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A new survey from the Midwest Business
Group on Health has found that many
employers have only a vague understanding of
the role of specialty pharmaceuticals in
driving up employee benet costs.
About one quarter of employers have little
or no understanding of specialty pharma, and
53% have just a moderate understanding, the
group discovered.
Specialty drugs are tricky to dene but the
coalition has identied them as a high cost
driver for healthcare. The category usually
includes biologics (derived from living
organisms), injectables, infusion drugs, and
parenterals. Specialty pharma products may
be used to treat diabetes, rheumatoid arthritis,
auto-immune disorders, HIV infection, cancer,
growth hormone disorders, and Crohns
Disease.
There is a tsunami coming at employers,
said Cheryl Larson, the vice president of the
Chicago-based business coalition who led the
survey. Theyre hearing about it but theyre
focusing on healthcare reform.
Take an employee with hemophilia, for
example. There are not a lot of hemophiliacs
in the world, but having one in your employee
group can dramatically raise your pharma
costs, Larson said in an interview. The cost
can range from $2,000 to $350,000 annually,
and there is a huge gap between what its
costing the employer and employee. Usually,
there is no generic equivalent for specialty
medications.
Most of the respondents to the survey were
self-insured employers, she said. They are
focused on medical benets, not so much on
pharmacy benets. They are relying on their
health plan or pharmacy benet manager to
manage this, and that might not be in their
best interest, Larson said. They need a
disinterested party to help them navigate this.
We know we cant reduce the cost, but we
have ways to manage it.
The Midwest Business Group wants to
create resources and tools to help employers
manage these exploding costs, including
working with vendors, health plans, and PBMs
to make sure theyre contracting appropriately
and designing the benet plan to reward
patient compliance.
We know we cant impact the cost of
specialty drugs right now, but we can impact
the people who are on them, by removing
barriers to compliance, Larson said.
With chronic, incurable lifetime diseases, a
consistent medication regime can sometimes
halt the progress of the disease and help the
patient in daily functioning. The medications
are so expensive that lapses in compliance are
a signicant waste of money and may cause
the patients health to deteriorate, leading to
more expensive treatments. Some people
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November 2-4
December 4-7
Calendar
11 October 2011
November 14-16
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
www.lakesidecommunityhealthcare.com
Midwest Edition
A Tsunami of Specialty Drug Costs
Midwest Business Group Finds Firms Are Unprepared
Continued on Next Page
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Payers & Providers Page 2
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Bottomless Potential
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In Brief
Wisconsin Governor
Creates OIG for Fraud
Prevention in Medicaid
Wisconsin Gov. Scott Walker has
created a new Ofce of the Inspector
General to improve fraud prevention
efforts in the Department of Health
Services. The ofce will centralize
efforts to ght fraud that are housed
within separate programs in the
department.
The DHS runs several of the states
major public assistance programs,
including Medicaid, FoodShare, the
Women, Infants and Children (WIC)
supplemental food program and the
state supplement to Supplemental
Security Income (SSI). The programs
have a two-year budget worth $14
billion and serve 1 million people in
Wisconsin.
The director of the new OIG will be
Alan White, who served 13 years as
Wisconsin Bureau of Program Integrity
director, which works against
Medicaid fraud.
The 2009-11 biennial budget adds
$2 million and 19 positions to prevent
fraud.
Indiana Report Cites
High Percentage of
Children on Medicaid
An estimated 60.5% of all children
under six in Indiana are served by
Medicaid, according to a recent report,
The State of the Young Hoosier Child.
The report, by the Maternal and
Child Health Division at the Indiana
Department of Health, is designed to
shine a spotlight on indicators of
Continued on Page 3
NEWS
Specialty pharma costs (Continued from Page One)
have cultural views, or their own view, on why
they should or shouldnt continue taking a
medication, she said.
In general, pharmaceutical costs have been
declining for health plans and employers as
more drugs have moved off patent in recent
years. When Mercks Zocor, a statin, went off
patent in 2006, it saved insurers billions of
dollars as physicians switched patients to
generic equivalents. Many employers have
moved to tiered benet plans to reward
patients for using lower-cost medications.
Some employers are embracing value-
based pharmaceutical plans, which may
waive copays and supply costs related to
diabetes products, for example, in exchange
for the employee agreeing to meet regularly
with a trained diabetes counselor.
Mark Hagland, editor of Medical
Informatics, who attended the presentation.
HHS is inviting developers to create new
applications that leverage the data. At
Challenge.gov, HHS is sponsoring a series of
contests among innovators and developers
with prize money and publicity for creating
the most interesting applications.
On June 9, it held what Park called a
Datapalooza, or Health Data
Inititiative, in Bethesda, Md.,
where teams of innovators built
new applications from scratch in
a matter of hours.
One such contest, the Lifeline
Facebook Application Challenge,
asks designers to create an
application so that people in
disaster areas have three
lifelines on Facebook to help
them recover and declare their
whereabouts.
Or take the Blue Button
initiative at
www.myhealth.va.gov. Launched
a year ago, the program allows
veterans, Medicare beneciaries,
or military beneciaries to
download an electronic copy of their own
personal health or claims data, and share it
with their providers.
Park was the co-founder of
AthenaHealth, a health IT company, and
before that a consultant at Booz Allen
Hamilton. He spoke to about 300 attendees
at client conference sponsored by Merge
Healthcare, which develops imaging
exchange products for providers.
Parks vision of HHS as facilitator and
incubator of innovation is one that I believe
most in the industry would welcome, if it can
be executed successfully, Hagland said.
The Department of Health and Human Services
is moving toward an information liberation
strategy that will become the greatest
entrepreneurial opportunity since the Internet, a
top department ofcial said in Chicago last week.
Todd Park, chief technology ofcer for HHS,
said he joined the government in 2009 to help its
leadership harness data, technology and
innovation to improve public health and the
healthcare delivery system.
He aims to turn HHS into the
NOAA of healthcare, he said.
The National Oceanographic
and Atmospheric Admin-
istration provides the raw data
that powers a new industry of
weather and climate information,
such as AccuWeather and The
Weather Channel. By making its
data instantly available in
downloadable formats, Park said,
this branch of government
actually propels private sector
innovation, employment, and
economic growth.
HHS intends to do the
same with health information.
Park said the department
wants to start publishing all new health data, and
will make existing data more accessible. This
includes community health data, including
provider directories and quality data, as well as
Medicare claim les for provider quality
measurement, consumer product information,
medical and scientic data, and government
spending gures. More details about the program
are available at www.data.gov/health.
What is signicant here is that Park and his
colleagues recognize that HHS needs not only to
manage processes, but also to lead, and to lead
with a vision of the future, one that fully engages
providers as partners in creating that future, said
Todd Park
HHS Technology Chief
HHS Seeks Information Liberation
Chief Technology Officer Encourages Innovation
!"#$%&'!(()!*+((!,!*+((!%-!./-&'0!1!.'$234&'0!.5%6307389)!::;
Page 3
Payers & Providers
Longer ALOS!*
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*For our ads, not your hospital
NEWS
In Brief
childrens health that inuence their
future wellbeing.
Just over 2 out of every ve babies
born in Indiana are born to women on
Medicaid.
Infant mortality for black children
in the state is 2.4 times higher than for
non-Hispanic whites. Likewise, black
infants are four times as likely to die
than other racial groups from
complications related to low
birthweight. African-Americans have
the highest rate of low birthweight
babies: 13.9%, compared to whites at
7.7%.
Michigans Blue Care
to Refund $7.3 Million
to Small Employers
Due to Cost Decline
The Blue Care Network in Michigan,
the states largest commercial health
plan, will refund 2.5% of billed
premiums to employers because
medical expenses were lower than
expected this year.
The total refund amounts to $7.3
million, which will be distributed to
5,200 small businesses.
Blue Care, an HMO product of
Blue Cross Blue Shield of Michigan,
also said it will raise premiums by
6.7% in the rst quarter of 2012 for
small-group employers of fewer than
50 people. That would be the lowest
premium increase in four years. The
insurers increases were 8.3% in 2009,
10.9% in 2010, and 9.9% in 2011.
The Blues work every day to
provide quality healthcare coverage
while balancing costs, said Kevin
Klobucar, Blue Care president. We
provide products that encourage
healthy behaviors, programs that
promote preventive care and wellness,
and networks of high-quality doctors
and hospitals. This approach is
working and translates into lower
costs for Michigan businesses.

The prestigious Institute of Medicine last
week recommended that costs be taken into
account when the Department of Health and
Human Services determines what should be
included in a basic health plan offered for sale
on a health information exchange.
The IOM, which is independent of the
government, suggested that the typical
premium shouldnt cost more than
benchmarks set by the department. The IOM
report doesnt list benets but advises the
government on how to go about determining
what should be covered. A small-employer
plan should be the model, the IOM said,
because large employers typically offer richer
benet packages that may be too expensive.
The health reform law of 2010 obliges
everyone to purchase health insurance or pay
tax penalties. The IOM said the basic benet
package should be dened by May 1, 2012.
Federal authorities arrested an Indiana attorney
in Florida last week and charged him with
aiding his client in evading paying penalties
involved with the Edgewater Hospital scandal
in Chicago.
Frederick M. Cuppy, 70, of Fort Lauderdale,
was charged in a 10-count indictment with
perjury and obstruction of justice. Cuppy
represented Peter G. Rogan, former owner of
Edgewater Hospital and Medical Center on the
North Side of Chicago. The hospital was
shuttered in 2001 and went into bankruptcy a
year later after federal and state agencies
uncovered an elaborate Medicaid and
Medicare fraud scheme based at the hospital.
Rogan was not charged criminally but was
tried in a civil lawsuit alleging that he was
responsible for the submission of millions of
dollars of false claims. After a bench trial in
2006, Rogan was ordered to pay $64,259,032.
The judge found that Rogan testied falsely,
destroyed documents, and obstructed justice.
The bank that provided Edgewater nancing,
Dexia Credit Local, was awarded a judgment of
$124 million after a civil fraud lawsuit against
Rogan.
The government went after Rogans assets,
but they were hidden in a trust in the Bahamas
that Cuppy helped him set up, the indictment
said. Between 2002 and 2010, Rogan and
Cuppy conspired to obstruct justice in both
the governments case and the Dexia case. The
trust paid out more than $11 million to Rogan
and his wife between 2002 and 2006, said the
U.S. Attorneys Ofce for Northern Illinois.
In 2006 Rogan led an afdavit with the
court in which he declared he had no control
over the trust. The indictment said that in
reality Rogan did control the trust and its
distributions.
Cuppy has been indicted for misleading the
court by testifying under oath that he had no
authority to instruct the trustee about how to
dispose of the assets and that had nothing to
do with the trustees payments to Rogans wife.
Rogan and his wife, formerly of Valparaiso,
Ind., are living in Vancouver, British Columbia.
In 2008 he was detained on entering Canada
after a trip to China, but appealed the denial
of admission. He is free on bond.
Indiana Lawyer Arrested in Fraud
Charged in Edgewater Hospital Medicaid Case
HEALTHCARES BEST ADVERTISING VALUE
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PAYERS & PROVIDERS reaches 5,000 hospital, health plan and non-
prot executives statewide. There is no better venue for marketing
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Payers & Providers Page 4
Perioperative services can contribute as much
as 40% of total hospital revenue. Therefore,
optimizing this resource is essential.
The management of operating room
operations is typically a data-
driven enterprise with close
tracking of metrics, such as start
times, turnover time, room
utilization, and other data to
maximize resource utilization.
However, this approach is not
sufcient to optimize
operations.
There is a complex
interconnection of personnel,
specialized space, equipment,
and scheduling that must be
coordinated concurrently to
make ORs function at peak
efciency.
Scheduling is at the heart of
perioperative efciency because
it impacts the rooms that are
open, the staff paid to operate
those rooms, the amount of
specialized equipment needed,
and the necessary personnel in
the pre-operative and post-
operative departments to care
for these patients. Managing the
perioperative schedule has the
power to not only improve
perioperative efciency but can
also impact utilization
throughout the hospital.
A successful method to
manage the perioperative
schedule is schedule
smoothing. This process can be dened as
aligning the elective surgical cases with the
resources available to support the patients
during the post-surgical course. Schedule
smoothing involves gathering key OR metrics
over a six to twelve month period by case
volume, type of surgery, minute(s) per case,
turnaround time per case, and personnel and
equipment needed by case type.
Each case should be pre- and post-
operatively evaluated in the context of
personnel work hours, required bed type, and
length-of-stay. Average case times are
calculated by day of week to determine the
total OR time needed.
The cases are then reviewed, and the post-
procedure care requirements are quantied by
stage of recovery time, inpatient bed
requirements, specialized care needed, and
average LOS. This data is used to
determine bed availability, personnel
needed, and revenue per case by day
of week.
The subsequent data is matched
with ambulatory surgical bed
availability, target inpatient unit
average census, and discharging
diagnosis to determine the availability
of resources each day. A total cost
per case including personnel hours is
then calculated to determine if the
post-operative personnel and space
requirements are aligned with the
cases scheduled.
The process to transition to a
smoothed schedule requires more
than just calculations. Surgeon buy-
in is essential to the process and
requires their early involvement in
the planning and data-analysis
process. Surgeon and staff
engagement in combination with
computer modeling of smoothed
schedule variations allow OR
managers to control the case ow
more effectively. This results in
higher room utilization, personnel
expenses savings, and the elimination
of bottlenecks that surround
schedule peaks and valleys.
Schedule smoothing
benets are optimized when
implemented for every
elective case on the OR schedule. Choosing the
services with a high level of service intensity for
the initial phases facilitates enterprise-wide
involvement and provides the greatest revenue
impact.
OPINION
Perioperative Schedule Smoothing
A Strategy to Raise Efficiency in the OR Suite
By Bonnie Barndt-Maglio
and W. Richard Goddard
Bonnie Barndt-Maglio is a vice president and
W. Richard Goddard is a consultant with The
Camden Group.
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Op-ed submissions of up to 600 words are
welcomed. Please e-mail proposals to
dmoore@payersandproviders.com,
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MARKETPLACE/EMPLOYMENT
Payers & Providers Page 5


luyors & lrovdors und MCCL prosont koundtubo lntoructvo. lt dobuts Murch 20ll n tho luyors & lrovdors Nutonu odton.
Cur roudors uvuys vunt to knov vhut s on tho mnds ol houthcuro's c-suto oxocutvos. Conloroncos und trudo ovonts olton
ony uov lor crucu momonts to ntoruct vth thoso thought oudors. \th koundtubo lntoructvo, you' cut through tho
promnuros und mmodutoy knov vhut's on thor mnd.
Lvory koundtubo lntoructvo v louturo u &A sosson conductod by luyors & lrovdors lubshor kon Shnkmun. Hs
docudos ol oxporonco n ournusm und tho houthcuro ndustry v promso concso und rovoung ntorvovs.
1opcs lor upcomng koundtubo lntoructvos ncudo:
!! lntogrutod Systoms vs. lrvuto lructco: 1o vhut dogroo v physcuns not uroudy n urgor modcu groups or ntogrutod
houth systoms romun n prvuto pructco durng ths docudo, und vhy. \hut uro tho udvuntugos, dsudvuntugos und
mpcutons n toduy's onvronmont:
!! Modcud luns und Dovory Systoms: Hov much s thor cout grovng us Modcud onromont s prooctod to sour us
purt ol rolorm: \ Modcud ncrousngy bo usod us u vohco lor sottng houthcuro pocy: 1o vhut dogroo v muor
houth puns und systoms try to ncrouso shuro und concontruton n ths murkot:
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ncuson:
Do you vunt to proposo or purtcputo n u luturo koundtubo lntoructvo: lurtcputon s ontroy onno, vth u commtmont ol
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It costs up to $27,000 to fill a healthcare job*
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*New England Journal of Medicine, 2004.
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MARKETPLACE/EMPLOYMENT
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SEEKING A NEW POSITION?
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