41:25.060
Can anybody tell me

00:41:25.060 --> 00:41:26.080
how many people are
going to come into

00:41:26.080 --> 00:41:27.100
the emergency department

00:41:27.100 --> 00:41:30.115
between seven tonight
and nine tonight?

00:41:30.115 --> 00:41:32.350
Is there a football game?

00:41:32.350 --> 00:41:34.660
Probably higher
predictability that

00:41:34.660 --> 00:41:35.110
I'm going to have

00:41:35.110 --> 00:41:36.700
more admissions into

00:41:36.700 --> 00:41:38.830
my emergency department
than I have when?

00:41:38.830 --> 00:41:40.735
>> And more ambulance
runs from the city.

00:41:40.735 --> 00:41:44.530
>> Exactly. You can
have some of that,

00:41:44.530 --> 00:41:45.895
but it's still variable,

00:41:45.895 --> 00:41:47.650
and it doesn't
always come.

00:41:47.650 --> 00:41:51.520
When we had the
Apple cup here,

00:41:51.520 --> 00:41:53.380
we staffed a whole
unit just in

00:41:53.380 --> 00:41:55.390
case because
the year before

00:41:55.390 --> 00:41:56.860
we were inundated

00:41:56.860 --> 00:41:59.530
and we didn't
have that many.

00:41:59.530 --> 00:42:01.555
That's the
challenge we run.

00:42:01.555 --> 00:42:03.520
We can run on an
inpatient unit,

00:42:03.520 --> 00:42:04.780
med surg unit,

00:42:04.780 --> 00:42:09.685
two inpatients to
12 inpatients.

00:42:09.685 --> 00:42:11.800
And that can be a
difference in hours,

00:42:11.800 --> 00:42:13.660
and it can be a
difference in days.

00:42:13.660 --> 00:42:16.300
So we have 25 beds
across the board,

00:42:16.300 --> 00:42:18.835
OB, ICU, and med surg,

00:42:18.835 --> 00:42:23.125
and we can have
census from 2-25,

00:42:23.125 --> 00:42:24.730
and that can be
within the week,

00:42:24.730 --> 00:42:26.200
and then back to
five and then to 10

00:42:26.200 --> 00:42:27.490
and it's

00:42:27.490 --> 00:42:29.200
really hard to get
that predictability.

00:42:29.200 --> 00:42:31.885
How do some hospitals
deal with that?

00:42:31.885 --> 00:42:33.820
I'll tell you, a lot of
your for profits etc.

00:42:33.820 --> 00:42:35.695
will say, okay, staff,

00:42:35.695 --> 00:42:37.510
I hired you full time.

00:42:37.510 --> 00:42:39.280
You have a family and
kids. That's all right.

00:42:39.280 --> 00:42:40.405
Come on in. Well,
we're going to pay you

00:42:40.405 --> 00:42:42.070
full time. I'm sorry.

00:42:42.070 --> 00:42:43.120
I don't have enough
patients, go

00:42:43.120 --> 00:42:46.585
home without pay.

00:42:46.585 --> 00:42:47.860
I do that to you

00:42:47.860 --> 00:42:49.585
three or four
times this month.

00:42:49.585 --> 00:42:51.490
Guess what? You're
going to the hospital

00:42:51.490 --> 00:42:53.290
down the street that
doesn't do that to you.

00:42:53.290 --> 00:42:54.700
We don't low census,

00:42:54.700 --> 00:42:55.840
and a lot of
it's low census.

00:42:55.840 --> 00:42:57.805
We don't do a lot of
that here because

00:42:57.805 --> 00:43:01.075
your actual turnover rate

00:43:01.075 --> 00:43:02.410
increases significantly.

00:43:02.410 --> 00:43:03.280
It's better to retain

00:43:03.280 --> 00:43:04.240
those employees than it is

00:43:04.240 --> 00:43:06.550
to be training new
employees all the time.

00:43:06.550 --> 00:43:08.710
That's part of the
challenges we have here.

00:43:08.710 --> 00:43:10.190
And that's why
Medicare decided,

00:43:10.190 --> 00:43:11.575
we'll pay you at
least your cost

00:43:11.575 --> 00:43:13.945
because when you
have enough volume,

00:43:13.945 --> 00:43:15.640
you can cover those
loss leaders every

00:43:15.640 --> 00:43:17.575
now and then because
you have enough volume,

00:43:17.575 --> 00:43:19.360
and your variability
is a lot greater.

00:43:19.360 --> 00:43:20.590
Here it's not, so that's

00:43:20.590 --> 00:43:22.180
why Medicare came
in and said,

00:43:22.180 --> 00:43:24.055
we'll pay your cost.

00:43:24.055 --> 00:43:27.760
Problem with that is
there's no incentive to

00:43:27.760 --> 00:43:31.465
control your costs. I'll
give you an example.

00:43:31.465 --> 00:43:33.280
A lot of our total hips,

00:43:33.280 --> 00:43:36.355
total joints are
Medicare population.

00:43:36.355 --> 00:43:38.260
No surprise. Hey,

00:43:38.260 --> 00:43:40.700
you had one? Two.

00:43:41.190 --> 00:43:43.090
>> Which your bodies work?

00:43:43.090 --> 00:43:47.035
>> Of course. Does it help

00:43:47.035 --> 00:43:48.670
Pullman Regional
Hospital to

00:43:48.670 --> 00:43:50.230
negotiate with Smith
and Nephew and

00:43:50.230 --> 00:43:54.085
Depew on those devices
and save money?

00:43:54.085 --> 00:43:56.590
Does it help
our bottom line

00:43:56.590 --> 00:44:00.200
for especially the
Medicare population?

00:44:00.480 --> 00:44:04.360
Thank you. Not one bit.
I get paid my costs.

00:44:04.360 --> 00:44:06.895
Where's my incentive
to control the cost?

00:44:06.895 --> 00:44:09.790
However, we did
go and we do.

00:44:09.790 --> 00:44:12.010
I negotiated
with Depew and

00:44:12.010 --> 00:44:14.200
Smith and Nephew a
year and a half ago,

00:44:14.200 --> 00:44:18.550
we saved 1.2 Million
in our device costs.

00:44:18.550 --> 00:44:20.815
Most of that goes to
the federal government.

00:44:20.815 --> 00:44:23.200
It's the right
thing to do,

00:44:23.200 --> 00:44:25.690
because that will
save eventually,

00:44:25.690 --> 00:44:27.070
if every hospital worked

00:44:27.070 --> 00:44:28.180
hard at doing
those things,

00:44:28.180 --> 00:44:29.290
that saves critical access

00:44:29.290 --> 00:44:31.090
hospitals the
chopping block.

00:44:31.090 --> 00:44:33.130
If I lost critical

00:44:33.130 --> 00:44:34.690
access hospital
reimbursement today,

00:44:34.690 --> 00:44:35.590
remember that $1 million I

00:44:35.590 --> 00:44:36.880
told you we had last year,

00:44:36.880 --> 00:44:39.740
take five million
off of that.

00:44:39.860 --> 00:44:43.480
We would have
lost $4 million.

00:44:44.180 --> 00:44:46.800
We wouldn't last.

00:44:46.800 --> 00:44:50.010
You would be amputating
major services.

00:44:50.010 --> 00:44:51.570
There'd just be
things you would

00:44:51.570 --> 00:44:54.135
not do in this market.

00:44:54.135 --> 00:44:56.010
It just would
not be there.

00:44:56.010 --> 00:44:57.390
No, ICU.

00:44:57.390 --> 00:44:58.770
You wouldn't have
a hospital around

00:44:58.770 --> 00:45:00.510
this area that had an ICU.

00:45:00.510 --> 00:45:03.285
Behavior health?
Forget it.

00:45:03.285 --> 00:45:05.265
Those people are
on their own.

00:45:05.265 --> 00:45:08.010
Good luck on managing
your drugs and

00:45:08.010 --> 00:45:11.755
your problems because
you couldn't afford it.

00:45:11.755 --> 00:45:14.275
Positive margin areas.

00:45:14.275 --> 00:45:15.805
These are where
we make money,

00:45:15.805 --> 00:45:17.695
especially on a
commercial side.

00:45:17.695 --> 00:45:19.600
Imaging, surgery,
pharmacy,

00:45:19.600 --> 00:45:21.565
women's health,
lab pathology.

00:45:21.565 --> 00:45:23.725
And we don't actually

00:45:23.725 --> 00:45:25.390
have a pathologist

00:45:25.390 --> 00:45:26.470
that is part of
the hospital.

00:45:26.470 --> 00:45:27.610
They're actually
a group out of

00:45:27.610 --> 00:45:29.110
Spokane that reside here.

00:45:29.110 --> 00:45:31.210
But those are your
moneymakers today.

00:45:31.210 --> 00:45:33.325
Your negative things,
medical groups,

00:45:33.325 --> 00:45:35.005
physician practices.

00:45:35.005 --> 00:45:38.110
Oftentimes, for every
employed physician

00:45:38.110 --> 00:45:39.280
across the nation,

00:45:39.280 --> 00:45:42.055
in primary care
costs $110,000.

00:45:42.055 --> 00:45:44.245
That's net.

00:45:44.245 --> 00:45:45.340
That's the bottom line.

00:45:45.340 --> 00:45:47.020
That's the loss.
You cover.

00:45:47.020 --> 00:45:50.155
I'm pretty close to that.

00:45:50.155 --> 00:45:52.165
Not quite. I'm
pretty close.

00:45:52.165 --> 00:45:54.340
Transitional care units,
your home health,

00:45:54.340 --> 00:45:56.305
your ICUs, your
emergency department.

00:45:56.305 --> 00:45:58.675
There's so much
fixed cost in those.

00:45:58.675 --> 00:46:01.090
Now, my physicians

00:46:01.090 --> 00:46:02.875
would say they make money.

00:46:02.875 --> 00:46:04.720
But they do, in essence,

00:46:04.720 --> 00:46:06.325
because they order tests.

00:46:06.325 --> 00:46:08.185
People end up going
to the surgery.

00:46:08.185 --> 00:46:09.790
It's important to
have all of them.

00:46:09.790 --> 00:46:12.010
You can't have one
without the other.

00:46:12.010 --> 00:46:14.425
So how much did that cost?

00:46:14.425 --> 00:46:16.660
You go to a store and
you look and say,

00:46:16.660 --> 00:46:20.950
okay, what's that TV
going to cost me?

00:46:20.950 --> 00:46:23.005
You can see exactly
what you want.

00:46:23.005 --> 00:46:24.550
No one patient that come

00:46:24.550 --> 00:46:25.570
through the
emergency department

00:46:25.570 --> 00:46:27.700
with the same thing
is exactly the same.

00:46:27.700 --> 00:46:29.980
You come in, I
do your hip.

00:46:29.980 --> 00:46:31.330
Your hip isn't the same as

00:46:31.330 --> 00:46:33.520
your hip and your hip.

00:46:33.520 --> 00:46:35.500
How long it takes
that surgeon

00:46:35.500 --> 00:46:37.210
because you had a
complication within

00:46:37.210 --> 00:46:39.580
there can be significantly

00:46:39.580 --> 00:46:40.660
different than
the person that

00:46:40.660 --> 00:46:42.100
had no complication.

00:46:42.100 --> 00:46:43.930
The resources
and intensity

00:46:43.930 --> 00:46:45.310
of services are
much different.

00:46:45.310 --> 00:46:47.950
In some areas you're
going to get paid more

00:46:47.950 --> 00:46:50.755
because that DRG
will reflect that,

00:46:50.755 --> 00:46:52.810
but not always use the
way Medicare pays you,

00:46:52.810 --> 00:46:54.175
they pay you off a DRG.

00:46:54.175 --> 00:46:55.510
Now, there are two
different DRGs,

00:46:55.510 --> 00:46:57.490
one with complications,
one without.

00:46:57.490 --> 00:46:58.720
But you might have been

00:46:58.720 --> 00:47:01.450
the same surgery
without a complication.

00:47:01.450 --> 00:47:03.580
But you might have
been in the OR

00:47:03.580 --> 00:47:05.470
because when that
surgeon was in there,

00:47:05.470 --> 00:47:06.595
it took a lot more time.

00:47:06.595 --> 00:47:08.605
It took him 45 minutes

00:47:08.605 --> 00:47:11.155
where the other patient
took 20 minutes.

00:47:11.155 --> 00:47:13.315
The resources are
much different.

00:47:13.315 --> 00:47:15.550
But the amount that
we're going to get paid

00:47:15.550 --> 00:47:17.920
is the same for that
particular insurance.

00:47:17.920 --> 00:47:19.720
But if you go back to
those methodologies,

00:47:19.720 --> 00:47:22.000
remember those cost,

00:47:22.000 --> 00:47:25.540
fixed percentage
charges, DRG, MSG,

00:47:25.540 --> 00:47:29.365
MSERG, those all have
influences within this.

00:47:29.365 --> 00:47:31.300
So those are
all different.

00:47:31.300 --> 00:47:32.680
Hey, we're just
talking about

00:47:32.680 --> 00:47:33.580
you, by the way.

00:47:33.580 --> 00:47:35.800
We're talking about
orthopedic surgeries.

00:47:35.800 --> 00:47:38.935
Not you specifically,
just talk prices.

00:47:38.935 --> 00:47:42.580
Welcome, by the
way. So again,

00:47:42.580 --> 00:47:44.050
some reimbursement
methodologies

00:47:44.050 --> 00:47:44.680
and we've talked about.

00:47:44.680 --> 00:47:45.550
Under the hospital,

00:47:45.550 --> 00:47:46.930
you have percentage
charges.

00:47:46.930 --> 00:47:49.645
You have per
diems, case rates,

00:47:49.645 --> 00:47:54.355
a mix of the DRG, MSDRG
components to it.

00:47:54.355 --> 00:47:58.930
APGs, which is an
outpatient payment scheme,

00:47:58.930 --> 00:48:00.895
we have none
of those here.

00:48:00.895 --> 00:48:02.680
They do have them, and

00:48:02.680 --> 00:48:04.420
they are significant
across the nation.

00:48:04.420 --> 00:48:06.415
We're just fortunate some

00:48:06.415 --> 00:48:08.110
insurance companies
want me to go to there.

00:48:08.110 --> 00:48:09.970
Primera wants us
to go to that.

00:48:09.970 --> 00:48:12.895
However, in order
to do that,

00:48:12.895 --> 00:48:14.485
the system behind that to

00:48:14.485 --> 00:48:16.960
capture all that
would cost us 50,000,

00:48:16.960 --> 00:48:18.475
so I asked Primera
to pay for that.

00:48:18.475 --> 00:48:19.870
They didn't want
to, so they keep

00:48:19.870 --> 00:48:21.565
paying me percent
of charges.

00:48:21.565 --> 00:48:23.125
But there's a
big investment.

00:48:23.125 --> 00:48:25.090
We're moving towards VBS,

00:48:25.090 --> 00:48:26.755
which is value
based purchasing.

00:48:26.755 --> 00:48:29.050
Bundled. Anybody heard
of bundle payments,

00:48:29.050 --> 00:48:31.570
especially the joint
replacement program

00:48:31.570 --> 00:48:33.730
that CMS has done
across the nation?

00:48:33.730 --> 00:48:35.095
That's a movement.

00:48:35.095 --> 00:48:36.220
What that's
doing is saying,

00:48:36.220 --> 00:48:37.360
we're going to give you

00:48:37.360 --> 00:48:40.615
this pot of money
between your physician,

00:48:40.615 --> 00:48:43.000
hospital, nursing home,

00:48:43.000 --> 00:48:44.410
and everything
else in between,

00:48:44.410 --> 00:48:46.900
PT, etc., you
divvy it out.

00:48:46.900 --> 00:48:48.130
You've got to
deal with only

00:48:48.130 --> 00:48:49.945
that component of it.

00:48:49.945 --> 00:48:51.865
Problem with that is

00:48:51.865 --> 00:48:53.560
if you're not on
the same team,

00:48:53.560 --> 00:48:55.885
you got winners
and losers.

00:48:55.885 --> 00:48:58.255
So I'll tell you right
now a bundle payment,

00:48:58.255 --> 00:48:58.690
we're going to work

00:48:58.690 --> 00:49:00.175
really closely
with physicians.

00:49:00.175 --> 00:49:02.230
I'm sorry, nursing home,

00:49:02.230 --> 00:49:04.690
you're out because
I don't want

00:49:04.690 --> 00:49:06.190
that patient with
nursing home because

00:49:06.190 --> 00:49:07.930
then I have to give them
some of that money.

00:49:07.930 --> 00:49:09.370
So we're going to try
to do everything we can

00:49:09.370 --> 00:49:10.990
to keep them within
this little group.

00:49:10.990 --> 00:49:12.040
That's why you need

00:49:12.040 --> 00:49:13.375
to work collectively
together,

00:49:13.375 --> 00:49:15.850
because usually
there's winners

00:49:15.850 --> 00:49:17.290
and losers in
those things.

00:49:17.290 --> 00:49:18.550
But that's where
it's moving.

00:49:18.550 --> 00:49:19.720
These value based things

00:49:19.720 --> 00:49:21.970
are evolving
significantly.

00:49:21.970 --> 00:49:23.830
Eventually, a lot
of our payments

00:49:23.830 --> 00:49:24.880
will be based on keeping

00:49:24.880 --> 00:49:26.080
people out of the system,

00:49:26.080 --> 00:49:27.820
which ultimately should
be what we're doing.

00:49:27.820 --> 00:49:29.605
That's in the
business we're is

00:49:29.605 --> 00:49:30.850
taking care of
those in needs

00:49:30.850 --> 00:49:32.800
and trying to keep
people healthy.

00:49:32.800 --> 00:49:34.975
But you can't make
people be healthy.

00:49:34.975 --> 00:49:37.570
So, these are the
basic overviews,

00:49:37.570 --> 00:49:38.410
and we've talked
a little bit

00:49:38.410 --> 00:49:39.460
of that within that.

00:49:39.460 --> 00:49:40.780
So you've got for us

00:49:40.780 --> 00:49:42.520
we critical
access hospitals.

00:49:42.520 --> 00:49:44.755
Other systems
outside of that,

00:49:44.755 --> 00:49:48.445
PPS hospital, progressive
payment systems,

00:49:48.445 --> 00:49:50.140
those are your
typical urban.

00:49:50.140 --> 00:49:54.070
They're going to get
this DRG fixed rate.

00:49:54.070 --> 00:49:55.480
And the more
they see then,

00:49:55.480 --> 00:49:56.920
the more they're
going to make because

00:49:56.920 --> 00:49:58.615
they can cover
their overhead.

00:49:58.615 --> 00:49:59.920
Critical access
hospitals were

00:49:59.920 --> 00:50:00.670
not able to do that,

00:50:00.670 --> 00:50:01.480
so that's why they came

00:50:01.480 --> 00:50:03.650
up with this methodology.

00:50:06.740 --> 00:50:09.930
I covered that. We will
move on from that.

00:50:09.930 --> 00:50:11.985
I probably covered that.

00:50:11.985 --> 00:50:14.640
So hospitals converted to

00:50:14.640 --> 00:50:17.760
these CAH since
cost reimbursement

00:50:17.760 --> 00:50:20.640
was and is greater

00:50:20.640 --> 00:50:21.810
than the reimbursement
we would

00:50:21.810 --> 00:50:23.640
have received under PPS.

00:50:23.640 --> 00:50:26.325
So that's why it was
important to move to.

00:50:26.325 --> 00:50:28.290
There's requirements
to stay that.

00:50:28.290 --> 00:50:30.510
Back under Obama, he

00:50:30.510 --> 00:50:33.510
had within his
proposed budget plan,

00:50:33.510 --> 00:50:35.940
you couldn't be a
critical access hospitals

00:50:35.940 --> 00:50:38.640
within 10 miles of
another facility.

00:50:38.640 --> 00:50:40.230
Or you would lose

00:50:40.230 --> 00:50:42.435
your critical
access designation.

00:50:42.435 --> 00:50:45.375
Do you know how far
we are from Gritman?

00:50:45.375 --> 00:50:48.450
9.2 miles. Why didn't we

00:50:48.450 --> 00:50:50.145
build it up the
hill, another.

00:50:50.145 --> 00:50:51.420
But the issue was,

00:50:51.420 --> 00:50:52.890
who cares if it's 10?

00:50:52.890 --> 00:50:55.905
Why not 15? Why was it 10?

00:50:55.905 --> 00:50:58.455
Because it was a
budgetary number.

00:50:58.455 --> 00:50:59.610
They looked to see how

00:50:59.610 --> 00:51:00.855
much could they capture.

00:51:00.855 --> 00:51:02.835
That helps our budget.

00:51:02.835 --> 00:51:06.045
Fortunately enough,
Congress did not pass that.

00:51:06.045 --> 00:51:07.620
They didn't even
entertain that.

00:51:07.620 --> 00:51:09.120
We only had to go a few

00:51:09.120 --> 00:51:11.130
times to DC to fight that.

00:51:11.130 --> 00:51:13.350
But that was
the discussion.

00:51:13.350 --> 00:51:16.080
What's the mileage?

00:51:16.080 --> 00:51:17.250
You know what I
would have done,

00:51:17.250 --> 00:51:18.390
Mayor, come and say,

00:51:18.390 --> 00:51:20.340
please close down
Bishop Boulevard,

00:51:20.340 --> 00:51:22.380
Mike us go around.

00:51:22.380 --> 00:51:25.050
Let us go half a mile.

00:51:25.050 --> 00:51:28.710
Exactly. Something. We
just 0.8 of a mile,

00:51:28.710 --> 00:51:31.080
please figure
something out.

00:51:31.080 --> 00:51:33.840
So, Irene, part
of your question,

00:51:33.840 --> 00:51:35.130
cost typically
in hospital.

00:51:35.130 --> 00:51:36.690
Variable cost
includes your supply,

00:51:36.690 --> 00:51:38.040
your implants,
your staffing,

00:51:38.040 --> 00:51:39.090
your food, your dietary,

00:51:39.090 --> 00:51:40.890
your pharmacy,
fixed costs,

00:51:40.890 --> 00:51:42.990
CEO, core staffing,

00:51:42.990 --> 00:51:45.780
utilities, bad
your debt service,

00:51:45.780 --> 00:51:47.190
and then your
physician compensation

00:51:47.190 --> 00:51:49.425
because many of them
have a fixed payment.

00:51:49.425 --> 00:51:50.190
Not all of them.

00:51:50.190 --> 00:51:51.720
So are very
productivity based,

00:51:51.720 --> 00:51:53.040
and so the more you see,

00:51:53.040 --> 00:51:53.670
the more you made,

00:51:53.670 --> 00:51:56.190
but that's changing
in their environment.

00:51:56.190 --> 00:51:59.940
So really some of

00:51:59.940 --> 00:52:01.980
these really truly
are semi variable.

00:52:01.980 --> 00:52:03.960
There's only a
certain level

00:52:03.960 --> 00:52:05.370
that we can go down to.

00:52:05.370 --> 00:52:06.930
So this is supposed to
be a true and false.

00:52:06.930 --> 00:52:08.685
I'm just going to give
you the answers here.

00:52:08.685 --> 00:52:11.550
Generally, in many are

00:52:11.550 --> 00:52:13.200
not sensitive to volume.

00:52:13.200 --> 00:52:17.055
If we saw 15,000 emergency

00:52:17.055 --> 00:52:19.050
department visits or

00:52:19.050 --> 00:52:21.300
5,000 emergency
department visits,

00:52:21.300 --> 00:52:22.590
I'm sure hoping
the hospital

00:52:22.590 --> 00:52:24.820
still keeps one CFO.

00:52:25.640 --> 00:52:29.310
It's tongue and
cheek. So I'm

00:52:29.310 --> 00:52:31.125
hopefully not
volume dependent.

00:52:31.125 --> 00:52:32.835
But at some point,

00:52:32.835 --> 00:52:36.360
like even our human
resources, at some point,

00:52:36.360 --> 00:52:38.040
we need additional
support when we

00:52:38.040 --> 00:52:40.215
have a few years ago,

00:52:40.215 --> 00:52:43.680
we had 300 employees.

00:52:43.680 --> 00:52:45.450
Now we have 450.

00:52:45.450 --> 00:52:46.650
The amount of paperwork

00:52:46.650 --> 00:52:47.820
and processing
the payroll,

00:52:47.820 --> 00:52:49.620
etc, is more intensive.

00:52:49.620 --> 00:52:50.910
So we either have to find

00:52:50.910 --> 00:52:53.835
system applications to
do that, technology,

00:52:53.835 --> 00:52:56.040
or we have add
resources and

00:52:56.040 --> 00:52:59.010
staffing to be able to
help support those.

00:52:59.010 --> 00:53:03.645
So cause volume increase.

00:53:03.645 --> 00:53:04.950
What happens to your fixed

00:53:04.950 --> 00:53:06.405
cost per unit of service?

00:53:06.405 --> 00:53:07.710
So volume goes up, and

00:53:07.710 --> 00:53:09.000
I have a fixed cost, me.

00:53:09.000 --> 00:53:10.785
Let's say we have
100 patients,

00:53:10.785 --> 00:53:12.660
and we allocate
the cost of

00:53:12.660 --> 00:53:15.720
administrator over
those 100 patients.

00:53:15.720 --> 00:53:17.430
Now I have 200.
What happens

00:53:17.430 --> 00:53:18.705
to that cost per unit?

00:53:18.705 --> 00:53:21.345
It goes down. Same thing.

00:53:21.345 --> 00:53:23.865
If we have 200 and
it goes down 100,

00:53:23.865 --> 00:53:26.830
that cost per
unit goes up.

00:53:27.050 --> 00:53:30.180
Same with variable cost.

00:53:30.180 --> 00:53:31.410
Units of service equals

00:53:31.410 --> 00:53:33.480
patient days for
room and board,

00:53:33.480 --> 00:53:36.315
revenue, and charges
for ancillary services.

00:53:36.315 --> 00:53:40.300
Reimbursement under
PPS hospitals.

00:53:40.400 --> 00:53:42.525
You decrease your volume.

00:53:42.525 --> 00:53:44.880
What happens to
your reimbursement?

00:53:44.880 --> 00:53:46.320
It goes down.

00:53:46.320 --> 00:53:47.835
The less you see,
the less you make.

00:53:47.835 --> 00:53:49.875
That's traditional.
We all know that.

00:53:49.875 --> 00:53:52.830
You go to Walmart.
They sell 1,000 TVs.

00:53:52.830 --> 00:53:55.080
They sold thousand TV.

00:53:55.080 --> 00:53:56.790
They sell 2000 and
they mad more.

00:53:56.790 --> 00:53:58.785
The more they sell,
the more they make.

00:53:58.785 --> 00:54:01.560
Guess what?
Kirklaxs hospitals,

00:54:01.560 --> 00:54:04.185
that's counterintuitive.
It's not true.

00:54:04.185 --> 00:54:07.065
If I see less patients,

00:54:07.065 --> 00:54:09.210
what's my reimbursement
from Medicare going

00:54:09.210 --> 00:54:12.045
to be? It's higher.

00:54:12.045 --> 00:54:16.515
Catch. Why? Because
they pay me my cost.

00:54:16.515 --> 00:54:18.885
My cost per unit went up.

00:54:18.885 --> 00:54:20.580
So, the less I see,

00:54:20.580 --> 00:54:22.710
the more I make,
more I see,

00:54:22.710 --> 00:54:24.555
the less I make
because I'm

00:54:24.555 --> 00:54:26.535
only ever going to
get paid my cost.

00:54:26.535 --> 00:54:28.260
It's counterintuitive.

00:54:28.260 --> 00:54:30.450
And so that's
always confusing.

00:54:30.450 --> 00:54:31.380
It doesn't matter
if you're sitting

00:54:31.380 --> 00:54:32.580
on the board or
not, yes, sir.

00:54:32.580 --> 00:54:36.380
>> But don't Medicare
define what I mean,

00:54:36.380 --> 00:54:37.805
they have
observation bids,

00:54:37.805 --> 00:54:39.380
which you get
paid less for

00:54:39.380 --> 00:54:41.195
versus a regular bid.

00:54:41.195 --> 00:54:43.610
So they're defining
your costs going to be

00:54:43.610 --> 00:54:44.690
that observation bid

00:54:44.690 --> 00:54:45.830
that's all I want
to reimburse.

00:54:45.830 --> 00:54:47.915
Are they doing those
kind of things still?

00:54:47.915 --> 00:54:49.520
>> So the question really

00:54:49.520 --> 00:54:51.560
is under Medicare
reimbursement,

00:54:51.560 --> 00:54:53.660
how do they define
how they'll pay you?

00:54:53.660 --> 00:54:55.880
Do they drive business?

00:54:55.880 --> 00:54:58.160
I'm phrasing this.

00:54:58.160 --> 00:55:00.470
>> Nursing homes,
too. Cheaper over

00:55:00.470 --> 00:55:02.525
there than they are
than regular hospital.

00:55:02.525 --> 00:55:03.510
>> So are they driving

00:55:03.510 --> 00:55:05.025
businesses to
certain things like

00:55:05.025 --> 00:55:08.160
observation, like
inpatient care?

00:55:08.160 --> 00:55:10.320
Is it better to have
a Medicare patient

00:55:10.320 --> 00:55:12.315
in an inpatient
bed or an obs bed?

00:55:12.315 --> 00:55:14.235
Obs Observation, sorry,

00:55:14.235 --> 00:55:16.725
abbreviation. Which
one's better?

00:55:16.725 --> 00:55:18.780
For Medicare, honestly,
having them in

00:55:18.780 --> 00:55:19.830
an observation bed is

00:55:19.830 --> 00:55:23.080
better because
then Medicare,

00:55:23.720 --> 00:55:26.190
constituents or
customers have

00:55:26.190 --> 00:55:27.915
to pay 20% of that charge.

00:55:27.915 --> 00:55:29.520
If they're in an
inpatient bed,

00:55:29.520 --> 00:55:30.420
they have a straight

00:55:30.420 --> 00:55:31.860
deductible and it's done.

00:55:31.860 --> 00:55:33.840
And if they met that
earlier, it's done.

00:55:33.840 --> 00:55:36.960
So Medicare population has

00:55:36.960 --> 00:55:38.805
to pay for that 20%.

00:55:38.805 --> 00:55:40.920
So having them in an
outpatient setting

00:55:40.920 --> 00:55:43.425
makes a lot more
sense for Medicare.

00:55:43.425 --> 00:55:44.820
They have requirements, so

00:55:44.820 --> 00:55:47.145
now they have
it used to be

00:55:47.145 --> 00:55:52.140
based on certain
criteria based driven,

00:55:52.140 --> 00:55:53.970
now it's based on

00:55:53.970 --> 00:55:55.470
how many midnights
you're in.

00:55:55.470 --> 00:55:57.060
Are you in two? If you're

00:55:57.060 --> 00:55:58.080
in two, then you're knobs.

00:55:58.080 --> 00:55:58.935
If you're in
more than two,

00:55:58.935 --> 00:55:59.985
then you're in in.

00:55:59.985 --> 00:56:01.485
It's based on that.

00:56:01.485 --> 00:56:03.540
So by the way,

00:56:03.540 --> 00:56:05.550
we asked for that,
and we all hate it.

00:56:05.550 --> 00:56:06.420
Now, we said, we don't

00:56:06.420 --> 00:56:07.650
like the way
you're doing this.

00:56:07.650 --> 00:56:08.730
You got to
simplify, and then

00:56:08.730 --> 00:56:10.065
they simply we
didn't like it.

00:56:10.065 --> 00:56:13.560
So some of the things

00:56:13.560 --> 00:56:14.790
that are influencing
healthcare and

00:56:14.790 --> 00:56:16.200
why it's getting
challenging.

00:56:16.200 --> 00:56:17.850
We had a major change in

00:56:17.850 --> 00:56:20.310
our classification ICD 10,

00:56:20.310 --> 00:56:22.320
which is your diagnosis

00:56:22.320 --> 00:56:25.005
and related
classifications.

00:56:25.005 --> 00:56:28.920
This changed from
ICEC 9 to 10 in 2014,

00:56:28.920 --> 00:56:30.660
actually, in 2015, and

00:56:30.660 --> 00:56:32.505
it really
substantially changed.

00:56:32.505 --> 00:56:33.795
The coding aspect
went from like,

00:56:33.795 --> 00:56:36.840
8,000 codes to 80,000.

00:56:36.840 --> 00:56:38.700
And so it's got a
lot more specific.

00:56:38.700 --> 00:56:41.700
It's really hard to
run today to get

00:56:41.700 --> 00:56:45.180
any comparables is
almost impossible,

00:56:45.180 --> 00:56:46.950
especially on
inpatient care

00:56:46.950 --> 00:56:48.030
or surgeries and stuff

00:56:48.030 --> 00:56:49.680
because of the
fact that ICD

00:56:49.680 --> 00:56:50.850
10 is so specific,

00:56:50.850 --> 00:56:53.280
like they literally
have some.

00:56:53.280 --> 00:56:56.115
If you hit by a car
on a rural road,

00:56:56.115 --> 00:56:57.705
then you code it to this.

00:56:57.705 --> 00:57:00.255
But if you were hit by
a dog, it's different.

00:57:00.255 --> 00:57:01.680
I could throw some up,

00:57:01.680 --> 00:57:02.790
and you'd be like, really?

00:57:02.790 --> 00:57:05.820
That's a code. And they
are that specific.

00:57:05.820 --> 00:57:06.720
It's really strange.

00:57:06.720 --> 00:57:08.055
Some of them
are hilarious.

00:57:08.055 --> 00:57:09.450
I don't know how they
came up with them,

00:57:09.450 --> 00:57:10.515
but they are like,

00:57:10.515 --> 00:57:12.930
bit by a shark while scuba

00:57:12.930 --> 00:57:16.680
diving. Did they live?

00:57:16.680 --> 00:57:19.155
Inpatient quality
reporting,

00:57:19.155 --> 00:57:20.250
the macro which I

00:57:20.250 --> 00:57:22.350
talked about earlier on
physician reporting,

00:57:22.350 --> 00:57:23.625
this is significant.

00:57:23.625 --> 00:57:26.835
You could have
upwards of 9%.

00:57:26.835 --> 00:57:29.730
Now, for physicians
that can be

00:57:29.730 --> 00:57:32.970
a huge swing in their
pay in any one year.

00:57:32.970 --> 00:57:34.845
Yet, on the other side,
if you do it well,

00:57:34.845 --> 00:57:37.230
you might gain
readmission rates.

00:57:37.230 --> 00:57:38.205
We got to monitor that.

00:57:38.205 --> 00:57:39.030
All of these things are

00:57:39.030 --> 00:57:40.890
reporting requirements
that we have to do.

00:57:40.890 --> 00:57:42.825
We don't get any
additional money,

00:57:42.825 --> 00:57:43.560
but if you don't do them,

00:57:43.560 --> 00:57:45.490
then you make less money.

00:57:45.830 --> 00:57:51.270
So one of the things
in that in summary,

00:57:51.270 --> 00:57:53.130
as we start to
wrap this up,

00:57:53.130 --> 00:57:55.230
why does our
foundation help us?

00:57:55.230 --> 00:57:58.545
There are many non
cost based programs.

00:57:58.545 --> 00:58:03.615
Psych and rehab,
don't make money.

00:58:03.615 --> 00:58:07.305
So by providing
certain services

00:58:07.305 --> 00:58:09.510
and continue to
support those

00:58:09.510 --> 00:58:11.010
across the
continuing to have

00:58:11.010 --> 00:58:13.200
the foundation helping
us within that so

00:58:13.200 --> 00:58:15.660
that we can be self
sustaining and

00:58:15.660 --> 00:58:16.680
self determining in our

00:58:16.680 --> 00:58:19.510
future is really
important.

00:58:20.180 --> 00:58:23.055
Skilled nursing
facilities, SNIFs,

00:58:23.055 --> 00:58:24.495
home health agencies,

00:58:24.495 --> 00:58:26.775
non reimburseable
cost centers.

00:58:26.775 --> 00:58:28.290
It's just certain things
that we don't get

00:58:28.290 --> 00:58:29.610
any payment for,

00:58:29.610 --> 00:58:30.690
but we want to continue to

00:58:30.690 --> 00:58:31.740
provide those
services because

00:58:31.740 --> 00:58:34.530
it's important to
our community.

00:58:34.530 --> 00:58:36.570
That's where the
foundation that's where

00:58:36.570 --> 00:58:38.880
being a public hospital
district really help.

00:58:38.880 --> 00:58:41.880
Other things within
cost reimbursement cost

00:58:41.880 --> 00:58:44.295
per head that are
non cost services.

00:58:44.295 --> 00:58:45.570
Things like today are

00:58:45.570 --> 00:58:47.280
care coordination, I
mentioned earlier.

00:58:47.280 --> 00:58:49.620
This the right
thing to do.

00:58:49.620 --> 00:58:52.695
Honestly, it costs
us money to do it.

00:58:52.695 --> 00:58:54.195
We look to grants, and

00:58:54.195 --> 00:58:56.130
that's part of the
foundation's efforts

00:58:56.130 --> 00:58:58.320
to bring in those type

00:58:58.320 --> 00:58:59.820
of things to help
offset that.

00:58:59.820 --> 00:59:01.335
It doesn't dollar
for dollar,

00:59:01.335 --> 00:59:03.210
but it's caring
for patients and

00:59:03.210 --> 00:59:05.070
getting them in
the right place so

00:59:05.070 --> 00:59:06.300
that their care is better

00:59:06.300 --> 00:59:07.380
so that they
don't end up in

00:59:07.380 --> 00:59:08.520
the emergency
department with

00:59:08.520 --> 00:59:10.590
a major problem
down the road.

00:59:10.590 --> 00:59:12.300
Those are really
important things to do.

00:59:12.300 --> 00:59:15.100
Nobody's paying
for you today.

00:59:16.580 --> 00:59:18.150
Some of the things

00:59:18.150 --> 00:59:19.650
the foundation has
really helped us with in

00:59:19.650 --> 00:59:22.590
their giving
the whole hydro

00:59:22.590 --> 00:59:24.240
works pool therapy,

00:59:24.240 --> 00:59:25.620
underwater
treadmill, we would

00:59:25.620 --> 00:59:26.865
not have had that.

00:59:26.865 --> 00:59:28.380
The system we had had

00:59:28.380 --> 00:59:30.030
failed and would
not be obsolete.

00:59:30.030 --> 00:59:32.370
It'd basically be probably

00:59:32.370 --> 00:59:35.610
a mosquito pond.
It'd be gone.

00:59:35.610 --> 00:59:38.265
And that helped
us tremendously.

00:59:38.265 --> 00:59:41.610
The 3D mammography unit

00:59:41.610 --> 00:59:42.690
where you have
been blessed

00:59:42.690 --> 00:59:45.060
with happened in 2014,

00:59:45.060 --> 00:59:47.495
the 2015, various areas,

00:59:47.495 --> 00:59:49.565
a lot of different
areas, services.

00:59:49.565 --> 00:59:53.780
In 2016, the OR project.

00:59:53.780 --> 00:59:55.190
And then now one of

00:59:55.190 --> 00:59:57.755
their major efforts is
2017 on the expansion.

00:59:57.755 --> 00:59:59.270
And as we look to that,

00:59:59.270 --> 01:00:00.635
why we needed that.

01:00:00.635 --> 01:00:03.140
In 2004, when
we opened this,

01:00:03.140 --> 01:00:05.540
we thought we plenty
of space forever,

01:00:05.540 --> 01:00:07.085
and now we're
out of space.

01:00:07.085 --> 01:00:10.130
With volume increasing
as much as they have,

01:00:10.130 --> 01:00:11.945
as much as 25, 30%,

01:00:11.945 --> 01:00:13.585
we need more space.

01:00:13.585 --> 01:00:15.675
And that will be the
case for a while.

01:00:15.675 --> 01:00:17.340
Then there's I've
probably got this

01:00:17.340 --> 01:00:19.020
out of order, but
the surgery project,

01:00:19.020 --> 01:00:20.190
which is well
underway and should

01:00:20.190 --> 01:00:21.960
be done by August,

01:00:21.960 --> 01:00:23.490
end of August and
coming online

01:00:23.490 --> 01:00:25.410
by September, which
will be perfect.

01:00:25.410 --> 01:00:29.580
So summary Healthcare
finances is complicated.

01:00:29.580 --> 01:00:32.400
I mean, we can't do it
justice in an hour.

01:00:32.400 --> 01:00:34.110
I hope that you got
a little bit of

01:00:34.110 --> 01:00:36.150
taste of the
complexity and what

01:00:36.150 --> 01:00:38.295
it means within
our institution

01:00:38.295 --> 01:00:40.080
on how we manage that.

01:00:40.080 --> 01:00:42.210
But each input is unique.

01:00:42.210 --> 01:00:44.700
Therefore, care delivery
must be flexible.

01:00:44.700 --> 01:00:46.995
It can't be stagnant.

01:00:46.995 --> 01:00:48.720
Everybody we're going
to treat you the same.

01:00:48.720 --> 01:00:50.085
We'll put you on
a conveyor belt.

01:00:50.085 --> 01:00:51.690
We'll run you through

01:00:51.690 --> 01:00:53.085
because you're
all the same,

01:00:53.085 --> 01:00:55.905
and I can then control
all my costs that way.

01:00:55.905 --> 01:00:57.705
And we can't do
that in healthcare.

01:00:57.705 --> 01:00:59.220
Physician orders drive.

01:00:59.220 --> 01:01:01.740
Physicians still drive
everything we do.

01:01:01.740 --> 01:01:04.035
Without physicians
in our community,

01:01:04.035 --> 01:01:05.655
we would not
have a hospital.

01:01:05.655 --> 01:01:08.220
They still drive
everything

01:01:08.220 --> 01:01:09.975
that the care today.

01:01:09.975 --> 01:01:12.345
So orders drive
provisions of care,

01:01:12.345 --> 01:01:14.640
adding to the variability.

01:01:14.640 --> 01:01:17.130
Payment is also
variable depending

01:01:17.130 --> 01:01:20.040
on who's the
insurance payer?

01:01:20.040 --> 01:01:22.125
What coverage do you have?

01:01:22.125 --> 01:01:25.125
Does your insurance
company cover that today?

01:01:25.125 --> 01:01:26.745
Not tomorrow? By the way,

01:01:26.745 --> 01:01:28.260
one of those
things that we

01:01:28.260 --> 01:01:30.105
want an example of
this. What do I mean?

01:01:30.105 --> 01:01:33.540
Primera decided, and
I'll say this wrong,

01:01:33.540 --> 01:01:38.250
and please correct
me those that, no.

01:01:38.250 --> 01:01:41.640
But Propathol is
that the right word,

01:01:41.640 --> 01:01:43.785
the administration
of the drug with

01:01:43.785 --> 01:01:46.545
anesthesia drug,
especially colonoscopies.

01:01:46.545 --> 01:01:48.225
Doctor Jones likes that.

01:01:48.225 --> 01:01:49.605
It works very
well. He wants

01:01:49.605 --> 01:01:51.045
the CRNA in the room.

01:01:51.045 --> 01:01:52.425
>> It's patients
wagon too.

01:01:52.425 --> 01:01:53.970
>> Man. I loved it.
I had that done.

01:01:53.970 --> 01:01:56.025
It was awesome. I
remember nothing.

01:01:56.025 --> 01:01:57.510
But, you know, I
got to tell you,

01:01:57.510 --> 01:01:58.650
when I came out of
it, I had it done

01:01:58.650 --> 01:02:00.210
here I didn't
do it at home.

01:02:00.210 --> 01:02:01.890
And I had John O'Brien,

01:02:01.890 --> 01:02:03.810
my materials manner
come in and make

01:02:03.810 --> 01:02:04.770
sure I got to where I

01:02:04.770 --> 01:02:06.570
needed to go after
we were done.

01:02:06.570 --> 01:02:09.030
And I told him, Hey,

01:02:09.030 --> 01:02:10.515
call my wife,
tell her I died.

01:02:10.515 --> 01:02:11.745
'Cause I thought
it'd be funny.

01:02:11.745 --> 01:02:12.600
I don't remember actually

01:02:12.600 --> 01:02:15.240
saying that. I'm glad
he didn't call her.

01:02:15.240 --> 01:02:16.500
But I thought it
would be funny,

01:02:16.500 --> 01:02:18.030
I guess, apparently.

01:02:18.030 --> 01:02:19.230
He's probably
what you tell

01:02:19.230 --> 01:02:20.190
people under that stuff.

01:02:20.190 --> 01:02:22.560
It was awesome.
But premier

01:02:22.560 --> 01:02:24.420
decided, we're not
paying for that.

01:02:24.420 --> 01:02:26.415
It's an additional cost.

01:02:26.415 --> 01:02:29.175
Even though a physician
preference is that,

01:02:29.175 --> 01:02:30.885
they're just not
going to pay for it.

01:02:30.885 --> 01:02:34.350
So we help
subsidize that for

01:02:34.350 --> 01:02:35.910
the CRNAs because it's
really important to

01:02:35.910 --> 01:02:38.655
a physician for that
aspect of care.

01:02:38.655 --> 01:02:40.380
That's what insurance
companies do,

01:02:40.380 --> 01:02:41.760
so that insurance
company is

01:02:41.760 --> 01:02:43.725
part of that negotiating
those raised,

01:02:43.725 --> 01:02:46.050
payer mix regulations have

01:02:46.050 --> 01:02:49.260
a big influence of how
and what we do here.

01:02:49.260 --> 01:02:50.625
We're going through
part of that,

01:02:50.625 --> 01:02:51.690
within the next
few months,

01:02:51.690 --> 01:02:53.700
we'll have a review by

01:02:53.700 --> 01:02:55.350
an outside agency
that will come

01:02:55.350 --> 01:02:57.030
in and evaluate
how we're doing,

01:02:57.030 --> 01:02:58.785
are we meeting the
Medicare standards?

01:02:58.785 --> 01:03:00.990
Technology
changes rapidly.

01:03:00.990 --> 01:03:02.520
How do we
reinvest in that?

01:03:02.520 --> 01:03:04.320
So we need a profit
in order to reinvest,

01:03:04.320 --> 01:03:05.790
or the foundation
has stepped in in

01:03:05.790 --> 01:03:07.950
many gaps where we
didn't have that

01:03:07.950 --> 01:03:09.480
to be able to
offset that and

01:03:09.480 --> 01:03:11.400
help us continue to offer

01:03:11.400 --> 01:03:14.070
high quality
technology and

01:03:14.070 --> 01:03:15.930
keep our prices
reasonable.

01:03:15.930 --> 01:03:17.820
And then many
different players in

01:03:17.820 --> 01:03:22.845
healthcare. Yes, sir.

01:03:22.845 --> 01:03:24.840
>> Truly a negotiable rate

01:03:24.840 --> 01:03:27.630
what I hear from

01:03:27.630 --> 01:03:30.510
insurance companies
standard here,

01:03:30.510 --> 01:03:31.860
what is the limitation?

01:03:31.860 --> 01:03:33.555
You may want to negotiate

01:03:33.555 --> 01:03:34.710
you're only
going to be told

01:03:34.710 --> 01:03:36.000
how much you're
going to get.

01:03:36.000 --> 01:03:37.950
>> So the question
is, is it

01:03:37.950 --> 01:03:40.830
a truly negotiated
rate or you just told?

01:03:40.830 --> 01:03:43.800
Medicare or Medicaid,
they're the big boy

01:03:43.800 --> 01:03:46.875
you're told. You
don't negotiate.

01:03:46.875 --> 01:03:49.740
Other commercial
payers, you do

01:03:49.740 --> 01:03:52.335
have the opportunity
to negotiate.

01:03:52.335 --> 01:03:56.880
You're negotiating power
is limited by even

01:03:56.880 --> 01:03:59.745
within our community wall

01:03:59.745 --> 01:04:02.115
by who's negotiating what?

01:04:02.115 --> 01:04:04.830
The more players and
as we talk about

01:04:04.830 --> 01:04:06.060
fully integrated health

01:04:06.060 --> 01:04:07.260
systems where you have

01:04:07.260 --> 01:04:09.060
physicians and
hospital and

01:04:09.060 --> 01:04:10.470
all that working
collectively,

01:04:10.470 --> 01:04:12.825
you have more
negotiating power.

01:04:12.825 --> 01:04:14.940
So then you do have
the ability to

01:04:14.940 --> 01:04:17.070
go and see now,

01:04:17.070 --> 01:04:19.140
at some point, you got
to approve outcomes.

01:04:19.140 --> 01:04:20.670
If you're improving,
this is what we're

01:04:20.670 --> 01:04:22.440
doing, and we're
working on that,

01:04:22.440 --> 01:04:24.165
part of the center
of excellence with

01:04:24.165 --> 01:04:26.385
the orthopedic surgeons

01:04:26.385 --> 01:04:27.975
is in developing that.

01:04:27.975 --> 01:04:29.700
At some point,
we will develop

01:04:29.700 --> 01:04:31.440
a bundle payment
that we can take to

01:04:31.440 --> 01:04:35.625
a Primera or to a
uniform and say,

01:04:35.625 --> 01:04:37.410
why would you want to
send your patients to

01:04:37.410 --> 01:04:39.285
the West Side to
have this done here?

01:04:39.285 --> 01:04:40.710
Here's our outcomes.
By the way,

01:04:40.710 --> 01:04:43.080
our prices are half

01:04:43.080 --> 01:04:45.015
of what they
are over there.

01:04:45.015 --> 01:04:46.530
So why wouldn't you
want to have it done

01:04:46.530 --> 01:04:48.030
here, keep them local?

01:04:48.030 --> 01:04:49.590
But if you can
prove that, you

01:04:49.590 --> 01:04:50.895
got to have statistics
to do that.

01:04:50.895 --> 01:04:52.350
You got better
negotiating power.

01:04:52.350 --> 01:04:54.900
>> How long
negotiation look for?

01:04:54.900 --> 01:04:57.000
>> Typically, two
to three years.

01:04:57.000 --> 01:04:58.350
So right now I'm

01:04:58.350 --> 01:05:00.465
working on the
Primera contract.

01:05:00.465 --> 01:05:02.850
Hospital loan,
it's really hard

01:05:02.850 --> 01:05:05.250
because Grandma just
signed last year,

01:05:05.250 --> 01:05:09.060
so I'm not going to get
any better than that.

01:05:09.060 --> 01:05:12.060
If I had an isolated
market, I could.

01:05:12.060 --> 01:05:14.250
So I would take
the same contract

01:05:14.250 --> 01:05:16.755
that Tristate can
get with Primera,

01:05:16.755 --> 01:05:20.070
but they have one
eighth the number

01:05:20.070 --> 01:05:22.800
of covered lives
in their arena,

01:05:22.800 --> 01:05:24.900
so they can get 90 plus
percent of charges.

01:05:24.900 --> 01:05:27.105
They just don't have
the same volume we do.

01:05:27.105 --> 01:05:29.445
Were here, they can
drive a lot of that.

01:05:29.445 --> 01:05:32.340
But it's getting more
and more challenging.

01:05:32.340 --> 01:05:35.460
Have people heard of
what narrow markets are?

01:05:35.460 --> 01:05:37.350
Okay, so we have

01:05:37.350 --> 01:05:40.500
one in our arena. It's
a catalyst group.

01:05:40.500 --> 01:05:42.780
They went directly to

01:05:42.780 --> 01:05:44.730
the Blue Cross of Idaho

01:05:44.730 --> 01:05:47.370
to a very isolated market,

01:05:47.370 --> 01:05:48.510
and they said, We'll

01:05:48.510 --> 01:05:50.070
take care of
those patients.

01:05:50.070 --> 01:05:52.020
If that patient
goes outside,

01:05:52.020 --> 01:05:56.580
so these are self
purchased insurance plans.

01:05:56.580 --> 01:05:59.775
If that patient goes
outside of the market,

01:05:59.775 --> 01:06:03.105
they have a $50,000
deductible.

01:06:03.105 --> 01:06:04.740
So they can go to Gritman.

01:06:04.740 --> 01:06:06.315
They can't come
to Pullman,

01:06:06.315 --> 01:06:08.295
because that's how narrow

01:06:08.295 --> 01:06:09.750
they did the market.

01:06:09.750 --> 01:06:13.300
They kept it in Idaho.
Those are happening.

01:06:13.480 --> 01:06:16.370
>> [inaudible] for
pricing supply and

01:06:16.370 --> 01:06:18.920
demand in theory,
determines price.

01:06:18.920 --> 01:06:21.920
So how has the
Pullman Hospital done

01:06:21.920 --> 01:06:23.555
in demand growth

01:06:23.555 --> 01:06:25.580
compared to
population growth?

01:06:25.580 --> 01:06:28.085
How are we competing
with the other guys?

01:06:28.085 --> 01:06:30.605
>> How are we competing
on supply and demand?

01:06:30.605 --> 01:06:32.480
>> Are we
increasing demand

01:06:32.480 --> 01:06:35.300
as fast or faster as
the population growth?

01:06:35.300 --> 01:06:37.070
>> Not in all areas.

01:06:37.070 --> 01:06:41.240
So a lot of that is
contingent on providers.

01:06:41.240 --> 01:06:42.710
And can you get a provider

01:06:42.710 --> 01:06:43.970
within those specialties?

01:06:43.970 --> 01:06:45.050
One of the things we're

01:06:45.050 --> 01:06:46.640
actively trying
to recruit, too,

01:06:46.640 --> 01:06:49.280
and we have been
successful here just

01:06:49.280 --> 01:06:52.115
recently is in non
invasive cardiology.

01:06:52.115 --> 01:06:54.485
The other areas in
pulmonology and sleep.

01:06:54.485 --> 01:06:56.075
The demands there,

01:06:56.075 --> 01:06:57.410
we have to outsource
that today,

01:06:57.410 --> 01:06:59.210
so an outside group
does all of that.

01:06:59.210 --> 01:07:00.740
All of those funds
go outside of

01:07:00.740 --> 01:07:03.230
our market to be
able to do that,

01:07:03.230 --> 01:07:04.880
because we may
do the study

01:07:04.880 --> 01:07:07.370
here but the providers
aren't here.

01:07:07.370 --> 01:07:08.930
So there's no
reinvestment back into

01:07:08.930 --> 01:07:11.615
the community for
those like services.

01:07:11.615 --> 01:07:13.085
So in some areas,

01:07:13.085 --> 01:07:14.240
it's a real challenge

01:07:14.240 --> 01:07:15.785
because it's
specific on that.

01:07:15.785 --> 01:07:17.510
In other areas now
we're keeping up,

01:07:17.510 --> 01:07:18.860
and that's one of the
reasons we're looking

01:07:18.860 --> 01:07:21.110
at building the fourth or

01:07:21.110 --> 01:07:23.525
adding same day
services expansion

01:07:23.525 --> 01:07:25.700
is because the demand
has been there.

01:07:25.700 --> 01:07:27.680
We are at capacity
and we have

01:07:27.680 --> 01:07:29.900
just no more room in
order to get that.

01:07:29.900 --> 01:07:33.320
Now, I say that almost
tongue in cheek,

01:07:33.320 --> 01:07:34.700
because there's a lot to

01:07:34.700 --> 01:07:36.020
do with physician
preferences.

01:07:36.020 --> 01:07:39.020
And if you're a physician

01:07:39.020 --> 01:07:41.165
and Dr. Tinsted
could speak to this,

01:07:41.165 --> 01:07:43.130
you don't want to start
surgery at 6:00 at

01:07:43.130 --> 01:07:45.275
night unless it's
an emergency.

01:07:45.275 --> 01:07:47.150
You prefer to get
in and get out,

01:07:47.150 --> 01:07:48.230
and so you get back
to your clinical

01:07:48.230 --> 01:07:49.580
care for your patients.

01:07:49.580 --> 01:07:51.800
And so most
physicians have

01:07:51.800 --> 01:07:52.940
blocked schedules
because then

01:07:52.940 --> 01:07:54.125
they can control
their life.

01:07:54.125 --> 01:07:55.040
They don't want to just,

01:07:55.040 --> 01:07:57.050
what do you have today?

01:07:57.050 --> 01:07:58.340
We'll call and see if we

01:07:58.340 --> 01:07:58.940
can get them in today.

01:07:58.940 --> 01:08:00.665
That doesn't work very
well in their life.

01:08:00.665 --> 01:08:03.095
So you have to have
that capacity.

01:08:03.095 --> 01:08:04.820
But in order to do that,
sometimes you have

01:08:04.820 --> 01:08:05.990
those downsides
because nobody

01:08:05.990 --> 01:08:06.670
wants to start 2:00,

01:08:06.670 --> 01:08:07.820
3:00, 4:00 in
the afternoon.

01:08:07.820 --> 01:08:09.665
If we could run 24/7

01:08:09.665 --> 01:08:12.545
in those areas and
people willing to do it,

01:08:12.545 --> 01:08:15.230
you could control the
cost much better.

01:08:15.230 --> 01:08:16.670
But you can't today

01:08:16.670 --> 01:08:18.050
because a lot of it's
best off preface.

01:08:18.050 --> 01:08:19.580
>> Practical areas
you'll be dealing with.

01:08:19.580 --> 01:08:21.300
>> You might.

01:08:21.910 --> 01:08:23.510
>> [OVERLAPPING]
What you have in

01:08:23.510 --> 01:08:24.590
this market is, well,

01:08:24.590 --> 01:08:26.390
I can go 9.2

01:08:26.390 --> 01:08:27.650
miles and I can

01:08:27.650 --> 01:08:28.895
start at 7:00 so
I'll take it there.

01:08:28.895 --> 01:08:30.530
Oh, no, wait you
stop. We want

01:08:30.530 --> 01:08:32.105
them here we don't
want you to do that.

01:08:32.105 --> 01:08:33.830
So some of that
predictability

01:08:33.830 --> 01:08:34.820
and stuff is very

01:08:34.820 --> 01:08:36.350
challenging in
our markets just

01:08:36.350 --> 01:08:38.510
based on providing
healthcare.

01:08:38.510 --> 01:08:40.640
So I don't know
if that totally

01:08:40.640 --> 01:08:42.815
answered it
adequately or not.

01:08:42.815 --> 01:08:44.255
We can talk more
if it didn't,

01:08:44.255 --> 01:08:47.490
no. Other questions?

01:08:49.000 --> 01:08:51.845
>> You must have
figures too.

01:08:51.845 --> 01:08:54.230
>> I have a good figure.

01:08:54.230 --> 01:08:56.420
>> [OVERLAPPING] who's
top of the game.

01:08:56.420 --> 01:08:58.040
But even a surgeon

01:08:58.040 --> 01:08:59.705
knows that they're
only good for

01:08:59.705 --> 01:09:02.465
so many hours of
solid surgery

01:09:02.465 --> 01:09:04.310
before they get a

01:09:04.310 --> 01:09:05.840
little punch drunk,
too, a little bit.

01:09:05.840 --> 01:09:08.615
So they know that
you can commit

01:09:08.615 --> 01:09:12.005
a surgery unit for how
long and of course,

01:09:12.005 --> 01:09:14.000
that affect
your price too.

01:09:14.000 --> 01:09:17.075
>> Well, yeah, and
that's really dependent.

01:09:17.075 --> 01:09:19.040
You're exactly right.

01:09:19.040 --> 01:09:24.710
The quality of care
of your providers,

01:09:24.710 --> 01:09:26.810
be it your
nursing staff to

01:09:26.810 --> 01:09:29.300
your physicians
diminishes greatly

01:09:29.300 --> 01:09:32.000
if you don't give them
enough rest time.

01:09:32.000 --> 01:09:35.540
And so one of the
key importances

01:09:35.540 --> 01:09:38.120
of recruitment
is to provide,

01:09:38.120 --> 01:09:41.180
and especially physicians
break in between,

01:09:41.180 --> 01:09:44.345
so they aren't on
call all of the time

01:09:44.345 --> 01:09:45.965
because you will
burn them out

01:09:45.965 --> 01:09:48.695
and in short order.

01:09:48.695 --> 01:09:52.220
Same goes for your nursing
and support staff.

01:09:52.220 --> 01:09:53.300
If they don't have rest

01:09:53.300 --> 01:09:54.770
between shifts, and
we used to do this.

01:09:54.770 --> 01:09:56.000
So you'd be done,

01:09:56.000 --> 01:09:56.975
and you had to go late

01:09:56.975 --> 01:09:58.325
because the
case went late,

01:09:58.325 --> 01:09:59.750
and you were on call,

01:09:59.750 --> 01:10:00.740
and you got called back,

01:10:00.740 --> 01:10:02.240
and then you had
to come back in at

01:10:02.240 --> 01:10:03.170
7:00 in the morning to

01:10:03.170 --> 01:10:04.190
start it all over again.

01:10:04.190 --> 01:10:06.980
The quality goes down.

01:10:06.980 --> 01:10:10.595
Now what we do is we
have a call shift.

01:10:10.595 --> 01:10:12.395
And then when they're

01:10:12.395 --> 01:10:13.925
not on call, then
they're off.

01:10:13.925 --> 01:10:15.200
So they don't
come in the next

01:10:15.200 --> 01:10:16.910
day that's a
different group.

01:10:16.910 --> 01:10:18.425
So you have to have staff,

01:10:18.425 --> 01:10:20.555
which adds some cost,

01:10:20.555 --> 01:10:23.000
but it provides a
better quality of care.

01:10:23.000 --> 01:10:24.350
Plus rest between shift,

01:10:24.350 --> 01:10:25.370
we guarantee a
certain amount

01:10:25.370 --> 01:10:26.720
of rest between shift

01:10:26.720 --> 01:10:30.155
so that they aren't
only getting eight,

01:10:30.155 --> 01:10:31.370
that they're
getting 10, so

01:10:31.370 --> 01:10:32.720
they get a full
night's sleep.

01:10:32.720 --> 01:10:34.550
>> You're speaking
of staff, there's

01:10:34.550 --> 01:10:35.630
a difference in cost

01:10:35.630 --> 01:10:37.280
too depending on if you

01:10:37.280 --> 01:10:40.025
have your own staff
versus travelers.

01:10:40.025 --> 01:10:42.350
We have allowed travellers

01:10:42.350 --> 01:10:43.520
here from time to time.

01:10:43.520 --> 01:10:44.795
>> Yeah, occasionally.

01:10:44.795 --> 01:10:46.280
>> [inaudible]
Swedish in Seattle.

01:10:46.280 --> 01:10:48.320
>> Yeah, 2.5 times
the cost for

01:10:48.320 --> 01:10:51.005
traveling compared to
what you can keep here.

01:10:51.005 --> 01:10:53.315
You're typically
doing that in areas.

01:10:53.315 --> 01:10:56.765
Most of the time here
in our market now,

01:10:56.765 --> 01:10:58.310
not when you were
on the board,

01:10:58.310 --> 01:10:59.600
we had a problem back then

01:10:59.600 --> 01:11:01.370
just turnover because you

01:11:01.370 --> 01:11:03.260
were doing a lot of
low senses, etc.

01:11:03.260 --> 01:11:04.550
Today, if we have

01:11:04.550 --> 01:11:06.380
a travelers generally do

01:11:06.380 --> 01:11:08.255
to somebody that's
on maternity leave.

01:11:08.255 --> 01:11:09.485
It's a planned event

01:11:09.485 --> 01:11:10.370
you know they're
going to be out

01:11:10.370 --> 01:11:12.620
for 12 weeks.
It makes sense.

01:11:12.620 --> 01:11:13.880
You're going to
pay a little more,

01:11:13.880 --> 01:11:15.860
but you wouldn't want
to hire because you

01:11:15.860 --> 01:11:18.035
made a commitment to
employ them forever.

01:11:18.035 --> 01:11:19.775
So you do short term
stuff like that.

01:11:19.775 --> 01:11:22.310
We don't have nearly
the travelers we

01:11:22.310 --> 01:11:26.130
used to. It's
typically that.

01:11:28.690 --> 01:11:32.810
>> Do you think the
value based system

01:11:32.810 --> 01:11:34.175
will survive if

01:11:34.175 --> 01:11:37.025
the Affordable Care
Act went away?

01:11:37.025 --> 01:11:39.380
That was in the
Affordable Care Act,

01:11:39.380 --> 01:11:42.365
meaningful use, etc.

01:11:42.365 --> 01:11:43.610
>> So, will the value

01:11:43.610 --> 01:11:47.000
based payment
system continue

01:11:47.000 --> 01:11:52.775
to exist if the Affordable
Care Act changes?

01:11:52.775 --> 01:11:54.680
The Affordable Care
Act will change,

01:11:54.680 --> 01:11:56.870
inevitably, it'll
change somehow.

01:11:56.870 --> 01:11:58.385
It doesn't matter
what administration,

01:11:58.385 --> 01:12:02.120
it will change. I do.

01:12:02.120 --> 01:12:05.330
Health care at
the rate it was

01:12:05.330 --> 01:12:09.005
going is non sustainable
it has to change.

01:12:09.005 --> 01:12:10.565
You can't continue to have

01:12:10.565 --> 01:12:13.310
escalating payments
and expect

01:12:13.310 --> 01:12:14.330
anybody to be willing

01:12:14.330 --> 01:12:17.945
to do and be able
to pay for it.

01:12:17.945 --> 01:12:19.310
So what does
have to change.

01:12:19.310 --> 01:12:22.130
How we deliver healthcare
needs to change.

01:12:22.130 --> 01:12:23.510
We're reactionary,

01:12:23.510 --> 01:12:25.595
but America has done
that to himself.

01:12:25.595 --> 01:12:27.110
We've done to ourselves.

01:12:27.110 --> 01:12:28.520
We don't want
anybody telling us

01:12:28.520 --> 01:12:29.870
what to do we
just want to make

01:12:29.870 --> 01:12:31.790
it better when we
didn't do it because

01:12:31.790 --> 01:12:35.225
that's a lot of
how we live.

01:12:35.225 --> 01:12:38.075
I didn't take care of
myself, but fix me now.

01:12:38.075 --> 01:12:40.055
So some of that
needs to change.

01:12:40.055 --> 01:12:42.710
That getting in front
of that and changing

01:12:42.710 --> 01:12:44.075
our culture and how we

01:12:44.075 --> 01:12:46.325
respond to that
needs to change.

01:12:46.325 --> 01:12:48.215
So, yeah, I do believe

01:12:48.215 --> 01:12:49.850
in some sense, it will.

01:12:49.850 --> 01:12:50.900
There's demonstrations
that are

01:12:50.900 --> 01:12:53.930
showing how it will be.

01:12:53.930 --> 01:12:55.655
I don't know
what it'll take.

01:12:55.655 --> 01:12:57.380
But today,

01:12:57.380 --> 01:13:00.080
part of the problem is
the fragmentation in

01:13:00.080 --> 01:13:02.000
healthcare and the lack of

01:13:02.000 --> 01:13:03.170
communication between

01:13:03.170 --> 01:13:04.805
even us and our providers.

01:13:04.805 --> 01:13:05.780
You think you're all on

01:13:05.780 --> 01:13:06.710
the same page,
but you're really

01:13:06.710 --> 01:13:08.510
not in all sense.

01:13:08.510 --> 01:13:11.915
So streamlining that,

01:13:11.915 --> 01:13:14.000
integrating a
lot of that will

01:13:14.000 --> 01:13:16.220
have a lot of
impact on that.

01:13:16.220 --> 01:13:18.080
And I do believe that

01:13:18.080 --> 01:13:20.195
it will take
such a foothold.

01:13:20.195 --> 01:13:23.420
It started out at 20%
demonstration expecting

01:13:23.420 --> 01:13:24.455
two years value based

01:13:24.455 --> 01:13:25.505
purchasing will represent

01:13:25.505 --> 01:13:28.190
80% of the payments
in two years.

01:13:28.190 --> 01:13:29.720
They originally
thought it would be

01:13:29.720 --> 01:13:31.580
five but that's how

01:13:31.580 --> 01:13:33.560
quickly it has
broadcast it out.

01:13:33.560 --> 01:13:35.165
So it's here to stay,

01:13:35.165 --> 01:13:37.565
and we've got to learn
how to deal with it.

01:13:37.565 --> 01:13:39.395
The problem will be

01:13:39.395 --> 01:13:41.900
is we're under this
payment model,

01:13:41.900 --> 01:13:43.910
which the more we do,
the more we make,

01:13:43.910 --> 01:13:44.870
in some sense, I just

01:13:44.870 --> 01:13:46.130
contradicted something
else like this.

01:13:46.130 --> 01:13:48.500
But that's the
healthcare system

01:13:48.500 --> 01:13:51.575
today, fee for service.

01:13:51.575 --> 01:13:54.575
Tomorrow, when we
finally get there,

01:13:54.575 --> 01:13:56.000
I don't know what
it'll look like.

01:13:56.000 --> 01:13:58.490
When it's value based and

01:13:58.490 --> 01:13:59.690
you're providing value

01:13:59.690 --> 01:14:01.580
and keeping
people healthy,

01:14:01.580 --> 01:14:03.500
how do you
bridge that gap?

01:14:03.500 --> 01:14:05.225
That'll be the challenge.

01:14:05.225 --> 01:14:07.460
And hopefully you
have enough to

01:14:07.460 --> 01:14:10.700
survive that
period of time.

01:14:10.700 --> 01:14:12.290
And so it's
really important.

01:14:12.290 --> 01:14:13.730
Now, we utilize again,

01:14:13.730 --> 01:14:15.740
I'm promoting Ruben
and his staff.

01:14:15.740 --> 01:14:17.600
But that's what
we've determined

01:14:17.600 --> 01:14:20.240
as part of that
pathway there to

01:14:20.240 --> 01:14:24.170
survive those time
periods so that

01:14:24.170 --> 01:14:26.210
we aren't falling behind
in technology and

01:14:26.210 --> 01:14:28.280
other things so that
when you get there,

01:14:28.280 --> 01:14:29.480
you can't provide
it because you're

01:14:29.480 --> 01:14:31.370
too far behind
the curve anyway.

01:14:31.370 --> 01:14:33.830
>> When will it come
that you're going

01:14:33.830 --> 01:14:35.720
to be dictated that I

01:14:35.720 --> 01:14:37.820
don't need to have
another MRI just

01:14:37.820 --> 01:14:40.760
because I had one here
for the specialist.

01:14:40.760 --> 01:14:42.440
And the insurance
company is going

01:14:42.440 --> 01:14:44.060
to say you already
have one MRI

01:14:44.060 --> 01:14:45.800
for that particular injury

01:14:45.800 --> 01:14:47.180
you don't need to
have another one

01:14:47.180 --> 01:14:52.070
or they won't approve
the second one.

01:14:52.070 --> 01:14:54.410
>> So the question is,
when will that happen?

01:14:54.410 --> 01:14:56.030
When will that occur?

01:14:56.030 --> 01:14:59.000
Meaning, will
insurance companies

01:14:59.000 --> 01:15:00.215
dictate the fact that

01:15:00.215 --> 01:15:02.630
somebody else ordered
a secondary test

01:15:02.630 --> 01:15:05.645
that has already been
done? Is that fair?

01:15:05.645 --> 01:15:07.340
I'm doing this for her.

01:15:07.340 --> 01:15:08.900
She's told me I got
to repeat these,

01:15:08.900 --> 01:15:12.170
so I'll get paid tonight.

01:15:12.170 --> 01:15:14.960
No, I'm not getting
paid anyway.

01:15:14.960 --> 01:15:17.270
It's cost, I'm
going to paid cost.

01:15:17.270 --> 01:15:20.990
So the question is,
when will that happen?

01:15:20.990 --> 01:15:25.730
It's happened, that
happens today.

01:15:25.990 --> 01:15:29.180
Insurance companies,
if you had an MR,

01:15:29.180 --> 01:15:30.410
they aren't going
to approve.

01:15:30.410 --> 01:15:33.560
That's part of that
whole pre authorization.

01:15:33.560 --> 01:15:36.140
If they see you had
this test done,

01:15:36.140 --> 01:15:38.885
they're not approving
one for another one.

01:15:38.885 --> 01:15:40.940
They'll deny it, so you

01:15:40.940 --> 01:15:42.770
won't get it. So
that happens today?

01:15:42.770 --> 01:15:48.890
[inaudible] Exactly.

01:15:48.890 --> 01:15:50.420
So some of that's
happening today.

01:15:50.420 --> 01:15:52.550
Now, is there
duplication of services?

01:15:52.550 --> 01:15:54.440
Yes. That still
happens in some sense,

01:15:54.440 --> 01:15:56.750
but more and more
that's changing.

01:15:56.750 --> 01:15:58.460
So one of the things that

01:15:58.460 --> 01:16:00.710
is when you
start looking at

01:16:00.710 --> 01:16:02.210
an integrated
model and you

01:16:02.210 --> 01:16:04.640
start looking about
coordination,

01:16:04.640 --> 01:16:06.380
it's when you're all
on the same team.

01:16:06.380 --> 01:16:08.930
Well Dr. Joe is

01:16:08.930 --> 01:16:10.430
much better at
this than I am.

01:16:10.430 --> 01:16:11.510
I'm going to
send my patient

01:16:11.510 --> 01:16:12.590
there because

01:16:12.590 --> 01:16:13.955
I know that patient
will come back,

01:16:13.955 --> 01:16:16.415
and we're not competing
against each other.

01:16:16.415 --> 01:16:19.310
That'll be important
to control costs.

01:16:19.310 --> 01:16:20.390
Because today we compete

01:16:20.390 --> 01:16:21.170
against each other for

01:16:21.170 --> 01:16:24.050
the same patient for
many different services.

01:16:24.050 --> 01:16:27.035
We have a few more
minutes. Yeah, Pat.

01:16:27.035 --> 01:16:28.430
>> Steve, what do you see

01:16:28.430 --> 01:16:31.040
as the overriding benefits

01:16:31.040 --> 01:16:33.515
of acquiring other
medical practices.

01:16:33.515 --> 01:16:35.270
That's the first
part of my question.

01:16:35.270 --> 01:16:36.695
And the second part is,

01:16:36.695 --> 01:16:40.940
do you see us acquiring
more in the future?

01:16:40.940 --> 01:16:42.590
>> So the question
is, what are

01:16:42.590 --> 01:16:43.985
the advantages
of acquiring

01:16:43.985 --> 01:16:45.425
other medical practices,

01:16:45.425 --> 01:16:48.500
be it physician
practices or anything?

01:16:48.500 --> 01:16:50.840
And will we look

01:16:50.840 --> 01:16:52.475
to acquire more
in the future?

01:16:52.475 --> 01:16:53.690
I will tell you
this Pullman

01:16:53.690 --> 01:16:54.800
Regional Hospital has not

01:16:54.800 --> 01:16:55.940
aggressively ever gone

01:16:55.940 --> 01:16:57.395
out and tried to buy any.

01:16:57.395 --> 01:17:02.180
We have reactionarily
responded to requests.

01:17:02.180 --> 01:17:06.005
So Plus Pediatrics
as an example, 2009,

01:17:06.005 --> 01:17:10.535
remember, Al, Dr.
Frosted, and Mike.

01:17:10.535 --> 01:17:13.940
When Al decided he
was going to retire,

01:17:13.940 --> 01:17:16.250
Mike realized I'm
going to be basically

01:17:16.250 --> 01:17:17.630
the only pediatrician

01:17:17.630 --> 01:17:18.950
on the blues, I
don't want it.

01:17:18.950 --> 01:17:20.345
And I don't want
this headache.

01:17:20.345 --> 01:17:21.860
And by the way, I
can make more money

01:17:21.860 --> 01:17:23.330
by being a locum and

01:17:23.330 --> 01:17:24.590
traveling and
getting out of here

01:17:24.590 --> 01:17:27.260
and making a
lot more money.

01:17:27.260 --> 01:17:30.500
So they realized that

01:17:30.500 --> 01:17:31.700
in order to
have pediatric,

01:17:31.700 --> 01:17:33.230
which Al had
established on

01:17:33.230 --> 01:17:35.600
the Palouse and
continued to be here,

01:17:35.600 --> 01:17:36.950
they needed
something different.

01:17:36.950 --> 01:17:38.690
They came to the
hospital and said,

01:17:38.690 --> 01:17:41.315
would you be willing
to look at this?

01:17:41.315 --> 01:17:43.910
And for the sake
of the community,

01:17:43.910 --> 01:17:45.215
we responded and say,

01:17:45.215 --> 01:17:46.865
yeah, we'll look at that.

01:17:46.865 --> 01:17:48.710
Most of everything we've

01:17:48.710 --> 01:17:50.870
done has been in
response, too.

01:17:50.870 --> 01:17:53.120
So many providers today,

01:17:53.120 --> 01:17:54.620
when they look
at the model

01:17:54.620 --> 01:17:55.730
of reimbursement
and trying

01:17:55.730 --> 01:17:56.510
to recruit into it,

01:17:56.510 --> 01:17:58.400
are facing challenges
and saying,

01:17:58.400 --> 01:17:59.975
people don't want to
come to that model,

01:17:59.975 --> 01:18:01.070
they will come to the
hospital and say,

01:18:01.070 --> 01:18:02.480
can we look at
something different?

01:18:02.480 --> 01:18:03.650
We'll always look and say,

01:18:03.650 --> 01:18:05.105
what does that look like?

01:18:05.105 --> 01:18:07.340
So there's no future plans

01:18:07.340 --> 01:18:09.605
right now to continue,

01:18:09.605 --> 01:18:12.590
but we would respond,
being the thing.

01:18:12.590 --> 01:18:14.660
Some have decided to
stay independent,

01:18:14.660 --> 01:18:17.000
the advantages that we're

01:18:17.000 --> 01:18:19.835
starting to see
that are coming.

01:18:19.835 --> 01:18:21.590
I talked about
care coordination,

01:18:21.590 --> 01:18:23.195
I mentioned a couple
of different times.

01:18:23.195 --> 01:18:25.730
There are new
reimbursement models that

01:18:25.730 --> 01:18:28.445
will pay you per member
per month to do that.

01:18:28.445 --> 01:18:30.635
Most all that resides
in primary care.

01:18:30.635 --> 01:18:31.910
We had no access

01:18:31.910 --> 01:18:33.515
because we had
no primary care.

01:18:33.515 --> 01:18:36.230
Under our clinic
network provider

01:18:36.230 --> 01:18:38.060
that to get to

01:18:38.060 --> 01:18:39.650
the new revenue
streams that are

01:18:39.650 --> 01:18:42.710
emerging under these
value based models,

01:18:42.710 --> 01:18:44.405
that's one of
the advantages

01:18:44.405 --> 01:18:47.285
of coordination
and integration.

01:18:47.285 --> 01:18:49.595
So that's coming,

01:18:49.595 --> 01:18:51.935
and we're getting
ahead of some of that.

01:18:51.935 --> 01:18:54.365
Contract negotiation
because you're all going

01:18:54.365 --> 01:18:55.490
to the same
person and you're

01:18:55.490 --> 01:18:56.870
not divide and conquer,

01:18:56.870 --> 01:18:58.970
you're going
jointly, we'll

01:18:58.970 --> 01:19:01.415
also have some
advantages there.

01:19:01.415 --> 01:19:03.500
>> You just took
over Pullman

01:19:03.500 --> 01:19:05.045
Family Medicine
as of April.

01:19:05.045 --> 01:19:05.855
>> Correct.

01:19:05.855 --> 01:19:06.365
>> So how do

01:19:06.365 --> 01:19:10.560
those competing
practices recruit?

01:19:12.880 --> 01:19:14.705
>> Well,

01:19:14.705 --> 01:19:16.400
I'm sure I understand
your question.

01:19:16.400 --> 01:19:17.420
>> Do they recruit
separately?

01:19:17.420 --> 01:19:18.095
>> No.

01:19:18.095 --> 01:19:19.310
>> If they were
asked to recruit

01:19:19.310 --> 01:19:24.920
a general physician
[inaudible]

01:19:24.920 --> 01:19:27.485
>> So I see your
question now.

01:19:27.485 --> 01:19:30.395
So the question
is, is today

01:19:30.395 --> 01:19:32.090
Pullman Family
Medicine may

01:19:32.090 --> 01:19:34.625
have an opening. How
do they recruit?

01:19:34.625 --> 01:19:36.890
How's the hospital
involvement with

01:19:36.890 --> 01:19:38.495
that compared to like
Palouse Medical Group?

01:19:38.495 --> 01:19:40.010
Today we're
working closely

01:19:40.010 --> 01:19:41.090
with Pullman
Family Medicine,

01:19:41.090 --> 01:19:42.140
identifying what the needs

01:19:42.140 --> 01:19:43.175
are of the community,

01:19:43.175 --> 01:19:46.085
what type of provider
should be there?

01:19:46.085 --> 01:19:49.220
We work with them jointly.

01:19:49.220 --> 01:19:50.630
Palouse Medical Group
because they're

01:19:50.630 --> 01:19:53.645
independent are out
doing their thing.

01:19:53.645 --> 01:19:55.595
They're trying
to recruit in.

01:19:55.595 --> 01:19:58.980
There's still a
competitive model.

01:19:59.110 --> 01:20:01.670
The nice thing is,
in our market,

01:20:01.670 --> 01:20:03.770
I'll tell you
today, we work

01:20:03.770 --> 01:20:04.730
closely with them and

01:20:04.730 --> 01:20:05.870
have a lot of
communication.

01:20:05.870 --> 01:20:08.240
So thankfully enough, it

01:20:08.240 --> 01:20:11.870
isn't eat what
one can and kill.

01:20:11.870 --> 01:20:15.740
It's whatever I do for
me is just my thing,

01:20:15.740 --> 01:20:17.570
and it's that tragedy
of the commons,

01:20:17.570 --> 01:20:18.200
which we're all going to

01:20:18.200 --> 01:20:19.430
fish out of the same pond.

01:20:19.430 --> 01:20:21.260
The more fish I
make or catch,

01:20:21.260 --> 01:20:22.190
the better off I am

01:20:22.190 --> 01:20:23.645
until we're all
out of fish.

01:20:23.645 --> 01:20:25.925
That doesn't happen
today. We do coordinate.

01:20:25.925 --> 01:20:27.350
So there's some
communication

01:20:27.350 --> 01:20:29.525
which is nice
in our market.

01:20:29.525 --> 01:20:31.475
It's not a stream
line, though,

01:20:31.475 --> 01:20:32.990
because we don't have
that involvement.

01:20:32.990 --> 01:20:34.070
Yes, sir.

01:20:34.070 --> 01:20:37.055
>> When you talk
about coordination,

01:20:37.055 --> 01:20:39.290
you see changes in

01:20:39.290 --> 01:20:42.005
the hospitals,
for example,

01:20:42.005 --> 01:20:44.585
with all of the
hospitals in this area,

01:20:44.585 --> 01:20:47.720
some of them might
end up closing.

01:20:47.720 --> 01:20:49.325
>> That's a
great question.

01:20:49.325 --> 01:20:50.840
So the question is,

01:20:50.840 --> 01:20:52.640
in this area will

01:20:52.640 --> 01:20:55.775
all hospitals
exist, long term?

01:20:55.775 --> 01:20:57.530
Will some in danger of

01:20:57.530 --> 01:21:00.960
closing or is there
better models?

01:21:02.800 --> 01:21:05.780
I couldn't
professionally tell you

01:21:05.780 --> 01:21:09.155
that all will exist
and should exist.

01:21:09.155 --> 01:21:11.660
There's a lot of
duplication of services.

01:21:11.660 --> 01:21:16.265
And I lived the cord
run for three years.

01:21:16.265 --> 01:21:20.120
It doesn't make sense
to have three RMRIs in

01:21:20.120 --> 01:21:22.550
a basically 20
mile radius when

01:21:22.550 --> 01:21:25.880
they're almost
$2 million each.

01:21:25.880 --> 01:21:27.665
Now, you still
may need two

01:21:27.665 --> 01:21:28.520
because of volume,

01:21:28.520 --> 01:21:29.675
but it should be
volume driven.

01:21:29.675 --> 01:21:33.380
I do eventually
believe for this area,

01:21:33.380 --> 01:21:36.200
there has to be
coordination of that.

01:21:36.200 --> 01:21:38.600
You could have a very

01:21:38.600 --> 01:21:43.850
effective and
inpatient care unit.

01:21:43.850 --> 01:21:45.200
And they focus on that

01:21:45.200 --> 01:21:46.865
and they do it very well.

01:21:46.865 --> 01:21:49.055
And still in communities,

01:21:49.055 --> 01:21:50.540
I'm pointing
outside because

01:21:50.540 --> 01:21:51.335
I think Pullman
ought to be

01:21:51.335 --> 01:21:53.630
central because they are.

01:21:53.630 --> 01:21:57.065
They're the middle.
And then outside that,

01:21:57.065 --> 01:22:00.590
you could have outpatient
surgery centers

01:22:00.590 --> 01:22:02.780
or support or urgent
care centers,

01:22:02.780 --> 01:22:05.630
etc, but you work
collectively.

01:22:05.630 --> 01:22:07.010
I believe long term,

01:22:07.010 --> 01:22:08.285
that's where it'll get to.

01:22:08.285 --> 01:22:11.120
I think until
reimbursement dictates

01:22:11.120 --> 01:22:12.455
that, it won't change.

01:22:12.455 --> 01:22:14.615
And under a critical
access model,

01:22:14.615 --> 01:22:16.175
because we get
paid our costs,

01:22:16.175 --> 01:22:18.320
what advantages is
there to do that?

01:22:18.320 --> 01:22:22.140
So, today we have a
fake glass bottom,

01:22:22.540 --> 01:22:24.350
there's not a lot of

01:22:24.350 --> 01:22:25.310
incentives to
control class.

01:22:25.310 --> 01:22:26.615
There's some.
There's not a lot.

01:22:26.615 --> 01:22:28.460
But if that
model went away,

01:22:28.460 --> 01:22:30.470
problem is, could you
react quick enough?

01:22:30.470 --> 01:22:32.645
I think that some of
that's happening,

01:22:32.645 --> 01:22:34.790
we are partners in

01:22:34.790 --> 01:22:36.440
the general
surgeon practices,

01:22:36.440 --> 01:22:38.150
the specialty practices,

01:22:38.150 --> 01:22:40.460
medication oncology
coming on board.

01:22:40.460 --> 01:22:41.780
That will be collective.

01:22:41.780 --> 01:22:44.495
More and more that
communications happening.

01:22:44.495 --> 01:22:47.015
I think that'll evolve
long term. How long?

01:22:47.015 --> 01:22:50.480
I have no idea. I
realize at some point,

01:22:50.480 --> 01:22:51.200
if that happens, and I

01:22:51.200 --> 01:22:52.730
think that
ultimately needs

01:22:52.730 --> 01:22:55.145
to I don't know if you.

01:22:55.145 --> 01:22:56.810
>> That was going on in

01:22:56.810 --> 01:22:58.970
Reagan's time when they

01:22:58.970 --> 01:23:00.530
had if you wanted

01:23:00.530 --> 01:23:04.295
a MRI and Gritman
wanted one,

01:23:04.295 --> 01:23:06.695
there was a committee
that determine

01:23:06.695 --> 01:23:08.750
whether you ought
to have one

01:23:08.750 --> 01:23:11.525
because of the
population and the size.

01:23:11.525 --> 01:23:14.030
And that went away.

01:23:14.030 --> 01:23:15.710
>> I think
eventually you'll

01:23:15.710 --> 01:23:16.880
come back to some of that.

01:23:16.880 --> 01:23:17.990
I do believe
they'll drive.

01:23:17.990 --> 01:23:19.160
>> Some of us
remember there was

01:23:19.160 --> 01:23:29.090
a vet school that
also [inaudible].

01:23:29.090 --> 01:23:30.470
>> >> That was my love of

01:23:30.470 --> 01:23:31.760
working for two
facilities.

01:23:31.760 --> 01:23:33.305
That was awesome.
By the way,

01:23:33.305 --> 01:23:35.195
it is a little after 7:00.

01:23:35.195 --> 01:23:37.370
I do want to be
respectful of your time.

01:23:37.370 --> 01:23:39.245
I have nowhere to go,

01:23:39.245 --> 01:23:40.190
I will stick around if

01:23:40.190 --> 01:23:41.120
there are other questions.

01:23:41.120 --> 01:23:42.860
But I appreciate the fact

01:23:42.860 --> 01:23:43.990
that you all team
out. Thank you.

01:23:43.990 --> 01:23:44.000
[APPLAUSE]

01:23:44.000 --> 01:23:45.365
>> Thank you, Steve.

01:23:45.365 --> 01:23:48.390
>> Yeah, Ruben.
Thank you very much.