Federal Reserve announces 2nd consecutive rate cut

https://www.axios.com/federal-reserve-rate-cut-77c504c1-1bed-4336-9c37-490a3452a54f.html?stream=top&utm_source=alert&utm_medium=email&utm_campaign=alerts_all

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The Federal Reserve cut interest rates by a quarter point on Wednesday, bringing the target range for the benchmark Fed Funds rate to 1.75%–2%.

Why it matters: The Fed’s 2nd consecutive rate cut reflects worries about the U.S. economy. The trade war and slowing growth around the world have made corporate executives more worried than they’ve been in years.

  • The move prompted a near-immediate response from President Trump, who called chair Powell a “terrible communicator.” The president has demanded in a series of tweets that the Fed cut interest rates more aggressively.

The big picture: Speaking at a press conference, Powell again cited the trade war as a key risk to the economic outlook. “Our business contacts around the country have been telling us that uncertainty about trade policy has discouraged them from investing in their businesses,” Powell said.

  • Still, new projections showed a division among Fed officials about whether more rate cuts are warranted this year.
  • Powell did note that if “the economy does turn down, then a more extensive sequence of rate cuts could be appropriate.”

Powell also acknowledged the liquidity shortfall in money markets that has forced the Fed to intervene — something that before this week hadn’t happened since the financial crisis.

  • In response to the drama in the short-term funding markets, Powell suggested that the Fed may increase the size of its balance sheet through “organic growth” earlier than expected.

 

 

 

 

Report: 3 in 4 hospital markets are now ‘highly concentrated’

https://www.fiercehealthcare.com/hospitals-health-systems/report-three-four-hospital-markets-are-now-highly-concentrated?mkt_tok=eyJpIjoiT1dJNE5tUTFZV0k1TVdRNCIsInQiOiJMakFtS1IzZmxaRDlQNUtjdFdMUHVYUFdBd1wvXC9EZFR3ekhHU3ZsYVNib2t3bTlEb0Z2bklLZndEZXFOTjZ1RVZ0bURYMXI5dGFNcW92SXFYV25HTVh4d01tNEY4YkVCUnBMamhpbllXSytVTW5ybGJ1OTh0UjJmVDRmSWJ6c1wveCJ9&mrkid=959610

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Nearly 3 in 4 hospital markets around the U.S. are “highly concentrated,” according to a new Healthy Marketplace Index report by the Health Care Cost Institute (HCCI).

Researchers examined more than 4 million commercial inpatient hospital claims between 2012 and 2016 and found 81 out of 112 (72%) were considered “highly concentrated” using the Department of Justice’s Herfindahl-Hirschman Index (HHI). That’s up from 67% in 2012. 

“Increasingly concentrated hospital markets have been linked to the rising cost of hospital care by nearly every expert in the field,” said Niall Brennan, president and CEO of HCCI, in a statement.

Funded by the Robert Wood Johnson Foundation, the report found:

  • 69% of markets studied experienced an increase in concentration.
  • Metro areas with smaller populations tended to have higher concentration levels. For instance, Springfield, Missouri; Peoria, Illinois; Cape Coral, Florida; and both Durham and Greensboro, North Carolina, had the most concentrated markets in the U.S.
  • Larger metropolitan areas including New York City, Philadelphia and Chicago had the lowest levels of concentration.
  • Some of the less concentrated metros in 2012 like Trenton, New Jersey, experienced larger increases in concentration over time.

“Our findings add to the growing consensus that most localities have highly concentrated hospital markets, and this is becoming increasingly true over time,” Bill Johnson, Ph.D., a senior researcher at HCCI and an author of the report, said in a statement. “The increased concentration we observed can be driven by many factors such as hospital closures, mergers, and acquisitions, changes in hospital capacity, patient preference, or changes in patients’ insurance networks.”

Previous, HCCI reports found inpatient hospital prices were rising in nearly every metro area studied. This new study found a positive relationship—but not a causal relationship—between price increases and increases in hospital market concentration. Those findings align with similar findings correlating consolidation with rising healthcare prices including from the Harvard Global Health Institute and the Robert Wood Johnson Foundation and The Urban Institute.

However, the American Hospital Association recently released its defense of consolidation in a report that argues mergers can improve costs by increasing scale, improving care coordination, reducing capital costs and improving clinical standardization.

 

 

 

Judge strikes down Trump administration’s site-neutral payments rule

https://www.fiercehealthcare.com/hospitals-health-systems/judge-strikes-down-trump-administration-s-site-neutral-payments-rule?mkt_tok=eyJpIjoiT1dJNE5tUTFZV0k1TVdRNCIsInQiOiJMakFtS1IzZmxaRDlQNUtjdFdMUHVYUFdBd1wvXC9EZFR3ekhHU3ZsYVNib2t3bTlEb0Z2bklLZndEZXFOTjZ1RVZ0bURYMXI5dGFNcW92SXFYV25HTVh4d01tNEY4YkVCUnBMamhpbllXSytVTW5ybGJ1OTh0UjJmVDRmSWJ6c1wveCJ9&mrkid=959610

Gavel court room lawsuit judge

In a huge win for hospitals, a federal judge has tossed the Trump administration’s rule instituting site-neutral payments.

District of Columbia Judge Rosemary Collyer ruled Tuesday that the Centers for Medicare & Medicaid Services (CMS) overstepped its authority when it finalized a plan to extend a site-neutral payment policy to clinic visits with the goal of paying the same in Medicare for evaluation and management services at physician offices and hospitals.

Hospital groups immediately rebelled against the plan. Within hours of the rule’s finalization in November, the American Hospital Association (AHA) vowed to challenge the change, as it would cut payment rates to hospitals significantly. AHA and the Association of American Medical Colleges formally did so about a month later.

CMS argues that the payment change would save Medicare beneficiaries $150 million per year, lowering average copays from $23 to $9. Those savings, however, are coupled with significant payment cuts to hospitals; the AHA estimated losses of $380 million in 2019 and $760 million in 2020.

In her order, Collyer said that the rule did not meet the standard of a method to control unneeded hospital use, as CMS argued in court filings.

“CMS believes it is paying millions of taxpayer dollars for patient services in hospital outpatient departments that could be provided at less expense in physician offices. CMS may be correct,” the judge wrote. “But CMS was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain providers.”

Collyner did not require CMS to pay funds lost under policy change so far this year and instead requested a status report by Oct.1 from both parties to determine whether additional briefings are required to decide a suitable resolution.

In a statement, the AHA and AAMC praised the judge’s decision.

“The ruling, which will allow hospitals to maintain access to important services for patients and communities, affirmed that the cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the many real and crucial differences between them and other sites of care,” the hospital groups said. “Now that the court has ruled, it is up to the agency to put forth remedies for impacted hospitals and the patients they serve.”

 

 

 

Orlando Health opens 6th freestanding ER, keeping pace with rivals

https://www.beckershospitalreview.com/facilities-management/orlando-health-opens-6th-freestanding-er-keeping-pace-with-rivals.html?em=&oly_enc_id=2893H2397267F7G

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Orlando (Fla.) Health opened its sixth freestanding emergency room in Central Florida., Sept. 16, according to The Orlando Business Journal

The 40,000-square-foot, two-story freestanding ER houses an imaging department, outpatient pharmacy and lab services unit. The ER, located in Lake Mary, Fla., cost $69 million to build. 

The opening of Orlando Health’s freestanding ER comes as two rivals that operate in Central Florida — Altamonte Springs-based AdventHealth and national for-profit hospital operator Nashville, Tenn.-based HCA Healthcare — race to build additional freestanding ERs in the state.

Standalone emergency departments are on the rise in Florida because of overcrowded ERs on hospital campuses, according to the report.

 

Philadelphia hospital receives 2 takeover bids

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/philadelphia-hospital-receives-2-takeover-bids.html

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A consortium of four health systems that was expected to submit a bid for St. Christopher’s Hospital for Children in Philadelphia bowed out of the auction, according to The Philadelphia Inquirer.

The hospital, which is being sold through the bankruptcy process, received two takeover bids: One from West Reading, Pa.-based Tower Health and Drexel University in Philadelphia, and another from Santa Ana, Calif.-based KPC Global.

Four healthcare organizations based in Philadelphia that teamed up in July to explore the acquisition of St. Christopher’s did not submit a bid. The consortium was led by Jefferson Health and also included Einstein Healthcare Network, Philadelphia College of Osteopathic Medicine and Temple Health.

“As a consortium responsible for 60 percent of patient activity to St. Chris with three safety-net hospitals, we remain very interested in collaboration with whoever the winning bidder is to ensure continued access and quality of care for our pediatric patients,” Jefferson said in a statement to The Philadelphia Inquirer. “We look forward to supporting the provision of these needed services for the children of our community.”

If the two bids submitted for St. Christopher’s Hospital for Children qualify as valid bids, an auction will be held Sept. 19, according to the report.

 

Healthcare jobs grow at rapid clip, but wages lag amid consolidation boom

https://www.healthcaredive.com/trendline/labor/28/#story-4

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Healthcare employment is growing at a record pace, but wages remain stagnant, which some experts say likely results in part from the trend of consolidating health systems.

The latest Bureau of Labor Statistics numbers show the industry gained 49,000 jobs in March and 398,000 over the past 12 months. Analysts at Jefferies say the month-to-month growth is the second largest increase on record for the sector. Healthcare job growth has surpassed non-healthcare job growth and nudging the share of total jobs to an all time high, according to consulting firm Altarum.

Hospital employment grew by 14,000 jobs in March, adding up to a total of 120,000 for the combined first quarter of 2019. BLS tallied ambulatory jobs at 27,000 and home health and skilled nursing jobs at 9,000.

At the same time, real average weekly earnings for production and non-supervisory employees across sectors grew 0.1% over the month according to BLS. That growth in earnings is due to an increase in average weekly hours.

For nurses and pharmacists working in hospitals in heavily concentrated markets, annual wage growth has been lagging behind national rates by as much as 1.7 times. That’s according to researchers Elana Prager and Matt Schmitt, of Kellogg and UCLA, respectively, whose working paper compares wage growth rates in markets where mergers have occurred.

The paper drew the ire of the American Hospital Association.

“Among the many serious concerns about the study are its lack of rigor in the definitions and assumptions it used, and absence of data on total compensation and the recognition of other obvious factors that could affect wage growth,” an AHA spokesperson said in a statement criticizing media coverage of the research.

Academics researching the impacts of consolidation have asked the Federal Trade Commission to look at the impact horizontal mergers have on labor and consumers before they become difficult to challenge. FTC green-lit hundreds of horizontal hospital mergers over the past decade, maxing out at 115 in 2017, according to the National Institute for Health Care Management. In 2009, there were 50 such deals.

A Penn Law paper on mergers and labor markets published last year found employer consolidation has had a direct impact on wages and productivity in concentrated labor markets in the past. Wages, the authors write, tend to dilute when competition is scarce and labor concentration is “very high, as high or higher overall than product market concentration.”

Jason Plagman, a healthcare analyst at Jefferies, agreed, telling Healthcare Dive it becomes an “oligopsony situation where there are only a handful of buyers of a product” — in this case, labor — “you tend to see [employers] exert more control.”

As AHA noted, hospital and health systems tend to offer non-wage benefits, “such as employer-sponsored insurance, time off and education benefits” rather than increase wages. That’s an important caveat, said Dennis Shea, a health policy professor at Penn State.

 

Labor push

The debate comes as nurses unions have been pushing hard for additional staff and higher wages for hospital workers in consolidated states like California, New York, Massachusetts and Pennsylvania. Hospital consolidation has raised prices as much as 20% to 40% when they occur in the same market, according to National Institute for Health Care Management, with some prices reaching as much as 55%.

Unions argue hospitals can afford to pay extra to hire more nurses. Jefferies analyst Plagman said it’s not that easy. About 50% of hospital revenue goes to salary, wages and benefits, he said, and half of that chunk of revenue goes to nurses. “If they give a 3% raise to all nurses, that’s a big impact on their overall expense line,” Plagman said.

The lack of competition bars labor from seeking work elsewhere. A nurse in a concentrated labor market can’t quit their job to work for the hospital down the street, because it’s probably owned by the same health system, Shea said.

Shea and Plagman agreed that movement of labor away from concentrated markets is one way to break the wage slump. But lack of mobility was one of the consequences of concentration found in a National Bureau of Economic Research published in February 2018. The paper suggests a negative relationship between consolidated markets and wages that becomes more pronounced with higher levels of concentration and only increases over time.

Pay raises have historically been pushed by labor unions, and though some hospitals have already raised wages, few have been inclined to raise staffing levels as well.

“Strikes are picking up,” Shea said. “That’s always an indicator that wage and salary growth will pick up a little bit.”

While labor disruption has been on the rise over the past year, Plagman ​said he expects employment and wage growth to continue at the current pace. At some point, he said the market will have to resolve itself.

“What we’re seeing is hospitals and healthcare providers are hiring, but they’ve been very disciplined over the past few years giving raises to nurses and therapists,” Plagman said.

In testimony to the FTC in October, economist Alan Kreuger alleged employers in concentrated markets “collude to hold wages to a fixed, below-market rate,” even when the economy is booming. Union membership has plummeted 25% since 1980, and without a counterweight to balance the power of a monopsony, he argued, employers are free to set wages at will — even if they lag behind inflation rates.

Pressures to contain costs and move from volume to value is forcing health system executives to be extra delicate with their labor expenses. When nurses strike, hospitals have temps at the ready. That’s a boon for staffing agencies like AMN Healthcare Services and Cross Country Healthcare.

Cost control in healthcare is a bit like “pushing on a balloon,” Shea said.

Slow growth or declines in one sector means business is booming for another. In this case, ambulatory added 27,000 jobs month-to-month in March, up from 22,000 in February, and Jefferies analysts are looking favorably at temporary staffing agencies.

While “all indicators” say healthcare wages should be pushed up, Shea said, he wouldn’t be surprised if the growth rate continued to limp along for a little while longer.

 

 

 

 

 

Hospitals hit bump, but healthcare jobs showed steady growth in July

https://www.healthcaredive.com/trendline/labor/28/#story-1

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Dive Brief:

  • A total of 30,000 healthcare jobs were added to the U.S. labor rolls in July, representing 18% of all new jobs added during the month, according to the Department of Labor.
  • Virtually all of the healthcare job growth occurred in ambulatory care — that segment accounted for 29,000 new jobs alone.
  • The weak spot was in hospital job growth, which was down by 2,000 jobs from the month before.

Dive Insight:

Hospitals are often the biggest employers in many towns and medium-sized cities, but their job creation has been uneven at best in recent months. According to an analyst note from Jefferies, employment by hospitals dropped by 2,000 on a seasonally adjusted basis, although that grew to a net 1,000 new jobs on an unadjusted basis.

By comparison, hospitals added a seasonally adjusted 9,000 new jobs in June, 25,000 on an unadjusted basis. However, much of that boost was created by the minting of new residents who just graduated from medical schools.

Hospital employment is still growing at a 1.8% annual clip (compared to 1.4% as of July 2018), although that’s down from the 2.1% rate reported in April.

“Overall, healthcare employment growth continues to demonstrate strong momentum, but hospital jobs growth appears to be moderating,” the analysts said. Inpatient providers account for more than 5.2 million jobs nationwide.

However, Jefferies’ analysts believe that healthcare will continue to be a big job engine for the foreseeable future.

“We believe the supply of clinical labor continues to struggle to keep pace with solid demand growth, resulting in tight clinician labor markets and strong demand for healthcare temp staffing services,” they said.

Although healthcare job growth has been extremely robust, wages have been stagnant in recent years, a phenomenon attributed in part to continued consolidation among industry players.

The ambulatory care segment has been growing rapidly in recent years. Its addition of 29,000 new jobs was up from 17,000 in June, and significantly outpaced the year-to-date average monthly growth of 22,000.

Home healthcare services added 11,000 new jobs last month alone — the highest rate since 2017. The segment’s annual growth rate is currently 5.3%, up from 3.2% in July 2018.

The nursing home segment added another 1,000 jobs.