Category Archives: Financial Transparency

The 6 challenges facing health care in 2023—and how to handle them

Posted on by • Posted in Challenge, Digital Health, Digital Health Initiatives, Financial Stewardship, Financial Strength, Financial Transparency, Financial Viability, Financially Distressed, Health Equity, Health Policy, Health System, Hospital, Hospital Industry, Inflation, Labor Shortages, Labor Spend Management, Leadership, Market Consolidation, Payor Contracting, Quality Measures, Quality of Care, Quality Reporting, Recruiting, Talent Imperative, Talent Management, Talent Pipelines • Leave a comment
https://www.advisory.com/Daily-Briefing/2023/01/04/healthcare-2023?utm_source=public_db&utm_medium=email&utm_campaign=2023Feb08&utm_content=public_headline_public_x_x_x_secondcta&elq_cid=4778863&x_id=

With input from stakeholders across the industry, Modern Healthcare outlines six challenges health care is likely to face in 2023—and what leaders can do about them.

1. Financial difficulties

In 2023, health systems will likely continue to face financial difficulties due to ongoing staffing problems, reduced patient volumes, and rising inflation.

According to Tina Wheeler, U.S. health care leader at Deloitte, hospitals can expect wage growth to continue to increase even as they try to contain labor costs. They can also expect expenses, including for supplies and pharmaceuticals, to remain elevated.

Health systems are also no longer able to rely on federal Covid-19 relief funding to offset some of these rising costs. Cuts to Medicare reimbursement rates could also negatively impact revenue.

“You’re going to have all these forces that are counterproductive that you’re going to have to navigate,” Wheeler said.

In addition, Erik Swanson, SVP of data and analytics at Kaufman Hall, said the continued shift to outpatient care will likely affect hospitals’ profit margins.

“The reality is … those sites of care in many cases tend to be lower-cost ways of delivering care, so ultimately it could be beneficial to health systems as a whole, but only for those systems that are able to offer those services and have that footprint,” he said.

2. Health system mergers

Although hospital transactions have slowed in the last few years, market watchers say mergers are expected to rebound as health systems aim to spread their growing expenses over larger organizations and increase their bargaining leverage with insurers.

“There is going to be some organizational soul-searching for some health systems that might force them to affiliate, even though they prefer not to,” said Patrick Cross, a partner at Faegre Drinker Biddle & Reath. “Health systems are soliciting partners, not because they are on the verge of bankruptcy, but because they are looking at their crystal ball and not seeing an easy road ahead.”

Financial challenges may also lead more physician practices to join health systems, private-equity groups, larger practices, or insurance companies.

“Many independent physicians are really struggling with their ability to maintain their independence,” said Joshua Kaye, chair of U.S. health care practice at DLA Piper. “There will be a fair amount of deal activity. The question will be more about the size and specialty of the practices that will be part of the next consolidation wave.”

3. Recruiting and retaining staff

According to data from Fitch Ratings, health care job openings reached an all-time high of 9.2% in September 2022—more than double the average rate of 4.2% between 2010 and 2019. With this trend likely to continue, organizations will need to find effective ways to recruit and retain workers.

Currently, some organizations are upgrading their processes and technology to hire people more quickly. They are also creating service-level agreements between recruiting and hiring teams to ensure interviews are scheduled within 48 hours or decisions are made within 24 hours.

Eric Burch, executive principal of operations and workforce services at Vizient, also predicted that there will be a continued need for contract labors, so health systems will need to consider travel nurses in their staffing plans.

“It’s really important to approach contract labor vendors as a strategic partner,” Burch said. “So when you need the staff, it’s a partnership and they’re able to help you get to your goals, versus suddenly reaching out to them and they don’t know your needs when you’re in crisis.”

When it comes to retention, Tochi Iroku-Malize, president of the American Academy of Family Physicians (AAFP), said health systems are adequately compensated for their work and have enough staff to alleviate potential burnout.

AAFP also supports legislation to streamline prior authorization in the Medicare Advantage program and avoid additional cuts to Medicare payments, which will help physicians provide care to patients with less stress.

4. Payer-provider contract disputes

A potential recession, along with the ensuing job cuts that typically follow, would limit insurers’ commercial business, which is their most profitable product line. Instead, many people who lose their jobs will likely sign up for Medicaid plans, which is much less profitable.

Because of increased labor, supply, and infrastructure costs, Brad Ellis, senior director at Fitch Ratings, said providers could pressure insurers into increasing the amount they pay for services. This will lead insurers to passing these increased costs onto members’ premiums.

Currently, Ellis said insurers are keeping an eye on how legislators finalize rules to implement the No Surprise Act’s independent resolution process. Regulators will also begin issuing fines for payers who are not in compliance with the law’s price transparency requirement.

5. Investment in digital health

Much like 2022, investment in digital health is likely to remain strong but subdued in 2023.

“You’ll continue to see layoffs, and startup funding is going to be hard to come by,” said Russell Glass, CEO of Headspace Health.

However, investors and health care leaders say they expect a strong market for digital health technology, such as tools for revenue cycle management and hospital-at-home programs.

According to Julian Pham, founding and managing partner at Third Culture Capital, he expects corporations such as CVS Health to continue to invest in health tech companies and for there to be more digital health mergers and acquisitions overall.

In addition, he predicted that investors, pharmaceutical companies, and insurers will show more interest in digital therapeutics, which are software applications prescribed by clinicians.

“As a physician, I’ve always dreamed of a future where I could prescribe an app,” Pham said. “Is it the right time? Time will tell. A lot needs to happen in digital therapeutics and it’s going to be hard.”

6. Health equity efforts

This year, CMS will continue rolling out new health equity initiatives and quality measurements for providers and insurers who serve marketplace, Medicare, and Medicaid beneficiaries. Some new quality measures include maternal health, opioid related adverse events, and social need/risk factor screenings.

CMS, the Joint Commission, and the National Committee for Quality Assurance are also partnering together to establish standards for health equity and data collection.

In addition, HHS is slated to restore a rule under the Affordable Care Act that prohibits discrimination based on a person’s gender identity or sexual orientation. According to experts, this rule may conflict with recently passed state laws that ban gender-affirming care for minors.

“It’s something that’s going to bear out in the courts and will likely lack clarity. We’ll see differences in what different courts decide,” said Lindsey Dawson, associate director of HIV policy and director of LGBTQ health policy at the Kaiser Family Foundation. “The Supreme Court acknowledged that there was this tension. So it’s an important place to watch and understand better moving forward.”

Here’s how hospitals can chart a path to a sustainable financial future (Part 2: Hospital of the Future series)

Posted on by • Posted in Affordability, Ambulatory Care Services, Ambulatory Surgery Centers (ASC), Cost Management, Cost Reduction, Financial Stewardship, Financial Strength, Financial Transparency, Financial Viability, For-Profit, Health System, Home-Based Care, Home-Hospital Care, Hospital, Hospital Industry, Inpatient Care, Nurse Staffing, Nurses, Outpatient Care, Outpatient Clinic Model, Outpatient Migration, Physician, Physician Practice Management, Price Transparency, Price Variation, Pricing Leverage, Rural Health, Rural Health Clinics (RHC), Rural Hospital, Strategic Plan, Streamlining Operations, Telemedicine, Telemedicine Strategy • Leave a comment
https://www.advisory.com/daily-briefing/2022/12/22/radio-advisory-143?utm_source=member_db&utm_medium=email&utm_campaign=2022Dec22&utm_content=member_headline_final_ecpost_x_x_x&elq_cid=4838956&

Radio Advisory’s Rachel Woods sat down with Optum EVP Dr. Jim Bonnette to discuss the sustainability of modern-day hospitals and why scaling down might be the best strategy for a stable future.

Read a lightly edited excerpt from the interview below and download the episode for the full conversation.https://player.fireside.fm/v2/HO0EUJAe+Rv1LmkWo?theme=dark

Rachel Woods: When I talk about hospitals of the future, I think it’s very easy for folks to think about something that feels very futuristic, the Jetsons, Star Trek, pick your example here. But you have a very different take when it comes to the hospital, the future, and it’s one that’s perhaps a lot more streamlined than even the hospitals that we have today. Why is that your take?

Jim Bonnette: My concern about hospital future is that when people think about the technology side of it, they forget that there’s no technology that I can name that has lowered health care costs that’s been implemented in a hospital. Everything I can think of has increased costs and I don’t think that’s sustainable for the future.

And so looking at how hospitals have to function, I think the things that hospitals do that should no longer be in the hospital need to move out and they need to move out now. I think that there are a large number of procedures that could safely and easily be done in a lower cost setting, in an ASC for example, that is still done in hospitals because we still pay for them that way. I’m not sure that’s going to continue.

Woods: And to be honest, we’ve talked about that shift, I think about the outpatient shift. We’ve been talking about that for several years but you just said the change needs to happen now. Why is the impetus for this change very different today than maybe it was two, three, four, five years ago? Why is this change going to be frankly forced upon hospitals in the very near future, if not already?

Bonnette: Part of the explanation is regarding the issues that have been pushed regarding price transparency. So if employers can see the difference between the charges for an ASC and an HOPD department, which are often quite dramatic, they’re going to be looking to say to their brokers, “Well, what’s the network that involves ASCs and not hospitals?” And that data hasn’t been so easily available in the past, and I think economic times are different now.

We’re not in a hyper growth phase, we’re not where the economy’s performing super at the moment and if interest rates keep going up, things are going to slow down more. So I think employers are going to become more sensitized to prices that they haven’t been in the past. Regardless of the requirements under the Consolidated Appropriations Act, which require employers to know the costs, which they didn’t have to know before. They’re just going to more sensitive to price.

Woods: I completely agree with you by the way, that employers are a key catalyst here and we’ve certainly seen a few very active employers and some that are very passive and I too am interested to see what role they play or do they all take much more of an active role.

And I think some people would be surprised that it’s not necessarily consumers themselves that are the big catalyst for change on where they’re going to get care, how they want to receive care. It’s the employers that are going to be making those decisions as purchasers themselves.

Bonnette: I agree and they’re the ultimate payers. For most commercial insurance employers are the ultimate payers, not the insurance companies. And it’s a cost of care share for patients, but the majority of the money comes from the employers. So it’s basically cutting into their profits.

Woods: We are on the same page, but I’m going to be honest, I’m not sure that all of our listeners are right. We’re talking about why these changes could happen soon, but when I have conversations with folks, they still think about a future of a more consolidated hospital, a more outpatient focused practice is something that is coming but is still far enough in the future that there’s some time to prepare for.

I guess my question is what do you say to that pushback? And are there any inflection points that you’re watching for that would really need to hit for this kind of change to hit all hospitals, to be something that we see across the industry?

Bonnette: So when I look at hospitals in general, I don’t see them as much different than they were 20 years ago. We have talked about this movement for a long time, but hospitals are dragging their feet and realistically it’s because they still get paid the same way until we start thinking about how we pay differently or refuse to pay for certain kinds of things in a hospital setting, the inertia is such that they’re going to keep doing it.

Again, I think the push from employers and most likely the brokers are going to force this change sooner rather than later, but that’s still probably between three and five years because there’s so much inertia in health care.

On the other hand, we are hitting sort of an unsustainable phase of cost. The other thing that people don’t talk about very much that I think is important is there’s only so many dollars that are going to health care.

And if you look at the last 10 years, the growth in pharmaceutical spend has to eat into the dollars available for everybody else. So a pharmaceutical spend is growing much faster than anything else, the dollars are going to come out of somebody’s hide and then next logical target is the hospital.

Woods: And we talked last week about how slim hospital margins are, how many of them are actually negative. And what we didn’t mention that is top of mind for me after we just come out of this election is that there’s actually not a lot of appetite for the government to step in and shore up hospitals.

There’s a lot of feeling that they’ve done their due diligence, they stepped in when they needed to at the beginning of the Covid crisis and they shouldn’t need to again. That kind of savior is probably not their outside of very specific circumstances.

Bonnette: I agree. I think it’s highly unlikely that the government is going to step in to rescue hospitals. And part of that comes from the perception about pricing, which I’m sure Congress gets lots of complaints about the prices from hospitals.

And in addition, you’ll notice that the for-profit hospitals don’t have negative margins. They may not be quite as good as they were before, but they’re not negative, which tells me there’s an operational inefficiency in the not for-profit hospitals that doesn’t exist in the for-profits.

Woods: This is where I wanted to go next. So let’s say that a hospital, a health system decides the new path forward is to become smaller, to become cheaper, to become more streamlined, and to decide what specifically needs to happen in the hospital versus elsewhere in our organization.

Maybe I know where you’re going next, but do you have an example of an organization who has had this success already that we can learn from?

Bonnette: Not in the not-for-profit section, no. In the for-profits, yes, because they have already started moving into ambulatory surgery centers. So Tenet has a huge practice of ambulatory surgery centers. It generates high margins.

So, I used to run ambulatory surgery centers in a for-profit system. And so think about ASCs get paid half as much as a hospital for a procedure, and my margin on that business in those ASCs was 40% to 50%. Whereas in the hospital the margin was about 7% and so even though the total dollars were less, my margin was higher because it’s so much more efficient. And the for-profits already recognize this.

Woods: And I’m guessing you’re going to tell me you want to see not-for-profit hospitals make these moves too? Or is there a different move that they should be making?

Bonnette: No, I think they have to. I think there are things beyond just ASCs though, for example, medical patients who can be treated at home should not be in the hospital. Most not-for-profits lose money on every medical admission.

Now, when I worked for a for-profit, I didn’t lose money on every Medicare patient that was a medical patient. We had a 7% margin so it’s doable. Again, it’s efficiency of care delivery and it’s attention to detail, which sometimes in a not-for-profit friends, that just doesn’t happen.

As fraud rises, CFOs must approach numbers skeptically, report finds

Posted on by • Posted in Asset Impairment, Audit Committee, Auditor External, Auditor Internal, CEO, CFO, Checks and Balances, Financial Reporting Fraud, Financial Reserve Manipulation, Financial Statement Fraud, Financial Stewardship, Financial Transparency, Financially Distressed, Fraud Deterrent and Detection, Fraud Triangle, Improper Revenue Recognition, Internal Audit, Internal Control, Inventory Manipulation, Manipulation of Debt Compliance Covenants, Opportunity, Over/Understating Accounting Estimates, Pandemic, Pressure, Professional Skepticism, Rationalization, Revenue Fabrication, Revenue Manipulation, Understate of Accounts Receivable Reserves, Unrecognized Inventory Impairments • Leave a comment

https://www.cfodive.com/news/Center-Audit-Quality-financial-reporting-fraud/593123/

Executives might be committed to accuracy, but middle managers and others throughout the organization must be on board, too.

The pandemic is increasing financial reporting fraud, putting the onus on CFOs to create an organization-wide system that prevents wrongdoing, a coalition of auditing and other oversight groups said in a report released today.

“Financial statement fraud in public companies is real and that risk has only increased during the Covid-19 pandemic,” said Julie Bell Lindsay, executive director of the Center for Audit Quality, one of four groups to release the report.

To help ensure the integrity of their company’s financial reporting, CFOs can’t rely on external auditors as their bulwark against fraud; they must weave protection into the fabric of the organization and exercise the same skepticism toward numbers auditors are trained to do.

“The strongest fraud deterrent and detection program requires extreme diligence from all participants in the financial reporting system,” Lindsay said. “Certainly, you have internal and external auditors, but you also have regulators, audit committees and, especially, public company management.”

Heightened stress

The report looks at SEC enforcement data from 2014 to 2019, a period of relative calm Linsday said can help set a baseline for assessing how much in pandemic-caused fraud regulators will find when they do their post-crisis analysis.

“The timing of this report is really a great way to … remind all the folks in the financial reporting ecosystem that … the pressures for fraud to happen are strong right now,” she said. 

Improper revenue recognition comprises about 40% of wrongdoing in financial reporting, more than any other type, a finding that tracks an SEC analysis released last August. 

Companies tend to manipulate revenue in four ways:

  1. The timing of recognition
  2. The value applied
  3. The source
  4. The percentage of contract completion claimed

The report singles out revenue-recognition manipulation by OCZ Technology Group, a solid-state drive manufacturer that went bankrupt in 2013, as a typical case.

The company had to restate its revenues by more than $100 million after it was caught mis-characterizing sales discounts as marketing expenses, shipping more goods to a large customer than it could be expected to sell, and withholding information on product returns.

The CEO was charged with fraud and the CFO with accounting, disclosure, and internal accounting controls failures.

The report lists three other common types of fraud: manipulation of financial reserves, manipulation of inventories, and improper calculation of impairment.

Reserve issues involve how, and when, balances are changed, and how expenses are classified; inventory issues involve the amounts that are listed and how much sales cost; and impairment issues involve the timing and accuracy of the calculation. 

Increase expected

More of these kinds of problems will likely be found to be happening because of the pandemic, the report said. 

“This is where all of this comes to a head,” Lindsay said. “You certainly can see pressure, because some companies are struggling right now and there can be pressure to meet numbers, analysts expectations.”

The pressure finance professionals face is part of what the report calls a “fraud triangle,” a convergence of three factors that can lead to fraud: pressure, opportunity and rationalization.

In the context of the pandemic, pressure comes as companies struggle with big drops in revenue; opportunity arises as employees work remotely; and the rationalization for fraud is reinforced by the unprecedented challenges people are facing. 

“It could be anything,” said Lindsay. “‘My wife just lost her job, so I need to make up for it.'”

The report lists fraud types that analysts expect are rising because of the pandemic:

  • Fabrication of revenue to offset losses.
  • Understatement of accounts receivable reserves as customers delay payments. 
  • Manipulation of compliance with debt covenants. 
  • Unrecognized inventory impairments.
  • Over- or understated accounting estimates to meet projection.

About a dozen types in all are listed. 

“Past crises have proven that at any time of large-scale disruption or stress on an economy or industry, companies should be prepared for the possibility of increased fraud.” the report said. 

Lindsay stressed three lessons she’d like to see CFOs take away from the report.

First, the potential for fraud in their companies shouldn’t be an afterthought. Second, protection against it is management’s responsibility but there’s also a role for company’s audit committee, its internal auditors and it’s external auditors. Third, CFOs and the finance executives they work with, including at the middle management level, must bring that same skepticism toward the numbers that auditors are trained to bring.

“Professional skepticism is a core competency of the external auditor and, quite frankly, the internal auditor,” she said. “Management and committee members are not necessarily trained on what it is, but it doesn’t mean you shouldn’t be exercising skepticism, [which is] asking questions about the numbers that are being reported. Is this exactly what happened? Do we have weaknesses? Do we have areas of positivity? It’s really about drilling down and having a dialogue and not just taking the numbers at face value.”

In addition to the Center for Audit Quality, Mitigating the Risks of Common Fraud Schemes: Insights From SEC Enforcement Actions was prepared by Financial Executives International, The Institute of Internal Auditors and the National Association of Corporate Directors.

The Mask Slackers of 1918

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As the influenza pandemic swept across the United States in 1918 and 1919, masks took a role in political and cultural wars.

The masks were called muzzles, germ shields and dirt traps. They gave people a “pig-like snout.” Some people snipped holes in their masks to smoke cigars. Others fastened them to dogs in mockery. Bandits used them to rob banks.

More than a century ago, as the 1918 influenza pandemic raged in the United States, masks of gauze and cheesecloth became the facial front lines in the battle against the virus. But as they have now, the masks also stoked political division. Then, as now, medical authorities urged the wearing of masks to help slow the spread of disease. And then, as now, some people resisted.

In 1918 and 1919, as bars, saloons, restaurants, theaters and schools were closed, masks became a scapegoat, a symbol of government overreach, inspiring protests, petitions and defiant bare-face gatherings. All the while, thousands of Americans were dying in a deadly pandemic.

The first infections were identified in March, at an Army base in Kansas, where 100 soldiers were infected. Within a week, the number of flu cases grew fivefold, and soon the disease was taking hold across the country, prompting some cities to impose quarantines and mask orders to contain it.

By the fall of 1918, seven cities — San Francisco, Seattle, Oakland, Sacramento, Denver, Indianapolis and Pasadena, Calif. — had put in effect mandatory face mask laws, said Dr. Howard Markel, a historian of epidemics and the author of “Quarantine!”

Organized resistance to mask wearing was not common, Dr. Markel said, but it was present. “There were flare-ups, there were scuffles and there were occasional groups, like the Anti-Mask League,” he said, “but that is the exception rather than the rule.”

At the forefront of the safety measures was San Francisco, where a man returning from a trip to Chicago apparently carried the virus home, according to archives about the pandemic at the University of Michigan.

By the end of October, there were more than 60,000 cases statewide, with 7,000 of them in San Francisco. It soon became known as the “masked city.”

“The Mask Ordinance,” signed by Mayor James Rolph on Oct. 22, made San Francisco the first American city to require face coverings, which had to be four layers thick.

Resisters complained about appearance, comfort and freedom, even after the flu killed an estimated 195,000 Americans in October alone.

Alma Whitaker, writing in The Los Angeles Times on Oct. 22, 1918, reviewed masks’ impact on society and celebrity, saying famous people shunned them because it was “so horrid” to go unrecognized.

“The big restaurants are the funniest sights, with all the waiters and diners masked, the latter just raising their screen to pop in a mouthful of food,” she wrote.

When Ms. Whitaker herself declined to wear one, she was “forcibly taken” to the Red Cross as a “slacker,” and ordered to make one and put it on.

The San Francisco Chronicle said the simplest type of mask was of folded gauze affixed with elastic or tape. The police went for gauze masks, which resembled an unflattering “nine ordinary slabs of ravioli arranged in a square.”

There was room for creativity. Some of the coverings were “fearsome looking machines” that lent a “pig-like aspect” to the wearer’s face.

The penalty for violators was $5 to $10, or 10 days’ imprisonment.

On Nov. 9, 1,000 people were arrested, The San Francisco Chronicle reported. City prisons swelled to standing room only; police shifts and court sessions were added to help manage.

“Where is your mask?” Judge Mathew Brady asked offenders at the Hall of Justice, where sessions dragged into night. Some gave fake names, said they just wanted to light a cigar or that they hated following laws.

Jail terms of 8 hours to 10 days were given out. Those who could not pay $5 were jailed for 48 hours.

On Oct. 28, a blacksmith named James Wisser stood on Powell and Market streets in front of a drugstore, urging a crowd to dispose of their masks, which he described as “bunk.”

A health inspector, Henry D. Miller, led him to the drugstore to buy a mask.

At the door, Mr. Wisser struck Mr. Miller with a sack of silver dollars and knocked him to the ground, The San Francisco Chronicle reported. While being “pummeled,” Mr. Miller, 62, fired four times with a revolver. Passers-by “scurried for cover,” The Associated Press said.

Mr. Wisser was injured, as were two bystanders. He was charged with disturbing the peace, resisting an officer and assault. The inspector was charged with assault with a deadly weapon.

That was the headline for a report published in The Los Angeles Times when city officials met in November to decide whether to require residents to wear “germ scarers” or “flu-scarers.”

Public feedback was invited. Some supported masks so theaters, churches and schools could operate. Opponents said masks were “mere dirt and dust traps and do more harm than good.”

“I have seen some persons wearing their masks for a while hanging about their necks, and then apply them to their faces, forgetting that they might have picked up germs while dangling about their clothes,” Dr. E.W. Fleming said in a Los Angeles Times report.

An ear, nose and throat specialist, Dr. John J. Kyle, said: “I saw a woman in a restaurant today with a mask on. She was in ordinary street clothes, and every now and then she raised her hand to her face and fussed with the mask.”

Suffragists fighting for the right to vote made a gesture that rejected covering their mouths at a time when their voices were crucial.

At the annual convention of the Illinois Equal Suffrage Association, in October 1918, they set chairs four feet apart, closed doors to the public and limited attendance to 100 delegates, the Chicago Daily Tribune reported.

But the women “showed their scorn” for masks, it said. It’s unclear why.

Allison K. Lange, an associate history professor at Wentworth Institute of Technology, said one reason could have been that they wanted to keep a highly visible profile.

“Suffragists wanted to make sure their leaders were familiar political figures,” Dr. Lange said.

San Francisco’s mask ordinance expired after four weeks at noon on Nov. 21. The city celebrated, and church bells tolled.

A “delinquent” bent on blowing his nose tore his mask off so quickly that it “nearly ruptured his ear,” The San Francisco Chronicle reported. He and others stomped on their masks in the street. As a police officer watched, it dawned on him that “his vigil over the masks was done.”

Waiters, barkeeps and others bared their faces. Drinks were on the house. Ice cream shops handed out treats. The sidewalks were strewn with gauze, the “relics of a torturous month,” The Chronicle said.

The spread had been halted. But a second wave was on the horizon.

By December, the San Francisco Board of Supervisors was again proposing a mask requirement, meeting with testy opposition.

Around the end of the year, a bomb was defused outside the office of San Francisco’s chief health officer, Dr. William C. Hassler. “Things were violent and aggressive, but it was because people were losing money,” said Brian Dolan, a medical historian at the University of California, San Francisco. “It wasn’t about a constitutional issue; it was a money issue.”

By the end of 1918, the death toll from influenza had reached at least 244,681, mostly in the last four months, according to government statistics.

In January, Pasadena’s city commission passed a mask ordinance. The police grudgingly enforced it, cracking down on cigar smokers and passengers in cars. Sixty people were arrested on the first day, The Los Angeles Times reported on Jan. 22, in an article titled “Pasadena Snorts Under Masks.”

“It is the most unpopular law ever placed on the Pasadena records,” W.S. McIntyre, the chief of police, told the paper. “We are cursed from all sides.”

Some mocked the rule by stretching gauze across car vents or dog snouts. Cigar vendors said they lost customers, though enterprising aficionados cut a hole in the cloth. (They were still arrested.) Barbers lost shaving business. Merchants complained traffic dropped as more people stayed home.

Petitions were circulated at cigar stands. Arrests rose, even of the powerful. Ernest May, the president of Security National Bank of Pasadena, and five “prominent” guests were rounded up at the Maryland Hotel one Sunday.

They had masks on, but not covering their faces.

As the contagion moved into its second year, so did the skepticism.

On Dec. 17, 1918, the San Francisco Board of Supervisors reinstituted the mask ordinance after deaths started to climb, a trend that spilled over into the new year with 1,800 flu cases and 101 deaths reported there in the first five days of January.

That board’s decision led to the creation of the Anti-Mask League, a sign that resistance to masks was resurfacing as cities tried to reimpose orders to wear them when infections returned.

The league was led by a woman, E.J. Harrington, a lawyer, social activist and political opponent of the mayor. About a half-dozen other women filled its top ranks. Eight men also joined, some of them representing unions, along with two members of the board of supervisors who had voted against masks.

“The masks turned into a political symbol,” Dr. Dolan said.

On Jan. 25, the league held its first organizational meeting, open to the public at the Dreamland Rink, where they united behind demands for the repeal of the mask ordinance and for the resignations of the mayor and health officials.

Their objections included lack of scientific evidence that masks worked and the idea that forcing people to wear the coverings was unconstitutional.

On Jan. 27, the league protested at a Board of Supervisors meeting, but the mayor held his ground. There were hisses and cries of “freedom and liberty,” Dr. Dolan wrote in his paper on the epidemic.

Repeal came a few days later on Feb. 1, when Mayor Rolph cited a downturn in infections.

But a third wave of flu rolled in late that year. The final death toll reached an estimated 675,000 nationwide, or 30 for every 1,000 people in San Francisco, making it one of the worst-hit cities in America.

Dr. Dolan said the story of the Anti-Mask League, which has drawn renewed interest now in 2020, demonstrates the disconnect between individual choice and universal compliance.

That sentiment echoes through the century from the voice of a San Francisco railway worker named Frank Cocciniglia.

Arrested on Kearny Street in January, Mr. Cocciniglia told the judge that he “was not disposed to do anything not in harmony with his feelings,” according to a Los Angeles Times report.

He was sentenced to five days in jail.

“That suits me,” Mr. Cocciniglia said as he left the stand. “I won’t have to wear a mask there.”

 

 

 

 

US weekly jobless claims hit 1.4 million, post second straight weekly increase

Posted on by • Posted in 2020 Election Issues, Bankruptcy, Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Recovery, Economy Reopening, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Financial Pressure, Financial Transparency, Financial Viability, Financially Distressed, Job, Job Loss, Job Market, Job Search, Job Security, Leadership Decentralized, Liquidity, Market Outlook, Market Uncertainty, National Strategy, Pandemic, Uncertainty, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.businessinsider.com/us-jobless-claims-unemployment-insurance-labor-market-filings-recession-coronavirus-2020-7

  • US jobless claims for the week that ended Saturday totaled 1.43 million, the Labor Department said Thursday. That came in slightly below the consensus economist estimate of 1.45 million.
  • It marked a second consecutive weekly increase after the prior week’s report ended a 15-week streak of declines. This week’s report brought total filings over a 19-week period to more than 54 million.
  • Continuing claims, the aggregate total of people receiving unemployment benefits, totaled 17 million for the week that ended July 18.

More than a million Americans filed for unemployment benefits last week, reflecting the continued high level of pandemic-induced layoffs as the US rolls back its economic-reopening efforts.

New US weekly jobless claims totaled 1.43 million in the week that ended Saturday, the Labor Department reported Thursday. That was slightly below the consensus economist estimate of 1.45 million compiled by Bloomberg. It also was a minor increase over the prior week’s 1.3 million filings, a reading that marked the first gain in 15 weeks.

In just a few months, the more than 54 million unemployment claims filed during the coronavirus pandemic have far surpassed the 37 million during the 18-month Great Recession. The latest figure is more than double the 665,000 filed during the Great Recession’s worst week.

“A combination of uncertainty from rising virus cases to the withdrawal of financial support is concerning for an already fragile recovery,” said Daniel Zhao, senior economist at Glassdoor. “The economy is still in deep risk of falling sideways – where conditions improve so sluggishly that the effects of the crisis become increasingly permanent.”

Continuing claims, which represent the aggregate total of people receiving unemployment benefits, came in at 17 million for the week that ended July 18, a decline from the prior period’s revised number.

Stubbornly high weekly claims for unemployment insurance add to growing concerns that the economic recovery from the pandemic-induced recession is stagnating as coronavirus cases increase. A number of states have had to pause or roll back their reopening plans to deal with COVID-19 spikes, harming the economic recovery.

Going forward, industry watchers will be waiting to see what the July jobs report shows. The report, due August 7, reflects a reference period that includes last week, when initial jobless claims ticked up for the first time in 15 weeks. That could foreshadow a negative headline jobs number in July, although the nonfarm payroll report has become increasingly difficult to predict.

Last week, the additional $600 unemployment benefit from the CARES Act expired, meaning that soon millions of Americans will see a significant decrease in weekly income. The GOP this week introduced its proposal, the HEALS Act, that would cut the weekly benefit to $200 until states could implement a program that’d replace 70% of wages for most filers.

In the week ending July 25, there were 829,697 initial claims from 50 states reporting for Pandemic Unemployment Assistance, the program that extended benefits to gig workers and independent contracts. The total applications for all state programs for the week ending July 11 was 30.2 million. 

 

 

 

 

6 months in: Following the flow of CARES hospital funding

Posted on by • Posted in 2020 Election Issues, Compliance, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Financial Pressure, Financial Transparency, Financial Viability, Financially Distressed, Health Policy, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Leadership Decentralized, Mortality, National Strategy, Pandemic, Public Health, Public Safety, Quarantine, Social Distancing, The CARES Act • Leave a comment

https://www.healthcaredive.com/news/6-months-cares-hospital-funding-covid/581506/

Congress has allocated $175 billion to help providers respond to the COVID-19 crisis, but HHS has been hit with multiple complaints about distribution as that money goes out the door.

The COVID-19 pandemic created massive upheaval for the nation’s healthcare system still evident six months after the U.S. declared it a national public health crisis.

The virus continues to surge, reaching new heights with more than 4 million confirmed cases and more than 143,000 deaths. No other country has experienced more deaths or cases than the U.S., data with Johns Hopkins Coronavirus Research Center show.

Parts of the country are facing the prospect of another lockdown as cases overwhelm healthcare facilities.

Forced into quickly responding to the pandemic, health systems have taken substantial financial hits. While the impact has been far from even, one estimate from the American Hospital Association estimates the nation’s health systems’ financial losses in the first four months of the outbreak reached nearly $203 billion.

To help staunch the free fall, Congress earmarked $175 billion in two pieces of legislation in an attempt to keep providers afloat as the virus wreaked havoc on the economy. The majority of that was from the Coronavirus Aid, Relief, and Economic Security Act passed in late March.

Yet, about 65% of the money has yet to go out to providers, with just $61 billion delivered and attested to by providers by mid-July, a senior HHS official told Healthcare Dive.

Still, with no end in sight for the pandemic, at least on U.S. shores, providers are ramping up lobbying in an effort to secure more funding as case counts soar. AHA is asking for another $100 billion in the next round of congressional relief now under discussion.

Many healthcare providers stopped profitable elective procedures as stay-at-home orders blanketed parts of the country to contain the spread of the disease. This also allowed providers to conserve much needed resources such as personal protective equipment that proved hard to procure amid the crisis.

But revenue quickly plummeted as providers delayed care in preparing for a surge of COVID-19 patients.

“The funding hospitals and health systems have received to date, while helpful, is just a small fraction of what we estimate they will lose this year,” Lisa Kidder Hrobsky, group vice president of federal relations for AHA, told Healthcare Dive in a statement.

Where did the money go?

So far, HHS has outlined a spending plan for $125 billion of the $175 billion in provider relief funds.

The program has been met with an array of criticism, including whether the distribution of funds went to those most in need and whether the fine print has deterred providers from taking a piece of the massive financial package.

https://www.datawrapper.de/_/7PvZ4/

In response to those critiques, HHS has sent out additional federal funding in more targeted waves since April.

The first tranche of money — $30 billion in April — was designed to get out the door quickly, as providers were struggling. From there, HHS has attempted to pinpoint the money to certain providers and geographic areas to appease the needs of various providers.

To even out distribution, HHS began sending targeted funding, such as to hospitals overrun with COVID-19 patients, mainly in New York and other hard hit areas. The agency also funneled money to rural providers and skilled-nursing facilities, among others.

After HHS was met with the argument that wealthier hospitals, or those that had larger shares of privately-insured patients, received more funding, it allocated money for those taking care of the neediest.

At the same time, as the agency doles out the rest of the $175 billion, it has promised to reimburse providers for uninsured COVID-19 patients. That has raised questions about whether HHS will have enough for uninsured care and additional tranches.  

However, a senior HHS official said it has only paid out $340 million to providers for uninsured COVID-19 patients, less than what they had expected. So low, that HHS has been trying to encourage providers to apply for such funding.

Timeline of HHS funding

  • AprilHHS​ released $30 billion from the first tranche of money based on a provider’s 2018 Medicare fee-for-service revenue. By the end of April, an additional $20 billion from general distribution was released, for a total of $50 billion.
  • MayMore than $26 billion was sent to rural, skilled-nursing facilities and those hit hard by the virus.
  • JuneHHS released an additional $25 billion earmarked for safety-net providers and those that cater to large populations of Medicaid patients.
  • JulyHHS​ said it would release another $4 billion for safety-net providers and certain specialty rural providers missed in earlier rounds, along with another $10 billion for those in hot spots.

Fears eased over fine print

Some providers declined or returned funding they had received, worried about the fine print or the terms and conditions, like how to appropriately spend the money.

However, HHS has relaxed some of those conditions, easing the fears of some.

For a lot of providers, it was a sigh of relief, causing many to say, “‘Great, we can feel comfortable participating in this program’,” Tim Fry, an attorney with McGuireWoods, told Healthcare Dive.

In particular, HHS recently said that if at the end of this pandemic, providers didn’t use all of the funding for lost revenue or healthcare related expenses, there will be a process to return the money. Initially, providers expressed concern that it was an all-or-nothing program.

Plus, HHS provided clarity on how the money can be used, stipulating that the funds go to healthcare-related expenses or lost revenue attributable to the coronavirus. HHS has provided more guidance and examples of appropriate uses, a relief to many, Fry said.

Earlier, health systems were overwhelmed by the administrative burden and fearful over how to appropriately spend the money without running afoul of new rules.

“We are not infinitely flexible around those requirements, but when we hear from providers of issues that they’re having — and we think we can be reasonably [accommodating], we try to be,” a senior HHS official said.

 

 

 

 

Bruising labor battles put Kaiser Permanente’s reputation on the line

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Bruising labor battles put Kaiser Permanente’s reputation on the line

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The ongoing labor battles have undermined the health giant’s once-golden reputation as a model of cost-effective care that caters to satisfied patients — which it calls “members” — and is exposing it to new scrutiny from politicians and health policy analysts.

Kaiser Permanente, which just narrowly averted one massive strike, is facing another one Monday.

The ongoing labor battles have undermined the health giant’s once-golden reputation as a model of cost-effective care that caters to satisfied patients — which it calls “members” — and is exposing it to new scrutiny from politicians and health policy analysts.

As the labor disputes have played out loudly, ricocheting off the bargaining table and into the public realm, some critics believe that the nonprofit health system is becoming more like its for-profit counterparts and is no longer living up to its foundational ideals.

Compensation for CEO Bernard Tyson topped $16 million in 2017, making him the highest-paid nonprofit health system executive in the nation. The organization also is building a $900 million flagship headquarters in Oakland. And it bid up to $295 million to become the Golden State Warriors’ official health care provider, the San Francisco Chronicle reported. The deal gave the health system naming rights for the shopping and restaurant complex surrounding the team’s new arena in San Francisco, which it has dubbed “Thrive City.”

The organization reported $2.5 billion in net income in 2018 and its health plan sits on about $37.6 billion in reserves.

Against that backdrop of wealth, more than 80,000 employees were poised to strike last month over salaries, retirement benefits and concerns over outsourcing and subcontracting. Nearly 4,000 members of its mental health staff in California are threatening to walk out Monday over the long wait times their patients face for appointments.

“Kaiser’s primary mission, based on their nonprofit status, is to serve a charitable mission,” said Ge Bai, associate professor of accounting and health policy at Johns Hopkins University. “The question is, do they need such an excessive, fancy flagship space? Or should they save money to help the poor and increase employee salaries?”

Lawmakers in California, Kaiser Permanente’s home state, recently targeted it with a new financial transparency law aimed at determining why its premiums continue to increase.

There’s a growing suspicion “that these nonprofit hospitals are not here purely for charitable missions, but instead are working to expand market share,” Bai said.

The scrutiny marks a disorienting role-reversal for Kaiser, an integrated system that acts as both health insurer and medical provider, serving 12.3 million patients and operating 39 hospitals across eight states and the District of Columbia. The bulk of its presence is in California. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

Many health systems have tried to imitate its model for delivering affordable health care, which features teams of salaried doctors and health professionals who work together closely, and charges few if any extraneous patient fees. It emphasizes caring and community with slogans like “Health isn’t an industry. It’s a cause,” and “We’re all in this together. And together, we thrive.”

Praised by President Barack Obama for its efficiency and high-quality care, the health maintenance organization has tried to set itself apart from its profit-hungry, fee-for-service counterparts.

Now, its current practices — financial and medical — are getting a more critical look.

As a nonprofit, Kaiser doesn’t have to pay local property and sales taxes, state income taxes and federal corporate taxes, in exchange for providing “charity care and community benefits” — although the federal government doesn’t specify how much.

As a percentage of its total spending, Kaiser Permanente’s charity care spending has decreased from 1.29% in 2012 to 0.8% in 2017. Other hospitals in California have exhibited a similar decrease, saying there are fewer uninsured patients who need help since the Affordable Care Act expanded insurance coverage.

CEO Tyson told California Healthline that he limits operating income to about 2% of revenue, which pays for things like capital improvements, community benefit programs and “the running of the company.”

“The idea we’re trying to maximize profit is a false premise,” he said.

The organization is different from many other health systems because of its integrated model, so comparisons are not perfect, but its operating margins were smaller and more stable than other large nonprofit hospital groups in California. AdventHealth’s operating margin was 7.15% in 2018, while Dignity Health had losses in 2016 and 2017.

Tyson said that executive compensation is a “hotspot” for any company in a labor dispute. “In no way would I try to justify it or argue against it,” he said of his salary. In addition to his generous compensation, the health plan paid 35 other executives more than $1 million each in 2017, according to its tax filings.

Even its board members are well-compensated. In 2017, 13 directors each received between $129,000 and $273,000 for what its tax filings say is five to 10 hours of work a week.

And that $37.6 billion in reserves? It’s about 17 times more than the health plan is required by the state to maintain, according to the California Department of Managed Health Care.

Kaiser Permanente said it doesn’t consider its reserves excessive because state regulations don’t account for its integrated model. These reserves represent the value of its hospitals and hundreds of medical offices in California, plus the information technology they rely on, it said.

Kaiser Permanente said its new headquarters will save at least $60 million a year in operating costs because it will bring all of its Oakland staffers under one roof. It justified the partnership with the Warriors by noting it spans 20 years and includes a community gathering space that will provide health services for both members and the public.

Kaiser has a right to defend its spending, but “it’s hard to imagine a nearly $300 million sponsorship being justifiable,” said Michael Rozier, an assistant professor at St. Louis University who studies nonprofit hospitals.

The Service Employees International Union-United Healthcare Workers West was about to strike in October before reaching an agreement with Kaiser Permanente.

Democratic presidential candidates Kamala Harris, Bernie Sanders, Elizabeth Warren and Pete Buttigieg, as well as 132 elected California officials, supported the cause.

California legislators this year adopted a bill sponsored by SEIU California that will require the health system to report its financial data to the state by facility, as opposed to reporting aggregated data from its Northern and Southern California regions, as it currently does. This data must include expenses, revenues by payer and the reasons for premium increases.

Other hospitals already report financial data this way, but the California legislature granted Kaiser Permanente an exemption when reporting began in the 1970s because it is an integrated system. This created a financial “black hole” said state Sen. Richard Pan (D-Sacramento), the bill’s author.

“They’re the biggest game in town,” said Anthony Wright, executive director of the consumer group Health Access California. “With great power comes great responsibility and a need for transparency.”

Patient care, too, is under scrutiny.

California’s Department of Managed Health Care fined the organization $4 million over mental health wait times in 2013, and in 2017 hammered out an agreement with it to hire an outside consultant to help improve access to care. The department said Kaiser Permanente has so far met all the requirements of the settlement.

But according to the National Union of Healthcare Workers, which is planning Monday’s walkout, wait times have just gotten worse.

Tyson said mental health care delivery is a national issue — “not unique to Kaiser Permanente.” He said the system is actively hiring more staff, contracting with outside providers and looking into using technology to broaden access to treatment.

At a mid-October union rally in Oakland, therapists said the health system’s billions in profits should allow it to hire more than one mental health clinician for every 3,000 members, which the union says is the current ratio.

Ann Rivello, 50, who has worked periodically at Kaiser Permanente Redwood City Medical Center since 2000, said therapists are so busy they struggle to take bathroom breaks and patients wait about two months between appointments for individual therapy.

“Just take $100 million that they’re putting into the new ‘Thrive City’ over there with the Warriors,” she said. “Why can’t they just give it to mental health?”