Ask The Expert: Ed Beranek on The New Maryland Medicare Waiver

Almost everyone expects that the new Maryland Medicare waiver will change the way the Johns Hopkins Health System operates. But what does that mean? Ed Beranek, senior director of regulatory compliance, is responsible for the health system's revenue budget—a forecast of hospital revenue—and regulatory matters involving the Health Services Cost Review Commission (HSCRC), which establishes hospital rates in Maryland. In today's Ask The Expert, Beranek answers some important questions about the waiver.

Beranek will also answer any questions about the Maryland Medicare waiver in the comments section below.

How does the new  waiver affect the Johns Hopkins Health System?

In the past, we generated revenue by increasing our patient  volume; that no longer is the case for our Maryland patients. Now we have a  revenue cap. That means there's a top limit over which we may not go. The  revenue cap is all-inclusive, including volume growth, inflation and growth in  expenses. If our patient volume increases, we need to lower our rates within  the limits set by the HSCRC. Likewise, if our volumes decrease, we need to  raise our rates.

It's a very different mindset. It's going to take us time to  adjust to that; not just us here at Johns Hopkins, but throughout the state.

Why do you draw a  distinction between Maryland and non-Maryland patients?

Twenty-five percent of the revenue at The Johns Hopkins  Hospital comes from outside Maryland. Although those patients are still charged  HSCRC rates, the revenue associated with those out-of-state cases is not  counted in the revenue cap. If we increase the number of patients we treat from  outside Maryland, that additional revenue is ours to keep.

What are we doing to  adjust to this new environment?

It's now more important than ever that we control costs. As an institution, we have certain fixed costs, such as our buildings and the costs of maintaining them, that are not easily reduced.   However, we can drive down our fixed cost per unit by optimizing the volume that we see in those areas. In addition, we can reduce our variable costs, such as supplies. With our large supply chain initiative, we're centralizing purchasing so we can leverage our buying power and get better pricing on medical supplies. We'll also be looking at pharmaceuticals.

The goal is to drive the cost per patient to the lowest level we can while also providing the highest quality care we can. That's how we're thinking about it. We need to focus on the value equation, which is essentially providing the highest quality care at the lowest cost. That is the value that patients and insurers are looking for in the new environment.

What does the waiver  mean for people who work here?

There should be little change, if any, in direct patient  care. We'll stay true to our mission and care for the patient the best way we  can in the most appropriate setting.

What the Maryland Medicare waiver has changed is how we  think about planning. What types of services should we be providing, and where  should we be providing them? Where should we concentrate our marketing efforts?  If a physician wants to start a new clinic, do we do it at The Johns Hopkins  Hospital or at one of our ambulatory sites, such as White Marsh or Green Spring  Station? What location will benefit the patient and Johns Hopkins Medicine the  most?

Our strategic  priority of integration must be key, to have all these individual units moving  more fluidly as a system.

Yes, integration is key to success under the waiver. We have  all the components to be successful in an integrated model. We have medical  assets like the clinics at Green Spring Station, Odenton and White Marsh. We  have community physicians. We have our hospitals.

Now we need to think as a system. For instance, stop  thinking in terms of hospital silos—The Johns Hopkins Hospital, Johns Hopkins  Bayview Medical Center, Howard County General, Suburban Hospital, Sibley  Memorial Hospital. We need to weigh whether it makes sense to take a particular  service and have it at a single site, rather than offer it at both Johns  Hopkins Bayview and The Johns Hopkins Hospital, which are only 3 miles apart.

One very important thing to keep in mind is that we can't  sit back and look at the changes under the waiver and think, "Oh, I wonder  what's going to happen?" We have to take an active role to make sure we succeed  under this system. And the only way we can do that is through integration.

From the patient's  perspective, will we look different?

Over time, we will probably look different. For instance,  wait times are a problem for us. Hopefully, as we become more integrated, long  wait times will decrease, and we can get our patients in faster and more  efficiently. This will improve our efficiency of care, which will improve our  throughput. That, in turn, helps us maximize our patient volume and lower our  costs per patient.

Where else are we  looking for efficiencies?

One initiative we're working on is Clinical Communities.  With physician leadership, we are partnering with the Armstrong Institute for  Patient Safety and Quality to bring together clinicians around a common service  and solicit their input on improving what they're doing. We ask each group,  "What types of data do you need to better manage patients?" Physicians are very  data-driven.

The Clinical Communities develop clinical pathways and best  practices. They're standardizing care, eliminating variations, making it more  efficient. Say our orthopods are using many different artificial joints. Maybe  we can narrow that down and then get better pricing.

Clinical Communities represent a step toward integration,  involving not just The Johns Hopkins Hospital, but also Hopkins Bayview, Howard  County General, Suburban and Sibley. As one of our financial directors says, "We all work for Mr. Hopkins."