Medical group deals face growing antitrust scrutiny as price worries rise

https://www.modernhealthcare.com/legal/medical-group-deals-face-growing-antitrust-scrutiny-price-worries-rise?utm_source=modern-healthcare-daily-finance&utm_medium=email&utm_campaign=20190708&utm_content=article1-readmore

Recent actions by antitrust enforcers and courts to block or regulate purchases of physician practices by hospitals and insurers may signal increasing scrutiny for such deals as policymakers intensify their focus on boosting competition to reduce healthcare prices.

Last month, the Federal Trade Commission announced a settlement with UnitedHealth Group and DaVita unwinding United’s acquisition of DaVita Medical Group’s Las Vegas operations.

At the same time, Colorado Attorney General Phil Weiser separately reached a deal imposing conditions on UnitedHealth’s acquisition of DaVita’s physician groups in Colorado Springs.

Also in June, the 8th U.S. Circuit Court of Appeals upheld a District Court ruling blocking Sanford Health’s proposed 2015 acquisition of the multispecialty Mid Dakota Clinic in the Bismarck, N.D., area. That antitrust case originally was filed by the FTC and North Dakota Attorney General Wayne Stenehjem in 2017.

And in May, Washington Attorney General Bob Ferguson settled an antitrust lawsuit with CHI Franciscan setting conditions on the health system’s 2016 affiliation with the Doctors Clinic, a multispecialty group, and its purchase of WestSound Orthopaedics, both in Kitsap County. CHI Franciscan will pay up to $2.5 million, distributed to other healthcare organizations to increase access to care.

The cases represent the most significant antitrust developments involving physician acquisitions since federal and state antitrust enforcers won9th U.S. Circuit Court of Appeals ruling in 2015 upholding a lower-court decision forcing Idaho’s St. Luke’s Health System to unwind its 2012 acquisition of Saltzer Medical Group.

The agreements with UnitedHealth in Nevada and Colorado show a new willingness by federal and state antitrust enforcers to use seldom-cited vertical merger theory. Under that theory, acquisitions of physician groups by insurers or hospitals may foreclose competition by making it more difficult or costly for rivals to obtain physician services.

“I am concerned about the state of consolidation,” Weiser said in an interview. “Healthcare costs in Colorado have risen at an alarming rate. Protecting competition needs to be a central part of our strategy to provide affordable and quality healthcare.”

These recent antitrust actions come as concerns mount over the growing consolidation of hospitals and physician practices and the impact on prices and total health spending. Sixty-five percent of metropolitan statistical areas are highly concentrated for specialist physicians, while 39% are highly concentrated for primary-care doctors, according to Martin Gaynor, a health economist at Carnegie Mellon University.

Hospital acquisitions of physician practices have led to higher prices and health spending, researchers have found. Average outpatient physician prices in 2014 ranged from 35% to 63% higher, depending on physician specialty, in highly concentrated California markets compared with less-concentrated markets, according to a 2018 study by researchers at the University of California at Berkeley. The link between physician market concentration and prices is similar across the country, experts say.

Market consolidation in California

That’s why some elected officials and antitrust attorneys say it’s past time to step up oversight of physician practice acquisitions by hospitals, insurers and private-equity firms. These deals traditionally have received less scrutiny than hospital and insurance mergers, partly because they are smaller transactions that federal and state antitrust enforcement agencies may not have known about beforehand.

The recent cases suggest state attorneys general may play a growing role in policing physician acquisition deals by hospitals and insurers, given that they are in a better position than the feds to find out about brewing local deals. Most of the growth in physician group size has come from piecemeal acquisitions of small group practices, a Health Affairs studyfound last year.

Washington and at least two other states have passed laws requiring healthcare providers to give state officials advance notice before finalizing a merger or acquisition. That gives state AGs another advantage over the FTC, which under federal rules only must receive advance notice of deals exceeding $78.2 million in value. Few physician acquisitions meet that threshold.

Others worry, however, that the absence of clear federal guidelines for challenging vertical mergers between hospitals and physicians has made the FTC and the courts overly cautious, and that it now may be too late because many physician markets are already highly concentrated. In March, the FTC and the Justice Department said they were working on new vertical merger guidelines, which were last updated in 1984.

“The horse may be out of the barn in a number of markets where there have been very large acquisitions of physician practices,” said Tim Greaney, a visiting professor at the University of California Hastings College of Law. “It’s not clear what you can do about that.”

But hospitals, insurers and other physician aggregators argue that making it harder to buy physician groups would hamper their ability to establish cost-saving, high-quality delivery models emphasizing care coordination.

That’s how Sanford Bismarck President Dr. Michael LeBeau responded to last month’s 8th Circuit ruling against his organization’s merger with Mid Dakota Clinic. “Sanford continues to believe that combining with Mid Dakota Clinic would lead to the enhanced provision of and access to healthcare for patients in central and western North Dakota,” he said in a written statement.

Researchers have raised doubts, however, about whether hospital acquisitions of medical practices have truly achieved efficiencies and cost savings, and whether any cost savings have been passed on to payers and patients.

Going forward, hospitals, insurers and other healthcare organizations need to prepare themselves for an era of closer state and federal examination of physician acquisition deals, antitrust experts agree. That also may apply to private-equity firms, which have accelerated their investment in physician groups and have sought to build market power in particular specialties.

The FTC did not respond to requests for an interview.

Healthcare organizations pursuing physician deals must be ready to cite circumstances where competition continues to thrive following a merger. But that may not be easy, conceded Lisa Gingerich, an antitrust attorney at Michael Best & Friedrich.

“The challenge now is there has been so much consolidation that it’s harder and harder to find those circumstances,” she said.

Scaling back integration in Nevada and Colorado

The UnitedHealth Group-DaVita case may present the clearest warning shot to organizations contemplating large physician acquisitions, attracting both federal and state attention.

The FTC argued that the proposed acquisition by United’s OptumCare of DaVita’s HealthCare Partners of Nevada would result in a near-monopoly controlling more than 80% of the market for services delivered by managed-care provider organizations to Medicare Advantage plans.

The merger would be both horizontal—combining OptumCare’s and DaVita’s competing physician groups—and vertical, as it would combine a Medicare Advantage insurer and a physician group. That, the FTC said, would increase costs and decrease competition on quality, services and amenities by forcing rival Medicare Advantage plans to pay more for physician services.

Under the FTC settlement, UnitedHealth agreed to sell DaVita’s Nevada medical group to Intermountain Healthcare, which offers a Medicare Advantage product in Las Vegas through its SelectHealth insurance arm.

Colorado’s terms

Meanwhile, under a separate consent judgment with Attorney General Phil Weiser in Colorado, UnitedHealth will lift its exclusive contract with Centura Health for at least 31/2 years, expanding the provider network available to other Medicare Advantage plans. In addition, DaVita Medical Group’s agreement with Humana, United’s main competitor in Colorado Springs, will be extended through at least 2020.

All four FTC commissioners approved the enforcement action in Nevada. But the two Republican-appointed commissioners and the two Democratic-appointed commissioners disagreed on whether to ask a judge to block United’s acquisition of DaVita’s medical group in Colorado, a purely vertical merger. The 2-2 split meant no federal action was taken.

The Democratic commissioners. Rebecca Kelly Slaughter and Rohit Chopra, said the merger would harm competition and consumers, and welcomed the Colorado attorney general’s remedial conditions. “We hope all state attorneys general actively enforce the antitrust laws to protect their residents from harmful mergers and anticompetitive practices,” they wrote.

But the Republican commissioners, Noah Joshua Phillips and Christine Wilson, opposed action in Colorado on the grounds that the law on vertical mergers is “relatively underdeveloped” and that there was mixed evidence on whether the Colorado merger was pro- or anti-competitive.

Weiser said his office had to intervene to protect the ability of Humana and other Medicare Advantage insurers to compete with United by having access to physicians and hospitals. “State attorneys general will be a critical part of protecting competition, both because we’re close to our citizens and because of a lack of action by the federal government,” he said.

To other observers, the Nevada and Colorado agreements were notable because they invoked seldom-used vertical merger theory, which the FTC has been reluctant to use because it generally saw vertical mergers as helping reduce costs and increase competition.

“This shows that in the proper case, the FTC won’t hesitate to pursue vertical theory to reverse the course of” a physician group acquisition, said Douglas Ross, a veteran antitrust attorney at Davis Wright Tremaine in Seattle.

A muddier outcome in Washington state

Washington Attorney General Bob Ferguson’s settlement of his antitrust case against CHI Franciscan was less definitive than the outcomes in the other recent cases.

He had accused the hospital system of engineering the purchase of WestSound Orthopaedics and the affiliation with the Doctors Clinic to capture a large share of orthopedists and other physicians in Kitsap County, fix prices at a higher level, and shift more services to its Harrison Medical Center in Bremerton. But the settlement left in place CHI Franciscan’s purchase of WestSound and its tight professional services agreement with the Doctors Clinic, while placing relatively modest conditions on joint contracting by the hospital system and the clinic.

Ferguson’s bargaining position was weakened by a federal District Court decision in March granting CHI Franciscan’s motion to summarily dismiss his allegation that the acquisition of WestSound reduced competition and violated antitrust law. That may be the first time since the 1990s that a defendant won summary judgment on a horizontal merger claim in an antitrust case, one expert said.

In addition, the judge required the parties to go to trial on whether the transaction between CHI Franciscan and the Doctors Clinic was a true merger, as the two organizations claimed, or whether they remained two competing provider groups. If Ferguson lost on that issue, his antitrust case would be dead because a merged entity cannot be cited for price-fixing.

The attorney general settled that claim with CHI Franciscan and the clinic by requiring a $2.5 million payment to other healthcare providers and expanding the types of value-based contracts they could participate in. But the two sides differed sharply in their characterization of the settlement.

“This was a matter where we identified anticompetitive effects and ongoing harm to consumers and saw a need to act quickly,” said Jonathan Mark, senior assistant attorney general in Washington. “We believe the remedies in the consent decree are sufficient to address the anticompetitive effects we alleged.”

For its part, CHI Franciscan said there never was any court judgment or admission that it engaged in anticompetitive conduct, noting that the settlement preserved its deals with WestSound and the Doctors Clinic. It was particularly important for hospitals all over the country that Ferguson failed to establish that a professional services agreement with a physician group constituted price-fixing, an attorney for the hospital system said.

“The AG lost this lawsuit and is now twisting the facts to match his baseless allegations,” said Cary Evans, the hospital system’s vice president for government affairs. “Had we not affiliated, the closing of the Doctors Clinic and WestSound would have resulted in less choice, decreased access, and high costs for residents.”

A classic example in North Dakota

The outcome in the North Dakota case was more conventional than the others.

There, the 8th U.S. Circuit Court of Appeals affirmed the District Court’s preliminary injunction blocking Sanford Health’s acquisition of Mid Dakota Clinic as a horizontal merger.

That was fairly predictable because of the huge physician market share Sanford—whose physician group competed with the clinic—would capture if it completed the deal, experts said.

Sanford would control 99.8% of general surgeon services, 98.6% of pediatric services, 85.7% of adult primary-care services, and 84.6% of OB-GYN services in the Bismarck-Mandan market, the 8th Circuit panel found.

The appeals court also upheld the lower court’s finding that a competitor, Catholic Health Initiatives’ St. Alexius Health, would not be able to enter the market quickly after the merger, at least partly because it faced difficulty recruiting physicians in the Bismarck-Mandan area.

“That case really seemed like a no-brainer to me,” said Tim Greaney, a visiting professor at the University of California Hastings College of Law.

A key takeaway was the 8th Circuit’s rejection of Sanford’s “powerful buyer” defense. Sanford had argued that Blue Cross and Blue Shield of North Dakota, the state’s dominant insurer, had enough market power to resist any price increases sought by the newly merged entity.

But analysis of claims data and testimony by a Blues plan representative demonstrated that the merged provider would have the market power to force the insurer to raise prices or leave the market, the 8th Circuit panel wrote.

“If antitrust authorities see someone getting more bargaining power and being able to charge higher prices, that’s something they’ll worry about, even if the (payer) has significant bargaining power as well,” said Debbie Feinstein, a former top Federal Trade Commission official who heads Arnold & Porter’s global antitrust group.

Sanford didn’t say whether it planned to abandon the deal.

 

 

 

Private equity sees ripe opportunity in healthcare this year

https://www.healthcaredive.com/news/private-equity-sees-ripe-opportunity-in-healthcare-this-year/548831/

Private equity investment in healthcare has ballooned over the past decade, and experts say 2019 is poised to be another robust year, with potential ripe targets in orthopaedics and mental health and addiction treatment.

Private equity deals in healthcare in the U.S. more than doubled over the past 10 years, according to financial data firm Pitchbook. In 2008 there were 325 deals (including buyers and sellers) and in 2018 that number swelled to 788, a record number of deals representing more than $100 billion in total value.

One of the largest recent deals was private-equity firm KKR’s nearly $10 billion purchase of Envision Healthcare last year, according to Preqin. Envision provides physician services to hospitals and operates hundreds of surgery centers across the country. Another big deal was the public-to-private takeover of athenahealth by Evergreen Coast Capital and Veritas Capital for $5.7 billion in 2018.

“It looks as though 2018 was a record year for the industry, and overall the trend in deal-making has been one of strong growth — this would suggest that 2019 could be another record year unless we see a change in the underlying conditions,” Preqin spokesman William Clarke told Healthcare Dive.

The Envision deal was among the biggest leveraged buyouts ever at more than $4 billion in debt, according to Pitchbook. The practice is criticized in several respects, including that many are financed by loading a company up with mounds of debt.​

Globally, healthcare accounts for about 13% of all private equity buy-out deals, according Preqin, an industry research firm.

The deals come amid a frenzy of consolidation, both vertical and horizontal, in the healthcare industry as hospitals and insurers try to scale up to insulate themselves from a number of headwinds and disruptors such as Amazon and Apple.

M&A began to accelerate after the Affordable Care Act, as many hospitals aligned themselves with physician groups, looking for greater reach into a market. But private equity firms “provide an attractive alternative to the traditional hospital-physician alignment models,” according to a recent report from the Investment Funds team at the law firm BakerHostetler.

Private equity investors are increasingly seeking deals in areas that are highly fragmented or areas that still operate in silos and are undercapitalized, Ben Isgur, health research institute leader at PwC, told Healthcare Dive. Fragmented areas provide an opportunity for private equity firms to come in and align a number of practices on the same platform, which increases size and scale to improve leverage in negotiations with payers.

Potential highly fragmented targets include orthopaedic practices, which are likely to see a number of private equity investments over the next few years, as well as gastroenterology and urology, according to BakerHostetler.

For example, “Only 30 orthopaedic practices in the country have more than 20 physicians in a single practice,” the report notes. Private equity firms’ attraction to these practices may have increased last year after CMS changed the rules to allow total knee replacements to be performed in outpatient settings. Previously, the agency only allowed total knee replacements to be performed on Medicare beneficiaries in an inpatient-only setting.

Orthopaedics, gastroenterology and urology also are ripe with lucrative ancillary services such as surgery and imaging centers and have high use thanks to an aging population, the report notes. There are more than 5,700 ambulatory surgery centers across the U.S. that perform more than 20 million surgeries every year, according to the Ambulatory Surgery Center Association. Medicare alone spent $4.3 billion on ASC services in 2016, according to the Medicare Payment Advisory Commission.

Investing in healthcare is also enticing for private equity investors as they seek to balance their investments. The healthcare sector is likely more insulated from a recession due to the aging population and demand for services, along with the projected increase in healthcare spending, according to a research report from PwC.

Another area experts are keeping an eye on for potential deals is in mental health, Isgur said.

“There is a huge need for these services and many of the providers are in small practices. The opportunity is to consolidate and capitalize and then build shared services around technology and back-office functions to create more value,” Isgur said.

Private equity investment in healthcare is not new; but like politics, healthcare is still very local, he said.

By 2008, private equity was already active in a number of areas including long-term care facilities, hospice, ambulatory surgery centers, acute care hospitals and clinical labs, according to a previous Health Affairs report.

Buying to sell

Private equity by its nature comes with controversy, with a business model based on buying for the purpose of selling for a one-time windfall profit for wealthy investors and for taking on big debt to finance the deals.

That leaves workers and patients last, critics say, and the sector’s forays into nursing homes brought those fears to the surface.

For years, unions have been critical of private equity firms in general. The American Medical Association, the nation’s prominent doctors group, is probing private equity investments into medical practices and its influence on healthcare. The report will likely be available in June, according to an AMA spokesperson.

The health of nursing home patients was put in jeopardy at facilities run by ManorCare, one of the largest nursing home operators in the country, according to a Washington Post investigation. ManorCare struggled financially when it was helmed by private-equity firm Carlyle Group and ended up filing for bankruptcy last year, nearly a decade after it was acquired by Carlyle Group.

A spate of nursing home acquisitions by private equity firms led to concerns about quality of care issues. Private equity bought up 1,900 nursing homes over the course of a decade, from 1998 to 2008, according to a GAO report from the time.

Isgur noted the controversy, pointing to the proliferation of freestanding emergency rooms in some states.

Some freestanding ERs are backed by private equity firms and may be closer and more convenient for consumers, but that convenience comes at a hefty cost. One insurer, UnitedHealth Group, has warned about that, too.

 

 

 

 

New Jersey health systems complete merger

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/new-jersey-health-systems-complete-merger.html

Image result for virtua health headquarters

Marlton, N.J.-based Virtua Health completed its acquisition of Camden, N.J.-based Lourdes Health System July 1, creating an organization with 280 care locations and more than 13,000 employees.

Virtua said the transaction will reshape healthcare in south New Jersey by combining the care Virtua provides with the specialized care Lourdes provides — particularly in cardiovascular surgery, complex neurosurgery and transplant services areas.

“The value we place on the patient experience and performance improvement — coupled with our commitment to quality and community involvement — will make a tremendous impact on the health and well-being of the patients we serve,” Dennis W. Pullin, president and CEO of Virtua, said in a news release.

The acquisition has been a monthslong process. Talks started when Carbondale, Pa.-based Maxis Health — the parent company of Lourdes and a subsidiary of Livonia, Mich.-based Trinity Health—  entered into a nonbinding agreement March 8, 2018, to sell Lourdes to Virtua. The boards of Maxis and Virtua signed a definitive agreement to proceed with the deal in June 2018. Last month — after regulatory review from New Jersey and federal agencies — New Jersey Superior Court Judge Paula Dow approved the transaction, according to Virtua.

Through the acquisition, Virtua has taken ownership of Our Lady of Lourdes Medical Center in Camden, Lourdes Medical Center of Burlington County, Lourdes Medical Associates and Lourdes Cardiology Services.

The combined organization has more than 100 buildings and 2,850 clinicians.

 

 

Has Community Health Systems Finally Bottomed Out?

https://www.healthleadersmedia.com/strategy/has-community-health-systems-finally-bottomed-out

After selling more than 80 hospitals in three years, leaders of the large for-profit hospital operator are suggesting the worst may be behind them.


KEY TAKEAWAYS

The troubled operator of rural hospitals is focusing now on growth-oriented markets.

The latest round of questions and accusations adds to the tumultuous past five years.

Some analysts say CHS isn’t poised for where the market is headed: outpatient services and value-based care.

Times have been tough for Community Health Systems Chairman and CEO Wayne T. Smith, who is voicing an optimistic message this year as the hospital operator continues to navigate choppy waters.

Smith and fellow CHS senior executives told investors this month that the company expects to complete its massive and long-running divestiture plan by the end of 2019, having already shed 81 hospitals from its portfolio in the three preceding years. The company, based in Franklin, Tennessee, operated 106 hospitals across 18 states as of the end of the first quarter.

While the divestitures give CHS cash to pay down its debt, they are also part of a strategic effort to align CHS operations with the geographic areas where the company sees the greatest growth potential, Smith said.


“This has allowed the company to shift more of our resources to more sustainable markets, ones with better population growth, better economic growth, and lower unemployment, which provides us an opportunity for sustainable growth,” Smith said during the first-quarter earnings call this month.

“As we complete additional divestitures, we expect our same-store metrics to further improve,” he added. “This will lead to not only additional debt reduction but also better cash flow performance and lower leverage ratios.”

Executive Vice President and Chief Financial Officer Thomas J. Aaron echoed that message at the Goldman Sachs Leveraged Finance Conference this month. While CHS was truly a rural hospital company 15 years ago, Aaron said the post-selloff organization is investing strategically in markets where it anticipates growth.

“We’d rather compete in a growing pie than have more market share in a pie that’s shrinking,” Aaron said.

“We feel like we’re well-positioned,” he said.

But the positive forecast is a bit of a tough sell, especially when you consider how bad the past five years have been:

  • Questionable HMA Acquisition: In 2014, CHS completed its $7.6 billion acquisition of Florida-based hospital operator Health Management Associates, Inc. (HMA), in what is widely viewed in hindsight as a bad move. In addition to a $260 million settlement with the U.S. Department of Justice, a subsidiary of HMA pleaded guilty to criminal fraud last year for alleged misconduct that predated the acquisition by CHS—allegations that Smith knew about before the deal was final. “We were aware of the issues they had,” Aaron said this month. “We went ahead and closed on the transaction, confident that we could get the cost synergy, and we felt like they had some great assets.”
  • Major Stock Market Woes: In 2015, the price of CHS shares peaked at nearly $53 apiece, according to New York Stock Exchange data. But by the end of that year, shares had lost more than half of that value. Share prices continued to slide the following year and haven’t made a meaningful recovery since. They have been trading below $5 so far this year.
  • Lackluster Quorum Spin-off: In 2016, CHS spun off 38 hospitals to form Quorum Health Corporation. The spin-off severely underperformed expectations, and investors began asking questions. Quorum formally responded to those investors with a letter that acknowledged several reasons to question the “operational competence” of CHS leaders who backed the spin-off. A related dispute between Quorum and CHS ended in arbitration earlier this year.
  • Ongoing Hospital Divestitures: In 2017, CHS sold 30 hospitals, followed by another 13 hospitals in 2018, Aaron said. So far this year, CHS has announced the sale of at least seven more: one in Tennessee, two in Florida, and four in South Carolina. A spokesperson for CHS did not respond to HealthLeaders‘ request for additional information and comment.
  • Recurring Bankruptcy Questions: Industry analysts have wondered for years whether bankruptcy may be on the horizon for CHS. Those questions were renewed again this month when Ryan Heslop, a portfolio manager for Firefly Value Partners LP, took a short position against the company and said a CHS bankruptcy is likely in the next few years, as Reuters reported. About that same time, Smith invested more than $3 million in CHS stock, according to two Securities and Exchange Commission filings. (Smith, 73, who has been CEO for 22 years, now directly and indirectly controls about 2.8% of the company, as the Nashville Post reported.)
  • Call for CEO’s Ouster: With the release of a report this month titled “Other People’s Money,” the National Nurses United (NNU) group accused Smith of squandering CHS’ assets and called for him to be removed. “The fact that Smith remains at CHS’ helm, given a series of fatal calculations that set the company on a downward spiral, is a real wonder,” the NNU report states. Shareholders, however, voted overwhelmingly in favor of keeping Smith as a director and significantly increasing his incentive plan compensation, according to SEC filings.

Despite the light-at-the-end-of-the-tunnel rhetoric coming from CHS executives, there’s still real concern the company could come undone. That’s because CHS’ problems run deeper than its balance sheets, says Mark Cherry, MFA, a principal analyst at Market Access Insights for Decision Resources Group.

“Given the national trend toward provider consolidation, CHS might not remain intact even if it were financially healthy,” Cherry tells HealthLeaders in an email, adding that CHS seems to be unsuited for the industry’s ongoing shifts toward value-based payments and outpatient care delivery.

“There are only a few markets, like Scranton, Knoxville, and Northwest Arkansas, where CHS has enough presence to act as a stand-alone health system that can influence physician and patient behaviors,” Cherry says.

The structural problem is rooted in a bad strategic bet a decade ago, Cherry says.

“As markets and regions were coalescing around large integrated delivery networks focused on value-based care, CHS continued to invest in suburban facilities and demand high fee-for-service reimbursement,” Cherry says.

“Whereas operating a couple of suburban hospitals within a larger market once gave CHS access to better insured patients and leverage against payers who wanted to offer broad provider networks, the post-ACA landscape does not have as wide a uninsured discrepancy between urban and suburban areas,” he adds, “and payers are shifting to high-performance narrow networks, allowing them to cut CHS facilities out entirely if they are unwilling to compromise.

 

 

 

Healthcare mergers and acquisitions require sensible data sharing strategies, and a solid analytics framework

https://www.healthcarefinancenews.com/news/healthcare-mergers-and-acquisitions-require-sensible-data-sharing-strategies-and-solid?mkt_tok=eyJpIjoiTmpJME5qVTNOVEU1TXpRdyIsInQiOiJDdUIxQ1NKdng1b0FkQ1wvQlwvNFBTc1JIbmVwYUZOeUhCZ3VlNlZzdmhNbkhBQlhnXC9JeTI4c2NDeE80REk0YWJ1Nk1jSzl4QjFDbjFMTkxKdmVCblY1RUlSYTIwUmlhSEJ6VXpkOUZZdytUWDhaV1poaEljcVh5ZFdEOUdVZlQzZyJ9

While it’s important for disparate EHRs to communicate with one another, organizations need a better handle on analytics and dashboards.

Mergers and acquisitions in healthcare have been going along at a pretty good clip for a number of years now. The volume of deals remains high, and with larger entities primed to scoop up some of their smaller, struggling peers, the trend seems poised to continue.

There’s an issue that consolidating organizations consistently run into, however: data sharing.

Specifically, many organizations that have initiated merger activity fail to consider that not only will the consolidation necessitate integrating multiple electronic health records, but other ancillary systems as well.

These organizations need to produce the analytics that are required to manage what’s essentially a new business, and that starts with the development of some sort of analytics blueprint early on in the merger activity.

As two or more forces join into one, it’s important to have the analytics blueprint in place so leaderships knows which dashboards are going to be needed for success.

“There used to be a trend where everyone was converted onto the same EHR platform,” said John Walton, solutions architect for IT consulting company CTG. “I guess the thought is that if everyone is converted, the problem will go away. Now … they end up in a situation where they can’t produce the kind of dashboards that are needed.”

THE FRAMEWORK

A key component of an effective analytics blueprint is a conceptual data model — basically a visual representation of what domains are needed for the dashboards.

“It sounds difficult to produce, but if it takes more than four to six weeks to produce something like that, you’re overthinking it,” said Walton. “But that’s then starting point. The key component is that analytics framework.”

Failure to have a framework in place can result in the newly merged entity losing out in terms of revenue and productivity. And once the problem becomes manifest, there’s often a lot of manual effort that goes into serving, for example, the financial dashboards that are so needed by CFOs. A lot of the manual effort goes into putting the data into Excel spreadsheets, which only puts a Band-Aid on the problem.

“The framework essentially provides pre-built routines to extract data from multiple data sources, as well as from financial systems,” said Walton. “It also provides, for lack of a better term, the data plumbing to enterprise standards, and most importantly there’s an analytic layer. The endgame is that the dashboards need to sit on top of an analytics layer that is easy to do analytics on. What it contains is pre-computed performance indicators based on approved business rules with multiple levels of aggregation.”

An effective framework, as with so many other things, begins with C-suite leadership. Having executive sponsorship, or at least an understanding of the issue at an executive level, can translate into a vision for how to integrate the data and provide the analytics that are needed to successfully manage the business.

PLANNING PROACTIVELY

Walton once observed a national organization that acquired another entity, and after two years the CEO still didn’t have any executive dashboards — which means a lack of visibility into the performance metrics. The CEO hen issued what was effectively a mandate to the acquiring organization: Get this done within three months, or else.

Thus began a flurry of activity to et the dashboard situation straightened out, which is not where an organization wants to be. Proactive planning is essential, yet Walton doesn’t see a lot of that in healthcare.

“I’ve never seen an organization proactively plan for this,” he said. “That doesn’t mean it’s not happening, but in my experience I haven’t seen it.”

In the meantime, mergers and acquisitions keep happening. Even if merging organizations become aware of the problem and factor that into their decision-making there’s another issue to consider.

“Another extremely significant problem is data quality and information consistency,” said Walton. “That problem really is not universally dealt with, in healthcare or for that matter other industries. It’s almost like they’ve learned to live with it. It’s almost like we need a call to arms or something. You’re almost certainly going to have the need for an analytics framework that will apply the data to your standards.”

The data in question could encompass missing or clinically inappropriate data. Quality, in this case, has to do with the cleanliness of the data. In terms of consistency, a good example would be something like average length of stay. There’s an opportunity to ensure that the right data ownership and stewardship is in place.

Importantly, it’s primarily a business solution. It’s possible that one of the merging entities has a data governance strategy, but all too often that strategy was launched by the IT department — which is not where an organization wants to be, said Walton, because it’s primarily a business problem rather than one that’s purely technical.

Data governance is a very well-known concept, but people struggle with its actual implementation for a number of reasons,” he said. “One, there’s a technical aspect of it, which centers around how we identify data quality issues. What kinds of tools are they going to use to address data quality issues?

“Then there’s establishing ownership of the data, and who are the subject matter experts. And there’s a workflow aspect that most organizations fail to deal with.”

It all starts with the framework. Only then can merging organizations get an appropriate handle on its data and analytics landscape.

 

 

 

More Aggressive Review of Hospital Mergers Needed, Says FTC Commissioner

https://www.healthleadersmedia.com/strategy/more-aggressive-review-hospital-mergers-needed-says-ftc-commissioner?spMailingID=15662786&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1641165714&spReportId=MTY0MTE2NTcxNAS2

The problems include ‘a legal shield’ enjoyed by nonprofit hospitals, and the solutions include more retrospective analysis of close calls, says Rebecca Kelly Slaughter.


KEY TAKEAWAYS

The FTC is prohibited from enforcing antitrust laws against nonprofits, which poses a challenge, Slaughter said.

The commission should conduct another round of retrospective study on closed healthcare mergers, she said.

Commissioners should be ‘as aggressive as possible’ moving forward to preserve healthcare competition, she added.

Federal Trade Commissioner Rebecca Kelly Slaughter told a liberal think tank Tuesday that antitrust regulators should take a more assertive approach to protect competitive forces among healthcare providers.

Slaughter, a Democrat appointed to the FTC by President Trump and confirmed last year, made the remarks in a speech at the Center for American Progress in Washington, D.C., where she took issue with what she described as “a legal shield for anticompetitive conduct” at nonprofit hospitals.

The FTC is allowed to review all hospital mergers, but it cannot enforce antitrust laws against nonprofits, including more than 45% of U.S. hospitals, she said.


“So, for example, if a non-profit hospital merger itself is not anticompetitive, but the newly merged entity engages in anticompetitive practices, the FTC is stuck on the sidelines,” Slaughter said in her prepared remarks.

“In effect, this means that all of the healthcare industry expertise that the FTC has worked for decades to, and continues to, develop cannot be deployed alongside the DOJ and state enforcers to stop anticompetitive practices by roughly half of all hospitals nationwide,” she added. “This is a significant lost opportunity.”

Slaughter called for greater scrutiny of horizontal and vertical mergers alike both in the future and in the past.

“I believe that the FTC should conduct a new round of retrospectives of healthcare provider mergers,” Slaughter said.

Studying the past has led the FTC to some of its biggest improvements in understanding market forces, as was the case with former Chairman Timothy J. Muris’ retrospective analysis of hospital mergers in the early 2000s, Slaughter said.

Moving forward, Slaughter said, the FTC should take another look at recently cleared “close-call hospital mergers” and those that were shielded from antitrust scrutiny by state laws despite posing significant concerns. This is consistent, she said, with a statement the FTC issued last fall when it decided not to challenge a proposed affiliation involving CareGroup Inc., Lahey Health System Inc., Seacoast Regional Health System, and others.

The FTC should also consider taking another look at vertical integration among healthcare providers, such as transactions involving hospitals and physician groups, she said.

“[W]e should be as aggressive as possible in challenging the mergers we encounter today, especially where the proposed consolidation involves new structural arrangements rather than traditional horizontal concerns,” Slaughter added. “It is important for parties considering mergers to know we will not shy away from challenging, for example, anticompetitive vertical organizations.”

“I am sensitive to the concern that we might lose litigation,” she added, “but our obligation is to identify the right outcome and fight for it.”