The number of independent physician practices continued to decline nationwide as health systems, payers, and investors accelerated their physician acquisition and employment strategies during the pandemic.
The graphic above highlights recent analysis from consulting firm Avalere Health and the nonprofit Physicians Advocacy Institute, finding that nearly half of physician practices are now owned by hospital or corporate entities, meaning insurers, disruptors, or other investor-owned companies.
This increase has been driven mainly by a surge in the number of corporate-owned practices, which has grown over 50 percent across the last two years. (Researchers said they were unable to accurately break down corporate employers more specifically, and that the study likelyundercounts the number of practices owned by private equity firms, given the lack of transparency in that segment.)
It’s no surprise that we’re seeing an uptick in physician employment, as about a quarter of physicians surveyed a year ago claimed COVID was making them more likely to sell or partner with other entities, and last year saw independent physicians’ average salary falling below that of hospital-employed physicians.
We expect the move away from private practice will continue throughout this year and beyond, as physicians seek financial stability and access to capital for necessary investments to remain competitive.
On Thursday, the Missouri Supreme Court unanimously reversed a lower court ruling that held that the state’s $1.9B Medicaid expansion, approved by voters in a 2020 ballot initiative, was unconstitutional.
The ruling clears the way for the state’s Department of Social Services to begin implementation of the expansion, which is expected to cover 275,000 low-income Missouri residents. Under the Affordable Care Act (ACA), the federal government will pay 90 percent of the cost to cover the newly eligible Medicaid beneficiaries, along with an additional bump in federal funding for Missouri’s Medicaid program, thanks to a provision in the American Rescue Plan Act passed earlier this year.
Missouri voters approved the expansion by a 53-47 margin last year, but the ballot initiative was held to be unconstitutional because it did not include a source of funding for the portion of coverage costs to be paid for by the state (and the state legislature refused to allocate money for the expansion, despite currently running a surplus). Five other states have turned to ballot initiatives to expand Medicaid under the ACA, seeking to work around state legislatures that have resisted the change. In all, a dozen states, mostly in the Southeast, have chosen not to expand their Medicaid programs, even despite the additional incentives Congress voted into law this year.
Democrats on Capitol Hill are considering legislative alternatives to provide new coverage to low-income residents in those states, as part of the $3.5T reconciliation package currently being negotiated. Numerous studies have shown the positive impact of expanding Medicaid on health and financial well-being, but state-level politics have proven to be a challenge, especially in deep-red states. Meanwhile, tax dollars continue to flow from those states to fund Medicaid expansion elsewhere—now, including Missouri.
Two major policy developments emerged from this week’s release by the Centers for Medicare & Medicaid Services (CMS) of the FY22 proposed rule governing payment for hospital outpatient services and ambulatory surgical centers.
First, CMS proposes todramatically increase the financial penalties assessed to hospitals that fail to adequately reveal prices for their services, a requirement first put in place by the Trump administration. According to a report by the consumer group Patient Rights Advocate, only 5.6 percent of a random sample of 500 hospitals were in full compliance with the transparency requirement six months after the regulation came into effect, with many instead choosing to pay the $300 per hospital per day penalty associated with noncompliance. The new CMS regulation proposes to scale the assessed penalties in accordance with hospital size, with larger hospitals liable for up to $2M in annual penalties, a substantial increase from the earlier $109,500 maximum annual fine. In a press release, the agency said it “takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.” In a statement, the AHA stated that it was “deeply concerned” about the proposal, “particularly in light of substantial uncertainty in the interpretation of the rules.” The penalty hike is a clear signal that the Biden administration plans to put teeth behind its new push for more competition in healthcare, which was a major focus of the President’s recent executive order. We’d expect to see most hospitals and health systems quickly move to comply with the transparency rule, given the size of potential penalties.
More heartening to hospitals was CMS’ proposal to roll back changes the Trump administration made, aimed at shifting certain surgical procedures into lower cost, ambulatory settings. The agency proposed halting the elimination of the Inpatient Only (IPO) list, which specifies surgeries CMS will only pay for if they are performed in an inpatient hospital. Citing patient safety concerns, CMS noted that the phased elimination of the IPO list, which began this year, was undertaken without evaluating whether individual procedures could be safely moved to an outpatient setting. Nearly 300 musculoskeletal procedures have already been eliminated from the list, and will now be added back to the list for 2022, keeping the rest of the list intact while CMS undertakes a formal process to review each procedure. Longer term, we’d anticipate that CMS will look to continue the elimination of inpatient-only restrictions on surgeries, as well as pursuing other policies (such as site-neutral payment) that level the playing field between hospitals and lower-cost outpatient providers.
For now, hospitals will enjoy a little more breathing room to plan for the financial consequences of that inevitable shift.
With the Delta variant now accounting for more than 83 percent of all new COVID cases in the US, daily new case counts more than quadrupling across the month of July, and hospitalizations—particularly in states with low vaccination rates—beginning to climb significantly, we appear to have entered a new and uncertain phase of the pandemic, now being dubbed a “pandemic of the unvaccinated”.
Welcome news, then, that this week the American Hospital Association (AHA) publicly encouraged its members to put in place vaccine mandates for their employees. While several large health systems have taken the lead in implementing vaccine mandates, including Trinity Health, the Livonia, MI-based Catholic system that operates hospitals across 22 states, Phoenix, AZ-based Banner Health, Houston Methodist in Texas, and the academic giant NewYork-Presbyterian, others have been more reticent to compel employees to get vaccinated, citing concerns over employee privacy and the potential for workforce backlash.
The New York Timesreports that a quarter of all hospital employees remain unvaccinated nationwide, with many facilities reporting that more than half of their healthcare workers have not gotten the COVID vaccine. In our discussions with health system executives, one consideration frequently cited is the desire for full Food and Drug Administration (FDA) approval of the new vaccines before mandates are put in place.
In a CNN town hall meeting this week, President Biden suggested that approval could come as soon as the end of August, although other reports point to likely approval much later, potentially not until January of next year. Facing a new variant of the virus that is much more transmissible and possibly more virulent than earlier strains, hospitals—and their patients—can’t afford to wait that long.
For safety’s sake, hospitals should quickly put in place vaccine mandates, with appropriate exceptions.
Unemployment claims jumped last week, as the delta variant of the coronavirus sparked rising caseloads around the country and renewed fears about the potential for more restrictions and business closures.
The number of new claims grew to 419,000 from 368,000, the third time in six weeks that they had ticked up, according to data from the Department of Labor.
Economists said the uptick was concerning but cautioned that it was too early to tell whether it was a one week aberration or telegraphed a more concerning turn for the labor market.
“The unexpected bump in claims could be noise in the system, but it’s also not hard to see how the rise of the covid-19 delta variant could add thousands of layoffs to numbers that already are double what they were pre-Covid,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Overall, unemployment numbers have been falling gradually from the peaks at other stages of the pandemic, but they are still well above pre-pandemic averages.
The jobless numbers have provided a jarring catalogue about the economic devastation wrought by the pandemic — spiking to records as the pandemic unfolded in March 2020, and remaining at historic high levels throughout most of 2020.
The coronavirus surge last fall helped precipitate a rise in claims that saw the labor market, as seen in the monthly jobs report, slide backward too.
But until recently, the last few months been marked by strong jobs growth and a sense of optimism as vaccinations picked up, giving economists hope that the country was back on track to recovering the nearly 7 million jobs it is still down from before the pandemic.
Now, the delta variant is driving an alarming increase in covid-19 cases around the country, according to public health officials: the number of new cases increased more than 40 percent in the last week, sending jitters through the stock market, and is raising questions about whether state and local health authorities will reinstitute restrictions to slow the virus’ spread.
Frick said that the report showed the potential for unemployment claims to start trending upward after months of steady declines.
“There’s definitely a correlation, however loose, that the rise in covid does cause a rise in claims,” he said. “My fear is that the rise in the delta variant could cause claims to go back up…Certainly one week doesn’t show that. But I wouldn’t be surprised if we start to see claims rise.”
However, there are also lots of signs that the economy continues to rebound despite rising caseloads.
The more than 2.2 million people that the Transportation Security Administration said it screened at airports on Sunday was the most since late February 2020 — and nearly three times the amount it was on the same day last year.
Restaurant dining has largely rebounded in recent months, at times surpassing the levels from before the pandemic — on Saturday the number of diners was 1 percent higher than the same day in 2019, according to data from Open Table.
Last week, some 12.5 million claims were filed for unemployment insurance overall, according to the most recent numbers — down from 32.9 million filed at the same point last year.
Nevada, Rhode Island and California topped the list of states with the highest number of people on unemployment, the Labor Department said.
Economic concerns in recent months have been more focused on the ways that workers are still held back from filling some of the more than 9 million job openings in the country, than unemployment, with high hopes that school re-openings in the fall will help many parents get back into the labor force.
Forty percent of all new cases this week have been recorded in Florida, Texas and Missouri, White House pandemic response coordinator Jeff Zients revealed at a press briefingThursday.
Florida alone accounts for 20 percent of all new cases nationally, Zients pointed out, a trend that has stretched into its second week.
Zients added that “virtually all” hospitalizations and deaths — a full 97 percent — are among unvaccinated people. “The threat is now predominantly only to the unvaccinated,” he said. A few vaccinated people do experience so-called breakthrough infections, but they tend to experience only mild COVID-19 illness, or no illness at all.
Encouragingly, Zients said the five states that have experienced the most significant rise in infections — Arkansas, Louisiana, Florida, Nevada and Missouri — all also saw vaccination rates beat the national average for a second week in a row. But because immunity takes two weeks to develop, and the Delta variant spreads so rapidly, the benefits of the increased uptake of vaccinations may not be evident right away.
Singling out the three states where infections are now spiking could have the effect of putting pressure on elected officials there to do more to encourage vaccinations.
Florida’s governor, Ron DeSantis, is a Donald Trump loyalist who is widely expected to seek the presidency in 2024. His handling of the pandemic is coming under new scrutiny with the recent rise in cases.
As the pandemic has surged back in parts of the country, other Republicans have deviated from that approach. The governor of Arkansas, Asa Hutchinson — a Republican who, like DeSantis and Abbott, is rumored to have presidential ambitions of his own — has recently pushed for more vaccinations in his state.
Rep. Steve Scalise, a member of Republican leadership in the House of Representatives and a close Trump ally, rolled up his sleeve last Sunday and was vaccinated. Scalise represents a district in Louisiana, another state with a low rate of vaccination that is experiencing a surge in new cases.
There were 46,318 new cases of the coronavirus reported nationwide on Tuesday, Centers for Disease Control and Prevention Director Rochelle Walensky said at Thursday’s briefing. That is a marked increase from the lows of late May and early June. Hospitalizations and deaths are also rising, after plummeting earlier this summer.
“If you are not vaccinated,” Walensky said, “please take the Delta variant seriously.”
HENRY KOTULA 