Category Archives: Hospital

‘We’re Going Away’: A State’s Choice to Forgo Medicaid Funds Is Killing Hospitals

Posted on by • Posted in ACA, Health Policy, Health System, Healthcare Reform, Hospital, Hospital Industry, Medicaid, Medicaid Expansion, Rural Health, Rural Health Clinics (RHC), Rural Hospital, Uncompensated Care • Leave a comment

Since its opening in a converted wood-frame mansion 117 years ago, Greenwood Leflore Hospital had become a medical hub for this part of Mississippi’s fertile but impoverished Delta, with 208 beds, an intensive-care unit, a string of walk-in clinics and a modern brick-and-glass building.

But on a recent weekday, it counted just 13 inpatients clustered in a single ward. The I.C.U. and maternity ward were closed for lack of staffing and the rest of the building was eerily silent, all signs of a hospital savaged by too many poor patients.

Greenwood Leflore lost $17 million last year alone and is down to a few million in cash reserves, said Gary Marchand, the hospital’s interim chief executive. “We’re going away,” he said. “It’s happening.”

Rural hospitals are struggling all over the nation because of population declines, soaring labor costs and a long-term shift toward outpatient care. But those problems have been magnified by a political choice in Mississippi and nine other states, all with Republican-controlled legislatures.

They have spurned the federal government’s offer to shoulder almost all the cost of expanding Medicaid coverage for the poor. And that has heaped added costs on hospitals because they cannot legally turn away patients, insured or not.

States that opted against Medicaid expansion, or had just recently adopted it, accounted for nearly three-fourths of rural hospital closures between 2010 and 2021, according to the American Hospital Association.

Opponents of expansion, who have prevailed in Texas, Florida and much of the Southeast, typically say they want to keep government spending in check. States are required to put up 10 percent of the cost in order for the federal government to release the other 90 percent.

But the number of holdouts is dwindling. On Monday, North Carolina became the 40th state to expand Medicaid since the option to cover all adults with incomes below 138 percent of the poverty line opened up in 2014 under the terms of the 2010 Affordable Care Act. The law, a major victory for President Barack Obama, has continued to defy Republican efforts to kill or limit it.

“This argument about rural hospital closures has been an incredibly compelling argument to voters,” said Kelly Hall, the executive director of the Fairness Project, a national nonprofit that has successfully pushed ballot measures to expand Medicaid in seven states.

In Mississippi, one of the nation’s poorest states, the missing federal health care dollars have helped drive what is now a full-blown hospital crisis. Statewide, experts say that no more than a few of Mississippi’s 100-plus hospitals are operating at a profit. Free care is costing them about $600 million a year, the equivalent of 8 percent to 10 percent of their operating costs — a higher share than almost anywhere else in the nation, according to the state hospital association.

Expanding Medicaid would uncork a spigot of about $1.35 billion a year in federal funds to hospitals and health care providers, according to a 2021 report by the office of the state economist.

And it would guarantee medical coverage to some 100,000 uninsured adults making less than $20,120 a year in a state whose death rates are at or near the nation’s highest for heart disease, stroke, diabetes, cancer, kidney disease and pneumonia. Infant mortality is also sky-high, and the Delta has the nation’s highest rate of foot and leg amputations because of diabetes or hypertension.

Health officials blame those numbers in part on the high rate of uninsured residents who miss out on preventive care.

“I can tell you I have a number of patients who are on dialysis with renal failure for the rest of their life because they couldn’t afford the medication for their blood pressure, and that caused their kidneys to go bad,” said Dr. John Lucas, a Greenwood Leflore surgeon.

Among Mississippi adults, only disabled people and parents with extremely low incomes, along with most pregnant women, are eligible for Medicaid. Many of the ineligible are also too poor to qualify for the tax credits for insurance under the Affordable Care Act, leaving them without affordable options.

The same is true for close to two million other Americans who live in the states that have not expanded Medicaid. Three in five are adults of color, according to a 2021 study by the Center on Budget and Policy Priorities, a nonprofit research group. In Mississippi, more than half are Black.

Gov. Tate Reeves, a Republican, and key G.O.P. state lawmakers argue that a bigger Mississippi program is not in taxpayers’ best interest. The governor says the state’s $3.9 billion surplus would be best used to help eliminate Mississippi’s income tax.

“Don’t simply cave under the pressure of Democrats and their allies in the media who are pushing for the expansion of Obamacare, welfare and socialized medicine,” Mr. Reeves said in his annual State of the State address in January.

Opponents also argue that the newly insured would become dependent on Medicaid and therefore be less likely to work. “I believe we should be working to get people off Medicaid as opposed to adding more people to it,” said Philip Gunn, the powerful Republican House speaker.

Yet in Mississippi’s Delta, a flat swath of fields of corn, soybeans and other crops nearly as big as Delaware, access to any kind of medical care is drying up for lack of money. More than 300,000 people live here, nearly 35 percent of them Black. About the same percentage live in poverty, a rate three times the national average.

Dr. Daniel P. Edney, the state’s top health officer, said he did not set Medicaid policy, and he has been careful not to take sides. But he predicted emerging health care deserts where women would have to travel long distances to deliver babies and more sick people would die because they could not gain access to care.

Of the state’s hospitals, “I have maybe heard of two that are generating any profit,” he said. When he asks hospital executives if Medicaid expansion would help their balance sheets, he said, “they say it’s a game changer.”

He predicted that five hospitals would soon downgrade into mere emergency rooms, where doctors work to stabilize patients, then transfer them to the nearest hospital.

If that happens, some of the sickest will not make it, said Dr. Jeff Moses, an emergency room physician at Greenwood Leflore.

“Where are they going? Davy Jones’s locker,” he said. “It is very dark, and I’m not exaggerating this. I just can’t imagine what will happen to this community if this hospital closes.”

Nine years after states began expanding Medicaid, evidence is growing that broader coverage saves lives. In a 2021 analysis, researchers for the National Bureau of Economic Research estimated that in one four-year period, 19,200 more adults aged 55 to 64 survived because of expanded coverage, and nearly 16,000 more would have lived if that coverage was nationwide.

Other studies suggest why: Making medical care more affordable led to increases in regular checkups, cancer screenings, diagnoses of chronic diseases and prescriptions for needed medicines.

Especially during the first six years of the Medicaid expansion, when the federal government picked up 95 to 100 percent of the cost, many states found that the program was a net fiscal gain. Some states have imposed taxes on hospitals or health care providers to cover their share of the expense, the same strategy used to help fund other Medicaid costs.

Now the federal government is offering a new incentive for the holdouts: As part of a 2021 pandemic relief measure, it agreed to temporarily pay a higher proportion of costs for some existing Medicaid patients if states broadened eligibility.

Mississippi’s office of the state economist has estimated that for at least the first decade, those savings and others would fully cover the roughly $200 million a year that Medicaid expansion would cost the state government.

Tim Moore, the president of the Mississippi Hospital Association, said expansion was “a no-brainer.” The state is so poor, he said, that for every dollar it spends on Medicaid, the federal government pumps four back in.

Polls, including by Mississippi Today and Siena College, appear to show Mississippians support Medicaid expansion, regardless of their political affiliation. Brandon Presley, the Democratic candidate for governor, is highlighting hospital closures as a reason to deny Mr. Reeves a second term in elections this November.

In a possible sign of political nervousness, the governor and the legislature recently agreed to extend Medicaid coverage to pregnant women for 12 months after they give birth, prolonging a federal pandemic-era policy.

The legislators are also trying to prop up the hospitals with a one-time infusion of $83 million or more. But that is a pittance compared with what the state has given up in Medicaid payments.

The state has lost four hospitals since 2008, according to the hospital association, and Dr. Edney, the state health officer, said that it would inevitably lose more. He said he worried most about health care access in the Delta, where he grew up, the child of working-class parents with no health insurance.

On Saturday, Representative Bennie Thompson, Democrat of Mississippi, said victims of a tornado that struck the Delta last week had to be ferried 50 miles away for medical treatment because the local hospital had no power. More Medicaid dollars, he said, would have equipped it with an emergency generator.

An hour due west from Greenwood Leflore, another major hospital, run by Delta Health System, is also in serious trouble. Licensed for more than 300 beds, the hospital one day last month held just 72 inpatients.

Thirty-two of them were kept in the emergency department, partly because of nursing cuts. One upshot is that patients seeking emergency care now wait an average of two hours, four times as long as they should, according to Amy Walker, the chief nursing officer. Some simply walk out.

The neonatal intensive care unit closed last July. Now babies in trouble must be ferried by ambulance or helicopter 125 miles south to Jackson.

Iris Stacker, the chief executive, said the hospital could remain open through the end of the year; after that, she makes no promises. She is hoping federal grants will help keep the doors open, despite the state’s failure to expand Medicaid.

But she said, “It’s very hard to ask the federal government for more money when you have this pot of money sitting here that we won’t touch.”

A top message on Greenwood Leflore’s website is now a request for donations. So far, the hospital has raised less than $12,000.

Mike Hardin, a 70-year-old retiree, was one of a handful of inpatients one recent day. He had come to the emergency room two days before with slurred speech. Doctors quickly diagnosed a stroke and now were sending him home with revised medications.

“They have to do something to keep this hospital open,” he said as he was wheeled out of his room. “The people around this area wouldn’t have any place else to go.”

The hospital’s outpatient clinics are largely still in business, and doctors there say their caseloads are full of impoverished patients who should have been treated earlier.

Dr. Abhash Thakur, a cardiologist, said he routinely saw patients in the late stages of congestive heart failure who had never seen a cardiologist or been prescribed heart medication. Some have as little as 10 percent of their heart function left.

“They are not the exception,” he said, before examining a 52-year-old man who uses a wheelchair because of his heart disease. “Every day, probably, I will see a few of them.”

Dr. Raymond Girnys, a general surgeon, had just treated a man in his late 50s. He said that a week earlier, the man had punctured his foot on a sharp stick while walking in his tennis shoes in a field.

The man did not seek medical attention until the foot became infected because he was poor and uninsured. Dr. Girnys pointed out the irony: If his patient lost his foot, he would become eligible for Medicaid because then he would be disabled.

“If they had insurance, they wouldn’t be afraid to seek care,” he said.

Experts say that no more than a few of Mississippi’s 100-plus hospitals are operating at a profit.

Razor-thin hospital margins become the new normal

Posted on by • Posted in Financial Distress, Financial Goals, Financial Instability, Financial Performance, Financial Stewardship, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Leadership, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Metrics, Operating Performance, Operating Revenue, Restructure • Leave a comment
https://www.beckershospitalreview.com/finance/razor-thin-hospital-margins-become-the-new-normal.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Hospital finances are starting to stabilize as razor-thin margins become the new normal, according to Kaufman Hall’s latest “National Flash Hospital Report,” which is based on data from more than 900 hospitals.

External economic factors including labor shortages, higher material expenses and patients increasingly seeking care outside of inpatient settings are affecting hospital finances, with the high level of fluctuation that margins experienced since 2020 beginning to subside.

Hospitals’ median year-to-date operating margin was -1.1 percent in February, down from -0.8 percent in January, according to the report. Despite the slight dip, February marked the eight month in which the variation in month-to-month margins decreased relative to the last three years. 

“After years of erratic fluctuations, over the last several months we are beginning to see trends emerge in the factors that affect hospital finances like labor costs, goods and services expenses and patient care preferences,” Erik Swanson, senior vice president of data and analytics with Kaufman Hall, said. “In this new normal of razor thin margins, hospitals now have more reliable information to help make the necessary strategic decisions to chart a path toward financial security.”

High expenses continued to eat into hospitals’ bottom lines, with February signaling a shift from labor to goods and services as the main cost driver behind hospital expenses. Inflationary pressures increased non-labor expenses by 6 percent year over year, but labor expenses appear to be holding steady, suggesting less dependence on contract labor, according to Kaufman Hall. 

“Hospital leaders face an existential crisis as the new reality of financial performance begins to set in,” Mr. Swanson said. “2023 may turn out to be the year hospitals redefine their goals, mission, and idea of success in response to expense and revenue challenges that appear to be here for the long haul.”

Healthcare employment rebounds to pre-pandemic levels

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https://www.beckershospitalreview.com/workforce/healthcare-employment-reaches-pre-pandemic-levels.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Contrary to widespread reports of staffing shortages, healthcare employment reached pre-pandemic levels with the addition of 44,200 jobs in February, according to a recent report from Altarum. 

A recent survey of hospital CEOs found that healthcare staffing was their top concern. Nurses nationwide have reported unsafe staffing levels, leading health systems to restructure and lawmakers to consider safe-staffing laws. 

Yet, healthcare currently has 1.3 percent more jobs than it did in February 2020, according to the monthly Health Sector Economic Indicators brief from Altarum. The nonprofit, healthcare-focused research and consulting organization analyzes available data on spending, prices, employment and utilization to craft the monthly report. 

The data holds that this isn’t a new occurence. The sector has been adding — on average — 49,100 jobs per month for the past year, according to the brief. In February, hospitals led that growth, tapping 19,400 workers. Nursing and residential care facilities added 13,700 jobs, and ambulatory care settings added 11,100. 

However, as healthcare employment rises, its wage growth continues to decline and now lags behind economywide growth. Healthcare wage growth has been declining since mid-2022; in January, pay grew 4.2 percent year over year, while total private sector wage growth grew 4.4 percent. 

This statistic also defies industry narratives, as recent labor negotiations between unions and health systems have scored big raises for workers and clinicians. 

AHA: MedPAC’s 2024 Medicare payment recommendation is ‘out of touch with reality’

Posted on by • Posted in American Hospital Association (AHA), Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Medicare Reimbursement, MedPAC, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue • Leave a comment
https://www.beckershospitalreview.com/hospital-finance/aha-medpacs-2024-medicare-payment-recommendation-is-out-of-touch-with-reality.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

MedPAC’s recommendation that acute care hospitals don’t need a significant increase in 2024 Medicare rates is “totally insufficient and out of touch with reality,” according to the American Hospital Association.

“This view is one-sided, inaccurate and misleading,” Ashley Thompson, AHA’s senior vice president of public policy analysis and development, wrote in a March 23 blog post. “After years of once-in-a-lifetime events in the form of a global pandemic and record inflation, hospitals across the country are struggling to continue to fulfill their mission to care for their patients and communities.”

In its annual March report to Congress, MedPAC recommended an update to hospital payment rates of “current law plus 1 percent,” which the AHA says is not enough for many hospitals to keep their doors open. 

The commission found that most indicators of sufficient Medicare rates for providers were positive or improved in 2021, though it acknowledged that hospitals saw more volatile cost increases in 2022 compared to years prior. Hospital margins were also lower last year than in 2021, according to preliminary data, driven in part by providers facing higher than expected costs and capacity and staffing challenges.

The report also said that its 2024 payment recommendations “may not be sufficient” to sustain some safety-net hospitals with a low number of commercially insured patients, and proposed $2 billion in add-on payments.

Across the U.S., a total of 631 rural hospitals — or about 30 percent of all rural hospitals — are at risk of closing in the immediate or near future.

MedPAC’s recommendations for 2024 differ from how some health economists have recently described hospitals’ finances. In January, hospitals had a median operating margin of -1 percent according to Kaufman Hall, a finding that arrived on the heels of 2022 being named the worst financial year for hospitals since the start of the COVID-19 pandemic.

“It is also important to realize that MedPAC’s report and data has limitations,” Ms. Thompson wrote, referring to a misalignment in the calendar year MedPAC chose to analyze and how hospitals can differ in how they report their individual financial earnings.

MedPAC said its report reflects 2021 data, preliminary data from 2022, and projections for 2023, along with recent inflation rates.

“…cost reports are filed for hospitals’ own specific fiscal years, and because surges, relief payments, and eventual expense increases happened at different times for different hospitals, these calculated margins don’t necessarily provide a fully accurate picture of the financial reality in 2021,” Ms. Thompson wrote.

The AHA stressed that hospitals’ finances in 2023 face much different challenges compared to 2021, when the industry was more supported by strong investment returns and federal pandemic relief. 

“The fact that massive numbers of hospitals are not currently closing due to financial pressures should be seen as positive for patients and communities,” Ms. Thompson said. “Instead, some observers seem to be disappointed that more hospitals are not failing financially.”

A detailed response from the AHA to the MedPAC report is available here.

30 hospitals, health systems cutting jobs

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https://www.beckershospitalreview.com/finance/17-hospitals-health-systems-cutting-jobs-february-2023.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

A number of hospitals and health systems are trimming their workforces or jobs due to financial and operational challenges. 

Below are workforce reduction efforts or job eliminations that were announced within the past six months and/or take effect later this year. 

Editor’s Note: This webpage was updated March 27 and will continue to be updated. 

1. Bellevue, Wash.-based Overlake Medical Center and Clinics has laid off administrative staff, the health system confirmed to the Puget Sound Business Journal. The layoffs, which occurred earlier this year, included 30 workers across Overlake’s human resources, information technology and finance departments, a spokesperson said, according to the publication. This represents about 6 percent of the organization’s administrative workforce. Overlake’s website says it employs more than 3,000 people total.

2. Columbia-based University of Missouri Health Care is eliminating five hospital leadership positions across the organization, spokesperson Eric Maze confirmed to Becker’s March 20. Mr. Maze did not specify which roles are being eliminated saying that the organization won’t address individual personnel actions. According to MU Health Care, the move is a result of restructuring “to better support patients and the future healthcare needs of Missourians.”

3. Greensboro, N.C.-based Cone Health eliminated 68 senior-level jobs. The job eliminations occurred Feb. 21, Cone Health COO Mandy Eaton told The Alamance News. Of the 68 positions eliminated, 21 were filled. Affected employees were offered severance packages. 

4. The newly merged Greensburg, Pa.-based organization made up of Excela Health and Butler Health System eliminated 13 filled managerial jobs. The affected employees and positions are from across both sides of the new organization, Tom Chakurda, spokesperson for the Excela-Butler enterprise, confirmed to Becker’s. The positions were in various support functions unrelated to direct patient care.

5. Crozer Health, a four-hospital system based in Upland, Pa., is laying off roughly 215 employees amid financial challenges. The system announced the layoffs March 15 as part of its “operational restructuring plan” that “focuses on removing duplication in administrative oversight and discontinuing underutilized services.” Affected employees represent about 4 percent of the organization’s workforce.

6. Philadelphia-based Penn Medicine is eliminating administrative positions. The change is part of a reorganization plan to save the health system $40 million annually, the Philadelphia Business Journal reported March 13. Kevin Mahoney, CEO of the University of Pennsylvania Health System, told Penn Medicine’s 49,000 employees last week that changes include the elimination of a “small number of administrative positions which no longer align with our key objectives,” according to the publication. The memo did not indicate the exact number of positions that were eliminated.

7. Sovah Health, part of Brentwood, Tenn.-based Lifepoint Health, has eliminated the COO positions at its Danville and Martinsville, Va., campuses. The responsibilities of both COO roles will now be spread across members of the existing administrative team. 

8. Valley Health, a six-hospital health system based in Winchester, Va., eliminated 31 administrative positions. The job cuts are part of the consolidation of the organization’s leadership team and administrative roles. 

9. Marshfield (Wis.) Clinic Health System will lay off 346 employees, representing less than 3 percent of its employee base.

10. St. Mark’s Medical Center in La Grange, Texas, is cutting nearly 50 percent of its staff and various services amid financial challenges. 

11. Roseville, Calif.-based Adventist Health plans to go from seven networks of care to five systemwide to reduce costs and strengthen operations. The reorganization will result in job cuts, including reducing administration by more than $100 million.

12. Arcata, Calif.-based Mad River Community Hospital is cutting 27 jobs as it suspends home health services.

13.. Hutchinson (Kan.) Regional Medical Center laid off 85 employees, a move tied to challenges in today’s healthcare environment. 

14. Oklahoma City-based OU Health is eliminated about 100 positions as part of an organizational redesign to complete the integration from its 2021 merger.

15. Memorial Sloan Kettering Cancer Center announced it would lay off to reduce costs amid widespread hospital financial challenges. The layoffs are spread across 14 sites in New York City, and equate to about 1.8 percent of Memorial Sloan’s 22,500 workforce.

16. St. Louis-based Ascension completed layoffs in Texas, the health system confirmed in January. A statement shared with Becker’s says the layoffs primarily affected nonclinical support roles. The health system declined to specify to Becker’s the number of employees or positions affected.

17. Lebanon, N.H.-based Dartmouth Health is freezing hiring and reviewing all vacant jobs at its flagship hospital and clinics in an effort to close a $120 million budget gap. 

18. Chillicothe, Ohio-based Adena Health System announced it would eliminate 69 positions — 1.6 percent of its workforce — and send 340 revenue cycle department employees to Ensemble Health Partners’ payroll in a move aimed to help the health system’s financial stability.

19. Ascension St. Vincent’s Riverside in Jacksonville, Fla., will end maternity care at the hospital, affecting 68 jobs, according to a Workforce Adjustment and Retraining Notification filed with the state Jan. 17. The move will affect 62 registered nurses as well as six other positions.

20. Visalia, Calif.-based Kaweah Health aims to eliminate 94 positions through early January as part of a new strategy to reduce labor costs. The job cuts come in addition to previously announced workforce reductions; the health system already eliminated 90 unfilled positions and lowered its workforce by 106 employees. 

21. Oklahoma City-based Integris Health is eliminating 200 jobs to curb expenses. The eliminations include 140 caregiver roles and 60 vacant jobs.

22. Toledo, Ohio-based ProMedica plans to lay off 262 employees, a move tied to its exit from a skilled-nursing facility joint venture late last year. The layoffs will take effect between March 10 and April 1. 

23. Employees at Las Vegas-based Desert Springs Hospital Medical Center were notified of layoffs coming to the facility, which will transition to a freestanding emergency department. There are 970 employees affected. Desert Springs is part of the Valley Health System, a system owned and operated by King of Prussia, Pa.-based Universal Health Services.

24. Philadelphia-based Jefferson Health plans to go from five divisions to three in an effort to flatten management and become more efficient. The reorganization will result in an unspecified number of job cuts, primarily among executives.

25. Pikeville (Ky.) Medical Center will lay off 112 employees by year’s end as it outsources its environmental services department. The 112 layoffs are effective Jan. 1, 2023, with the affected employees’ last day of work expected to be Dec. 31.

26. Southern Illinois Healthcare, a four-hospital system based in Carbondale, announced it would eliminate or restructure 76 jobs in management and leadership. The 76 positions fall under senior leadership, management and corporate services. Included in that figure are 33 vacant positions, which will not be filled. No positions in patient care are affected. 

27. Citing a need to further reduce overhead expenses and support additional investments in patient care and wages, Traverse City, Mich.-based Munson Health is eliminating 31 positions and leaving another 20 jobs unfilled. All affected positions are in corporate services or management. The layoffs represent less than 1 percent of the health system’s workforce of nearly 8,000. 

28. West Reading, Pa.-based Tower Health on Nov. 16 laid off 52 corporate employees as the health system shrinks from six hospitals to four. The layoffs, which are expected to save $15 million a year, account for 13 percent of Tower Health’s corporate management staff.

29. Sioux Falls, S.D.-based Sanford Health announced layoffs affecting an undisclosed number of staff in October, a decision its CEO said was made “to streamline leadership structure and simplify operations” in certain areas. The layoffs primarily affect nonclinical areas.

30. St. Vincent Charity Medical Center in Cleveland closed its inpatient and emergency room care Nov. 11, four days before originally planned — and laid off 978 workers in doing so. After the transition, the Sisters of Charity Health System will offer outpatient behavioral health, urgent care and primary care.

Which physician specialties are most targeted for corporate roll-ups?  

Posted on by • Posted in Health System, Hospital, Hospital Industry, Outpatient Care, Physician, Physician Aggregator, Physician Compensation, Physician Employment, Physician Independence, Physician Practice Management, Physician Practice Valuation, Physician Workforce, Private Equity • Leave a comment

https://mailchi.mp/6f4bb5a2183a/the-weekly-gist-march-24-2023?e=d1e747d2d8

In the last edition of the Weekly Gist, we illustrated how non-hospital physician employment spiked during the pandemic. Diving deeper into the same report from consulting firm Avalere Health and the nonprofit Physicians Advocacy Institute, the graphic above looks at the specialties that currently have the greatest number of physicians employed by hospitals and corporate entities (which include insurers, private equity, and non-provider umbrella organizations), and those that remain the most independent.


To date, there has been little overlap in the fields most heavily targeted for employment by hospitals and corporate entities. Hospitals have largely employed doctors critical for key service lines, like cancer and cardiology, as well as hospitalists and other doctors central to day-to-day hospital operations.

In contrast, corporate entities have made the greatest strides in specialties with lucrative outpatient procedural business, like nephrology (dialysis) and orthopedics (ambulatory surgery), as well as specialties like allergy-immunology, that can bring profitable pharmaceutical revenue.

Meanwhile, only a few specialties remain majority independent. Historically independent fields like psychiatry and oral surgery saw the number of independent practitioners fall over 25 percent during the pandemic.

While hospitals will remain the dominant physician employer in the near term, corporate employment is growing unabated, as payers and investors, unrestrained by fair market value requirements, can offer top dollar prices to practices. 

Sutter Health ends 2022 with $249M loss, but draws solace from $278M operating income

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https://www.fiercehealthcare.com/providers/sutter-health-ends-2022-249m-loss-draws-solace-278m-operating-income

Sacramento, California-based Sutter Health crossed the finish line strong but ultimately wrapped up 2022 with a $249 million net loss, a substantial decline from the $1.1 billion profit of 2021.

A $628 million dip in investment income, a $578 million decrease in net unrealized gains and losses on investments and the $208 million disaffiliation of Samuel Merritt University all contributed to the nonprofit’s year-over-year decline.

Still, the tally is a $289 million improvement over the $538 million net loss the system had reported at the year’s nine-month mark.

The loss was also blunted by a 12-month operating income of $278 million—a bump over the $199 million operating income of 2021 and a feather in Sutter’s cap at a time when several other major nonprofit systems are reporting hundreds of millions in operating losses.

“Our operating financial performance has put Sutter in a position to reinvest more within the system, which can help support even higher quality, equitable healthcare for patients throughout California,” CEO and President Warner Thomas said in a press release.

Sutter’s total operating revenues rose 3.9% year over year to $14.8 billion in 2022. This was just ahead of the 3.3% increase to $14.5 billion in total operating expenses. The system wrote in a release that “like other healthcare organizations around the country,” it was not immune from inflationary pressures on expenses like wages and benefits or supplies.

However, the strong results of its 2021 financial recovery initiative and patient volumes “returning to near-2019 levels by year’s end” give Sutter “a stable base to invest in the future,” the system said.

Providence suffers 2nd downgrade in a few days

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https://www.beckershospitalreview.com/finance/providence-suffers-2nd-downgrade-in-a-few-days.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Renton, Wash.-based Providence had its second downgrade in less than a week amid higher expenses that helped lead to steeper-than-expected losses and an expectation of a multiyear recovery.

The rating downgrade from “A+” to “A” applies to the system’s long-term rating as well as to various bonds it holds, S&P Global said March 21. The outlook is negative.

“The negative outlook reflects our view of the steep operating losses that management must address over the next year to put the organization on a path to better cash flow and break-even margins,” S&P said.

The rating downgrade follows a similar move by Fitch March 17.

Positive fundamentals such as its diversified services and robust strategic plan, as well as its leading market positions in all seven of its regionally centered markets, stands Providence in good stead, S&P added.

Providence, a 51-hospital system, recently reported a fiscal 2022 operating loss of $1.7 billion.

MedPAC recommendations on 2024 payment rates get mixed reaction

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Health System, Hospital, Hospital Industry, Long Term Care Hospital, Medicare, Medicare Advantage, Medicare Disproportionate Share Reimbursement, Medicare Fee Schedule, Medicare Part D, Medicare Payment Advisory Commission (MedPAC), MedPAC, Physician, Physician Reimbursement • Leave a comment

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The Medicare Advisory Payment Commission recommends a higher-than-current-law fee-for-service payment update in 2024 for acute care hospitals and positive payment updates for clinicians paid under the physician fee schedule. It recommends reductions in base payment rates for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

MedPAC gave Congress recommendations on payment rates in both traditional fee-for-service and Medicare Advantage for 2024, satisfying a legislative mandate comparing per enrollee spending in both programs.

MedPAC estimates that Medicare spends 6% more for MA enrollees than it would spend if those enrollees remained in fee-for-service Medicare.

In their March 2023 Report to the Congress: Medicare Payment Policy, commissioners said they were acutely aware of how providers’ financial status and patterns of Medicare spending varied in 2020 and 2021 due to COVID-19 and were also aware of higher and more volatile cost increases.

However, they’re statutorily charged to evaluate available data to assess whether Medicare payments are sufficient to support the efficient delivery of care and ensure access to care for Medicare’s beneficiaries, commissioners said. 

FEE-FOR-SERVICE RATE RECOMMENDATIONS 

MedPAC’s payment update recommendations are based on an assessment of payment adequacy, beneficiaries’ access to and use of care, the quality of the care, the supply of providers, and their access to capital, the report said. As well as higher payments for acute care hospitals and clinicians, MedPAC recommends positive rates for outpatient dialysis facilities.

It recommends providing additional resources to acute care hospitals and clinicians who furnish care to Medicare beneficiaries with low incomes. It also recommends a positive payment update in 2024 for hospice providers concurrent with wage adjusting and reducing the hospice aggregate Medicare payment cap by 20%.

It recommends negative updates, which are reductions in base payment rates, for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

Acute care

For acute care hospitals paid under the inpatient prospective payment system, commissioners recommend adding $2 billion to current disproportionate share and uncompensated care payments and distributing the entire amount using a commission-developed “Medicare SafetyNet Index” to direct funding to those hospitals that provide care to large shares of low-income Medicare beneficiaries.

This recommendation got pushback from America’s Essential Hospitals.

“We appreciate the Medicare Payment Advisory Commission’s desire to define safety net hospitals for targeted support, but the commission’s Medicare safety net index (MSNI) could have the perverse effect of shifting resources away from hospitals that need support the most,” said SVP of Policy and Advocacy Beth Feldpush. “The MSNI methodology fails to account for all the nation’s safety net hospitals by overlooking uncompensated care and care provided to non-Medicare, low-income patients – especially Medicaid beneficiaries. Any practical definition of a safety net provider must consider the care of Medicaid and uninsured patients, yet the MSNI misses on both counts.”

Feldpush urged policymakers to develop a federal designation of safety net hospitals and to reject the MSNI.

“Further, policymaking for these hospitals should supplement, rather than redistribute, existing Medicare DSH funding, which reflects a congressionally sanctioned, well-established methodology,” she said.

Physicians and clinicians

For clinicians, the commission recommends that Medicare make targeted add-on payments of 15% to primary care clinicians and 5% to all other clinicians for physician fee schedule services provided to low-income Medicare beneficiaries. 

The American Medical Association commended MedPAC, but also said that an update tied to just 50% of the Medicare Economic Index would cause physician payment to chronically fall even further behind increases in the cost of providing care. AMA president Dr. Jack Resneck Jr. urged Congress to pass legislation providing for an annual inflation-based payment update.

MedPAC has long championed a physician payment update tied to the Medicare Economic Index, Resneck said. Physicians have faced the cost of inflation, the COVID-19 pandemic and growing expenses to run medical practices, jeopardizing access to care, particularly in rural and underserved areas.

“Not only have Medicare payments failed to respond adequately, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment,” Resneck said. “As one of the only Medicare providers without an inflationary payment update, physicians have waited a long time for this change. When adjusted for inflation, Medicare physician payment has effectively declined 26% from 2001 to 2023. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities. Our workforce is at risk just when the health of the nation depends on preserving access to care.”

The AMA and 134 other health organizations wrote to congressional leaders urging for a full inflation-based update to the Medicare Physician Fee Schedule.

MGMA’s SVP of Government Affairs Anders Gilberg said, “Today’s MedPAC report recommends Congress provide an inflationary update to the Medicare base payment rate for physician and other health professional services of 50% of the Medicare Economic Index (MEI), an estimated annual increase of 1.45% for 2024. In the best of times such a nominal increase would not cover annual medical practice cost increases. In the current inflationary environment, it is grossly insufficient.”

MGMA urged Congress to pass legislation to provide an annual inflationary update based on the full MEI.

Ambulatory surgical centers and long-term care hospitals

Previously, the commission considered an annual update recommendation for ambulatory surgical centers (ASCs). However, because Medicare does not require ASCs to submit data on the cost of treating beneficiaries, the commissioners said they had no new significant data to inform an ASC update recommendation for 2024.

Commissioners also previously considered an annual update recommendation for long-term care hospitals (LTCHs). But as the number of cases that qualify for payment under Medicare’s prospective payment system for LTCHs has fallen, they said they have become increasingly concerned about small sample sizes in the analyses of this sector.

“As a result, we will no longer provide an annual payment adequacy analysis for LTCHs but will continue to monitor that sector and provide periodic status reports,” they said in the report. 

MEDICARE ADVANTAGE

Commissioners said that overall, indicators point to an increasingly robust MA program. In 2022, the MA program included over 5,200 plan options, enrolled about 29 million Medicare beneficiaries (49% of eligible beneficiaries), and paid MA plans $403 billion (not including Part D drug plan payments). 

In 2023, the average Medicare beneficiary has a choice of 41 plans offered by an average of eight organizations. Further, the level of rebates that fund extra benefits reached a record high of about $2,350 per enrollee, on average.

Medicare payments for these extra benefits – which are not covered for beneficiaries in FFS – have more than doubled since 2018. For 2023, the average MA plan bid to provide Medicare Part A and Part B benefits was 17% less than FFS Medicare would be projected to spend for those enrollees. 

However, the benefits from MA’s lower cost relative to FFS spending are shared exclusively by the companies sponsoring MA plans and MA enrollees (in the form of extra benefits). The taxpayers and FFS Medicare beneficiaries (who help fund the MA program through Part B premiums) do not realize any savings from MA plan efficiencies. 

Medicare should not continue to overpay MA plans, MedPAC said. Over the past few years, the commission has made recommendations to address coding intensity, replace the quality bonus program and establish more equitable benchmarks, which are used to set plan payments, the report said. All of these would stem Medicare’s excess payments to MA plans, helping to preserve Medicare’s solvency and sustainability while maintaining beneficiary access to MA plans and the extra benefits they can provide. 

PART D

Medicare’s cost-based reinsurance continues to be the largest and fastest growing component of Part D spending, totaling $52.4 billion, or about 55% of the total, according to the report. 

As a result, the financial risk that plans bear, as well as their incentives to control costs, has declined markedly. The value of the average basic benefit that is paid to plans through the capitated direct subsidy has plummeted in recent years. 

In 2023, direct subsidy payments averaged less than $2 per member per month, compared with payments of nearly $94 per member, per month, for reinsurance. To help address these issues, in 2020 the commission recommended substantial changes to Part D’s benefit design to limit enrollee out-of-pocket spending; realign plan and manufacturer incentives to help restore the role of risk-based, capitated payments; and eliminate features of the current program that distort market incentives.

In 2022, Congress passed the Inflation Reduction Act, which included numerous policies related to prescription drugs. One such provision is a redesign of the Part D benefit with many similarities to the commission’s recommended changes. 

The changes adopted in the IRA will be implemented over the next several years, and are likely to alter the drug-pricing landscape, commissioners said.

Nonprofit hospitals lifted by $28B in tax exemptions: KFF

Posted on by • Posted in Community Benefit, Health System, Hospital, Hospital Industry, Tax Exempt Status • Leave a comment
https://www.beckershospitalreview.com/finance/nonprofit-hospitals-lifted-by-28b-in-tax-exemptions-kff.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Tax exemptions for nonprofit hospitals amounted to $27.6 billion in value for 2020, according to new data from the Kaiser Family Foundation. 

Federal tax exemptions in 2020 made up $14.5 billion and state and local tax-exemptions amounted to $13.2 billion. Combined, the $27.6 billion represents 43 percent of net income earned by nonprofit hospitals in 2020, the foundation found.

Nonprofit hospitals may see renewed or heightened scrutiny of their tax-exempt status due in part to how much the value of tax-exemption has grown in recent years. The foundation’s analysis shows the value of tax exemption grew from about $20 billion in 2011 to about $27.6 billion in 2020 — a 41 percent increase.

“The rising value of tax exemption means that federal, state, and local governments have been forgoing increasing amounts of revenue over time to provide tax benefits to nonprofit hospitals, crowding out other uses of those funds,” KFF analysts wrote. “This has raised questions about whether nonprofit facilities provide sufficient benefit to their communities to justify this tax benefit.”

The $27.6 billion in estimated value of tax exemption exceeded nonprofit hospitals’ total estimated charity care costs of $16 billion in 2020, although KFF points out that charity care makes up one portion of nonprofit hospitals’ community benefits.

2020 was a standout year with the largest single-year increase — $4 billion — to the value of nonprofit hospitals’ tax-exemption. KFF analysts note that while COVID-19 caused disruptions that lowered net income from patient care, government relief funds and increased charitable contributions and investment income “more than offset those losses” and increased net income increased the value of not having to pay federal and state income taxes.  

“Even when setting aside the strong financial performance of nonprofit hospitals in 2020 as a potential outlier, total net income among nonprofit facilities increased from $19.4 billion in 2011 to $47.0 billion in 2019, a 143 percent increase, before jumping to $64.5 billion in 2020,” the analysts wrote. “Although we are not able to directly observe the value of the real estate owned by hospitals, the estimated value of exemption from local property taxes — which is based on our analysis of property taxes paid by for-profit hospitals — increased by 29 percent from 2011 to 2019. Finally, the supply expenses in our analysis increased by 44 percent and charitable contributions increased by 49 percent from 2011 to 2019.”

Melinda Hatton, general counsel for the the American Hospital Association, shared the following statement with Becker’s in response to the KFF analysis: 

“A more comprehensive report by the international firm EY has consistently found that the value of hospitals’ federal tax exemption was far outstripped by the community benefits provided. In the most recent analysis, the value was 9 to 1: for every one dollar in tax exemption hospitals provided nine dollars of community benefit. 

“A narrow reading of community benefit limited to financial assistance misses the important work hospitals do to close the pervasive gaps between federal reimbursements for care and the actual cost of care as well as the many other benefits hospitals provide directly to their communities. Whether it is public health activities, such as clinics and testing, training for the next generation of caregivers or efforts to prevent illness, including wellness education or more hand-on efforts to improve living conditions, hospitals continually give back to the communities they serve.”