Category Archives: Health System

Another reality check on hospital beds

Posted on by • Posted in Conflicts of Interest, Fee for Service Reimbursement, Financial Incentives, Health Policy, Health System, Hospital, Hospital Industry, Tax Exempt Debt, Tax Exempt Status, Tax-Exempt Status, Value-Based Healthcare • Leave a comment

https://www.axios.com/newsletters/axios-vitals-1a6dd9a6-5198-4abf-812f-dbf8dd8e67cb.html

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Hospital beds are not filling up like they used to, but that doesn’t mean hospitals want their beds to be empty, Axios’ Bob Herman reports.

What they’re saying: Even though more patients are being treated in outpatient clinics rather than hospitals, “we’ll still be able to keep our beds pretty full,” Don Scanlon, chief financial officer at Mount Sinai Health System, said this week at an investor lunch held at Goldman Sachs headquarters in New York City.

Details: Mount Sinai, a not-for-profit hospital system based in Manhattan with $5 billion in annual revenue, is preparing to sell $475 million in bonds, and was making its pitch to bondholders about why buying that debt would be a good deal.

Between the lines: Mount Sinai’s discharges have trended down, but the hospital doesn’t want to lose the bigger dollars tied to inpatient stays. And the system wants to reassure municipal investors they will see returns.

  • As a result, Mount Sinai has invested more money in outpatient centers in other parts of New York that serve as “feeders” for its main city hospitals, Scanlon said.

The bottom line: Mount Sinai, Trinity Health, Banner Health and a host of other hospital systems have openly touted plans to boost or retain admissions even though they say they want to keep people out of the hospital. This is a fundamental disconnect between “value-based care” and the system’s financial incentives.

Go deeper: How banks and law firms make millions from hospital debt

 

SANFORD HEALTH CEO FAULTS UNITYPOINT HEALTH FOR FAILED MERGER TALKS

Posted on by • Posted in Health System, Hospital Industry, Mergers & Acquisitions • Leave a comment

https://www.healthleadersmedia.com/strategy/sanford-health-ceo-faults-unitypoint-failed-merger-talks

The leader who had been in line to helm the post-merger entity said his potential merger partner’s board ‘failed to embrace the vision.’

KEY TAKEAWAYS

The merger would have created one of the nation’s 15 largest health systems.

The party that backed out cited a desire to maintain its existing corporate structure.

There seems to be some finger-pointing between Sanford Health, based in Sioux Falls, South Dakota, and UnityPoint Health, based in Des Moines, Iowa, after talks of a major potential merger between the two Midwestern health systems flatlined.

The two nonprofits had been exploring a plan to combine their operations and form a 76-hospital system with $11 billion in annual revenue and operations across 26 states. When they announced their letter of intent last June, they said the deal would form one of the nation’s 15 largest health systems.

But each acknowledged in separate statements Tuesday that their merger would not come to fruition.

Sanford Health President and CEO Kelby Krabbenhoft blamed the leaders of UnityPoint Health for the outcome.

“We were excited at the opportunity our combination would have provided to create a new health system of national prominence,” Krabbenhoft said in a statement. “The executive management teams and physicians worked diligently for 18 months to provide a merger recommendation to the boards.”

“We are disappointed that the UnityPoint Health board failed to embrace the vision,” he said. “Our focus now is on the patients and communities we serve and the 50,000 people working tirelessly to support them.”

Krabbenhoft had been expected to serve as president and CEO of the post-merger organization, while UnityPoint Health President and CEO Kevin Vermeer had been expected to serve as senior executive vice president.

Vermeer said UnityPoint decided to walk away from the deal after carefully considering its potential.

“Our organization concluded we can most effectively fulfill our mission by maintaining our existing corporate structure,” Vermeer said in a statement released to HealthLeaders. “As a leader in the delivery of value-based care, UnityPoint Health remains strong and competitively positioned for the future.”

The statement says UnityPoint has “great respect for Sanford Health and the relationships we’ve developed.”

In a letter to Sanford employees, Krabbenhoft said the parties were each scheduled to vote separately Tuesday on the deal but UnityPoint met a day earlier and voted 13–6 against the merger, as Melanie Evans reported for The Wall Street Journal.

Spokespeople for Sanford and UnityPoint didn’t immediately respond Wednesday to questions from HealthLeaders about the timing of UnityPoint’s vote.

 

 

 

CMS pitches ramped up oversight of Medicaid payments, promises block grant guidance

Posted on by • Posted in 2020 Election Issues, America's Essential Hospitals, American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicaid Block Grants, Safety Net Hospitals, Safety-Net Providers • Leave a comment

https://www.healthcaredive.com/news/cms-pitches-ramped-up-oversight-of-medicaid-payments-promises-block-grant/567135/

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UPDATE: Nov. 13, 2019: This brief has been updated to include comments from provider groups.

Dive Brief:

  • CMS proposed a new rule Tuesday that would establish stricter requirements for states to report information on supplemental Medicaid payments to providers in a bid to clamp down on spending and promote transparency.
  • The agency will also soon release guidance on how states can test alternative financing approaches in the safety net program like block grant and per-capita cap proposals for “certain optional adult populations,” CMS Administrator Seema Verma said Tuesday at the National Association of Medicaid Director’s annual conference in Washington, D.C.
  • Later this year, CMS will also issue guidance on how states can promote value-based payments and social determinants of health factors in Medicaid, Verma said. The Center for Medicare and Medicaid Innovation is currently developing several new payment models to push providers to take on more risk for their patient populations in those programs.

Dive Insight:

The moves are in line with sweeping changes from the Trump administration moving more power to the states and asking more from recipients. The CMS administrator teased late last month the agency would soon release new guidance for states to inject flexibility into their Medicaid programs.

“We shouldn’t ration care but instead make how we pay for care more rational,” Verma said Tuesday. “Medicaid must move toward value-based care.”

Speaking to the Medicaid directors Tuesday, Verma said the changes are aimed preserving Medicaid for future generations.

“Going forward there will be no new [State Innovation Model] grants, no more open-ended one-off district waivers,” she said. “We must move forward with a more unified, cohesive approach across payers, across CMS, across states.”

The proposed rule, called Medicaid Fiscal Accountability (MFAR), will add more scrutiny to supplemental payments, which are Medicaid payments to providers in addition to medical services rendered to Medicaid beneficiaries, such as payments supporting quality initiatives or bolstering rural or safety net providers.

Some states rely heavily on these additional payments to offset low Medicaid reimbursement or support struggling hospitals. Provider lobbies did not take kindly to the new rule.

“We share the government’s desire to protect patients and taxpayers with transparency in federal programs, but today’s proposal oversteps this goal with deeply damaging policies that would harm the healthcare safety net and erode state flexibility,” Beth Fledpush, SVP of policy and advocacy for America’s Essential Hospitals, said in a statement.

AEH, which includes more than 300 member hospital and health systems, many of which are safety net providers, asked CMS to withdraw the proposal. The American Hospital Association told Healthcare Dive it was still reviewing the rule and declined comment.

However, government oversight agencies like the Government Accountability Office and the Office of Inspector General have recommended changes to these payments, which have increased from 9.4% of Medicaid payments in 2010 to 17.5% in 2017, according to CMS.

MFAR would also propose new definitions for “base” and “supplemental” payments in order to better enforce statutory requirements around and eliminate vulnerabilities in program spending.

Verma has long teased CMS support of block grants, an idea popular with conservatives, but Tuesday’s speech solidifies the agency’s support of such proposals. A handful of red states have been mulling over capped spending to gain more clarity around budgets.

In September, Tennessee unveiled its plan to move to a block grant system that would set a floor for federal contributions adjusted on a per capita basis if enrollment grows. Any savings would be shared between the state and the government.

Tennessee must submit a formal application to CMS to later than Nov. 20. If approved, it would become the first state to use a block grant funding mechanism in Medicaid. Additionally, Utah submitted a waiver application seeking per-capita Medicaid caps in June; Oklahoma Gov. Kevin Stitt, a Republican, is reportedly considering such a program; and Alaska and Texas have both commissioned block grant studies.

 

 

 

Federal investigators probe Ascension, Google project

Posted on by • Posted in Dept of Health and Human Services (HHS), Health Policy, Health System, Hospital, Hospital Industry, Medical Records, Office of Civil Rights of HHS, Privacy • Leave a comment

https://www.beckershospitalreview.com/cybersecurity/federal-investigators-probe-ascension-google-project.html

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The Office of Civil Rights of HHS is asking for more information about Google’s “Project Nightingale” with St. Louis-based Ascension, according to a Nov. 12 The Wall Street Journal report.

Investigators “will seek to learn more information about this mass collection of individuals’ medical records to ensure that HIPAA protections were fully implemented,” OCR Director Roger Severino told WSJ.

Ascension and Google partnered last year to gather and share patient information to create healthcare solutions. Physicians and patients from 21 Ascension locations were not informed that information was being shared with Google. It is estimated that Google will gather data on 50 million patients.

Patient data that is being secretly shared with Google includes lab results, diagnoses and hospitalization records, reports WSJ. In some instances, Google has access to patients’ complete health history, including names and dates of birth. 

Although Ascension employees have questioned the ethical and technological ways Google is gathering data, privacy experts said it appears to be acceptable under federal law. Hospitals are generally allowed to share data with business partners without informing patients if the information is used “only to help the covered entity carry out its healthcare functions.”

An Ascension spokesperson said patient data wouldn’t be used to sell ads, reports WSJ.

“We are happy to cooperate with any questions about the project. We believe Google’s work with Ascension adheres to industry-wide regulations (including HIPAA) regarding patient data, and comes with strict guidance on data privacy, security and usage,” a spokesperson for Google said in a statement to WSJ.

Legislators on Nov. 12 also commented on the project. Presidential hopeful Sen. Amy Klobuchar of Minnesota said that there needs to be government oversight for the amount of data Google is handling, adding there are “very few rules of the road in place regulating how it is collected and used.”

Google has mapped out plans to develop a search tool that would aggregate patient data into a central location. Ascension physicians would then be able to use the tool to more quickly access patient information.

Ascension leader Eduardo Conrado, executive vice president of strategy and innovations for Ascension, shared his reactions to the WSJ Nov. 11 report on Project Nightingale on Nov. 12. Find his commentary here.

 

 

 

Can’t Pay the Medical Bill? Your Hospital May Take You to Court

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https://news.yahoo.com/cant-pay-medical-bill-hospital-170819820.html

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GEISINGER OFFERS DEBT-FREE PRIMARY CARE MEDICAL SCHOOL

Posted on by • Posted in Health System, Hospital, Hospital Industry, Medical School, Medical School Financing, Outcomes, Physician, Primary Care, Quality of Care • Leave a comment

https://www.healthleadersmedia.com/clinical-care/geisinger-offers-debt-free-primary-care-medical-school?spMailingID=16548061&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1760517984&spReportId=MTc2MDUxNzk4NAS2

Program offered for medical students who’ll commit to primary care at the Pennsylvania-based health system after graduating.

KEY TAKEAWAYS

The program will pick 40 first- and second-year students in each medical class through a competitive application process.

Selection criteria include  financial need, academic merit, diversity, and predictors of whether the applicant will stay in Geisinger’s service area.

The program will provide full coverage of tuition and fees plus a monthly $2,000 stipend through four years of medical school. 

Geisinger and Geisinger Commonwealth School of Medicine have created the Geisinger Primary Care Scholars Program that will offer debt-free medical school and living assistance to medical students who agree to work within primary care at the health system after they graduate.

Medical students often carry $200,000 or more in debt, which pushes them into higher-paying specialties. Geisinger President and CEO Jaewon Ryu, MD, says that removing the financial strain in exchange for a four-year commitment to practice at Geisinger will make it easier for more med students to pursue primary care.

“At Geisinger, we’ve been able to prove that by focusing on primary care we can improve outcomes, lower costs and improve satisfaction among patients and providers,” Ryu said.

“We’ve built some innovative programs that expand upon the notion of what is primary care and where it is delivered. With all of these different offerings, we are thrilled to welcome anyone who shares this passion around new and exciting ways to deliver this core care,” Ryu said.

“So, it’s only natural that we extend that commitment to training the next generation of physicians. These scholars have the opportunity to learn and later work in Geisinger’s innovative primary care environment without the worry of how they will pay for their education,” he said.

The program will pick 40 first- and second-year students in each incoming medical class through a competitive application process. Selection criteria include demonstrated financial need, academic merit, diversity, passion for serving their communities, and predictors of whether the applicant is likely to stay in Geisinger’s service area.

The program will provide full coverage of tuition and fees plus a monthly $2,000 stipend through the four years of medical school.

“I can’t think of a better opportunity for these scholars to pursue their commitment to primary care than by providing debt-free medical schooling,” said Steven J. Scheinman, MD, executive vice president and chief academic officer at Geisinger and Dean of the Geisinger Commonwealth School of Medicine.

Last year Geisinger started the Abigail Geisinger Scholars Program. Which gives 10 students in each class up to four years of tuition in the form of a loan, which is forgiven upon completion of a service commitment as a Geisinger physician in any specialty.

“I CAN’T THINK OF A BETTER OPPORTUNITY FOR THESE SCHOLARS TO PURSUE THEIR COMMITMENT TO PRIMARY CARE THAN BY PROVIDING DEBT-FREE MEDICAL SCHOOLING. ”

 

 

 

WHAT TO DO WHEN CONVERTING A HOSPITAL FROM NONPROFIT TO INVESTOR-OWNED

Posted on by • Posted in Charity Care, Culture, For-Profit, Governance, Health Policy, Health System, Hospital, Hospital Industry, Non-Profit Healthcare Industry, Tax Exempt Status, Tax Incentives, Tax Status • Leave a comment

https://www.healthleadersmedia.com/strategy/what-do-when-converting-hospital-nonprofit-investor-owned

While perhaps not as controversial as it once was, the ‘conversion’ of a nonprofit hospital to a for-profit venture can raise questions and spark unhelpful rumors.

KEY TAKEAWAYS

There may be an opportunity to highlight increased revenues for the benefit of local government, since investor-owned hospitals pay taxes.

Remember: Every hospital, regardless of its tax status, must bring in more dollars than it spends in order to be financially healthy and reinvest.

In most communities, the conversion of a hospital from a not-for-profit to an investor-owned enterprise no longer stirs the heated debate that it did decades ago. Instead, you’re much more likely today to see not-for-profit and investor-owned hospital organizations working in partnership.

Renowned not-for-profit health systems such as Duke Health and the Cleveland Clinic have formed strong affiliations with investor-owned hospital companies. In these and other partnerships, not-for-profits and investor-owned organizations are working together to strengthen hospitals, invest in communities, and serve patients.

In fact, the issues facing investor-owned hospital systems during a partnership are the same as those faced by not-for-profit health systems during a partnership discussion: Local control and governance, cultural compatibility, charity care support, and commitment to local investment are leading hot buttons for both.

Still, the “conversion” of a not-for-profit to an investor-owned organization can represent a change that can raise questions and ignite unhelpful rumors.

To help you be prepared, start by answering these basic questions: What’s the difference? How are not-for-profit and for-profit (investor-owned) hospitals different from one another?

  • Taxes: First, a (very) broad definition: “Not-for-profit” and “for profit” are tax-related designations. A not-for-profit hospital does not pay certain taxes, including those on property used for care, income, and sales. How- ever, it usually does pay payroll and other federal employee taxes. A for- profit hospital pays property, sales, and income taxes as well as payroll taxes. Not-for-profits sometimes make payments in lieu of taxes to help offset the costs of providing important community services, such as police and fire coverage.
  • Capital: Not-for-profit and investor-owned hospitals are also differentiated by where they get capital to invest in their facilities for infrastructure improvements, new equipment, staff, and the like. Not-for-profit hospitals usually go to the bond market for capital. Investor-owned hospitals go to the public stock market, the bond market, or investment groups for capital.
  • Analysts: Now for a word about financial ratings. Both types of organizations have outsiders judging the hospital’s financial performance. To help investors monitor their portfolios and make buying and selling decisions, not-for-profits are graded by credit rating agencies, such as Moody’s Investors Services and Standard & Poor’s. Publicly traded, investor-owned hospital stocks are watched by analysts and valued daily in stock exchanges.
  • Ownership: Who “owns” the hospital after such a sale is an important question and can reflect a community’s concerns about having a future voice in the care provided at its hospital. The answer can be complicated and inconsistent from hospital to hospital and community to community.

Here’s an overview: Independent, not-for-profit hospitals are, in a sense, owned by the communities they serve. The boards are usually comprised of local leaders and physicians. Excess revenues—profits—are fully reinvested into the community’s care after debt payments, payroll, and other expenses. Hospitals that join a regional or national not-for-profit health system, however, may or may not have a local board with a say in the direction of the facility and may or may not share their profits with the system. (In fact, if your local hospital is in financial trouble, the money flows into your hospital, not out of it!)

Investor-owned hospitals are, as you might guess by the name, owned by investors, who can be private individuals or stockholders. Investors traditionally benefit as the value of the company’s hospitals increases over time, through effective operations and local investments, and as the company overall grows by adding more hospitals.

Adding to this complexity is the trend for hospitals to pursue joint venture partnerships where ownership is shared by two or more organizations, including the “seller.” These partnerships call for strong and trusting relationships by every party. Communications is key to success.

Familiarize yourselves with these terms and issues as you move through a partnership. Be prepared for some myth busting.

That’s where the fundamental structural differences end. The driving forces of both organizations, however, are precisely the same:

  • No matter your tax status, every hospital must take in more dollars than it spends to be financially healthy and to reinvest in the care it provides.
  • Every hospital must offer quality care, provide current medical equipment and facilities, and support a trained staff to attract (and keep) patients  and serve the needs of physicians, payers, and others.

Now, consider some specific questions you may hear related to the structure of a not-for-profit to investor-owned conversion.

WHAT HAPPENS TO THE PROCEEDS OF THE SALE?

When there are funds left over from a sale, they are often referred to as the proceeds. These proceeds exist once the hospital’s debt and any other obligations (e.g., a pension fund) have been paid.

The answer as to what happens to those dollars depends on the ownership structure of the selling organization and the terms of the transaction. Here are a few scenarios:

  • The sale of a stand-alone, not-for-profit community hospital to an investor-owned company may lead to the creation of a community foundation. The creation of the foundation—including its board and mission—may be directed by your state attorney general’s office, and the proceeds from the sale will fund it.
  • When two not-for-profits merge, it is rare that there are proceeds. Instead, the common practice is for all assets from both organizations to combine for the good of the new system.
  • From the sale of a hospital owned by a religious organization, the remaining proceeds will likely return to that order or denomination.
  • When a government-owned hospital is sold, money left over may return to the city’s or county’s coffers, which may deposit it into the government’s general operating fund or create a new organization for meeting the charitable healthcare needs of the community.

WILL CHARITY CARE CONTINUE AT ITS CURRENT LEVEL?

This is really a question of community commitment and may be an indicator of how much the community-based culture is or is not going to change under the new ownership. In most cases, a commitment to either a specific level of charity care or a guarantee to continue the hospital’s existing charitable mission and policy is written into the deal documents. Expect the question and know the answer.

HOW MUCH MONEY IN LOCAL TAXES WILL THE NEW HOSPITAL OWNER PAY?

An investor-owned hospital pays taxes that benefit local government. This question is an opportunity to highlight the added contribution as a distinct benefit of investor-owned partnerships.

In many cases, the fire department, police force, schools, parks, and other community assets will benefit on an annual basis from an investor-owned partner paying state and local property and sales taxes.

One cautionary note: In some cases, new hospital owners may seek appropriate tax incentives when entering a new community and investing in a hospital. Be sure you understand the local government strategic thinking before you answer the tax question.

 

 

 

 

Study: Copper ICU Beds Mostly Untarnished by Bacteria

Posted on by • Posted in Copper, Health System, Hospital, Hospital Acquired Infections, Hospital Industry, Infection Control, Quality of Care • Leave a comment

https://www.medpagetoday.com/criticalcare/infectioncontrol/83224?xid=nl_mpt_DHE_2019-11-09&eun=g885344d0r&utm_source=Sailthru&utm_medium=email&utm_campaign=Daily%20Headlines%20Top%20Cat%20HeC%20%202019-11-09&utm_term=NL_Daily_DHE_dual-gmail-definition

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Converting from plastic surfaces could cut risk of HAIs, researchers argue.

Hospital beds with copper surfaces in an intensive care unit had significantly fewer bacteria than hospital beds with plastic surfaces, even after daily cleaning and disinfection, researchers found.

Active colony forming units per 100 cm2 on beds with copper rails, foot boards, and bed controls were less than 10% of those seen on conventional beds (median 42 vs 594), reported Michael Schmidt, PhD, of Medical University in South Carolina in Charleston, writing in Applied and Environmental Microbiology.

“The findings indicate that antimicrobial copper beds can assist infection control practitioners in their quest to keep healthcare surfaces hygienic between regular cleanings, thereby reducing the potential risk of transmitting bacteria associated with healthcare associated infections,” Schmidt said in a statement.

The authors explained that “metallic copper surfaces kill bacteria through a multi-modal mechanism through its ability to disrupt bacterial respiration, generate superoxide, and destroy genomic and plasmid DNA in situ.”

Studies have found that not only does environmental contamination play a role in transmitting pathogens responsible for healthcare-acquired infections, the investigators added, but copper-containing surfaces had reduced bacterial burdens.

Nevertheless, Schmidt noted, acute-care hospital beds on which all high-risk surfaces are copper have only recently become available.

“Based on the positive results of previous trials, we worked to get a fully encapsulated copper bed produced. We needed to convince manufacturers that the risk to undertake this effort was worthwhile,” he said.

This was a pragmatic cross-over study performed in a medical intensive care unit at a single medical center, which monitored the bacterial burden of control beds from April 2017 to July 2018, and interventional beds from April 2018 to March 2019 — noting a mixture of intervention and control beds from April to July 2018, as copper beds were introduced when a patient was discharged from a control bed.

Beds were thoroughly cleaned after patient discharge, and high-touch surfaces were routinely disinfected, as part of daily cleaning protocols, the authors said. Not surprisingly, they found that control beds accumulated higher concentrations of bacteria across all sampled areas, with the tops of the bed rails the most heavily soiled.

To put this into context, the authors noted that 89% of the samples collected from the control beds exceed the benchmark terminal cleaning and disinfection risk threshold compared to 9% from the copper beds, and 42% of copper beds were free of detectable bacteria.

In fact, the area with the heaviest bacterial burden on the copper bed was the internal, patient-facing surface of the foot board — though it was significantly lower than the comparative location on the control foot board, the authors noted.

One barrier to implementing this solution could be the cost of copper beds, but Schmidt and colleagues argued it would ultimately cost less than other adjunct cleaning options. Encapsulating a bed with antimicrobial copper would cost approximately $2,200 per bed, amortized over 5 years for a total of $1.20 per bed per day. The authors said that additional daily cleaning ($12-$13/room), ultraviolet radiation ($10/room), or hydrogen peroxide vapor phase deposition ($100/room) would be much more expensive.

“The copper intervention … is the only adjunct to act continuously, actively killing bacteria … and only adding a modest increase to the environmental services/infection control budget,” they wrote. “The value delivered by this intervention to the infection control bundle warrants further studies to assess its impact on HAI rates ultimately leading to consideration for its adoption.”

 

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

Posted on by • Posted in Board, Board Compensation, Executive Compensation, Financial Stewardship, Financial Transparency, Health Insurance Industry, Health Policy, Health System, Labor Spend Management, Labor Union, Mental Health, Tax Exempt Status, Tax Status, Tax-Exempt Status • Leave a comment

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?”

 

 

 

Retail makes its case, telehealth and voice tech dominate: 6 takeaways from HLTH19

Posted on by • Posted in Chronic Care Management, Competition, Consumerism, Disruption, Disruptive Technology, Funding Disruption, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Innovation, Leadership, Retail Healthcare, Social Determinants of Health, Telemedicine • Tagged • Leave a comment

https://www.healthcaredive.com/news/retail-makes-its-case-telehealth-and-voice-tech-dominate-6-takeaways-from/566548/

Headlines at HLTH 2019 included a peek behind the curtain at the secretive healthcare division of tech giant Google from ex-Geisinger CEO David Feinberg, Uber’s newly inked deal with Cerner and a preventive health push by Facebook sparking renewed data privacy concerns.

On the government side, outgoing head of CMS’ innovation center Adam Boehler suggested industry will be pleased with his replacement and CMS Administrator Seema Verma promised further Medicaid deregulation and “humility” in government.

But the four-day conference last week also covered some broader themes, including retail’s presence in the industry, the rise of telehealth and voice tech and the challenges of interoperability. Here are six of the biggest takeaways from Las Vegas.

Retail still defining its role in healthcare

Executives from Walmart and CVS taking to the main stage at HLTH to tout their initiatives.

Walmart’s VP of transformation, Marcus Osborne, talked up the company’s first health superstore in Dallas, Georgia, which opened this fall. The center provide patients with primary care, dental care, vision care and psychiatric and behavioral health counseling, with the goal of providing an integrated healthcare experience in the traditionally underserved area. Lab services and imaging are available on-site, as are nutrition and fitness classes.

“When you give consumers options, they engage more,” Osborne said. “The healthcare system is designed to be complex when it should be simple.”

A primary care visit at Walmart Health Center costs a flat fee of $40. For an adult, getting a dental checkup and cleaning costs $50, and an eye appointment is $45. Therapy services are $1 per minute.

The store pits the Bentonville, Arkansas-based retailer directly against CVS Health, which is expanding its own health-focused clinics, called HealthHUBs, to 13 new markets by the end of next year.

Brick-and-mortar behemoths’ attempts to position themselves as the front door to healthcare are spurred by the increasing push of consumerism in healthcare.

“With the emergence of this retail health consumer, we’ve got to make healthcare more integrated than it’s been for several years now,” CVS CEO Larry Merlo said.

Limits of consumerism

But engagement is notoriously tricky, and consumerism can only take the industry so far. Healthcare startups providing a new way of accessing or managing care, like digital chat startups allowing consumers to talk via text with a remote physician or chronic care management companies, are struggling to establish trust with the consumer.

Hank Schlissberg, president of care manager Vively Health, a subsidiary of DaVita that assumes full risk for its population, compared the sea change in the industry to what’s happened with companies like AirBnB.

“I sleep in someone else’s bed. I shower in their shower. And we’ve convinced ourselves that’s totally normal,” he said. “All I want to do is provide people with free healthcare. And convincing people of that is much harder than we expected.”

Natalie Schneider, VP of Digital Health for Samsung, agreed, telling Healthcare Dive consumers are “routinely irrational” and don’t act in their own best interests. But “we’re seeing policyholders, health plans and others in healthcare not only account for this irrationality, but also capitalize on it” through incentives like providing a reward immediately following a healthy behavior.​

The wearables trend is a key example, experts said. Payers and providers alike are increasingly turning to the tech in an effort to engage consumers in wellness, fitness and preventive care activities. However, the ROI of trackers, whether from Apple Watch, Fitbit, Samsung or others, is still unproven.

“We’ve seen a lot of technologies and they’re often not that smart and very rarely wearable,” Tom Waller, who heads up the R&D lab of athleisure retailer lululemon, said. “We’re still patiently waiting for that perfect contextualization of data that will give us both a physical and emotional insight, and that we can use to augment an existing behavior to nudge someone in the right way.”

“At the end of the day, these patients are consumers, and consumers have been trained over the last 10 years to decide what quality they want, to decide when they want it and how they want to get it,” Robbie Cape, CEO of primary care startup 98point6, said. “Healthcare hasn’t caught up to that.”

Execution could stymie looming interoperability rules

Two rules to halt information blocking from HHS are expected to be finalized any day now. Despite the regulatory pressure, industry is “still a ways from true interoperability,” said Ed Simcox, CTO and acting CIO of HHS, due to a slew of factors like a lack of economic incentive for EHR vendors.

The rules would impose a slate of new requirements on healthcare companies. Payers in federal programs would have to provide their 125 million patients with free electronic access to their personal health data by the end of next year; healthcare companies would have to adopt standardized application programming interfaces allowing their disparate software systems to communicate; and any player found information blocking could be fined up to $1 million per violation.

Google Cloud’s director of global healthcare solutions, Aashima Gupta, warned that although the government might mandate new standards, that doesn’t mean industry will be able or willing to immediately adhere to them.

Additionally, the government is still playing catch-up to technology, and interoperability is no different, Pranay Kapadia, CEO of voice-enabled digital assistant Notable, told Healthcare Dive. The rules are the “right thing to do, and then there’ll be an evolution of it, and then there’ll be another evolution of it.”

​”This problem is much bigger than big tech or government or health systems or innovators,” Gupta said. “It’s an ecosystem problem. No player can do it alone.”

Despite the private sector’s uncertainly, Don Rucker, the head of the Office of the National Coordinator for Health IT, said interoperability had fostered price and business model transparency in every other U.S. industry over the past few decades.

“Healthcare is just about the last one to resist,” Rucker said. “I don’t think that will be much longer.”

Telehealth and voice tech: the belles of the ball

Telehealth was unsurprisingly a big focus at HLTH, with themes touching on expansion to complex care needs, followup visits and chronic care management and barriers like state physician licensure.

It’s an “efficiency mechanism” that can help a lot in areas like primary care, Teladoc COO David Sides told Healthcare Dive.

Voice-enabled tech was another focus of chatter in Las Vegas. The technology, which allows physicians free use of their hands while enabling them to take notes or write a script, for example, is currently experiencing heavy hype from industry and Silicon Valley as a way to streamline the heavy EHR and documentation requirements on physicians.

Talking is an “important element to how people interface with things,” Notable’s Kapadia said. “You have to think of things from a human perspective.”

Suki also announced at HLTH it expanded its relationship with Google’s cloud computing business. The digital assistant’s CEO, Punit Soni, told Healthcare Dive industry could expect to hear about two “very, very large deployment announcements” with health systems in the near future as providers become more comfortable levering the software to cut down documentation time for clinicians.

Solving for social determinants, preventive health

A slew of players rolled out initiatives targeting social determinants of health in Las Vegas.

​Uber Health is now available for providers to schedule non-emergency rides for their patients via Cerner’s EHR platform in a bid to provide better access to transportation for underserved populations. The one-year-old NEMT division of San Francisco-based Uber has roughly 1,000 partnerships across payers, healthcare tech companies and providers such as Boston Medical Center.

“You need to develop a benefit that serves the needs of your distinct population,” Jami Snyder, director of Arizona’s Medicaid and CHIP programs, said. The state recently partnered with ride-hailing company and Uber rival Lyft to provide rides for eligible Medicaid beneficiaries.

Kaiser Permanente rolled out a food insecurity initiative to connect eligible California residents with CalFresh, the state’s supplemental nutrition assistance or food stamp program. The integrated, nonprofit health system plans to reach out via text and mail to more than 600,000 Kaiser Permanente health plan members with a goal of getting 100,000 enrolled in CalFresh by spring 2020.

If the program is successful, Kaiser plans to expand it to the rest of the country, CEO Bernard Tyson, noting “healthcare across the ecosystem of health plays a very small part” in outcomes. “Things like behavior, genetics and where you live has a bigger impact.”​

On the preventive health side, Facebook launched a consumer health tool. Users plug in their age and sex in return for targeted heart, cancer and flu prevention measures, with information supplied by healthcare groups like the American Cancer Society.

The pilot for the $7 billion tech behemoth will be evaluated for six months to a year before being expanded to other preventable conditions to make consumers their “own health advocates,” Freddy Abnousi, Facebook’s head of health research, said. “The lion’s share of health outcomes is driven by social and behavioral variables.”

CVS is similarly working to combat SDOH factors by leveraging its reams of consumer data, Firdaus Bhathena, the retail pharmacy giant’s CDO, told Healthcare Dive. If someone doesn’t pick up their prescription, “there’s a number of ways we can engage with them,” including by text message or speaking to services in the local town, to see if transportation to the pharmacy, a lack of funds or some other issue is stopping the person from receiving the medication they need.

Funding disruption

Much of the industry runs today like non-healthcare companies ran 50 or 60 years ago, according to entrepreneur Mark Cuban.

“For that reason, they’re ripe for disruption,” Cuban said at HLTH.

Investors and startups alike are taking note. Venture capitalists, eager to fund new medical solutions and methods of care delivery, pumped $26.3 billion into more than 1,500 healthcare startups in just the first 10 months of 2018.

Providers looking to invest in new solutions or acquire startups are looking for a relatively mature corporate structure and an alignment with existing priorities in-house, according to Dan Nigrin, SVP and CIO at Boston Children’s Hospital.

“It starts with our organizational strategy,” agreed Rebecca Kaul, VP at the MD Anderson Cancer Center. An attractive startup presents “something that really drives change,” she said. “If you’re pitching a solution that isn’t at a given time part of our strategy, it may not be the right time for us to connect.”

Highmark Health CEO David Holmberg told Healthcare Dive its physicians lead system-wide conversations in what areas need investment. “Ultimately, that’s how you’ll get things to scale.”

Intermountain Healthcare is similarly interested in ways to manage and inject value into its operations. “We’re not interested in point solutions,” Dan Liljenquist, SVP of the Salt Lake City-based nonprofit provider said, adding he deletes and blocks emailed pitches he receives. “We’re interested in technologies that obviate the need for clinical interventions, that help people solve their own problems, and the way to do that is not a point solution but in a systemic, creative way.”

Payers have similar priorities and seek out companies to invest in that could provide value down the road. Cigna Ventures, which recently invested in precision medicine company GNS Healthcare, looks for new tools across the areas of insight and analytics, digital health and retail and all-around care delivery and enablement, for example.

“We’re looking for companies that are innovative and looking to solve important problems,” Tom Richards, global strategy and business development leader at Cigna, told Healthcare Dive, noting most companies start with a more focused solution and then expand.

For example, chronic disease platform Omada Health, which raised $50 million in a 2017 funding round led by Cigna Ventures, started with diabetes, but has since expanded its care management services to hypertension, Type 2 diabetes and behavioral and mental health.