MHA CEO Report — The Challenges for Rural Hospitals

MHA Rounds Report - Brian Peters, MHA CEO

“The country is lyric, the town dramatic. When mingled, they make the perfect musical drama” Henry Wadsworth Longfellow

MHA Rounds Report - Brian Peters, MHA CEOHaving just returned from the annual American Hospital Association (AHA) Rural Health Care Leadership Conference, where I was joined by a strong contingent of MHA members and staff, the future of our rural hospitals has been top of mind.

When I was in graduate school at the University of Michigan many years ago, I recall clearly our discussions related to rural health. In short, we were taught that rural America was statistically older, poorer and sicker than the rest of the country – and this demographic and socioeconomic reality led to all kinds of challenges for those responsible for the health of rural populations and the viability of rural hospitals.

Fast forward to the most recent (2020) census and this dynamic remains true. In addition, we discovered that between 2010 and 2020, rural America actually lost population for the first time in history. Here in Michigan, the latest projections indicate that while the total state population will grow moderately over the next 20 years, the population in rural Michigan will remain flat or even decrease.

The operating environment has never been more difficult for healthcare organizations, for reasons we have documented at length in prior CEO Reports. This statement is particularly true for rural hospitals – 100 of which from across the country have actually closed since 2005. Many more have had to make the difficult decision to terminate service lines or otherwise scale back their operations to keep their doors open. What is driving these challenges?  A few items come immediately to mind:

  • An older and poorer population translates into a higher percentage of government payors (Medicare and Medicaid), which traditionally do not fully cover the true cost of care.
  • The traditional volume-based reimbursement model that has been one of the cornerstones of American healthcare does not serve rural providers – which often lack sufficient volume – particularly well. The pitfalls of the volume-based model were on full display during the worst days of the COVID-19 pandemic, particularly when non-emergent procedures were suspended.
  • Recruiting physicians today most often involves recruiting a spouse as well; in other words, there must be a good job match for both parties to spur a relocation. Physician recruitment is more difficult in rural communities for the simple fact that there are fewer potential jobs for that spouse. In addition, the on-call coverage demands can be particularly significant in rural areas, because the number of available rotating on-call clinicians is simply fewer. I would be remiss if I didn’t mention the Merritt Hawkins firm, which is one of our original MHA Service Corporation Endorsed Business Partners, and is dedicated to working with our members to create solutions to some of the most vexing challenges of the day.
  • Lastly, it is no secret the country is in the middle of a behavioral health crisis, with a lack of available placements leading to behavioral health patients boarding in emergency departments throughout the state, awaiting placement in a more appropriate setting. Hospitals are experiencing higher costs caring for these patients, increasing security to protect other patients and staff, while receiving little to no reimbursement since these patients have yet to be admitted to an inpatient psychiatric unit. This lack of access is even worse in rural areas. For example, the Upper Peninsula only has one licensed child psychiatrist for the entire region.

The reality is that when we think about rural Michigan and the more densely populated areas of the state, we are all inextricably linked. There is no “us and them.” People from the big city travel every day to rural communities for conferences and events, meetings, sales calls, deliveries, vacations and visits with friends and family (and people from rural communities come to the big city for the same reasons). While we want to ensure the vibrancy of a hospital in a rural community so that the residents have access to quality healthcare, we should all want the same thing, because we never know when we might be on one of those sales calls or vacations and need that same access. This is not just theoretical, as I have countless stories about this phenomenon playing out in real life, and I suspect you do as well.

Moreover, hospitals are one of the largest – if not the largest – employers in many rural Michigan communities, playing a crucial role in the economic vibrancy of the state. Healthcare careers provide stable, good paying jobs and positively impact lives every day. Not only are hospitals important for access to care, but also as economic drivers. 121,000 total workers are associated with the healthcare sector in rural Michigan, including 81,000 direct jobs. These direct healthcare workers received $7.6 billion in total wages, salaries and benefits and contributed $1.4 billion in local, state and federal taxes. In addition, the existence of a hospital nearby is one very important item for businesses of all kinds when considering investment in a new factory, office or headquarters.

So, the vibrancy of our rural hospitals should be a priority. What is the MHA doing about it? As it turns out, we have done a lot. Beyond our advocacy on the traditional Medicaid and Medicare budgets, certificate of need, medical liability, workforce funding and many, many other public policy issues that affect all our members, here are just a few of our rural advocacy highlights:

  • We fought hard to secure passage of the Healthy Michigan Plan (our Medicaid expansion program) and have advocated for full funding in every budget cycle since. For the reasons cited above, this is particularly impactful for our rural hospitals.
  • We worked to pass, implement and protect the Critical Access Hospital program, which has created an important lifeline for 37 Michigan hospitals. And the MHA was successful in changing existing statue at the end of 2022 to make adoption of the new Rural Emergency Hospital designation possible for our members.
  • We have worked very hard to protect the 340B drug pricing program, which is vital to many rural hospitals and their ability to provide access to care to all in their communities. Our work includes advocacy with both the state legislature and Congress, and even in the federal courts, where the MHA has filed amicus curiae briefs related to recent 340B cases.
  • The MHA successfully advocated for two new supplemental Medicaid payment pools that specifically benefit our rural members with implementation of the rural access pool in fiscal year (FY) 2012 and the obstetrical stabilization fund in FY 2015. Our advocacy efforts were also successful in securing Medicaid outpatient rate increases in FY 2020, the first increase in two decades, followed by an additional increase in FY 2021. These increases resulted in a 63% increase for critical access hospitals and a 21% increase for all other hospitals compared to Jan. 1, 2020, rates.
  • We successfully advocated for an extension of both the Medicare-dependent Hospital and Low-volume Adjustment programs during the 2022 Congressional lame-duck session, which provide critical support to many rural hospitals.
  • Finally, we have successfully advocated for passage and implementation of state legislation that modernizes the scope of practice for certified registered nurse anesthetists and allows flexibility for each hospital to choose the anesthesia care model that best fits its location, staffing and resources to offer safe and effective patient care.

Our advocacy is also focused on ensuring our members can tell their story and connect with lawmakers, both at the state and federal levels. The MHA hosted its first ever Rural Advocacy Day last September in Lansing to facilitate conversation between rural hospital leaders and members of the Michigan Legislature. The MHA also accompanied members in February for the National Rural Health Association’s Rural Health Policy Institute event. MHA members met with Michigan’s congressional delegation and staff during the trip to discuss rural health issues facing Michigan hospitals. And if you haven’t yet had the opportunity to listen to the Rural Health Rising podcasts, I encourage you to tune in to our friend JJ Hodshire, the CEO of Hillsdale Hospital and an MHA Board member, as he does a fantastic job shining a light on a wide range of rural health issues – with an impressive set of special guests – in real time.

Successful advocacy and storytelling require teamwork. As mentioned above, for years we have partnered closely with the AHA and the National Rural Health Association. We have also enjoyed a close partnership with the Michigan Center for Rural Health (MCRH), and I am pleased to share Hunter Nostrant, CEO of Helen Newberry Joy Hospital, is a member of both the MHA Board of Trustees as well as the MCRH Board.

The mission of the MHA is to advance the health of individuals and communities, and in that context, we have always strived to represent all our members and communities. Each hospital is vital to the health of our great state. While the path forward may be difficult, I’m encouraged by the many rural hospital leaders – some of the nicest, and most talented people that I have met – that have developed innovative and strategic ways to address these challenges and position themselves to be able to care for their communities for years to come.

As always, I welcome your thoughts.

MHA CEO Report — Medical Liability and Denney Damages

MHA Rounds Report - Brian Peters, MHA CEO

“I have gained this by philosophy; I do without being ordered what some are constrained to do by their fear of the law.” ― Aristotle

MHA Rounds Report - Brian Peters, MHA CEOIn last month’s CEO Report, we focused on the new political environment in Lansing, with a host of first-time lawmakers taking office, Democrats assuming majority control of both chambers of the legislature and a host of new leaders in key roles. The playing field has changed in a palpable way.

As healthcare leaders, the list of emerging challenges may seem endless today, ranging from unprecedented labor shortages, inflation, cybersecurity and much more. But as the new legislative session ramps up, we also can’t turn a blind eye toward issues from years past which have the potential to rear their ugly head once again. Medical liability is at the top of that list and merits our close attention.

One of the MHA’s signature achievements over the past thirty years was the passage of sweeping medical liability reforms in the early 1990s. Our leadership and collaboration with our friends in organized medicine and other partners helped to directly address a situation that had become untenable for Michigan: runaway verdicts in medical liability cases were threatening the financial viability of hospital-based service lines (and even entire hospitals). Doctors, particularly those in high-risk specialties, were leaving the state in droves and our recruitment efforts faced an extraordinarily high hurdle.

Since the passage of our reforms, which brought reason and predictability to the system, medical liability has been relatively stable for nearly three decades, even as the caps on noneconomic damages continued to grow with inflation. And over the years, the MHA has been extremely vigilant, advocating to preserve these reforms both in the legislative arena and in the courts, where we have filed countless amicus curiae briefs on behalf of our members and the healthcare field. However, a recent decision by the Michigan Supreme Court is bringing these concerns back to the forefront of our minds.

The case of Estate of Langell v McLaren Port Huron, heard by the Michigan Supreme Court in 2022, ultimately affirmed a Court of Appeals decision that a plaintiff’s estate can recover all earning potential that a decedent would have been able to earn and provide if a person who died due to medical malpractice had lived. This is now the law, even if that person was not responsible for the support of anyone else. The Court of Appeals cited the precedent established in Denney v Kent Road Commission. Since that decision, what a decedent’s estate can recover is referred to as “Denney damages.” Cases that once settled for $250,000 are now expected to be resolved for $700,000.

With “Denney damages,” the liability for healthcare organizations increase as earnings can be counted for any victim of medical malpractice, even those who have yet to establish any known talents, educational attainments or trainings typically used to calculate such earnings.

It is important to note that while we engage on this topic in the public policy arena, our ultimate priority is the safety and wellbeing of patients. Our hospitals and providers take the life of each patient in their care extremely seriously and there is nothing a hospital wants to avoid more than a medical error. To that end, we have “put our money where our mouth is” by establishing the MHA Keystone Center, which has become a true leader in this space, both in Michigan and nationally. The Keystone Center, which also operates a federally certified Patient Safety Organization, collects and analyzes data on medical errors and “near-misses,” serving as a North Star in our collective efforts to improve patient safety and quality. Our successes have been well-documented in peer-reviewed medical journals. Blue Cross Blue Shield of Michigan has provided significant funding to the MHA Keystone Center over the years, and so has the federal government through a series of contracts, as they have seen and valued the tangible improvements we have made and will continue to make.

Back to the issue at hand: our hospitals and providers are committed to doing right by patients, through the provision of the highest quality care possible. And for nearly three decades, Michigan’s medical liability laws have proven our system can fairly handle cases of medical malpractice that compensate patients and families fairly while maintaining hospital liability at sustainable levels that do not threaten the viability of an organization due to a single error. The system works and it is our intention to keep it that way.

As always, I welcome your thoughts.

MHA CEO Report — New Control in Lansing

MHA Rounds Report - Brian Peters, MHA CEO

“I don’t like that man. I must get to know him better.” Abraham Lincoln

MHA Rounds Report - Brian Peters, MHA CEOAs I put the proverbial pen to paper, the Michigan Legislature has completed the 2021-2022 legislative session and I am very pleased to report that in the lame-duck session, we successfully advanced several MHA-supported bills – and not a single MHA-opposed bill was signed into law. Another job extremely well done by our MHA Advocacy team as we protect access to affordable, high-quality healthcare for all.

Now shifting to the New Year: 2023 will usher in a monumental shift in power in Lansing as Democrats will control all aspects of government in the state for the first time during my 32-year tenure at the MHA. Following last November’s election results, Democrats not only retain power in all areas of the executive branch and a majority in the judicial, but both chambers of the legislative branch flipped to Democratic control. The last time Democrats had control of the Governor’s office and both chambers of the state legislature was 1984.

This change was due to a multitude of factors, including redistricting, ballot proposals, a trickle-down impact from the top of the ballot, candidate viability and record turnout. Earlier this year, the Michigan Independent Citizens Redistricting Commission established new district maps, which had previously been handled by the majority party in the state legislature in conjunction with the governor. Michigan saw a significant increase in the number of competitive districts due to their nonpartisan work. The Michigan midterm election saw record turnout again, with 4.5 million votes cast, including 1.8 million absentee ballots. This is a 2.4% increase from the prior record set in 2018 with 4.3 million votes. Turnout was partially driven by three ballot proposals as well as over 14,000 same day voter registrations, primarily from young Gen Z voters.

The MHA has a long history of being nonpartisan, but moving from divided government to one-party control will always bring about a change in the political dynamics and associated priorities. Our advocacy culture has long been to establish and maintain relationships regardless of leadership role or party affiliation so that in times of need, you have allies you can rely on. Both new Speaker of the House Joe Tate (D-Detroit) and Senate Majority Leader Winnie Brinks (D-Grand Rapids) have established track-records of working closely with the healthcare community to help us fulfill our mission of advancing the health and wellness of individuals and communities. Our MHA Advocacy team as well as our member hospitals and health systems consider them friends. And of course, our close partnership and personal friendships with Gov. Whitmer extend back to her time in the state legislature when she was recognized with an MHA Special Recognition Award at the 2014 MHA Annual Meeting. Our bonds with the governor and her administration grew even stronger as we confronted the COVID-19 pandemic together.

As a result of term limits, the new legislative session will also welcome an astounding 59 first-time legislators to Lansing. Since the Nov. 8 election, we have been busy establishing new relationships and introducing ourselves to many new faces. Most lawmakers only know healthcare through the prism of a consumer, so it is never too early to begin the education process related to this highly complex field. As part of this process, we hosted the Building Bridges event with our partners at the Small Business Association of Michigan, the Michigan Education Association, Michigan Association for Justice and Business Leaders for Michigan that helped us pursue these goals while also offering new legislators the opportunity to connect with their peers and learn how best to serve in Lansing.

Now I have no magic crystal ball so I can not predict what types of legislation we may see introduced and prioritized over the coming months. Having not held a dual-chamber majority for nearly 40 years, we anticipate there is no shortage of issues for Democrats to work on. There is no question we will continue to express the importance of access to care, which Democrats have traditionally strongly supported. Based on public comments and prior legislative track records, it is reasonable to expect continued activity on improving behavioral health, public health, health equity and addressing pharmaceutical pricing. American Rescue Plan Act funds also remain available and we strongly believe these funds should be appropriated quickly to make a difference in addressing the financial and staffing challenges that our member hospitals throughout the state, regardless of size, are experiencing. Those are positives. In reality, we need to also be prepared to address legislative proposals that we find more concerning – such as nurse to patient staffing ratio mandates which sound good in theory but would be impractical if not impossible to implement in practice.

The truth of the matter is that the Democrat majority is very slim, so we expect Republicans will still play an impactful role in healthcare funding and policy development. We certainly appreciate the work they’ve done for hospitals and healthcare over recent years and look forward to continuing those relationships during the new session.

I hope all our elected officials who will take office in January will reflect on the wise words of Abraham Lincoln above and include among their New Year’s resolutions to pause, set aside whatever preconceived notions they may have about the people across the aisle from them and make an earnest effort to truly get to know them. Will this guarantee that we come together and see eye-to-eye on all the issues? Of course not.  But hopefully, such an approach will lead to more civility in the political process and better public policy for all Michiganders.

The bottom line: 2023 presents new challenges and opportunities for all who work in Lansing. While many of the players in town may have changed, the playbook for successful advocacy has not. On behalf of our member hospitals, I’d like to express my gratitude for those finishing their years of service, congratulate all those who will be serving in office this upcoming year and look forward to working together to achieving a healthier Michigan.

As always, I welcome your thoughts.

MHA CEO Report — Pediatric Capacity Crisis

MHA Rounds Report - Brian Peters, MHA CEO

Every child begins the world again.Henry David Thoreau

MHA Rounds Report - Brian Peters, MHA CEOIn all of my life experiences to date, none have been so challenging in every sense as those times when my young children were hospitalized in the NICU, fighting for their very lives. We were incredibly fortunate to have positive outcomes with both of them, thanks to the efforts of our Michigan hospitals and the incredible people who work there every day.

I share this perspective because there is a crisis throughout Michigan that truly hits home with me. I know the angst and exhaustion being felt by far too many parents right now – emotions that are also being acutely felt by our heroic caregivers. In short, it feels like déjà vu in Michigan’s children’s hospitals, but instead of a surge of COVID-19 patients stressing capacity to the limits, our facilities are strained by a high number of pediatric patients suffering from respiratory illnesses largely driven by RSV. Similar tactics that have been implemented in prior years, such as initiating incident command systems, have been in operation to ensure appropriate direction and communication is occurring throughout those systems impacted by this crisis.

Hospitals operating at capacity is nothing new and the staffing challenges that continue to result in Michigan operating with 1,700 fewer staffed beds than we had prior to the pandemic are well documented. What we’re seeing today is the real impact of what those staffing challenges mean: longer wait times in the emergency department, lack of available beds for patient transports (particularly in rural Michigan) and pediatric ICUs operating at beyond 100% capacity.

There are few professionals in the world that have proven to be more resilient than healthcare workers, whether they are physicians, nurses, respiratory therapists, environmental service workers…the list goes on and on (and I am proud to say that the MHA Keystone Center has played an important role with the launch of our WELL-B initiative that continues to provide resiliency tools for our clinicians and other team members). But as residents of our communities, we can no longer take our healthcare workers and the access to care they provide for granted. These workers, and their organizations, need help.

Thankfully, the Michigan Legislature provided funding earlier this year through Public Act 9 to improve the recruitment, retention and training of healthcare workers. So far, over 69,000 healthcare workers have benefitted from that funding and it has helped to stabilize existing staffing levels. Hospitals are also exploring innovative ways to grow the talent pipeline, such as investment in higher education partnerships and other apprenticeships. However, while impactful, this funding is a finger in the dyke. Without additional attention, the problem will persist.

Addressing the strain on our children’s hospitals is a multi-pronged approach, and in addition to the aforementioned work of our MHA Keystone Center, we are also deriving input and guidance from our MHA Council on Children’s Health, led by Laura Appel, executive vice president for government relations and public affairs, as well as our system chief medical officer (CMO) group, led by our own CMO Gary Roth, DO.

While the MHA will continue to pursue legislative and regulatory solutions to the staffing crisis, there are actions anyone can undertake to help our healthcare workers caring for very sick children across Michigan, particularly as COVID-19, RSV and the flu converge to drive hospitalizations.

First and foremost, ensure that both you and your children are up to date on all the relevant vaccinations that are now readily available. The MHA is a long-time supporter of I Vaccinate which is a good source of information on vaccines, and our MHA Senior Vice President of Public Affairs and Communications Ruthanne Sudderth continues to be our point person with this organization. Second, practice proper hygiene, including handwashing and staying home when sick. Third, seek the appropriate setting for care; visit the hospital for emergencies but contact your primary care physician or an urgent care facility for testing or care for mild symptoms. Lastly – and very importantly – be sure to express some grace and appreciation for any healthcare worker you meet. As we approach the winter and holiday season, they are here to provide exceptional care to all who need it and deserve to be treated with respect both on and off duty.

If you have not done so already, please join me in sharing this messaging within your networks. Our hospitals need the support from our partners in healthcare, the business community and in Lansing and Washington, DC to weather this storm. Respiratory illnesses will always be here, but there are many small actions we can take to care for the health and wellness of our communities well into the future.

As always, I welcome your thoughts.

MHA CEO Report — Your Vote Matters

MHA Rounds Report - Brian Peters, MHA CEO

“We do not have government by the majority. We have government by the majority who participate.” Thomas Jefferson

MHA Rounds Report - Brian Peters, MHA CEOAt the MHA, we often say that politics is not a spectator sport. It requires continual engagement and relationship building so that when you are in a crisis and need assistance, you have trusted friends you can turn to. Look no further than the pandemic and the numerous bills and policies considered and enacted that helped hospitals and health systems during extremely challenging times. As an association, we are very appreciative and value the help we received from both the administration and legislature – at both the state and federal level – during that time.

This Election Day is a vital component to our healthcare priorities, as it includes the state’s gubernatorial race, followed by attorney general, secretary of state, all 13 U.S. House of Representatives seats, all seats in both the Michigan Senate and House of Representatives, two Supreme Court seats, three ballot proposals and local races.

As you can see, this year’s ballot is packed with important races that will determine the outlook of our state and nation’s political landscape for the next two years or more. In addition, several factors, including redistricting, have made for a number of highly competitive races. As a result, many observers believe that control of each chamber may be at stake.

Through our concerted efforts, the MHA HealthPAC has grown to become one of the largest political action committees in the state and is one of the important tools in our advocacy toolbox. And whether it is through HealthPAC, or through our many other activities, the MHA has a long history of remaining nonpartisan while highly encouraging all Michigan residents, particularly those in the healthcare community, to participate fully in the political process – and at no time is this more important than election season. Elections have consequences and the best way to ensure that our needs are addressed in the future is to use your constitutional right to vote for the candidates that best represent your values.

Healthcare is influenced by all three legs of the public policy stool – the executive branch, legislative branch and judicial branch. The Michigan medical community needs people in office at every level who understand their role in policy decisions that affect healthcare. The challenges facing hospitals are numerous and significant, such as financial viability, healthcare workforce restoration and wellness, behavioral health and health equity. Our elected officials are critical partners for identifying and implementing solutions to these issues.

Before completing your ballot, make sure to do your research. As always, we are pleased to share a series of useful resources on the MHA website.  In addition, the Citizens Research Council of Michigan has over 100 years of experience providing non-partisan, independent analysis on governmental policy and are another valuable resource when evaluating this year’s ballot proposals.

And while this election may change the political landscape of Lansing and Washington, D.C., it will not change the intensity or commitment of the MHA and our team at the MHA Capitol Advocacy Center towards our advocacy and policy work. Following the election will be a lame-duck session that could see a lot of activity prior to the end of the calendar year. In addition, once this year’s elected candidates are sworn into office, we will continue to meet with and identify healthcare champions that will be important partners towards improving the health and wellness of all Michiganders. And because of term limits, there will be a lot of them. One example: there will be over 50 new members of the Michigan House, all of whom will need to be educated and informed of the many complex issues in the healthcare domain.

Whether you’re planning to vote by absentee or in person on Nov. 8, you’re making a critical contribution to our democratic process. Every vote matters, particularly for the future landscape of healthcare.

As always, I welcome your thoughts.

MHA CEO Report — Michigan Hospitals: Benefitting Communities in Significant Ways

MHA Rounds Report - Brian Peters, MHA CEO

Life’s most persistent and urgent question is, ‘What are you doing for others?”  Martin Luther King, Jr.

MHA Rounds Report - Brian Peters, MHA CEOFall is officially upon us. At the MHA, that means a new program year is well underway, we have a new Strategic Action Plan in place and are preparing for the November election which is now just weeks away. This fall, we are also very proud to continue an annual tradition and publish two new reports documenting the critical role of our membership throughout the state: the 2022 Economic Impact of Healthcare in Michigan and the Healthy Futures, Health Communities community benefit report.

Fiscal year 2020 data (the most recently available) is shared in each report and it reinforces the position that hospitals are both economic drivers and community leaders. Healthcare remains the largest private sector employer in Michigan with nearly 572,000 total individuals directly employed, 224,000 of which are in hospitals. These direct healthcare workers earned $44.2 billion in wages, salaries and benefits and when combined with indirect, healthcare-supported jobs, contributed almost $15.2 billion in local, state and federal taxes. Hospitals provide mission-oriented work aimed at the health and wellness of their patients and communities, but the data is clear that hospitals clearly have a role in the economic health of our state as well.

We take our work towards improving community wellness seriously, which is demonstrated by the nearly $4.2 billion investment in community-based partnerships and programming. Hospitals invested more than $869 million in community and voluntary-based activities while providing $3.4 billion in uncompensated care. Hospitals are committed to not only caring for anyone who walks through their doors, but towards preventative care programs that can help reduce the need of inpatient hospital services. The costs of these efforts come directly out of a hospital’s bottom line but are vital towards ensuring vulnerable patients have the ability to receive needed care.

These reports are based on data from the first year of the pandemic. I do not have to tell you how trying and difficult those times were for hospitals. Despite the uncertainty and demand on hospitals and health systems during that time, they continued to support our communities in these important ways. Our healthcare system was stretched to new lengths, but we had over half a million individuals directly involved in providing care to patients. With a statewide population of 10 million, 40% of which are either under the age of 18 or aged 65 and older, healthcare either directly or indirectly employs over 18% of our workforce.

Yet the 2020 numbers also begin to provide evidence of the loss of healthcare workers that we anecdotally have shared for the last several years. For the first time in the history of the economic impact report, total direct jobs in Michigan from healthcare declined, including the loss of 7,000 jobs in hospitals. Despite those losses, total compensation for hospital workers remained the same, as contracted labor (e.g. those working for nurse staffing agencies) became a necessity for hospitals to maintain appropriate staffing levels.

But I do not want to lose sight of what the headline should be, and that is healthcare remains an economic engine and the largest private-sector employer in Michigan. At a time where every industry is struggling with having enough staff, healthcare remains a very significant employer. And the industry holds a tremendous amount of opportunity for new job growth moving forward: Michigan’s recent list of the top career fields with the highest projected growth is dominated by healthcare professions. Hospitals not only offer well-compensated careers with strong benefits, but in a rewarding field that truly makes a difference in the lives of our neighbors. Hospital careers also exist in communities large and small, helping to keep college graduates and young professionals in our state. Lastly, the skills of a healthcare professional are transferrable, regardless of region, and long-lasting. The training and education for a healthcare professional today will remain relevant over the next several decades.

Every year that goes by, hospitals seek to be more involved with individuals outside the walls of their facilities. They are helping to address the social determinants of health, including access to transportation and food insecurity. And they are intertwined in not only the individual health of community members, but in the success of local business and municipalities. Access to healthcare is at the top of any organization’s checklist wishing to expand their footprint into new markets. Our success depends on the success of community leaders and vice versa.

When we advocate for much-needed Medicaid and Medicare funding, for the 340B drug pricing program and for good health policy at the state and federal level, we do so because we know these are essential to maintaining access to quality healthcare in communities throughout Michigan. With the facts presented by our new reports on economic impact and community benefit, we believe there is more reason than ever for our elected officials – and all of us – to support our Michigan hospitals.

As always, I welcome your thoughts.

MHA CEO Report — Time to Focus on Cybersecurity

MHA Rounds Report - Brian Peters, MHA CEO

MHA Rounds Report - Brian Peters, MHA CEOThe world-altering powers that technology has delivered into our hands now require a degree of consideration and foresight that has never before been asked of us.” ― Carl Sagan

A long-held practice utilized by businesses of all stripes is the ubiquitous SWOT (strengths, weaknesses, opportunities and threats) analysis. For a hospital or health system in 2022, there is no shortage of candidates to fully stock the “threat” category. In this column, I want to draw attention to one that deserves increased attention because of its potential to cripple an organization in an instant: cybersecurity.

The wonders of technology have dramatically improved healthcare in Michigan and beyond. Advancements include imaging technology that identifies serious disease at a much earlier stage, robotic devices that permit surgical interventions that were previously considered too risky to attempt, remote patient monitoring and telehealth, and electronic medical records that facilitate better tracking and coordination for patients across various sites of care — the list is impressively long.  And amid our current workforce shortage crisis, we often describe technology in healthcare as a “force multiplier” that can supplement and extend our limited staffing resources to help ensure adequate access to care.

Make no mistake, healthcare still has one foot on the proverbial dock and one foot in the proverbial boat. That is, many of our communications and services remain in the “analog” world, while a growing share have become electronic, digitized and inter-connected. This phenomenon — coupled with the fact that the personal health information we collect and store has more value on the black market than any other data — has painted a neon target on our back for a growing cadre of cybercriminals and adversarial nation states. It is no accident the FBI has identified healthcare as the number one target of these bad actors. And simply put, a cyberattack on a hospital is a “threat to life” crime. We must act accordingly.

The statistics on healthcare attacks are enough to keep any executive up at night. An attack on a midsize hospital creates an average shutdown time of 10 hours and costs on average $45,700 per hour, according to an Ipsos report. In the same report, 49% of the respondents said their annual compliance budget for cybersecurity wasn’t enough. According to IBM, a data breach at a healthcare organization costs more than any other sector at $10.1 million. And the threat continues to grow, as healthcare cyberattacks have increased by 84% from 2018 to 2021, according to Critical Insight. Michigan hospitals, health insurance companies, physician offices and others have been the victims of ransomware attacks and related cybercrime in recent years.

If this wasn’t bad enough, a spotlight was shone on cybersecurity this past spring during Russia’s invasion of Ukraine, when cyberattacks on the Ukrainian government and critical infrastructure organizations had the potential to ripple across multi-national organizations and infect U.S.-based operations, including healthcare. Experts believe this scenario will be part of every future global conflict. And unfortunately, for many hospitals and health systems who welcome patients from multiple foreign countries, and who have business partners outside the United States, the practice of “geo-fencing,” or blocking all incoming email traffic from outside the country, is not always a viable approach.

So where can hospitals and health systems turn for help? At the national level, the American Hospital Association anticipated this trend several years ago and employs John Riggi as the national advisor for cybersecurity and risk. John has been a resource for the MHA in the past and as a former leader within the FBI’s cybercrime division, he maintains close ties with all the relevant government agencies.

And here at the MHA, we are also very committed to strengthening our own cyber defenses, while doing the same for our members. We have appointed Mike Nowak to serve as our own Chief Information Security Officer. Several years ago, Mike and his team helped to launch, and have subsequently helped to operate, the Michigan Health Security Operations Center (Mi|HSOC) for hospitals and health systems. Created for healthcare providers by healthcare providers, this first of its kind entity has the proven ability to prevent, detect, analyze and respond to cybersecurity events. Operating 24/7/365, the Mi|HSOC has developed strong relationships and communication with law enforcement at various levels, including the Michigan State Police Cyber Division, FBI and Secret Service.

An organization that helped form the Mi|HSOC is CyberForce|Q, which is now an MHA Service Corporation Endorsed Business Partner. In addition to sharing tactical information on emerging threats with the members of the security operations center, CyberForce|Q offers a variety of additional cybersecurity services to our members and other healthcare clients.

The bottom line — the MHA and our partners have helped Michigan become a leader in this space. By mitigating potential risk, physicians, nurses and staff of our member hospitals have the best opportunity to provide exceptional patient care without any external interruptions. While the advocacy, policy and safety and quality areas of the association often receive public attention, our cybersecurity efforts are constantly at work, often without much notice, to protect healthcare in Michigan.

But we need your help. I am the farthest thing from an expert in this field, but one thing I have learned is that the “human factor” is the most critical element of our defenses — and therefore the most vulnerable. Think twice before opening a suspicious email or text message, safeguard your electronic devices and passwords and take the time to educate yourself on all of the best practices to follow in the midst of this new, online world. The health of your patients and communities may depend on it.

As always, I welcome your thoughts.

MHA CEO Report — Benefits of the State Budget

MHA Rounds Report - Brian Peters, MHA CEO

MHA Rounds Report - Brian Peters, MHA CEO“We must find time to stop and thank the people who make a difference in our lives.” ― John F. Kennedy

We have rightfully spent a lot of time in the past two years thanking the heroes who work in our hospitals and other healthcare settings for the incredible work they have done in the face of extreme challenge.

I want to take a moment now to thank another group of people who have recently helped our cause through their bipartisan actions; our elected officials in Lansing were extremely busy the last week of June passing the fiscal year 2023 state budget, which has since been signed by Gov. Whitmer. Our MHA mission is to advance the health of individuals and communities — and this budget absolutely provides significant help in that regard. While some elements of the new budget represent long-standing MHA priorities, others are new funding items that have the potential to reshape access to care and help our members and the patients and communities they serve.

Our MHA team does a tremendous job advocating for the importance of items such as the Healthy Michigan Plan, graduate medical education of physician residents, disproportionate share hospital funding, maximization of our robust provider tax program and Medicaid payment rates, the rural access pool and obstetrical stabilization fund, and critical access hospital reimbursement rates. Every election cycle, new legislators are welcomed to Lansing and the MHA’s efforts never stop to ensure these decisionmakers are aware of the impact these budget items play in their communities. The bottom line is the financial viability of hospitals is increasingly reliant on these important programs, and the MHA is dedicated to protecting them.

Hospital closures continue to happen across the country. However, they have occurred at a much higher rate in states that have not participated in Medicaid expansion through the Affordable Care Act. Maintaining funding for our expansion program — the Healthy Michigan Plan — has been one of our top priorities, and the pandemic has made the importance of insurance coverage more important than ever. In short, when the pandemic hit and thousands of Michiganders lost their jobs, the Healthy Michigan Plan was there to ensure access to good healthcare.

Our hospitals that treat the highest numbers of uninsured and underinsured patients also qualify for disproportionate share hospital funding, which provides enhanced reimbursement to account for the higher costs of care. This pool is funded through hospital provider taxes that reduce the state’s general fund contribution to the overall Medicaid program.

Small, rural and independent hospitals can often experience financial challenges in a particularly acute way, thus items such as the rural access pool, obstetrical stabilization fund and critical access hospital reimbursement rates also support access to healthcare services in rural areas. Labor and delivery units typically do not contribute to positive margins, but they are extremely important for families and communities. The obstetrical stabilization fund provides additional means for hospitals in rural areas to maintain these services so expectant mothers can avoid driving exorbitant distances for these services. Lastly, the state also included $56 million in new funding to increase Medicaid reimbursement rates for primary care services, which will help individuals on Medicaid receive the necessary primary and preventative care that can help prevent hospitalizations and reduce overall healthcare costs.

The top concern of hospital leaders remains workforce sustainability, and the continued funding for graduate medical education is one tool we must continue to use to maintain the physician talent pipeline that is sorely needed. At the same time, we are extremely happy to see inclusion of state funds to expand access to Bachelor of Science in Nursing degree programs at the state’s community colleges to help address the nurse talent pipeline, a $56 million line item. This proposal was supported by the MHA when it was formally introduced, and we look forward to seeing our post-secondary partners implement it to grow the healthcare workforce.

Lastly, behavioral health investments have been at the forefront of our advocacy efforts for some time and we were very pleased to see new funding to improve and enhance state behavioral health facility capacity. Michigan lacks adequate capacity to treat patients with behavioral and mental illness and this new funding is an important and necessary step to address the shortage. Included is $50 million to expand pediatric inpatient behavioral health capacity, $30 million to establish crisis stabilization units and $10 million to fund the essential health provider loan repayment program to cover behavioral health professionals.

In total, the budget includes $625 million in new investments for behavioral health funding and investments in workforce. While this will not solve all the issues impacting hospitals, it provides needed resources and demonstrates the commitment of lawmakers to a healthy Michigan. This budget also signifies that our work must continue to advocate for the resources necessary for hospitals and health systems to care for all Michiganders. Once again, on behalf of the entire MHA family, I want to acknowledge and thank both Governor Whitmer, as well as lawmakers in the state House and Senate, for their support of this latest state budget. And I would also encourage anyone who cares about access to quality, affordable healthcare to engage in the process, share your stories and input with those who can make a difference going forward. But also remember to say thank you when they support our cause.

As always, I welcome your thoughts.

MHA CEO Report — Stronger Together

MHA Rounds Report - Brian Peters, MHA CEO

“Alone we can do so little. Together we can do so much.” ― Helen Keller

MHA Rounds Report - Brian Peters, MHA CEOThe arrival of summer signifies the completion of the MHA’s program year. During this time, the association reviews our many accomplishments related to the core issues reflected in our strategic action plan. These accomplishments directly benefit not only our members, but the patients and communities that we collectively serve as well. As we went through the process this year — a year that was still heavily influenced by the COVID-19 pandemic — a key theme resonated throughout: the MHA, and the health of our communities, is strengthened by collaboration and stakeholders working together.

“Stronger together” is the theme of the MHA’s 2021-2022 Annual Report. It encapsulates how integrated healthcare truly is, whether reflected by partnerships between health systems throughout the state, with our partners at other associations, or through external stakeholders in public health and government. As I have said many times in the past year, our work in this challenging environment is truly an all-hands-on-deck affair. With that in mind, stronger together also addresses the value of the amazing staff at the MHA and how we collectively could not achieve our goals without the expertise, talent and teamwork of our various divisions. Lastly, I must thank Tina Freese Decker, president and CEO of BHSH System and the 2021-2022 MHA Board of Trustees chair, for her exceptional leadership during this program year. Tina provided direction and influence in both the crafting of the strategic action plan, as well as the tactics that we used to meet our goals.

During the year in review, our members had to navigate multiple COVID-19 surges and the most significant workforce crisis I’ve experienced throughout my professional career. However, vaccine access was available to most of our population and new therapeutics became available that have truly improved health outcomes for those infected by COVID-19. In addition, as the focus and attention of our society and lawmakers slowly pivoted away from the pandemic, we devoted significant energy and resources to a host of other important issues including workforce sustainability, health equity, data strategy, behavioral health and more. Collectively, these efforts have supported our association mission and helped to advance the health of individuals and communities.

It is my pleasure to share the completed MHA 2021-2022 Annual Report that goes into greater detail on the strategic objectives and how the MHA met and addressed each task head-on. This summary makes me extremely proud to work with an incredible organization that unquestionably has provided value to our members and made a real difference in our state.

As COVID-19 moves closer to an endemic stage, we have entered a “new normal” phase in the healthcare landscape, which brings unique opportunities to significantly improve how care is designed, delivered and reimbursed. In the coming months, the MHA will establish our specific priorities and strategies for the new program year — and I can promise that we will address all of those priorities with the same intense focus, professionalism and commitment that the MHA has always displayed. And we will do it together.

As always, I welcome your thoughts.

MHA CEO Report — Healthcare Transparency and the Flaws of RAND 4.0

MHA Rounds Report - Brian Peters, MHA CEO

“We will make electricity so cheap that only the rich will burn candles.”― Thomas A. Edison

MHA Rounds Report - Brian Peters, MHA CEO

Recently the RAND Corp. released its latest hospital pricing study that uses Medicare as a benchmark for hospital pricing. For many years, pricing and affordability has been top of mind for our patients, and our hospitals and health systems go to great lengths to ensure anyone who walks through our doors at any date or time will receive high-quality care regardless of their level of coverage. Efforts have been made to increase healthcare transparency, including the development of the MHA’s verifymicare.org website, recent federal legislation to establish a dispute resolution process for balanced billing that removes patients from payer and provider disputes, and federal requirements that hospitals post price information online.

Unfortunately, the recent study from RAND does not provide an accurate picture on the relationship between fixed government reimbursement rates, negotiated private insurer rates and financial sustainability for hospitals. We know Medicare does not cover the true cost of care. Hospitals do everything they can to break even, and most operate on razor-thin margins. Just consider that 52 hospitals in the US closed between 2018 and 2020. Nearly all hospitals still lose money on Medicare. In addition, unlike public goods that respond quickly to inflationary pressures, the ability of a hospital to pass cost on to consumers is extremely limited. The drivers of increased cost in the economy are felt by all hospitals, such as through the increased cost of labor and supply chain increases.

The RAND study makes a very broad claim from a cherry-picked data set that looks at claims for just 2.2% of overall hospital spending and inappropriately uses Medicare reimbursement rates as a benchmark. It fails to acknowledge that hospitals are the only healthcare entities in our communities and modern society that are open 24/7/365 to everyone, regardless of their ability to pay. This remains a commitment of ours well into the future.

Hospitals not only have to consider the actual and projected cost of care but plan capital improvements that will be necessary in terms of new technologies or facility renovations. For example, the cost of the workforce is built into negotiations with insurers. The reason we see price increases is that underlying costs for hospitals are on the rise. When contrasting the price of hospital care with the price of many goods and services in this inflationary economy, we do not look out of line. Looking at 2020, the unbudgeted expenses for hospitals exploded due to personal protective equipment and staffing expenses that totally changed the cost of hospital operations. Remember, hospitals are extraordinarily labor dependent, and hospitals must meet workforce sustainability challenges to maintain appropriate staff throughout their facilities and ensure the quality of care is never impacted.

Recent analysis from Kaufman Hall clearly indicates profiteering is not occurring by hospitals. Hospitals have been losing money during the pandemic and, while federal relief funds have made a significant impact, many have still lost money because of the exorbitant staffing and supply expenses they have been forced to absorb. Median operating margins for hospitals fell from 5.6% to -1.4% between December 2021 and March 2022, which includes funding from the Coronavirus Aid, Relief, and Economic Security Act. Hospital labor expenses have increased by more than one-third from pre-pandemic levels while contract labor as a percentage of total labor expenses increased more than five times the rate from pre-pandemic levels. In addition, drug costs have seen the largest increase in expenses for hospitals, up 24% compared to before the pandemic.

We empathize with our patients: no one wants to pay more money for healthcare than is necessary. This is true whether it’s healthcare or gas or milk. Hospitals’ shared goal is providing access to high-quality care in this challenging environment in a cost-effective way. It is a costly enterprise to ensure everyone in the community has high-quality healthcare every minute of every day, but hospitals do their best to keep costs as low as possible for every patient, every time.