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Monthly Archives: March 2018
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Hospitals acquired 5,000 physician practices in a single year
Since hospital-employed doctors tend to perform services in an outpatient setting, the trend increases costs for Medicare and patients.
Hospitals have been scooping up physician practices at a record clip. Research conducted by Avalere for the nonprofit Physician Advocacy Institute shows hospitals nabbed 5,000 physician practices and employed 14,000 physicians between July 2015 and July 2016, an 11 percent uptick.
Since 2012, that’s a 100 percent increase in hospital-owned physician practices, indicating those medical groups may be struggling to maintain independence in a healthcare landscape that is increasingly geared toward larger, integrated systems.
That scenario increases costs for both Medicare and patients themselves, since hospital-employed physicians tend to perform services in a hospital outpatient setting. The researchers revealed higher costs for services such as colonoscopy and cardiac imaging.
Increased physician employment by hospitals, in fact, caused Medicare costs for four healthcare services to rise $3.1 billion between 2012 and 2015, with beneficiaries facing $411 million more in financial responsibility for these services than they would have if they were performed in independent physicians’ offices, the research showed.
From mid-2012 to mid-2016, the percentage of hospital-employed physicians increased by more than 63 percent, with increases in nearly every six-month time period measured over these four years. All regions of the country saw an increase in hospital-owned practices at every measured time period, with a range of total increase from 83 percent to 205 percent.
This trend, the authors said, shows government- and insurer-mandated payment policies favor larger health systems, creating a competitive disadvantage for independent physicians, many of whom are already struggling financially due to administrative and regulatory burdens. Independent physicians often find it prohibitively difficult to cut costs while maintaining clinical quality, and failure to maintain quality can result in federal reimbursement penalties.
The acquisition trend held true in every region of the country, but was most prevalent in the Midwest; it was least prevalent in the South.
PAI is examining these trends as part of an ongoing effort to better understand how physician employment and health care consolidation affects the practice of medicine and impacts patients.
Republicans release new plan to lower health premiums, stabilize Obamacare markets
Sen. Lamar Alexander and other congressional Republicans are pressing forward with their latest plan to stabilize Obamacare health insurance markets and help provide coverage for patients with high medical costs.
But while previous versions have had bipartisan support, Democrats are refusing to back the latest bill.
Alexander and three key Republicans filed legislation Monday that they said could provide coverage for an additional 3.2 million individuals and lower premiums by as much as 40 percent for people who don’t get their health insurance through the government or their employer.
Beginning in 2019, the bill would reinstate for three years the government subsidies paid to insurers that provide health-care coverage to low-income clients. It also would provide $30 billion in funding – $10 billion a year over three years – to help states set up high-risk insurance pools to provide coverage for people with high medical costs.
The proposal also would revise the Obamacare waiver process so that states will have more flexibility to design and regulate insurance plans. In addition, it would require the Department of Health and Human Services to issue regulations allowing insurers to sell plans across state lines.
“Our recommendations are based upon Senate and House proposals developed in several bipartisan hearings and roundtable discussions,” the proposal’s Republican sponsors said in a statement.
The bill is sponsored in the Senate by Alexander, who chairs the Senate Health, Education, Labor and Pensions Committee, and Sen. Susan Collins, R-Maine. The sponsors in the House are Rep. Greg Walden, R-Ore., who chairs the House Energy and Commerce Committee, and Rep. Ryan Costello, R-Penn.
The lawmakers are hoping to include the bill in a massive spending package that Congress is expected to take up by the end of the week. President Donald Trump told Alexander and Collins in a conference call over the weekend that he wants money to lower health insurance premiums included in the spending package.
The bill marks the latest attempt by lawmakers to offer short-term fixes that could bring some stability to the volatile health insurance markets created under the Affordable Care Act and help offset the higher insurance premiums expected to result from the repeal of the Obamacare requirement that most Americans buy insurance.
Alexander and the Senate health committee’s top Democrat, Sen. Patty Murray of Washington, struck a deal last fall to extend the cost-sharing subsidies for two years. Trump has halted the payments, established under the Affordable Care Act, which are worth around $7 billion each year.
But Murray and other Democrats are refusing to sign onto the latest proposal because it includes language that they say would expand the restrictions on federal funding of abortions.
“Senator Murray is disappointed that Republicans are rallying behind a new partisan bill that includes a last-minute, harmful restriction on abortion coverage for private insurance companies instead of working with Democrats to wrap up what have been bipartisan efforts to reduce health care costs,” said Murray’s spokeswoman, Helen Hare.
Murray “hopes the unexpected release of this partisan legislation isn’t a signal from Republicans that they have once again ended ongoing negotiations aimed at lowering families’ health care costs in favor of partisan politics, and that they come back to the table to finally get this done,” Hare said.
Republicans, meanwhile, pointed to an analysis by health care experts at the management consulting firm Oliver Wyman that compared the new proposal to what people in the individual market will pay if Congress fails to act.
The analysis showed that the package would reduce premiums by up to 40 percent in the individual market for farmers, small business owners and others who don’t buy their insurance from the government or their employer.
A self-employed plumber making $60,000, for example, may be paying $20,000 for health insurance now, but over time that insurance bill could be cut up to $8,000, the lawmakers said.
Preliminary projections from the Congressional Budget Office indicated that the plan could be adopted without adding to the federal debt.
Turn-Around Efforts Start with a Look at Operations
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Even before a hospital shows signs of financial distress, the responsible action is to take a head-to-toe look at hospital operations to fully address financial and performance issues.
Hospital leaders may recognize the need for improvement but may not know where to turn. Since operations span the entire hospital, a head-to-toe operational assessment may be warranted to fully address financial and performance issues.
Following are high-level best practice tips that serve as cost-reduction and revenue enhancement strategies, and can help redirect an ailing situation toward a partial or full turnaround.
Evaluate labor and its costs.
Labor costs typically account for 50 to 60 percent of a hospital’s operating revenue, so a thorough review of productivity is critical. While a productivity tool can help to set productivity targets, it also integrates a level of accountability toward helping to control labor expenses. Productivity standards, manager involvement, and executive oversight will move you toward your goals of greater efficiency while reducing labor costs.
Analyze supply costs.
Second only to labor costs, supply spend represents significant expense for hospitals. Often, small hospitals don’t have the negotiating power, so look to the expertise of a group purchasing organization (GPO), or evaluate whether you have the right GPO with your interests in mind. The right GPO relationship can mean supply savings from 10 to 14 percent.
One key area to look at is your supply inventory. Have quantities been adjusted based on volumes, or types of procedures such as those performed in orthopedics or the cath lab? It may be possible to work with vendors to be charged for supplies when they’re needed (just-in-time delivery) versus overstocking for procedures that may be scheduled; this practice helps to free up dollars for other purposes. Also examine inventory “turns,” the number of times per year that supplies are being replaced. Based on our experience, a reasonable level of inventory turn is 9 to 12 times per year.
Examine revenue cycle management.
Because the revenue cycle is a complex function, points in the process may be overlooked or broken. Your hospital may also face common challenges such as keeping your chargemaster current and competitively priced, and keeping up with each payer’s unique rates and payment methodology.
Additional areas to evaluate and address: ·
- Have managed care contracts been updated or renegotiated? ·
- Compare charges to reimbursement. Although you may be charging for an item at a fixed cost, it doesn’t necessarily mean that you will be reimbursed at that level.
Move ahead with greater confidence.
Your overall action plans should identify who is responsible and accountable for each area of evaluation and opportunity. The discipline of frequent review helps to ensure that you are not drifting off the plan and that progress is occurring across all areas. A new level of accountability across team members is one indication that you have arrived. Be mindful that it does take time and diligence to impact turnaround efforts.
California Unions Secure 12% Raises from Kaiser Permanente, Dignity Health
Under the terms of separate, five-year contracts, about 34,000 workers in the state expect their wages to rise at least 12%, with lump sum payments added thereafter.
Two labor unions in California announced Monday that they have reached separate contract deals with major providers in the state.
Oakland-based Kaiser Permanente, which operates 21 medical centers and other facilities in central and northern California, agreed to a 12% across-the-board wage increasefor the 19,000 registered nurses and nurse practitioners it employs, according to the California Nurses Association (CNA).
San Francisco-based Dignity Health, which operates throughout California, agreed to a 13% wage increase over five years for the 15,000 union members it employs as healthcare workers, according to SEIU-United Healthcare Workers (UHW) West.
The five-year deal with Kaiser Permanente is pending ratification by CNA members, while SEIU-UHW members already ratified their five-year deal with Dignity Health.
“Our new contract maintains employer-paid family healthcare and provides rising wages, and that security and peace of mind enables us to focus on caring for our patients,” Dennis Anderson, a laboratory assistant who works for Dignity at Mercy Hospital in Folsom, California, said in a statement.
The deal details: Kaiser Permanente
The tentative agreement with Kaiser Permanente will ultimately benefit patients, according to CNA Executive Director Bonnie Castillo.
“Protecting the economic security of our future RNs is essential to defending the health of everyone who will be a patient today and tomorrow,” Castillo said in a statement. “This agreement gives us a strong foundation for health security for Kaiser nurses and patients for the next five years in a turbulent time of health care in our state and nation.”
Key provisions of the contract, according to CNA, include the following:
- Additional staffing: Kaiser will add 150 RN full-time-equivalents to assist in its migration to a new computer system, with 106 of those positions to be posted within 90 days of the contract’s ratification.
- One wage scale: Kaiser agreed to withdraw a proposed four-tier wage scale for RN/NP new hires—a proposal the union said would otherwise “promote workplace divisions between current nurses and new RN graduates.”
- Wage increases: The agreement calls for 12% wage increases for all RNs and NPs, with a 3% lump sum over five years.
The agreement also calls for 600 formerly non-union RN patient care coordinators to be included in the contract with the other RNs and NPs employed by Kaiser.
A spokesperson for Kaiser Permanente could not be immediately reached Tuesday for comment.
The deal details: Dignity Health
The ratified agreement between SEIU-UHW and Dignity Health—which lasts through April 30, 2023—includes the following key provisions, according to the union:
- Benefits: Union members employed by Dignity will keep their fully paid, employer-provided family healthcare.
- Wage increases: Workers secured 13% raises over five years, with a 1% bonus in the second year.
- Funding for training: Dignity also agreed to contribute another $500,000 annually to a joint labor-management training program designed to keep workers on top of the latest changes in healthcare, the union said.
This deal comes as Dignity Health prepares to merge with Catholic Health Initiatives, based in Chicago, which would form one of the largest nonprofits in the country.
A spokesperson for Dignity Health could not be immediately reached Tuesday for comment.
Cartoon – Nothing Wrong with Killing the Messenger
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HENRY KOTULA 