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CHS debt swap plan is unsustainable, Moody’s says
Although Franklin, Tenn.-based Community Health System’s proposed debt exchange plan will alleviate short-term liquidity concerns, it will also add to an already unsustainable capital structure, Moody’s Investors Service said Nov. 4
On Oct. 29, CHS said it plans to offer $700 million in new senior secured notes due in 2027 and up to $1.9 billion in senior unsecured notes due in 2028 in exchange for its $2.6 billion worth of outstanding senior unsecured notes due in 2022.
The plan would increase how much CHS pays in interest.
Moody’s didn’t alter the health system’s current “Caa3” rating in its public comment about the debt swap plan, but said if the plan moves forward it would likely result in downward pressure on some of its ratings.
“If the transaction is completed in its proposed form, the addition of incremental first lien debt will likely result in downward pressure on the existing senior secured first lien ratings of ‘Caa1,'” Moody’s said.
Pennsylvania revokes Hahnemann’s license as security concerns remain
Philadelphia-based Hahnemann University Hospital’s license has been revoked, the Pennsylvania Department of Health told the judge overseeing the hospital’s bankruptcy case in a Nov. 1 letter, according to The Philadelphia Inquirer.
The license revocation comes roughly two months after the hospital closed and about four months after the hospital entered Chapter 11 bankruptcy.
Pennsylvania Secretary of Health Rachel L. Levine brought the license revocation to the judge’s attention and expressed concerns about security in the letter.
“I am bringing the current situation at Hahnemann to your attention because I am deeply concerned about the state and security of the building and the supplies and equipment it is housing,” she wrote, according to the report.
Ms. Levine said a small team has made some progress but more work needs to be done. “While I do not want to take away from the effort that they have put forth, the fact is it is just not enough.”
Among the work that needs to be done, the removal of laboratory equipment and highly flammable chemicals, the letter stated.
Kaiser can’t stop Hawaii health system from balance billing
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A federal court has dismissed a lawsuit Kaiser Foundation Health Plan filed against Honolulu-based Queen’s Health Systems after a contract between the parties expired May 30, according to The Honolulu Star-Advertiser.
Queen’s Health Systems, which includes four hospitals, provides emergency services to hundreds of Kaiser members each year. After the contract expired, and the parties were unable to reach a new agreement, Kaiser said it would pay the “reasonable value of Queen’s emergency services,” but “not necessarily 100% of billed charges,” according to the report.
In response, QHS said Kaiser members would be billed for the balance of charges not paid by Kaiser. Kaiser subsequently sued to prevent the billing practice and QHS asked the court to dismiss the suit.
In dismissing the lawsuit with prejudice Oct. 31, Judge Derrick Watson, a U.S. District judge in Hawaii, said there are “no real winners,” according to the report.
“Should QMC [Queen’s Medical Center] choose to balance bill Kaiser’s members for emergency services, QMC is unlikely to receive glowing attention from interested observers. In terms of dollars and cents, eventually someone or some entity will need to pay (or be ordered to pay) for the services QMC has rendered to Kaiser’s members.”
Kaiser told The Honolulu Star-Advertiser it intends to appeal the court’s ruling.
Tenet posts 3rd consecutive quarter of volume growth
https://www.healthcaredive.com/news/tenet-posts-3rd-consecutive-quarter-of-volume-growth/566597/
Dive Brief:
- Shares of hospital chain Tenet Healthcare rose more than 3% Tuesday morning after reporting its third quarter results Monday evening showing broad-based volume growth.
- Comparing hospital-to-hospital performance, Tenet reported a 3.6% increase in admissions and a slight uptick for inpatient surgeries (1.9%) and outpatient visits (1.6%).
- The Dallas-based company reported a net loss of $232 million for the quarter attributable to the company’s common shareholders, compared to a loss of $9 million a year earlier.
Dive Insight:
Tenet CEO Ronald Rittenmeyer touted the results on Tuesday’s call with investors and said the company is raising its outlook for the year based on the numbers.
“We had a very positive third quarter with performance improvement in each of our operating segments,” Rittenmeyer said in a statement.
It’s the third consecutive quarter of volume growth, executives said Tuesday.
Rittenmeyer attributed positive trends over the past few years to a strong leadership team. “Tenet is in a much different place than it was two years ago,” he said.
Same-hospital patient revenue grew 5.8% and surgical revenue increased 6.9% on a same-facility basis.
Commercial volume trends were also very positive, executives said.
Still, they said the company faced more than $50 million in unanticipated headwinds including closures and costs related to Hurricane Dorian, lower California provider fee revenues and costs related to a nursing strike at 12 facilities.
The company is raising its outlook for adjusted earnings per share for the year. It expects adjusted diluted earnings per share from continuing operations of $2.25 to $2.91 for the year.
The company’s other segments also showed growth.
Conifer, the revenue cycle management unit, reported adjusted EBITDA of $90 million, an 11% increase from the previous year period. Tenet announced earlier this year it will spin off Conifer into an independent publicly traded company by the second quarter of 2021.
USPI, the outpatient surgical business, has a steady pipeline of health systems willing to send patients to the outpatient facilities, executives said during the call. During the third quarter, the company added three health systems and expects to reach a total of seven by end of year.
Execs flirt with ‘Medicare for All’ at HLTH19
Despite Trump administration warnings about “Medicare for All” and other expansions of public coverage upending the private market, some executives at HLTH last week seemed more agnostic about the Democrat-backed plans, some of which would eliminate private insurance altogether.
”It’s a symptom of a pricing issue, and a rate issue,” Vivek Garpialli, CEO of Medicare Advantage plan provider Clover Health, said. “Until we see a better idea, it’s actually not a bad framework to have a debate around and, unless a better one comes along in the next three, five, 10 years, it probably is inevitable.”
Democratic candidates hoping to take on incumbent President Donald Trump in 2020 are pitching a slate of proposals to give the current healthcare system a major facelift. Former Vice President Joe Biden endorses a public option and bolstering the Affordable Care Act, while Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., are stumping for a Medicare for All-type system that would terminate private insurance.
The debate itself is a “good example of the fact that the status quo needs to change,” Tom Richards, global strategy and business development leader at Cigna, told Healthcare Dive.
Many healthcare tech startups have configured their products to be compatible within multiple platforms or companies, including myriad providers, Medicare, insurance on the ACA exchanges or employer-based coverage, so the payer platform doesn’t matter as much to them — or their margins.
“So long as innovation is maintained, I think it could go either way,” Pranay Kapadia, CEO of voice-enabled digital assistant startup Notable, said.
But executives, even on the startup side, seemed leery about the uncertainty Medicare for All would inject into the system.
“At the end of the day, the government is already unable to fully fund its obligations, from Social Security, to Medicare, to Medicaid,” Ali Diab, CEO of employer-sponsored insurance startup Collective Health, said.
“Unless someone proposes a means to actually fund it that’s credible, I just don’t see a way for the government to take on more of the financial burden,” he said, though he clarified he didn’t have an opinion on the politics either way.
Moving to some form of a nationalized healthcare system could drag down profit margins across the industry (especially for payers). Cost estimates for the plans vary in the tens of trillions, from Sanders’ $33 trillion to Warren’s $52 trillion, both spread out over a decade.
Democratic backers say Medicare for All will drive down overall costs in the long run, despite hiking federal spending. Warren, who released her plan Friday, pledged there would be no middle-class tax increases and that Americans’ pocketbooks would be helped overall due to the elimination of premiums and other out-of-pocket costs.
But industry isn’t so sure the government could implement such a sweeping plan, even if it wanted to.
“I just don’t see the legislators getting their act together to make this happen and, frankly, I don’t want to wait for them,” Marijka Grey, executive leader for transformation implementation at 150-hospital CommonSpirit Health, said.
At HLTH, Trump administration officials kept up their drumbeat of criticism of the idea.
It would “hand the reins to government bureaucrats to fix all our problems” and is marked by an “unwarranted confidence in government central planners,” CMS Administrator Seema Verma said, while White House policy official and ex-pharma lobbyist Joe Grogan said Democrats “cannot accept no one is smart enough to design a healthcare system for all Americans.”
Few Democrats have released comprehensive healthcare proposals, though 11 of the remaining 16 candidates support some version of single-payer healthcare.
“Quite frankly, branding-wise it’s not horrible,” Adam Boehler, the former head of CMS’ innovation center, said. “In my opinion, it’s the content versus the brand in terms of whether something will work or not.”
Cartoon – Modern Strategy Execution
HENRY KOTULA 