— by Susan McBain, Orcas Issues reporter —
For the commissioners of the Orcas Island Health Care District, December has been a month of digging deep into what potential structures would work best for providing primary, urgent, and after-hours care to all residents and visitors on Orcas Island. And the answer is: It depends—on whether the commissioners are more interested in having control over operations or minimizing financial risk; on the assumptions underlying various financial projections; and on which partners, if any, are interested in working with them in different types of structures.
The commissioners held a special five-hour meeting on December 10 with two experts from WIPFLi CPAs and Consultants: Steve Rousso, a specialist in Federally Qualified Health Centers (FQHCs), and Katie Jo Raebel, who specializes in Rural Health Clinics (RHCs). Either of these federal designations would increase Medicare and Medicaid reimbursements for services to covered patients. (Currently, Orcas Family Health Center is already an RHC, while the UW Neighborhood Clinic has neither designation.)
Rousso started the presentation by noting some basic issues. The central question, he said, was whether the District “wants to operate health care or subsidize health care.” Owning and running a clinic or clinics will maximize control over services but also maximize financial risk to the District, whereas subsidizing providers does the opposite. He also noted that much of the presentation would assume that the District formally owns or controls at least one of the clinics, which it does not at present. Also noted was the unusually high percentage of government payers for Orcas patients: 40% of patient services here are reimbursed under Medicare and 20% under Medicaid.
The consultants listed five options for an overall structure and described the pros and cons of each. Their full presentation is on the District website. The options and (believe it or not!) simplified discussions of each are given below.
- Develop a “Co-Applicant” FQHC. In this structure, the District and a provider would co-apply to start a new FQHC ( “look-alike”). The District would be required to set up a new nonprofit board to run the practice. The District’s degree of control over operations would be established in the co-applicant agreement and the nonprofit’s by-laws; however, the nonprofit would have the final say in day-to-day operations. The District would subsidize clinic expenses according to the co-applicant agreement. Startup costs for the new practice would be significant, and ongoing costs for the extensive reporting required could reach $150,000-$200,000 per year or more. The approval process would take at least 18 months, and approval would not be guaranteed even when all the startup work was complete. Medicare and Medicaid reimbursements would increase, but the increased amounts would not begin until final approval of FQHC status.
- Partner with an existing FQHC. If the District identified an existing FQHC willing to add an Orcas clinic as a site under its designation, the process would be much shorter, about three months. The existing FQHC’s nonprofit board would have the final say on operations; however, the FQHC would likely have an interest in adding an Orcas resident to its Board. Medicare/Medicaid reimbursements for clinic patients would increase as noted above. The District’s contribution to the partnership would be a subsidy to cover added costs, such as those for any additional services needed on Orcas.
- Combine the two clinics and affiliate with a hospital as a new “provider-based” RHC. Combining the two practices would, of course, lower overhead rates. The new RHC would ideally partner with a hospital of 50 beds or fewer (the “provider”) for the highest reimbursement rates. The best staffing for reimbursements includes at least as many mid- level practitioners (nurse practitioners, physician assistants, and nurse midwives) as physicians, and preferably more. The process for obtaining RHC designation is much quicker and easier than that for FQHCs, and required reports are less onerous. The hospital would own the practice, but management contracts would affect how and what services were offered. The District’s contribution to the partnership would be a subsidy to cover gaps in reimbursement and any additional services.
- Combine the two clinics as a free-standing RHC. A free-standing RHC is one not affiliated with a hospital or other organization, such as OFHC is at present. The District would own the practice, have full control over operations, and assume all financial risks. According to Raebel, a free-standing RHC typically receives lower reimbursements than a provider-based RHC. She gave a hypothetical example using typical rates of charges and reimbursement for the two RHC types under Medicare: for a service with a customary charge of $120, a provider-based RHC would receive $64 more in reimbursement than a free-standing RHC.
- Continue subsidizing the two clinics under their current ownership while seeking to improve reimbursements and operations. For example, the two clinics might co-locate in a single space to achieve some reduction in overhead.
The afternoon discussion began with the question of where to start in pursuing one or more of these options. Rousso suggested identifying several likely partners of both types and sending out letters of intent, perhaps after making personal contacts. “You would quickly learn who to pursue,” he added. When pressed, he stated that in our position he would seek provider-based RHC status, and Raebel agreed. Second choice would be affiliating with an existing FQHC, and third would be subsidizing a physician as owner of a free-standing RHC. Talking to a group like the Family Care Network of independent providers might also be useful. Both consultants offered to provide samples of documents and names of contacts.
The commissioners explored the issue of whether to consolidate the clinics before or after seeking a partner. They agreed that discussing the possibilities with each potential partner would be the best approach. In order to be prepared to do that, they agreed that next steps would be to: 1) finish the draft prospectus describing the District’s current status, its desired direction, and benefits for potential partners; 2) identify FQHCs and RHCs that might be interested in becoming partners; and 3) if none were found that seemed suitable, contact the Family Care Network. They established work groups of two commissioners for each of these tasks, and others for further refining FQHC requirements and for interacting with the two existing clinics.
The December 17 regular District meeting has been cancelled. The next regular meeting is scheduled for January 7 at 5 p.m. at the Eastsound Fire Hall. For readers interested in more detail about meetings, minutes of each meeting are posted soon after final approval by the commissioners, usually at their next meeting.
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Excellent summary. This presentation seems much clearer in that it notes that there are major downsides for County taxpayers in any dramatic change in direction of the District from a provider of subsidies to a “provider” of actual healthcare.
What the presentation doesn’t seem to address directly is the fact that UW doesn’t fit well into any of the alternatives available. I doubt that UW is in a legal position to participate in a unified practice at the OIMC building.
What I believe the District needs is to identify, or encourage the formation of, a single physician group to occupy the facility owned by the District, with the involvement of an experienced umbrella organization like Family Care Network.
Investing the money and effort involved in seeking qualification as an FQHC or RHC is not likely warranted by the current marginally higher level of payment for some services by the Medicare program. That program has been moving toward equalizing payment for the same services across all types of providers for some time already.
Our Commissioners have quite a bit of work to do over the next few months. I wish them the best in their efforts to achieve an equitable result for the people of Orcas.
I would like to thank the reporter for a complete summary and linked resources. I also would like to commend the Commissioners and guests for a complete forthright and insightful exchange ranging from banal reimbursement regulations to big-picture perspectives, all that might be apropos to discovering our best path forward. I would like to clarify some distinctions that still may seem murky though.
The distinction is not between control and financial risk, but control and legal risk. Orcas’ business-oriented management has an unfortunate history of conflating these when managing the business of healthcare. In the present setup, we are at minimal legal risk with corresponding low operational control THUS great financial risk as demonstrated by the over $300,000 annual increase in subsidies requested by the two clinics. Right?
THAT is what has us restructuring our local healthcare system.
Let us first absorb that reality.
Secondly, the issue of control is far more than financial risk, but risk to our community’s health. This is much much harder to quantify. Emblematic is what we need to call “Unscheduled Care,” a term that cuts to the heart of the matter. For at issue are Orcas’ unique circumstances and what it means to “subsidize” our community’s health.
Being a rural island with an aging populace, access to services is paramount. But “Access” entails much more than having an address with the lights on to drive up to, just as “Health” is qualitatively more than having the correct diagnosis, more than you get by controlling purse strings and metrics. And this is the crux of it: the only way to have Quality is by having operational quality Control.
Which brings us back around to “Unscheduled Care.” To quibble about whether this means putting someone on a helicopter, a ferry, a gurney, or in their own bed misses the point. The real issue is what happens tomorrow and ALL this person’s tomorrows. This in a nutshell is Quality. And there is no system of liability which can cover this and this is what makes the business of healthcare different from any other. You can own nothing like you own your own body.
ANYone having an encounter with the healthcare system knows that afterwards it is the bills and the pills, the follow-ups and the schedules, all the unknowns, that make up health from then on. How successful this is, call it ‘outcomes,’ is what we end up subsidizing. It is not a question of what Medicare, Medicaid or Premera will pay for, but if what we did ~ WORKS ~
Right?
And from this perspective, what*works*costs*less.
THIS is what we are subsidizing.
So now let’s talk about “Risk..”
..and Control.
When we as a PHD affiliate with any other entity,
be it physician/group, PBRHC, PBCAH, RHC, FCN, FQHC/any-flavor,
the most powerful influence we may have on our community’s behalf, is
IF WE OWN THE CLINIC.
PERIOD
A “Public Hospital District” is so called because the normal structure is the far riskier proposition: a regional hospital, not just some local rural clinic. As such the legal protections are far better understood and undertaken to protect this important community resource. So let us dispense right away with the fearful malarky obstructively bandied about on Orcas; this is where the buck stops as “D.B.A.”
To accept responsibility for community health, one must accept the legal risk of the appropriate level of control. Delegating that legal risk just strips away operational control while retaining financial risk for outcomes: our subsidy.
Our history is a detailed exploration of costly and ineffective healthcare management. Lets. Try. Something. Different!
Leif–I appreciate your comments, but the notion that the PHD is in a position to control the health care provided on island by literally owning and operating it, rather than renting out the building to licensed practitioners with service level requirements and quality metrics, and providing subsidies as governed by an annual contract, is a real reach.
I have experienced 40 years’ of efforts to improve health care delivery in every context, and in my opinion, one task that our Commissioners–with all their talents and dedication–are NOT prepared for is accepting the legal and financial burden and risk of actually owning the practice and operating it. Nor am I, as a taxpayer, interested in financing uncontrolled deficits, potential overpayment recoveries, and possible fraud/abuse penalties (the latter are quite large and are imposed even in cases where “mistake” would be the better descriptor). For one example near-to-home, IIRC, the San Juan entity is on the hook to Medicaid for what was more than a million dollars in “errors,” committed several budget periods ago but people no longer in charge.
What we need is a small integrated physician/practitioner group (we have too many physicians for our small population under almost any guideline, believe or not) that will lease the medical center building and work with the PHD to provide the care islanders need.
What we signed on for with our vote was stable primary care with after hours access, not a new bureaucracy with unlimited costs.
Yep. That’s the discussion.
We explored this in depth at the special session:
Though there are multiple pathways, in the end there are a set of insurmountable obstacles to providing Primary Care here on Orcas if we lack operational control. It seems an irreducible fact. We tried! And we have tried, historically too, repeatedly and unsuccessfully. There is no way contractually or by having an “understanding” that one may replace the power of ownership! The needs here are too great too specific and too unique.
So put away the scary lawyer-talk. We know too much.
Scary lawyer talk? No, it’s reality. I’m not sure that jumping into a big black hole will improve healthcare on the island.
It’s too late! The leap into a black hole has already happened. By subsidizing for pay increase and benefits the Distric is now responsible for the lively hood of the clinics. Unless plans are in the works to cover the short falls in upcoming budgets of the clinics we are the fix and if subsidies with annual increases are not approved we will be in a position of appearing responsible for the clinics closing. The long term fix isn’t going to be easy but handing out money with no accountability isn’t the answer.
Single payer Health care without corruption is the only reasonable answer at present. Research Wa. Healthcare for all and the Washington Universal Health Work Group.
Michael