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Elder Care Insurance Matures

To the old adage that two things are guaranteed – death and taxes – a third could be added: high medical costs for the elderly.

To the old adage that two things are guaranteed – death and taxes – a third could be added: high medical costs for the elderly.

Long-term care insurance rose as a private product over the last decade with state encouragement to counter rising Medicaid costs. Care cost increases, though, have brought premium hikes that have cooled the market somewhat.

House Bill 259 in 2008 created Kentucky’s Long-Term Care Insurance Partnership Program. Signed into law by Gov. Steve Beshear on April 7, 2008, the bill seemed a win-win all around. The state was able to shift some of the cost of long-term care for the elderly away from the Medicaid budget, while consumers faced fewer hurdles to access Medicaid benefits once their private insurance was tapped out.

Those who obtained coverage did not have to drain their personal assets below $2,000 before Medicaid would foot any long-term care costs. Their private insurance benefits often were dollars that Medicaid – hence, taxpayers – would have had to reimburse to providers.

Brad Montel, State Representative, House District 58

Brad Montel, State Representative, House District 58

“The driving motivation was to certainly save the state money,” said Rep. Brad Montell, a Shelby County Republican who co-sponsored the bill. “It encourages the consumer to purchase long-term care insurance and assume that risk themselves, rather than shifting that cost to the state.”

The bill’s other sponsor, Meade County’s Rep. Jeff Greer, said his long work experience as the owner of an insurance firm in Kentucky convinced him of the need for this bill.

“I knew how important it was to have this program,” Greer said in a statement released by his office, “both for the families who would benefit from the financial protection it provides and the taxpayers who would benefit from the resulting savings in Medicaid where long-term care is a major cost driver.”

Since Kentucky became one of approximately 40 states offering partnership incentive programs, conditions have changed dramatically. The 2008 recession has pressured the insurance industry, and premiums have gone up. More medical advances have lengthened lives, but they have come at a cost. And Kentucky’s newly elected governor has said he desires to limit the number of new people on Medicaid, the primary source of elder-care benefits.

A question remains as to whether the long-term care policies are effective at reducing the Medicaid-funded taxpayer burden, or whether they’re a stop-gap measure before someone can develop a better solution to manage healthcare costs for the elderly.

“The governor’s intent is to get fewer people on the Medicaid rolls, so if that’s the case we’re going to see further need for this bill and other initiatives that attempt to shift the risk to consumers in an equitable and fair way,” Montel said.

The high cost of growing old

To the old adage that two things are guaranteed – death and taxes – a third could be added: high medical costs for the elderly.

According to the American Elder Care Research Organization, a Nevada-based nonprofit that maintains the
PayingforSeniorCare.com website, the roughly one in eight Americans 65 and older spend an average of $11,000 annually on healthcare.

If you consider that the average Social Security payment in 2015 was $1,335 per month and factor in that the average cost for a nursing home stay is $76,680 a year, a grim picture emerges about the lack of affordable healthcare options for seniors.

Rising costs are attributed to a variety of factors, including supply and demand as the number of Baby Boomers entering retirement is increasing. Life expectancy has also grown, from 47 years a century ago to almost 80 years in 2015.

Long-term care insurance generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer’s facilities. Private long-term care insurance is growing in popularity in the United States. Premiums, however, have risen dramatically in recent years even for existing policy holders.

Once a person purchases a policy, the language cannot be changed by the insurance company, and the policy usually is guaranteed renewable for life. It can never be canceled by the insurance company for health reasons, but can be canceled for non-payment.

Forbes reported in February 2015 that buyers of market leader Genworth’s newest policies (called PC Flex III) are purchasing insurance that averages $137 per day for 3.4 years, about $170,000 in maximum coverage – a lot less than some older policies that typically provided almost $200 per day for four years (more than $283,000).

A 2014 survey by Broker World magazine found sales of five-year policies plunged from 18.9 percent in 2007 to 13.5 percent in 2013, while sales of three-year policies increased from 23.6 percent in 2007 to 35.3 percent. Sales of lifetime policies fell from 5.7 percent to just 3.6 percent.

Beth Munnich, Assistant Professor of Economics, University

Beth Munnich, Assistant Professor of Economics, University

“People are living longer,” said Beth Munnich, an assistant professor of economics at the University of Louisville. “As people live longer, there’s a greater likelihood that they will need a nursing home at some point.”

And the likelihood of poor health is a sticking point in Kentucky, which boasts diabetes, smoking and heart disease rates above the national average. Shannon Gadd, senior director of programs with Louisville-based ElderServe, says residents ElderCare serves in the seven-county metro region on average have two chronic illnesses.

“Typically we see people who are living on their Social Security benefits or on a small pension,” she said. “All it takes is one bad fall before your health can really deteriorate.”

To bridge the gap in care, ElderService provides in-home care that recipients pay for on a sliding scale; it is funded by Kentuckiana Regional Planning & Development Agency.

“It’s an option that allows people to stay in their home and live independently as long as possible,” said ElderServe CEO Julie Guenthner.

But for some with the worst illnesses, such as dementia, remaining at home is not an option, especially if they have no family members who can help with their care. Hence the need for the Kentucky’s partnership program.

“If they have a long-term care policy, it might give (consumers) a choice of where they receive their services,” said Ron Burkhart, a consultant with the Kentucky Department of Insurance. “And it can pay for nursing home care that can relieve family members who may have been the sole caregivers.”

Good for some, but not for everyone

Although long-term care insurance can protect one’s assets, experts say they work best for a certain slice of middle-income retirees who live above the poverty line but would not be considered wealthy.

“Long-term care insurance isn’t a fit for everyone, but it has value for people who are interested in preserving some of their estate for their heirs,” said John Accius, a senior strategic policy advisor for the American Association of Retired Persons.

Typically, when someone applies to receive Medicaid benefits, they must have no more than $2,000 of available assets. Partnership programs like the one in Kentucky allow consumers to get around this limitation. If someone has a $200,000 house, for example, they can buy a policy for $200,000 in long-term care benefits, allowing them to keep the house and still qualify for Medicaid benefits, once their insurance policy benefits have been exhausted.

Policy costs vary depending on age and coverage level, according to statistics from the American Association of Long-Term Care Insurance. For example, a 50- to 54-year-old can expect to pay anywhere from $1,384 to $11,667 per year, whereas the rates jump significantly for a 60- to 65-year-old, to $3,321 to $10,002 annually.

So, in the eight years the partnership law has been in effect, what kind of results have been seen?

Stephanie Bowker, Senior Insurance Program Manager, Kentucky Department  of Insurance

Stephanie Bowker, Senior Insurance Program Manager, Kentucky Department
of Insurance

The jury’s still out, it seems. Burkhart said no official report tracks the issuance of long-term care policies in Kentucky, but data suggests 700 may have been issued annually in 2014 and 2015, down from 1,500 in 2013.

“You have to keep in mind, it’s an expensive product,” said Stephanie Bowker, a senior insurance program manager with the Kentucky Department of Insurance.

“So it’s not for everyone. They are expensive policies to maintain.”

On its website, the AARP publishes a checklist for evaluating policies, and notes that premiums can increase over time. One reason is that insurers suffered from sticker shock when they found costs were much higher than expected when they issued these policies, the site says.

“Because interest rates are low, (insurance carriers) are not getting as much money from their investments as they would have otherwise,” Munnich explained. “They have to find other ways to fund coverage, so it’s now coming through premium increases.”

Features, Healthcare, September 2015

Fewer uninsured, more revenue

Jewish Hospital in downtown Louisville has 826 staffed beds. Kentucky hospitals are seeing more patients and taking in more revenue since the expansion of Medicaid and launch of the Kynect state health insurance exchange in 2014.

Jewish Hospital in downtown Louisville has 826 staffed beds. Kentucky hospitals are seeing more patients and taking in more revenue since the expansion of Medicaid and launch of the Kynect state health insurance exchange in 2014.

Over a year and half into Medicaid expansion and the launch of Kynect, the state’s health insurance exchange program, Kentucky is among the nation’s leaders in reducing its uninsured population.

As a result of providing more services to more people throughout the commonwealth, however, Kentucky hospitals are reporting healthy improvement in their revenues.

Many state healthcare systems are “experiencing an overall improvement in their financial positions” in the last 18 months, Mike Rust, CEO of the Kentucky Hospital Association, reports. Much of the credit, he said, goes to the state’s efforts to implement the health insurance mandates of the Patient Protection and Affordable Care Act (ACA). Performance varies among the institutions, but, from a broad perspective, revenues are up and some by significant margins.

Baptist Health Lexington (formerly Central Baptist Hospital) has 360 staffed beds and is nearing completion of a $200 million expansion. Kentucky hospitals are managing shifts in their payer mix with hundreds of thousands of additional state residents covered now by Medicaid and 110,000 newly enrolled in commercial health insurance plans.

Baptist Health Lexington (formerly Central Baptist Hospital) has 360 staffed beds and is nearing completion of a $200 million expansion. Kentucky hospitals are managing shifts in their payer mix with hundreds of thousands of additional state residents covered now by Medicaid and 110,000 newly enrolled in commercial health insurance plans.

There are notable exceptions, said Elizabeth Cobb, KHA vice president of health policy and a member of the board of directors for the Kentucky Rural Health Association (KRHA). Some rural hospitals are still struggling to keep their doors open, Cobb said, despite increasing numbers of payers and a reduction in uncompensated care statewide.

Nevertheless, Kentucky is well ahead of its neighbor states in realizing many of the ACA’s early goals.

Audrey Tayse Haynes, secretary of the Cabinet for Health and Family Services, takes great pride in the various reports that show Kentucky leads its region, and even the country as a whole, in reducing the numbers of the uninsured in its population.

Nationally the numbers of uninsured dropped to about 12.9 percent of the population in December 2014, a report published the first quarter of 2015 by The Foundation for a Healthy Kentucky showed. In that same period, Kentucky’s uninsured stood at an estimated 9.8 percent, a 10.6 percentage point drop in the uninsured from 2013, according to a Gallup-Healthways survey.

There are many more encouraging statistics from the last year and half, Haynes said. According to CHFS estimates, improvements in the number of uninsured people in the commonwealth have introduced about $2.2 billion in new revenue into the healthcare industry, $1 billion of which has been shared among the state’s hospitals.

“That’s money going directly into the healthcare system, not to the recipients” she pointed out. ACA influence is credited also with the creation of 11,900 new jobs in the professional healthcare and social work sectors, Haynes said.

But a year and half is still a very short period of time. While on the surface Kentucky hospitals are doing better financially, analysis of hospital revenues reveals the Medicaid expansion engendered a major payer-mix shift, which paints a different and much more complex portrait of the financial health of Kentucky’s systems.

Sheila Currans, CEO of Harrison Memorial Hospital in Cynthiana, and Carl Herde, chief financial officer for the Baptist Health system, acknowledge that Kentucky’s efforts to reduce the ranks of the uninsured has made positive strides, but the rapid increase in the state’s Medicaid rolls pose a new set of challenges to hospitals across Kentucky.

“When it’s said that revenues are up, it’s a relative term,” Herde said. “We are seeing more patients, doing more services and certainly our charges are up. But we are also experiencing a significant shift in our payer mix. If you are caring for the same or more patients but not getting the same (amount of revenue) as you used to get for services, it creates an operational challenge.”

Medicaid expansion grows faster than expected

A critical variable in assessing hospital revenues, Currans said, is the payer mix, which in the simplest terms is the ratio of patients with commercial insurance coverage, Medicaid/Medicare or other forms of government reimbursement, and those few who still self-pay.

“The payer mix in our service area (the Harrison County region) is naturally going to be different from what hospitals in Louisville, Paducah or other Kentucky communities may see. Payer mix is directly associated with community’s specific demographics,” she said.

Since the Medicaid expansion, Currans and Herde have noted a significant shift in their systems’ payer mix.

“Though (Harrison Memorial’s) population is mostly Medicare/Medicaid, we used to have a higher percentage of commercial insurance than we’ve seen lately. There has been a clear shift in our payer mix to more Medicaid patients,” Currans said.

Taking into consideration that Medicaid reimburses between 70 percent and 80 percent of charges, the facility anticipates some cuts in revenues even if its total patient volume is up.

While hospitals may be seeing more patients and performing more services, Cobb said, “it’s important to remember that Medicaid doesn’t cover 100 percent of the costs of care.”

The KHA has noted an inverse relationship between the steep reduction in Kentucky’s uninsured in the last year and a half and the increase in Medicaid rolls, she said. And there is a larger impact on rural hospitals whose Medicaid/Medicare patient populations are proportionately larger than those in urban hospitals.

Herde, an administrator tasked with oversight of Baptist Health’s “bottom line,” said he is not seeing much difference between rural and urban hospitals among the facilities he monitors across the state. There is a slightly better margin with commercial insurance than with Medicaid.

“For a small percentage of our insured patients, we had a margin (previously) that we now don’t have,” Herde said.

The cabinet publishes a weekly tally of the total numbers of Medicaid recipients as reported from the six Managed Care Organizations (MCOs) the state contracts with to manage the program to insure those near or below the poverty income level. The report Aug. 17 listed just over 1.27 million recipients, or about 25 percent of the commonwealth’s population, Haynes said. That includes about 500,000 children under age 18 and people with permanent disabilities.

The first Medicaid expansion enrollment period welcomed about 310,000 additional individuals, Haynes said. Counts have fluctuated since, but the overall increase in recipients has averaged around 400,000. Additionally, the state estimates another 110,000 enrolled in commercial health insurance plans through Kynect. About 75 percent of those were among the previously uninsured, she said.

“When the state began enrolling people into medical coverage, the Medicaid numbers did exceed our initial expectations, but the numbers have been stable since,” Haynes said.

Eastern Kentucky, which had been noted for having the highest number of uninsured, is the area of the state with the most new enrollments in both Medicaid and commercial insurance, she said.

There is speculation the influx of Medicaid patients may include low-income individuals and families formerly covered by commercial insurance through an employer. Migration away from private coverage to Medicaid also skews payer mixes toward the government program. While there has been no study to substantiate the claim, the shift in payer mix has led Currans and Herde to make the assumption that the phenomenon has occurred.

“It seems as though we’re seeing more Medicaid patients in our service areas than have been converted from the ranks of the uninsured,” Herde said.

High-deductible plans and bad debt

A KHA report to CHFS earlier this year showed a dramatic improvement in 2014 in the rate of uncompensated care – for which no payment is received. The influence of Kynect and Medicaid expansion is credited for reducing those charges, which usually are left hanging on balance sheets.

“The KHA’s mission is to work with hospitals and the state to ensure that Kentuckians get access to the care and coverage they need to be a healthier population,” Rust said.

To a significant extent, the direction healthcare has taken in the last year represents positive steps toward realizing that mission. However, although uncompensated care has reached new lows, the incidence of bad-debt accounts for hospitals is actually on the rise.

The ACA’s intent to make healthcare more affordable to a greater number of people is happening, Rust said, but an issue of “under-insured” individuals remains.

This typically involves people who opt for cheaper health insurance plans with high deductibles, which they then can’t pay when they receive care. This mainly affects families with incomes just above the level at which they would qualify for Medicaid.

“In general, there are two types of folks who buy high-deductible insurance plans with cheaper premiums: Young people who imagine they’re in good health and don’t need expensive health coverage,” Herde said, “and those persons who simply can’t afford to pay the premiums of a high-end insurance plan. If that person or family can’t afford high premiums, then they’re not going to able to afford the high deductible either.”

The rise in liability among insured patients is a challenge for hospitals to address, but it’s not insurmountable and is preferable to the financial results of caring for uninsured patients.

“It’s a lot better for both the patient and hospital to try and work out a payment plan to cover a $5,000 deductible than writing off debts of over $100,000 in cases of injury or a catastrophic illness,” Haynes said.

Rust agreed: “At least a portion of that debt is getting paid.”

Although their numbers are down, nearly 10 percent of Kentuckians still, for a variety of reasons, have not signed up with an insurance plan or taken advantage of their Medicaid eligibility.

“In any given month of the last two years, about 2-3 percent of our patients are still essentially self-pay,” Currans said. “We try to offer assistance to get them signed up through the (Kynect) exchange, but patients have to be proactive and ask for that help. So we still have a lingering problem with charges we write off because of our commitment and obligation to provide high-quality care.”

Currans and Herde face write-offs regularly when analyzing their balance sheets, but said they do so with an understanding that delivering quality healthcare is their primary mission.

ER overuse and other fiscal pains

There is some debate about the payer mix shift for hospitals, but not about the ongoing need to reduce the overuse of emergency rooms during off-hours.

One strategy being tested is development of advance triage units to assess, prioritize and treat critical cases. To address non-emergency complaints, Baptist Health has opened medical clinics and urgent treatment centers providing off-hour care. Harrison Memorial is considering adding a clinic adjacent to its ER. Another approach is telehealth solutions, such as KentuckyOne Health system’s introduction of Anywhere Care, which puts patients in touch with a physician or physician extender by phone or online video chat for treatment of common ailments.

The federal government is paying 100 percent of the cost of expanding Medicaid coverage now, but that will decrease to 95 percent in 2017 and fall to 94 percent in 2018, then 93 percent in 2019, then 90 percent thereafter. Looking toward the time when federal coverage of Medicaid costs is passed down to the state, everyone is adopting a wait and see attitude.

 

Currans and Herde expect that hospitals will continue to be asked to maintain high-level quality care while managing reductions in reimbursement.

Meeting the demand for quality healthcare delivery will always require major expenditures, Herde said. Baptist is currently financing multimillion-dollar expansions and renovations of several facilities, implementing an updated computer networking system, keeping up with federal mandates on Electronic Health Records, and changing its billing systems to the ICD-10 coding protocols required starting in October, which all directly impact hospital revenues. That list doesn’t even include buying and maintaining the latest clinical technology or expected increases in salaries and benefits for staff and employed physicians.

“Looking to our future, and those of other healthcare systems in the state, there are a lot of headwinds,” he said.

“But this is part of our job as administrators – to manage expenses and make the best use of our revenues to maintain and improve high standards of quality healthcare delivery. I’m proud to be associated with an organization that does this job well,” Herde said.

In the past two years, he said, Baptist Health cut about $40 million in costs on supplies, maintenance agreements, contracted services and other operations to run more efficiently.

But hospitals are motivated by greater things than just revenues, Rust said. Their first priority is providing even higher standards of quality healthcare than today.

“We’re seeing hospitals changing their care settings to be more proactive around wellness,” Cobb observed. Rust added that small and large hospitals are also getting benefits from partnering even closer with health departments to reduce re-admissions through follow-ups.

Haynes acknowledges there are challenges ahead, but the direction that Kentucky healthcare has taken in the last year and a half amounts to more positives than negatives for the patient and the provider.

“Hospitals are using this time to analyze their service delivery and business models to take advantage of ACA’s emphasis on improving population health rather than reactively treating illness,” Haynes said.

She believes the program is capable of sustaining itself in the long run and that staying the course long term will result in a healthier Kentucky population and a more vigorous economic engine moving the state’s collective private and public healthcare enterprises forward.

“I think the CHFS is playing an important part in fostering the type of market competition among the state’s health systems that promotes invention and innovation,” Haynes said. “By expanding coverage, we are creating a buyer’s market and introducing more transparency in healthcare delivery.”

Features, Features, Healthcare

Kentuckian Heads AMA … Again

Steven Stack, M.D., Medical Director, Emergency Department, St. Joseph East, St. Joseph Mt. Sterling, Baptist Memorial Memphis

Steven Stack, M.D., Medical Director, Emergency Department, St. Joseph East, St. Joseph Mt. Sterling, Baptist Memorial Memphis

Dr. Steven Stack is well adjusted to the darkness. The Lexington-based emergency physician and president of the American Medical Association frequently rises before the light of dawn to catch flights to AMA conferences and meetings, or work back-to-back 12 hour shifts in the emergency department at St. Joseph East hospital. In a different city or country nearly three weeks out of every month, Stack often kisses his family goodbye not knowing exactly when he’ll see them next.

Sometimes it’s hours, sometimes days, and sometimes weeks. But they know he’ll always return, and luckily they understand of the value of his work. For this reason, Stack continues on, always striving toward creating a healthier, happier world.

“My family pays a price for my absence. But I couldn’t be more blessed to have them; they’re my strongest supporters,” said Stack of his wife, Tracie, a pediatric allergist physician, and 10-year-old daughter, Audrey. “We feel we have an obligation and opportunity to make the world a better place. Sometimes it comes at a cost, but it’s worth doing, and worth doing well.”

Stack, 43, was elected president of the AMA, the nation’s largest and most influential physician organization, in June 2015 and is the first emergency physician and youngest to serve in that role in over a century.

He is the second AMA president from Lexington, Ky., in three years. Ardis Hoven, a University of Kentucky infectious disease specialist, headed the organization in 2013-14. In June, Hoven was chosen chair of the World Medical Association, an international organization representing physicians from 111 national medical associations.

Stack, born and raised in Cleveland, has dedicated much of his life to being a leader in various areas of medicine and working tirelessly to improve healthcare across the nation.

“My interaction with patients is undeniably the most memorable part of my career,” said Stack, who in the last 15 years has served as medical director of the emergency departments at St. Joseph East, St. Joseph Mt. Sterling in rural Eastern Kentucky, and Baptist Memorial Hospital in Memphis, Tenn. “Over the years, I’ve had the joy of saving lives, bringing new lives into the world, and assuring people they will recover from injuries and illnesses. There’s a special bond between doctor and patient, and those bonds are priceless. That joy is what motivates and inspires me. It helps me to get up in the morning and do the work I do.”

Stack graduated magna cum laude from the College of the Holy Cross in Worcester, Mass. He returned to Ohio and completed his medical school education and emergency medicine training at the Ohio State University before moving to Memphis to begin his clinical practice. In 2006, he and his family relocated to Lexington.

“My wife is a University of Kentucky graduate, and she and my daughter ride horses every week,” Stack said. “Between the rolling hills, horses and bourbon, it’s a beautiful place to live; I’m glad this is our home.”

Stack is nationally recognized for his special expertise in health information technology and served as chair of the AMA’s Health Information Technology Advisory Group from 2007 to 2013. He has also served on multiple federal advisory groups for the Office of the National Coordinator for Health Information Technology (ONC), including the Information Exchange, PCAST Report, and Strategic Plan workgroups.

With additional contributions to the areas of physician licensure, regulation and assessment as a chair and member of other boards and committees, Stack’s plate is incredibly full. But that hasn’t distracted his focus from the vital role he plays in the emergency department. The passionate nature with which he speaks about his profession makes it clear he’s found his calling.

“The emergency department is the great equalizer in the healthcare system – a place where rich and poor, insured and uninsured, those at death’s door, and those with minor aches and pains, lay side by side,” Stack said during his June 9 AMA inaugural address in Chicago. “You quickly realize illness does not discriminate – that the C-suite executive is no more immune to accidents or emergencies than the homeless man living under a bridge.

“These lessons have furnished me with a sense of perspective regarding the challenges we face in organized medicine. If one lesson stands above the rest, however, it’s how tenuous and precious life is – and what a gift it is to be a physician.”

Stack is undoubtedly grateful for the many blessings his vocation has provided, but he admits there have also been some major frustrations. In spite of the numerous groundbreaking medical advancements over the years, the nation’s healthcare system has a long way to go, Stack said.

“The bureaucratic intrusions and interferences of government in healthcare are the singularly most frustrating parts of the practice,” he explained. “There are so many different government programs we have to comply with, and when they’re implemented, they cause a regulatory tsunami. People often take a good thing and turn it into a compliance nightmare.

“I’m going to work 46 hours over the next three days, and half of that time will be spent typing into a machine so someone can analyze what I’m doing and whether or not they should pay for the service,” Stack said. “It prevents me from spending more time at people’s bedsides, answering questions and spending extra care and attention like I want to.”

Kentucky in particular needs to improve its Medicaid program, which Stack believes suffers from some government-sanctioned fraudulent activity.

“Now that Kentucky has expanded its Medicaid program, we must make sure those programs are acting in good faith and funding the clinical services being provided,” he said.

“When I reflect on being a physician today, I see many challenges,” he added. “But for each story of frustration, there is a story of vision, perseverance and success. There is a story of hope.”

As an elected leader within numerous specialty and geographic medical associations at both the national and state levels in Kentucky, Ohio and Tennessee over the last 18 years, and now as president of the AMA, Stack has enjoyed many accomplishments. While he’s proud of the improvements that have occurred under his guidance, Stack knows there is always more to be done.

Stack’s ambitious goals for the future of the AMA include the following:

• To profoundly improve health outcomes for the 86 million people in the United States with pre-diabetes and the 70 million with hypertension.

• To forge a generation of physicians prepared to meet the needs of the 21st-century healthcare system.

• To restore the joy in medicine and enable physicians to spend their time where it matters most – helping patients.

Stack admits they are ambitious goals, and accomplishing them won’t be easy. But nothing worthwhile ever is. In the midst of many dark mornings and some pain along the way, Stack has also experienced immense joy, and a desire to continue his quest to overcome adversity and improve the face of healthcare – one patient, family and community at a time.

“The physician’s life is defined not by one but by hundreds of moments,” Stack said. “Our profession is literally built around them. And to play a part in these moments is a priceless gift. These are the moments we went to medical school for. These are the moments for which we forego nights with our families. These are the moments that sustain us.”

Features, Features, Healthcare

The doctor will Skype you now

A nasty sinus infection. Pink eye. A strange rash. Most people have experienced conditions or ailments that need medical attention at times outside regular doctor’s office hours, then had to pay hefty fees at emergency rooms or urgent treatment centers on nights and weekends.

There was no other choice except for sticking it out until morning or the next time the doctor was available – until recently. Thanks to new telemedicine programs like KentuckyOne Health’s Anywhere Care and Anthem BlueCross BlueShield’s LiveHealth Online, Kentucky patients now have inexpensive, 24-hour access to a variety of doctors with a few mouse and computer key clicks.

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Kentucky patients now have inexpensive, 24-hour access to a variety of doctors with a few mouse and computer key clicks.

Baptist Health also has begun a limited telehealth services, currently only for Home Health heart patients in Madisonville.

And on April 30, UnitedHealthcare, the Minnesota-based health benefits provider for many Kentuckians, announced it plans by next year to cover video-based doctor visits through three telemedicine companies, NowClinic, Doctor on Demand and American Well.

“Increasing access to healthcare and strengthening the primary care system in the commonwealth is an important step in our work to create a healthier
Kentucky,” said Ruth W. Brinkley, CEO of Kentucky-One Health.

Patients like telemedicine because it’s fast and easy to use, and cheaper because it’s a low-overhead service. Provider systems feel better about the low overhead, too. And doctors who provide telehealth care like being able to “see” more patients, sometimes doing so from their own homes.

The new telemedicine programs, said John Jesser, Anthem Blue Cross Blue Shield vice president of provider engagement strategy, represent a true shift in healthcare delivery by using technology to make treatment easier and more consumer friendly.

“At this critical juncture in our nation’s healthcare transformation, we are taking a lead in improving access to care and bringing a better healthcare experience to our Kentucky members,” Jesser said.

While telemedicine isn’t new, until recently it has been used mostly to expand access in rural areas with doctor shortages or connect primary-care doctors with specialists. The new approach represents a new way for telemedicine to give patients more control over their healthcare.

Non-emergency care via mobile devices

Both Anywhere Care and Live Health Online allow patients to use their smart phone, tablet or computer to initiate a live video visit with a U.S.-based, board certified doctor of their choice (profiles are available online) to discuss non-emergency health issues from home, work or any other location with Internet access. Doctors with both programs can provide a diagnosis, treatment and a prescription if needed – all for an affordable fee.

LiveHealth Online launched in 2013, first to national employers. It has expanded to the majority of Anthem’s health plan customers, including health exchange members. A LiveHealth Online visit for eligible members a costs the same or less than a primary-care office visit.

Consumers who do not have Anthem Blue Cross Blue Shield in Kentucky as a health plan can use LiveHealth Online by signing up online and paying with a credit card. Doctors participating in LiveHealth Online typically charge $49 per medical “visit.”

Anywhere Care launched in 2013 through a partnership with Carena Inc. and costs patients $35 per visit whether they are covered by insurance or not.

Patients use both programs to communicate face-to-face with doctors about non-emergency medical conditions as colds, aches, sore throats, allergies, infections, rashes and minor injuries. Doctors may prescribe medications, recommend an over-the-counter medicine or provide home-care options. They cannot, however, prescribe or refill prescriptions for controlled substances such as narcotic pain relievers or lifestyle drugs.

If appropriate, healthcare providers will refer patients to an emergency department for a follow-up clinic visit. Anywhere Care and Live Health Online also can provide follow-up reports to the patient’s primary care doctor after an online visit.

Larry Shepherd of Louisville said he recently started feeling sick over the weekend and decided to try Anywhere Care.

“My regular doctor wasn’t open and I really didn’t want to wait until Monday to get an appointment,” Shepherd said. “I called close to midnight and the doctor called back in about 5 minutes. She was very in-depth and asked me what remedies I had tried and what medications I have used before. I was very impressed with the doctor.”

Shepherd got his prescriptions filled Sunday morning and felt well enough to work Monday.

“I use (Live Health Online) when I don’t feel bad enough to go to the emergency room but bad enough to want to go to the doctor’s office,” said Deborah Sue Baker, Anthem BlueCross and BlueShield Kentucky member. “My doctor is an hour away and if I’m sick, that’s a long drive. And sometimes, it’s hard to get an appointment with my doctor.

“The iPad app makes it easy,” she said. “The doctors are very professional and very thorough with their questions. They’ll even call in a prescription. It’s the best you can get without visiting a doctor.”

Providers can mobile-enable their practice

Jesser said telemedicine provides three main benefits to patients: expanded access to care, affordability and an improved consumer experience.

“As we know, care can be limited and is based on being able to get someplace when (a doctor) has an opening. They only have certain hours and that doesn’t always work for when people don’t feel well,” Jesser said. “(Telemedicine) expands access to care for the consumers, making it much more friendly to their schedule and lifestyles.

“Also, because telemedicine doesn’t involve a lot of the overhead that is involved in offices, it allows the price point to be less expensive – especially less than going to the emergency room or urgent care center,” he said.

Consumer experience is improved because telemedicine programs are easy to use.

“You don’t have to have a PhD to understand it. You just get online, choose a doctor and you’re in a visit,” he said.

From the provider’s perspective, telemedicine has the potential to save hospitals and doctors money with less overhead, as well as increase the value of a doctor’s time. It essentially allows providers to web- or mobile-enable their practices.

“That allows them to be available to see patients face-to-face for more hours,” Jesser said. “One doctor in the same location can be available on mobile and web for their patients no matter where they live.”

Telemedicine could help doctors better manage patients who have chronic diseases or mobility issues, as it allows for frequent visits without the burden of travel. And getting early care via telemedicine can help reduce the severity and duration of many typical illnesses such as the flu and infections.

Telemedicine is expected to lessen the burden on primary-care doctors who increasingly feel the pressure of a growing doctor shortage. The Association of American Medical Colleges estimates the United States will have 62,900 fewer doctors than needed this year, with the problem more acute in rural areas.

‘Amazingly positive feedback from patients’

Anywhere Care has been extremely well received since it launched last August, said Kathy Love, director of strategy and business development for KentuckyOne Health’s Central East Kentucky Market.

“We’ve had amazingly positive feedback from patients who have tried this service,” Love said. “People have told me they’ve used (Anywhere Care) multiple times when they’ve needed it … either late at night, or over the weekend.”

While telemedicine is affordable and convenient, Love said patients still need a primary care doctor.

“This is definitely a service that’s intended to be a complementary offering to your primary-care doctor if you can’t get to them for whatever reason and have a non-emergency health condition like a sinus or ear infection,” she said. “It’s something you can access 24 hours a day with a very minimal wait and very professional providers, but it shouldn’t replace your very important relationship with your primary-care doctor.”

Recent upgrades to KentuckyOne Anywhere Care’s system include an embedded video option to visually connect patients with providers directly without using an outside video chat service such as Skype.

Live Health Online has improvements on the horizon also. Anthem plans to expand the Spanish mobile app it has introduced in California nationally in the next couple of years. It is building behavioral health capabilities to add in 2016; it will include basic counseling, a program that provides registered dietician advice, and lactation consultant services for new mothers.

One of its biggest telehealth challenges, Jesser said, is simply making sure people know programs exist and understand how they work. Live Health Online will work to increase awareness among Anthem members in the coming years, he said.

Employers manage costs, meet needs

The LG&E and KU power utility company is one of several major Kentucky businesses offering Live Health Online to their employees.

“We have employees spread out across Kentucky and into Virginia, so this is a beneficial alternative for employees who may not have this same level of convenient access to medical care for common symptoms and illnesses,” said Liz Pratt, LG&E and KU public relations specialist. “We’re continually evaluating services for our employees that allow us to continue to manage costs while still meeting employees’ needs.”

Anywhere Care allows patients to use their smart phone, tablet or computer to initiate a live video visit with a U.S.-based, board certified doctor of their choice to discuss non-emergency health issues from home, work or any other location with Internet access.

Anywhere Care allows patients to use their smart phone, tablet or computer to initiate a live video visit with a U.S.-based, board certified doctor of their choice to discuss non-emergency health issues from home, work or any other location with Internet access.

Stephanie Duncan, manager of labor relations for the company, said her overall experience with Live Health Online was very positive.

“Navigating through the process was straightforward, and I was impressed with the thoroughness of the physician’s assessment,” she said.

Dr. Charles Wallace, a practicing family medicine doctor in North Canton, Ohio, has both in-office hours, as well as designated time slots when he serves patients nationwide via the Live Health Online network. On a Saturday afternoon in mid-late April, he had already visited with nine different telemedicine patients from his home office.

“You get a wide variety of people of different ages – I never knew there were so many accents (in the U.S.),” Wallace said with a laugh. “My last two calls were regarding a 72-year-old lady and an 11-month-old baby.”

Wallace said he enjoys the diversity of patients he encounters through the program, which is available to all Kentuckians and residents in 43 other states plus Washington D.C.

“For the most part, people really enjoy the experience,” he said. “We’re able to give good quality care. People have an expectation (for service), and we can fulfill it.”

Wallace prescribes for about 80 percent of his Live Health Online patients, with acute sinusitis (sinus infection) being the most common diagnosis. Urinary tract infection, pink eye and other skin lesions are common also. He relies heavily on patients’ explanations of their symptoms and guides them through a self-exam, sometimes using flashlights or cell phone lights.

Wallace uses his professional judgment to decide whether he has enough information to treat the patient or they should be seen face-to-face. For example, patients who need X-rays or lab work or who have complex medical conditions need to schedule in-person visits.

Repeat customers have come to trust him, Wallace said, and specifically seek him out to pursue their medical concerns when they notice he is among the online doctors available.

“I usually always get a ‘thank you’ at the end of a visit,” Wallace said. “I’ve thoroughly enjoyed my experience (with Live Health Online)…you get a few minutes to make a difference, and also potentially leave an impact on people from an educational standpoint.”

Managing chronic health conditions

Baptist Health Home Care began that major commonwealth provider system’s first limited telehealth service late last month in Madisonville. Offered only to at-risk heart patients, the new interactive program launched April 21 links patients with nurse coaches to better monitor their health.

It includes in-home equipment such as weighing scales, a blood pressure cuff and pulse oximetry sensors to measure blood oxygen levels. Daily readings are transmitted via telephone lines or an internal cellular modem to a monitoring service. If any readings cause concern, a home health nurse is alerted to contact the patient.

The main objective is to teach patients to self-manage their chronic heart issues, thus reducing their time in the hospital, said Rebecca Cartright, state executive director for Baptist Health Home Care.

“This program gives patients a sense of security when we’re not there that there’s something monitoring their vital signs daily and making sure they’re doing OK,” she said.

Baptist Health expects the program to become a tool to detect and solve potential problems before they worsen and multiply, Cartright said. The new home telehealth program already detected one patient’s weight gain, and a doctor helped remedy the situation.

“We watch for signs that they (the patients) are getting into trouble,” said Cyndi Clark, director of Home Care and Hospice with Baptist Health Home Care in Madisonville. “Then the nurses can teach the patient about cause and effect, such as how eating too much salt leads to unwelcome water retention and weight gain.”

In the coming months, Baptist Health Home Care will extend telehealth services to additional Kentucky communities, including Paducah, Louisville and Lexington. It may also eventually develop criteria for other sets of patients, Cartright said.

Esther Zunker is a correspondent for The Lane Report. She can be reached at editorial@lanereport.com.

Departments, Economic Development, Features, Features, Healthcare, Healthcare, March 2015, Medicine

Better Outcomes Via Partnerships

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In 2012, Baptist Health announced two new additions to its Kentucky healthcare system – Trover Health in Madisonville and Pattie A. Clay Hospital in Richmond. They merged into the Louisville-based system and today are Baptist Health Madisonville and Baptist Health Richmond.

“Larger systems have a better opportunity at surviving in the reform of the industry that is coming,” Andy Sears, chief planning and marketing officer for Baptist Health, said then about the move to acquire those facilities.

And he was not alone in this view. Many Kentucky health system and individual hospital leaders have been saying that some form of shared risk via larger networks was necessary to meet needs, move healthcare forward and be financially stable. A question remained, however: Should systems grow market share through acquisition of other hospitals or were there more preferable partnership models?

Two-plus years later, there is less talk about consolidating regional hospitals into a handful of competing systems and more about developing strategic affiliations, which is less expensive and more in keeping with the goals of ongoing healthcare reform.

In February, Baptist Health Corbin finalized a joint agreement with Community Health Corp. of Plano, Texas, to provide clinical support to 54-bed Jellico Community Hospital on the Kentucky-Tennessee border and its CarePlus Center 14 miles away in Williamsburg, Ky.

The circumstances and care needs at those facilities are, indeed, substantially different from those of Baptist Health Madisonville and Baptist Health Richmond hospitals. However, Sears now describes healthcare industry strategies in a manner that provides an interesting contrast to his 2012 comments.

“Many rural hospitals will have to … see if something besides traditional ‘acute care’ would serve the community better,” Sears said. “The solution is not necessarily consolidation with a larger health system, although it might be.”

UK HealthCare a partnership pioneer

As the trend toward affiliations continues to evolve, the models industry leaders are implementing now avoid direct acquisition. There seems to be a growing preference for building relationships that emphasize appropriate systemic delivery of medical services across the commonwealth.

UK HealthCare has been a pioneer in strategic affiliation development. In the past several years, it has developed a network of mutually beneficial alliances with regional hospitals and health systems in central and eastern Kentucky. Its cancer treatment network associated with the Markey Cancer Center is familiar to many, but UK HealthCare is also building successful network affiliations in advanced heart care with its Gill Heart Institute and in stroke care via the UKHealthCare-Norton Healthcare Stroke Care Network.

Meanwhile, both the Saint Elizabeth Healthcare system in northern Kentucky and Pikeville Medical Center recently entered into formal affiliations with the Mayo Clinic Care Network based in Minnesota. It mirrors UK’s affiliation model.

Common themes emerge in interviews with the program directors and leaders about their strategic affiliations. The phrase “care close to home” is common in the marketing signatures of community hospitals.

Among the business benefits of affiliation relationships is that they don’t require the capital that an acquisition demands. They are easier to organize.

Dr. Michael Dobbs

Dr. Michael Dobbs

But the most significant benefit, according to Dr. Michael Dobbs, director of the UK Healthcare-Norton Healthcare Stroke Care Network; Dr. Susan Smyth, director of the UK Gill Heart Institute; and Tony Hyott, a planning director at Saint Elizabeth, is that it allows patients to receive appropriate treatment closer to home while allowing tertiary-care hospitals to deliver the advanced treatments best suited to them.

UK-Norton Stroke Care Network

Dobbs talked about the success of UK HealthCare-Norton Healthcare Stroke Care Network, an example of the affiliation strategy, which he said began at UK in 2008 when he was “tapped on the shoulder” by Dr. Michael Karpf, UK executive vice president for health affairs, to build a “value-based” stroke care network.
“At the time, I didn’t know what that meant,” Dobbs said. He now knows “value-based care” as an increasingly common term to describe a multihospital network that raises care standards across a broad population base with better quality, efficiency and less cost to patients and society.

Fortunately for Dobbs and his new mission, three hospitals with established relationships with UK HealthCare were looking for a stroke care partner: Georgetown Community Hospital, Rockcastle County Hospital and Harrison Memorial Hospital.

UK HealthCare medical centerInitially, the idea was to create a telemedicine system, but the communication technology required was beyond the partner hospitals’ means. Had the network pursued that strategy, it risked creating an alliance of “elites” – including only hospital systems with money for advanced technology.

“Our goal was to give patients across Kentucky better access to stroke care,” he said. “We wanted to narrow the disparities and improve access – in essence to ‘level the playing field’ for patients needing quality stroke care.”

They decided on an inexpensive, low-tech method in order to reach many more hospitals and allow them to affiliate. “Our approach was to go into network hospitals and teach their nurses and staff how to deliver better stroke care,” Dobbs said.

Meanwhile, somewhat uniquely, neither UK nor Norton is positioned as leader of the affiliation network. “The stroke care network has evolved into a self-learning institution. The member hospitals learn from us, but we also learn from them,” he said.

The network acts as a communication medium for every hospital to share ideas. It enabled Harrison Memorial and Rockcastle to talk about what worked for them, he said.

More importantly, the network established an effective assessment protocol to determine what type of stroke patient care is best retained at the home community hospital and what should be passed up the line to a larger system.

UK HealthCare-Norton Healthcare Stroke Care Network “has really taken off,” Dobbs said, and involves nearly 30 hospitals in three states. Of the roughly 16,000 stroke patients a year discharged from Kentucky hospitals, Dobbs said, around 6,000 of those discharges are from UK-Norton network hospitals. They’ve also done more than 13,000 public screenings for stroke risk.

The affiliation model that UK Healthcare and Norton are exploring in their relationships with regional hospital systems in Kentucky and in neighboring states is also being mirrored on a much larger scale involving some of the most respected names in the healthcare industry.

Establishing national-level affiliations also

Pikeville-Medical-CenterKing’s Daughters Medical Center in Ashland, for example, announced its affiliation with Cleveland (Ohio) Clinic’s globally recognized Heart and Vascular Institute in September 2014.

Saint Elizabeth Healthcare, whose hospitals dominate the Northern Kentucky-Greater Cincinnati region, was the first healthcare system in Kentucky to be accepted into the Mayo Clinic Care Network (MCCN). It was the 10th health system to join the network.

Pikeville Medical Center was accepted into the MCCN a year later.

Today, there are about 32 health systems affiliated with the Mayo Clinic. Tony Hyott, director of system orthopedics and neurology as well as planning and program development, was on staff as director of planning when Saint Elizabeth entered into a discussion with Mayo about joining the MCCN network.

Saint Elizabeth determined that a national affiliation made strategic sense, Hyott said. It was just finishing the details of its merger with Saint Luke, was managing its finances well by itself and not interested in further acquisitions.

Dr. Tony Hyott

Dr. Tony Hyott

St Elizabeth considered Cleveland Clinic, but at the time of their discussion, Cleveland’s affiliation model was focused on its niche in cardiovascular services. The Mayo Clinic model was much broader in scope, Hyott said. “The Mayo Clinic model was not service-line specific,” Hyott said. Actually, a key feature of the network is that it gives Saint Elizabeth’s medical staff access to e-consults with the Mayo Clinic across specialties.

While the medical staff is very good, there are situations when Saint Elizabeth patients present sets of symptoms that are unique and unusual, he said. Mayo’s resources are available to allow second and third opinions at no additional cost to the patient. “This is just an added layer of reassurance to patients about the quality of service at Saint Elizabeth,” he said.

Formerly when someone presented a serious illness or disease that required specialized treatments, families would pack up and head for Mayo’s location in Rochester, Minn. But healthcare has changed. Similarly to how UK Healthcare specialists talked about their new affiliations are “leveling the field” in access to a standard of care in Kentucky, Hyott echoes that point in relation to Saint Elizabeth’s participation in MCCN.

St. Elizabeth Hospital

St. Elizabeth Hospital

“Mayo recognized that they needed a model to expand their outreach. Instead of adopting a strategy of acquisition, it has instead sought to establish affiliations,” Hyott said. “These affiliations should have the net benefit of leveling access to quality care.”

In very rare circumstances would a patient present a case that would demand admission to a Mayo Clinic hospital. The affiliation network is designed to reduce those cases to only those that are right for Mayo’s brand of specialized care, he said. For many patients, even those seriously ill, this means being able to receive highly advanced care in a setting close to home where family and friends can stay in contact.

Other advantages include getting medical staff training on new methods of treatment and minimally invasive surgical procedures. In the last year, cardiothoracic surgeons from Saint Elizabeth were able to travel to a Mayo Clinic hospital to observe and assist in a trans-aortic valve replacement (TAVR) procedure – minimally disruptive heart surgery performed via a catheter inserted through an artery in the groin or a small incision rather than by a large chest incision and spreading the patient’s ribcage.

OwensboroHealthRegionalHospital_0

Owensboro Health remains independent but has entered into cooperative relationships with multiple professional medical education programs around Kentucky whose students rotate into its $385 million medical center that opened in 2013.

Attaining MCCN affiliation was also an endorsement of Saint Elizabeth’s quality of care, Hyott said. Health systems engage in a lengthy application process, and members are specifically selected by the Mayo Clinic to be included in the network.

“They liked what they saw in the Saint Elizabeth system, and it’s been an honor to be able to be a part of it. Certainly, it is a boon to be able to use the Mayo Clinic Network logo in our marketing efforts. But the network has a lot more meat on it than just a promotional tool,” he said.

Independent Owensboro creating affiliations

At first glance, it appears that Owensboro Health is unique because it has maintained an independent identity while its peers have either joined a hospital system or sought an affiliation with a recognized national provider like Mayo or Cleveland Clinic.

While Owensboro prides itself on being an independent tertiary-care system serving its portion of west-central Kentucky, it is interested in developing collaborative partnerships, said Dr. Chris Toler, chief medical officer of Owensboro Health.
“We are always interested in building affiliations with the hospitals in our service area,” Toler said. “We have a mark of quality ourselves and serve an important role in our region as a full-service health system.”

Owensboro Health opened a new $395 million medical center in 2013, and the significant patient growth it has experienced in the past five years has made it possible to imagine it forming a Western Kentucky system with which other hospitals would benefit from a connection. It has extended management support to an embattled Muhlenburg Community Hospital in Greenville, Toler said.

“Hospitals of a particular size and location in this area of Kentucky are being challenged in the current state of the industry,” he said. “We would always be glad to lend our support.”

Aside from service affiliations though, Owensboro Health has actively cultivated relationships with the state’s medical colleges to serve a different purpose. UK College of Pharmacy students rotate through the new facility. The University of Louisville’s School of Nursing has a branch that works directly with Owensboro. The medical system has made arrangements also for Pikeville University College of Osteopathic Medicine’s students to complete their third- and fourth-year rotations in Owensboro.

Just as service affiliations with larger provider systems help level the playing field in terms of accessing higher standards of care, these relationships to the state’s medical programs enable Owensboro to upgrade the healthcare quality of their area by recruiting young providers to practice in Western Kentucky.

Dr. Chris Toler

Dr. Chris Toler

Toler, a native of Owensboro, said he loved returning to his community, and one of the most satisfying aspects of his practice is the independence of the healthcare system.

“There is a lot of flexibility that comes from being independent,” Toler said. “Though we’re a large hospital and a major employer, there is still this sense that we have a voice in the changes and direction of the health system here.” Until the hospital began outreach programs with Kentucky’s colleges and universities, it was a challenge to recruit providers to this area. Those unfamiliar with Owensboro perceived it as remote, he said.

Because of its location, Owensboro Health has thrived despite the previously prevailing theories about the way in which healthcare systems should grow. At this point, Owensboro is not feeling the same pressures as its peers to seek out a business partner, Toler said.

Individuals and institutions, however, should never say never, Toler said. There is always that possibility down the road considering how frequently the healthcare climate changes. ■

Josh Shepherd is a correspondent for The Lane Report. He can be reached at editorial@lanereport.com.

Banking and Financial Services, Departments, Economic Commentary, Features, Features, Healthcare, Legal Affairs, March 2015, Medicine, Technology

Rising Cyber Insecurity

 

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Potential dire effects vary by business, the type of computer-reliant operations it has and the nature of its data, and these effects can range from mere irritation to significant financial loss all the way up to a closing of the company doors.

Information technology security issues grow more important and urgent for business and industry week by week. Commerce-critical data today is made with intention at work stations as well as streamed by always-connected apps and devices into the cloud – streams that simultaneously make operations more efficient and more vulnerable.
Managers, accountants, healthcare providers, lawyers, retailers, bankers, public officials and more all are joining IT professionals in spending more of their time and energy on cybersecurity matters.

Anti-virus expert Eugene Kaspersky said at an IT security conference in October 2013 that the cost of data system disruption to business is “many times more than $100 billion.” Since then, data breaches have occurred at Target, Neiman Marcus, JP Morgan Chase, Home Depot, Sony Pictures, Anthem and others. However, while these large events attract news coverage, much of the overall cost of data breaches actually occurs at small- and medium-sized businesses because they are often easy targets.

John Askew

John Askew

“You have to assume that you have already been breached to some extent and determine how to continue running your business with that assumption,” according to John Askew, consulting manager and security team lead for SDGblue, a Lexington-based IT services firm.

“Hacking” into computer systems started three decades ago, largely among young men wanting to impress friends with their technical savvy. Nearly all data breaches today are by criminals looking to make money using an array of methods and powerful tools. The realities of computer security are much different than even just five years ago.

One result is that no one is too small to be a target. Thieves formerly tended to individually target the high-dollar score, like fishing with a large pole for that “big one.” Computer-powered automation today, however, enables thieves to fish with a net – which because of volume targeting creates large cumulative results.

Security experts all estimate the likelihood that a specific business’ computer systems will crash or be compromised at 100 percent – a matter not of if but of when. They also agree that most incidents are either preventable or can be cleaned up quickly with proper preparation. Money-sapping downtime can be averted or recovery expedited, reducing costs across the board. This security has a price, but prevention and planning tend to be far cheaper than curing a system shutdown for which a business is unprepared.

Most businesses today can’t run without computers, which are service platforms for credit card processing, tax filing, business websites and interacting with suppliers and customers.

Another recent computer security issue is that Kentucky and 47 other states along with Puerto Rico, the District of Columbia and the Virgin Islands have laws that punish companies found negligent in handling customer data, or that do not notify customers of a breach in a timely fashion.

Barbarians at the gate – and inside

Think of data security, experts say, in terms similar to doors to your business: The more data connection doors you have, the more security you need since doors are generally the most vulnerable points for unauthorized entry – or exit. Every email account is a potential door.

Further data vulnerability exists because businesses have to go through lot of other people’s “doors,” too. Cyber criminals watch that activity with programs designed to sniff out your and their weaknesses.

Many business people are shocked to learn that various studies find from 45 percent to 80 percent of data security issues originate inside the company. Not all are malicious; sometimes an employee password is easily hacked, like the word “password” or “1234567890” or their password is pasted on their desk for anyone passing by to see.

Data security becomes compromised because employees often aren’t trained, or no security guidelines exist and they innocently do something inappropriate. It can be a disgruntled employee or one paid to steal company data. “Drive-by downloads” into business networks can occur when an employee visits a web page with a malware delivery mechanism that is disguised as an ad. Sometimes network anti-virus programs are inadequate (such as free versions) or are not installed at all.

Phishing is most common attack mode

Internal breaches commonly come from “social engineering” attacks, which prey on human behavioral weaknesses. “Phishing,” a common social engineering method, is the most commonly used data assault process seen by those interviewed for this article. And it achieves the most success against users.

Phishing2Phishing criminals, usually using stolen email addresses, “bait” users at a target business with what appears to be an urgent email from a familiar company, such as a bank or retail chain they use. Problems begin if a recipient clicks a link or opens an attached file promising f urther details. The 2013 Target stores holiday shopping season breach that led to 110 million customer credit card records being stolen started with a phishing attack against employees of a subcontractor; Home Depot’s 100-million-customer-records breach in 2014 was a phishing attack.

Phishing messages whose official-looking logos, headquarters information or other content succeed in prompting a click for details instead initiate a download of malware onto the recipient’s device that propagates across the network. The many variations of this trick have worked worldwide millions of times.

“Phishing is the No. 1 problem for us on campus, and that is across faculty, staff and students,” said Brian Purcell, Murray State University’s information security officer and the school’s interim chief information officer. “If we see a phishing attack on campus, we proactively look to see who has responded to it by examining data traffic leading to the offending site. We then change their password and user identification and notify them that we have done so … because data breaches are very expensive to correct.”

A sophisticated variation is “spear phishing” in which attackers research individuals at a company and target them with sometimes surprisingly personal appeals. This technique increases the odds of success so much that spear phishing accounts for 91 percent of attacks. At financial institutions specifically, reported individual losses average $55,000 and some have exceeded $800,000, according to the Washington-based Internet Crime Complaint Center.

Phishing is one of the most common consumer complaints the Kentucky Attorney General’s Office gets, said Daniel Kemp, deputy communication director.

“Many of the calls lately extended from attempts to dupe consumers affected by the recent Anthem (Blue Cross Blue Shied) data breach,” Kemp said. “Getting trained in spotting these threats is one of the most effective defenses a business or consumer has. We have staff who go around the state training consumers in our Scam Jam classes. Face-to-face training is always effective, and every business should consider it for their employees.”

Who are the phishers? They come from around the world. The Chinese and North Korean governments have often been accused (e.g., the Sony Pictures Entertainment hack), as have criminals in former communist bloc countries, South America and in the United States. A town in Romania’s Transylvanian Alps, Râmnicu Vâlcea, population 120,000, is called the cyber-crime capital of the world, but it has only two government agents assigned to combat digital law-breaking. Regardless of their origin or motivation, the criminals are after your system, your data, your customers and your money.

Those illegally harvesting customer data often bundle their stolen info and sell it to others to avoid being caught using it – they let others do the phishing or scamming. It makes arrests and prosecutions difficult, and even if they are caught, restitution for victims’ losses is rare.

Assessing costs, value, safety and savings

Brian Purcell, Information Security Officer, Murray State University

Brian Purcell, Information Security Officer, Murray State University

The good news is that with appropriate measures, a business network can be kept reasonably-to-very safe. Although the due diligence of installing, maintaining and securing computer systems can be costly, security breach costs can be far, far more.
“PCs and computing resources are now a utility, not a luxury. IT security is often regarded as a discretionary cost, but it’s not – it should be fixed in the budget of every business,” Purcell said.

The term “disaster recovery” refers to being able to restore a computer system to the state it was in a short time before a failure. Only very rarely is this the result of a fire, flood, lightning strike or tornado, although those are considerations. Much more commonly it means a single computer’s hard drive fails and ruins all its data, which a business must recover to get back to work; or a server dies, corrupts a wider swath of data and shuts down daily operations.
Business IT disaster recovery plans often mean having off-site backup in case equipment is

tolen or offices are too damaged to use. With off-site data storage, operations can be restored in a temporary location and to continue to serve customers and avoid losing revenue also.

 Dave Sevigny, President, DMD Data Systems

Dave Sevigny, President, DMD Data Systems

“A company with six PCs that has no regular service vendor for support, and that hasn’t been getting regular system evaluations, is usually down two or three days,” according to Dave Sevigny, president of Frankfort-based DMD Data Systems, a regional IT services provider. “A company that has an established relationship is usually down about a half day. There is no substitute for qualified help.”

Sevigny and others advise considering the question: How would being without computers for two or three days affect your company?

“Today’s technology is more robust, more resilient and has more ‘call home’ properties that alert us, often before the customer knows they have a problem,” he said. Clients “have fewer problems if they make an effort to keep up their systems and allow us to help them. That’s what IT professionals do.”

An office technology policy can avert some of the latest threats to business. Sevigny advises caution regarding “the bring-your-own-device (BYOD) trend of letting employees bring smart phones and tablets into the office with no supervision, and even letting them do (company) work with them.

“While an employer might think he’s saving money by having employees use their own equipment to perform tasks for which the business formerly provided the equipment,” he said, “they are also opening themselves up to some real security problems. Giving someone open access to a business network when you can’t control what happens with that device after work is a very risky proposition.”

Lack of knowledge, lack of preparation
Investing in IT security and disaster recovery is less costly than restoring data from bits and pieces, or going back to printed records. Data breaches mean lost customers and tarnished business reputations, especially when customers must be contacted to inform them sensitive personal data is now “in the wild” and in the hands of criminals.

In calculating a budget for IT security and disaster recovery, managers are advised to consider their company’s average revenue or profit per hour or per customer, then assess the potential cost of lost operating hours or customers. At what point would losses become critical? At what point would the business be fatally crippled?

Many businesses lack security and data recovery plans.

Russ Hensley, CEO,  Hensley Elam Associates

Russ Hensley, CEO,
Hensley Elam Associates

“Kentucky lags the national averages for a variety of reasons,” said Russ Hensley, CEO of Hensley Elam Associates, a regional data services firm with headquarters in Lexington. “Despite the routinely quoted (estimate that there are only) 30 percent of businesses with adequate protection, we may be as low as 10 percent for companies with appropriate backup and disaster recovery plans.”

Lack of knowledge is thought to be the main reason why. “Most of them simply don’t know the risks, or they think it won’t happen to them because it hasn’t happened yet,” Hensley said. “They don’t realize their employees are usually their biggest threat. They often see the backups and IT security as something being sold to them versus being a real asset. Since they have never had an incident – despite some of them already being infected with malware and they don’t know it – they either balk at the cost or don’t see the need.”

Studies estimate the cost of repairing a data breach at $185-$195 per customer. That’s $18,500 for 100 customers or $185,000 in losses for 1,000 customers. Repairs can take months as little issues continue to present themselves. It’s fairly common for some data to be lost forever, complicating making financial books whole again. Damage to reputation and trust can mean a loss of current customers and future business.

Studies show preventive measures do reduce per-customer losses for data breaches: $14 less for companies with comprehensive security policies and procedures; $13 less when the company has an incident response or disaster recovery plan; another $7 less if a well-trained staff person serves as the chief information security officer. Those steps lower average losses to $151 per customer.

Mitigation but no 100% guarantee
Locks“There’s a saying in our industry that computer security always seems to cost too much, but still is never enough,” said Jerry Bell, a computer security consultant and founder of the DefensiveSecurity.org website and blog in Atlanta. “Computer security is something like what they say about those who fight terrorism: We have to be right all the time, but they only have to be right once.

“There is no 100 percent guarantee against hacks or data loss,” Bell said. “Everyone is a target, too. There are breaches and attacks going on at all levels – from giant financial firms all the way down to parking garages. Statistics don’t tell the whole story because many breaches are not reported to authorities. The fear of damage to a company’s reputation is pretty powerful.”

One product that can mitigate the cost of data breaches, he said, is cyber-security insurance, which many companies now offer. Data breach coverage can mitigate costs in any case, and especially when the policyholder is not to blame.
“When a breach happens and a claim is paid, the insurance companies are looking for those responsible for the breach,” said Bell. “If (the insurance company) pays a claim, then someone else is likely to wind up paying the insurance company.

“Take some of the big, well-known, national companies whose data breaches made headlines in 2014. There are lawsuits against some of them by their vendors, like credit card processing companies, and those vendors’ insurers to cover the costs of cleaning up the mess,” he said. “They lay the blame at the feet of the big company, and that mess includes new cards, reimbursements, credit monitoring and many other charges.”

All the experts in this article concur that, on average, only about 30 percent of businesses today have adequate security and a disaster recovery plans – not elaborate security, but decent protection and enough to help with recovery.

“The one thing that keeps me awake the most at night is how our data is handled,” said Purcell at Murray State. “We’ve been collecting people’s personal data since the late ’80s, and the standards for security were different then. We’re like any other business in that regard. That legacy data is very valuable, and we have the responsibility for protecting it.” Most businesses are in the same boat.

The most common lament among the IT security professionals interviewed is that customers reel when told the cost to adequately protect their systems but don’t understand the value of that investment.

For example, initiating recommended system security measures might cost a small to medium-sized business $10,000 up front and another $300 in costs per month to monitor the system security, perform maintenance and pay for regular professional services ($3,600 per year). Under this scenario, first year expenses are $13,600; subsequent years might total $5,000 when software upgrades, checkups, equipment replacements, etc., are included. This is a five-year cost of $33,600, or $6,720 per year. It’s a considerable budget line.

If this business has 300 customers, however, using the $185-per-customer cost for a breach that studies found, a data system problem could cost $55,500. That’s about $22,000 more than the cost of IT system security.

Compliance does not mean security

Michael Gilliam, Security Team Lead, SDGblue

Michael Gilliam, Security Team Lead, SDGblue

In managing costs, businesses generally opt for meeting legal or regulatory obligations as an expense baseline.
“Compliance does not equal security,” warns Michael Gilliam, consulting manager and security team lead for SDGblue. “Security is a very complex issue to tackle (and) it becomes harder to defend the individual information systems and the organization as a whole as it grows.”

A lack of dedicated resources to implement an effective security program is the biggest issue SDGblue sees, Gilliam said.
“Security (is) often viewed as a cost center that needs to be minimized,” he said.

That anemic approach is further weakened when “combined with a confusion with regulatory compliance,” The word Compliance in blue 3d letters surrounded by related terGilliam said. A managerial view that data security resources are “dedicated to avoiding fines stemming from violations makes security often nothing more than an afterthought, prioritized only when it is too late.”

State and federal government requirements to notify customers of a breach are considered burdensome and complicating factors. However, the cost of doing so is small compared to the fines and penalties for not doing it in a timely fashion, and far less than criminal or civil charges, or lawsuits by customers.

There are major additional compliance issues in the medical field, which also must comply with complicated federal HIPAA and HITECH regulations.

The Health Insurance Portability and Accountability Act of 1996 mandates the confidentiality and security of healthcare information. Health Information Technology for Economic and Clinical Health Act of 2009 anticipates a massive expansion in the exchange of electronic protected health information.

“The cost of a breach to medical clinics can be staggering,” Hensley said. “One doctor had a laptop stolen with 2,000 patient records, and none of the data was encrypted (to make it unreadable to the thieves). They were fined $150,000 by the government for non-compliance – un-encrypted laptops are the No. 1 cause of fines. It used to be that large clinics were the ones fined, but now smaller offices are seeing fines, and they are never cheap. For the largest companies, there have been fines of $12-14 million. It’s quite serious.”

Breaches trigger legal obligations
Hensley holds the advanced Certified Information Systems Security Professional credential, which in addition to technical expertise requires knowledge of IT’s legal and financial issues. The CISSP credential is valued especially in the healthcare sector and other operations with high-stakes compliance obligations. Hensley said it improves his ability to advise clients about avoiding potentially expensive situations.

“For instance, I’ve seen cases where attorneys took a patient’s medical records into their office for a case. This puts the lawyers at tremendous risk because they think the attorney-client privilege protects them, but that’s not entirely true,” he said. “By assuming responsibility for those records, they are now under HIPAA laws and subject to penalties.”

Meanwhile, state legislatures are enacting new cybersecurity laws and reporting requirements, creating legal obligations sometimes to notify customers and staff about a data breach – or to not notify them because the breach is under a criminal investigation.

In Kentucky, HB5 and HB232 cybersecurity laws passed in the General Assembly in 2014 are now in effect. They changed the way the commonwealth’s businesses are required to store customer data and protect confidentiality. Depending on who is potentially affected, businesses and other entities that experience a data breach must contact the Kentucky State Police, state auditor of public accounts, state attorney general, Kentucky Department of Education or the Council on Postsecondary Education.

HB 232 defines what businesses must know about an electronic security breach, sets deadlines for informing customers and staff and whether to notify law enforcement.

Frank Goad is digital editor of The Lane Report. He can be reached at frankg@lanereport.com.

Economic Commentary, Economic Development, Faster Lane, Healthcare

Poll results: Kentuckians delaying medical care due to cost

Kentucky Health Issues Poll shows 22% needed care but did not get it due to cost

Fdn Healthy KyLOUISVILLE, Ky.— Poll data released today by the Foundation for a Healthy Kentucky and Interact for Health indicate that lower-income Kentuckians are much more likely to forgo medical care and have more trouble paying for health care than those with higher incomes. Meanwhile, the Kentucky Health Issues Poll (KHIP) data reveal three out of every four Kentucky adults now have a usual or appropriate source of care.

KHIP highlights include:

• More than two in 10 (22%) said they or a family member in their home needed care at some point over the past 12 months but they did not get care or delayed getting it because of cost; in 2009, 32% reported delaying or skipping needed care due to cost.
• Almost one third (32%) of adults who earn at or below 138% Federal Poverty Level (FPL) indicated they did not get or delayed medical care due to cost while 14% of those making more than 200% FPL reported they had to forgo or delay coverage because of cost.
• Three in 10 (31%) reported that they or a family member in their home had trouble paying a medical bill in the past twelve months.
• Almost 5 in 10 (47%) of uninsured adults indicated they had trouble paying medical bills at some point during the past twelve months.
• Nearly 8 in 10 (77%) of insured adults have a typical and appropriate source of care compared to 5 in 10 (51%) of uninsured adults with a typical and appropriate care source.

“Being able to afford needed medical care and having access to appropriate usual sources of care are two important challenges that may prevent a person from receiving care,” said Susan Zepeda, President/CEO of the Foundation for a Healthy Kentucky. “KHIP data indicate lower income Kentucky adults have to forgo treatment more often than their higher income neighbors and are more likely to have problems paying for their care.”

KHIP was funded by the Foundation for a Healthy Kentucky and Interact for Health, based in Cincinnati. The poll was conducted October 8, 2014—November 6, 2014, by the Institute for Policy Research at the University of Cincinnati. A random sample of 1,597 adults from throughout Kentucky was interviewed by telephone, including landlines and cell phones. The poll has a margin of error of ±2.5%.

More health care related posts:

Education, Faster Lane, Healthcare

More than 131,000 Kentuckians have enrolled in kynect

Events scheduled to provide information and assistance about kynect

FRANKFORT, Ky. (Jan. 23, 2015) — More than 131,000 Kentuckians have newly enrolled for health care coverage or renewed their current plans through kynect in the two months since open enrollment began on Nov. 15, 2014.

kynect_logo_4C_300This enrollment total includes individuals who have either newly enrolled in a private health insurance plan, qualified for Medicaid coverage or renewed the private insurance plans they purchased through kynect last year.

The deadline to enroll is Feb. 15.

Several events are scheduled to help provide information and assistance about kynect.

Events are:

  • Elizabethtown Community and Technical College campus, 11 a.m.–4 p.m., Jan. 26 and 27
  • Hopkinsville Community College campus, 10 a.m.–2 p.m., Jan. 27 and 28
  • Big Sandy Community and Technical College, Pikeville campus, 10 a.m.–2 p.m., Jan. 28 and 29
  • Jefferson Community and Technical College, Shelby campus, 10 a.m.–2 p.m., Jan. 28 and 29
  • Bluegrass Community & Technical College (BCTC), Leestown campus and Newtown campus, 10 a.m.–2 p.m., Feb. 2 and 3
  • Jefferson Community and Technical College (JCTC), downtown campus, 10 a.m.–2 p.m., Feb. 4 and 5
  • Gateway Community and Technical College, Urban Covington campus (Two Rivers Building), 10 a.m.–2 p.m., Feb. 9 and 10
  • Gateway Community and Technical College, Boone campus, 10 a.m.–2 p.m., Feb. 11 and 12

Enrollment statistics current as of 3:30 p.m. on Jan. 22:

  • 515,677 unique visitors viewing more than 18 million pages
  • 269,252 individuals have conducted preliminary screenings
  • 391,377 calls have been handled by the kynect contact center
  • 28,637 new accounts have been created
  • 7,401 people have downloaded the new kynect app
  • 46,511 new applications for coverage have been submitted
  • 38,547 have enrolled in Medicaid coverage
  • 75,760 individuals have renewed their enrollment in a qualified health plan
  • 17,126 individuals have newly enrolled in a qualified health plan
  • 4,977 individuals have enrolled in dental plans
  • 6,274 visitors to the kynect store at Fayette Mall in Lexington have completed 3,964 applications for new coverage

Related news:

More than 125,000 Kentuckians have newly enrolled in kynect

Kentuckians continue to enroll in health care through kynect

Only 25 percent of Kentuckians eligible for kynect have signed up

Most uninsured Kentuckians aware of kynect, but few have sought more information

Economic Development, Fast Lane, Healthcare, Workforce Development

Kindred healthcare to create up to 500 jobs

Louisville, Ky. – Kindred Healthcare is planning a $39.5 million expansion of its corporate headquarters in Louisville that is expected to create up to 500 full-time jobs.

Kindred-healthcare-louisville-expansion-500-jobsKindred plans to construct a six-story, 142,000-s.f. building adjacent to the company’s corporate headquarters on South Fourth Street. The new facility will house Kindred’s support center operations, national training center, Kindred University and an employee wellness clinic. Construction will begin early next year with the building expected to be operational in 2017. The new facility also will bring Kindred employees from across the U.S. to Louisville for seminars, educational programs and company meetings.

Kindred is a healthcare services company that through its subsidiaries, operates transitional care hospitals, inpatient rehabilitation hospitals, nursing and rehabilitation centers, and provides contract rehabilitation services and home health and hospice care. Once it completes a merger with Atlanta-based Gentiva Health Services Inc. in early 2015, Kindred will become one of the largest healthcare companies in the U.S., providing jobs to more than 100,000 people in 47 states. Kindred currently has nearly 2,500 employees in Louisville.

“It is exciting and gratifying to see a homegrown company continue to expand and become the national leader in its healthcare sector,” said Louisville Mayor Greg Fischer. “Kindred’s expansion and development of Kindred Square is a major investment in our downtown, creating a new headquarters building for our skyline and a major anchor for South Fourth Street. Their growth plans, including the creation of so many new jobs, underscores this company’s confidence in Louisville and solidifies our best-in-the-world status as the leader in lifelong wellness and aging care.”

Economic Commentary, Economic Development, Education, Healthcare, Perspective, Political Commentary

Don’t just keep up — aim to be the best

When Kentucky’s legislators gather in January for the 2015 General Assembly, they will face issues that could have a major impact on the business community.

The Kentucky Chamber, the state’s largest business association, will watch closely, looking for ways to make state government more effective and accountable.

Improving education will continue to be the No. 1 priority of the chamber because education represents the future of Kentucky’s workforce. Supporting our schools and Kentucky’s core academic standards is critical to our success.

Resolving the state’s public pension problems is also a priority. Despite important reforms in recent years, the system is still struggling. Lawmakers must find the funds needed to keep promises made to state workers and retirees while balancing long-term sustainability. Our pension obligations have already downgraded the financial standing of our state, and how we address them will affect everything else state government does – like funding our schools, repairing our roads and other important priorities to help us be the best.

The chamber will again support a bill that will encourage partnerships between private companies and the government. This legislation – which we refer to as P3 for public-private partnerships – would create jobs while saving tax dollars and providing needed projects and services. The chamber’s legislative agenda is a comprehensive approach to creating a competitive business climate and investing in the future of the commonwealth. Other areas of focus include:

Kentucky Competitiveness

• The chamber supports the need for the General Assembly to address the long-term need for comprehensive tax reform that would include, among other items, a simplified tax code, a focus on prioritized government spending and support of growth-oriented policies that would improve the competitiveness of Kentucky’s business climate.
• The chamber supports an amendment to the Kentucky Constitution that would allow cities and counties the choice, with voter approval, to enact a local sales tax with a sunset provision, dedicated for the funding of transformational local projects.
• Right-to-work legislation that prohibits requiring any worker to join a union as a condition of employment is strongly supported by the chamber. The chamber believes union membership should be a matter of personal choice, and that enacting this legislation would put Kentucky on a level playing field with surrounding states when it comes to business recruitment

Education

• The chamber will support the enactment of a charter school law to give all children access to the highest-quality education possible.
• The agenda also includes support for early childhood education and for protecting school funding.

Health and Wellness

• The Chamber will continue to support the creation of incentives for workplace-based wellness programs and enactment of a statewide smoke-free law.
• Improving the medical liability climate through medical review also is a priority item.

Energy

• Supporting the infrastructure of Kentucky’s signature coal industry has long been a priority for the chamber and that will continue in the 2015 session.
• The chamber will advocate for policies that strive for energy independence and encourage a sensible regulatory approach

Dave-Adkisson-President-CEO,-Kentucky-Chamber-of-Commerce-Frankfort-Kentucky must consistently double down on its efforts to be competitive and to out-think other states in terms of creating jobs. Each time our policymakers come to Frankfort for a legislative session, we need to be there with solid proposals – not just about how we can keep up with the competition but how Kentucky can be the best!

— Dave Adkisson is president and CEO of the Kentucky Chamber of Commerce