Category Archives: Hospital

Hospitals vs. the world

Posted on by • Posted in Health Policy, Health System, Hospital, Hospital Industry, Lawsuit, Price Transparency • Leave a comment

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A hospital sign with the 'H' replaced with a dollar sign

Hospitals sued the Trump administration yesterday over its requirement that they disclose their negotiated rates, the latest of the industry’s moves to protect itself from policy changes that could hurt its revenues.

Why it matters: Hospitals account for the largest portion of U.S. health costs — which patients are finding increasingly unaffordable.

The big picture: Hospitals are going to war against Trump’s price transparency push while simultaneously trying to kill Democrats’ effort to expand government-run health coverage.

  • The industry is one of the main forces behind the Partnership for America’s Health Care Future, the group that’s gone on offense against “Medicare for All” and every other proposal that would extend the government’s hand in the health system, as Politico recently reported.
  • It’s also emerging victorious from blue states’ health reforms so far, which all started as proposals much more threatening to hospitals than the watered-down versions that eventually replaced them.

Between the lines: The industry has a lot to lose; even non-for-profit systems are, as my colleague Bob Herman put it, “swimming in cash.”

  • The Trump administration’s transparency measure could lead to either more pricing competition or further regulation, if it exposes egregious pricing practices.
  • And Democrats’ proposals often feature government plans that pay much lower rates than private insurance does.

Hospitals argue that the transparency measure could end up raising prices if providers with lower negotiated rates see what their competitors are getting. They also warn that Democrats’ plans could put hospitals and doctors out of business and threaten patients’ access to care.

The bottom line: Politicians are reacting to patients’ complaints about their health care costs, but the industry has historically been excellent at getting its way.

Go deeper: Hospitals winning big state battles

 

 

 

UNION RESCHEDULES KAISER PERMANENTE STRIKE POSTPONED AFTER CEO’S DEATH

Posted on by • Posted in Health Insurance Industry, Health Plan, Health System, Hospital, Hospital Industry, Labor Spend Management, Labor Strike, Labor Union, Mediator, Mental Health, Pension, Retirement Benefits • Leave a comment

https://www.healthleadersmedia.com/strategy/union-reschedules-kaiser-permanente-strike-postponed-after-ceos-death?spMailingID=16676008&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1780330838&spReportId=MTc4MDMzMDgzOAS2

The health system’s senior vice president of national labor relations said the conflict is resolvable, ‘and there is no reason to strike.’

A five-day strike that was postponed last month after the sudden death of Kaiser Permanente Chairman and CEO Bernard J. Tyson is back on the calendar.

Thousands of psychologists, therapists, psychiatric nurses, and other healthcare professionals plan to strike December 16–20 at more than 100 Kaiser Permanente facilities across California, the National Union of Healthcare Workers (NUHW) said Wednesday.

“Mental health has been underserved and overlooked by the Kaiser system for too long,” said Ken Rogers, PsyD, MEd, a Kaiser Permanente clinical psychologist who serves as a vice president on the NUHW executive board, in a statement released by the union.

“We’re ready to work with Kaiser to create a new model for mental health care that doesn’t force patients to wait two months for appointments and leave clinicians with unsustainable caseloads,” Rogers said. “But Kaiser needs to show that it’s committed to fixing its system and treating patients and caregivers fairly.”

The union accuses Kaiser Permanente of refusing to negotiate unless mental health clinicians agree to “significantly poorer retirement and health benefits” than those received by its more than 120,000 other California employees.

Dennis Dabney, senior vice president of national labor relations and the Office of Labor Management Partnership at the Kaiser Foundation Health Plan and Hospitals, said the parties have been working together with an external mediator in pursuit of a collective bargaining agreement. The union rejected a compromise solution proposed last week by the mediator, Dabney said.

“The only issues actively in negotiation in Northern California are related to wage increases and the amount of administrative time that therapists have beyond patient time,” Dabney said. “We believe these issues are resolvable and there is no reason to strike.”

The mediator’s recommendation includes about 3% in annual wage increases for therapists in Northern California for four years, plus a $2,600 retroactive bonus, Dabney said

“In Southern California, the primary contract concern relates to wage increases and retirement benefits,” Dabney said.

The mediator’s recommendation includes about 3% in annual wage increases for therapists in Southern California for four years, plus a $2,600 retroactive bonus, even though the organization’s therapists in Southern California “are paid nearly 35% above market,” Dabney said.

“Rather than calling for a strike, NUHW’s leadership should continue to engage with the mediator and Kaiser Permanente to resolve these issues,” Dabney said.

 

 

 

HOSPITAL SPLITS THIS PAYROLL EXPENSE 50/50 WITH LOCAL PAYER TO CURB ER OVERUSE

Posted on by • Posted in Cost Management, Cost Reduction, Emergency Care, Health Insurance Industry, Health Plan, Health System, Hospital, Hospital Industry, Social Determinants of Health, Social Worker • Leave a comment

https://www.healthleadersmedia.com/strategy/hospital-curbs-er-overuse-splitting-payroll-expense-5050-local-payer

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New Ulm Medical Center struck a deal with a local payer willing to share the cost of a simple intervention. The arrangement has been paying dividends for seven years.

KEY TAKEAWAYS

The intervention slashed PMPM billing by 61% in three years for a small cohort of plan members.

What makes this program atypical is the way the hospital took a broad problem-solving approach while minimizing its expenses.

Patients who use the emergency department at least three times within four months at Allina Health’s New Ulm Medical Center in New Ulm, Minnesota, have their names added to a high-utilization list.

The keeper of that list is Jennifer Eckstein, a licensed social worker who follows up with each patient directly, looking to solve underlying problems that may be driving their frequent ED use. Whether the patients need a primary care physician, a mental healthcare provider, supportive housing, or another solution, Eckstein does her best to address their social determinants of health and steer them away from the ED for non-emergent care.

The intervention is a straightforward concept. Many other hospitals have similarly hired social workers to help meet the needs of these ED frequent flyers. The program at New Ulm Medical Center, in fact, was inspired in part by an earlier and narrower intervention that focused exclusively on mental health needs of ED patients at Allina’s Owatonna Hospital in Owatonna, Minnesota.

But what makes this program a bit different from others is the way New Ulm Medical Center took a broad problem-solving approach while minimizing its expenses. Rather than shouldering the full cost of employing a full-time ED social worker, the hospital partnered with local insurer South Country Health Alliance. They struck a deal and signed a contract agreeing to split the personnel expense 50/50, beginning in 2012.

Allina’s four hospitals in the Twin Cities metro area have regularly staffed social workers in their EDs, too, but none of them fund those positions through cost-sharing arrangements with health plans, according to a spokesperson for the nonprofit health system.

South Country Health Alliance CEO Leota Lind, who has been with the organization since its founding in 2000, says her organization didn’t need much convincing to sign the contract with New Ulm Medical Center. While unmet mental health needs are often a major factor contributing to ED overuse, they are far from the only factor, so the broader approach taken at New Ulm offered a chance to solve a wider range of the challenges that were leading plan members to an ED when they should be seeing a more cost-effective primary care physician instead, Lind says.

“We really just were looking at ways to influence and reduce emergency department visits,” Lind tells HealthLeaders. “By taking that broader scope, it gave us the opportunity to identify what other issues were contributing to that high utilization of the emergency department.”

FEWER DOLLARS, MORE SENSE

South Country Health Alliance and New Ulm Medical Center each contribute about $40,000 per year to cover Eckstein’s salary and benefits—which, at about $80,000 per year, are in line with what other hospital social workers earn in total compensation in the Midwest, says Carisa Buegler, MHA, director of operations for the hospital.

Both the hospital and payer say their shared investment has been paying off.

Before the social worker was introduced, a small cohort of 28 South Country Health Alliance plan members who received care in New Ulm Medical Center’s ED generated $731 per member per month (PMPM) in hospital bills, according to Buegler. A year after Eckstein began her work, in 2012, those bills fell to $416 PMPM, then they kept falling. By the end of the third year, in 2014, the 28-patient cohort generated $286 PMPM in bills, Buegler says.

That 61% reduction means the hospital billed the payer nearly $150,000 less in 2014—just for those 28 patients—than it had before the social worker was introduced. By the end of the third year, the cohort’s overall ED utilization was cut in half, and its inpatient admissions fell 89%, Buegler says.

That’s only part of the impact Eckstein’s labor has produced, since she doesn’t work exclusively with South Country plan members. Eckstein, who was hired into the position when it was created, says she helps roughly 150–200 patients per year, regardless of who’s paying for their care. Some needs are easier to meet than others, so she’s built a sense of rapport with some returning patients over the years.

“The good thing is they utilize me now instead of the ER, so when they get into a pickle or if they’re having trouble with something, they call me,” she says.

Across all payers, the intervention has likely been saving $500,000 or more, Buegler says.

The intervention is about more than just money, of course. It aims also to improve clinical care and patients’ quality of life.

“I don’t think the driver was necessarily just cost but appropriate care at the right place, at the right time, with the right kind of provider,” says South Country Health Alliance Chief Medical Officer Brad Johnson, MD.

But the financial implications of this intervention are especially interesting considering the fact that New Ulm Medical Center is spending $40,000 per year on a program that delivers cost-savings to payers while reducing the hospital’s revenue. The immediate financial benefit goes to the payer, not the provider.

The hospital has seen a 20% reduction in its overall ED volumes in the past five years, and that’s likely the direction in which most hospitals’ EDs are headed, which is generally good news, Buegler says. The situation presents a challenge, though, since value-based payment arrangements haven’t matured and proliferated to a point where they can compensate adequately for the trend, she says.

Why, then, would the hospital keep investing in this intervention?

“It’s the right thing to do,” Buegler says. “It’s providing the best level of care to our patients who are coming in the emergency department seeking help and then providing another level of service to those individuals to help them improve their social conditions, that will then help them to improve their health. … It’s really looking at the patient as a whole person.”

There’s also a longer-term business case to be made for the hospital’s continued investment, Buegler says.

“From a financial perspective, we’re preparing for more value-based payment contracts,” she says.

Although risk-based contracts have been arriving more slowly than many industry stakeholders had expected, leaders remain confident that more value-based models are on the way, so it makes sense for hospitals like New Ulm Medical Center to invest in the future it anticipates, Buegler says.

PLUGGED INTO SUPPORT NETWORK

Eckstein is the sole social worker stationed in the ED, but she’s not running a one-woman show.

New Ulm Medical Center has a social worker assigned to its clinic, too, and South Country Health Alliance employs a physician as a community care connector in each of the 11 counties it serves—so Eckstein has multiple partners just outside the ED’s walls.

“By having that hospital social worker work in partnership with the community care connector at the county, they’re able to effectively make referrals and access some of those other types of community supports that have also helped address the issues that individuals may be experiencing as barriers to managing their healthcare,” Lind says.

This idea of bridging the gap between traditional medical care and broader social services has been central to South Country Health Alliance’s mission since it was founded, Lind says.

“We recognized way back then that those other aspects, those other social, environmental aspects of an individual’s life, impact their ability to manage and maintain their healthcare,” she adds. “That’s been a part of our program since the beginning.”

Johnson says this care coordination is a vital component of the local safety net.

“In rural Minnesota,” he says, “there’s lots of opportunities for people that are not savvy users of the healthcare system to fall through the cracks.”

“THE GOOD THING IS THEY UTILIZE ME NOW INSTEAD OF THE ER, SO WHEN THEY GET INTO A PICKLE OR IF THEY’RE HAVING TROUBLE WITH SOMETHING, THEY CALL ME.”

 

 

 

 

Dignity Health’s class-action settlement actually worth $700M, workers say

Posted on by • Posted in Employee Retirement Income Security Act (ERISA), Health Policy, Health System, Hospital, Hospital Industry, Lawsuit, Pension, Pension Funding, Pension Liability • Leave a comment

https://www.beckershospitalreview.com/finance/dignity-health-s-class-action-settlement-actually-worth-700m-workers-say.html

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A California federal judge refused to approve a deal in October requiring Dignity Health to pay more than $100 million to settle a class-action lawsuit accusing the San Francisco-based health system of using a religious Employee Income Retirement Security Act exemption it wasn’t entitled to. Current and former Dignity workers argue the deal is actually worth more than $700 million in court documents filed Nov. 25, according to Law360.

Dignity Health allegedly used the religious exemption to underfund its pension plan by $1.5 billion. On Oct. 29, a federal judge in the Northern District of California refused to sign off on a proposed settlement because it contained a “kicker” clause. The clause would allow Dignity to keep the difference between the amount of attorneys’ fees awarded by the court and the more than $6 million in fees authorized by the settlement.

“Although the fact is not explicitly stated in the Settlement, if the Court awards less than $6.15 million in fees, Defendants keep the amount of the difference and those funds are not distributed to the class,” Judge Jon S. Tigar said, according to Bloomberg Law. “The Court concludes that this arrangement, which potentially denies the class money that Defendants were willing to pay in settlement — with no apparent countervailing benefit to the class — renders the Settlement unreasonable.”

Though the judge refused to sign off on the deal, he gave the parties an opportunity to revise the agreement and resubmit it for approval. Workers tweaked the proposed deal in a renewed motion for settlement filed Nov. 25.

According to the motion, the parties have agreed to eliminate the kicker clause.

“As provided in the new settlement, class counsel will apply to the court for approval of a total award of $6.15 million, for attorney fees, expenses and incentive awards,” the motion states. “If the court awards less than the requested amount, Dignity Health has agreed to pay the balance into the plan’s trust.”

The workers also argue that the attorney fee award is reasonable given the value of the settlement.

Under the proposed settlement, Dignity would add $50 million in retirement plan funding in 2020 and 2021.The settlement also requires Dignity to fund the pension plan until 2024 and prohibits the health system from reducing accrued benefits because of a plan merger or amendment for 10 years. For 2022 through 2024, Dignity Health’s cash contributions to the plan will be at least the “minimum contribution recommendation,” an amount calculated each year by independent actuaries.

“Under this settlement, Dignity Health will make substantial contributions to the plan for five years, in an amount we estimate to exceed $700 million,” the motion states.

The court previously noted that plaintiffs did not identify any settlement provisions governing how Dignity Health’s actuaries calculate the minimum contribution recommendation. The plaintiff’s actuary provided more information on the calculation in a supplemental declaration submitted Nov. 25.

The workers are seeking preliminary approval of the new settlement.

 

10 latest hospital closures

Posted on by • Posted in Bankruptcy, Hospital, Hospital Bankruptcy, Hospital Closure, Hospital Industry • Leave a comment

https://www.beckershospitalreview.com/finance/10-latest-hospital-closures-120219.html

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From reimbursement landscape challenges to dwindling patient volumes, many factors lead hospitals to close.

Here are 10 hospitals that have closed in the past four months, beginning with the most recent:

1. Dallas-based Steward Health Care closed St. Luke’s Medical Center in Phoenix on Nov. 24. Officials said the hospital closed due to dwindling patient volumes. St. Luke’s Medical Center’s occupancy rate remained below 40 percent over the past two years, President James Flinn wrote in a letter to the local community in October.

2. Nix Medical Center, a 208-bed hospital in San Antonio, closed in November. A few months earlier, Los Angeles-based Prospect Medical Holdings said it was closing the hospital because community demand for acute care at Nix Medical Center has declined over the past year.

3. Southcross Hospital in San Antonio closed Oct. 11. The hospital and its operator, San Antonio-based Arete Healthcare, entered Chapter 11 bankruptcy in November.

4. Haskell County Community Hospital in Stigler, Okla., closed Oct. 2, according to the Cecil G. Sheps Center for Health Services Research. Haskell County Community Hospital is one of several hospitals previously owned by Kansas City, Mo.-based EmpowerHMS that filed for bankruptcy protection earlier this year.

5. Brentwood, Tenn.-based Quorum Health closed MetroSouth Medical Center in Blue Island, Ill., on Sept. 30. Quorum announced in June that it filed an application with the Illinois Health Facilities and Services Review Board to close the 314-bed hospital.

6. East Ohio Regional Hospital in Martins Ferry closed Sept. 27. The hospital’s president and CEO cited mounting financial losses as one of the factors that forced the hospital to shut down.

7. Ohio Valley Medical Center in Wheeling, W.Va., closed in September. Hospital officials said the “unwanted, yet unavoidable,” decision was made due to an unsuccessful search for a strategic partner, lack of interest from potential buyers and a more than $37 million operating loss over the last two years.

8. Hahnemann University Hospital in Philadelphia closed in early September. Hahnemann announced in June that it would close Sept. 6. The hospital pushed back the closure date after a bankruptcy judge approved the sale of its residency programs on Sept. 5.

9. Westlake Hospital in Melrose Park, Ill., closed in August, according to the Chicago Sun-Times. Los Angeles-based Pipeline Health revealed plans to close Westlake Hospital in February, a few weeks after acquiring the 230-bed hospital from Dallas-based Tenet Healthcare.

10. North Metro Medical Center in Jacksonville, Ark., closed Aug. 20, leaving local residents without an emergency room. No notice was given before the hospital shut down.

 

 

 

Democrats double down on health care prices

Posted on by • Posted in 2020 Election Issues, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Medicare for All • Leave a comment

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Illustration of price tag stickers in the shape of a health plus.

Many 2020 Democrats’ health care proposals feature aggressive price regulations, either as a feature or a byproduct — a sign the party has largely given up on the idea that competition alone can keep costs in check.

Between the lines: It’s not just Democrats. As public outrage has grown over prescription drug prices and surprise medical bills, there’s been bipartisan congressional interest in regulating prices.

“The two big trends are increasing out-of-pocket costs to consumers and increasing disparity between public and commercial rates — and therefore consumer and employer pushback on those dynamics — and policymakers are now attempting to respond.”

— Chris Jennings, a Democratic health care consultant

The big picture: “Medicare for All” brings all provider and drug reimbursements under the federal government’s control.

  • Sen. Bernie Sanders has been elusive about what those rates would be, but Sen. Elizabeth Warren has proposed massive rate cuts to doctors and hospitals as a way to reduce her plan’s cost.

Even the more moderate candidates’ public-option plans would enroll more Americans in government health care plans that set rates. And some have pitched ideas like limiting how much providers can charge for out-of-network care.

  • But supporters of a public option argue that it also enhances competition in the private insurance market, driving prices down across the board without completely abandoning the use of market forces.

All of the leading 2020 candidates have proposed drug policies, ranging from limiting how much drug companies can increase their prices to allowing the federal government to strip the patent from drugs that are deemed too expensive.

  • Even President Trump has proposed limiting how much Medicare pays for certain drugs by tying the price to what other countries pay.

The other side: The industry hates all of these ideas.

 

 

 

The Health 202: Here’s what doctors, drugmakers and politicians are thankful for

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Out of Pocket Expenses, Physician, Physician Compensation, Surprise Bills • Leave a comment

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/11/27/the-health-202-here-s-what-doctors-drugmakers-and-politicians-are-thankful-for/5ddd69ec88e0fa652bbbda64/

A turkey pardoned by President Trump yesterday. REUTERS/Tom Brenner

It’s Thanksgiving Eve. Which for Health 202 begs this question: What is everyone thankful for this year when it comes to health policy?

We suspect that maybe – just maybe –you’d get vastly different answers from doctors versus insurers versus drugmakers versus consumers versus any other stakeholder in the $3.6 trillion U.S. health-care industry complex. Everyone has competing interests, which is a prime reason why the country’s besetting problems of ever-rising costs and subpar medical outcomes never quite seem to get solved.

So before you tune out the news cycle for Turkey Day, here’s our best guess at what’s giving each health-care stakeholder an attitude of gratitude.

—The White House and Republicans: Democrats are fixated on Medicare-for-all.

The GOP could hardly be more eager to focus on Medicare-for-all proposals from the Democratic presidential candidates. They view it as a way to veer the political conversation away from their own, unpopular actions on health-care policy and to depict Democrats as out-of-touch with voters.

President Trump and his top health officials have repeatedly decried Medicare-for-all, including during an October speech where the president announced an executive order boosting the role of private plans in the Medicare program.

“Every major Democrat in Washington has backed a massive government health care takeover that would totally obliterate Medicare,” the president said during that address. “These Democratic policy proposals … may go by different names, whether it’s single payer or the so-called public option, but they’re all based on the totally same terrible idea: They want to raid Medicare to fund a thing called socialism.”

—Democrats: The Trump administration is refusing to defend the Affordable Care Act.

Democrats are well aware that the refusal by Trump’s Justice Department to defend the Affordable Care Act from a challenge by GOP-led states is a political gift. They spent the 2018 election castigating the administration for not standing by the health-care law’s protections for patients with preexisting conditions – and it helped them win the House majority.

They plan to hammer that message again in 2020, as they seek the White House.

—The Department of Health and Human Services: Obamacare hasn’t been struck down (yet).

A federal appeals court is expected to rule any time now on the challenge to the ACA, which was upheld by a lower court last year. As The Health 202 has written, the decision against defending the law was a deeply controversial one inside the administration.

HHS Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, tried to persuade the White House to defend the law. If the courts ultimately strike down the ACA, the administration will be on the hook to propose a replacement that would preserve health coverage for millions of Americans who gained it under the health-care law.

—Health-care advocates: Marketplace premiums are somewhat more affordable.

After several rough years for the ACA’s individual marketplaces, they got some good news this year. Average premiums for mid-level “silver” plans fell four percent for 2020 – a marked shift from the double-digit increases shoppers have typically seen.

That doesn’t mean plans are suddenly affordable for consumers ineligible for government subsidies. But it does mean insurers have found a sustainable way to keep participating in the marketplaces – and the marketplaces are here to stay for people without access to employer-sponsored coverage.

—Drugmakers: Chances for a major, bipartisan drug pricing deal this year are fading.

One of the pharmaceutical industry’s biggest fears is that Congress passes legislation allowing the federal government to directly negotiate lower prices in the Medicare program – a move the industry describes as government “price-fixing.”

Trump used to support allowing direct negotiations, and his staff was even in discussions with House Speaker Nancy Pelosi’s (D-Calif.) office earlier this fall over the potential for a bipartisan effort along these lines.

But the president and his aides have increasingly distanced themselves from Pelosi’s bill to allow direct negotiations. Now it looks like House Democrats will pass that measure as a messaging tactic, only to see it blocked in the GOP-led Senate. A bipartisan Senate bill capping how much drugmakers can annually raise prices has somewhat better prospects, but even that measure has made many Republicans suspicious.

In the end, only minor and less-controversial drug pricing measures may end up being attached to a longer-term spending bill.

—Doctors and hospitals: Any legislation protecting patients from “surprise” medical bills will almost certainly include arbitration – an approach that means higher payments for them.

Virtually every member of Congress agrees American patients should be protected from the surprise bills that can result when they visit an emergency department outside their health plan’s provider network or get care from an out-of-network provider at an in-network hospital.

But how to solve that has turned into an insurers-versus-doctors food fight.

Insurers and the Trump administration want to use a benchmarking approach to resolve out-of-network bills, in which the payments are tied to average prices in the same geographic area. That approach would save the government money, the Congressional Budget Office has said.

But doctors – and some dark-money groups that represent their interests – have been spending millions of dollars to push Congress toward adopting an approach called arbitration. In arbitration, which CBO has said would cost the government more money, the medical provider and the insurer each submit a bid to a third party arbiter, who then make a final decision.

Doctors believe arbitration would translate to beefier payments for them – and outcomes from New York’s arbitration system supports that notion. So if Congress passes surprise billing legislation, it will likely include some element of arbitration given the heavy influence by the doctor lobby.

—Regular Americans: Not much.

We hate to say it, readers, but there’s little for you to be thankful for this year when it comes to health-care policy. Costs for employer-sponsored coverage are going up and coverage plans are getting less generous. Congress appears unable to pass major reforms on the biggest consumer concerns. And the next election is likely to result in a government severely split over how to improve health-care – making it likely the status quo will prevail for some time.

But Happy Thanksgiving, anyway!

 

 

 

Fitch says 2020 healthcare environment bumpy but negotiable

Posted on by • Posted in ACA, Credit Ratings, Health Policy, Health System, Hospital, Hospital Industry, Operating Performance, Uncertainty • Leave a comment

https://www.healthcaredive.com/news/fitch-says-2020-healthcare-environment-bumpy-but-negotiable/568158/

Dive Brief:

  • Demand for healthcare services will remain stable next year, but profitability will become more of a challenge, according to a new forecast from Fitch Ratings. The continued move from volume to value is encouraging the evolution of traditional business models, the analysis found.
  • The legal fate of the Affordable Care Act is one of several uncertainties, according to the report. Ongoing opioid litigation is another. And healthcare itself will be an important political issue during the election season.
  • Fitch said that credit downgrades in the sector are likely to outweigh upgrades, but that ongoing discord in Washington means that most companies will be insulated from significant change.

Dive Insight:

The healthcare sector seems to be entering a volatile period, although the chances for a major upheaval are far more remote, according to Fitch Ratings.

The biggest risk to healthcare is currently the uncertainty regarding the ACA, which as it nears its 10th anniversary remains embroiled in litigation, currently awaiting a decision from the U.S. Fifth Circuit Court of Appeals in New Orleans.

Fitch noted that if the law is struck down with no replacement waiting, “it may result in a disorderly wind down of the insurance expansion elements of the legislation, which could have negative ramifications for cash flow and profitability of segments most exposed to patient liabilities.”

While there are legal uncertainties surrounding the ACA, Fitch believes the gridlock in the nation’s capital remains a plus for the sector, noting that “progress on major pieces of healthcare legislation, due to political discord in Washington, will insulate issuers from the effects of any new policy measures on profitability during 2020.”

Meanwhile, those companies caught up in litigation over the opioid crisis will likely have to negotiate years of lawsuits, but Fitch believes it will be manageable over the long-term. “We expect investment-grade issuers to navigate the litigation with credit profiles intact, given the ability to redirect a portion of cash flow from operations from shareholder returns to litigation payments,” the rating firm noted. “Moreover, early indications are issuers will pay cash settlements over a period of years rather than in lump sums, which limits the effect on credit metrics.”

Healthcare ventures are also navigating the shift from volume to value. “A slow changing payment environment tying profits to high value, rather than high volume care, will continue to encourage gradual evolution of business models across the sector,” Fitch observed. “The convergence of business models via strategic M&A is viewed as constructive to credit profiles since it could help companies align value propositions with shifting consumer and payer preferences, despite its potential to reshape issuers’ balance sheets.”

 

 

 

 

Hospitals and health systems: 6 trends and issues

Posted on by • Posted in Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Preexisting Conditions, Public Option, Strategy, Trends • Leave a comment

https://www.beckershospitalreview.com/strategy/hospitals-and-health-systems-6-trends-and-issues.html

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This article discusses the current state and issues of hospitals and health systems for several different areas. First, this discusses types of hospitals and health systems. Second, it addresses what’s working and what’s not for health systems. Third, this discusses the mix of access, quality and cost as well as the shortages of different kinds of providers fourth. Fifth, this discusses policy issues and political issues. Sixth, we address threats and challenges.

1. 5,200+ acute-care hospitals. Currently, there are approximately 5,200 acute-care hospitals in the country. This number changes a little each year, with more closures than openings.

We view the landscape as one with seven core types of health systems. 

First, there’s what we think of as the very elite health systems, which are often academic medical centers. This usually includes the top 20 to 30 systems as ranked by U.S. News & World Report. These are typically great research institutions that provide great care in some of the most critical, life-threatening areas. This category may include hospitals like NewYork-Presbyterian, UChicago Medicine, Cleveland Clinic, Mayo Clinic, Northwestern Medicine and a number of other institutions that typically comprise the top 20 to 30 in the U.S. News & World Report’s Best Hospitals.

Second are regionally dominant systems. These systems are so important to a given area that they are often the focus point of care in said area. There are also situations where it’s very hard for payers and patients to go around these institutions — even if they wanted to. This might be an institution like Carilion Clinic or Sentara Healthcare in Virginia, Northwell in New York, Ochsner in Louisiana or NorthShore University Health System in the north suburbs of Chicago. It may be Advocate Aurora Health in the Chicagoland area and Eastern Wisconsin, Hartford HealthCare in Connecticut, Intermountain Healthcare in Utah and Idaho, and a number of institutions regionally strong in their areas.

A third type of system is the community hospital, typically the single- or two-hospital system. This could be rural, urban or suburban. Here, this may be a health system that has served as the core of primary care — and at one time tertiary care — for a community, but more and more has to have a certain reason for being, something that its really great at to remain relevant and open.

A fourth type of hospital is what we think of as a specialty hospital, usually built around a certain specialty like pediatrics, behavioral health, oncology or some other area. It is a hospital that has a specific focus and is just great at what it does, much like Hospital for Special Surgery in New York, which U.S. News & World Report has ranked as the No. 1 hospital in the country for orthopedics for the past 10 years.

National chains of hospitals and health systems make up the fifth type of system. This can be for-profit or nonprofit, and they come in a couple different varieties. First, they can pursue a strategy of being in lots of different markets, but regionally dominant in the markets they’re in. This has typically been the strategy for success. Second, they can pursue the strategy of having the most hospitals possible. This has typically not been a strategy for success. Market strength or market dominance and excellence in certain areas is far more important than having lots of different hospitals.

The sixth type of hospital that we think of as Kaiser Permanente. Here, we put Oakland, Calif.-based Kaiser Permanente in its own category. It is a regionally dominant system in certain parts, but more importantly it is vertically integrated with its own insurance plan. This has allowed Kaiser to do things in the cost savings areas and the efficiency area that many other systems have not been able to do. We have also found over the last decade that it is much harder for other systems to replicate what Kaiser has done, in terms of fully integrating insurance, than expected.

The seventh category of hospital we think of as the safety-net hospital. The safety-net hospital can really be in any of the above categories. We largely think of safety-net hospitals as those that are serving a huge percentage of Medicare and Medicaid patients. The safety-net hospital is a very important part of the fabric of American healthcare and the delivery system, and at the same time they often struggle to ensure they have the finances to make the system go.

2. What has worked the last 10 years? The three types of categories that have really worked the past 10 years are as follows.

First, one prescription for success has been to be regionally dominant. Whether a Novant Health or an Atrium Health, both based in North Carolina, or a system like Advocate Aurora in Wisconsin or ProMedica in Ohio, being regionally strong has been a prescription for success. It allows one to stack resources, invest in talent, invest in systems and get better and better.

The second prescription for success the last decade and for a long time is being an elite health system. As much as the world changes, these elite systems — whether Stanford Medicine, Mayo Clinic, Cleveland Clinic or UCLA Health — continue to be sought out for care and continue to recruit great physicians, researchers and providers. This may also include being elite in certain areas like Rush University Medical Center in Chicago in orthopedics, MD Anderson in oncology or a number of other actors that are elite.

The third type of category that has worked is clearly the Kaiser Permanente category. This is a situation where Kaiser is almost its own vehicle, led famously by the late Bernard J. Tyson. Over the years, Kaiser grew into being a great integrated system and was able to do things on the value-based side and make major investments to address social determinants of health that really no one else was able to do.

3. Access, quality and cost. There is constant discussion of access, quality and cost. As we look as things evolve, we see things as follows.

On the quality side, the American healthcare system seems to do a pretty good job of delivering pretty good care to a huge percentage of people. In essence, compared to other countries, the U.S. is providing care to more than 325 million people. While imperfect, it is pretty good. There are pockets of care in other countries that are certainly better and more advanced than it is here, but often in pockets versus an entire system.

In terms of access, the American healthcare system seems to be challenged in numerous ways. As shortages evolve, particularly among specialties and subspecialties, it is harder and harder to find access to the right type of provider when one needs that provider. Access can also be a challenge in many different ways for poor communities in our country and, of course, there is no quality without access.

A third issue in terms of the American healthcare system is cost. As costs continue to grow at a percentage higher than inflation, particular pockets of costs remain very challenging, specifically on the pharmaceutical side, technology side and labor side.

4. Shortages of doctors and allied health professionals. As we look at access challenges in the country, there is a perspective that it is very hard to solve without the minting of a great deal more of physicians and allied health professionals. Even as the ways care is delivered evolve, the physician shortage remains. We will see a shortage of up to nearly 122,000 physicians by 2032 as the population grows and ages and demand continues to grow faster than supply, the Association of American Medical Colleges.

There are different structural elements in place that make it hard to add on providers at a fast clip. For example, medical school, residency and fellowship take many years. In efforts to modernize medical education, there is a question as to whether that much education is needed. The American Medical Association is one body that is working with major institutions for accelerated programs, like a six-year model at University of California, Davis School of Medicine. The school offers a six-year path to practice — three years each of medical school and residency — in partnership with Kaiser Permanente Northern California.

As we look at our society, we probably need more incentive for people to go to medical school and graduate with medical degrees than are currently in place. The more one tries to attack some of benefits of being a physician, the harder it is to encourage the next generation to become physicians. In response, we do see a growing number of medical schools being opened, including those at Kaiser Permanente and Hackensack Meridian. We think this is absolutely critical. It is also critical that we develop more and more allied health professionals and those allied health professionals are largely able to practice at the top of their license.

Finally, there is this concept in medical school and in premed of “weed out” classes. We believe this is somewhat overdone and overemphasized, and many bright, talented people are weeded out that would be perfectly great physicians. As one resident at Stanford University School of Medicine put it, “Today we ‘weed out’ potentially wonderful doctors through a demoralizing maze of basic sciences that more often resembles the Hunger Games than a sensible recruitment process.”

5. Political polarization. In healthcare, and the hospital sector specifically, we see a great deal of political polarization. There are largely three different types of systems that people think about in terms of reform.

First, there is the “Medicare for All” perspective. While this would provide adequate “access” at a certain level for everybody in terms of health insurance coverage, there is concern from providers that reimbursement would be so low it would not encourage people to pursue medicine, thus flattening or denting the supply of physicians needed to provide the care that is needed.

Second, there is the concept of the “free market.” Here, the concept of a total free market and free market alternatives is somewhat illusory. In reality nearly 30 to 50 percent of most providers’ revenue comes from Medicare and Medicaid. Thus, you are never really dealing with a free market in healthcare. There are free market incentives — like health savings plans and transparency — that can help, but one is not in total dealing with a free market.

Third, is the concept of a public option. One way to think about a public option is to think about it as akin to the post office. One can either go to the post office to mail something via the United States Postal Service, or one could use UPS or Federal Express. The idea of a public option is that you would not have to buy insurance from an insurance company. Rather, you could buy into the Medicare program through a public option. Washington signed a public option into law this past summer and will launch it in 2021, becoming the first state to test the policy.

Whatever the answer is for healthcare reform, it is clear that the general public prefers two things. First, they like the concept that you should be able to buy insurance regardless of whether or not you have a pre-existing condition. Second, a large percentage of the public seems to prefer that there be some sort of public option to access care.

6. Threats and challenges. Some the challenges healthcare systems face today are as follows.

First, the strength of payers and the power they hold, especially as they diversify and broaden their scope of business. Under the UnitedHealth Group umbrella, for instance, is Optum, the Advisory Board and Equian, among other arms. In 2018, Cigna acquired Express Scripts, CVS Health combined with Aetna, and Humana and private equity firms acquired Kindred Healthcare. Highmark, one of the largest insurers in the country, acquired the West Penn Allegheny Health System years ago. Each of these forays into technology, consulting, payment, pharmacy benefit management, post-acute care and provider spaces make health insurers more prevalent in the industry.

A second great concern is the growing number of access points that are providing threats to health systems and their margins and revenues. This may be things like the CVS’, Walgreens and Walmarts of the world, which are expanding the medical services and health hubs in their stores to provide consumers with an alternative access point for chronic conditions and routine care. This fall, Walmart even revealed plans to build its own healthcare workforce.

Third, powerful payers are developing provider networks and providing alternatives to health systems and their delivery systems. Blue Cross Blue Shield Association, for instance, will launch a national provider network in 2021 that spans across 55 markets to help large employers better control medical costs.

Fourth is the total costs of bricks and mortar and labor that hospitals and health systems carry.

Fifth is the development of new types of insurance programs by companies like Haven, which is JPMorgan, Berkshire Hathaway and Amazon’s effort to serve their combined 1.2 million employees. Currently, commercial insurance and payments from employed people ultimately subsidize what hospitals and health systems receive from Medicare and Medicaid. Thus, if these efforts like Haven are successful at peeling off good-paying patients, this will have a big negative impact on hospitals and health systems.  

 

 

 

 

15 Doctors Fired From Chicago-Area Health System

Posted on by • Posted in Advance Practice Nurse, Cost Management, Cost Reduction, Health System, Hospital, Hospital Industry, Nurses, Physician, Strategy • Leave a comment

https://www.medpagetoday.com/publichealthpolicy/workforce/83576?utm_source=Sailthru&utm_medium=email&utm_campaign=Weekly%20Review%202019-12-01&utm_term=NL_DHE_Weekly_Active

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Physicians “broadsided” by their termination.

At least 15 physicians have been fired from Edward-Elmhurst Health as the suburban Chicago-based health system moves to cut costs, sources told MedPage Today.

The doctors, who worked across its seven “Immediate Care” or urgent care sites, will be replaced by advanced practice nurses, according to an email sent by hospital leadership that was shared with MedPage Today. The physicians were informed late last week that they would be terminated as of April 1, 2020.

A physician who spoke on the condition of anonymity said the doctors were “broadsided” by the news. While they harbored some concerns that a few of the slower urgent care sites might be turned over to non-physician clinicians, they weren’t expecting so many of the sites to be impacted and for such a large number of doctors to be let go.

In their email, hospital system CEO Mary Lou Mastro, MS, RN, and Chief Medical Officers Robert Payton, MD, and Daniel Sullivan, MD, pointed to patient cost concerns as the reason for eliminating the jobs: “Patients have made it very clear that they want less costly care and convenient access for lower-acuity issues (sore throats, rashes, earaches), which are the vast majority of cases we treat in our Immediate Cares.”

“Beginning in the spring of 2020, we will move to a delivery model in which care is provided by Advanced Practice Nurses (APNs) at select Immediate Care locations,” they wrote.

Leadership also stated in the email that they are “working closely with these physicians to assist them with finding alternative positions within Edward-Elmhurst Health or outside our system,” but doctors noted that they face a saturated Chicago healthcare market and they’re likely to have to relocate.

When asked to confirm the layoffs, Keith Hartenberger, a spokesperson for Edward-Elmhurst Health, said in a statement: “We continue to assess our care delivery models in the interest of providing cost-effective care to our patients. We shared with physicians that we have plans to change the model next year at some outpatient sites and are working with anyone affected to find alternative placement.”

The move is becoming a more familiar one as some health systems try to save money by relying more heavily on non-physician clinicians.

Last year, 27 pediatricians at a chain of clinics in the Dallas area lost their jobs and were replaced by nurse practitioners — even though the chain subsequently changed its name to MD Kids Pediatrics.

Rebekah Bernard, MD, wrote in Medical Economics that she spoke with three of the pediatricians who were fired: “They told me that they and their physician colleagues were completely shocked by the sudden firing. ‘We thought we were going to retire from this place,’ one told me.”

Also in 2018, Charlotte, North Carolina-based Atrium Health ended a nearly 40-year contract with a 100-member physician group, signing up instead with Scope Anesthesia, which says it’s dedicated to forming partnerships with certified registered nurse anesthetists. Atrium said it too was looking to reduce patient costs.

“This trend of shuttering hospital departments and firing physicians to save money is dangerous and short-sighted,” Bernard wrote.

Purvi Parikh, MD, of NYU Langone Health in New York City, and a board member of Physicians for Patient Protection, which advocates against other healthcare providers replacing doctors, said that although non-physician clinicians “are vital members of the healthcare team, they are not trained to be substitutes of physicians and as a result diagnoses are missed and improper treatments and tests [are] prescribed.”

Parikh said patients “have the right to choose a facility that is physician-only or one with physician-led care. In Chicago, luckily there are other options among competitors.”