Two lawsuits against hospital mergers announced the same day may look like the FTC under Chair Lina Khan (pictured) is flexing its muscle to restrain deals that raise prices. But those complaints are “more smoke than fire,” Ken Field, a former FTC lawyer and current co-chair of Jones Day’s global health care practice, told STAT’s Tara Bannow.
The real target shouldn’t be the mergers in Utah and New Jersey between hospitals, antitrust experts said, but something called vertical mergers, in which hospitals buy up physician groups. After such deals, doctors spent $73 million more on 10 common imaging and lab tests over four years, a 2021 Health Affairs study found.
An FTC spokesperson didn’t comment on the agency’s strategy with respect to hospital consolidation.
The Centers for Medicare and Medicaid Services (CMS) fined two of Atlanta-based Northside Hospital’s five facilities a total of $1.1M for failing to disclose their prices. Though only six percent of hospitals are fully in compliance with the federal rules that went into effect in January 2021, CMS has only sent 352 warning letters to date, and this week’s fines are the first the agency has issued.
The Gist: While these first fines are notable, it remains an open question whether the financial penalties for not complying with price transparency are stiff enough to motivate hospitals to submit their data. While more substantial than those under the Trump Administration, the current fines remain a rounding error for many hospitals, as they represent less than one percent of net patient revenue on average.
Market dynamics may be more of a factor in compliance than monetary penalties: a recent JAMA study found that hospitals in more competitive, urban markets were more likely to share prices.
A consultant colleague recently recounted a call from a health system looking for support in physician alignment. He mused, “It’s never a good sign when I hear that the medical group reports to the system CFO [chief financial officer].” We agree. It’s not that CFOs are necessarily bad managers of physician networks, or aren’t collaborative with doctors—as you’d expect from any group of leaders, there are CFOs who excel at these capabilities, and ones that don’t.
The reporting relationship reveals less about the individual executive, and more about how the system views its medical group: less as a strategic partner, and more as “an asset to feed the [hospital] mothership.” Or worse, as a high-cost asset that is underperforming, with the CFO brought in as a “fixer”, taking over management of the physician group to “stop the bleed.”
Ideally the medical group would be led by a senior physician leader, often with the title of chief clinical officer or chief physician executive, who has oversight of all of the system’s physician network relationships, and can coordinate work across all these entities, sitting at the highest level of the executive team, reporting to the CEO. Of course, these kinds of physician leaders—with executive presence, management acumen, respected by physician and executive peers—can be difficult to find.
Having a respected physician leader at the helm is even more important in a time of crisis, whether they lead alone or are paired with the CFO or another executive. Systems should have a plan to build the leadership talent needed to guide doctors through the coming clinical, generational, and strategic shifts in practice.
The Biden administration recently signaled that it will extend the federal COVID-19 public health emergency (PHE), which has been in place for nearly two-and-a-half years, beyond its current July 15 expiration date. As shown in the graphic above, a number of key pandemic-era policies would end if the PHE were discontinued. Hospitals, already experiencing financial challenges, would face an immediate 20 percent reduction in Medicare reimbursement for each hospitalized COVID patient.
Combined with the end of funding for treating uninsured COVID patients, and with millions of Americans expected to lose Medicaid coverage when eligibility checks restart, the cost of treating COVID patients will fall more heavily on providers. More treatment costs will also be passed on to patients, as most private insurers no longer waive cost-sharing for COVID care.
On the telemedicine front, Congress has temporarily extended some Medicare telehealth flexibilities (including current payment codes and coverage for non-rural beneficiaries) for five months after the PHE ends, while CMS studies permanent coverage options. But further Congressional action will be required to keep current Medicare telehealth coverage in place, and these decisions will surely influence private insurers’ telehealth reimbursement policies.
Although the Biden administration promises that it will provide sixty days’ notice before terminating the PHE or letting it expire, providers must prepare for the inevitable financial hit when the PHE ends.
HENRY KOTULA 