Has U.S. Healthcare Reached its Tipping Point?

At a meeting with hospital system CEOs last Wednesday, one asked: “has healthcare reached the tipping point?”  I replied ‘not yet but it’s getting close.’

I iterated factors that make these times uniquely difficult in every sector:

  • An uncertain economy that’s unlikely to fully recover until next year.
  • The growth of Medicaid and Medicare coverage that shifts their financial shortfall to employers and taxpayers who are fed up and pushing back.
  • A vicious political environment that rewards partisan brinksmanship and focus-group tested soundbites to manipulate voters on complex issues in healthcare.
  • The growing domination of Big Business in each sector that have used acquisitions + corporatization to their advantage.
  • The widening role of private equity in funding non-conventional solutions that disrupt the status quo (and the uncertain future for many of these).
  • The federal courts system that’s increasingly the arbiter over access, fairness, quality and freedoms in healthcare.
  • The lingering impact of the pandemic.
  • And growing public disgust and distrust as the system’s altruism and good will is undermined by pervasive concern for profit.

Unprecedented! But events like those last week prompt hitting the pause button: not everyone pays attention to healthcare like many of us. The slaughter of 6 innocents in Nashville hit close to home: it’s about guns, mental health and life and death. The appeal of tech-giants to press the pause button on Generative AI for at least 6 months was sobering. The ravage of tornados that left thousands insecure without food, housing or hope seemed unfair. Mounting tensions with Russia and complex negotiations with China that reminded us that the U.S. competes in a global economy.  And President Trump’s court appearance tomorrow will stoke doubt about our justice system at a time when it’s role in healthcare and society is expanding.

I am a healthcare guy. I am prone to see the world through the lens of the U.S. health industry and keen to understand its trends, tipping points and future. There’s plenty to watch: this week will be no exception. The punch list is familiar:

  • Medicaid coverage: Many will be watching the fallout of from state redetermination requirements for Medicaid coverage starting as soon as this week with disenrollment in Arizona, Arkansas, Idaho, New Hampshire and South Dakota.
  • Medicare Advantage: Health insurers will be modifying their Medicare Advantage strategies to adapt to CMS’ risk adjustment and Value-based Insurance Design modifications announced last week.
  • Prescription drug prices: PBMs and drug companies will face growing skepticism as Senate and House committees continue investigations about price gauging and collusion. Hospitals will be making adjustments to higher operating losses as states cut their Medicaid rolls.
  • Technology: The 7500 VIVA attendees will be doing follow-up to secure entrées for their technologies and solutions among prospective buyers.
  • Physicians: And physicians will intensify campaigns against insurers and hospitals now seen as adversaries while lobbying Congress for more money and greater income opportunities i.e., physician-owned hospitals.
  • Hospitals: On the offense against site-neutral payments, physician owned hospitals, drug prices and inadequate reimbursement from health insurers.

All will soldier on but the food fights in healthcare and broader headwinds facing the industry suggest a tipping point might be near.

I am not a fatalist: the future for healthcare is brighter than its past, but not for everyone. Strategies predicated on protecting the past are obsolete. Strategies that consider consumers incapable of active participation in the delivery and financing of their care are archaic. Strategies that depend on unbridled consolidation and opaque pricing are naïve. And strategies that limit market access for non-traditional players are artifacts of the gilded age gone by when each sector protected its own against infidels outside.

These times call for two changes in every board room and C Suite in of every organization in healthcare:

Broader vision: Understanding healthcare’s future in the broader context of American society, democracy and capitalism: Beltway insiders and academics prognosticate based on lag indicators that are decreasingly valid for forecasting. Media pundits on healthcare fail to report context and underpinnings. Management teams are operating under short-term financial incentives lacking longer-term applicability. Consultants are telling C suites what they want to hear. And boards are being mis-educated about trends of consequence that matter. Understanding the future and building response scenarios is out of sight and out of mind to insiders more comfortable being victims than creators of the new normal.

Board leadership: Equipping boards to make tough decisions: Governance in healthcare is not taken seriously unless an organization’s investors are unhappy, margins are shrinking or disgruntled employees create a stir. Few have a systematic process for looking at healthcare 10 years out and beyond their business. Every Board must refresh its thinking about what tomorrow in healthcare will be and adjust. It’s easier for board to approve plans for the near-term than invest for the long-term: that’s why outsiders today will be tomorrow’s primary incumbents.

So, is U.S healthcare near its tipping point? I don’t know for sure, but it seems clear  the tipping point is nearer than at any point in its history. It’s time for fresh thinking and new players.

Healthcare CEO, physicians sentenced to prison for $27M fraud

Thirteen people involved in a $27 million healthcare fraud scheme have been sentenced to a combined 84 years in federal prison, the Justice Department announced Aug. 31. 

The defendants allegedly participated in a fraud scheme that involved Novus Health Services, a Dallas-based hospice agency. The defendants allegedly defrauded Medicare by submitting false claims for hospice services, providing kickbacks for referrals and violating HIPAA to recruit beneficiaries. Novus employees also dispensed controlled substances to patients without the guidance of medical professionals, according to the Justice Department. 

Novus CEO Bradley Harris admitted to the fraud and testified against two physicians who elected to go to trial. Mr. Harris pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of healthcare fraud and aiding and abetting. He was sentenced to 159 months in federal prison in January. 

The 12 others convicted in the scheme include three physicians, four nurses and several executives. 

Read more here

More hospitals poised to require COVID-19 vaccines

It’s “a trickle that will become a torrent,” Ashish Jha, dean at Brown University’s School of Public Health, tweeted.

More hospitals are likely to require employees receive a COVID-19 vaccine, experts said, to further protect the sick and vulnerable patients who rely on them for care.

A Houston-area hospital captured headlines after taking a firm stance on requiring vaccines that prevent severe illness of the coronavirus, which has killed more than 600,000 in the U.S. and ravaged the economy.

Houston Methodist employees who refused the vaccine were either terminated or resigned. A judge earlier this month sided with the hospital and tossed out an employee lawsuit that was seeking to block the mandated inoculation. The ruling may give other hospitals the green light to require the jab, and as more facilities put a similar policy in place, others are likely to follow, experts said.

It’s “a trickle that will become a torrent,” Ashish Jha, professor and dean at Brown University’s School of Public Health, posted Thursday on Twitter.

3 large health systems in Massachusetts to require all workers to be vaccinated.

Given the critical need to protect vulnerable patients, its critical all hospitals do this.

Leading systems will do it soon.

Laggards will get there eventually.

Joining the growing tide of vaccine mandates are a variety of systems and hospitals, including Mass General Brigham in Boston, BJC Healthcare in St. Louis and Inova Health System in Virginia.

Some of the nation’s largest health systems have yet to mandate the shot, including Kaiser Permanente and CommonSpirit Health.

“Vaccination will only be required for Kaiser Permanente employees if a state or county where we operate mandates the vaccine for health care workers,” the company said in an email.

The American Hospital Association continues to hear that a growing number of its members are requiring the vaccine, with some exemptions. However, many member hospitals are waiting until the FDA grants full approval, a time when more safety and efficacy data will be made available.

“Getting vaccinated is especially critical for health care professionals because they work with patients with underlying health conditions whose immune systems may be compromised,” AHA, which has not taken on stance on the requirement, said in a statement.

The mandates raise ethical questions, some say, pointing to the profession’s promise to “do no harm.”

Arthur Caplan, head of medical ethics at New York University School of Medicine, said the codes of ethics that doctors and nurses says to put patients first, do no harm and protect the vulnerable.

“Of course they should be vaccinated,” he said. “If they don’t want to get vaccinated, I think they’re in the wrong profession.”

The Equal Employment Opportunity Commission said employment law does not prohibit employers from requiring the jab, essentially giving the green light to employers to put incentives and requirements in place for their workers. The EEOC is the federal agency tasked with ensuring that workplaces do not discriminate.

Some states are going against the tide and signing legislation that bars vaccine mandates, including Florida. The city of San Francisco will require hospital employees and workers in high-risk settings to get the vaccine. San Francisco, like other employers and universities, will require all city workers get inoculated.

The differing policy stances across the country creates additional hurdles for corporations with a large footprint.

3 Ascension Texas hospitals to pay $20.9M for alleged kickbacks

Kickback Definition

Three Ascension hospitals in Texas agreed to pay $20.9 million for allegedly paying multiple physician groups above fair market value for services, according to a recent news release from the HHS’ Office of Inspector General.

The three Texas hospitals are Ascension’s Dell Seton Medical Center in Austin, Ascension Seton Medical Center Austin and Ascension Seton Williamson in Roundrock. Ascension self-disclosed the conduct to the inspector general.

The hospitals allegedly violated the Civil Monetary Penalties Law, including provisions related to physician self-referrals and kickbacks in seven instances, according to the April 30 news release.

Some of the allegations the report outlined include Dell Seton paying an Austin physician practice above fair market value for on-call coverage; Ascension Seton Austin paying an Austin practice above fair market value for transplant on-call coverage and administrative services; and Ascension Seton Williamson paying a practice above fair market value to lease the practice’s employed registered nurses and surgical technologists who assisted in surgeries at the hospital. 

The release did not disclose the physician groups allegedly involved.

Access the full release here

A mounting wave of post-COVID CEO retirements


The Great Reset - YouTube

A recently retired health system CEO pointed us to a working paper from the National Bureau of Economic Research, which indicates that leading an organization through an industry downturn takes a year and a half off a CEO’s lifespan.

It’s not surprising, he said, that given the stress of the past year, we will face a big wave of retirements of tenured health system CEOs as their organizations exit the COVID crisis. Part of the turnover is generational, with many Baby Boomers nearing retirement age, and some having delayed their exits to mitigate disruption during the pandemic.

As they look toward the next few years and decide when to exit, many are also contemplating their legacies. One shared, “COVID was enormously challenging, but we are coming out of it with great pride, and a sense of accomplishment that we did things we never thought possible.

Do I want to leave on that note, or after three more years of cost cutting?” All agreed that a different skill set will be required for the next generation of leaders. The next-generation CEOs must build diverse teams capable of succeeding in a disruptive marketplace, and think differently about the role of the health system.

“I’m glad I’m retiring soon,” one executive noted. “I’m not sure I have the experience to face what’s coming. You won’t succeed by just being better at running the old playbook.” Compelling candidates exist in many systems, and assessing who performed best under the “stress test” of COVID should prove a helpful way to identify them.