Hackensack Meridian Riverview Medical Center in Red Bank, N.J., part of Edison, N.J.-based Hackensack Meridian Health, evacuated patients July 20 after two air-conditioning units went offline, which affected the emergency department and intensive care unit.
The hospital confirmed the issue in a statement shared with Becker’s and said team members immediately acted to ensure affected patients were safely moved into unaffected areas of the facility. Some patients were also transferred to neighboring Hackensack Meridian Health facilities.
“Fortunately, our teams were able to restore air conditioning capabilities to our emergency department and ICU,” Riverview Medical said.
Although some areas of the facility remained offline July 20, the hospital estimated that service will be fully restored by the afternoon of July 21.
The air-conditioning issue at Riverview Medical comes as states across the country are facing extreme heat. As of July 20, heat warnings and advisories were issued affecting 28 states, according to the National Weather Service.
Here are 10 health systems with strong operational metrics and solid financial positions, according to reports from Fitch Ratings and Moody’s Investors Service.
1. AnMed Health has an “AA-” rating and stable outlook with Fitch. The Anderson, S.C.-based system has a leading market share in most service lines, strong operating performance and very solid EBITDA margins, Fitch said.
2. Banner Health has an “AA-” rating and stable outlook with Fitch. The Phoenix-based health system’s core hospital delivery system and growth of its insurance division combine to make it a successful highly integrated delivery system, Fitch said. The credit rating agency said it expects Banner to maintain operating EBITDA margins of about 8 percent on an annual basis, reflecting the growing revenues from the system’s insurance division and large employed physician base.
3. Franciscan Alliance has an “AA” rating and stable outlook with Fitch. The Mishawaka, Ind.-based health system has a very strong cash position and maintains leading market shares in seven of its nine defined primary service areas, Fitch said. The health system benefits from a good payer mix, the credit rating agency said.
4. Gundersen Health System has an “AA-” rating and stable outlook with Fitch. The La Crosse, Wis.-based health system has strong balance sheet metrics and a leading market position and expanding operating platform in its service area, Fitch said. The credit rating agency expects the health system to return to strong operating performance as it emerges from disruption related to the COVID-19 pandemic.
5. Hackensack Meridian Health has an “AA-” rating and stable outlook with Fitch. The Edison, N.J.-based health system has shown consistent year-over-year increases in market share and has a solid liquidity position, Fitch said.
6. Falls Church, Va.-based Inova Health System has an “Aa2” rating and stable outlook with Moody’s. The health system has a consistently strong operating cash flow margin and ample balance sheet resources, Moody’s said. Inova’s financial excellence will remain undergirded by its favorable regulatory and economic environment, the credit rating agency said.
7. Salt Lake City-based Intermountain Healthcare has an “Aa1” rating and stable outlook with Moody’s. The health system has exceptional credit quality, which will continue to benefit from its leading market position in Utah, Moody’s said. The credit rating agency said the health system’s merger with Broomfield, Colo.-based SCL Health will give Intermountain greater geographic reach.
8. Fort Wayne, Ind.-based Parkview Health has an “Aa3” rating and stable outlook with Moody’s. The health system has a leading market position with expansive tertiary and quaternary clinical services in northeastern Indiana and northwestern Ohio, Moody’s said. The credit rating agency said the stable outlook reflects management’s ability to generate strong operating performance during the pandement and with less favorable reimbursement rates.
9. UnityPoint Health has an “AA-” rating and stable outlook with Fitch. The Des Moines, Iowa-based health system has strong leverage metrics and cash position, Fitch said. The credit rating agency expects the health system’s balance sheet and debt service coverage metrics to remain robust.
10. Yale New Haven (Conn.) Health has an “AA-” rating and stable outlook with Fitch. The health system’s turnaround efforts, brand recognition and market presence will help it return to strong operating
Healthcare mergers reached a record-high $19.2 billion in total transacted revenue in the second quarter of this year, led by the planned tie-up of Advocate Aurora Health and Atrium Health and several other large deals, according to the latest quarterly M&A report from Kaufman Hall.
Still, the number of healthcare transactions announced during the second quarter remained below pre-pandemic levels at just 13 deals, one more than the record-low total seen in the first quarter of this year. Activity so far in 2022 underscores what could be a longer-term shift toward fewer but larger hospital deals, the industry consultants said.
Kaufman Hall also predicted continued interest in partnerships between health systems and skilled nursing facilities that can offer new services or more specialized care. Such facilities can support patients’ earlier discharge from inpatient care to a lower-cost setting and can help reduce hospital re-admissions, the report said.
Dive Insight:
Dealmaking in the first half of the year continues a sluggish pace established in 2021, when just 49 health system mergers were announced all year. Last year’s tally marked the lowest annual deal total in a decade, according to Kaufman Hall.
But deals are getting larger. The second quarter’s $19.2 billion in transacted revenue is more than double the total of $8.5 billion seen in the second quarter of 2021, when a similar number of transactions was announced.
Megamergers, in which the seller’s annual revenue tops $1 billion, remain an ongoing trend. Kaufman Hall tracked two such deals in the second quarter: the Advocate-Atrium transaction and Trinity Health’s planned acquisition of Iowa-based MercyOne.
The second quarter saw two additional transactions with smaller-party revenue above $500 million: Bellin Health System’s merger with Gundersen Health System and George Washington University Hospital’s combination with Universal Health Services.
All told, the average size of the smaller party in a deal reached a record $1.5 billion in the second quarter. This was more than double 2021’s record average size of $619 million, Kaufman Hall found.
A couple of recent transactions illustrate the trend toward partnerships with skilled nursing facilities, the report noted. Hackensack Meridian Health announced in late March that the majority of its long-term care facilities would be acquired by Complete Care, and in April, Virtua Health announced the sale of its two skilled nursing facilities to Tryko Partners. Kaufman Hall advised Virtua Health in the transaction.
Exterior of the Center for Disease Control headquarters is seen on October 13, 2014, in Atlanta, Georgia.
Dive Brief:
Hospital-acquired, antibiotic-resistant infections grew 15% from 2019 to 2020, according to data out Tuesday from the Centers for Disease Control and Prevention.
Nearly 30,000 people died from infections associated with healthcare settings in the first year of the pandemic and about 40% were infected during a hospital stay, according to the CDC.
Personal protective equipment and staffing shortages; longer patient stays and use of devices like catheters and ventilators; and significant surges in antibiotic use contributed to the rise in infections, the CDC said.
Dive Insight:
The new data erases years of progress — from 2012 to 2017, hospital-acquired, antimicrobial-resistant infections fell 27%, according to data from the CDC.
Hospitals struggled to follow infection prevention and control guidance during the first year of the pandemic as they faced resource strains and treated sicker patients who needed longer stays. At the same time, hospitals boosted their use of antibiotics, reducing their effectiveness.
In many cases, patients who exhibited pneumonia-like symptoms at hospitals were given antibiotics as a first option even though they were infected with COVID-19. Antibiotics are not effective in treating COVID-19.
Nearly 80% of patients hospitalized with COVID-19 from March to October of 2020 received an antibiotic, according to the CDC.
Antimicrobrial resistance testing was also down in 2020. The CDC’s AR lab network reported receiving 23% fewer testing specimens during 2020 compared to 2019. Due to the pandemic, some CDC progams that focused on antimicrobrial resistance were also repurposed to offer surge capacity COVID-19 testing, the report said.
Without infrastructure and preparedness, it warned, critical data could be “delayed again when the next threat emerges.”
“This setback can and must be temporary,” Michael Craig, director of the CDC’s antibiotic resistance coordination and strategy unit, said in a report analyzing the data.
“The best way to avert a pandemic caused by an antimicrobial-resistant pathogen is to identify gaps and invest in prevention to keep our nation safe,” he said.
Nonprofit hospitals are reporting thinner margins this year, stretched by rising labor, supply and capital costs, and will be pressed to make big changes to their business models or risk negative rating actions, Fitch Ratings said in a report out Tuesday.
Warning that it could take years for provider margins to recover to pre-pandemic levels, Fitch outlined a series of steps necessary to manage the inflationary pressures. Those moves include steeper rate increases in the short term and “relentless, ongoing cost-cutting and productivity improvements” over the medium term, the ratings agency said.
Further out on the horizon, “improvement in operating margins from reduced levels will require hospitals to make transformational changes to the business model,” Fitch cautioned.
Dive Insight:
It has been a rough year so far for U.S. hospitals, which are navigating labor shortages, rising operating costs and a rebound in healthcare utilization that has followed the suppressed demand of the early pandemic.
The strain on operations has resulted in five straight months of negative margins for health systems, according to Kaufman Hall’s latest hospital performance report.
Fitch said the majority of the hospitals it follows have strong balance sheets that will provide a cushion for a period of time. But with cost inflation at levels not seen since the late 1970s and early 1980s, and the potential for additional coronavirus surges this fall and winter, more substantial changes to hospitals’ business models could be necessary to avoid negative rating actions, the agency said.
Providers will look to secure much higher rate increases from commercial payers. However, insurers are under similar pressures as hospitals and will push back, using leverage gained through the sector’s consolidation, the report said.
As a result, commercial insurers’ rate increases are likely to exceed those of recent years, but remain below the rate of inflation in the short term, Fitch said. Further, federal budget deficits make Medicare or Medicaid rate adjustments to offset inflation unlikely.
An early look at state regulatory filings this summer suggests insurers who offer plans on the Affordable Care Act exchanges will seek substantial premium hikes in 2023, according to an analysis from the Kaiser Family Foundation. The median rate increase requested by 72 ACA insurers was 10% in the KFF study.
Inflation is pushing more providers to consider mergers and acquisitions to create economies of scale, Fitch said. But regulators are scrutinizing deals more strenuously due to concerns that consolidation will push prices even higher. With increased capital costs, rising interest rates and ongoing supply chain disruptions, hospitals’ plans for expansion or renovations will cost more or may be postponed, the report said.
Providence said Tuesday it is restructuring and reducing executive roles amid persistent operating challenges spurred by the COVID-19 pandemic.
Providence said it will reduce its regional executive teams to three divisions from seven. The Washington-based nonprofit health system also has plans to consolidate three clinical lines of business— physician enterprise, ambulatory care network and clinical institutes —down to one executive leadership team.
“We began this journey before the pandemic, but it has become even more imperative today as health systems across the country face a new reality,” Providence President and CEO Rod Hochman said in a statement.
The new operating model is aimed at protecting direct patient care staff and other essential roles, Melissa Tizon, vice president of communication, told Healthcare Dive.
It’s unclear how many roles will be eliminated as part of the restructuring. Providence did not provide a specific number of job reductions.
Erik Wexler, former president of strategy and operations in Providence’s southern regions, will step into a new role as chief operating officer and will oversee the three new divisions.
Kevin Manemann will serve as division chief executive of the South region, which includes operations in Southern and Northern California.
Joel Gilbertson, division chief executive for the central region, will oversee operations in Eastern Washington, Montana, Oregon, Texas and New Mexico.
Guy Hudson will lead the North Division, which includes operations in Western Washington and Alaska. Hudson will keep his role as president and CEO of Swedish Health Services in Seattle.
David Kim, an executive vice president, will lead the three clinical business lines that were consolidated under one leadership team.
The shakeup comes after Providence reported in March that its operating loss doubled in 2021, reaching $714 million as operating expenses climbed 8% for the year.
The system said it treated more patients who were sicker and required a higher level of care than in 2020 and, at the same time, struggled with labor shortages.
The rise of ubiquitous self-testing and the paucity of accurate, timely data from the CDC on COVID numbers has left us feeling our way in the dark in terms of the current state of the pandemic. Clearly there’s a new surge underway, driven by the BA.5 variant. What we can report from our experiences on the road over the past few weeks is that the wave is significant.
We’re hearing from our health system members that inpatient COVID volumes and COVID-related ED visits are significantly up again—often double or more what they were just two months ago, although still well below levels of past surges. Length of stay for COVID inpatients is shorter, with fewer ICU visits than during the Delta surge—about the same intensity, proportionally, as during Omicron.
But COVID-related staffing shortages are once again having a real impact on hospitals’ ability to deliver care—clinical and non-clinical staff callouts are at high levels again, as during Omicron.
One piece of good news: masking is back in vogue among many health system executive teams, likely in response to a number of “superspreader” events: gatherings of hospital staff over the past few weeks that resulted in clusters of cases. One system described an all-hands session for anesthesiologists that resulted in more than a dozen cases across the next week—forcing the hospital to cancel procedures.
We’re worried that this BA.5 surge is just getting started, and with booster uptake stagnating and masking all but nonexistent in the general population, the late summer and early autumn situation could be significantly worse.
Embarking on a new strategy requires myriad organizational changes—which will inevitably come with losses. Some parts of the business, people, roles, processes, and traditions will inevitably be deemphasized, or even eliminated from the organization. A recent article in the Harvard Business Review identifies how leaders launching new strategies typically spend a significant amount of time trying to plan for the unpredictable future, while overlooking one of the most predictable parts of any change in strategy: what will be lost when something else is gained.
The Gist: It is critical to identify, acknowledge, and plan for these losses in adopting any new strategy, as the unexpressed fear of loss is a key driver of organizational inertia and resistance to change.
With health systems deep in strategy development for the post-COVID market, leaders must takeinto account the wide range of challenges their organizations will face when it comes to reconfiguring investment, growth, competencies, and people, in addition to focusing on new areas of opportunity revealed by the pandemic.
Failing to confront these tradeoffs head-on may sacrifice any strategic gains resulting from new initiatives.
While the world’s attention was focused on fighting COVID-19, antibiotic-resistant infections were spreading. A Centers for Disease Control and Prevention (CDC) report finds that hospital-acquired infections and deaths from antimicrobial-resistant pathogens increased 15 percent in 2020, compared to 2019. COVID overwhelmed healthcare settings, shifting the focus of infection control resources, resulting in sicker patients with longer catheter and ventilator use, which increased infection risks. Plus, clinicians initially unsure of how to treat the new disease prescribed COVID patients antibiotics at unusually high rates, setting the stage for growing drug resistance.
The Gist:This uptick reverses years of progress made on reducing the number of superbug infections in hospitals. Prior to the pandemic, hospitals were becoming markedly safer places, with fewer hospital-acquired infections, adverse drug reactions, and poor procedural outcomes.
As health systems exit COVID crisis mode, hospitals must renew their focus on these longstanding goals of the infection control agenda.
HENRY KOTULA 