Category Archives: Healthcare Industry

Gut Punches for Healthcare and Hospitals

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Bankruptcy, Center for Medicare and Medicaid Services (CMS), Deferred Healthcare, Financially Distressed, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Industry, Hospital, Hospital Industry, Medicaid Cuts, Medical Debt, Out of Pocket Expenses, Politics, Profit, Profit Margin, Profit Model, Profit Motive, Public Opinion, Public Perception, Shareholder Expectations, Sign of the Times, Underinsured, Uninsured, Wall Street • Tagged , , , , • Leave a comment
Gut Punches for Healthcare and Hospitals: The One Big Beautiful Bill Act and the CMS Proposed Rule

The healthcare industry is still licking its wounds from $1 trillion in federal funding cuts included in the One Big Beautiful Bill Act (OBBBA) signed into law July 4.

Adding insult to injury, the Center for Medicare and Medicaid services issued a 913-page proposed rule last Tuesday that includes unwelcome changes especially troublesome for hospitals i.e. adoption of site neutral payments, expansion of hospital price transparency requirements, reduction of inpatient-only services, acceleration of hospital 340B discount repayment obligations and more.

The combination of the two is bad news for healthcare overall and hospitals especially: the timing is precarious:

  • Economic uncertainty: Economists believe a recession is less likely but uncertainty about tariffs, fear about rising inflation, labor market volatility a housing market slowdown and speculation about interest rates have capital markets anxious. Healthcare is capital intense: the impact of the two in tandem with economic uncertainty is unsettling.
  • Consumer spending fragility: Consumer spending is holding steady for the time being but housing equity values are dropping, rents are increasing, student loan obligations suspended during Covid are now re-activated, prices for hospital and physicians are increasing faster than other necessities and inflation ticked up slightly last month. Consumer out-of-pocket spending for healthcare products and services is directly impacted by purchases in every category.
  • Heightened payer pressures: Insurers and employers are expecting double-digit increases for premiums and health benefits next year blaming their higher costs on hospitals and drugs, OBBBA-induced insurance coverage lapses and systemic lack of cost-accountability. For insurers, already reeling from 2023-2024 financial reversals, forecasts are dire. Payers will heighten pressure on healthcare providers—especially hospitals and specialists—as a result.

Why healthcare appears to have borne the brunt of the funding cuts in the OBBBA is speculative: 

Might a case have been made for cuts in other departments? Might healthcare programs other than Medicaid have been ripe for “waste, fraud and abuse” driven cuts? Might technology-driven administrative costs reductions across the expanse of federal and state government been more effective than DOGE- blunt experimentation?

Healthcare is 18% of the GDP and 28% of total federal spending: that leaves room for cuts in other industries.

Why hospitals, along with nursing homes and public health programs, are likely to bear the lion’s share of OBBBA’ cut fallout and CMS’ proposed rule disruptions is equally vexing.  Might the high-profile successes of some not-for-profit hospital operators have drawn attention? Might Congress have been attentive to IRS Form 990 filings for NFP operators and quarterly earnings of investor-owned systems and assume hospital finances are OK? Might advocacy efforts to maintain the status quo with facility fees, 340B drug discounts, executive compensation et al been overshadowed by concerns about consolidation-induced cost increases and disregard for affordability? Hospital emergency rooms in rural and urban communities, nursing homes, public health programs and many physicians will be adversely impacted by the OBBBA cuts: the impact will vary by state. What’s not clear is how much.

My take:

Having read both the OBBBA and CMS proposed rules and observed reactions from industry, two things are clear to me:

The antipathy toward the healthcare industry among the public  and in Congress played a key role in passage of the OBBBA and regulatory changes likely to follow. 

Polls show three-fourths of likely voters want to see transformational change to healthcare and two-thirds think the industry is more concerned with its profit over their care: these views lend to hostile regulatory changes. The public and the majority of elected officials think the industry prioritizes protection of the status quo over obligations to serve communities and the greater good.

The result: winners and losers in each sector, lack of continuity and interoperability, runaway costs and poor outcomes.

No sector in healthcare stands as the surrogate for the health and wellbeing of the population. There are well-intended players in each sector who seek the moral high ground for healthcare, but their boards and leaders put short-term sustainability above long-term systemness and purpose. That void needs to be filled.

The timing of these changes is predictably political. 

Most of the lower-cost initiatives in both the OBBBA changes and CMS proposals carry obligations to commence in 2026—in time for the November 2026 mid-term campaigns. Most of the results, including costs and savings, will not be known before 2028 or after. They’re geared toward voters inclined to think healthcare is systemically fraudulent, wasteful and self-serving.

And they’re just the start: officials across the Departments of Health and Human Services, Justice, Commerce, Labor and Veterans Affairs will add to the lists.

Buckle up.

The hospital finance misconception plaguing C-suites

Posted on by • Posted in Access, Access & Quality of Healthcare, Complex, Cost Management, Health Policy, Health System, Healthcare Economics, Healthcare Industry, Healthcare Reform, Hospital, Hospital Industry, Non-Profit Healthcare Industry, State of the Union • Leave a comment
https://www.beckershospitalreview.com/hospital-management-administration/the-hospital-finance-misconception-plaguing-c-suites.html?origin=BHRSUN&utm_source=BHRSUN&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Health systems have a big challenge: rising costs and reimbursement that doesn’t keep up with inflation. The amount spent on healthcare annually continues to rise while outcomes aren’t meaningfully better.

Some people outside of the industry wonder: Why doesn’t healthcare just act more like other businesses?

“There seems to be a widely held belief that healthcare providers respond the same as all other businesses that face rising costs,” said Cliff Megerian, MD, CEO of University Hospitals in Cleveland. “That is absolutely not true. Unlike other businesses, hospitals and health systems cannot simply adjust prices in response to inflation due to pre-negotiated rates and government mandated pay structures. Instead, we are continually innovating approaches to population health, efficiency and cost management, ensuring that we maintain delivery of high quality care to our patients.”

Nonprofit hospitals are also responsible for serving all patients regardless of ability to pay, and University Hospitals is among the health systems distinguished as a best regional hospital for equitable access to care by U.S. News & World Report.

“This commitment necessitates additional efforts to ensure equitable access to healthcare services, which inherently also changes our payer mix by design,” said Dr. Megerian. “Serving an under-resourced patient base, including a significant number of Medicaid, underinsured and uninsured individuals, requires us to balance financial constraints with our ethical obligations to provide the highest quality care to everyone.”

Hospitals need adequate reimbursement to continue providing services while also staffing the hospital appropriately. Many hospitals and health systems have been in tense negotiations with insurers in the last 24 months for increased pay rates to cover rising costs.

“Without appropriate adjustments, nonprofit healthcare providers may struggle to maintain the high standards of care that patients deserve, especially when serving vulnerable populations,” said Dr. Megerian. “Ensuring fair reimbursement rates supports our nonprofit industry’s aim to deliver equitable, high quality healthcare to all while preserving the integrity of our health systems.”

Industry outsiders often seek free market dynamics in healthcare as the “fix” for an expensive and complicated system. But leaving healthcare up to the normal ebbs and flows of businesses would exclude a large portion of the population from services. Competition may lead to service cuts and hospital closures as well, which devastates communities.

“A misconception is that the marketplace and utilization of competitive business model will fix all that ails the American healthcare system,”

said Scot Nygaard, MD, COO of Lee Health in Ft. Myers and Cape Coral, Fla.

“Is healthcare really a marketplace, in which the forces of competition will solve for many of the complex problems we face, such as healthcare disparities, cost effective care, more uniform and predictive quality and safety outcomes, mental health access, professional caregiver workforce supply?”

Without comprehensive reform at the state or federal level, many health systems have been left to make small changes hoping to yield different results. But, Dr. Nygaard said, the “evidence year after year suggests that this approach is not successful and yet we fear major reform despite the outcomes.”

The dearth of outside companies trying to enter the healthcare space hasn’t helped. People now expect healthcare providers to function like Amazon or Walmart without understanding the unique complexities of the industry.

“Unlike retail, healthcare involves navigating intricate regulations, providing deeply personal patient interactions and building sustained trust,” said Andreia de Lima, MD, chief medical officer of Cayuga Health System in Ithaca, N.Y. “Even giants like Walmart found it challenging to make primary care profitable due to high operating costs and complex reimbursement systems. Success in healthcare requires more than efficiency; it demands a deep understanding of patient care, ethical standards and the unpredictable nature of human health.”

So what can be done?

Tracea Saraliev, a board member for Dominican Hospital Santa Cruz (Calif.) and PIH Health said leaders need to increase efforts to simplify and improve healthcare economics.

“Despite increased ownership of healthcare by consumers, the economics of healthcare remain largely misunderstood,” said Ms. Saraliev. “For example, consumers erroneously believe that they always pay less for care with health insurance. However, a patient can pay more for healthcare with insurance than without as a result of the negotiated arrangements hospitals have with insurance companies and the deductibles of their policy.”

There is also a variation in cost based on the provider, and even with financial transparency it’s a challenge to provide an accurate assessment for the cost of care before services. Global pricing and other value-based care methods streamline the price, but healthcare providers need great data to benefit from the arrangements.

Based on payer mix, geographic location and contracted reimbursement rates, some health systems are able to thrive while others struggle to stay afloat. The variation mystifies some people outside of the industry.

“Healthcare economics very much remains paradoxical to even the most savvy of consumers,” said Ms. Saraliev.

The Healthcare Economy: Three Key Takeaways that Frame Public and Private Sector Response

Posted on by • Posted in American Hospital Association (AHA), Congressional Budget Office (CBO), Consumer Price Index (CPI), Cost Management, Cost Reduction, Forecast, Health Policy, Health System, Healthcare Industry, Healthcare Market, Healthcare Price Index, Healthcare Reform, High Cost Therapies, High Deductible Health Plans, High Drug Prices, High Premiums, Highly Specialized Drugs, Hospital, Hospital Industry, Market Outlook, Market Trends, Out of Network, Out of Pocket Expenses, Prescription Drugs, Value-Based Contracting, Value-Based Healthcare • Leave a comment
The Healthcare Economy: Three Key Takeaways that Frame Public and Private Sector Response

Last week, 2 important economic reports were released that provide a retrospective and prospective assessment of the U.S. health economy:

The CBO National Health Expenditure Forecast to 2032: 

“Health care spending growth is expected to outpace that of the gross domestic product (GDP) during the coming decade, resulting in a health share of GDP that reaches 19.7% by 2032 (up from 17.3% in 2022). National health expenditures are projected to have grown 7.5% in 2023, when the COVID-19 public health emergency ended. This reflects broad increases in the use of health care, which is associated with an estimated 93.1% of the population being insured that year… During 2027–32, personal health care price inflation and growth in the use of health care services and goods contribute to projected health spending that grows at a faster rate than the rest of the economy.”

The Congressional Budget Office forecast that from 2024 to 2032:

  • National Health Expenditures will increase 52.6%: $5.048 trillion (17.6% of GDP) to $7,705 trillion (19.7% of GDP) based on average annual growth of: +5.2% in 2024 increasing to +5.6% in 2032
  • NHE/Capita will increase 45.6%: from $15,054 in 2024 to $21,927 in 2032
  • Physician services spending will increase 51.2%: from $1006.5 trillion (19.9% of NHE) to $1522.1 trillion (19.7% of total NHE)
  • Hospital spending will increase 51.6%: from $1559.6 trillion (30.9% of total NHE) in 2024 to $2366.3 trillion (30.7% of total NHE) in 2032.
  • Prescription drug spending will increase 57.1%: from 463.6 billion (9.2% of total NHE) to 728.5 billion (9.4% of total NHE)
  • The net cost of insurance will increase 62.9%: from 328.2 billion (6.5% of total NHE) to 534.7 billion (6.9% of total NHE).
  • The U.S. Population will increase 4.9%: from 334.9 million in 2024 to 351.4 million in 2032.

The Bureau of Labor Statistics CPI Report for May 2024 and Last 12 Months (May 2023-May2024): 

“The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in May on a seasonally adjusted basis, after rising 0.3% in April… Over the last 12 months, the all-items index increased 3.3% before seasonal adjustment. More than offsetting a decline in gasoline, the index for shelter rose in May, up 0.4% for the fourth consecutive month. The index for food increased 0.1% in May. … The index for all items less food and energy rose 0.2% in May, after rising 0.3 % the preceding month… The all-items index rose 3.3% for the 12 months ending May, a smaller increase than the 3.4% increase for the 12 months ending April. The all items less food and energy index rose 3.4 % over the last 12 months. The energy index increased 3.7%for the 12 months ending May. The food index increased 2.1%over the last year.

Medical care services, which represents 6.5% of the overall CPI, increased 3.1%–lower than the overall CPI. Key elements included in this category reflect wide variance: hospital and OTC prices exceeded the overall CPI while insurance, prescription drugs and physician services were lower.

  • Physicians’ services CPI (1.8% of total impact): LTM: +1.4%
  • Hospital services CPI (1.0% of total impact): LTM: +7.3%
  • Prescription drugs (.9% of total impact) LTM +2.4%
  • Over the Counter Products (.4% of total impact) LTM 5.9%
  • Health insurance (.6% of total) LTM -7.7%

Other categories of greater impact on the overall CPI than medical services are Shelter (36.1%), Commodities (18.6%), Food (13.4%), Energy (7.0%) and Transportation (6.5%).

Three key takeaways from these reports:

  • The health economy is big and getting bigger. But it’s less obvious to consumers in the prices they experience than to employers, state and federal government who fund the majority of its spending. Notably, OTC products are an exception: they’re a direct OOP expense for most consumers. To consumers, especially renters and young adults hoping to purchase homes, the escalating costs of housing have considerably more impact than health prices today but directly impact on their ability to afford coverage and services. Per Redfin, mortgage rates will hover at 6-7% through next year and rents will increase 10% or more.
  • Proportionate to National Health Expenditure growth, spending for hospitals and physician services will remain at current levels while spending for prescription drugs and health insurance will increase. That’s certain to increase attention to price controls and heighten tension between insurers and providers.
  • There’s scant evidence the value agenda aka value-based purchases, alternative payment models et al has lowered spending nor considered significant in forecasts.

The health economy is expanding above the overall rates of population growth, overall inflation and the U.S. economy. GDP.  Its long-term sustainability is in question unless monetary policies enable other industries to grow proportionately and/or taxpayers agree to pay more for its services. These data confirm its unit costs and prices are problematic.

As Campaign 2024 heats up with the economy as its key issue, promises to contain health spending, impose price controls, limit consolidation and increase competition will be prominent.

Public sector actions

will likely feature state initiatives to lower cost and spend taxpayer money more effectively.

Private sector actions

will center on employer and insurer initiatives to increase out of pocket payments for enrollees and reduce their choices of providers.

Thus, these reports paint a cautionary picture for the health economy going forward. Each sector will feel cost-containment pressure and each will claim it is responding appropriately. Some actually will.

PS: The issue of tax exemptions for not-for-profit hospitals reared itself again last week.

The Committee for a Responsible Federal Budget—a conservative leaning think tank—issued a report arguing the exemption needs to be ended or cut.  In response,

the American Hospital Association issued a testy reply claiming the report’s math misleading and motivation ill-conceived.

This issue is not going away: it requires objective analysis, fresh thinking and new voices.  For a recap, see the Hospital Section below.

Has U.S. Healthcare reached its Tipping Point?

Posted on by • Posted in Affordability, Cost Management, Dept of Justice (DOJ), Disruption, Disruptive Technology, Federal Trade Commission, Federal Trade Commission (FTC), Health Insurance Industry, Health Policy, Health System, Healthcare Industry, Healthcare Reform, High Drug Prices, Inflation, Innovation, Innovative Care Models, Integrated Delivery System, Meaningful, Price Transparency, Private Equity, Tipping Point, Transformation, Transformational Change • Leave a comment
Has U.S. Healthcare reached its Tipping Point?

Last week was significant for healthcare:

  • Tuesday, the, FTC, and DOJ announced creation of a task force focused on tackling “unfair and illegal pricing” in healthcare. The same day, HHS joined FTC and DOJ regulators in launching an investigation with the DOJ and FTC probing private equity’ investments in healthcare expressing concern these deals may generate profits for corporate investors at the expense of patients’ health, workers’ safety and affordable care.
  • Thursday’s State of the Union address by President Biden (SOTU) and the Republican response by Alabama Senator Katey Britt put the spotlight on women’s reproductive health, drug prices and healthcare affordability.
  • Friday, the Senate passed a $468 billion spending bill (75-22) that had passed in the House Wednesday (339-85) averting a government shutdown. The bill postpones an $8 billion reduction in Medicaid disproportionate share hospital payments for a year, allocates $4.27 billion to federally qualified health centers through the end of the year and rolls back a significant portion of a Medicare physician pay cut that kicked in on Jan. 1. Next, Congress must pass appropriations for HHS and other agencies before the March 22 shutdown.
  • And all week, the cyberattack on Optum’s Change Healthcare discovered February 21 hovered as hospitals, clinics, pharmacies and others scrambled to manage gaps in transaction processing. Notably, the American Hospital Association and others have amplified criticism of UnitedHealth Group’s handling of the disruption, having, bought Change for $13 billion in October, 2022 after a lengthy Department of Justice anti-trust review. This week, UHG indicates partial service of CH support will be restored. Stay tuned.

Just another week for healthcare: Congressional infighting about healthcare spending. Regulator announcements of new rules to stimulate competition and protect consumers in the healthcare market.  Lobbying by leading trade groups to protect funding and disable threats from rivals. And so on.

At the macro level, it’s understandable: healthcare is an attractive market, especially in its services sectors. Since the pandemic, prices for services (i.e. physicians, hospitals et al) have steadily increased and remain elevated despite the pressures of transparency mandates and insurer pushback. By contrast, prices for most products (drugs, disposables, technologies et al) have followed the broader market pricing trends where prices for some escalated fast and then dipped.

While some branded prescription medicines are exceptions, it is health services that have driven the majority of health cost inflation since the pandemic.

UnitedHealth Group’s financial success is illustrative: 

it’s big, high profile and vertically integrated across all major services sectors. In its year end 2023 financial report (January 12, 2024) it reported revenues of $371.6 Billion (up 15% Year-Over-Year), earnings from operations up 14%, cash flows from operations of $29.1 Billion (1.3x Net Income), medical care ratio at 83.2% up from 82% last year, net earnings of $23.86/share and adjusted net earnings of $25.12/share and guidance its 2024 revenues of $400-403 billion. They buy products using their scale and scope leverage to  pay less for services they don’t own less and products needed to support them. It’s a big business in a buyer’s market and that’s unsettling to many.

Big business is not new to healthcare:

it’s been dominant in every sector but of late more a focus of unflattering regulator and media attention. Coupled with growing public discontent about the system’s effectiveness and affordability, it seems it’s near a tipping point.

David Johnson, one of the most thoughtful analysts of the health industry, reminded his readers last week that the current state of affairs in U.S. healthcare is not new citing the January 1970 Fortune cover story “Our Ailing Medical System”

 “American medicine, the pride of the nation for many years, stands now on the brink of chaos. To be sure, our medical practitioners have their great moments of drama and triumph. But much of U.S. medical care, particularly the everyday business of preventing and treating routine illnesses, is inferior in quality, wastefully dispensed, and inequitably financed…

Whether poor or not, most Americans are badly served by the obsolete, overstrained medical system that has grown up around them helter-skelter. … The time has come for radical change.”

Johnson added: “The healthcare industry, however, cannot fight gravity forever. Consumerism, technological advances and pro-market regulatory reforms are so powerful and coming so fast that status-quo healthcare cannot forestall their ascendance. Properly harnessed, these disruptive forces have the collective power necessary for U.S. healthcare to finally achieve the 1970 Fortune magazine goal of delivering “good care to every American with little increase in cost.”

He’s right.

I believe the U.S. health system as we know it has reached its tipping point. The big-name organizations in every sector see it and have nominal contingency plans in place; the smaller players are buying time until the shoe drops. But I am worried.

I am worried the system’s future is in the hands of hyper-partisanship by both parties seeking political advantage in election cycles over meaningful creation of a health system that functions for the greater good.

I am worried that the industry’s aversion to price transparency, meaningful discussion about affordability and consistency in defining quality, safety and value will precipitate short-term gamesmanship for reputational advantage and nullify systemness and interoperability requisite to its transformation.

I am worried that understandably frustrated employers will drop employee health benefits to force the system to needed accountability.

I am worried that the growing armies of under-served and dissatisfied populations will revolt.

I am worried that its workforce is ill-prepared for a future that’s technology-enabled and consumer centric.

I am worried that the industry’s most prominent trade groups are concentrating more on “warfare” against their rivals and less about the long-term future of the system.

I am worried that transformational change is all talk.

It’s time to start an adult conversation about the future of the system. The starting point: acknowledging that it’s not about bad people; it’s about systemic flaws in its design and functioning. Fixing it requires balancing lag indicators about its use, costs and demand with assumptions about innovations that hold promise to shift its trajectory long-term. It requires employers to actively participate: in 2009-2010, Big Business mistakenly chose to sit out deliberations about the Affordable Care Act. And it requires independent, visionary facilitation free from bias and input beyond the DC talking heads that have dominated reform thought leadership for 6 decades.

Or, collectively, we can watch events like last week’s roll by and witness the emergence of a large public utility serving most and a smaller private option for those that afford it. Or something worse.

P.S. Today, thousands will make the pilgrimage to Orlando for HIMSS24 kicking off with a keynote by Robert Garrett, CEO of Hackensack Meridian Health tomorrow about ‘transformational change’ and closing Friday with a keynote by Nick Saban, legendary Alabama football coach on leadership. In between, the meeting’s 24 premier supporters and hundreds of exhibitors will push their latest solutions to prospects and customers keenly aware healthcare’s future is not a repeat of its past primarily due to technology. Information-driven healthcare is dependent on technologies that enable cost-effective, customized evidence-based care that’s readily accessible to individuals where and when they want it and with whom.

And many will be anticipating HCA Mission Health’s (Asheville NC) Plan of Action response due to CMS this Wednesday addressing deficiencies in 6 areas including CMS Deficiency 482.12 “which ensures that hospitals have a responsible governing body overseeing critical aspects of patient care and medical staff appointments.” Interest is high outside the region as the nation’s largest investor-owned system was put in “immediate jeopardy” of losing its Medicare participation status last year at Mission. FYI: HCA reported operating income of $7.7 billion (11.8% operating margin) on revenues of $65 billion in 2023.

Six Majority Beliefs about the U.S. Health System Compromise its Value Proposition

Posted on by • Posted in Abortion, ACA, Health System, Healthcare Industry, Healthcare Reform, Interest Rates, Misinformation, Political Differences, Political Lobbying, Politics, Public Opinion, Public Perception, Value Proposition • Leave a comment
Six Majority Beliefs about the U.S. Health System Compromise its Value Proposition

Last week was notable for healthcare because current events thrust it into the limelight…

Hospitals and emergency responders in Maine: Media attention to Gaza and the Speaker-less U.S. House of Representatives was temporarily suspended as the deaths of 18 in the U.S.’ 36h mass shooting in Lewiston, Maine took center stage. The immediate overload on Lewiston’s Central Maine Medical Center and Mass General where the 13 injured were treated (including 4 still hospitalized) drew media attention—largely gone by Friday when the shooter’s death by suicide was confirmed.

The New Speaker of the House: The GOP House of Representatives elected Mike Johnson, the 4-term Representative from Shreveport to the post vacant since October 3.

Johnson is no stranger to partisan positions on healthcare issues. As Chairman of the conservative-leaning Republican Steering Committee from 2019-2021, he led the group’s platform to dismantle the Affordable Care Act and supports a national restriction on abortions despite Senate GOP Leader McConnell’s preference it be left to states to decide.

With the prospect of a government shutdown November 17 due to inaction on the FY2024 federal budget, the 52-year-old lawyer faces delicate maneuvering around $106 billion proposed for Israel, the Ukraine, Taiwan and border security alongside appropriations for the health system that consumes 28% of entire federal outlays.

Health organizational business strategy announcements: Friction between physicians and hospital officials in Asheville (Mission) and Minnesota (Allina) attracted national coverage and brought attention to staffing, cultural and financial circumstances in these prominent organizations. —and on the heels of the Kaiser Permanente strike settlement. The divorce from Mass General by Dana Farber in Boston and announcements by GNC, Best Buy, Optum (re-branding NaviHealth) and Sanofi hit last week’s news cycle.

And indirectly, the 3Q 2023 GDP report by the Department of Commerce raised eyebrows: it was up 4.9%–far higher than expected prompting speculation that the Federal Open Market Committee (FOMC) will raise interest rates (again) at its meeting this week or next month. That means borrowing costs for struggling hospitals, nursing homes and consumers needing loans will go up along with household medical debt.

As news cycles go, this one was standard fare for healthcare: with the exception of business plan announcements by organizations or as elements of tragedies like Lewiston, Gaza or a pandemic,

the business of the health system—how it operates is largely uncovered and often subject to misinformation or disinformation.

That’s the problem: it’s background noise to most voters who can be stoked to action over a single issue when prompted by special interests (i.e., Abortion rights, surprise billing, price transparency et al) but remain inattentive and marginally informed about the bigger role it plays in our communities and country and where it’s heading long-term.

The narrative common to most boils down to these:

  • The U.S. health system is good, but it’s complicated. ‘How good’ depends on your insurance and your health—both are key.
  • The U.S. health system is expensive and profitable. It pays its executives well and its frontline workers unfairly.
  • The delivery system focuses on the sick and injured; prevention and public health matter less.
  • Hospitals and physicians are vital to the system; health insurers keep their costs down.
  • The U.S. system pays lip service to “customer service” and ‘engaged consumers.” It is spin not supported by actions.
  • The U.S. system needs to change dramatically.

In the next 3 weeks, attention will be on the federal budget: healthcare will be in the background unless temporarily an element of a mass tragedy. Each trade group will tout its accomplishments to regulators and pimp their advocacy punch list. Each company will gin-out news releases and commentary about the future of the system will default to think tanks and focused on a single issue of interest.

That’s the problem. In this era of social media, polarization, and mass transparency, these old ways of communicating no longer work. Left unattended, they undermine the value proposition on which the U.S. system is based.

The ethics and legality of private equity (PE) once again in the spotlight

Posted on by • Posted in Ethical Pitfalls, Ethics, Health Insurance Industry, Healthcare Industry, Legal, Legal Challenges, Market Consolidation, Market Power, Market Trends, Mergers & Acquisitions, Private Equity, Profit Model, Profit Motive • Leave a comment

https://mailchi.mp/46ca38d3d25e/the-weekly-gist-november-4-2022?e=d1e747d2d8

 In a recent STAT News article, reporters Tara Bannow and Bob Herman took an in-depth look at private-equity firm Welsh, Carson, Anderson & Stowe, examining the performance of four of its healthcare portfolio companies. They show how the firm’s A-list partners, clients, and board members have promoted controversial business practices—often at the expense of publicly funded healthcare programs—that conflict with its well-curated public image.

The Gist: This article emphasizes how the complex and opaque regulatory structure of American healthcare allows motivated parties like PE firms to find technically legal, though ethically suspect, business models, which can easily tip over into outright illegality.

It highlights the “revolving door” flow of executives between industry and government, which allows investment firms to play a long game by actively shaping the regulatory landscape and lobbying to create business opportunities where none previously existed. Justified backlash at “gotcha” business models and profit-seeking at the expense of vulnerable patients may swamp any positive contribution that PE investment and rollups may make to the business of healthcare.

The next health care wars are about costs

Posted on by • Posted in ACA, Affordability, Cost Management, Cost Reduction, Cost Shifting, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Healthcare Industry, Healthcare Reform, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Out of Pocket Expenses, Political Lobbying • Leave a comment
https://www.axios.com/2022/11/02/health-care-costs-congress-insurance-politics?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

All signs point to a crushing surge in health care costs for patients and employers next year — and that means health care industry groups are about to brawl over who pays the price.

Why it matters: The surge could build pressure on Congress to stop ignoring the underlying costs that make care increasingly unaffordable for everyday Americans — and make billions for health care companies.

[This special report kicks off a series to introduce our new, Congress-focused Axios Pro: Health Care, coming Nov. 14.]

  • This year’s Democratic legislation allowing Medicare to negotiate drug prices was a rare case of addressing costs amid intense drug industry lobbying against it. Even so, it was a watered down version of the original proposal.
  • But the drug industry isn’t alone in its willingness to fight to maintain the status quo, and that fight frequently pits one industry group against another.

Where it stands: Even insured Americans are struggling to afford their care, the inevitable result of years of cost-shifting by employers and insurers onto patients through higher premiums, deductibles and other out-of-pocket costs.

  • But employers are now struggling to attract and retain workers, and forcing their employees to shoulder even more costs seems like a less viable option.
  • Tougher economic times make patients more cost-sensitive, putting families in a bind if they get sick.
  • Rising medical debt, increased price transparency and questionable debt collection practices have rubbed some of the good-guy sheen off of hospitals and providers.
  • All of this is coming to a boiling point. The question isn’t whether, but when.

Yes, but: Don’t underestimate Washington’s ability to have a completely underwhelming response to the problem, or one that just kicks the can down the road — or to just not respond at all.

Between the lines: If you look closely, the usual partisan battle lines are changing.

  • The GOP’s criticism of Democrats’ drug pricing law is nothing like the party’s outcry over the Affordable Care Act, and no one seriously thinks the party will make a real attempt to repeal it.
  • One of the most meaningful health reforms passed in recent years was a bipartisan ban on surprise billing, which may provide a more modern template for health care policy fights.
  • Surprise medical bills divided lawmakers into two teams, but it wasn’t Democrats vs. Republicans; it was those who supported the insurer-backed reform plan vs. the hospital and provider-backed one. This fight continues today — in court.

The bottom line: Someone is going to have to pay for the coming cost surge, whether that’s patients, taxpayers, employers or the health care companies profiting off of the system. Each industry group is fighting like hell to make sure it isn’t them.

Kaiser posts $1.3B loss in Q2

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Kaiser Permanente reported lower revenues in the second quarter of this year than in the same period a year earlier, and the Oakland, Calif.-based healthcare giant ended the period with a net loss. 

Kaiser, which provides healthcare and health plans, reported operating revenue of $23.47 billion in the second quarter of 2022, down from $23.69 billion in the same quarter of 2021. The organization’s expenses climbed from $23.34 billion in the second quarter of last year to $23.38 billion in the same period this year. 

“Much like the entire health care industry, we continue to address deferred care while navigating COVID-19 surges and associated expenses,” Kathy Lancaster, Kaiser executive vice president and CFO, said in an Aug. 5 earnings release. “Kaiser Permanente’s integrated model of providing both care and coverage enables us to meet these challenges as demonstrated by our moderate increase in year-over-year operating expenses for the second quarter.”

Kaiser ended the second quarter of this year with operating income of $89 million, down from $349 million a year earlier. 

After factoring in a nonoperating loss of $1.4 billion, Kaiser reported a net loss of $1.3 billion for the second quarter of this year, compared to net income of $2.97 billion in the same period last year. Kaiser said the loss was largely attributable to market conditions. 

This is the second quarter in a row that Kaiser has reported a loss. The organization closed out the first quarter of this year with a net loss of $961 million, compared to net income of $2 billion in the same quarter of 2021. 

‘Doxxing’ of healthcare workers banned in Colorado

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Colorado Gov. Jared Polis signed a law designed to prevent “doxxing” of healthcare workers.

Doxxing refers to an act that reveals private or identifying information about an individual on the internet, opening them up to harassment or intimidation.

The state Senate passed House Bill 1041 on March 4, after the House passed it Feb. 14. Mr. Polis signed the bill into law March 24.

“(The protected workers) do have a public-facing job, but just because you have a public-facing job doesn’t mean you should have threats against your family or yourself for doing the work you’ve been tasked with doing,” bill sponsor and state Rep. Andrew Boesenecker, said, according to The Denver Post.

In 2021, Colorado banned doxxing of public health workers. That law, in part, allowed public health workers to seek redaction of their personal information from publicly available government databases, according to the Post. 

The new law expands protections to include child representatives, code enforcement officers, healthcare workers, mortgage servicers, and office of the respondent parents’ counsel staff members and contractors.

Under the new law, these individuals are people “whose personal information may be withheld from the internet if the protected person believes dissemination of such information poses an imminent and serious threat to the protected person or the safety of the protected person’s immediate family.”

Personal information includes the protected person’s full name and home address.

Labor Shortage extends beyond Nursing, beyond Hospitals

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https://mailchi.mp/60a059924012/the-weekly-gist-september-10-2021?e=d1e747d2d8

How Could You Be Affected by the Healthcare Labor Shortage? - Right Way Medical

The typical media coverage of the healthcare workforce crisis often focuses on the acute shortage of hospital-based nurses. For instance, the hospital forced to close a unit as nurses, burned out after 18 months of extra shifts taking care of COVID patients, leave for lower-stress, more predictable jobs in outpatient facilities or doctors’ offices.

But we’re hearing about a reverse trend in recent conversations with health system leaders. Instead of outpatient settings benefiting from an influx of nursing talent, ambulatory leaders report that nurses are now leaving for hospital or travel nursing positions that offer higher salaries and large sign-on bonuses. That’s forcing non-hospital settings to reduce operating room and endoscopy capacity.

Nor are shortages just in the nursing workforce. One system executive lamented that they had to cancel several non-emergent cardiac surgeries, not due to nurse staffing challenges; rather, they were short on surgical technicians. “Surgical techs aren’t leaving because of COVID,” the executive shared, “they’re leaving because the labor market is so strong, and they can make the same money doing something entirely different.” 

For lower-wage workers in particular, the old value proposition of working for a health system, centered around good benefits, continuing education, and a long-term career path, isn’t providing the boost it used to. Workers are willing to trade those for improved work-life balance, predictability, and the perception of a “safer” workplace.

Stabilizing the healthcare workforce will ultimately require providers to rethink job design, the allocation of talent across settings of care, and the integration of technology in workflow. And it will require re-anchoring the work in the mission of serving the community.

But in the short term, many health systems will find themselves having to pay more to retain key workers, including but not limited to hospital nurses, to maintain patient access to care.