Six years ago, disaster loomed for San Mateo Medical Center, as it did for most county hospitals in California.
In 2005, California used a waiver granted by CMS to make sweeping changes to the process hospitals used to get reimbursed for treating beneficiaries of Medi-Cal, California's Medicaid program. The new system shifted funding responsibilities for Medi-Cal inpatient hospital payments from the state general fund to the hospitals.
The financial margin for public hospitals at the time was pretty thin and had been for a while. Melissa Stafford Jones, president of the California Association of Public Hospitals, said it was a pretty daunting moment across the state.
"When it first happened, it was a tough conversation," Stafford Jones said. "It was a wholesale shift -- basically, all of the hospitals became self-funded."
That is, the counties and University of California system that ran 22 public hospitals in the state were required then to assume responsibility for the non-federal share of the Medi-Cal inpatient hospital expenditures, instead of the state. The amount of federal matching funds now is determined based on the hospitals' expenditures.
Simplistically, it means the county hospitals have had to put up their own match money.
"It seems so counterintuitive," Stafford Jones said. "But that's how it is. And it has been an evolution since then." These days, public hospitals in California are not only still functioning, but doing well, she said.
For one of those hospitals, crafting success out of instability involved a huge cultural shift in the way health care was delivered, and that set the tone for creating a new financial growth model, according to Susan Ehrlich, CEO of the San Mateo Medical Center. "There have been cuts and we've become more efficient," Ehrlich said. "But we've also become a different kind of provider."
That shift in the medical and business culture at the hospital mirrors the tenets and intention of national health care reform, she said. The hospital has made its operation leaner and its patient care better. Ehrlich said the change has enabled institutions like SMMC to compete with private hospitals in quality and outcomes.
It was a shift, she said, away from the old public hospital model of scraping together funds to temporarily plug a hole in the safety net. She said the institution shifted from being a public hospital that needed to be taken care of to a facility that provides highest-level service of its own.
"It's not enough to just do whatever you think you can for people," Ehrlich said, "but instead, it's providing care at the highest standards."
At the heart of SMMC's self-transformation, Ehrlich said, is its Innovative Care Center.
It doesn't look like much. On the third floor of the main hospital building, the ICC looks just like any clinic office, from the aisles of patient rooms to the crayoned thank-yous posted on the nursing station walls.
But inside, it's different, Ehrlich said.
"For most of us, we understood that we had to do something radically different, to survive and to thrive," Ehrlich said. "Even if there were no [national] health care reform movement, we'd have to do the same things, make the same changes, anyway. If we're going to cover more people, we want them to receive better care."
The ICC officially launched in 2009, about two years after the hospital started a comprehensive clinic redesign. The redesign and the ICC were meant to improve the quality of care, lower costs and improve satisfaction for both patients and staff. Hospital officials did it by shifting to team-based care, adding an electronic health record system, instituting an outcomes measurement system and pushing hard to handle patients' chronic care conditions.
Patrick Grisham, clinic manager, said one goal was to have the patient experience a different kind of health care, right from the start.
"The patient sees us as a three-person team," Grisham said. "But really, each team is more." The patient deals with the same provider, nurse and greeter, he said, so that a patient knows the clinic staff by name and how to contact them. That helps involve patients in their own care, cuts down on missed visits, limits non-compliance in taking medication, and more effectively manages chronic conditions.
"The team itself is more than three people," Grisham said. "We have a nutritionist, an optometrist, a diabetes educator, a whole team for the patient."
There are actually three teams at the ICC, and each team, or work pod, has two physicians, two medical assistants, a nurse and a greeter. Those teams are backed up by the targeted experts Grisham mentioned, such as a diabetes educator, psychologist and pharmacist. Those specialists take care of most patient needs.
The clinic sends about 100 patients a month for diabetes screening. The plan is to screen patients and figure out who has chronic conditions and to what degree, so they can be managed.
Little things can make a big difference, he said. For instance, the clinic greeter calls patients two days ahead of an appointment -- not just to remind them about appointments, but to make sure tests have been completed, and to focus attention on the health issue that will be addressed at an appointment. Phone calls from patients go directly to team members, so that patients know who they're talking with.
Something as complicated as a language barrier can be made simpler with a new online translation service, which guarantees that patients always will have a trained translator in the exam room with them, whatever their language.
"The concept of the Innovative Care Center is access," Grisham said. "We want patients to get care early, so they don't end up in the ER. If you focus on the patient experience and on outcomes, you see major improvement."
The ICC handles all of the primary care adult patients at the central hospital facility, and the concept is being expanded to the 11 clinics across the county, Ehrlich said.
By changing the patient and staff experience, Ehrlich said, the whole process of handling patients has become more streamlined and efficient -- and less costly.
The ICC has resulted in fewer hospital readmissions, fewer missed appointments, less emergency department utilization and higher patient satisfaction, Ehrlich said.
"We're more effective by being more proactive. And that relates to the financial piece," she said.
"Really, this is an example of how health care reform is trying to go," Ehrlich said. "We're trying to forge a path here. These are the things in health care we should do, anyway. Access. Quality. Satisfaction. And they're things that we haven't done all that well, historically."
Ehrlich sighed as she recalled the 2005 Medicaid waiver agreement that was such a financial challenge. And she brightened at mention of the 2010 waiver agreement, which has money for public hospitals to implement the kind of initiative SMMC is doing with its Innovative Care Clinic -- incentivized cash that rewards hospitals for strategies that provide lower cost and better outcomes.
"The really great thing about the waiver is that it gives all public hospitals in California the incentive to do the same thing. That's really what [the federal health reformers] had in mind," she said. "Setting up new systems that change the way health care is delivered. That's really what this is all about."