Author Archives: henrykotula

Amazon to acquire primary care company One Medical for $3.5B

Posted on by • Posted in Amazon, Amazon Care, Disruption, Innovation, Market Consolidation, Mergers & Acquisitions, Primary Care, Primary Care Delivery Model, Primary Care Strategy • Leave a comment

https://mailchi.mp/efa24453feeb/the-weekly-gist-july-22-2022?e=d1e747d2d8

While Amazon has been amassing a range of healthcare assets in recent years, including an online pharmacy, virtual and in-home care capabilities, and even diagnostics, this marks the e-commerce giant’s first significant push into bricks-and-mortar healthcare delivery.

One Medical, which went public in 2020, operates 182 medical offices in 25 markets, and acquired Medicare-focused primary care provider Iora Health last year. It offers an access-forward, concierge-lite model to employer clients and individual consumers, and more recently has pursued a partnership strategy with anchor health systems in the markets where it operates.

The Gist: Amazon’s pricey purchase of One Medical, for which it will pay a 77 percent premium over market value, is sure to set the healthcare punditocracy afire—even more than its earlier, ill-fated arrangement with JPMorgan Chase and Berkshire Hathaway.

Clearly, Amazon is shifting from a build-and-tinker to a buy-and-scale approach to its Amazon Care business, which has been slow off the mark since the company first started selling its own employee clinic services to other employers. With One Medical, Amazon gets thousands more employer relationships, a much larger physical footprint, and a buzzy brand in primary care.

But the deal is less “disruptive” than it might first appear. There is still a missing piece—namely, a risk model that lets Amazon profit from managing patients in the primary care setting. One Medical’s model is expensive—it has yet to turn a profit—and despite the acquisition of Iora’s population health platform, it has doubled down on creating linkages with high-cost health systems rather than truly investing in care management. 

Primary care on its own is not an attractive growth business, even in a hybrid virtual/in-person model, even at Amazon’s scale. To truly disrupt healthcare, Amazon will need to wade into the risk business, either by partnering with a health plan or creating its own risk arrangements with employer clients.

That’s going to be hard, for all the same reasons that Haven was hard—entrenched payer relationships, slow-moving benefits managers, and a murky and conflicted broker channel. We’d love to be proven wrong, but this deal feels less like true innovation and more like a frothy story for slide decks and conference panels.

HCA, Tenet profits sink: 10 things to know

Posted on by • Posted in For-Profit, Health System, Hospital, Hospital Industry, Net Income, Nonoperating Income, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Model, Operating Performance, Operating Revenue • Leave a comment
https://www.beckershospitalreview.com/finance/hca-tenet-profits-sink-10-things-to-know.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

HCA Healthcare and Tenet Healthcare, two of the largest for-profit hospital operators in the U.S., reported lower net income in the second quarter of this year than in the same period of 2021. 

HCA Healthcare

1. Nashville, Tenn.-based HCA Healthcare, a 182-hospital system, reported revenues of $14.82 billion in the second quarter of this year, up from $14.44 billion in the same period last year. 

2. HCA’s net income totaled $1.16 billion in the second quarter of 2022, down from $1.45 billion in the same period a year ago. The second quarter of this year included $32 million in losses on the sales of facilities and and losses on retirement of debt of $78 million. 

3. HCA said same-facility admissions declined 1.2 percent year over year in the second quarter of this year. Emergency room visits were up 7.3 percent year over year. 

4. “Many aspects of our business were positive considering the challenges we faced with the labor market and other inflationary pressures on costs,” Sam Hazen, CEO of HCA, said in a July 22 earnings release. “Our teams executed well as they have in the past through other difficult environments. Again, I want to thank them for their dedication and excellent work.”

5. For the six months ended June 30, HCA reported net income of $2.43 billion on revenues of $29.77 billion. In the same period a year earlier, the company posted net income of $2.87 billion on revenues of $28.41 billion. 

Tenet Healthcare

1. Dallas-based Tenet Healthcare reported revenues of $4.64 billion in the second quarter of this year, down from $4.95 billion in the same period a year earlier. The decrease was primarily attributed to the sale of the company’s Miami-area hospitals in the third quarter of 2021 and the impact of a cybersecurity incident. 

2. The 60-hospital system ended the second quarter of this year with net income of $38 million, down from $119 million in the same quarter last year. 

3. Same-hospital admissions adjusted for outpatient activity were down 5.3 percent year over year in the second quarter of this year. Tenet said a cybersecurity incident in April that temporarily disrupted some acute care operations contributed to the decline. 

4. “We demonstrated resilience in the face of a disruptive cyber attack and discipline through challenging market conditions,” Saum Sutaria, MD, CEO of Tenet, said in a July 21 earnings release. “The ongoing diversification of Tenet driven by our capital efficient ambulatory expansion is a key differentiator that presents compelling opportunities for growth in earnings and free cash flows.”

5. Looking at the six months ended June 30, Tenet reported net income of $178 million on revenues of $9.38 billion. In the same period of 2021, the company reported net income of $216 million on revenues of $9.74 billion. 

Amazon to acquire One Medical in $3.9B deal

Posted on by • Posted in Competition, Disruption, Disruptive Technology, Innovation, Mergers & Acquisitions, Primary Care, Primary Care Delivery Model, Retail Clinic, Retail Healthcare, Vertical Integration, Vertical Merger, Virtual Care Strategy, Virtual Healthcare • Leave a comment
https://www.beckershospitalreview.com/healthcare-information-technology/amazon-to-acquire-one-medical-in-3-9b-deal.html?utm_medium=email&utm_content=newsletter

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. 

New Jersey hospital evacuates ED after A/C breaks

Posted on by • Posted in Emergency Back Up, Emergency Care, Equipment Failure, Health System, Hospital, Hospital Evacuation • Leave a comment
https://www.beckershospitalreview.com/care-coordination/new-jersey-hospital-evacuates-ed-after-a-c-breaks.html?utm_medium=email&utm_content=newsletter

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. 

Feds charge 36 in $1.2B healthcare fraud schemes

Posted on by • Posted in Bribes, Cancer Genetic Testing, Cardiovascular Testing, Dept of Justice (DOJ), Durable Medical Equipment, Fraud and Abuse, Kickbacks, Telemedicine, Unnecessary Care • Leave a comment
https://www.beckershospitalreview.com/legal-regulatory-issues/feds-charge-36-in-1-2b-healthcare-fraud-schemes.html?utm_medium=email&utm_content=newsletter

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.

10 health systems with strong finances

Posted on by • Posted in Credit Quality, Credit Ratings, Financial Performance, Financial Ratios, Financial Strength, Financial Viability, Health System, Hospital, Hospital Industry, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Model, Operating Performance, Operating Revenue • Leave a comment
https://www.beckershospitalreview.com/finance/10-health-systems-with-strong-finances-0720.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=1727F7626990D7P

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

Finances of older Americans being dinged by high health costs, survey finds

Posted on by • Posted in Deferred Healthcare, Health Insurance Coverage Adequacy, Health Policy, Hidden Fees, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Out of Pocket Expenses • Leave a comment

https://www.healthcaredive.com/news/finances-older-americans-being-dinged-high-health-costs-survey-finds/625545/

Dive Brief:

  • 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.

The resulting stress on the Medicare program could impact benefits and cost for beneficiaries.

“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.

Megadeals lift healthcare M&A revenues to record in Q2

Posted on by • Posted in Health System, Hospital, Hospital Industry, Market Consolidation, Market Trends, Nursing Home, Specialty Care • Leave a comment

https://www.healthcaredive.com/news/Kaufman-Hall-second-quarter-healthcare-report-megadeal/627260/

Dive Brief:

  • 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.

Antibiotic-resistant infections rose in hospitals during pandemic, CDC data shows

Posted on by • Posted in Antibiotic-Resistant Infections, Antibiotics, Antimicrobrial Resistance Testing, Centers for Disease Control & Prevention (CDC), Health System, Hospital, Hospital Acquired Infections, Hospital Industry, Infection Control, Pandemic • Leave a comment

https://www.healthcaredive.com/news/covid-pandemic-rise-hospital-infections-antibiotic-resistant-cdc/627109/

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.

Hospitals need ‘transformational changes’ to stem margin erosion

Posted on by • Posted in Change Agent, Change Management, Changing Responsibilities, Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Labor Shortages, Labor Spend Management, Market Consolidation, Market Power, Market Trends, Market Uncertainty, Mergers & Acquisitions, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Model, Restructure, Strategic Change, Strategic Leadership, Strategy, Transformational Change • Leave a comment

https://www.healthcaredive.com/news/Fitch-ratings-nonprofit-hospital-changes/627662/

Dive Brief:

  • 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.