Cartoon – Modern Healthcare
Monthly Archives: June 2017
Healthcare’s Consolidation Landscape
Market and regulatory factors have unleashed a wave of merger, acquisition, and partnership activity that is changing the delivery of healthcare services.
Consolidation in the healthcare-provider sector has accelerated in recent years, reshaping the relationships between health systems, hospitals, and independent physicians across the country.
In the Buckeye State, healthcare consolidation activity has been a transformational force at OhioHealth, says Michael Louge, CPA, who serves as executive vice president and chief operating officer at the 11-hospital health system based in Columbus.
“When you look at OhioHealth, and you go back two or three decades, it was a much different organization. The reason it is different today is because of philosophy and the way we approach regional partnerships—how we have worked with physicians and hospitals in the region. Our whole organization’s evolution has been through successful partnerships and consolidations with regional players.”
Over the past year, statistics have been gathered on the pace of healthcare-provider consolidation.
In a recent HealthLeaders Media survey, 159 healthcare executives—mainly from health systems, hospitals, and physician practices—were asked about their merger, acquisition, and partnership (MAP) deals.
Eighty-seven percent of the respondents said their organizations were expected to both explore potential deals and complete deals that were underway in the next 12–18 months. Only 13% of the respondents said their organizations were not planning MAP deals in that same time period.
From the passage of the Patient Protection and Affordable Care Act (PPACA) in 2010 through the end of last year, merger and acquisition transactions involving acute-care hospitals increased 55% from 66 announced deals to 102, according to Skokie, Illinois–based Kaufman Hall. Last year, the operating revenue of acquired organizations was more than $22 billion, according to the consultancy.
Kit Kamholz, managing director at Kaufman Hall, says two sets of drivers are propelling consolidation activity among health systems and hospitals.
“There are transactions that are driven by financial rationale. This is driven by a level of distress at the smaller organization, either from a historical-financial standpoint, an access-to-capital standpoint, or they are experiencing some significant clinical deficiencies. … The second bucket is in the category of strategic rationale. These are organizations that tend to be relatively strong financially, that are considered to be strong community-based providers in their marketplaces; but they are looking at the landscape of the evolving healthcare environment and saying, ‘Do we have the skills and capabilities to be successful in this new era of value-based care?’ ”
Healthcare consolidation activity is impacting the country’s physician practices and physician-employment trends.
EHR vendor, executives to pay $155M for allegedly misrepresenting software’s capabilities
Westborough, Mass.-based eClinicalWorks, an EHR vendor, and some of its executives and employees have agreed to pay $155 million to resolve allegations it violated the False Claims Act, according to the Department of Justice.
HHS offers incentive payments to healthcare provider organizations that demonstrate meaningful use of certified EHR technology. Companies that develop and market EHR software must attest that their software meets certain criteria adopted by HHS and also pass testing by an HHS-approved entity.
The government alleged eClinicalWorks falsely obtained certification for its EHR software by withholding information from its certifying entity. For example, the company allegedly concealed that its software wasn’t able to meet certain criteria for standardized drug codes. Software must be able to retrieve any drug code from a complete database for certification. Instead of disclosing that its software didn’t meet this requirement, eClinicalWorks allegedly hardcoded only the 16 drug codes required for testing directly into its software.
Due to eClinicalWorks’ alleged misrepresentations, healthcare organizations using the company’s software submitted false claims for federal incentive payments, according to the DOJ.
The government also alleged the company paid kickbacks to certain customers in exchange for promoting its product.
Under the settlement agreement, eClinicalWorks and three of its founders — CEO Girish Navani, CMO Rajesh Dharampuriya, MD, and COO Mahesh Navani — will pay $154.92 million to the federal government. A software developer will pay an additional $50,000 and two project managers will each pay $15,000, according to the DOJ.
In addition to the monetary settlement, eClinicalWorks entered into a corporate integrity agreement with HHS’ Office of Inspector General that covers the company’s EHR software.
The allegations against eClinicalWorks were originally brought under the qui tam, or whistle-blower, provisions of the False Claims Act.
CBO scores House-approved AHCA: 5 things to know
http://www.beckershospitalreview.com/finance/cbo-scores-house-approved-ahca-5-things-to-know.html
The Congressional Budget Office released its score on the American Health Care Act Wednesday, finding it would reduce the federal deficit significantly but increase the projected number of uninsured Americans by about 82 percent over the next 10 years.
The CBO previously scored the AHCA in March, but that was before changes were made to the bill that ultimately passed the House. The latest projections include the following modifications to the bill:
- A delay in repealing the increase to the payroll tax
- State waivers for essential health benefits and community rating rules
- $8 billion in funding to offset increased premiums for people with preexisting conditions in waiver states
- $15 billion in funding for the Federal Invisible Risk Sharing Program
- $15 billion in state funding for maternity care and mental health services
Here are five things to know about the CBO’s findings.
Leaders can’t write a memo to change culture
When Chris Van Gorder joined San Diego-based Scripps Health as COO in 1999, the health system had 55 days cash on hand, and there was no trust between the administration and clinical staff.
His first day on the job, Mr. Van Gorder attended a meeting at Scripps Memorial Hospital La Jolla (Calif.) with another Scripps executive to resolve a miscommunication surrounding contract renegotiations. Rising tensions between physicians and administrators boiled over at the meeting, which cumulated with the Scripps executive quitting his job on the spot so he could sue the hospital’s chief of staff for slander.
“The physician sitting next to me tapped my shoulder and said, ‘Welcome to Scripps, you’re on,'” says Mr. Van Gorder. “That was the end of my first day.”
Flash forward 18 years and Mr. Van Gorder — promoted to CEO six months after joining Scripps — now runs a $3.1 billion health system that’s been named to Fortune’s top 100 employers in the country 10 years in a row.
Mr. Van Gorder discussed Scripps’ transformation — and the leadership strategies he used to drive these improvements — at the Becker’s Hospital Review 8th Annual Meeting in Chicago.
Earn employees’ trust
Shortly after he took over the CEO role, Mr. Van Gorder met with every board member one-on-one.
“Everyone wanted me to fix everything all at once,” he says. “But I knew I needed to prioritize and first find a way to work with our physicians.”
Mr. Van Gorder says it’s crucial for leaders to ensure proper communication with employees to establish trust and set the groundwork for a culture change. To mend relationships with Scripps’ physicians, he called a meeting with the health system’s elected physician leaders entire to acknowledge the lack of transparency between administrators and staff.
“They had all these demands and expectations they wanted us to meet,” he says. “But they didn’t know we were on the verge of bankruptcy.”
Mr. Van Gorder developed a physician advisory body called the “Physician Leadership Cabinet” to serve as a liaison between the clinical and administrative teams and weigh in on decision-making. Giving physicians more responsibility to manage the health system’s limited resources helped them understand the institution’s financial constraints, thus breaking down the communication wall between them and leadership.
“It’s really easy to say, ‘I want, I want, I want’ when you’re on the outside,” says Mr. Van Gorder. “But when you’re on the inside, you realize how difficult it is to manage scarce resources.”
The Physician Leadership Cabinet has proven successful. Health system leadership has accepted every recommendation from the board in the last 18 years, and every vote except one has been unanimous, according to Mr. Van Gorder.
Drive culture change from the middle up
Once leaders earn staff members’ trust, they should shift their attention to changing the organization’s culture, says Mr. Van Gorder. He believes managers have the most influence on culture, as they manage a majority of the organization’s employees.
“Leaders can’t write a memo to change culture,” he says. “But our frontline employees and middle management can influence culture.”
To develop an umbrella culture for the organization from the middle, Mr. Van Gorder launched the Scripps Leadership Academy — a year-long behind-the-scenes program for managers at the health system. Every program starts with a two-hour Q&A session where Scripps executives talk about how they got to where they are today.
“I was a cop. I worked at Arby’s,” says Mr. Van Gorder. “Most people look at executives and just see the suits. But as soon as you remove the veil of the title away from the individual, they become a human being.”
The leadership academy strives to show managers how the organization operates and how decisions are made. Each graduating class also works on a change project to improve a specific aspect of the organization. After the academy ends, Mr. Van Gorder challenges the managers — his “agents of culture change” — to take what they learned and demand more from the people they work with.
Maintain regular communication
Leaders must maintain a positive relationship with staff members to sustain the improvements in trust and culture, says Mr. Van Gorder.
He sends out a daily newsletter to Scripps managers and employees who request it, highlighting major news in the healthcare industry, along with organization updates and photos.
“Even if they just read the titles, they’ll start to understand the external factors impacting our organization,” Mr. Van Gorder says. “The more they understand this, the more they’ll accept the changes we’re trying to make in our organization. They’ll see it’s not something forced on them from management — it stems from the changes in healthcare.”
As email is the one way he can connect with Scripps’ 15,000 employees, Mr. Van Gorder freely invites employees and physicians to reach out to him directly if they are not getting the support they need to do their jobs, or even if they want to say hello. He responds the same day to every email he receives — a feat he sees as a basic level of respect.
“One of our values is respect,” he says. “If I’m not responsive to them, I’m not being very respectful.”
BCBS of Georgia to stop covering ED visits it deems unnecessary
Starting next month, Anthem Blue Cross Blue Shield of Georgia will no longer cover emergency department services it determines are unnecessary for members with individual plans.
The insurer said the policy aims to steer patients with nonemergent symptoms to see a primary care physician, urgent care provider or use its LiveHealth telehealth app to limit costly ED visits. If a BCBS of Georgia policyholder receives care for nonemergent symptoms, a medical director will use the prudent layperson standard to deem whether the service is necessary.
Jeff Fusile, president of BCBS of Georgia, told WABE, “The cost of care’s been going up so much faster than people’s earnings. We have got to find a better way to do some of this stuff, taking some of that unnecessary spending out of the system.”
The policy does not include referrals from a physician to the ED for nonemergent services, nonemergent services provided to children under age 14, instances when an urgent care clinic is more than 15 miles away and when care is administered on Sundays and major holidays.
“We’re not trying to steer people away from the emergency room if they have a serious condition,” Debbie Diamond, director of publications for BCBS of Georgia, told Becker’s Hospital Review. “If a member is having chest pain that they think is a heart attack, they should still go to the emergency department.”
Ms. Diamond said similar policies have been enacted at Anthem-affiliated plans in Missouri, Kentucky and Virginia. Missouri said it would reinforce the program June 1 and Kentucky enacted the policy in 2015.
Donald Palmisano, president of the Medical Association of Georgia, told WABE the policy disproportionately affects the elderly, rural residents and children over the age of 14. He added physicians are concerned the policy places “the patient, who doesn’t have the clinical background, to determine whether their condition is of an emergency nature.”
HENRY KOTULA 