Cumberland Times-News

September 7, 2013

WMHS gets national attention for success with revenue model

Medical center among rural Maryland hospitals taking part

Greg Larry
Cumberland Times-News

— CUMBERLAND — Following a recent New York Times article, the Western Maryland Health System has received widespread attention for the success it has achieved utilizing a revenue model that has generated profits for the medical provider while offering increased outreach health care for its patients.

Since 2010, the WMHS, along with 10 other rural Maryland hospitals, has been participating in a revenue model known as Total Patient Revenue.

“It’s a value driven model. It lowers costs and improves the health of the population we are here to serve,” said George Garrow, chief medical officer with WMHS.

The model allows the state’s Health Services Cost Review Commission to set price controls, also known as a guaranteed budget, for the care administered to patients.

Since the hospital will receive what amounts to a flat fee, the system spurs innovation as the hospital finds ways to keep health care costs within those pricing reimbursements set by the model.

The Total Patient Revenue model has created benefits on many levels. Hospitals that keep their costs under the pricing budget, get to keep the profits.

Barry Ronan, the chief executive for WMHS, told the New York Times writer Eduardo Porter that as of the fiscal year ending in June, WMHS made an operating profit of $15 million on about $370 million in revenues.

That yields a 4 percent return that dwarfs the average return of Maryland hospitals which is around .08 percent.

However, under the model, if the cost of the hospital’s services exceeds the budget, hospitals are forced to innovate, and find ways to reduce costs since they receive no extra payment.

The system actually rewards medical providers that reduce the number of patient hospital visits and stays, which are the most expensive services for patients.

Here is where WMHS innovated to make the model work for them. They decided to provide outreach services that will keep the members of the community they serve healthier.

This generates income for the hospital while keeping its costs from escalating.

They established, in conjunction with the physicians, programs that monitor patients before medical issues can develop into serious problems that require hospitilization.

“If we can catch patient problems before they get to the point where they have to go to the hospital, we can take care of it earlier,” said Kim Repac, senior vice president and chief financial officer.

 The new programs also monitor patients following a medical event, to ensure they take their medicines, keep appointments, verify the availability of transportation as well as checking for any possible change in their conditions.

WMHS utilizes nurse practitioners and managers and staff to help with extending the outreach care.

The result is a healthier patient base. The reward has been a decrease in hospital admissions at WMHS. Admissions to the hospital are down 15 percent. Readmissions have also decreased.

Officials say that in 2011, 16 percent of people who had been discharged went back to the hospital. That has dropped to 9 percent, with many patients reporting they are happier with the care, according to the New York newspaper.

“The old way was the hospital was very passive. You waited until you got sick and came in. That system wasn’t working,” said Garrow.

WMHS has started outreach programs in areas like wound care, congestive heart disease, behavioral health, emphysema and COPD, anti-coagulate treatment and diabetes.

The hospital has partnered with Johns Hopkins in the development of their diabetes treatment program.

Another benefit of the TPR model has been its stabilizing effect on health care costs in Maryland, which have skyrocketed nationally.

If hospitals like WMHS come in under the budget, they can raise their prices, but when then exceed the budget they are required to lower the fees.

The TRP model has also contributed to Maryland ranking as one the cheapest in the country for health insurance costs.

The model has not been successful in all states. Officials said it really depends on what region of the country the hospitals are in. Some hospitals have tried it, only to drop it later.

However, the success in Maryland has caused many to take notice.

The Times wrote, “ The system could address head-on Obamacare’s main weakness, providing a direct means to rein in the cost of care.”

Greg Larry can be contacted at