Carroll Hospital Center ahead of governor's health care goals

Maryland hospitals are outpacing Gov. Martin O'Malley's goals for reducing the cost of care in the state, and Carroll Hospital Center is one of the hospitals leading the pack.

In 2011, O'Malley set a goal to cut the rate of preventable hospitalizations and readmissions by 10 percent by the end of 2015. The year the goal was established, the rate of preventable hospitalizations was 1,605 per 100,000 state residents, and by 2012, that rate had dropped by 10.4 percent to 1,438 hospitalizations per 100,000 residents, according to data from the data.maryland.gov website.


According to Ron Boehmer, a spokesman for the governor, O'Malley and health officials plan to set a new goal since the initial target was met so quickly.

At Carroll Hospital Center, changes have been made to increase both quality and efficiency of care, as well as increasing the focus on preventive care, according to president and CEO Leslie Simmons. Case managers in the emergency department and service navigators now help guide patients to the most appropriate care, oftentimes outside the more expensive hospital setting.

"As a result of that, since 2010, Carroll Hospital Center has had a 21 percent reduction in admissions and readmissions," Simmons said. "We've had a 30 percent reduction in our behavioral health admissions and readmissions."

As of press time, Carroll Hospital Center was not able to provide more specific admissions data, but according to a chart provided by the Maryland Department of Health and Mental Hygiene, the hospital had a preventable hospitalization rate of 1,505.68 per 100,000 county residents in 2010, which had dropped to 1,100.30 per 100,000 by 2013, a 26.9 percent decrease.

These changes at Carroll Hospital Center were all made possible by a change in the way the hospital is reimbursed for services, according to Simmons.

In 2010, Carroll Hospital Center joined nine other Maryland hospitals in an experimental pilot program called Total Patient Revenue, which aims to realign hospitals' incentives so they are reimbursed based on the quality of care they provided, rather than the number of patients served, according to Joshua Sharfstein, secretary of the Maryland Department of Health and Mental Hygiene. Rather than growing revenue by billing more patients for more services rendered, participating hospitals are given a global budget by the state, he said, and the more efficiently they treat patients and the fewer unnecessary admissions they see through quality and preventive care, the more money they save.

"What a global budget allowed is for the hospital to really change to keep people healthy," Sharfstein said. "It re-thinks what the purpose is of health care. It is to improve health, it's not just to provide a service."

The Total Patient Revenue program has been considered a success and Sharfstein said the other 37 acute care hospitals in Maryland that did not participate in the pilot program began operating under a similar reimbursement plan as of July 1. Carroll Hospital Center and the other eight pilot hospitals are continuing to operate under Total Patient Revenue.


This shift in the focus of hospitals on health outcomes rather than on services rendered would not have been possible without another experiment in health care, one that is unique to Maryland, according to Steve Ports, deputy director of the Maryland Health Services Cost Review Commission. Since 1977, Maryland has been the only "all payer" state in the country, meaning a medical service like an MRI scan will cost the same for all payers at any given hospital, whether the payer is a big insurance company, an individual paying cash or Medicare. It's the Maryland Health Services Cost Review Commission that sets those rates for each Maryland hospital.

In all other states, each insurance company and — crucially — Medicare negotiate their own fees for each service at any given hospital, according to Sharfstein. First, however, Maryland and Medicare had to come to an agreement where Medicare would be OK with paying the Maryland rates, even if they were more than what Medicare wanted to pay, a deal called the Medicare waiver.

"Why would Medicare ever do that?" Sharfstein said. "They did it with an important condition, that the rate of growth of Medicare payments in Maryland would have to grow slower than the overall rate of the growth of Medicare [nationally]."

Such a waiver agreement was in place that worked well for decades, according to Sharfstein, but in recent years the rising costs of health services threatened to raise the cost of Maryland fees to the point where they would violate the conditions of the waiver. There was also the problem of a perverse incentive in the rate setting system: If a hospital cannot change the prices of its services, its only option for more revenue is to increase the volume of patients treated, a goal exactly opposite that of the governor's.

"It got to the point, 40 years later, that the waiver was not aligned with the goals of the state," Sharfstein said. "Plus, we were about to lose it."

In January, a new Medicare waiver agreement was reached, according to Ports. This time, instead of focusing on keeping the cost of Medicare payments per admission low, Maryland will focus on keeping per capita hospital costs low and increasing quality, reducing the occurrence of problems like post-operative infections, bringing the conditions of the waiver in line with the goals of the governor.


This was a direction that Carroll Hospital Center had been heading in before the Total Patient Revenue program and the new waiver agreement, according to Simmons. The hospital had long been planning to focus on preventive care, for instance, and will open the Tevis Center for Wellness this October. The new changes at the state and federal level have simply provided a framework where the hospital can innovate.

"It's our community mission to make sure that people, number one, have access to care, and number two, that the care is as high quality and as cost-efficient as possible … We asked, 'What can we do to make this better?'" Simmons said. "We just saw the writing on the wall."

Reach staff writer Jon Kelvey at 410-857-3317 or jon.kelvey@carrollcountytimes.com.