Author Archives: henrykotula

Memphis hospital CEOs discuss policies on debt collection after patient lawsuits draw scrutiny

Posted on by • Posted in Charity Care, Community Benefit, Debt Collection Agency, Health Policy, Medical Debt, Private Equity, Venture Capital • Leave a comment

https://www.commercialappeal.com/story/news/2019/12/05/medical-debt-memphis-hospital-patients-sued/2611018001/

Dr. Reginald Coopwood, CEO of Regional One Health, on Feb. 5, 2016.

Representing more than half of the hospitals in Shelby County, the CEOs of four local health care organizations convened at the University of Memphis Tuesday for a panel on “successfully leading change” in the industry.

The gathering took place amid a growing conversation on medical debt — the cause of more than 58 percent of bankruptcies in the United States, according to the American Journal of Public Health. 

Communities across the countries have recently seen individuals and faith-based organizations launch fundraising initiatives to erase millions in medical expenses as part of a burgeoning movement to buy medical debt for the sole purpose of erasing it.

Memphis has also been at the fore of the conversation in recent months, with a pair of investigations by MLK50 and ProPublica revealing an aggressive system of suing patients involving wage garnishments, interest charges and court fees.

That reporting has since prompted a wave of debt reduction and forgiveness for thousands who were being sued by Methodist Le Bonheur Healthcare and Southeastern Emergency Physicians, a private equity-owned firm that staffs Baptist Memorial Health Care’s four local emergency rooms.

‘We have to be a profitable business’

At the Tuesday panel, organized by the professional association Mid-South Health Care Executives, the discussion touched on workplace harassment, the impending automation of health care jobs, and diversity.

The CEOs of Methodist Le Bonheur and Baptist Memorial also addressed medical debt as did their fellow panelists.

Dr. Reginald Coopwood, CEO of Regional One Health, the county hospital, said his organization was compelled to reassess its policies as a result of the recent scrutiny surrounding debt collection, though he defended the practice of suing patients in general.

“We send people through processes of collection,” Coopwood said of the public hospital.

“We have a great passion to deliver great care to whoever walks into our door. The flip side of that is … if everybody cannot pay their bills, we can’t buy $100 million record systems and we can’t buy technology that the community as a whole wants,” Coopwood said. “So we have policies to collect whatever is collectible from individuals.”

“That’s what a business needs to do,” he said.

According to General Sessions Court data, analyzed by MLK50 and ProPublica and shared with The Commercial Appeal, those hospitals and a physicians staffing firm, sued more than 2,500 patients in the first six months of the year, between January 1 and June 30:

  • Baptist Memorial Hospital, 486 lawsuits
  • Methodist Le Bonheur, 622 lawsuits
  • Regional One Health, 161 lawsuits
  • Southeastern Emergency Physicians, 1,292 lawsuits

“At the end of the day, we’re businesses, and in order to stay in business, we have to be able — in order to take care of those that are uninsured — we have to be a profitable business,” Coopwood said.

Sally Deitch, CEO of St. Francis Hospitals in Memphis, said the amount of charity care hospitals give back to communities is rarely seen, and, meanwhile, “most of these hospitals are living under their margins of actually being able to say ‘We are financially solid and stable and ready to make investments in new technology.'”

In a Memphis Business Journal review of nonprofit tax filings, Coopwood, Methodist Le Bonheur CEO Michael Ugwueke and Baptist Memorial Health Care CEO Jason Little are listed among the five highest paid nonprofit executives in the metro area, earning between $874,493 and $1,300,954 in 2018. Deitch was appointed to her position in October, after the Memphis Business Journal’s compensation review.

‘No one is perfect’

In the Methodist Le Bonheur system, MLK50 and ProPublica’s investigation found the nonprofit hospital’s practice of taking patients to court, through its in-house collection agency, had entrapped some of its own workers in a cycle of wage garnishments, interest and debt — while they were being paid less than a living wage.

Ugwueke, president of Methodist Le Bonheur’s hospitals in Shelby County, said his organization has gone “above and beyond the issues that were raised.”

The hospital, which is affiliated with the United Methodist Church, announced in July it would cease suing its employees and would raise the hospital network’s minimum wage to $15 an hour.

Methodist Le Bonheur also said it would institute a revamped financial assistance policy to ensure no one making less than 250 percent of federal poverty guidelines would be sued for debt collection in the future. For the approximately 6,500 patients who were in the process of being sued, the hospital also committed to forgiving or reducing their debts.

“As part of our process, we have made additional changes and accommodations,” Ugwueke said. “No one is perfect. I don’t think it’s anyone’s intention to do anything to harm patients.”

He added that he thinks other institutions have a role to play in serving the needs of low-income and poor communities.

“Memphis is a very challenging community. Health care organizations are not going to be the only ones solving the problems,” he said.

Deitch said no one seeking emergency care would ever be turned away from any hospital. Beyond that, she said she considered hospitals to be participants in helping their communities but not a deciding factor.

“When you start to think through the cost to the system and the burden to the system — at a certain point, it can’t all be the responsibility of a hospital,” she said.

Charity care

Little said he  thinks hospitals should address problems with affordability.

“We still need change in health care because it’s expensive. … Seventy-five percent of Americans are living paycheck to paycheck,” Little said, “and nobody sets money aside and plans to need a transplant. So that’s a challenge for all Americans and all Memphians.”

“And it’s a challenge that I’m really bullish on my colleagues up here continuing to address,” Little said, “because I think we’ve gotten really good at caring for our communities, particularly those in the greatest of need.”

For every dollar spent on expenses, Little said, Baptist Memorial spends 21 cents of it on charity care.

But that financial assistance hasn’t always been accessible to emergency-room patients, MLK50 and ProPublica reported in an investigation into Southeastern Emergency Physicians. The staffing firm contracts with doctors to treat emergency room patients in four of Baptist’s five hospitals in the region.

Southeastern filed nearly 1,300 lawsuits in the first half of 2019, according to MLK50 and ProPublica’s analysis of General Sessions Court data — more lawsuits than Regional One, Baptist Memorial and Methodist Le Bonheur combined.

But by the end of the year, in response to the MLK50 and ProPublica investigation, the firm’s parent company, TeamHealth, said it promote financial assistance program participation and would no longer pursue its active lawsuits — or sue any patients again.

 

 

Health care spending grows — again — in 2018

Posted on by • Posted in Health Policy, High Deductible Health Plans, High Premiums, High Prices, Market Consolidation, Market Power, Medicaid, Medicare, Mergers & Acquisitions, Out of Network, Out of Pocket Expenses • Leave a comment

https://www.axios.com/newsletters/axios-vitals-7acf29e4-cb5c-437f-975e-7dd04f588cab.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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Americans spent $3.65 trillion on health care in 2018 — 4.6% more than the year before. That growth also was higher than the 4.2% rate from 2017, according to revised figures from independent federal actuaries, Axios’ Bob Herman reports.

Between the lines: U.S. health care spending climbed again not because people went to the doctor or hospital more frequently, but because the industry charged higher prices. And private health insurers didn’t do a particularly good job negotiating lower rates.

The intrigue: The number of people with private health plans — which mostly consists of the coverage people get through their jobs — dipped in 2018, yet the amount spent per person soared 6.7%.

  • That is the highest per-enrollee spending growth rate among people with private health insurance since 2004, actuaries wrote.
  • Part of that increase was due to higher premiums that insurance companies passed on from the Affordable Care Act’s health insurance tax.
  • More importantly: Hospitals, doctors and drugmakers continued to wring out much higher rates from private insurers thanks to provider mergers and perverse negotiating incentives.

Medicare and Medicaid had much lower per-enrollee spending growth rates in 2018 than private insurance, but those figures were the highest they’ve been since 2015 — again due to higher costs for the private insurers that are increasingly running those government programs.

 

Here come the prediabetics

Posted on by • Posted in Centers for Disease Control & Prevention (CDC), Diabetes, Health Insurance Industry, Health Plan, Population Health, Prediabetic, Preexisting Conditions • Leave a comment

https://mailchi.mp/1d8c22341262/the-weekly-gist-the-spotify-anxiety-edition?e=d1e747d2d8

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Alarming statistics appeared this week in the journal JAMA Pediatrics, based on an analysis conducted by researchers at the Centers for Disease Control and Prevention (CDC) that showed that 20 percent of adolescents (ages 12-18) and 25 percent of young adults (ages 19-34) in the US are now prediabetic. These young people are at substantially increased risk for developing type 2 diabetes, as well as related cardiovascular diseases, as they grow older.

The numbers are a staggering picture of what confronts the American healthcare system as the millennial generation (whose median age is now 30) and the younger “Gen-Z” generation (born after 1997) move closer to their prime care consumption years. These age cohorts are likely to be much more medically complex, and will drive even higher healthcare costs, than previous generations—especially since both of the younger generations are larger than those that preceded them. But the statistics also raise important health policy questions.

To what extent should we “medicalize” prediabetes? In other words, should we begin to flag and treat prediabetes, which is more of a predisposition than an actual medical condition, with medications and interventions? Surely the reimbursement system will create a powerful temptation to do exactly that—at exorbitant cost. Or will we instead focus efforts on “reversing” prediabetes, with more robust attempts to encourage lifestyle changes (diet, exercise) and drive environmental changes (neighborhood walkability, availability and affordability of healthy foods)?

And there’s an information privacy issue looming as well—how will “prediabetics” be flagged, and could prediabetes be viewed as a “pre-existing condition” that might be used in coverage (and even employment) decisions should the regulatory environment change? As much as we focus today on the healthcare impact of the aging Baby Boom generation, we need to get out ahead of some of the issues we’re certain to face as our younger citizens grow older (and sicker).

 

 

 

Rethinking the model for managing chronic disease

Posted on by • Posted in Chronic Care Management, Chronic Conditions, Chronic Diseases, Congestive Heart Failure (CHF), Diabetes, Health System, Home Care, Hospital, Hospital Industry • Leave a comment

https://mailchi.mp/1d8c22341262/the-weekly-gist-the-spotify-anxiety-edition?e=d1e747d2d8

 

As we’ve discussed before, the greatest challenge facing health system economics is demographics. Simply put, with 80M Boomers entering their Medicare years, hospitals beds will fill with elderly patients receiving treatment for exacerbations of congestive heart failure (CHF), diabetes, or other chronic conditions, of which the average Medicare beneficiary has four. It’s easy to envision the hospital becoming a giant nursing facility, with the vast majority of beds occupied by Medicare patients receiving nursing care and drugs, only to be sent home until their chronic disease flares again and the cycle repeats, four or five times a year.

Health systems must create a new model for managing Medicare patients with multiple chronic conditions, one that does not rely on care delivered in an inpatient setting. In the graphic below, we outline two approaches for managing a Medicare patient with advanced CHF. The top path illustrates today’s legacy model, where limited support for ongoing care management leaves the patient vulnerable to exacerbations, leading to numerous ED visits and admissions for diuresis, after which the patient returns home to a sub-optimal diet and lifestyle and is likely to return.

A better alternative is illustrated in the second path. Here our CHF patient has access to the ongoing support of a care team, which regularly monitors her status from home with the help of remote monitoring and can communicate with the patient to adjust therapy if early symptoms are detected. At Gist, we’re working with clinicians to understand just how to build this system of care and maximize its impact.

One example: a leading heart failure specialist told us that admissions for CHF could be reduced by one-third if patients with severe heart failure were monitored with a CardioMEMS implantable device, which can detect changes in pressure before the patient has symptoms, allowing for very early intervention. Developing these kind of care approaches to manage chronic disease outside the hospital will be the key to sustainable health system economics—and may have the greatest impact on lowering the total cost of care for the growing Medicare population.

 

Amazon launches new medical transcription service

Posted on by • Posted in Automatic Speech Recognition, Disruption, Disruptive Technology, Electronic Health Record (EHR), Medical Transcription, Protected Health Information (PHI) • Leave a comment

https://mailchi.mp/1d8c22341262/the-weekly-gist-the-spotify-anxiety-edition?e=d1e747d2d8

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In addition to capturing your personal conversations at home through its ubiquitous Echos, Amazon is now in the business of recording physician-patient conversations. This week the company announced Amazon Transcribe Medical, a machine learning service for quickly creating accurate speech-to-text transcriptions for providers in clinical settings. Cerner, a co-developer, has already signed on as a customer “to develop a digital voice scribe that can ‘listen’ in the background during a patient’s visit”, transcribe the conversation into text, and automatically document the note in its electronic health record (EHR) system.

Amazon’s move into this space is a natural extension of both its “Transcribe Service”, which automatically converts speech to text with natural formatting and punctuation, and its “Comprehend Medical” technology, which can read and mine unstructured medical text for specific information.

While cloud rivals Microsoft and Google are also making a play for speech-to-text tools that work with EHRs, Amazon is looking to differentiate on the basis of providing highly accurate automatic speech recognition specifically designed to go directly into medical records. The company claims the service can understand the nuances of medical language, including the myriad abbreviations used by clinicians.

Amazon is focusing on an area ripe for improvement in cost, time, and patient experience. At a cost of less than a quarter of a cent per minute (!), Transcribe Medical looks like a very cost competitive alternative to what most providers are paying for medical transcription today—especially those who rely heavily on scribes.

It remains to be seen if providers and patients will be comfortable having their often very personal conversations added to Amazon’s cloud, word for word. Providers who adopt this new service should be as transparent as possible with their patients about their partnership with Amazon, as well as how personal data is being stored and used.

 

 

 

What Makes A Non-Profit Hospital?

Posted on by • Posted in Community Benefit, Health Policy, Health System, Hospital, Hospital Industry, Internal Revenue Service (IRS), Tax Exempt Debt, Tax Exempt Status, Tax Status, Tax-Exempt Status • Leave a comment

What Makes A Non-Profit Hospital?

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What are non-profit hospitals and what is the community benefit standard?

Recently, several news outlets including ProPublica, Kaiser Health News, and Wall Street Journal have published stories on non-profit hospitals’ medical debt collection practices and the effects on low income patients. These news stories prompted me to take a closer look at non-profit hospitals, their tax-exempt status, the community benefits they must fulfill to qualify for it, and the impact on care.

This is the first piece of two posts that consider the requirements that non-profit hospitals need to fulfill to qualify for their tax-exempt status and the impact of these standards on non-profit hospitals and the communities they seek to serve.

Has the definition of a non-profit hospital evolved over time?

Short answer: yes.

To date, non-profit hospitals have significantly benefited from their tax-exempt status, saving $24.6 billion in taxes in 2011. Originally, hospitals were granted tax-exempt status because of affiliations with religious institutions and for serving a charitable purpose. It wasn’t necessarily related to medical care. However, in 1956, the Internal Revenue Service (IRS) implemented the charity care standard requiring hospitals to offer uncompensated care to patients unable to pay in order to qualify as a charitable organization under Internal Revenue Code 501c3.

Many believed charity care would no longer be necessary after the implementation of Medicare and Medicaid in 1965. Policymakers assumed the two programs would ensure insurance coverage for most people, obviating the need for a charity care standard. This wasn’t the case, and over the next decade, two events led to the elimination of the charity care standard and the introduction of its successor, the community benefit standard, in 1969.

First, the House of Representatives released a report citing concerns about the execution of the charity care standard and its effectiveness. Second, a hospital that did not provide free or discounted health care mounted a legal challenge. The hospital asserted that, because it had an emergency room open to all community members, it was already providing a charitable service and should qualify for non-profit, or 501c3, status. The courts agreed with the hospital, stating that the provision of an open-access emergency room promoted the health of the community. This fulfilled a charitable purpose according to its legal definition. Ultimately, the IRS agreed with the court’s decision and deemed it necessary to change the charity care standard to accommodate this decision.

Consequently, the IRS issued Ruling 69-545, introducing the community benefit standard. From its implementation and onwards instead of being judged solely on the provision of free or discounted care, a hospital’s 501c3 status would be based on whether it “promoted the health of a broad class of individuals in the community,” including but not limited to just providing free or discounted care.

In 2010, additional requirements were included in the community benefit standard. Non-profit hospitals are now required to perform a community health needs assessment every three years and have both an accessible Financial Assistance Policy and Emergency Medical Care Policy (a charge limit for people who qualify for financial assistance and a billings) and a collections system that determines if individuals are eligible for financial assistance prior to engaging in extraordinary collection actions (applies to all emergency and medically necessary care).

What does non-profit status mean for hospitals?

Short answer: tax-exempt with charity donations required.

Most hospitals in the United States are recognized as charitable organizations, with 78 percent qualifying for 501c3 status. This means they are exempt from most taxes and benefit from tax-deductible charity donations and tax-exempt bond financing but they must meet general Internal Revenue Code requirements, including the community benefit standard aimed at improving the health of the surrounding community.

A variety of activities qualify as community benefits. Some examples are charity care, unreimbursed costs through means-tested programs (Medicaid, Medicare, CHIP, etc.), unreimbursed health professions education, unfunded research, and cash and in-kind contributions for community benefits. Hospitals must submit IRS Form 990 Schedule H annually to demonstrate their community benefit expenditures and maintain their 501c3 designations.

Are non-profit hospitals behaving like their for-profit counterparts?

Short answer: often times, yes.

Seven of the ten most profitable hospitals in the country are non-profits. Many of these exhibit for-profit characteristics such as being part of a larger hospital system, being located in urban areas, and not having a teaching program.

But these aren’t the only features of non-profit hospitals that resemble for-profits. A study conducted by the Kellogg School of Management found that non-profits regularly behaved like for-profits after financial shocks. In response to financial crises, non-profits cut back on unprofitable services to offset losses instead of increasing prices. This is not what we expect; the study authors argue that we should expect them to do the latter — forgoing financial gain by starting with lower prices with room to increase in times of financial stress. That they don’t suggests that non-profits are already maximizing profits, similar to for-profit hospitals.

While it is unusual for non-profit hospitals to experience large financial profits, it does happen. The question is whether these gains are then reinvested into the hospital’s charity care and community health and wellbeing initiatives.

How much of a non-profit hospital’s revenue goes back into care and its community?

Short answer: some.

Herring, et al. found that, on average, 7.6 percent of non-profit hospitals’ 2012 total expenses were community benefit expenditures, 3 percent were unreimbursed Medicaid costs, and about 2 percent were charity care. (These findings are consistent with past studies.)

In some cases, non-profit hospitals receive tax benefits that far outweigh their community benefit investments. For example, in fiscal year 2011-2012, the University of Pennsylvania Medical Center made approximately $1 billion in profits, spent less than $20 million on charity care, and received $200 million in tax benefits. Cases like these have increased public scrutiny on hospitals’ non-profit status and whether current 501c3 requirements go far enough to ensure that hospitals provide sufficient charity care and community benefits.

Non-profit hospitals maintain their tax exempt status through the fulfillment of the community benefits standard. In the next piece we will look at the impact of these standards on the hospitals and the communities they serve.

 

An ex-NFL player became a hospital CEO. Feds questioned his qualifications

Posted on by • Posted in Behavioral Health, CEO, For-Profit, Health System, Hospital, Leadership, Mental Health, Recruiting • Leave a comment

https://www.beckershospitalreview.com/hospital-management-administration/an-ex-nfl-player-became-a-hospital-ceo-feds-questioned-his-qualifications.html

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The CEO of North Tampa Behavioral Health did not meet the requirements to lead the Wesley Chapel, Fla.-based psychiatric hospital, according to a report cited by the Tampa Bay Times.

Bryon Coleman Jr., the former CEO of North Tampa Behavioral, is no longer leading the hospital. Instead, he is in another position within Acadia Healthcare, the Franklin, Tenn.-based parent company of North Tampa Behavioral.

In October, lawmakers called on federal officials to look into North Tampa Behavioral after the Tampa Bay Times published an investigative report that found Mr. Coleman had no healthcare experience. The report also raised quality concerns, claiming North Tampa Behavioral boosted revenues by using a loophole in Florida’s mental health law to hold some patients longer than a 72-hour limit. The hospital rejected the claims.

In November, federal inspectors discovered serious problems at the psychiatric hospital, according to the Tampa Bay Times. Inspectors said medical staff hadn’t been held accountable for poor care. Inspectors also found “no evidence” that Mr. Coleman “met the education or experience requirements defined in the position description” for the CEO role. Officials threatened to end the facility’s federal funding if the issues aren’t addressed by Feb. 19.

Mr. Coleman became CEO of Tampa Behavioral Health in 2018. Prior to that, he quarterbacked for the Green Bay Packers practice squad, managed sales for a trucking company and oversaw employee benefits at an insurance firm, according to the Tampa Bay Times.

In a statement to the Tampa Bay Times, a spokesperson from Acadia denied that federal officials threatened to cut public funding from the hospital and said officials didn’t find Mr. Coleman lacked requirements for his job.

Read the full article here.

 

 

 

Lehigh Valley Health Network’s net income more than triples to $115M

Posted on by • Posted in Health System, Hospital, Hospital Industry, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue • Leave a comment

https://www.beckershospitalreview.com/finance/lehigh-valley-health-network-s-net-income-more-than-triples-to-115m.html

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Allentown, Pa.-based Lehigh Valley Health Network saw its net income more than triple from $35.1 million in fiscal year 2018 to $115.3 million in fiscal year 2019, according to financial documents released Dec. 4. 

The health system saw its revenue increase year over year to $2.96 billion in the 12 months ended June 30. In the same period in 2018, the system reported revenue of $2.73 billion.

In fiscal year 2019, Lehigh Valley Health reported expenses of $2.86 billion, up from $2.68 billion in 2018.

Expense growth resulted from several factors, including an increase in salaries and wages and supply costs.

Lehigh Valley Health System attributed the net income increase to cutting back on contract workers and overtime and reducing costs on readmissions and contracts, according to The Morning Call. 

 

UPMC to close hospital in 2020

Posted on by • Posted in Health System, Hospital, Hospital Closure • Leave a comment

https://www.beckershospitalreview.com/finance/upmc-to-close-hospital-in-2020.html

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Pittsburgh-based UPMC will close its hospital in Sunbury, Pa., on March 31, 2020, according to The Daily Item.

The health system cited dwindling patient volume as one of the reasons it is closing UPMC Susquehanna Sunbury.

“This decision was made with careful consideration and analysis of the use of hospital services in the region,”  UPMC Susquehanna President Steven Johnson said, according to The Daily Item. “According to market data, patients are utilizing facilities other than UPMC Susquehanna Sunbury for their care. UPMC must prudently examine opportunities to integrate and consolidate functions balanced against the needs of the community.”

The hospital, previously named Sunbury Community Hospital, has been open for nearly 125 years. Jody Ocker, Sunbury city administrator, said she’s concerned local residents won’t have access to care after the hospital closes.

“I’m very concerned about our residents’ access to care,” she told TV station WNEP. “We have people that are getting around on their electric scooters and their bicycles. They don’t have access to reliable transportation.”

About 150 people will lose their jobs when UPMC Susquehanna Sunbury closes, according to WNEP. UPMC said it will try to relocate employees to other hospitals in the area.