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Monday, October 29, 2012, 6:10 am

Health Care: Meritage Medical officially seeks ACO status

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    Dan Verel, Business Journal Staff ReporterThe Meritage Medical Network, formerly known as the Marin-Sonoma IPA, has officially made known its plan to earn accountable care organization, or ACO, designation by the Centers for Medicare and Medicaid under the Affordable Care Act of 2010.

    The designation, if granted, would afford the physicians network bonuses and better reimbursement rates for providing coordinated care for Medicare beneficiaries.

    Meritage Medical NetworkWriting in Sonoma County Medical Association‘s magazine Sonoma Medicine, Mark Wexman, chairman of the board for the 600-plus member network that includes physicians in Marin, Sonoma and now Napa counties, said the ACO model will be a key step in a post-reform health care environment, particularly for “non-Kaiser patient care delivery.”

    Kaiser Permanente‘s structure very closely resembles that of the new ACO structure, which typically includes a provider or hospital working more closely with an HMO to ensure less redundant care. While ACOs officially fall under the purview of CMS, much of the private sector is aligning in similar fashion, with the most recent North Bay example of Western Health Advantage, a Sacramento-based HMO, expanding into the North Bay, where it will work with the Meritage network as well as all of the region’s non-Kaiser and non-Sutter Health affiliated hospitals.

    Given the aging population in the three North Bay counties, the Medicare savings could be significant, according to Dr. Wexman, a Larkspur cardiologist.

    Across Marin, Sonoma and Napa counties, the Medicare population is roughly 136,000 people, Dr. Wexman said. Of those, 45 percent are already covered by Kaiser, leaving about 75,000 Medicare recipients remaining for Mertiage’s network.

    Dr. Wexman explained that if the physicians network could reduce medical inflation from the predicted 8 percent to 4 percent, then half of the savings, or 2 percent, could go toward physician or hospital reimbursement and other community care processes.

    The average Medicare patient uses roughly $12,000 per year in services, meaning total spending on non-Kaiser Medicare patients across the three counties is roughly $900 million. A 4 percent reduction in inflation could translate to a shared $18 million in savings per year, according to Dr. Wexman.

    The ACO structure “aligns the expense of an innovation in health care delivery with the economic incentive of better reimbursement for ACO providers who can demonstrate better care outcomes and patient satisfaction and ‘bend the cost curve,’” Dr. Wexman wrote.

    The physician’s network filed for the designation recently and expects a response from CMS by early 2013.

    ***

    Mendocino Coast District Hospital, a 25-bed nonprofit critical access facility, is seeking bankruptcy court protection from creditors as it seeks to reorganize its debts while keeping the doors open.

    The hospital district that oversees the rural hospital voted recently to enter into Chapter 9 bankruptcy on the hopes of restructuring its debt and saving the hospital, according to court documents. In its court petition for bankruptcy court protection, the district listed debts of between $10 million and $50 million and assets in the same range.

    “The forgoing circumstances present an immediate financial crisis that leaves the district with no viable option other than to commence a case under Chapter 9 of the Bankruptcy Code in order to permit the district to fulfill its obligations to the community it serves, to continue the operation of its hospital and to propose a plan for the adjustment of its debts,” the district board wrote in an April resolution that initiated the bankruptcy proceedings.

    Rural hospitals across the country have been facing financial difficulty, particularly with respect to low patient censuses and lower reimbursement rates for patient care from both insurers and the federal government.

    The hospital has been operating at a $429,000 deficit since the start of this fiscal year, according to the filing.

    The estimated number of creditors in the petition is between 200 and 999. The hospital’s annual budget is $45 million and it employs more than 300 people, according to the petition.

    The district also opted not to renew the contract of Chief Executive Officer Ray Hino, who was brought on in 2006 to help the district with its struggling finances. 

    The closest hospitals to Fort Bragg are in Ukiah and Willits.

    ***

    Evan Rayner, Healdsburg District Hospital chief executive officer, is stepping down from his position, according to the North Sonoma County Healthcare District, which owns and operates the 43-bed hospital.

    Mr. Rayner’s departure will take effect on Dec. 31.

     “I feel I have accomplished what I set out to do when I joined the district,” Mr. Rayner said. “And I am exploring other opportunities and challenges.”

    Kurt Hahn, chairman of the district board of directors, cited a number of Mr. Rayner’s contributions that helped the hospital during his six-and-a-half year tenure as CEO.

    Among them: leading the successful hospital turnaround and maintaining strong financial performance, construction of a new emergency department, re-opening of the intensive care unit with robotic innovations, implementation of physician integration and recruitment strategies, regional collaborations and affiliations, the addition of stroke treatment and regional wound care centers, and the creation of hospital-based primary and specialty care departments and receiving the Association of California Healthcare Districts “Most Innovative” award in 2008.

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    Send items for this column to dan.verel@busjrnl.com or call 707-521-4257.

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