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A Conversation with Joe DeMattos, President and CEO of Health Facilities Association of Maryland About Healthcare in Maryland

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Advocating for long-term healthcare providers to improve the quality and cost of services across Maryland Joe DeMattosJoe DeMattos is the president and CEO of Health Facilities Association of Maryland (HFAM), the largest, oldest, nationally-affiliated association of skilled nursing and post-acute care providers in Maryland. Since 1948, HFAM has been dedicated to advocating for Maryland’s community of long-term care providers, such as assisted living, rehabilitation, sub-acute, and skilled nursing facilities. The organization represents a critical link in the state’s long-term care network, which accounts for approximately $3.7 billion in economic activity. Currently, HFAM encompasses 150 providers, 19,000 employees, and cares for more than 25,000 Marylanders annually. Where has Maryland landed historically in terms of healthcare cost, and what does the field look like now? JOE DEMATTOS: Maryland has a very unique opportunity now going forward. While Hawaii in 1974 established universal coverage, a couple of years later there were a number of states that went to CMS—the Centers for Medicare and Medicaid—and they made a proposal. Here’s the proposal they made back in 70s—these four states said, “Medicare, if you allow us to set our own prices and to use our own system of rating acuity, we will have Medicare in our state grow slower than the national average. You’ll just give us a pot of money and we’ll do that.” Maryland’s hospitals made that bet with the federal government 30 years ago. And that bet has turned out to be a very, very good one for all involved: for the federal government, for the state of Maryland, in terms of the economy and in terms of the hospitals. Because what it meant in Maryland, over the last 30 years, is that our hospitals were able to provide quality care at a lower growth rate than the rest of the country. The way Maryland did it, unique to the country, is we created a cost review commission, and so in Maryland the price of procedures and which hospitals can offer which specific procedures have been regulated for about 30 years. The result of that is that you haven’t seen in Maryland, over the last 30 years, the cost shifting that you have seen in other states for uncompensated care. The price is the price across all care settings, and so you have a much lower percentage of uncompensated care in the hospitals historically in Maryland than you have in the rest of the country. But there was a flaw in the system going forward. The flaw in the system was that it didn’t put enough emphasis on utilization and on outcomes. A couple of years ago, Secretary John Colmers and Secretary Josh Sharfstein, working with their economists, realized that in a couple of years, we were no longer going to be be able to meet the threshold test of having costs less than the national average. So, they got into a national dialogue with CMS, and they created a new waiver, which we’ve now had in place for a year. Maryland now has a new hospital waiver that not only focuses on being the spear of cutting edge healthcare delivery for the next 30 years, but very specifically links spending utilization and outcomes. And so, we could, going forward, be the model of the rest of the country relative to that. What it will mean is that hospitals will have to partner with other providers, such as skilled nursing and rehab centers. And skilled nursing and rehab centers and home healthcare companies will have to partner with hospitals to make sure that care is more integrated and produces greater clinical outcomes. What are your concerns about the current state of healthcare in Maryland? It scares me that we live in a state with the best hospitals in the country, perhaps in the world, but we still have tremendous healthcare disparity because of the lack of access to care historically. And because of the lack of integrated care historically, that concerns me. It concerns me that when the federal government passed the stimulus package and they underwrote electronic medical records for hospitals and physician practices, that they didn’t underwrite the cost of those electronic medical records for skilled nursing or rehab centers. What that means is that most hospitals, and most physicians across Maryland—and the country—have robust, meaningful-use electronic medical records, but what it means here in Maryland is about only half of the skilled nursing and rehab centers have those systems, because they have to pay for them on their own nickel—unlike the hospitals and the physicians where those systems were underwritten as part of the federal stimulus out of the Great Recession. What do you think about the state of healthcare nationwide? It is still true that the United States pays a large percentage of its GDP for healthcare, compared with other industrialized nations. What’s interesting and unfortunate about that, relative to my earlier point, is that our healthcare outcomes are also less impressive than many of those nations. As a country, historically, we spend more with expectations with outcomes that aren’t as robust. But, in terms of the actual cost of healthcare and the percentage of that cost, the inflation rate of healthcare has actually gone down in the last couple of years, relative to the passage of the ACA. We’re actually trending in the right direction. Do you think baby boomers, the current incoming generation of geriatrics, will change the healthcare system as it stands now? There’s no doubt that what the aging of the boomers going forward that the current system will have to be adjusted. It’s not sustainable, just purely based on demographics, but there are aspects of that system that are going extraordinarily well. Again, the Prescription Drug Act of 2003 actually turned out to be more cost-efficient than what was predicted by the Congressional Budget Office at the time. The ACA has actually helped to contain the inflation rate of healthcare and lower that and sort of change that trend. But, when you have 10,000 boomers turning 65 every day for the next 18 years, just the pure math of it presents some challenge. Again, that’s where Maryland can lead the nation. So, what will happen in an ideal world with healthcare in terms of going forward? What will happen is we’ll have more touches with the boomers as they age, in terms of healthcare: more touches with the primary care physician or with the nurse practitioner; more touches, fewer hospitalizations, shorter stays in the hospital; more touches with skilled nursing and rehab centers who are able to provide hospital level care at about 40% of the cost; more touches with skilled nursing and rehab centers, and better coordinated care when they’re back at home and continue to be engaged. So, again, Maryland can lead the country in this because what it will mean is that we will pay hospitals for their very important, acute, episodic care for which they are really the only quality provider, but we will also incentivize those hospitals to partner with healthcare providers outside of their walls to continue that care at a lower cost. Really, going forward, the only way that Medicare and other systems work is if we do that, and we also look at the cost of end of life care, which is a whole other topic that should be handled by a much better panel than I at some later date.

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