Health insurers eat higher medical costs

https://www.axios.com/newsletters/axios-vitals-b6a8b813-d93a-43d6-9080-bc9ee9606440.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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Almost all of the major health insurance companies are spending more on medical care this year than they have in the past, Axios’ Bob Herman reports.

The big picture: Rising prices and more services for some sicker patients are among the many reasons why this is happening. That uptick in spending has freaked out Wall Street, even though insurers are still quite profitable.

Driving the news: Almost all of the eight major publicly traded insurers have shown their medical loss ratio — the percentage of premium revenues they’re spending on medical claims — is rising this year.

  • UnitedHealth Group, the largest insurer in the country, said its loss ratio was 82.4% in the third quarter this year compared with 81% in the same period a year ago.
  • But these companies are handling billions of premium dollars, so any increase in medical claims equates to hundreds of millions of dollars in additional spending, which they don’t want.

Between the lines: Medical loss ratios are often higher for health plans that cover more older adults, the disabled and the poor, because those groups typically need more care or are in the hospital more frequently.

But costs have been climbing in some commercial markets, too.

  • Anthem executives admitted on their earnings call that the company is dumping some employers with workers who had medical needs and costs that were too high.
  • CVS Health, which now owns Aetna, previously said some middle-market clients had employees that it thought were getting too many services and drugs.
  • CVS “intensified our medical management in those geographies,” an executive said on the earnings call.

The bottom line: Health insurance companies closely track their medical loss ratios and aim to hit those targets most often by charging higher premiums, denying care, forcing people to use lower-priced providers or declining to cover people they deem to be too expensive.

 

 

 

 

 

 

Tenet posts 3rd consecutive quarter of volume growth

https://www.healthcaredive.com/news/tenet-posts-3rd-consecutive-quarter-of-volume-growth/566597/

Dive Brief:

  • Shares of hospital chain Tenet Healthcare rose more than 3% Tuesday morning after reporting its third quarter results Monday evening showing broad-based volume growth.
  • Comparing hospital-to-hospital performance, Tenet reported a 3.6% increase in admissions and a slight uptick for inpatient surgeries (1.9%) and outpatient visits (1.6%).
  • The Dallas-based company reported a net loss of $232 million for the quarter attributable to the company’s common shareholders, compared to a loss of $9 million a year earlier.

Dive Insight:

Tenet CEO Ronald Rittenmeyer touted the results on Tuesday’s call with investors and said the company is raising its outlook for the year based on the numbers.

“We had a very positive third quarter with performance improvement in each of our operating segments,” Rittenmeyer said in a statement.

It’s the third consecutive quarter of volume growth, executives said Tuesday.

Rittenmeyer attributed positive trends over the past few years to a strong leadership team. “Tenet is in a much different place than it was two years ago,” he said.

Same-hospital patient revenue grew 5.8% and surgical revenue increased 6.9% on a same-facility basis.

Commercial volume trends were also very positive, executives said.

Still, they said the company faced more than $50 million in unanticipated headwinds including closures and costs related to Hurricane Dorian, lower California provider fee revenues and costs related to a nursing strike at 12 facilities.

The company is raising its outlook for adjusted earnings per share for the year. It expects adjusted diluted earnings per share from continuing operations of $2.25 to $2.91 for the year.

The company’s other segments also showed growth.

Conifer, the revenue cycle management unit, reported adjusted EBITDA of $90 million, an 11% increase from the previous year period. Tenet announced earlier this year it will spin off Conifer into an independent publicly traded company by the second quarter of 2021.

USPI, the outpatient surgical business, has a steady pipeline of health systems willing to send patients to the outpatient facilities, executives said during the call. During the third quarter, the company added three health systems and expects to reach a total of seven by end of year.

 

 

 

Phoenix hospital CEO gets $85K raise despite criticism from board members

https://www.beckershospitalreview.com/compensation-issues/phoenix-hospital-ceo-gets-85k-raise-despite-criticism-from-board-members.html

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The CEO of a public and nonprofit safety-net health system in Phoenix will get an $85,000 raise despite objections from two board members who questioned if the increase was excessive, according to the Arizona Republic.

Under a new five-year contract effective Oct. 25, Steve Purves, CEO of Valleywise Health, will see his annual salary rise to $685,000. Mr. Purves could also receive a discretionary $171,250 performance bonus and is eligible for a $68,500 retention bonus on Oct. 25, 2020. In 2020, Mr. Purves’ base pay will climb to $753,500, and by 2023 his base salary will be $872,191, according to the contract cited by the Arizona Republic.

The hospital’s governing board approved the contract in a 3-2 vote. The two board members who voted against the contract raised concerns about its length as well as the rise in salary and bonuses. They questioned whether a raise of that magnitude was appropriate, given that the hospital has faced federal penalties for five consecutive years over patient injuries and infections. They also noted Valleywise Health anticipates a $3 million deficit this fiscal year.

But the three board members who supported the contract said it was necessary to ensure Mr. Purves remained at Valleywise Health. They argued the package is similar to other CEOs at comparable health systems. They also praised Mr. Purves for steering Valleywise’s finances in a better direction, according to the Arizona Republic.

The final contract is $15,000 lower than one proposed in September. In that proposal, Mr. Purves would have received a $100,000 pay hike with a discretionary performance bonus of up to $175,000.

Read the full report here.

 

Walgreens shying away from in-store clinics

https://www.axios.com/walgreens-shying-away-from-in-store-clinics-37dfff5f-87a3-4f98-ba65-82c5c6cd6628.html

Walgreens

Walgreens is inviting outside providers to deliver medical services to its pharmacies as it tries to move away from in-store clinics, the Wall Street Journal reports.

The big picture: The drugstore chain’s decision signals a shift from treating minor issues to treating chronic conditions such as diabetes, heart disease and hypertension.

Treatment for chronically ill patients could offset slowing revenue from prescription drugs and competition from online retailers.

By the numbers: Chronic conditions account for about 90% the U.S.’s annual health-care spending of $3.3 trillion, according to the Centers for Disease Control and Prevention.

  • Walgreens has about 400 walk-in clinics and CVS Health has 1,000 Minute Clinic locations, which have “barely broken even,” WSJ writes.
  • The company will close 160 of its in-store clinics.