A Mile-High Challenge

Peg Burnette oversees the financial condition of a sprawling hospital authority with many uninsured patients—one on which the state of Colorado depends

While media chatter outside the healthcare industry focuses on the cost of insurance, everyone from clinicians to administrators to policy specialists know that healthcare reform is about much more. To the CFO at Denver Health, Peg Burnette, it’s about finding strategies to reduce costs while increasing the level of care to the greatest number of people.

From Burnette’s seat, that’s no small challenge. Denver Health serves a full quarter of the city’s population, or about 220,000 people. It’s Colorado’s primary “safety-net institution,” providing care regardless of patients’ ability to pay. The hospital’s physician network serves a third of all children in the Mile High City.

So, when it comes to managing the finances of the system, Burnette has a tall order to fill. Colorado was among the states that took the Medicaid expansion under the Affordable Care Act, which has increased Denver Health’s Medicaid population from about 36 to 50 percent of its patients.

The good news is that the uninsured portion of patients dropped from 27 to 13 percent. And per ACA design, “Patients are now getting care less through use of the emergency department for illnesses that can be managed outside the hospital,” she says.

But all of this could cost the hospital an unsustainable amount if managed poorly. So, administrators, Burnette, and her C-suite colleagues made bold plans to squeeze out costs and increase revenues, reconfiguring how and where health and medical services are provided.

“We always knew it would be a challenge,” says Burnette of the Medicaid expansion. “But we’ve always been a nonprofit system, so we understand how to serve this population.” She mentions this includes staffing for psychosocial issues and addressing uncertain housing and transportation needs of patients—factors that can be as much a part of care and recovery as medicine.

“We always knew [Medicaid Expansion] would be a challenge, but we’ve always been a nonprofit system, so we understand how to serve this population.”

The American Academy of Family Physicians (AAFP) cites Denver Health—among institutions that include the Mayo Clinic, Geisinger Health, Cleveland Clinic, and Kaiser Permanente—in an October 2011 white paper (“Accountable Care Organizations: Can They Rein in Health Care Spending for States?”) for its achievements as an early ACO.

The paper specifically credits Denver Health for provision of “high-quality, patient-centered care to uninsured and low-income populations”; data-driven medical decisions that provide continuous quality improvement; providing patients with alerts on preventative services and immunizations; an open-access scheduling system that reduces no-show rates by half; and modernized IT systems that streamline both clinical and financial functions.

Since the AAFP paper was written, Denver Health has transitioned from being a pioneer ACO to a Medicare Managed Care Organization. Burnette calls it an advance, where they receive capitated payments for services. The Hospital Authority also has its own insurance subsidiary, a Medicare Advantage Plan, which supports this approach.

Of course, nothing happens in a vacuum. Burnette knows that clinicians can find management changes—particularly those that affect the nature and costs of healthcare delivery—challenging. So, she meets with doctors, nurses, and allied health professionals to sound out proposed programs, locations, and building renovations. “I listen to their concerns,” she says. “We talk it through and approach it rationally.”

One recent example of how this works came though dialogue on a proposed new ambulatory care facility. Clinical staff raised questions about the design. “Someone from my department and the master planning representative met with them,” she says. “From that feedback we made reasonable changes. What’s important is to establish your credibility.”

But as Burnette acknowledges, with half their patients on Medicaid, there is more likely loss than profit on those services. That creates pressure to find privately insured patients. The solution is to target employer groups through relationships in municipal—city and county—organizations, such as employees with the Denver Public Schools, the water department, and the Denver International Airport. While in competition with other healthcare providers, they offer a cost-competitive package that is successfully winning over new patients.

Other things that might help win over patients are the changes in the Authority’s physical plant—which just so happen to fall under Burnette’s supervision. She oversees the planning and construction of two major buildings that will help reconfigure care delivery to maximum efficiency. One is the Federico F. Peña Southwest Family Health and Urgent Care Center, which is oriented to preventive care and problems that do not require a visit to the hospital emergency department. That’s on top of nine other community clinics, some of which are being rehabilitated or rebuilt.

The second building is the Ambulatory Care Center, a new build, which consolidates outpatient services into a single location on the hospital campus. This helps manage traffic better, but also makes outpatient care more inviting. That helps bring down costs as well—something Peg Burnette knows to be essential for Denver Health to remain viable. AHL