By David Rogers. December 6, 2011. BLOWING ROCK -- There is an urgent need for national healthcare reform, Appalachian Regional Healthcare System (ARHS) Chief Executive Officer Richard Sparks told The Rotary Club of Blowing Rock on Monday. Initiatives taken by ARHS in Blowing Rock that target chronic and advanced stage disease have gained statewide and regional attention.

Framing the Problem

Sparks framed the healthcare issue and the perceived ARHS opportunity in Blowing Rock by reporting that the U.S. gross domestic product (GDP) is roughly $15 trillion. The second highest, he revealed, is China at a relatively distant $6 trillion.  He noted that in 2010, 17.4% of the U.S. GDP is related to healthcare.  The next highest level of healthcare spending as a percentage of GDP is 12% (the Netherlands). "That (larger proportion of healthcare spending relative to GDP) has probably already put us in a non-competitive position, economically," he postulated.

In separate, independent research, Blowing Rock News found in a November 2011 report published by the Organisation for Economic Co-operation and Development (OECD), that the majority of the OECD's 34 member nations are spending less than 10% of GDP on healthcare.

Sparks went on to detail that the Federal government spends about $1 trillion on healthcare, or about 25% of its budget.   "We must change our track," Sparks suggested, if the U.S economic system is to remain competitive, if not dominant in the world. In follow-up questioning by Blowing Rock News, Sparks explained that the healthcare reform legislation enacted in 2010 is aimed at shifting the national course, including the creation of greater efficiency by eliminating the many layers of administrative costs built into the system between the patient and his or her healthcare provider.

"We are in Phase One," Sparks said, "which is 'pay for performance.'   We get paid for HOW we do things, not just for 'doing things'. We (incur) severe penalties in our hospital if we re-admit a patient within 30 days.  The penalty is: we don't get paid.  We also don't get paid if you have a hospital acquired condition, whether it be an infection you get (during a hospital stay) or you fall and break a limb (at the hospital). We simply don't get paid (for conditions resulting from hospital treatment). So (pay for performance) is forcing (healthcare providers) to look toward quality and really being good at what we do."

Sparks relayed that Phase Two is about creating efficiencies: the elimination of waste.  "The elimination of everything that does not add value to the patient experience," he added. Sparks provided an example of a surgery procedure, from a diagnosis that surgery is required to the completion of the procedure. "Our study found that there were 30 steps in the process, when there really only needed to be 10."

"In Phase Three (by 2015-2016)," the ARHS CEO outlined, "we will get paid for the health of the population we serve. There will be an emphasis on the preventive side and the wellness side.  We will try to get patients in a position where they are not accessing the healthcare system so much, especially where it is the most expensive."

The Historical Healthcare Delivery Model is Inefficient

To set up his discussion about the planned Blowing Rock facility, Sparks offered that 80% of the U.S. population falls into one of two categories in terms of their health: "stable" or "healthy."

"And that is a good thing," he said.  "This (mostly healthy) segment of the population accounts for just 29% of all the healthcare dollars spent in the U.S."

Sparks went on to report that 10% of the U.S. population falls into the category of chronic or advanced illness, and that this segment accounts for an alarming 52% of the healthcare dollars being spent.  "That's what we have to get control of," declared Sparks.

Sparks provided an automobile corollary for the Rotarians in helping them understand where ARHS is headed, and to set up his explanation of the perceived Blowing Rock opportunity, speaking as much systemically as locally. "We have done many of the same things forever (in the U.S.).  As our healthcare system evolved, we used the same 'chassis' for delivering healthcare to patients from birth up to 65-70 years old.  The same chassis that we use for things like strokes, broken limbs, heart attacks or gall bladders, is the same one we use for chronic diseases like diabetes, high blood pressure, and cardiovascular disease.  That is a very expensive chassis to be applying to chronic disease.  That's why...it is important for us to find the right way to care for that chronic group of our populations.

The ARHS Strategy and Blowing Rock

"Our strategy at Appalachian Regional Healthcare is to develop a continuum of care," related Sparks. "We want to treat the right patient at the right place at the right time.

"That is the segue into our project here in Blowing Rock," Sparks said.  "It is very very important."

For several months, AHRS was involved in the application process with the State of North Carolina, trying to get approval for a Certificate of Need (CON) relating to its plans for the recently acquired 40+ acres of land along U.S. 321, near its intersection with Edmisten Road.  Because it was a competitive bid (Glenbridge Health & Rehabilitation of Boone was the other bidder), none of the management team members, employees or board members have been permitted to talk about ARHS plans for the property. Nor, Sparks said, was it prudent to spend any money since there was no way of knowing which CON application would be approved.  Now that the state's decision has been announced in favor of ARHS, Sparks and other members of his team are beginning to provide more detail about their plans and strategies.  Glenbridge has appealed the state's decision, so there is still a chance that the CON approval will be reversed, but Sparks said they are beginning to go public with their property development ideas and how the Blowing Rock property fits into the High Country healthcare scene. Editor's Note: The CON appeal can last up to 275 days before a decision is made.

Sparks noted that the current Blowing Rock (Hospital) facility has served the area well many decades. "It has done a lot for thousands of people, but it is an old building that is not in compliance with (many building codes), including the Americans With Disabilities Act."

So once Blowing Rock Hospital became a part of ARHS, they performed an exhaustive analysis of what could and should be done in Blowing Rock.  One option was to do a refurbishment of the existing building, but the management team concluded that spending $5 million to complete the project and still be left with an old building that did not do all that they needed it to do was not the best use of funds.

A second option was to build a new building on the same site. "That bounced us up to about $10-$12 million," confided Sparks, "and about a five-story building in order to get everything needed, but still we would not have the design that we truly wanted."

Then ARHS was able to locate the 40-acre parcel of land that was reasonably priced, so they took an option to buy it and continued the process of developing comprehensive, long-term plans and how Blowing Rock fit in.

"The future of Blowing Rock will be on this 40-acre site," Sparks said. "...and we got tremendous support from people in Blowing Rock...One of the things that is critical in a project of this magnitude is municipal water and sewer, and the Town has been really good about guiding us in how to go about being annexed.

"The focus of this facility will be post-acute," stated Sparks.  "It will anchor the development of services that, to a large degree, will address this 52% (of the population) that was mentioned earlier, so that we can get a handle on this expensive part of healthcare (chronic and advanced disease), do it in a quality way, and in a beautiful setting.  We have asked permission from the State of North Carolina to build a 100-bed facility that is designed 'home like'... a neighborhood concept with specialized areas like rehab, short-term skilled nursing (2-3 months), long-term skilled nursing, and memory support."

Sparks indicated that ARHS would work extensively with the College of Health Sciences at Appalachian State University

"We will have a (development) model that can be shared with people across North Carolina," Sparks explained, "in how to better take care of individuals in this particular group (chronic and advanced disease)."  He indicated that the program has attracted a lot of interest not only from Appalachian State, but also from Wake Forest, Durham, and UNC-Chapel Hill, especially in the field of geriatrics.  "We are generating a lot of interest. This is the future....This facility in Blowing Rock will be more important than the acute section at Watauga Medical Center in Boone. It will be more vital to the success of our healthcare system...We are excited about it."

Several members of the Appalachian Regional Healthcare System management team were present at the Rotary meeting, including Alice Salthouse, the Director of Community Outreach who is a member of Blowing Rock Rotary and who introduced Sparks.  Also in attendance was Jerry Hutchens, Senior Vice President of System Advancement for the ARHS Foundation, and Gillian Baker, Vice President of Corporate Communications.

Added Feature to Development Plan: Continuing Care Retirement Community

To finish the presentation, Mr. Sparks introduced Stephen Fleming, the President and Chief Executive Officer of Well Spring, a not-for-profit "LifeCare" retirement community in Greensboro, NC. "We have been encouraged in our plans to think about the (broader concept) of elder care," Sparks said. "This dialogue led to a discussion with Steve and Well Spring, about the potential of a retirement community at the same location, on the same campus, because it is a beautiful location."

Have received his undergraduate degree at UNC-Chapel Hill, Fleming is not a stranger to the High Country, Sparks maintained in his introduction, because he earned his master's degree at Appalachian State and currently has a daughter enrolled at ASU.

"We are excited about the trifecta we have put together," noted Fleming in addressing the Rotarians, "including Appalachian State University, Appalachian Regional Healthcare, and Well Spring."

Fleming delineated the various aspects of Well Spring's service offerings aimed at the elderly. "To build a continuing care retirement community takes time and resources," he said. "So those of you that want to move in tomorrow, be patient," he quipped to the chuckling Rotarians.

The Greensboro-based executive suggested that the ARHS post-acute plans are a little less risky than (building) a continuing care retirement community, citing a decline in the occupancy rates of retirement communities nationwide, from an average of 93% occupancy to approximately 89%.  "We don't go into a market without a lot of research, and that is what we are doing right now.  There will be four phases of research, including a phase on written survey this past summer...When completed, this continuing care retirement community will be about a $40 million investment....We are not going to go into something blindly...Our goal is to do the right thing...The beauty of this project is that we go into it in partnership with a high quality skilled care facility and have something concrete to show people right at the beginning."

Fleming reported that development work for the retirement community has been delayed in concert with the appeal for the CON decision. "Usually, a continuing care retirement facility's path to construction is 3-5 years from the time we say 'yes'. So as Richard (Sparks) already alluded to (assuming the CON approval is upheld), it will be probably three years before the post-acute care facility is opened, and then it will be maybe another year or two after that before the retirement housing component comes online."

OTHER ROTARY BUSINESS

In other Rotary business, Lisle Snyder reminded club members of the Boy Scouts Auction fundraiser on Friday, December 9th, 6:00 pm to 9:00 pm at the American Legion Hall in Blowing Rock.

Next week, The Rotary Club of Blowing Rock members will enjoy the club's annual Holiday Banquet, with cocktails (cash bar) beginning at 6:00 pm and dinner served at 6:30 pm.  A musical program will be led by David Rogers and Rhett Huffman.

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