Amazon plans to acquire virtual and in-person primary care company One Medical, the online retailer said July 21.
In a cash deal valued at $3.9 billion, the aim is to combine One Medical’s technology and team with Amazon, it said in a news release. The goal of the acquisition, according to the two companies, is to offer more convenient and affordable healthcare in-person and virtually.
“The opportunity to transform healthcare and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention and willingness to invest in the long-term is so exciting,” said Amir Dan Rubin, CEO of One Medical, in a company news release. “There is an immense opportunity to make the healthcare experience more accessible, affordable, and even enjoyable, for patients, providers and payers. We look forward to innovating and expanding access to quality healthcare services together.”
Amazon will acquire One Medical for $18 per share.
Completion of the transaction is subject to customary closing conditions, including approval by One Medical’s shareholders and regulatory approval.
If the acquisition is approved, Mr. Rubin will remain CEO of One Medical.
Hackensack Meridian Riverview Medical Center in Red Bank, N.J., part of Edison, N.J.-based Hackensack Meridian Health, evacuated patients July 20 after two air-conditioning units went offline, which affected the emergency department and intensive care unit.
The hospital confirmed the issue in a statement shared with Becker’s and said team members immediately acted to ensure affected patients were safely moved into unaffected areas of the facility. Some patients were also transferred to neighboring Hackensack Meridian Health facilities.
“Fortunately, our teams were able to restore air conditioning capabilities to our emergency department and ICU,” Riverview Medical said.
Although some areas of the facility remained offline July 20, the hospital estimated that service will be fully restored by the afternoon of July 21.
The air-conditioning issue at Riverview Medical comes as states across the country are facing extreme heat. As of July 20, heat warnings and advisories were issued affecting 28 states, according to the National Weather Service.
Thirty-six people across the U.S. were charged for their alleged roles in schemes involving $1.2 billion in fraudulent telemedicine, durable medical equipment, cardiovascular and cancer genetic testing, the Justice Department announced July 20.
The alleged schemes involved lab owners paying medical professionals illegal kickbacks and bribes in exchange for referring patients. The medical professionals were allegedly working with fraudulent telemedicine and digital medical technology companies.
“As alleged in court documents, medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests, as well as durable medical equipment,” the Justice Department said.
Prosecutors allege that in many cases the test results or durable medical equipment were not provided to the patients.
Here are 10 health systems with strong operational metrics and solid financial positions, according to reports from Fitch Ratings and Moody’s Investors Service.
1. AnMed Health has an “AA-” rating and stable outlook with Fitch. The Anderson, S.C.-based system has a leading market share in most service lines, strong operating performance and very solid EBITDA margins, Fitch said.
2. Banner Health has an “AA-” rating and stable outlook with Fitch. The Phoenix-based health system’s core hospital delivery system and growth of its insurance division combine to make it a successful highly integrated delivery system, Fitch said. The credit rating agency said it expects Banner to maintain operating EBITDA margins of about 8 percent on an annual basis, reflecting the growing revenues from the system’s insurance division and large employed physician base.
3. Franciscan Alliance has an “AA” rating and stable outlook with Fitch. The Mishawaka, Ind.-based health system has a very strong cash position and maintains leading market shares in seven of its nine defined primary service areas, Fitch said. The health system benefits from a good payer mix, the credit rating agency said.
4. Gundersen Health System has an “AA-” rating and stable outlook with Fitch. The La Crosse, Wis.-based health system has strong balance sheet metrics and a leading market position and expanding operating platform in its service area, Fitch said. The credit rating agency expects the health system to return to strong operating performance as it emerges from disruption related to the COVID-19 pandemic.
5. Hackensack Meridian Health has an “AA-” rating and stable outlook with Fitch. The Edison, N.J.-based health system has shown consistent year-over-year increases in market share and has a solid liquidity position, Fitch said.
6. Falls Church, Va.-based Inova Health System has an “Aa2” rating and stable outlook with Moody’s. The health system has a consistently strong operating cash flow margin and ample balance sheet resources, Moody’s said. Inova’s financial excellence will remain undergirded by its favorable regulatory and economic environment, the credit rating agency said.
7. Salt Lake City-based Intermountain Healthcare has an “Aa1” rating and stable outlook with Moody’s. The health system has exceptional credit quality, which will continue to benefit from its leading market position in Utah, Moody’s said. The credit rating agency said the health system’s merger with Broomfield, Colo.-based SCL Health will give Intermountain greater geographic reach.
8. Fort Wayne, Ind.-based Parkview Health has an “Aa3” rating and stable outlook with Moody’s. The health system has a leading market position with expansive tertiary and quaternary clinical services in northeastern Indiana and northwestern Ohio, Moody’s said. The credit rating agency said the stable outlook reflects management’s ability to generate strong operating performance during the pandement and with less favorable reimbursement rates.
9. UnityPoint Health has an “AA-” rating and stable outlook with Fitch. The Des Moines, Iowa-based health system has strong leverage metrics and cash position, Fitch said. The credit rating agency expects the health system’s balance sheet and debt service coverage metrics to remain robust.
10. Yale New Haven (Conn.) Health has an “AA-” rating and stable outlook with Fitch. The health system’s turnaround efforts, brand recognition and market presence will help it return to strong operating
Healthcare costs are becoming an increasing source of stress for older Americans, leading to some paring back on treatment, medicines or other spending on food and utilities — or skipping them altogether — to cover medical costs, according to new research conducted by Gallup in partnership with West Health.
The survey of U.S. adults released Wednesday found that almost half of adults aged 50 to 64 and more than a third of adults 65 and older are concerned they won’t be able to pay for needed healthcare services in the next year. That’s nearly 50 million older Americans.
About 80 million adults above age 50 see healthcare costs as a financial burden. Becoming eligible for Medicare seems to assuage those worries slightly, however: 24% of adults aged 50 to 64, who are not yet eligible for the federal health insurance, said health costs were a major burden. That percentage fell to 15% for those aged 65 and above.
Dive Insight:
The West Health-Gallup survey, conducted in September and October of 2021, is the latest vignette of how exorbitant healthcare costs in the U.S. are increasingly impacting the financial stability of Americans, especially those of retirement age who are more likely to have expensive medical needs.
Out-of-pocket healthcare expenses for adults aged 65 and older increased 41% from 2009 to 2019, according to HHS data. That population spends on average almost double their total expenditures on healthcare costs compared with the general population, despite Medicare coverage.
That cost problem is only likely to worsen amid surging inflation raising the cost of groceries, gas and other needed items. Additionally, U.S. demographics shifts are an added stressor. By 2030, the percentage of Americans 65 years and older will outweigh those under the age of 18, a first in the country’s history, according to Census Bureau projections.
“As sizable numbers of Americans 65 and older face tangible tradeoffs to pay for healthcare, many more Americans in the next decade will incur health and financial consequences because of high costs,” researchers wrote in the report.
The West Health-Gallup poll found about one in four adults aged 65 and above cut back on food, utilities, clothing or medication to cover healthcare costs. That’s compared to three in 10 for adults aged 50 to 64.
Older women and Black adults were more likely to forgo basic necessities to pay for healthcare than other demographics.
More than 20 million Americans aged 50 years and above said there was a time within the last three months when they or a family member was sick, but didn’t seek treatment due to cost.
More than 15 million Americans said they or a family member skipped a pill or dose of prescribed medicine in order to save money.
Researchers urged policymakers to act to improve efficiency and reduce the costs of medical care and prescription drugs in the U.S. Congress has yet to take meaningful action to lower medical costs, despite rising support for government intervention and high-profile proposals from the Biden administration.
Healthcare mergers reached a record-high $19.2 billion in total transacted revenue in the second quarter of this year, led by the planned tie-up of Advocate Aurora Health and Atrium Health and several other large deals, according to the latest quarterly M&A report from Kaufman Hall.
Still, the number of healthcare transactions announced during the second quarter remained below pre-pandemic levels at just 13 deals, one more than the record-low total seen in the first quarter of this year. Activity so far in 2022 underscores what could be a longer-term shift toward fewer but larger hospital deals, the industry consultants said.
Kaufman Hall also predicted continued interest in partnerships between health systems and skilled nursing facilities that can offer new services or more specialized care. Such facilities can support patients’ earlier discharge from inpatient care to a lower-cost setting and can help reduce hospital re-admissions, the report said.
Dive Insight:
Dealmaking in the first half of the year continues a sluggish pace established in 2021, when just 49 health system mergers were announced all year. Last year’s tally marked the lowest annual deal total in a decade, according to Kaufman Hall.
But deals are getting larger. The second quarter’s $19.2 billion in transacted revenue is more than double the total of $8.5 billion seen in the second quarter of 2021, when a similar number of transactions was announced.
Megamergers, in which the seller’s annual revenue tops $1 billion, remain an ongoing trend. Kaufman Hall tracked two such deals in the second quarter: the Advocate-Atrium transaction and Trinity Health’s planned acquisition of Iowa-based MercyOne.
The second quarter saw two additional transactions with smaller-party revenue above $500 million: Bellin Health System’s merger with Gundersen Health System and George Washington University Hospital’s combination with Universal Health Services.
All told, the average size of the smaller party in a deal reached a record $1.5 billion in the second quarter. This was more than double 2021’s record average size of $619 million, Kaufman Hall found.
A couple of recent transactions illustrate the trend toward partnerships with skilled nursing facilities, the report noted. Hackensack Meridian Health announced in late March that the majority of its long-term care facilities would be acquired by Complete Care, and in April, Virtua Health announced the sale of its two skilled nursing facilities to Tryko Partners. Kaufman Hall advised Virtua Health in the transaction.
Exterior of the Center for Disease Control headquarters is seen on October 13, 2014, in Atlanta, Georgia.
Dive Brief:
Hospital-acquired, antibiotic-resistant infections grew 15% from 2019 to 2020, according to data out Tuesday from the Centers for Disease Control and Prevention.
Nearly 30,000 people died from infections associated with healthcare settings in the first year of the pandemic and about 40% were infected during a hospital stay, according to the CDC.
Personal protective equipment and staffing shortages; longer patient stays and use of devices like catheters and ventilators; and significant surges in antibiotic use contributed to the rise in infections, the CDC said.
Dive Insight:
The new data erases years of progress — from 2012 to 2017, hospital-acquired, antimicrobial-resistant infections fell 27%, according to data from the CDC.
Hospitals struggled to follow infection prevention and control guidance during the first year of the pandemic as they faced resource strains and treated sicker patients who needed longer stays. At the same time, hospitals boosted their use of antibiotics, reducing their effectiveness.
In many cases, patients who exhibited pneumonia-like symptoms at hospitals were given antibiotics as a first option even though they were infected with COVID-19. Antibiotics are not effective in treating COVID-19.
Nearly 80% of patients hospitalized with COVID-19 from March to October of 2020 received an antibiotic, according to the CDC.
Antimicrobrial resistance testing was also down in 2020. The CDC’s AR lab network reported receiving 23% fewer testing specimens during 2020 compared to 2019. Due to the pandemic, some CDC progams that focused on antimicrobrial resistance were also repurposed to offer surge capacity COVID-19 testing, the report said.
Without infrastructure and preparedness, it warned, critical data could be “delayed again when the next threat emerges.”
“This setback can and must be temporary,” Michael Craig, director of the CDC’s antibiotic resistance coordination and strategy unit, said in a report analyzing the data.
“The best way to avert a pandemic caused by an antimicrobial-resistant pathogen is to identify gaps and invest in prevention to keep our nation safe,” he said.
Nonprofit hospitals are reporting thinner margins this year, stretched by rising labor, supply and capital costs, and will be pressed to make big changes to their business models or risk negative rating actions, Fitch Ratings said in a report out Tuesday.
Warning that it could take years for provider margins to recover to pre-pandemic levels, Fitch outlined a series of steps necessary to manage the inflationary pressures. Those moves include steeper rate increases in the short term and “relentless, ongoing cost-cutting and productivity improvements” over the medium term, the ratings agency said.
Further out on the horizon, “improvement in operating margins from reduced levels will require hospitals to make transformational changes to the business model,” Fitch cautioned.
Dive Insight:
It has been a rough year so far for U.S. hospitals, which are navigating labor shortages, rising operating costs and a rebound in healthcare utilization that has followed the suppressed demand of the early pandemic.
The strain on operations has resulted in five straight months of negative margins for health systems, according to Kaufman Hall’s latest hospital performance report.
Fitch said the majority of the hospitals it follows have strong balance sheets that will provide a cushion for a period of time. But with cost inflation at levels not seen since the late 1970s and early 1980s, and the potential for additional coronavirus surges this fall and winter, more substantial changes to hospitals’ business models could be necessary to avoid negative rating actions, the agency said.
Providers will look to secure much higher rate increases from commercial payers. However, insurers are under similar pressures as hospitals and will push back, using leverage gained through the sector’s consolidation, the report said.
As a result, commercial insurers’ rate increases are likely to exceed those of recent years, but remain below the rate of inflation in the short term, Fitch said. Further, federal budget deficits make Medicare or Medicaid rate adjustments to offset inflation unlikely.
An early look at state regulatory filings this summer suggests insurers who offer plans on the Affordable Care Act exchanges will seek substantial premium hikes in 2023, according to an analysis from the Kaiser Family Foundation. The median rate increase requested by 72 ACA insurers was 10% in the KFF study.
Inflation is pushing more providers to consider mergers and acquisitions to create economies of scale, Fitch said. But regulators are scrutinizing deals more strenuously due to concerns that consolidation will push prices even higher. With increased capital costs, rising interest rates and ongoing supply chain disruptions, hospitals’ plans for expansion or renovations will cost more or may be postponed, the report said.
Providence said Tuesday it is restructuring and reducing executive roles amid persistent operating challenges spurred by the COVID-19 pandemic.
Providence said it will reduce its regional executive teams to three divisions from seven. The Washington-based nonprofit health system also has plans to consolidate three clinical lines of business— physician enterprise, ambulatory care network and clinical institutes —down to one executive leadership team.
“We began this journey before the pandemic, but it has become even more imperative today as health systems across the country face a new reality,” Providence President and CEO Rod Hochman said in a statement.
The new operating model is aimed at protecting direct patient care staff and other essential roles, Melissa Tizon, vice president of communication, told Healthcare Dive.
It’s unclear how many roles will be eliminated as part of the restructuring. Providence did not provide a specific number of job reductions.
Erik Wexler, former president of strategy and operations in Providence’s southern regions, will step into a new role as chief operating officer and will oversee the three new divisions.
Kevin Manemann will serve as division chief executive of the South region, which includes operations in Southern and Northern California.
Joel Gilbertson, division chief executive for the central region, will oversee operations in Eastern Washington, Montana, Oregon, Texas and New Mexico.
Guy Hudson will lead the North Division, which includes operations in Western Washington and Alaska. Hudson will keep his role as president and CEO of Swedish Health Services in Seattle.
David Kim, an executive vice president, will lead the three clinical business lines that were consolidated under one leadership team.
The shakeup comes after Providence reported in March that its operating loss doubled in 2021, reaching $714 million as operating expenses climbed 8% for the year.
The system said it treated more patients who were sicker and required a higher level of care than in 2020 and, at the same time, struggled with labor shortages.
More than 180 members of the House of Representatives are urging the Biden administration to crack down on drugmakers restricting drug discounts in the 340B program.
Enforcement actions should include fines, the letter from a bipartisan group of House members to HHS Secretary Xavier Becerra and other administration officials said.
Currently, 18 drug manufacturers are limiting 340B discounts dispensed through pharmacies that contract with 340B providers, according to the letter.
Dive Insight:
The 340B program requires drugmakers to charge hospitals only the statutory ceiling prices for eligible outpatient drugs. The goal of the three-decade-old program is to have savings flow into care for low-income patients and underserved communities. But critics — notably, drugmakers and some lawmakers — argue the program doesn’t have enough oversight, as hospitals don’t need to account for what they do with any savings.
Drug manufacturers began imposing restrictions on 340B discounts as early as summer 2020, sparking legal challenges from regulators. The HHS sent nine warning letters to pharmaceutical companies, referring seven of them to the Office of the Inspector General for investigation and potential enforcement.
However, eight months later, the OIG has yet to take enforcement action, the new letter from 181 House members reads.
The letter asks the OIG to finish its ongoing review of seven drug manufacturers for potential noncompliance with federal law on 340B discounts “as soon as possible.”
The law allows the OIG to impose fines up to $6,000 per drug claim on companies that intentionally overcharge 340B providers, according to the Health Resources and Services Administration, which oversees the program.
Regulators should begin imposing civil monetary penalties against pharmaceutical companies found in violation, the congresspeople said.
The letter also argues that the Biden administration should pursue enforcement action against 11 drug companies restricting 340B pricing, which either haven’t received notice from the HHS that they’re in violation of law yet, or have received a notice but haven’t been referred to OIG for enforcement.
“Every day that drug manufacturers violate their obligation to provide these discounted drugs, vulnerable communities, federal grantees, and safety net health care providers are deprived of resources Congress intended to provide,” the letter reads.
A number of hospital associations came out in support of the letter, including the National Rural Health Association, the American Hospital Association, America’s Essential Hospitals and the National Association of Community Health Centers.
340B Health, which lobbies on behalf of hospitals in the 340B program, thanked the House members for the letter in a statement Monday, and reiterated calls for fines.
“HHS should impose steep financial penalties on all the companies that are ignoring their legal commitments to the health care safety net,” said Maureen Testoni, CEO of 340B Health, in a statement.
A survey of more than 500 hospitals by 340B Health released in May estimated that the annual financial impact from drug company restrictions has doubled since the end of 2021, costing hospitals millions of dollars per year.
Drugmakers that have imposed or announced restrictions on 340B discounts for drugs dispensed at community and specialty pharmacies include AbbVie, AstraZeneca, Johnson & Johnson, Merck and Pfizer.
HENRY KOTULA 