November 2, 2006

Dear Candidates for Hospital Board Who Appeared at the Apple Shed Restaurant:

First of all I would like to thank all of you that took the time on a weeknight to attend a public forum so that the public can hear your views on the hospital issues.  And thank you to the Apple Shed restaurant for hosting the evening.  Unfortunately, the whole experience was very frustrating for me.  As I listened to the questions and the answers given, I felt like I wanted to give a hospital perspective on the questions.  Of course, I was unable to do that because this was a night for the candidates.  I do, however, want to give all of the candidates who attended last night the benefit of a hospital perspective on the questions and some of the statements that were made.

First of all, I would like to say for the benefit of all candidates that the Hospitalist program at TVHD is primarily concerned about providing better quality care for our patients.  Some of the candidates last night said that the program was for the purpose of increasing revenue.  From my perspective, that is not the primary purpose.  The purpose is to provide care locally for patients who would otherwise be sent away from our community.   Transfers away from our facility can cause delays in receiving care and hardships on family members who have to travel outside our community to visit loved ones.

Here are some additional observations:

• Dr. Hall stated that the physicians are supportive of having a Hospitalist function at Tehachapi Hospital. 

Additional inputs: This does not match with the fact that TVHD medical staff has rejected 2 prior proposals from Hospital Administration to implement a Hospitalist program.  The first proposal was for an ER MD group to provide the service.  The second proposal was to use the new CA law allowing hospitals to employ physicians.  A proposal was made to the medical staff to employ a Hospitalist physician.  The proposal was rejected.

• Dr. Olsen stated that he was running for the Hospital Board so that he can receive the same financial reports that the Board of Directors receives

Additional inputs:  Number one, the financials for TVHD are public record and are available to anyone that requests to receive them.  However, it is particularly disturbing when Dr. Olsen says that he wants to receive the Board financial reports, since he has been receiving the exact same financial reports that the Board receives for the past 2 years.  In his capacity as Chief of the Medical Staff, Dr. Olsen receives the exact same Board packet that the Board members receive.

• All 3 physician candidates stated that they had been excluded from the planning process for the new hospital.

Additional inputs:  I find this statement to be baffling since the new hospital plans were presented at, at least 2 medical staff meetings and due to the fact that there were several Building Committee meetings held in which Dr. Olsen was the medical staff representative.  But what is particularly disturbing is that community citizen, John Hicks rose and introduced himself and stated that he, as a private citizen, had requested to borrow the new hospital plans and to make recommendations.  In fact he convened a meeting of his friends and associates, which included at least 1 doctor and 1 nurse.  They submitted a list of recommendations back to the hospital board which then turned the recommendations over to the hospital architect.  Many of the changes recommended by Mr. Hicks group were, indeed, incorporated into the new hospital plans.  What struck me from this report, is that wouldn’t it make sense that if the TVHD medical staff had taken the same interest in reviewing the plans and in making recommendations for changes that they would have, at least, received the same courtesy as Mr. Hicks?  The answer is yes.  Of course they would have.

• Dr. Olsen stated that he favors contracts with all health plans, including Kaiser.

Additional inputs:  Dr. Olsen added that he would not accept an insurance plan in which the “reimbursement is less than the cost to provide the services."  He left me with the distinct impression that Kaiser is going to be held to a higher standard than other health plans because he has already made up his mind that TVHD is inflating its charges when it comes to the GEMCare contract negotiations.

• Dr. Hall stated that she recalled an early conversation with Ray Hino in which she questioned "why don't we have a Kaiser contract?"  I was quoted as having  said that we tried but that Kaiser would not contract with us. 

Additional inputs:  I recall a more recent conversation with Dr. Hall in which I told her of our hopes for a Kaiser contract.  That time her response to me was "you don't want a Kaiser contract, do you?"   I understood her comment to mean that she feared TVHD having a Kaiser contract.  I have also heard from Dr. Horowitz that he is not supportive of TVHD having a Kaiser contract.

• All of the physicians stated that they would support TVHD contracting with all health plans.

Additional inputs:  As Dr. Horowitz correctly stated last night, if Kaiser were to come to Tehachapi then they would insist that they have their own physician in the community.  It would be commendable if the physician candidates for the Board put the community ahead of their own personal interests and persisted to bring a Kaiser contract here.  By doing so, they would be inviting a competitor into our community that would, likely, not be welcomed by local Tehachapi physicians or by GEMCare (and by the way, that would constitute a conflict of interest because the TVHD MD Board members would actually be voting to bring a competitor into the community).

• Dr. Horowitz stated last night that relations between the Administration and the Medical Staff have worsened in the past 4 years.

Additional inputs:  Just last May Dr. Horowitz and I shared a stage at a National Rural Convention and talked about the marvelous spirit of collaboration in Tehachapi in which the Administration and medical staff are working together.  Also, Dr. Horowitz has been present at hospital planning meetings during the past 2 years in which we discussed alternatives to the GEMCare contract.  Dr. Horowitz has been in favor of creating a Tehachapi Independent Practice Association (IPA) as a competitor to GEMCare.  I think that a more correct statement by Dr. Horowitz last night would have been to say that relations between Administration and the Medical Staff have worsened in the past 5 months.

• Dr. Horowitz stated that TVHD’s costs are too high.  He further stated that instead of selling donuts for $1,000 each that TVHD should sell donuts for $10 each (or was it $100 each) and sell more donuts.  He went on to say that TVHD inflates its charges in order to maximize Medicare reimbursement.

Additional inputs:  Dr. Horowitz’s explanation of how Medicare reimburses critical access hospitals is just plain wrong.  If TVHD were to sell donuts for $100 each, when it costs $1,000 each to produce them, then they would be subsidizing the health plan that is only paying a tenth of the cost of the product.  Should TVHD subsidize a big company like GEMCare?  And, as every accountant knows, you can’t turn a loss into a profit by increasing sales of products sold at less than cost.  Dr. Horowitz’s statement that TVHD is gaming the government by inflating charges in order to maximize reimbursement from Medicare is also wrong.  Medicare pays TVHD on the basis of cost (that is what we pay to produce a product – not what we ask the consumer to pay for that product).  In fact Medicare doesn’t care what we charge to other commercial insurers (just so long as we don’t undercut our charge master to other payors).

• Dr. Horowitz also stated that he recommends that a financial audit of TVHD be conducted, as recommended by the Grand Jury.

Additional inputs:  Just like Dr. Horowitz’s statements last night to Pete Sturn, demanding that Pete show the doctors “where it says in the June med staff letter that the doctors want the hospital construction project delayed,” I would challenge Dr. Horowitz to show me where in the Grand Jury report it says “TVHD should do a financial audit.”  It doesn’t.  But that really doesn’t make any difference because TVHD does an independent financial audit every year anyway.  The 2006 audit will be presented to the Board and to the community on November 29, 2006.

• At the closing, Dr. Horowitz stated that Tehachapi Hospital only has a 1.7% market share which is indicative of the need for the hospital to be made available to the entire community.

Additional inputs:  Dr. Horowitz uses that number to prove that Tehachapi Hospital is not used by the entire community.  What he neglects to mention is the physicians role in keeping market share low in Tehachapi.  As a small rural hospital, of course, it is understood that we will never get close to achieving 100% market share.  The universe of hospitalizations that occur for Tehachapi residents includes secondary and tertiary care services that are likely to never be available here.  However, we can do much better.  Physicians admit patients to hospitals.  Hospitals do not admit patients to hospitals.  With our recent upswing in hospital admissions our percentage of market share has certainly improved in the past 4-5 months.  I believe that we could have been serving that improved market share, for many years.

My hope for the outcome from last night’s meeting is that, regardless of who may be elected to the Hospital Board, at least the following commitments can be carried through from the campaign into actual implementation:

1.        & nbsp;       &n bsp; Continue the Hospitalist program at TVHD.  It is serving a need that has been missing at TVHD.

2.        & nbsp;       &n bsp; Make continued financial viability of TVHD a priority. 

3.        & nbsp;       &n bsp; Become educated on what constitutes the true cost of operating a hospital.  Don’t make assumptions that TVHD can allow “low balling” in some areas of the hospital in order to make it up in other areas.  This doesn’t work.  When we tried it before, we found that the HMO plans took full advantage of discounts in the ER without referring business to other areas of the hospital (inpatient and rehab, to name 2).

4.        & nbsp;       &n bsp; Treat all managed care plans equally.  Don’t give favoritism to 1 plan over other plans.

5.        & nbsp;       &n bsp; Move to expedite the approval of the new hospital plans and the construction of the new hospital.

Additionally, I highly recommend that the TVHD Board not follow through with the medical staff recommendation to eliminate the rural health clinic from the new hospital plans.  Downsize it, if necessary.  But ripping a profitable service from a marginal facility, which, as the physicians admit, will struggle for sustainability, makes no sense at all.  I have no problem with maintaining a rural health clinic in the downtown area.  I even encourage it.  However, by housing a rural health clinic and an emergency department side by side, TVHD can use the rural health clinic as a fast track clinic and will be able to (1) lessen the load on the emergency department and (2) take advantage of higher Medi-Cal reimbursement when patients are appropriately referred from the ED to the RHC.

Thank you all again for your interest in serving the community of Tehachapi and its surrounding areas.  This is an exciting time and I am going to be very sorry to miss it.

Sincerely,

Raymond T. Hino