Philanthropist backs antitrust lawsuits against large health systems

https://mailchi.mp/8e26a23da845/the-weekly-gist-june-17th-2022?e=d1e747d2d8

 Consumers and employers recently filed lawsuits against Hartford HealthCare, HCA Healthcare, and Advocate Aurora Health, accusing the health systems of using their market power to increase prices through anticompetitive contracting practices. New reporting from the Wall Street Journal finds that all three suits are receiving funding from billionaire John Arnold, through his charitable foundation Arnold Ventures, which has sponsored several efforts to reduce healthcare spending. While the health systems say that the claims are baseless, the law firm leading the suits, Fairmark Partners, says that it’s attempting to enforce antitrust laws through the courts.

The Gist: Amid the Biden administration’s increased scrutiny of health system anticompetitive behavior, state governments and philanthropic groups are also taking a more active role in challenging hospital deals and contracting practices. 

While these groups have targeted hospital prices because they’re a significant source of increased healthcare spending, these lawsuits do little to address the perverse underlying incentives that push hospitals to seek higher prices from commercial patients, to cross-subsidize what they view as insufficient pricing from public payers.

The Federal Trade Commission (FTC) wants more information on UnitedHealth’s $5.4B LHC deal

https://mailchi.mp/8e26a23da845/the-weekly-gist-june-17th-2022?e=d1e747d2d8

LHC, a postacute care behemoth with several hundred home health and hospice locations, as well as a dozen long-term care hospitals, would greatly expand Optum’s ability to provide home-based and long-term care. The FTC’s second request for information threatens to delay the deal, which was set to close in the latter half of this year. 

The Gist: The LHC deal is the second UnitedHealth Group (UHG) transaction that antitrust regulators have targeted recently. The Department of Justice filed a lawsuit earlier this year to block UHG’s acquisition of Change Healthcare, alleging that acquiring a direct competitor for claims solutions would reduce competition. 

The FTC has historically focused its efforts on horizontal integration, but the LHC scrutiny, in combination with a recent inquiry into pharmacy benefit managers, indicates its focus may be expanding to vertical integration.

Inpatient volumes poised to grow 2% over next 10 years

https://www.beckershospitalreview.com/patient-experience/inpatient-volumes-poised-to-grow-2-over-next-10-years.html

Adult inpatient volumes will recover to pre-pandemic numbers but grow only 2 percent over the next decade, a new report from Sg2 forecasts.

At the same time, adult inpatient days are expected to increase 8 percent and tertiary inpatient days are poised to increase 17 percent, fueled by an increase in chronic conditions

“While case mix varies by hospital, it is likely this combination of increased inpatient volume, patient complexity and length of stay may require healthcare organizations to rethink service line prioritization, service distribution and investment in care at-home initiatives,” Maddie McDowell, MD, senior principal and medical director of quality and strategy for Sg2, said in a June 7 news release for the report. 

Five other key takeaways from Sg2’s forecasts: 

1. Outpatient volumes are projected to return to pre-pandemic levels in 2022 and then grow 16 percent through 2032, three percentage points above estimated population growth.

2. Surgical volumes are projected to grow 25 percent at ambulatory surgery centers and 18 percent at hospital outpatient departments and physician offices over the next decade. 

3. The pandemic-driven decline in emergency department visits is expected to plateau with a decline in demand projected at -2 percent over the next 10 years.

4. Over the next five years, home care is expected to gain traction, with home evaluation and management visits seeing 19 percent growth, home hospice at 13 percent growth and home physical and occupational therapy at 10 percent growth.

5. Telehealth is expected to resume its climb and by 2032 account for 27 percent of all evaluation and management visits.

Eyeing a rebound in emergency department volumes

https://mailchi.mp/31b9e4f5100d/the-weekly-gist-june-03-2022?e=d1e747d2d8

This week we heard from three healthcare executives that they’ve seen a recent uptick in emergency department (ED) volumes. As we’ve discussed before, ED visits plummeted at the beginning of the pandemic, and were the slowest class of care volume to rebound. Over the past year, many systems reported that ED volume had remained persistently stuck at 10 to 15 percent lower than pre-COVID levels, leading us to question whether there had been a secular shift in patient demand, with consumers choosing alternative options like telemedicine or urgent care as a first stop for minor acute care needs. 
 
An uptick in ED volume would be welcome news to many hospital executives, as the emergency department is the source of half or more of inpatient admissions for many hospitals. But according to what we’re hearing, the recent rise in emergency department patient volume has not resulted in an expected bump in inpatient volume.

“We’ve dug into it, and it seems like the jump in ED visits is a function of COVID,” one leader shared. “There’s just so much COVID out there now…even though the disease is milder, there are still a lot of patients coming to the ED. But unlike last year, most aren’t sick enough to be admitted.”

And ED visits for other causes have not rebounded in the same way: “We’re hoping patients aren’t still staying away because they’re afraid of catching the virus.” We’ll be watching closely across the summer to see how volumes trend as the pandemic waxes and wanes across the country—we’d still bet that many consumers have changed their thinking on where and how they will seek care when the need arises.   

Steward Health Care sells its Medicare value-based care business to CareMax

https://mailchi.mp/31b9e4f5100d/the-weekly-gist-june-03-2022?e=d1e747d2d8

The for-profit, 39-hospital Steward system manages 171K lives across the Medicare Advantage, Medicare shared savings, and Medicare direct contracting programs. This deal will allow Miami-based CareMax, a publicly-traded, value-based care company with 42 senior centers (mostly in Florida) and 34K lives under management, to expand across Steward’s footprint, which includes Texas and Arizona, states with rapidly growing Medicare populations.

The Gist: This deal is an example of the rise of venture-funded MSO (medical services organization) services that aim to subsume and scale value-based care functions from hospitals and medical groups. Steward wagers it can find greater success in managing risk in partnership with CareMax, moving a greater share of its Medicare population into risk, and outsourcing care management and patient engagement functions.

Many health systems have spent substantial resources building out accountable care organizations and risk-based Medicare businesses over the last decade. While selling these assets to a company like CareMax may be one way to generate a return, particularly for those frustrated by lower-than-anticipated gains from moving to value-based care, it also requires relinquishing control of functions likely central to the future health system business model.

2022 forecast: Medicare Advantage is the industry’s hottest market. Don’t expect that to change next year

https://www.fiercehealthcare.com/payer/medicare-advantage-industry-s-hottest-market-2022-don-t-expect-to-change

The momentum behind Medicare Advantage is only growing as more baby boomers age into eligibility, and experts don’t expect the energy around the program to slow down any time soon.

recent analysis from the Kaiser Family Foundation found that a record 3,834 plans were available for the 2022 plan year in MA, which represents an 8% increase over 2021 and the largest number on the market in a decade.

Open enrollment for Medicare ended Dec. 7, and enrollment numbers will begin trickling out as the year winds down. In 2021, 26 million Medicare beneficiaries, or about 42% of those eligible for the program, were enrolled in an MA plan.

As Medicare Advantage enrollment continues to grow, insurers seem to be responding by offering more plans and choices to the people on Medicare,” the KFF analysts said.

Part of the appeal of MA to an increasingly savvy consumer base is that it offers additional benefits beyond those afforded people in traditional Medicare, such as vision and dental coverage as well as supports for members’ social needs.

Sachin Jain, M.D., CEO of SCAN Health Plan, told Fierce Healthcare that people are increasingly shopping around for plans, building greater awareness of MA as a whole as well as of the different types of benefits beneficiaries could select.

“We’re seeing that consumers are more sophisticated today than they were a decade ago,” he said. “I think people are realizing that fee-for-service Medicare doesn’t cover a lot of things.”

The KFF report shows that more than 90% of non-group MA plans offer some kind of vision, hearing, telehealth or dental benefits and that most (89%) include prescription drug coverage as well. 

Elena McFann, president of Medicare at Anthem, told Fierce Healthcare that throughout the open enrollment period, plans built with benefits that target the social determinants of health and promote whole-person care resonated strongly with members.

Anthem, for example, offers plans that include a slate of essential extra benefits that members can choose from based on what they need the most. Options include grocery cards, transportation benefits and in-home supports.

She said that the grocery benefits and flex cards that allow members to purchase additional hearing, vision and dental coverage have proven particularly popular in this enrollment season.

“What those all point to is the concept of flexibility and helping them lead healthier lives where they really need the help where they are in their journey,” McFann said.

As these benefits prove popular, an increasing number of plans are offering them in tandem. The Better Medicare Alliance released a survey late last month that found the number of plans including supplemental benefits grew by 43% for the 2022 plan year.

The Centers for Medicare & Medicaid Services (CMS) has issued additional flexibilities that allow MA plans to address members’ social determinants of health as the program’s enrollment continues to swell.

Jain said SCAN has seen similar interest in supplemental benefits, and that flexibility afforded to MA plans to adapt to seniors’ needs and expectations is a critical factor in the program’s success.

“When you’re in the business of serving seniors, a lot of what you have to do is anticipate needs that those seniors may not anticipate that they have, give them things they didn’t know they needed,” he said.

In addition, insurers are eyeing non-traditional partners to launch new plans. Anthem teamed up this year with Kroger on co-branded MA plans, and in late 2020 MA startup Clover Health similarly joined forces with Walmart.

McFann said that beneficiaries value plans like these that unite brands they trust and recognize and that partners like Kroger enable insurers to more effectively meet seniors where they are. In its co-branded plans, members can access benefits like Healthy Grocery Cards and stipends to purchase over-the-counter health items.

She said that there has been significant “excitement” around those plans, which are available in four states, during the current enrollment period.

“It gives the Medicare eligibles a sense of familiarity and a sense of comfort, again meeting them on their terms,” McFann said.

However, while many established insurers have set ambitious growth targets in this market and new startups enter the space regularly, they still have plenty of work to do if they want to catch up with the market’s dominant forces: UnitedHealthcare, Humana and Blues plans.

UHC and Humana together account for 45% of the MA market in 2021, according to the KFF analysis. Humana offers plans in 85% of counties and UHC in 74% for 2022.

That means, 89% of Medicare eligibles have access to a Humana plan and 90% have access to a UHC MA plan if they choose, according to the report.

Competition is continuing to grow, though, and both McFann and Jain said they don’t feel the momentum around MA slowing down anytime soon. 

“It is those extras and social drivers of health solutions that really have caught on with the Medicare-eligible segment and we expect to see that expand even further,” McFann said.

Understanding the impact of the growing dominance of Medicare Advantage (MA)

https://mailchi.mp/d73a73774303/the-weekly-gist-may-27-2022?e=d1e747d2d8

recent piece in JAMA argues that policymakers need to be proactive in addressing how the rise of MA enrollment will affect the Medicare program as a whole, including its role in national quality and utilization measurement, rural healthcare access, and graduate medical education. The ability to monitor care delivered to the traditional, fee-for-service Medicare beneficiary population has been critical for assessing cost growth and shifting care patterns, distributing subsidies, and basing MA payments—all things that will become increasingly difficult as traditional Medicare becomes both smaller and less representative of the entire Medicare population.  

The Gist: Traditional Medicare has been a springboard for national healthcare policy goals and industry-wide innovations. However, consumers’ preference for, and policy shifts supporting, the growth of Medicare Advantage are proving to be unstoppable.

Providers must prepare for a future in which a shrinking minority of beneficiaries are enrolled in traditional Medicare. If current trends continue, Medicare policymakers must bolster ongoing support for medical education, and build a higher standard of transparency and quality reporting for MA carriers and providers to maintain the sustainability of one of the country’s greatest healthcare data resources.

The Trend of Health System Mergers Continues

While healthcare is delivered locally, the business of healthcare
is regional, and the regions are only getting bigger.
Hospital
and health system mergers alike have continued to shift from
local to regional, and the recently announced merger between Advocate Aurora
Health and Atrium Health clearly highlights that the regions are only getting
bigger.


Advocate Aurora, with a presence in Illinois and Wisconsin, and Atrium Health,
with a presence in North Carolina, South Carolina, Georgia, and Alabama, will
combine to create a $27 billion health system that will span six states and make it
one of the leading healthcare delivery systems in the country. The combined
organization, which will transition to a new brand, Advocate Health, will operate
67 hospitals and over 1,000 sites of care, employ nearly 150,000 teammates, and
serve 5.5 million patients. Together, Advocate Health will become the 6th largest
system in the country behind Kaiser Permanente, HCA Healthcare, CommonSpirit
Health, Ascension, and Providence.


We have seen a number of large health systems come together recently,
including Intermountain Healthcare + SCL Health to create a $15 billion revenue
system, Spectrum Health + Beaumont ($14 billion), NorthShore University Health
System + Edward-Elmhurst Healthcare
($5 billion), LifePoint Health + Kindred
Healthcare
($14 billion), and Jefferson Health + Einstein Healthcare Network ($8
billion).


The exact reasoning for each merger differs slightly, but one of the common
threads across all is scale.
But not scale in the traditional M&A sense. Rather,
scale in covered lives; scale in physician infrastructure and alignment; scale in
clinical and operational capabilities; scale in technology, innovation, and
partnerships with non-traditional players; scale for capital access; and scale for
insurance risk to compete in a value-based world. It is no longer the strong
acquiring the weak. Rather, strong players are coming together to gain scale to
face the headwinds in a unified manner.

For Advocate Aurora and Atrium, coming together is about leveraging their combined clinical excellence,
advancing data analytics capabilities and digital consumer infrastructure, improving affordability, driving health equity, creating a next-generation workforce, research, and environmental sustainability. Together, they have pledged $2 billion to disrupt the root causes of health inequities across underserved communities and create more than 20,000 new jobs.


Both Advocate Aurora and Atrium are no strangers to mergers. Advocate and Aurora came together in 2018, and prior to that Advocate was intending to merge with NorthShore before being blocked due to anti-trust. Atrium has grown over the years, merging with systems such as Navicent Health in Georgia in 2018, Wake Forest Baptist Health in North Carolina 2020, and Floyd Health System in Georgia in 2021. In the newly proposed merger, Advocate Aurora and Atrium are coming together via a joint operating arrangement where each entity will be responsible for their own liabilities and maintain ownership of their respective assets but operate together under the new parent entity and board. This may allow the combined entity more flexibility in local decision-making. The current CEOs, Jim Skogsbergh and Eugene Woods will serve as co-CEOs for the first 18 months, at which point Skogsbergh will retire, and Woods will take over as the sole CEO.


Mergers can come in various shapes and structures, but the driving forces behind consolidation are not unique. With the need to compete in value-based care, adequately manage risk, gain scale across covered lives, physicians, and points of access, successfully deliver affordable high-quality care, and the need to deal with the vertical and horizontal consolidation of the large-scale payers, the markets that health systems operate in must be large enough to be effective and relevant. We fully expect to see more of these larger scale health system mergers in the near term.


The physical delivery of healthcare is local, but, again, the business of healthcare is not; it is regional, and the regions are only getting bigger.

6 hospital, health system deals called off this year

Six health system and hospital deals have been canceled so far this year, whether it be a scrapped merger or acquisition or the unwinding of a partnership.

1. Proposed Dartmouth Health, GraniteOne Health merger canceled
Lebanon, N.H.-based Dartmouth Health and Manchester, N.H.-based GraniteOne Health are canceling their proposed merger after the state Attorney General’s Office said the move would violate the New Hampshire constitution, according to VTDigger.

2. Hackensack Meridian, Englewood withdraw merger plans
Edison, N.J.-based Hackensack Meridian Health and Englewood (N.J.) Health have dropped their merger plans, a spokesperson for Hackensack Meridian told Becker’s.

3. Canyon Atlantic ends bid to buy 2 Pennsylvania hospitals
The prospective buyer of two shuttered Pennsylvania hospitals has filed a motion to end litigation to purchase the facilities, The Daily Local reported March 8.

4. Lifespan, Care New England withdraw merger application
The boards of Lifespan and Care New England — both based in Providence, R.I. — have decided to withdraw their merger application after the Federal Trade Commission made an announcement Feb. 17 it would file suit to block the deal.

5. Hoag, Providence to split: 5 things to know
Hoag Memorial Hospital Presbyterian in Newport Beach, Calif., and Providence, a Catholic health system based in Renton, Wash., said they would end their affiliation in January.

6. Trinity Health won’t buy Tower Health hospital
Trinity Health Mid-Atlantic has abandoned its plan to buy Tower Health’s Chestnut Hill Hospital in Philadelphia, according to the Philadelphia Inquirer.

Charlotte, NC-based Atrium Health and Illinois- and Wisconsin-based Advocate Aurora Health announce plans to merge

The combined health system will become the sixth largest nationwide, with $27B in revenue and 67 hospitals across six Midwest and Southeast states. The system will be based in Charlotte, and known as Advocate Health, though Atrium will continue to use its name in its markets.

Atrium CEO Gene Woods is slated to ultimately lead the combined entity, after an 18-month co-CEO arrangement with Advocate Aurora CEO Jim Skogsbergh. While the cross-market merger is unlikely to create antitrust concerns about increased pricing leverage, the Biden administration has been making noises about applying stricter scrutiny to the impact of health system consolidation on labor market competition.  

The Gist: Earlier this year, Utah-based Intermountain Healthcare and Colorado-based SCL Health combined to create a 33-hospital, $14B health system, which became the 11th largest nationwide. While these mega-mergers of regional systems can realize cost savings from back-office synergies, there is a significant opportunity to create larger “platforms” of care to win consumer loyalty, deploy digital capabilities, attract talent, and become more desirable partners for nontraditional players like Amazon, Walmart, and One Medical.

It will be critical to watch whether the governance and cultural challenges that often hinder health system mergers come into play here. Advocate Aurora has had two prospective mergers fall apart in recent years, the first with Chicago-based NorthShore University HealthSystem, and the second with Michigan-based Beaumont Health (who subsequently finalized a merger with Spectrum Health earlier this year). 

But the combination with Atrium is structured as a joint operating agreement, essentially creating a new superstructure atop the two legacy systems. This may allow the combined entity more flexibility in local decision-making, but the ultimate question will be how the combined entity will create value for consumers. Time will tell.