458
Mabry et al
Discussion
19. Newgard CD, Staudenmayer K, Hsia RY, et al. The cost of overtriage: more than one-third of low-risk injured patients were taken to major trauma centers. Health Aff 2013;32:1591e1599. 20. Taheri PA, Butz DA, Watts CM, et al. Trauma services: a profit center? J Am Coll Surg 1999;188:349e354. 21. Rutledge R, Shaffer VD, Ridky J. Trauma care reimbursement in rural hospitals: implications for triage and trauma system design. J Trauma 1996;40:1002e1008. 22. Fakhry SM, Potter C, Crain W, Maier R. Survey of national usage of trauma response charge codes: an opportunity for enhanced trauma center revenue. J Trauma 2009;67: 1352e1358.
Discussion DR RONALD M STEWART (San Antonio, TX): First, I congratulate you and your team of authors for (in the span of 5 short years) building a robust and growing trauma system for the citizens of Arkansas. It is clear that the Arkansas system was designed and implemented with great foresight, which laid the groundwork for this paper, and I am sure many to come. I congratulate the surgeons of Arkansas for both leading and working together so successfully. Getting right to the bottom line: Net margin or profit essentially falls with increasing severity of injury and is worst at the level I trauma center. If there is a “sweet spot” with respect to profitability from Arkansas, it rests with level II trauma centers, the only group of trauma centers with a positive median net margin. I have 4 questions for you: 1. Because there are large variations in state payer mix and funding methods, do you believe these results are generalizable to other states or the country as a whole? 2. Did net margin take into account other nonpatient care revenue, such as local property taxes and state programs to offset the care of trauma patients without health care coverage? 3. Did you examine, or do you plan to examine, the impact of blunt vs penetrating trauma or direct transport patients vs interhospital transfer patients? 4. There are clearly many reasons why hospitals and their surgeons want to be a trauma center. Level I trauma centers are specifically responsible for and charged with development of future leaders and research, but clearly, are the least profitable. How do you propose to encourage the level I trauma centers in Arkansas to continue as healthy, financially viable trauma centers? As a corollary, how do you keep all hospitals from aspiring to become level II trauma centers? DR SAMIR FAKHRY (Charleston, SC): Let me start by first congratulating the authors on taking on the always daunting task of understanding the costs associated with the care we deliver, trauma care included. Because of the way our health care system is designed, or rather distorted, determining the actual cost of any particular service or encounter ranks among the great mysteries of American health care. At a time in our history when we are inching ever closer to the cure for cancer, breaking down the complexities of the inflammatory response, and finally resolving the
J Am Coll Surg
debate about crystalloids and colloids (in favor of crystalloids), we are still challenged to answer the seemingly simple question of what something costs in health care. To illustrate the point, at a recent meeting with the Centers for Medicare and Medicaid Services, none of us could answer the ostensibly simple question, “What does a trauma activation cost?” Of course, that matters, as payers would like to reimburse relative to costs. Absent that information, it is difficult to justify the wide variation in charges for services, such as the trauma activation fees that have been reported. No business would accept that as part of their business model because it not only interferes with accurate profit and loss assessments but also undermines market valuations and negotiations with purchasers of those services. This will only be exaggerated in the evolving world of value-based purchasing. Trauma care stakeholders in Arkansas were presented with a unique opportunity to evaluate the trauma financial impact of trauma centers and a trauma system. I suggest that similar efforts in other specialties are needed. I have a few comments and questions for the authors. 1. As you point out in the discussion in the manuscript, a major accomplishment of this work is convincing a large group of centers to share their financial data and developing a methodology that combines the disparate source data into a single dataset that can be meaningfully analyzed. Congratulations on accomplishing that feat. Was the guarantee of confidentiality the prime driver for that process? What other elements contributed to that success? 2. I also commend you on implementing the Arkansas Trauma Band ID Number. Do you plan to use that resource to study other important post-discharge outcomes of trauma care besides financials, such as 6- and 12-month survival, mental health/ post-traumatic stress disorder prevalence, functional status, and return to work? 3. Even with your extensive efforts, you continue to refer to “estimated costs.” Did you include both direct and indirect costs in your calculations? If you included both, how did you correct for the variation in attributable indirect costs that occur because of different cost accounting systems at different hospitals? 4. You describe removing the costs associated with trauma activation from the Medicare Cost Report. What are those costs and how did you select them? We have struggled to find a uniformly applicable methodology to accomplish that over a large number of centers. 5. In Table 4 in the manuscript, you show that the mean estimated costs, charges, and payments are approximately twice as high as the respective medians. This suggests that there is a small outlier population that has high associated costs and charges. In a paper we presented at the 2012 meeting of this Association, we determined that population to be the Medicareage patient with multiple comorbidities and ICU stays of greater than 10 days. If that was your experience and with that population expected to grow dramatically, should we be working on contracting strategies that allow us to recoup the high outlier costs of this population instead of accepting Diagnosis-Related Group-based or capitated payments based on our mean estimated costs?
Vol. 220, No. 4, April 2015
6. Table 4 shows that level I centers have higher charges, higher costs, and lower reimbursements for comparable Injury Severity Score (ISS) categories. This results in smaller margins for them. Any thoughts on why that would happen if we assume that level I and level II centers are very similar when it comes to patient care infrastructure? Could this be related to teaching status or for-profit status? DR DAVID RICHARDSON (Louisville, KY): Those of you who know of Dr Mabry’s work in the area of finance know that he does a wonderful job in all of this. Dr Brent Eastman and I actually did a similar study with an outside consultant in 1991, which we published in The Journal of Trauma. One of the difficulties we encountered in our study conducted over 2 decades ago has already been alluded to, and that’s ferreting out hidden costs that may not have been included, plus trying to ascertain costs that were ascribed to the trauma center that were really general expenses. In 1 institution, an entire CT scanner, which was a new online purchase as a multi-use CT scanner, was attributed to the trauma center, for example. So I was unclear in your manuscript exactly how you determined actual expenses and the confidence level you had in your cost per patient numbers there. Second, this study also begs the question of how trauma centers in Arkansas are really staying afloat, as most of them seem to be losing money on almost every category of patient treated. Do you receive subsidies other than those things to start up your infrastructure? Are the patients who were treated for < 2 days providing some kind of positive margin? Otherwise, I don’t see how that’s a sustainable model. As many of you who follow the news may know, regarding the Affordable Care Act (ACA), Kentucky has been sort of its poster child for signing up prospective patients under the Medicaid system. In our hospital and our trauma center, we have seen a major increase in funded patients, albeit poorly funded ones, as a result. However, the other monies that we have been receiving have been consistently knocked down commensurate with that, such that we really see no positive impact in that change, and a very slight change in reimbursement for those poorly funded patients could now make our trauma center a real money loser. So we wonder what’s going to happen around the country. I think the concern that we should have is if this is applicable, what’s going to happen as we move forward, especially if reimbursement declines, as it is frankly likely to do. So in our 1991 paper, what we really tried to push, and we have been successful to some degree in Kentucky with our trauma center, is that we ought to be looked at as a public trust, like a fire department. If you are going to keep something open 24/7/365, you have to have other funding, because I don’t think just trying to do that by using money you generate is going to make it in this kind of model. DR JOSEPH TEPAS (Jacksonville, FL): I congratulate Dr Mabry for his leadership in developing what we are now calling “big data,” which physicians are beginning to analyze to define actionable items. I have 2 questions and 2 comments. There are 69 trauma centers in Arkansas, and only 32 participated in this. What effect did the nonparticipants exert as outliers in these data? In the abstract I noticed that the cost-to-charge ratio
Mabry et al
Discussion
459
of your level IIIs was the highest, yet the reimbursement rate was the lowest. According to the abstract, this group had a very substantial number of patients and may have been performing a little bit differently with less severe patients with more upfront costs, rather than different quality of care. When you put all this together, there are 2 great opportunities afforded by this tool that you have developed. You can enhance it with additional data, and you can recruit additional hospitals. You would then be able to crosscut this by specific injury profiles and case matches, and identify where those cost differences really are. This could be a significant step toward meaningful comparative effectiveness research. While you started out looking at the burden to the hospital, in reality, these data can be scaled up to assess the burden of injury to the population. To reiterate what Dr Richardson was saying regarding the ACA, this is what we are really all about! Congratulations on a superb start! DR NICK NAMIAS (Miami, FL): You pointed out that 32 participating centers took 75% of the trauma patients in Arkansas, which leads you to wonder what the other 37 centers are doing and if you really need them. What would happen to the whole cost structure if you concentrated expertise in the 32 centers that are seeing 75% of all the patients? DR MICHAEL SUTHERLAND: One of the themes that I heard in the comments regarded how you account for the fact that the trauma centers in Arkansas are losing money? We think that there are multiple factors that play into that. The biggest issue that we see is, from our standpoint, no payers in the state are really contributing to that activation and readiness cost associated with trauma centers. That’s been a problem that we have seen throughout the state, and especially in comparison to other states that are recouping some of those costs from third-party payers. The activation fees that are typically seen in some of the other states that we have queried would offset the negative margin that we are seeing in a large percentage of the population of the patients who were studied. We think that’s an opportunity for us to go back to those third-party insurers and work to derive a solution that would offset that cost. The second issue that we are seeing here is that these are fully loaded costs. Compared with some other studies that are out there that looked at just the direct cost of care, the fully loaded cost includes the indirect cost of the attribution of the expenses of the facility, the personnel, and some of those fixed costs that do not change and are not directly paid as a result of that particular patient coming to the facility. We assigned payments based on the patient’s actual payment that came in, and doesn’t take into account any other outside funding. The block grants that Dr Mabry described are not included in those payments. When we looked at those direct payments vs the total fully loaded costs, the total margin became skewed. You get the gross margin, as opposed to the net margin. Although the net margin may be closer to positive or actually positive, the fully loaded margin is not. The other issue that was alluded to was payer mix. So what we see in Arkansas has been a shift in that payer mix. These data are from 2012, before implementation of ACA. One of our large level I trauma centers in the state has seen a marked shift in their reimbursement as a result of that. We went from a situation in which there was a 15% uninsured rate pre-ACA in the data shown here
460
Mabry et al
Discussion
to now having about a 5% or less uninsured rate. While that does skew, as Dr Richardson indicated, some of the other payers, in the big scheme of things, looking at that 1 institution, there has been a net positive impact on that institution’s finances. We think that the success of the study is the fact that it’s a novel way of looking at trauma finances. It gives us an opportunity to look across the entire state and apply a uniform mechanism of leveling those costs. The success of that is directly related to the facility’s trust in both the hospital association and the external consulting firm, BKD, in maintaining the confidentiality of the data and the familiarity of BKD with the hospital finances, as they are a large player in the state and already do the accounting for many of these institutions. They have the insight and the expertise to tease out those costs and attribute them to the appropriate buckets. While we still get a fully loaded cost that we are comparing, it does level things. We felt confident in the retrospective analysis of looking at the estimated cost for the facilities that we had access to that the targets were close and that we were getting a real true estimate of the cost associated with that care. The trauma band number has been a successfully implemented piece of the trauma system. While we have not done any research
J Am Coll Surg
in long-term outcomes as yet, it provides that opportunity. It’s certainly something that we view as an opportunity for the system. The other issues that came up in the discussions include the payment and the use of the median vs the mean. We agree that there’s a right-shifted curve, and that the use of the median offsets that. That’s the reason we focused on that in the course of the discussion. There is an opportunity for a discussion with payers to carve out the high outliers. That’s certainly something that comes out of this research that we can dive into further. With regard to Dr Stewart’s comments and relating to further analysis of the data and further analysis of subsets, I think that there’s definitely an opportunity for us to go back, look at these data in the next round of studies for penetrating vs blunt and transfers vs native first-time admission. The other option that we are currently looking at is developing a risk stratification model that would give us an idea of what risk-adjusted outcomes were associated with cost for any given trauma center or any given patient, and then using that as a model to determine quality as a true determinant of whether the value that’s applied at a level III vs level II or a level I hospital makes sense.
Mabry et al
Discussion
19. Newgard CD, Staudenmayer K, Hsia RY, et al. The cost of overtriage: more than one-third of low-risk injured patients were taken to major trauma centers. Health Aff 2013;32:1591e1599. 20. Taheri PA, Butz DA, Watts CM, et al. Trauma services: a profit center? J Am Coll Surg 1999;188:349e354. 21. Rutledge R, Shaffer VD, Ridky J. Trauma care reimbursement in rural hospitals: implications for triage and trauma system design. J Trauma 1996;40:1002e1008. 22. Fakhry SM, Potter C, Crain W, Maier R. Survey of national usage of trauma response charge codes: an opportunity for enhanced trauma center revenue. J Trauma 2009;67: 1352e1358.
Discussion DR RONALD M STEWART (San Antonio, TX): First, I congratulate you and your team of authors for (in the span of 5 short years) building a robust and growing trauma system for the citizens of Arkansas. It is clear that the Arkansas system was designed and implemented with great foresight, which laid the groundwork for this paper, and I am sure many to come. I congratulate the surgeons of Arkansas for both leading and working together so successfully. Getting right to the bottom line: Net margin or profit essentially falls with increasing severity of injury and is worst at the level I trauma center. If there is a “sweet spot” with respect to profitability from Arkansas, it rests with level II trauma centers, the only group of trauma centers with a positive median net margin. I have 4 questions for you: 1. Because there are large variations in state payer mix and funding methods, do you believe these results are generalizable to other states or the country as a whole? 2. Did net margin take into account other nonpatient care revenue, such as local property taxes and state programs to offset the care of trauma patients without health care coverage? 3. Did you examine, or do you plan to examine, the impact of blunt vs penetrating trauma or direct transport patients vs interhospital transfer patients? 4. There are clearly many reasons why hospitals and their surgeons want to be a trauma center. Level I trauma centers are specifically responsible for and charged with development of future leaders and research, but clearly, are the least profitable. How do you propose to encourage the level I trauma centers in Arkansas to continue as healthy, financially viable trauma centers? As a corollary, how do you keep all hospitals from aspiring to become level II trauma centers? DR SAMIR FAKHRY (Charleston, SC): Let me start by first congratulating the authors on taking on the always daunting task of understanding the costs associated with the care we deliver, trauma care included. Because of the way our health care system is designed, or rather distorted, determining the actual cost of any particular service or encounter ranks among the great mysteries of American health care. At a time in our history when we are inching ever closer to the cure for cancer, breaking down the complexities of the inflammatory response, and finally resolving the
J Am Coll Surg
debate about crystalloids and colloids (in favor of crystalloids), we are still challenged to answer the seemingly simple question of what something costs in health care. To illustrate the point, at a recent meeting with the Centers for Medicare and Medicaid Services, none of us could answer the ostensibly simple question, “What does a trauma activation cost?” Of course, that matters, as payers would like to reimburse relative to costs. Absent that information, it is difficult to justify the wide variation in charges for services, such as the trauma activation fees that have been reported. No business would accept that as part of their business model because it not only interferes with accurate profit and loss assessments but also undermines market valuations and negotiations with purchasers of those services. This will only be exaggerated in the evolving world of value-based purchasing. Trauma care stakeholders in Arkansas were presented with a unique opportunity to evaluate the trauma financial impact of trauma centers and a trauma system. I suggest that similar efforts in other specialties are needed. I have a few comments and questions for the authors. 1. As you point out in the discussion in the manuscript, a major accomplishment of this work is convincing a large group of centers to share their financial data and developing a methodology that combines the disparate source data into a single dataset that can be meaningfully analyzed. Congratulations on accomplishing that feat. Was the guarantee of confidentiality the prime driver for that process? What other elements contributed to that success? 2. I also commend you on implementing the Arkansas Trauma Band ID Number. Do you plan to use that resource to study other important post-discharge outcomes of trauma care besides financials, such as 6- and 12-month survival, mental health/ post-traumatic stress disorder prevalence, functional status, and return to work? 3. Even with your extensive efforts, you continue to refer to “estimated costs.” Did you include both direct and indirect costs in your calculations? If you included both, how did you correct for the variation in attributable indirect costs that occur because of different cost accounting systems at different hospitals? 4. You describe removing the costs associated with trauma activation from the Medicare Cost Report. What are those costs and how did you select them? We have struggled to find a uniformly applicable methodology to accomplish that over a large number of centers. 5. In Table 4 in the manuscript, you show that the mean estimated costs, charges, and payments are approximately twice as high as the respective medians. This suggests that there is a small outlier population that has high associated costs and charges. In a paper we presented at the 2012 meeting of this Association, we determined that population to be the Medicareage patient with multiple comorbidities and ICU stays of greater than 10 days. If that was your experience and with that population expected to grow dramatically, should we be working on contracting strategies that allow us to recoup the high outlier costs of this population instead of accepting Diagnosis-Related Group-based or capitated payments based on our mean estimated costs?
Vol. 220, No. 4, April 2015
6. Table 4 shows that level I centers have higher charges, higher costs, and lower reimbursements for comparable Injury Severity Score (ISS) categories. This results in smaller margins for them. Any thoughts on why that would happen if we assume that level I and level II centers are very similar when it comes to patient care infrastructure? Could this be related to teaching status or for-profit status? DR DAVID RICHARDSON (Louisville, KY): Those of you who know of Dr Mabry’s work in the area of finance know that he does a wonderful job in all of this. Dr Brent Eastman and I actually did a similar study with an outside consultant in 1991, which we published in The Journal of Trauma. One of the difficulties we encountered in our study conducted over 2 decades ago has already been alluded to, and that’s ferreting out hidden costs that may not have been included, plus trying to ascertain costs that were ascribed to the trauma center that were really general expenses. In 1 institution, an entire CT scanner, which was a new online purchase as a multi-use CT scanner, was attributed to the trauma center, for example. So I was unclear in your manuscript exactly how you determined actual expenses and the confidence level you had in your cost per patient numbers there. Second, this study also begs the question of how trauma centers in Arkansas are really staying afloat, as most of them seem to be losing money on almost every category of patient treated. Do you receive subsidies other than those things to start up your infrastructure? Are the patients who were treated for < 2 days providing some kind of positive margin? Otherwise, I don’t see how that’s a sustainable model. As many of you who follow the news may know, regarding the Affordable Care Act (ACA), Kentucky has been sort of its poster child for signing up prospective patients under the Medicaid system. In our hospital and our trauma center, we have seen a major increase in funded patients, albeit poorly funded ones, as a result. However, the other monies that we have been receiving have been consistently knocked down commensurate with that, such that we really see no positive impact in that change, and a very slight change in reimbursement for those poorly funded patients could now make our trauma center a real money loser. So we wonder what’s going to happen around the country. I think the concern that we should have is if this is applicable, what’s going to happen as we move forward, especially if reimbursement declines, as it is frankly likely to do. So in our 1991 paper, what we really tried to push, and we have been successful to some degree in Kentucky with our trauma center, is that we ought to be looked at as a public trust, like a fire department. If you are going to keep something open 24/7/365, you have to have other funding, because I don’t think just trying to do that by using money you generate is going to make it in this kind of model. DR JOSEPH TEPAS (Jacksonville, FL): I congratulate Dr Mabry for his leadership in developing what we are now calling “big data,” which physicians are beginning to analyze to define actionable items. I have 2 questions and 2 comments. There are 69 trauma centers in Arkansas, and only 32 participated in this. What effect did the nonparticipants exert as outliers in these data? In the abstract I noticed that the cost-to-charge ratio
Mabry et al
Discussion
459
of your level IIIs was the highest, yet the reimbursement rate was the lowest. According to the abstract, this group had a very substantial number of patients and may have been performing a little bit differently with less severe patients with more upfront costs, rather than different quality of care. When you put all this together, there are 2 great opportunities afforded by this tool that you have developed. You can enhance it with additional data, and you can recruit additional hospitals. You would then be able to crosscut this by specific injury profiles and case matches, and identify where those cost differences really are. This could be a significant step toward meaningful comparative effectiveness research. While you started out looking at the burden to the hospital, in reality, these data can be scaled up to assess the burden of injury to the population. To reiterate what Dr Richardson was saying regarding the ACA, this is what we are really all about! Congratulations on a superb start! DR NICK NAMIAS (Miami, FL): You pointed out that 32 participating centers took 75% of the trauma patients in Arkansas, which leads you to wonder what the other 37 centers are doing and if you really need them. What would happen to the whole cost structure if you concentrated expertise in the 32 centers that are seeing 75% of all the patients? DR MICHAEL SUTHERLAND: One of the themes that I heard in the comments regarded how you account for the fact that the trauma centers in Arkansas are losing money? We think that there are multiple factors that play into that. The biggest issue that we see is, from our standpoint, no payers in the state are really contributing to that activation and readiness cost associated with trauma centers. That’s been a problem that we have seen throughout the state, and especially in comparison to other states that are recouping some of those costs from third-party payers. The activation fees that are typically seen in some of the other states that we have queried would offset the negative margin that we are seeing in a large percentage of the population of the patients who were studied. We think that’s an opportunity for us to go back to those third-party insurers and work to derive a solution that would offset that cost. The second issue that we are seeing here is that these are fully loaded costs. Compared with some other studies that are out there that looked at just the direct cost of care, the fully loaded cost includes the indirect cost of the attribution of the expenses of the facility, the personnel, and some of those fixed costs that do not change and are not directly paid as a result of that particular patient coming to the facility. We assigned payments based on the patient’s actual payment that came in, and doesn’t take into account any other outside funding. The block grants that Dr Mabry described are not included in those payments. When we looked at those direct payments vs the total fully loaded costs, the total margin became skewed. You get the gross margin, as opposed to the net margin. Although the net margin may be closer to positive or actually positive, the fully loaded margin is not. The other issue that was alluded to was payer mix. So what we see in Arkansas has been a shift in that payer mix. These data are from 2012, before implementation of ACA. One of our large level I trauma centers in the state has seen a marked shift in their reimbursement as a result of that. We went from a situation in which there was a 15% uninsured rate pre-ACA in the data shown here
460
Mabry et al
Discussion
to now having about a 5% or less uninsured rate. While that does skew, as Dr Richardson indicated, some of the other payers, in the big scheme of things, looking at that 1 institution, there has been a net positive impact on that institution’s finances. We think that the success of the study is the fact that it’s a novel way of looking at trauma finances. It gives us an opportunity to look across the entire state and apply a uniform mechanism of leveling those costs. The success of that is directly related to the facility’s trust in both the hospital association and the external consulting firm, BKD, in maintaining the confidentiality of the data and the familiarity of BKD with the hospital finances, as they are a large player in the state and already do the accounting for many of these institutions. They have the insight and the expertise to tease out those costs and attribute them to the appropriate buckets. While we still get a fully loaded cost that we are comparing, it does level things. We felt confident in the retrospective analysis of looking at the estimated cost for the facilities that we had access to that the targets were close and that we were getting a real true estimate of the cost associated with that care. The trauma band number has been a successfully implemented piece of the trauma system. While we have not done any research
J Am Coll Surg
in long-term outcomes as yet, it provides that opportunity. It’s certainly something that we view as an opportunity for the system. The other issues that came up in the discussions include the payment and the use of the median vs the mean. We agree that there’s a right-shifted curve, and that the use of the median offsets that. That’s the reason we focused on that in the course of the discussion. There is an opportunity for a discussion with payers to carve out the high outliers. That’s certainly something that comes out of this research that we can dive into further. With regard to Dr Stewart’s comments and relating to further analysis of the data and further analysis of subsets, I think that there’s definitely an opportunity for us to go back, look at these data in the next round of studies for penetrating vs blunt and transfers vs native first-time admission. The other option that we are currently looking at is developing a risk stratification model that would give us an idea of what risk-adjusted outcomes were associated with cost for any given trauma center or any given patient, and then using that as a model to determine quality as a true determinant of whether the value that’s applied at a level III vs level II or a level I hospital makes sense.
