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Hawaii’s He@lthcare Revolution

Vast changes aim to control costs and improve care

(page 1 of 3)

Hawaii’s healthcare industry is investing heavily in far-reaching changes that are intended to hold the line on medical costs in the long run.

At the heart of the transformation: Health insurers will pay for quality of care rather than quantity. And quality will be based on good outcomes for patients, plus nationally accepted medical best practices.

“We’re in a period of profound change,” says Chuck Sted, president and CEO of Hawaii Pacific Health, the state’s largest healthcare provider group. “We’re all trying to accomplish the same thing – the highest possible quality healthcare at the most reasonable cost.”

Included in the changes is the expectation that patients will be more involved in monitoring their own health – and may even receive financial incentives such as lower copayments, Sted says.

Powering it all are efficient but expensive new Electronic Medical Records systems expected to help doctors treat conditions faster and better. EMR systems can store, track and compare unprecedented amounts of data; offer instant feedback for physicians and patients; provide automatic health alerts; and automatically check for drug interactions and proper dosages.

While costs to hospitals will rise as systems are established, they’re expected to drop over time as the changes settle in. A top health-insurance executive believes businesses could start to see the annual increases in health-insurance premiums taper off soon – perhaps within three years.

“There are two impacts for businesses,” says Hilton Raethel, HMSA senior vice president. “We believe it will result in healthier members and reduce the rate of increases of premiums. Instead of going up 8, 10, 12 percent annually, we would get them down to single digits.”

As part of Congress and President Obama’s expansion of healthcare insurance this year, greater pressure was put on the country’s insurance plans and health providers to rein in costs. Many are emphasizing principles closer to managed care rather than fee-for-service medicine, plus relying more on less-expensive professionals like nutritionists, nurses and community health workers. Health maintenance organizations – HMOs like Kaiser Permanente – have been doing that for years.

     Rick Keene,
     CFO, The Queen’s
     Health Systems

“Over time, measures like this will play into cost containment that faces all the local businesses in providing healthcare for their employees,” says Rick Keene, CFO of The Queen’s Health Systems. “That’s the ultimate objective.”

EMR systems that cover doctors and other healthcare providers statewide could cost as much as $145 million – about $50,000 per provider. Hospitals could shell out another $50 million or more for their systems, according to the Hawaii Health Information Exchange, a nonprofit created in 2006 to coordinate the changes.

So far, only about 10 percent to 20 percent of the state’s physicians have installed EMR systems, said HMSA’s Raethel. But, since 2006, HMSA has provided $50 million to help both providers and hospitals install systems.

Even before HMSA’s efforts, Hawaii Pacific Health, a leader in electronic records, began pouring $54 million into its system. The network is capable of linking HPH’s medical centers – Straub, Kapiolani, Pali Momi, and Wilcox – plus 44 clinics, 1,300 affiliated physicians and 290,000 patients.

“We went through a gradual, measured installation of the Epic system,” says Sted. “It took seven years to complete installation in all of our departments, labs, imaging centers, doctor’s offices. We have approximately 300 employee positions hooked up and in May we hooked up the first 24 physicians not employed by us.”

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