Category Archives: Health System

Accountable Care Organizations: The case for “embracing” down-side risk

Posted on by • Posted in ACA, Accountable Care Organization (ACO), Center for Medicare and Medicaid Services (CMS), Health Policy, Health System, Hospital, Population Health, Risk-Based Contracting, Value-Based Healthcare • Leave a comment

https://www.linkedin.com/pulse/accountable-care-organizations-case-embracing-risk-thomas-campanella/

The picture above is not exactly on point, but who can resist a little boy “embracing” a bear.

Per the Centers for Medicare & Medicaid Services (CMS), Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve (and hopefully saves money in the process).

ACOs are a product of the Affordable Care Act of 2010 (ACA). The theory behind ACOs was based on the recognition that we have a fragmented healthcare system that contributes to poor quality and higher healthcare costs.

Hospital-based health systems aggressively jumped on the ACO bandwagon starting with the passage of the ACA and, in the process, established relationships with physicians, ancillary providers, long-term care organizations, etc. Many times these Health Systems acquired (especially physicians) rather than established collaborative agreements with these community providers.

As a result of these acquisitions and collaborations, the hospital-based ACO and, in turn, the parent health systems became an even greater force in their communities. They were also in a better position to negotiate with payers because of the increased leverage they had as a result of their enhanced local provider presence. 

This also had a negative impact on health systems, since it did increase their fixed costs and made them less flexible to respond to competitors of different forms, especially in the outpatient and home setting.

Have ACOs lived up to their promise?

There have been many articles and research studies on the value of ACOs to determine if they have lived up to their promise of increased quality and cost-efficiencies. The consensus of research seems to be that ACOs have had a positive impact on quality, especially with regard to continuity of care for individuals with chronic diseases.

The jury is still out on the cost savings side, especially for hospital-based ACOs. 

Recently CMS has required that hospital-based ACOs to take on both up-side and downside risk.

Historically, ACOs have had the ability to take on only upside risk (or rewards), but at a lower percentage of potential gain vs. what they would have received if they were also willing to take on downside risk.

As I have noted in prior blogs, I am believer in risk/value-based contracting with downside financial exposure for hospital systems. I support this approach, not in a vindictive way, but because I want hospitals to survive and prosper in this new world of healthcare.

I also believe that if we are to successfully evolve from a “sick-care” system to a true “health” system, hospitals need to enter into the appropriate payer contracts that reward them for keeping patients healthy, not just for providing additional services.

Breaking down the silos inside and outside the walls of the hospital

I have worked in the healthcare industry in a variety of sectors since the early 1980s and during that period of time, I constantly heard the refrain about the need to break down the silos of healthcare both inside and outside the walls of the hospital.

The fee-for-service payment methodologies that exist today “the more you do the more you make” creates no “real” incentives to break down these silos. ACOs that have downside risk exposure along with payment methodologies such at capitation and bundled payments have the real ability to break down these silos.

As long as the majority of payments from payers is based on the fee-for-service payment methodologies, hospitals will have no “real” incentives to break down the silos that prevent value-based care from being provided. It also does not provide any “real” incentives to keep people healthy.

Per the dictionary, “Accountability refers to an obligation or willingness to accept responsibility for one’s actions. … When roles are clear and people are held accountable, work is accomplished efficiently and effectively. Furthermore, constructive change and learning is possible when accountability is the norm.”

While this definition was not met for ACOs, it really does apply and was ultimately the goal of the original drafters of the ACO concept. ACOs must be held accountable, and only through downside risk along with appropriate rewards will that occur.

If we want to achieve our goals of a value-base healthcare system as well as an overall healthier society, we need to create the proper incentives in our payment methodologies. As I have stated repeatedly in past healthcare blogs, “a healthcare system is shaped by what you pay for and how you pay for it.” The “how you pay for it” gets to the heart of the “risk” linkage with regard to hospital-based ACOs.

All of this is not to say that physician-led ACOs should not have risk but, given their size, these independent practices are much more financially vulnerable. Payment models for physician-led ACOs need to recognize the current value they are bringing to the ACO world, and consider ways to gradually add a risk component.

Hospital-based ACOs are looking to exit (or walk away from) Medicare Shared Savings Programs if required to take on downside risk

Per a recent article (April 26, 2019), “Just over half of accountable care organizations (ACOs) said they would consider leaving (or walking away from) the Medicare Shared Savings Program (MSSP) if required to take on more downside risk, revealed a study published in Health Affairs.

Thirty-two percent of ACOs said they are extremely or very likely to leave, and 19 percent believe they are moderately likely to leave.

The results also showed that there were significant differences in responses from physician-based ACOs and hospital-based ACOs.

“Approximately two-thirds of physician-based ACO respondents reported that they were likely to remain in the program if required to accept downside risk, compared with only about one-third of hospital-based ACOs,” the team said.

“This reflects the fact that physician-based ACOs have performed better, and a higher proportion of these ACOs have earned shared savings, than hospital-based ACOs. Physician-based ACOs have generated substantial savings by reducing spending for both inpatient and outpatient hospital services, which has not been true for hospital-based ACOs.”

Hospital based ACOs and well as hospital systems in general are doing themselves “no favors” by not accepting risk. 

By entering into “risk-based” contracts, hospital systems will create the appropriate incentives to address their supply-chain costs. Hospitals would also find it easier to engage physicians in addressing the cost side of the equation if physicians also understood and embraced the risk-based payment methodologies.

Under risk arrangements, hospitals would also have even more motivation to develop strategic relations with their vendors (medical device, etc.), such as what the auto industry does with their suppliers.

These risk arrangements will also allow hospital systems to be better prepared for the new world of healthcare. In this new world there will be winners and losers and different types of competitors, especially in the outpatient and home setting.

As we have also noted in prior blogs, hospital inpatient admissions are decreasing and patients have a higher acuity. Hospital inpatient care has been evolving to some form of a center of excellence. As hospitals look to find ways to expand their revenue opportunities they should be looking to bundle services for prospective patients and employers. These bundled services would and should have a risk-component tied to them.

Accepting risk-based contractual arrangements with payers is also better than competing in the retail marketplace where hospitals are much more vulnerable to lower priced regional and national competitors, especially as the result of the increased push for transparency.

Payers: Medicaid Managed Care, Medicare Advantage, Commercial Carriers, Self-insured employers should be pushing risk contracts. 

As noted in this article in Health Affairs, there are two ways employers should push ACO arrangements to evolve:

Financial Risk

“As experts jest, if ACO providers don’t take on the financial risk of caring for their population of patients (for example, only shared savings), it is like “vegan barbeque…or gin and tonic without the gin.” Payers’ ability to change provider behavior is likely to be negligible if they only reward providers with small bonuses for effective care a year after the fact. Greater financial accountability would encourage providers to promote preventive care and look for ways to cut waste.

In fact, without downside risk, health systems may take advantage of the ACO model. Experts argue that health systems may take on the practice of “ACO squatting” (that is, they form ACOs, take on patients, but avoid looking for ways to cut waste, reduce total cost of care, and improve quality) and that “a migration to two-sided risk for ACOs…after a certain number of years, so that there is a cost [downside financial risk]…would help to address this issue.”

Alignment of Patient Incentives

“Providers would be loath to assume financial risk for a patient population without the ability to manage their care. Commercial payers can modify patients’ out-of-pocket spending to encourage them to seek care only within the ACO. For example, by treating the ACO as a narrow network, the payer could pair it with a benefit design that offers lower premiums and minimal out-of-pocket spending for care from an ACO provider but little to no coverage for care sought outside of the ACO.

If the vast majority of patient visits occur within the ACO, it might be more likely to stay within budget because those providers can coordinate care and reduce redundancies. In addition, the ACO leadership can communicate with ACO providers about the cost and quality implications of their care decisions.”

If Medicare Advantage and Medicaid Managed Care Plans are not pushing for risk arrangements with Hospital-based ACOs or health systems, and these Plans continue to rely on some form of fee-for-service, then the true payers, Medicare and the individual states, should be reevaluating their own payment formulas with these entities. The payment formulas maybe too rich and do not provide enough incentives for these Plans to enter into risk arrangements with the above providers.

CONCLUDING THOUGHTS:

If you have been a reader of my blogs, you know I like sprinkling in health economic concepts into them. It is natural for individuals and other entities to make decisions based on their own self-interest.By not embracing risk in a manageable, but continuous fashion, hospital-based ACOs as well as hospital systems are sacrificing their long-term self-interest for immediate gain.

Active purchasers of healthcare services will continue to demand value in the marketplace, and for hospital-based ACOs and hospital system to meet this demand they need to break down the silos which can only be done effectively by embracing risk-based contracting tied to appropriate rewards.

Finally, we, as a society, are recognizing the need to focus our attention on population health, not only because it is the right thing to do, but because it also represents the best uses of our resources. We will not be able to achieve our goal of population health unless hospitals fully embrace it. One true way to expedite the transition to population health is for hospitals and ACOs payment methodologies to incorporate in their reimbursement contracts the appropriate risk/rewards that incent them to keep people healthy both inside and outside the walls of the hospital.

 

 

 

Amazon’s Push in Health-Care Supply Chain Has Faded, UBS Says

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

https://www.bloomberg.com/news/articles/2019-07-08/amazon-s-push-in-health-care-supply-chain-has-faded-ubs-says

  

Amazon.com Inc.’s push into distribution of health-care supplies and equipment has lost momentum, according to a survey by UBS Group AG.

Hospital purchasing managers say they are buying fewer medical supplies from Amazon compared to last year, while increasing their purchases of office supplies from the online retailer, UBS analyst Kevin Caliendo wrote in a research note on Monday. One reason could be that respondents are seeing “less discounting” for medical supplies, but it’s unclear whether Amazon discounts are lower or if wholesalers offered better deals in response to Amazon’s push in the sector, he said.

UBS’s survey found that while hospitals still expect to increase their supply purchases through Amazon over the next three years, the percentage of respondents in talks for sourcing agreements with Amazon has declined to 7% from 11% last year. The bank surveyed 100 purchasing managers.

At a conference last year, hospital supply-chain executives described Amazon’s effort in the medical distribution space as still “in its infancy,” with the biggest issues relating to procedures that allow hospitals to track and trace the products they buy from vendors.

 

 

 

There’s little chance appeals court will strike down ACA, legal experts say

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Lawsuit, Severability • Leave a comment

https://www.modernhealthcare.com/legal/theres-little-chance-appeals-court-will-strike-down-aca-legal-experts-say?utm_source=modern-healthcare-daily-finance&utm_medium=email&utm_campaign=20190708&utm_content=article3-readmore

Seven months after a federal judge struck down the Affordable Care Act, a coalition of 21 Democratic attorneys general will once again defend the landmark healthcare law in New Orleans on Tuesday. The challenge, if upheld, would have far-reaching consequences for millions of Americans and the healthcare companies that serve them.

Left-leaning and conservative legal experts alike say there’s little chance the three-judge panel in New Orleans agrees with the lower court and declare the ACA unconstitutional. The arguments used by the Republican states that sued to wipe out the ACA are “frivolous,” the experts say.

“This case is different from all of the previous Obamacare cases because there is a consensus among the Republican intellectual establishment that the legal arguments are frivolous,” said Yale University health law professor Abbe Gluck. “You’ve got a lot of prominent Republican legal experts siding against the Trump administration in this case, so I think that most people are hoping that this circuit will apply very settled law and reverse the lower-court decision.”

Even so, Democratic senators on Monday were worried that the ACA would ultimately be struck down, causing millions of Americans to lose their insurance and consumer protections overnight without any Trump administration plan to pick up the pieces.

“Make no mistake, this lawsuit has a good chance of succeeding,” Sen. Chris Murphy (D-Conn.) said during a conference call Monday with reporters. “I understand that there are some legal scholars that say that the theory of the petitioners is wacky, but it survived the district court and it now has the administration as a full and complete partner with the attorneys general. There is real muscle on the side of the plaintiffs in this case.”


The appellate court arguments largely mirror those in the district court. This time around, the U.S. Justice Department is urging the 5th U.S. Circuit Court of Appeals to uphold the lower-court ruling that the entire Affordable Care Act must fall because the 2017 Congress reduced the individual mandate penalty to zero. Previously, the Justice Department argued the individual mandate is unconstitutional, but could be “severed” from most of the ACA.

This question of whether the entire ACA must go is the crux of the case. Gluck explained that a non-controversial, settled legal doctrine called “severability” states that the decision to scrap a piece of a law or destroy the whole thing rests on what Congress would have wanted. That’s something courts usually have to guess, but in this case there’s no question what Congress would have wanted: it already zeroed-out the individual mandate penalty and left the rest of the ACA alone.

“It is an absolutely outrageous argument to say that the district court was doing what Congress wanted when Congress in 2017 reduced the penalty and left the entire statute standing,” Gluck said.

Nicholas Bagley, a law professor at the University of Michigan Law School, similarly said, “These are bad legal arguments.”

The odds of the Fifth Circuit declaring the entire ACA unconstitutional are low, he said, given the arguments in the case “are thin to the point of frivolousness, and I think the Fifth Circuit judges will know that, whatever their political disposition may happen to be. But I’d be lying if I said I knew that for sure.”

The panel announced last week includes Judges Jennifer Walker Elrod, Kurt Englehardt and Carolyn Dineen King. Two were appointed by Republican presidents; one is a Democratic appointee. U.S. District Judge Reed O’Connor, who struck down the healthcare law, was also appointed by a Republican president.

Legal experts said it is also likely that oral arguments will devote time to whether the Democratic states and the U.S. House of Representatives have standing to intervene in the case. The Fifth Circuit judges last week asked for supplemental briefs on that question. While the court’s request was seen by some as a sign that it is supportive of the Republican states, others viewed it as normal, given the high stakes and the fact that the Justice Department declined to defend the law.

Gluck said it’s unlikely the court will decide neither the blue states or the House have standing in the case. It would be hard to argue that the Democrat-led states would not be harmed by a ruling that invalidates the entire ACA, and the House has previously intervened to defend a statute when the executive branch chose not to, she said.

But if the Fifth Circuit does decide neither have standing, it would have to decide whether to let the lower-court decision stand or erase it, she said.

Should the appellate court uphold the lower-court ruling, the consequences would be sweeping. In a June analysis, the left-leaning Urban Institute found that the number of uninsured Americans would climb 65% to 50.3 million in 2020 if the ACA is ultimately struck down. The decision would affect not only people who buy coverage in the individual market but also those with coverage through Medicaid expansion, Medicare and from their employers.

That would also impact healthcare providers and insurers.

“No industry has been more directly impacted by the ACA than health insurance providers, which have invested vast amounts of resources to participate in the relevant markets, comply with the law’s myriad reforms, and organize their businesses to operate in a revamped healthcare system,” insurance industry lobbying group America’s Health Insurance Plans wrote in an amicus brief filed in April in support of reversing the lower-court decision.

 

 

 

Medical group deals face growing antitrust scrutiny as price worries rise

Posted on by • Posted in Antitrust, Competition, Federal Trade Commission (FTC), Health Policy, Health System, Hospital, Market Consolidation, Market Power, Mergers & Acquisitions, Vertical Merger Theory • Leave a comment

https://www.modernhealthcare.com/legal/medical-group-deals-face-growing-antitrust-scrutiny-price-worries-rise?utm_source=modern-healthcare-daily-finance&utm_medium=email&utm_campaign=20190708&utm_content=article1-readmore

Recent actions by antitrust enforcers and courts to block or regulate purchases of physician practices by hospitals and insurers may signal increasing scrutiny for such deals as policymakers intensify their focus on boosting competition to reduce healthcare prices.

Last month, the Federal Trade Commission announced a settlement with UnitedHealth Group and DaVita unwinding United’s acquisition of DaVita Medical Group’s Las Vegas operations.

At the same time, Colorado Attorney General Phil Weiser separately reached a deal imposing conditions on UnitedHealth’s acquisition of DaVita’s physician groups in Colorado Springs.

Also in June, the 8th U.S. Circuit Court of Appeals upheld a District Court ruling blocking Sanford Health’s proposed 2015 acquisition of the multispecialty Mid Dakota Clinic in the Bismarck, N.D., area. That antitrust case originally was filed by the FTC and North Dakota Attorney General Wayne Stenehjem in 2017.

And in May, Washington Attorney General Bob Ferguson settled an antitrust lawsuit with CHI Franciscan setting conditions on the health system’s 2016 affiliation with the Doctors Clinic, a multispecialty group, and its purchase of WestSound Orthopaedics, both in Kitsap County. CHI Franciscan will pay up to $2.5 million, distributed to other healthcare organizations to increase access to care.

The cases represent the most significant antitrust developments involving physician acquisitions since federal and state antitrust enforcers won a 9th U.S. Circuit Court of Appeals ruling in 2015 upholding a lower-court decision forcing Idaho’s St. Luke’s Health System to unwind its 2012 acquisition of Saltzer Medical Group.

The agreements with UnitedHealth in Nevada and Colorado show a new willingness by federal and state antitrust enforcers to use seldom-cited vertical merger theory. Under that theory, acquisitions of physician groups by insurers or hospitals may foreclose competition by making it more difficult or costly for rivals to obtain physician services.

“I am concerned about the state of consolidation,” Weiser said in an interview. “Healthcare costs in Colorado have risen at an alarming rate. Protecting competition needs to be a central part of our strategy to provide affordable and quality healthcare.”

These recent antitrust actions come as concerns mount over the growing consolidation of hospitals and physician practices and the impact on prices and total health spending. Sixty-five percent of metropolitan statistical areas are highly concentrated for specialist physicians, while 39% are highly concentrated for primary-care doctors, according to Martin Gaynor, a health economist at Carnegie Mellon University.

Hospital acquisitions of physician practices have led to higher prices and health spending, researchers have found. Average outpatient physician prices in 2014 ranged from 35% to 63% higher, depending on physician specialty, in highly concentrated California markets compared with less-concentrated markets, according to a 2018 study by researchers at the University of California at Berkeley. The link between physician market concentration and prices is similar across the country, experts say.

Market consolidation in California

That’s why some elected officials and antitrust attorneys say it’s past time to step up oversight of physician practice acquisitions by hospitals, insurers and private-equity firms. These deals traditionally have received less scrutiny than hospital and insurance mergers, partly because they are smaller transactions that federal and state antitrust enforcement agencies may not have known about beforehand.

The recent cases suggest state attorneys general may play a growing role in policing physician acquisition deals by hospitals and insurers, given that they are in a better position than the feds to find out about brewing local deals. Most of the growth in physician group size has come from piecemeal acquisitions of small group practices, a Health Affairs studyfound last year.

Washington and at least two other states have passed laws requiring healthcare providers to give state officials advance notice before finalizing a merger or acquisition. That gives state AGs another advantage over the FTC, which under federal rules only must receive advance notice of deals exceeding $78.2 million in value. Few physician acquisitions meet that threshold.

Others worry, however, that the absence of clear federal guidelines for challenging vertical mergers between hospitals and physicians has made the FTC and the courts overly cautious, and that it now may be too late because many physician markets are already highly concentrated. In March, the FTC and the Justice Department said they were working on new vertical merger guidelines, which were last updated in 1984.

“The horse may be out of the barn in a number of markets where there have been very large acquisitions of physician practices,” said Tim Greaney, a visiting professor at the University of California Hastings College of Law. “It’s not clear what you can do about that.”

But hospitals, insurers and other physician aggregators argue that making it harder to buy physician groups would hamper their ability to establish cost-saving, high-quality delivery models emphasizing care coordination.

That’s how Sanford Bismarck President Dr. Michael LeBeau responded to last month’s 8th Circuit ruling against his organization’s merger with Mid Dakota Clinic. “Sanford continues to believe that combining with Mid Dakota Clinic would lead to the enhanced provision of and access to healthcare for patients in central and western North Dakota,” he said in a written statement.

Researchers have raised doubts, however, about whether hospital acquisitions of medical practices have truly achieved efficiencies and cost savings, and whether any cost savings have been passed on to payers and patients.

Going forward, hospitals, insurers and other healthcare organizations need to prepare themselves for an era of closer state and federal examination of physician acquisition deals, antitrust experts agree. That also may apply to private-equity firms, which have accelerated their investment in physician groups and have sought to build market power in particular specialties.

The FTC did not respond to requests for an interview.

Healthcare organizations pursuing physician deals must be ready to cite circumstances where competition continues to thrive following a merger. But that may not be easy, conceded Lisa Gingerich, an antitrust attorney at Michael Best & Friedrich.

“The challenge now is there has been so much consolidation that it’s harder and harder to find those circumstances,” she said.

Scaling back integration in Nevada and Colorado

The UnitedHealth Group-DaVita case may present the clearest warning shot to organizations contemplating large physician acquisitions, attracting both federal and state attention.

The FTC argued that the proposed acquisition by United’s OptumCare of DaVita’s HealthCare Partners of Nevada would result in a near-monopoly controlling more than 80% of the market for services delivered by managed-care provider organizations to Medicare Advantage plans.

The merger would be both horizontal—combining OptumCare’s and DaVita’s competing physician groups—and vertical, as it would combine a Medicare Advantage insurer and a physician group. That, the FTC said, would increase costs and decrease competition on quality, services and amenities by forcing rival Medicare Advantage plans to pay more for physician services.

Under the FTC settlement, UnitedHealth agreed to sell DaVita’s Nevada medical group to Intermountain Healthcare, which offers a Medicare Advantage product in Las Vegas through its SelectHealth insurance arm.

Colorado’s terms

Meanwhile, under a separate consent judgment with Attorney General Phil Weiser in Colorado, UnitedHealth will lift its exclusive contract with Centura Health for at least 31/2 years, expanding the provider network available to other Medicare Advantage plans. In addition, DaVita Medical Group’s agreement with Humana, United’s main competitor in Colorado Springs, will be extended through at least 2020.

All four FTC commissioners approved the enforcement action in Nevada. But the two Republican-appointed commissioners and the two Democratic-appointed commissioners disagreed on whether to ask a judge to block United’s acquisition of DaVita’s medical group in Colorado, a purely vertical merger. The 2-2 split meant no federal action was taken.

The Democratic commissioners. Rebecca Kelly Slaughter and Rohit Chopra, said the merger would harm competition and consumers, and welcomed the Colorado attorney general’s remedial conditions. “We hope all state attorneys general actively enforce the antitrust laws to protect their residents from harmful mergers and anticompetitive practices,” they wrote.

But the Republican commissioners, Noah Joshua Phillips and Christine Wilson, opposed action in Colorado on the grounds that the law on vertical mergers is “relatively underdeveloped” and that there was mixed evidence on whether the Colorado merger was pro- or anti-competitive.

Weiser said his office had to intervene to protect the ability of Humana and other Medicare Advantage insurers to compete with United by having access to physicians and hospitals. “State attorneys general will be a critical part of protecting competition, both because we’re close to our citizens and because of a lack of action by the federal government,” he said.

To other observers, the Nevada and Colorado agreements were notable because they invoked seldom-used vertical merger theory, which the FTC has been reluctant to use because it generally saw vertical mergers as helping reduce costs and increase competition.

“This shows that in the proper case, the FTC won’t hesitate to pursue vertical theory to reverse the course of” a physician group acquisition, said Douglas Ross, a veteran antitrust attorney at Davis Wright Tremaine in Seattle.

A muddier outcome in Washington state

Washington Attorney General Bob Ferguson’s settlement of his antitrust case against CHI Franciscan was less definitive than the outcomes in the other recent cases.

He had accused the hospital system of engineering the purchase of WestSound Orthopaedics and the affiliation with the Doctors Clinic to capture a large share of orthopedists and other physicians in Kitsap County, fix prices at a higher level, and shift more services to its Harrison Medical Center in Bremerton. But the settlement left in place CHI Franciscan’s purchase of WestSound and its tight professional services agreement with the Doctors Clinic, while placing relatively modest conditions on joint contracting by the hospital system and the clinic.

Ferguson’s bargaining position was weakened by a federal District Court decision in March granting CHI Franciscan’s motion to summarily dismiss his allegation that the acquisition of WestSound reduced competition and violated antitrust law. That may be the first time since the 1990s that a defendant won summary judgment on a horizontal merger claim in an antitrust case, one expert said.

In addition, the judge required the parties to go to trial on whether the transaction between CHI Franciscan and the Doctors Clinic was a true merger, as the two organizations claimed, or whether they remained two competing provider groups. If Ferguson lost on that issue, his antitrust case would be dead because a merged entity cannot be cited for price-fixing.

The attorney general settled that claim with CHI Franciscan and the clinic by requiring a $2.5 million payment to other healthcare providers and expanding the types of value-based contracts they could participate in. But the two sides differed sharply in their characterization of the settlement.

“This was a matter where we identified anticompetitive effects and ongoing harm to consumers and saw a need to act quickly,” said Jonathan Mark, senior assistant attorney general in Washington. “We believe the remedies in the consent decree are sufficient to address the anticompetitive effects we alleged.”

For its part, CHI Franciscan said there never was any court judgment or admission that it engaged in anticompetitive conduct, noting that the settlement preserved its deals with WestSound and the Doctors Clinic. It was particularly important for hospitals all over the country that Ferguson failed to establish that a professional services agreement with a physician group constituted price-fixing, an attorney for the hospital system said.

“The AG lost this lawsuit and is now twisting the facts to match his baseless allegations,” said Cary Evans, the hospital system’s vice president for government affairs. “Had we not affiliated, the closing of the Doctors Clinic and WestSound would have resulted in less choice, decreased access, and high costs for residents.”

A classic example in North Dakota

The outcome in the North Dakota case was more conventional than the others.

There, the 8th U.S. Circuit Court of Appeals affirmed the District Court’s preliminary injunction blocking Sanford Health’s acquisition of Mid Dakota Clinic as a horizontal merger.

That was fairly predictable because of the huge physician market share Sanford—whose physician group competed with the clinic—would capture if it completed the deal, experts said.

Sanford would control 99.8% of general surgeon services, 98.6% of pediatric services, 85.7% of adult primary-care services, and 84.6% of OB-GYN services in the Bismarck-Mandan market, the 8th Circuit panel found.

The appeals court also upheld the lower court’s finding that a competitor, Catholic Health Initiatives’ St. Alexius Health, would not be able to enter the market quickly after the merger, at least partly because it faced difficulty recruiting physicians in the Bismarck-Mandan area.

“That case really seemed like a no-brainer to me,” said Tim Greaney, a visiting professor at the University of California Hastings College of Law.

A key takeaway was the 8th Circuit’s rejection of Sanford’s “powerful buyer” defense. Sanford had argued that Blue Cross and Blue Shield of North Dakota, the state’s dominant insurer, had enough market power to resist any price increases sought by the newly merged entity.

But analysis of claims data and testimony by a Blues plan representative demonstrated that the merged provider would have the market power to force the insurer to raise prices or leave the market, the 8th Circuit panel wrote.

“If antitrust authorities see someone getting more bargaining power and being able to charge higher prices, that’s something they’ll worry about, even if the (payer) has significant bargaining power as well,” said Debbie Feinstein, a former top Federal Trade Commission official who heads Arnold & Porter’s global antitrust group.

Sanford didn’t say whether it planned to abandon the deal.

 

 

 

Mixing medicine and money: Why the rise of health system VCs is raising ethical concerns

Posted on by • Posted in Bioethics, Conflicts of Interest, ECRI Institute, Ethical Pitfalls, Ethics, Food and Drug Administration (FDA), Health Policy, Health System, Hospital, Private Equity, Venture Capital • Leave a comment

https://www.healthcaredive.com/news/mixing-medicine-money-hospital-vc-funding-device-ethical-concerns/549392/

Industry-leading nonprofit health systems like Ascension, Providence St. Joseph and Cedars-Sinai have launched affiliated venture capital firms with increasingly more cash to fund start-ups. But the mixture of medicine and financial investment presents the potential for ethical pitfalls.

Deals involving at least one healthcare provider-linked corporate VC fund totaled roughly $1.3 billion last year, a record high nearly triple the amount recorded five years prior, according to data provided to Healthcare Dive by PitchBook, a financial data firm.

Health systems defend their corporate VCs, noting a separation of clinical and investment decisions along with general policies designed to prevent improper influence. Yet the potential for conflicts of interest looms, ethicists said in interviews — particularly when a health system’s hospitals adopt products from companies staked with funds via the affiliated VC.

“If you have a venture program that is really gearing up with some serious investments and they are going to use those devices in their own institution, I would say that’s a matter of concern,” said Jeffrey Flier, dean of Harvard Medical School from 2007 to 2016, in an interview.

“That doesn’t mean it would be done dishonestly, it just means that maybe they should promote doing it elsewhere, not in their own institution.”

A mixture of medicine and finance

The case of Gauss Surgical, a private medical device startup, illustrates how some of these questions can play out in practice.

Corporate VCs affiliated with nine hospital systems have invested in the company since its founding in 2011. A majority of those VC funds were launched in the past five years. A tenth system, Memorial Hermann Health System, invested directly in Gauss. All 10 systems also use — to varying extent — Gauss’ flagship Triton device in clinical practice.

A software platform designed to process images, Triton is used to quantify blood loss, typically during childbirth. Studies have shown standard practices, such as visually estimating or weighing bloody materials, to be inaccurate, leaving an opening for an improvement.

Between the 10 health systems invested in Gauss, 16 of their hospitals use Triton, according to Gauss. Overall, more than 50 U.S. hospitals use the device today, the Los Altos, California-based startup said.

Those running the funds invested in Gauss acknowledge the need for full disclosure to avoid any real or perceived conflicts of interest, particularly when their hospitals are using the device.

“It’s fair to ask why nonprofit systems have venture funds,” said Darren Dworkin, managing director of Summation Health Ventures, a joint VC arm for Cedars-Sinai and MemorialCare that launched in 2014 and has invested in Gauss.

Still, Dworkin, also Cedars’ chief information officer, argued the fund helps fill an investment gap for businesses like Gauss with promising ideas that might not otherwise have received financial backing.

“If there was perfect liquidity in the capital markets for all great ideas, maybe the case can be made that focus can be in other areas,” the exec said in an interview.

Timeline of investments in Gauss

Along with adoption — some hospitals routinely use the device in newborn delivery — has come controversy, however.

At one of those hospitals, St. Joseph Hospital in Orange County, California, an investment by the parent system’s VC fund led to objections from some healthcare staff over the adoption of Triton. The hospital is owned by Providence St. Joseph, which invested in Gauss through its VC arm, Providence Ventures.

Last April, 10 physicians working at the hospital signed onto a letter sent to Scott Rusk, the hospital’s chief medical officer, airing doubts over whether Triton improved patient outcomes, and questioning if its use was influenced by the chain’s financial investment in Gauss.

“We suspect that their use has been mandated by the health system due to investments made by the Providence Venture Capital Fund, and that the insistence that they be used has more to do with ensuring a return on investments than with improving patient care,” the doctors wrote, according to a copy of the letter obtained by Healthcare Dive.

In a statement to Healthcare Dive, Providence St. Joseph said clinical adoption decisions are made exclusively by clinical and operational leadership review, and are not influenced by Providence Ventures. After that review, hospitals in the system decide on their own whether or not to use such products.

“There was no directive from PSJH or Providence Ventures to use the device,” the chain stated on the Orange County hospital. “The decision was made to fund and adopt the Gauss solution at the local hospital level.”

Only three of the system’s 51 hospitals use Triton today, the organization said, and the Orange County hospital made the decision to start using the device before the merger creating Providence St. Joseph completed in July 2016.

But the fund isn’t entirely walled off from the rest of the system, as its leader also serves as a C-suite executive for the health system. Aaron Martin is the managing general partner at Providence Ventures as well as an executive vice president and chief digital officer for the broader PSJH system.

In response to the letter, Gauss stated it is “statistically impossible for a single practitioner or small group of practitioners to personally observe the impact of a monitoring device on patient outcomes across an entire population,” noting hemorrhage is a low-volume, high-risk event.

Testing Triton

The Food and Drug Administration cleared the device in 2014 as an adjunct to blood loss estimation techniques based on two clinical studies, respectively testing 46 patients and 50 patients, as well as a series of non-clinical studies.

Still, several doctors and one nonprofit group question Triton’s proven clinical value.

“It’s in its infancy,” said Abdulla Al-Khan, a doctor at New Jersey’s Hackensack University Medical Center, which has been testing the device since 2015. “Is it 100% reliable? I don’t think so. Is it perhaps better than a physician’s guesstimation of blood loss? Yes, probably.”

Al-Khan, who is the hospital’s director for its Division of Maternal-Fetal Medicine & Surgery and the Center for Abnormal Placentation, said earlier Triton studies “clearly had their limitations,” and plans to soon begin a study comparing all methods of blood loss estimation.

Daniel Katz, director of obstetric anesthesiology research at Mount Sinai, said in an interview arranged by Gauss that Triton’s clinical value has been well-demonstrated, giving healthcare providers a standard way to measure and keep track of blood loss. While Mount Sinai has an equity investment in Gauss through its corporate VC arm, Katz said he has not received any compensation from Gauss.

In a statement, Gauss said it “believes Triton has proven clinical value,” supported by “robust accuracy data,” particularly highlighting research done following its 2014 FDA clearance.

“Subsequent studies, published in peer-reviewed, academic journals, have demonstrated superiority compared with alternative means to measure blood loss and significantly improved clinical outcomes following adoption of Triton,” the company stated.

Gauss also noted a hospital pays a fee per annual subscription for the software as a service, no matter how often the product is used. It said adoption of the product is independent and goes through the hospital’s regular procurement process in instances where the health system has invested in the company.

The company did not make its CEO Siddarth Satish available for a phone interview.

However, the ECRI Institute, an independent organization that analyzes new technologies for providers, payers and government agencies, reviewed at Healthcare Dive’s request the body of evidence supporting Triton and concluded the device’s clinical value was far from established.

Diane Robertson, the institute’s director of health technology assessment, said the studies done have been small and low quality, noting limitations on trial design for controls, blinding and randomization.

“There isn’t any moderate quality or higher quality evidence on clinical outcomes improvement in patients with how this device is used,” she said.

In response to ECRI’s assessment, Gauss stated that a randomized, controlled trial would be “ineffective, impractical and potentially unethical.” The company further defended Triton’s studies, saying they showed it was more accurate than other estimation methods and is widely supported by leading physicians and experts.

A broader issue

Triton’s adoption spurs broader questions for nonprofit systems that have established VC arms.

About a decade ago, deals involving hospital-affiliated VCs were few, mustering less than $50 million in total value in 2008 and 2009 combined, according to PitchBook. Activity has steadily risen, surpassing $500 million in annual value in 2014 and reaching nearly $1.3 billion in 2018.

Little analysis has come with that money. Several ethicists told Healthcare Dive they were unaware of any published or ongoing studies examining hospital-affiliated VCs and the unique questions such funds pose for medical technology adoption.

“That is an issue of institutional conflicts of interest, which is, frankly, completely unsolved in general in healthcare,” said Steven Joffe, a bioethicist at the University of Pennsylvania. “We don’t have clear-cut mechanisms to make sure institutional conflicts of interest are navigated well.”

Most of the hospital systems invested in Gauss via corporate VCs said they take conflicts of interest seriously and have policies in place to prevent such influence.

For instance, Mount Sinai, which launched its VC back in 2008, has a board of people not affiliated with the health system to analyze the investments and clinical use, a spokesperson said.

According to ethics experts, such an independent review is a critical step to mitigate the potential for decisions to be made, which could compromise a hospital’s patient-driven mission.

But even the appearance of conflict can bring risks to an organization. In the case of St. Joseph in Orange County, uncertainty over the relationship between the hospital’s use of Triton and Providence St. Joseph’s investment in Gauss through its venture arm was enough to motivate physicians to speak out.

“One has to be very careful not to mix a medical practice with financial gain of an industry,” said Al-Khan, the doctor at Hackensack, which does not have such a VC arm.

The funds, though, appear to be here to stay.

In early 2019, Providence Ventures, which backed Gauss, literally doubled down, announcing its fund will expand from $150 million to $300 million. The fund targets companies just like Gauss: early-stage healthcare companies specializing in IT, medical devices and technology-enabled services.

 

Here’s What’s Missing From the Health-Care Debate

Posted on by • Posted in 2020 Election Issues, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Bankruptcy, Hospital Industry, Leadership, Medicare for All, Single Payer Health System, Single Payer Healthcare System, Universal Healthcare System • Leave a comment

https://www.bloomberg.com/opinion/articles/2019-06-28/democratic-2020-debate-medicare-for-all-and-health-care

Raise your hand if you want to debate health care.

There needs to be more frank talk and better explanations about the costs and trade-offs of plans like Medicare for All.

Health care took up a decent portion of the Democratic presidential debates this week. For all of the verbiage, we didn’t learn much new. Everybody wants universal coverage, but they have different ideas about how to get there. One group, led Vermont Senator Bernie Sanders, want a single-payer system like “Medicare for All”; others, including former Vice President Joe Biden, prefer various flavors of a public option that co-exists with elements of the status quo.

Nonetheless, there were a few moments that drew attention to important issues that could (or should) shape the health-care discussion going forward: 

 

THE BIG TRADE-OFF: “People who have health under Medicare for All will have no premiums, no deductibles, no co-payments, no out-of-pocket expenses,” Sanders said during Wednesday’s debate. “Yes, they will pay more in taxes, but less in health care for what they get.” Sanders was responding to a question about whether his policies would mean higher taxes for middle-class Americans; his answer elucidated an essential truth that’s still lost on many voters.

Medicare for All is at its core a shift in how America finances health care. Right now, people pay big chunks of their health costs themselves – especially when they’re sick. Sanders’s plan would replace that out-of-pocket spending with taxes. There’s an appeal to that. It’s more equitable and would eliminate situations where health crises result in bankruptcy, or costs dissuades people from seeking care. Whether this shift will result in savings for individuals will depend on tax details as well as income and health status. If such a plan can lower costs by cutting prices and eliminating insurer profits, there’s a real possibility that many Americans come out ahead. Right now, polls suggest that broad support for Medicare for All drops when people hear about tax increases. Getting voters to understand what they get in return will be critical. 

 

RAISE YOUR HAND: On both nights, the debate moderators chose to boil the health-care debate down to one yes-or-no question. Candidates who support eliminating private health insurance in favor of a single-payer system were asked to raise their hands. This is a defining divide in the field, so it was notable that Elizabeth Warren raised hers on Wednesday. She places third in most polls behind Joe Biden and Sanders, and has been vague on health care in the past. If she’s a dogmatic supporter of Sanders’s specific plan, that tilts the race in the direction of Medicare for All. I’m not sure that’s the case, though. She could end up diverging on specifics of how the U.S. should transition to a single-payer system and structure it. As the field shrinks, it will probably benefit her to stake out a place between Sanders and Biden, who supports a milder public option. A lot of candidates want to be in that space, though none have defined it well or made it their own yet. Given ambivalent polling about the details of Medicare for All and the idea of killing private insurance, this feels like an opportunity for the person who seizes it. 

 

WHAT PRICE IS RIGHT?  America spends far more than other countries on services without getting better results. That might not change without price controls for providers. Former Maryland representative John Delaney claimed on Wednesday that these types of controls would have consequences, saying that many hospitals would be forced to close if they had to accept the rates currently paid by Medicare for all services. While the truth of that statement is a matter of some debate, what isn’t in doubt is that lower reimbursement would be necessary even for milder plans, and that this could put pressure on hospital systems.

Reform-minded candidates don’t like to talk about that, which is why Delaney’s point stood out. Instead, they preferred to focus their ire on insurers and drugmakers. Drug prices and insurer overhead are important issues too, but services eat up a far more significant portion of spending. The field won’t be able to ignore that issue and the potentially disruptive consequences of dealing with it. 

These first debates got the discussion going. The devil will be in the details.

 

 

 

Downside risk contracts still less common for ACOs, study finds

Posted on by • Posted in ACA, Accountable Care Organization (ACO), Downside Risk, Health Insurance Industry, Health System, Hospital, Hospital Industry • Leave a comment

https://www.healthcarefinancenews.com/news/downside-risk-contracts-still-less-common-acos-study-finds?mkt_tok=eyJpIjoiTVRRMk9HTTFOVFV6WldFMSIsInQiOiJvdjllQmxoNHFCWWFVdm1uaEsrQWdnbm9TazQ4aTBveWRocVJpTlY0amNcL2lmdTJ5MEF5NUlOaTBmTTRMOTFEcmk1ejRqcm5xbm0yS3JTTmhwUndJRU03QVpMNkd0bkI1MzNibkhKUVdzNFwvelRINTg1TkFcL05rcVNEcUNraUhsMiJ9

The proportion of ACOs taking on downside risk remained relatively stable, with the majority in upside-only risk contacts.

While the number and variety of contracts held by Accountable Care Organizations have increased dramatically in recent years, the proportion of those bearing downside risk has seen only modest growth, according to a new study published in Health Affairs.

ACOs, which use financial incentives in an effort to improve patient care and reduce healthcare costs, have become one of the most commonly implemented value-based payment models by payers. In 2018, there were more than 1,000 ACOs nationally, covering an estimated 33 million lives and including more than 1,400 different payment arrangements.

Yet debates about the impact of the ACO model persist, especially pertaining to the contribution of downside risk, in which ACOs share responsibility for financial losses with payers if the former fail to meet their targets.

WHAT’S THE IMPACT

To help improve understanding of the rapid growth and evolution of ACOs, the research team analyzed ACO structure and contracts over a six-year period from 2012-2018, using data from the National Survey of Accountable Care Organizations.

They found that while the number of ACOs had grown fivefold during that time period, the proportion of ACOs taking on downside risk remained relatively stable — increasing from 28 percent in 2012 to 33 percent in 2018. Overall, the majority were upside-only risk contracts, which reward cost and quality improvements but do not financially penalize poor performance.

There’s concern among industry experts that these kinds of contracts might not provide adequate incentives to boost ACO performance.

When examining the leadership, services and size of ACOs, the researchers said those bearing downside risk were less likely to be physician-led or physician-owned, more likely to be part of larger, integrated delivery systems (that included hospitals), had more participating physicians, and were more likely to provide services such as inpatient rehabilitation, routine specialty care, and palliative or hospice care.

In addition, the authors found that ACOs with downside risk contracts were more likely to have participating providers who had experience with other forms of payment reform, such as bundled or capitated payments, and had more ACO contracts across payer types — Medicare, commercial and Medicaid.

THE LARGER TREND

The authors said increasing the number of ACO payment contracts per ACO suggests a broadening of financial incentives around value-based care, but that there’s been “stagnation in the proportion of ACOs with deeper financial incentives.” In 2018, just one-third chose contracts with downside risk.

CMS recently issued a rule mandating that ACOs take on financial risk sooner.

 

New Jersey health systems complete merger

Posted on by • Posted in Definitive Agreement, Due Diligence, Health System, Hospital, Mergers & Acquisitions • Leave a comment

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/new-jersey-health-systems-complete-merger.html

Image result for virtua health headquarters

Marlton, N.J.-based Virtua Health completed its acquisition of Camden, N.J.-based Lourdes Health System July 1, creating an organization with 280 care locations and more than 13,000 employees.

Virtua said the transaction will reshape healthcare in south New Jersey by combining the care Virtua provides with the specialized care Lourdes provides — particularly in cardiovascular surgery, complex neurosurgery and transplant services areas.

“The value we place on the patient experience and performance improvement — coupled with our commitment to quality and community involvement — will make a tremendous impact on the health and well-being of the patients we serve,” Dennis W. Pullin, president and CEO of Virtua, said in a news release.

The acquisition has been a monthslong process. Talks started when Carbondale, Pa.-based Maxis Health — the parent company of Lourdes and a subsidiary of Livonia, Mich.-based Trinity Health—  entered into a nonbinding agreement March 8, 2018, to sell Lourdes to Virtua. The boards of Maxis and Virtua signed a definitive agreement to proceed with the deal in June 2018. Last month — after regulatory review from New Jersey and federal agencies — New Jersey Superior Court Judge Paula Dow approved the transaction, according to Virtua.

Through the acquisition, Virtua has taken ownership of Our Lady of Lourdes Medical Center in Camden, Lourdes Medical Center of Burlington County, Lourdes Medical Associates and Lourdes Cardiology Services.

The combined organization has more than 100 buildings and 2,850 clinicians.

 

 

Hospitals could multiply in Florida as state cancels certificate-of-need requirement

Posted on by • Posted in Certificate of Need, Health System, Hospital, Hospital Construction, Hospital Industry • Leave a comment

https://www.beckershospitalreview.com/facilities-management/hospitals-could-multiply-in-florida-as-state-cancels-certificate-of-need-requirement.html

Related image

Florida lawmakers eliminated a regulatory process that limited how many hospitals and specialty services could be built in the state, according to the Orlando Sentinel.

Beginning July 1, general hospitals won’t need to secure a certificate of need to build a facility or start a new service, such as pediatric and adult open-heart surgeries, organ transplants, neonatal intensive care units and rehab programs.

In two years, the second part of the bill will go into effect, which cancels the certificate of need requirement for some specialty hospitals, such as children’s and women’s hospitals, rehab hospitals, psychiatric and substance misuse hospitals, and others.

Altamonte Springs, Fla.-based AdventHealth and Orlando (Fla.) Health told the Orlando Sentinel they will accelerate their construction projects that were on deck to go through the certificate-of-need application or were tied up in regulatory red tape. Nashville, Tenn.-based HCA Healthcare did not say how the change would affect its building plans in Florida.

Roughly 35 states have certificate-of-need laws, according to National Conference of State Legislatures data cited by the Orlando Sentinel. 

 

Out-of-pocket costs rising even as patients transition to lower-cost care settings

Posted on by • Posted in 2020 Election Issues, Consumerism, Denial Rates, Emergency Care, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Financial Management Association (HFMA), High Deductible Health Plans, High Drug Prices, High Prices, Highly Specialized Drugs, Hospital, Hospital Industry, Out of Pocket Expenses, Primary Care, Rev Cycle Management, Urgent Care • Leave a comment

https://www.healthcarefinancenews.com/news/out-pocket-costs-rising-even-patients-transition-lower-cost-care-settings?mkt_tok=eyJpIjoiWldZeVlXTm1aVEF6TVdKbSIsInQiOiJjbWFzeVA2TGlWZkNkXC9odGxcLzdLczFZSDYxd1hoYW04b0wxY0ljQ25zblpYN1VWc2FMWFFCQWpmc2tCYmE4d1Z3eVdMd2htY3JiSjZ3N2Urek43SHFJbWFsckdRbUNycFJoQjhzZm5VcGpJUUhKUDlBMWF2eGJzRUhmZGFlUUx0In0%3D

Patients saw increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and ED care in 2018.

A new TransUnion Healthcare analysis has found that most patients likely felt a bigger pinch to their wallets as out-of-pocket costs across all settings of care increased in 2018. The new findings were made public yesterday at the 2019 Healthcare Financial Management Association Annual Conference in Orlando.

The analysis reveals that patients experienced annual increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and emergency department care last year.

In 2017, the average inpatient cost was $4,068; the average outpatient cost was $990; and the average emergency department cost was $577.

In 2018, the average inpatient cost was $4,659; the average outpatient cost was $1,109; and the average emergency department cost was $617.

FUELING THE TREND

There are certain factors that are influencing this trend, according to Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare.

“Patients are becoming more aware that emergency care is expensive and somewhat inefficient,” Wiik said. “No one wants to go to the emergency room unless we have to, because we don’t want to deal with the time there or the expense. They aren’t the best place to get primary or even urgent care.”

Another factor, he said, is that providers realize the emergency department is a care setting of last resort for many. Providers want to make sure that have room in the ED for cases that are real emergencies, so they’re essentially curating their patients, steering patients to the most cost effective settings possible — often primary care, which is the least expensive setting.

Noting that the biggest annual increases were in inpatient and outpatient care, Wiik said that was largely a function of utilization and just a general wariness, in addition to the fact that most EDs have pretty flat contracts. Financial communication with patients is also an issue.

“Most people can’t afford the average out-of-pocket, so providers are really trying to educate patients as early as they can about those costs,” said Wiik. “Emergency care is a really hard place to educate people on finances, let alone collect on them.”

RISING COSTS

The analysis found that, during a hospital visit, patients are likely experiencing cost increases that continue the trend of higher out-of-pocket costs. About 59% of patients in 2018 had an average out-of-pocket expense between $501 and $1,000 during a healthcare visit. This was a dramatic increase from 39% in 2017. Conversely, the number of patients that had an average out- of-pocket expense of $500 or below decreased from 49% in 2017 to 36% in 2018.

And with out-of-pocket costs increasing, the trend toward consumerism is growing as more patients, payers and providers transition to lower cost settings of care.

One example: Inpatient care, traditionally the most expensive healthcare option, has seen a leveling off with the percentage of price estimates remaining at 8% between 2017 and 2018. The percentage of outpatient services estimates, generally about one-quarter of the cost of inpatient services, rose in that same timeframe from 65% to 73%.

“Patients are likely seeing more providers and payers recommending that they take advantage of cost-effective healthcare options, which brings down costs for all parties,” said Wiik. “This is especially important as costs continue to rise in all areas of healthcare, particularly in inpatient, outpatient and emergency department services.”

This is having an impact on providers, payers and patients, he said.

“Let’s pretend Joanna had an MRI in her head, and that ran $3,200. That might have been paid by Blue Cross Blue Shield, and $100 out of Joanna’s pocket. Now Joanna’s paying $300. Most patients don’t look up how much the MRI’s going to be. They just get the bill later and try to figure it out. I think the patient portion of the bill is going to be in the 35, 40% range very soon. What that means is we’re quickly approaching half of the bill coming from the patient and half from the payer. That’s not insurance anymore, that’s a bank account.”

A recent Kaiser Family Foundation study indicated that 34% of patients are finding it difficult to pay their deductible before insurance kicks in. In addition to patients being challenged to make payments, the trend is that providers are also feeling the pressure of increased denial rates and write-offs, which is increasing bad debt.

Considering these factors together — increased out-of-pocket expenses, a patient’s challenge to make payment, and increased denial rates — collecting payments from all payers is critical for providers. In order for providers to ensure they receive payment for the patient-care services rendered, it is vital that they implement strategies that maximize reimbursements.