Study: Higher Death Rates and Taxpayer Costs at Nursing Homes Owned by Private Equity

About 1 in 10 nursing homes in California and nationwide are owned by private equity (PE) investors, and new research suggests that death rates for residents of those facilities are substantially higher than at institutions with different forms of ownership.

Essential Coverage

Researchers from New York University, the University of Chicago, and the University of Pennsylvania found that the combination of subsidies from Medicare and Medicaid alongside incentives for PE owners to increase the value of their investments “could lead high-powered for-profit incentives to be misaligned with the social goal of affordable, quality care [PDF].” The researchers — Atul Gupta, Constantine Yannelis, Sabrina Howell, and Abhinav Gupta — reported that nursing homes owned by private equity entities were associated with a 10% increase in the short-term death rate of Medicare patients over a 12-year period. That means more than 20,000 people likely died prematurely in homes run by PE companies, according to their study, which was published in February by the National Bureau of Economic Research (NBER).

In addition to the higher short-term death rates, these homes were found to have sharper declines in measures of patient well-being, including lower mobility, increased pain intensity, and increased likelihood of taking antipsychotic medications, which the study said are discouraged in the elderly because the drugs increase mortality in this age group. Meanwhile, the study found that taxpayer spending per patient episode was 11% higher in PE-owned nursing homes.

Double-Checked, Triple-Checked, Quadruple-Checked

The researchers were stunned by the data. “You don’t expect to find these types of mortality effects. And so, you know, we double-checked it, triple-checked it, quadruple-checked it,” Atul Gupta, a coauthor of the NBER study, told NPR reporter Gabrielle Emanuel.

There’s nothing new about for-profit nursing homes, but private equity firms are a unique subset that in recent years has made significant investments in the industry, Dylan Scott reported in Vox. PE firms typically buy companies in pursuit of higher profits for shareholders than could be obtained by investing in the shares of publicly traded stocks. They then sell their investments at a profit, often within seven years of purchase. They often take on debt to buy a company and then put that debt on the newly acquired company’s balance sheet.

They also have purchased a mix of large chains and independent facilities — “making it easier to isolate the specific effect of private equity acquisitions, rather than just a profit motive, on patient welfare.” About 11% of for-profit nursing homes are owned by PE, according to David Grabowski, professor of health care policy at Harvard Medical School. The NBER study covered 1,674 nursing homes acquired in 128 unique transactions.

While the owners of many nursing homes may not be planning to sell them, they also have strong incentives to keep costs low, which may not be good for patients. A study funded by CHCF, for instance, found that “early in the pandemic, for-profit nursing homes had COVID-19 case rates five to six times higher than those of nonprofit and government-run nursing homes. This was true of both independent nursing homes and those that are part of a corporate chain.”

Nationallyabout 70% of nursing homes are operated by for-profit corporations, 24% of nursing homes are nonprofit, and 7% are government-owned. Corporate chains own 58%. In California, 84% of nursing homes are for-profit, 12% are nonprofit, and 3% are government-owned, according to the CHCF report.

Growing PE Investment in Health Care

Given the dramatic increase in PE ownership of nursing facilities coming out of the COVID-19 pandemic, the higher death rates are troubling. The year-over-year growth between 2019 and 2020 is especially striking. Before the pandemic, 2019 saw 33 private equity acquisitions of nursing homes valued at just over $483 million. In 2020, there were 43 deals valued at more than $1.5 billion, according to Bloomberg Law reporter Tony Pugh.

And PE interest in health care is not restricted to nursing homes, explained Gretchen Morgenson and Emmanuelle Saliba at NBC News. “Private equity’s purchases have included rural hospitals, physicians’ practices, nursing homes and hospice centers, air ambulance companies and health care billing management and debt collection systems.” Overall, PE investments in health care have increased more than 1,900% over the past two decades. In 2000, PE invested less than $5 billion. By 2017, investment had jumped to $100 billion.

Industry advocates argue that the investments are in nursing homes that would fail without an influx of PE capital. The American Investment Council said private equity firms invest in “nursing homes to help rescue, build, or grow businesses, often providing much-needed capital to strengthen struggling companies and employ Americans,” according to Bloomberg Law.

The Debate Over Staffing

A bare-bones nursing staff is implicated in poorer quality at PE-owned nursing homes, both before and during the COVID-19 pandemic. Staff is generally the greatest expense in nursing homes and a key place to save money. “Labor is the main cost of any health care facility — accounting for nearly half of its operating costs — so cutting it to a minimum is the fastest profit-making measure owners can take, along with paying lower salaries,” journalist Annalisa Merelli explained in Quartz.

Staffing shrinks by 1.4% after a PE purchase, the NBER study found.

The federal government does not set specific patient-to-nurse ratios. California and other states have set minimum standards, but they are generally “well below the levels recommended by researchers and experts to consistently meet the needs of each resident,” according to the journal Policy, Politics, & Nursing Practice.

According to nursing assistant Adelina Ramos, “understaffing was so significant [during the pandemic] that she and her colleagues . . . often had to choose which dying or severely ill patient to attend first, leaving the others alone.”

Ramos worked at the for-profit Genesis Healthcare, the nation’s largest chain of nursing homes, which accepted $180 million in state and federal funds during the COVID-19 crisis but remained severely understaffed. She testified before the US Senate Finance Committee in March as a part of a week long look into how the pandemic affected nursing homes.Before the pandemic, we had this problem,” she said of staffing shortages. “And with the pandemic, it made things worse.”

$12.46 an Hour

In addition, low pay at nursing homes compounds staffing shortages by leading to extremely high rates of turnover. Ramos and her colleagues were paid as little as $12.46 an hour.

“The average nursing home in the US has their entire nursing home staff change over the course of the calendar year. This is a horrible way to provide good, quality nursing home care,” Grabowski told NPR, speaking of his March 2021 study in Health Affairs.

Loss of front-line staff leads to reductions in therapies for healthier patients, which leads to higher death rates, according to the NBER study. The effect of these cuts is that front-line nurses spend fewer hours per day providing basic services to patients. “Those services, such as bed turning or infection prevention, aren’t medically intensive, but they can be critical to health outcomes,” wrote Scott at Vox.

Healthier patients tend to suffer the most from this lack of basic nursing. “Sicker patients have more regimented treatment that will be adhered to no matter who owns the facility,” the researchers said, “whereas healthier people may be more susceptible to the changes made under private equity ownership.”

Growing Interest on Capitol Hill

In addition to the Senate Finance Committee hearings, the House Ways and Means Committee held a hearing at the end of last month about the excess deaths in nursing homes owned by PE. “Private equity’s business model involves buying companies, saddling them with mountains of debt, and then squeezing them like oranges for every dollar,” said Representative Bill Pascrell (D-New Jersey), who chairs the House Ways and Means Committee’s oversight subcommittee.

The office of Senator Elizabeth Warren (D-Massachusetts) will investigate the effects of nursing-home ownership on residents, she announced on March 17.

The hope is that the pandemic’s effect on older people will bring more attention to the issues that lead to substandard nursing home care. “Much more is needed to protect nursing home residents,” Denise Bottcher, the state director of AARP’s Louisiana office, told the Senate panel. “The consequence of not acting is that someone’s mother or father dies.”

Millions more smokers and ex-smokers should receive free annual screenings for lung cancer, a federally appointed task force says

Millions more smokers and ex-smokers should receive free annual screenings  for lung cancer, a federally appointed task force says - The Washington Post

The recommendation would double the number of people eligible, but some experts worry about possible false positives and follow-up tests.

A federally appointed task force recommended a major increase in the number of Americans eligible for free screening for lung cancer, saying expanded testing will save lives and especially benefit Black people and women.

The U.S. Preventive Services Task Force, an independent group of 16 physicians and scientists who evaluate preventive tests and medications, said people with a long history of smoking should begin getting annual low-dose CT scans at age 50, five years earlier than the group recommended in 2013. The group also broadened the definition of people it considers at high risk for the disease.

The changes mean that 15 million people, nearly twice the current number, will be eligible for the scans to detect the No. 1 cancer killer in the United States. Under the Affordable Care Act, private insurers must cover services, without patient cost-sharing, that receive “A” or “B” recommendations from the task force. The lung-cancer screening recommendation received a “B” rating. Medicare also generally follows the group’s guidance.

The recommendation was welcomed by many lung-cancer specialists but drew a more cautious reaction from some physicians who noted that the test can produce false positives — flagging a spot or growth that is benign — and lead to potentially costly and invasive follow-up tests such as biopsies.

Lung cancer killed more than 135,000 people in the United States last year, according to the National Cancer Institute. Smoking and increasing age are the biggest risk factors, although nonsmokers also develop the disease, sometimes as a result of genetic mutations.

Overall, the five-year survival rate for lung cancer is about 20 percent, but it is higher when the disease is caught at the earliest stages. In recent years, the death rate for non-small cell lung cancer — the most common form — has declined, partly reflecting decreases in smoking but also new treatments targeted at specific genetic mutations or alterations.

To update its 2013 recommendation, the task force commissioned a study of the latest data on lung-cancer screening and did modeling on the best age to start the screening.

The conclusion was that broadening eligibility would save a substantial number of lives, the task force said in an article Tuesday in the Journal of the American Medical Association.

The new recommendation applies to adults ages 50 to 80 who have smoked about a pack of cigarettes a day for 20 years. The 2013 version, which had the higher age threshold, was for those who smoked the equivalent of a pack a day for 30 years. In both cases, the policy applies to current smokers or those who have quit within the past 15 years. Someone who stopped smoking 20 years ago would not be eligible.

The task force said the changes will increase the number of Black people and women who will be eligible for screening and who tend to smoke fewer cigarettes than White men yet still are vulnerable to lung cancer. African Americans, the group said, have a higher risk of lung cancer than White men even with lower levels of smoking exposure. It said it hopes the new recommendation will increase the use of the test; estimates are that fewer than 5 percent of eligible Americans have been screened for lung cancer.

Roy S. Herbst, a lung-cancer specialist at the Yale Cancer Center, was enthusiastic about the recommendation. He said more screening would mean more cancer caught at an earlier stage, when there is a better chance of treating or curing it.

“We have to find these lung cancers early,” he said. “It’s a very minimal test.”

Some physicians and researchers were more cautious. Daniel S. Reuland, a professor of medicine at the University of North Carolina School of Medicine, co-wrote an updated analysis of benefits and harms that also ran in JAMA. Screening high-risk people with low-dose CT, the article said, “can reduce lung cancer mortality but also causes false-positive results leading to unnecessary tests and invasive procedures, overdiagnosis, incidental findings, increases in distress, and, rarely, radiation-induced cancers.”

Reuland noted that follow-up tests can be nerve-racking and costly. For that reason, he and other physicians, in a third JAMA article, called on the Centers for Medicare and Medicaid Services to continue to require doctors and patients to undergo “shared decision-making” — an in-depth discussion about the pluses and minuses of the screening.

Otis Brawley, an oncologist at Johns Hopkins University who has raised questions about lung-cancer screening, said he does not object to expanding the criteria but argued that all the tests should be performed at hospitals with extensive experience, to minimize the likelihood of false positives.

“You have to have a good program,” Brawley said. “A number of centers that are offering it should not be offering it. So those centers are perpetuating disparities, not reducing them.”

John Wong, a member of the task force and an internist at Tufts Medical Center in Boston, countered that the benefits of screening — and of finding a potentially lethal malignancy at an early, curable stage — far outweigh the harms.

Although follow-up tests involving what turns out to be a benign growth might cause short-term anxiety and be costly, he said, “if you miss a lung cancer, then it might spread and shorten your life.”

Risking lives in pursuit of profits

https://mailchi.mp/05e4ff455445/the-weekly-gist-february-26-2021?e=d1e747d2d8

Benefit of Private Equity in Healthcare? Lessons from Nursing Homes

Finding a good long-term care facility for a loved one has always been a difficult process. A new National Bureau of Economic Research working paper suggests that families should also be paying attention to who owns the facility, finding a significant increase in mortality in nursing homes owned by private equity investors.

Examining Medicare data from over 18,000 nursing homes, 1,674 of which were owned by private equity (PE) firms, researchers found that PE ownership increased Medicare patient mortality by 10 percent—translating to a possible 20,150 additional lives lost. PE-owned facilities were also 11 percent more expensive.

Counterintuitively, lower-acuity patients had the greatest increase in mortality. Researchers found staffing decreased by 1.4 percent in PE-owned facilities, suggesting that shorter-staffed facilities may be forced to shift attention to sicker patients, leading to greater adverse effects on patients requiring less care.

Antipsychotic use, which carries a higher risk in the elderly, was also a whopping 50 percent higher.

Nursing homes are low-margin businesses, with profits of just 1-2 percent per year—and PE ownership did not improve financial performance.

Researchers found private equity profited from three strategies: “monitoring fees” paid to services also owned by the PE firm, lease payments after real estate sales, and tax benefits from increased interest payments, concluding that PE is shifting operating costs away from patient care in order to increase return on investment. Private equity investment in care delivery assets has skyrocketed over the past decade.

This study draws the most direct correlation between PE investment and an adverse impact on patient outcomes that we’ve seen so far, highlighting the need for increased regulatory scrutiny to ensure that patient safety isn’t sacrificed for investor returns.

The growth of “pharmacy deserts”

https://www.axios.com/pharmacy-deserts-cities-prescriptions-45c32271-37ac-4105-b1bb-e2d2436b88c1.html

Neighborhoods in cities like Chicago are rapidly becoming places where people can’t fill medical prescriptions locally because their drugstores have shuttered or don’t accept Medicaid.

Why it matters: The pandemic has accelerated the growth of “pharmacy deserts” as unprofitable and less-profitable stores have closed. It’s a worrisome trend for the urban poor, who are less likely to try online pharmacies and more likely to let their drug regimens lapse when they can’t get medication locally.

Driving the news: Effective Dec. 1, Medicaid patients in Illinois — of which there are 400,000, per the Chicago Tribune — could no longer get their prescriptions filled at Walgreens, a prevalent chain headquartered in a Chicago suburb.

  • The change came because Aetna, which provides contracts with the state of Illinois to serve Medicaid recipients, dropped Walgreens as a provider. CVS — a top Walgreens rival — owns Aetna as well as the pharmacy benefits manager CVS Caremark.
  • CVS “has no pharmacies in five key West Side neighborhoods,” per the Tribune.
  • Illinois state Rep. La Shawn Ford called Aetna’s decision “pathetic” and told the Tribune, “It’s an attack not just on Black people, but on those that are struggling during the pandemic.”

The backstory: Researcher Dima Qato coined the term “pharmacy desert” in a 2014 article that found there were far fewer pharmacies in Chicago’s Black neighborhoods than in white and mixed neighborhoods.

  • Medicaid policies like the one in Illinois “are all over the country, where Medicaid dictates where and where you can go fill your medication,” Qato tells Axios. “And that leads to certain pharmacies having less patients in them, which leads to less profits, which leads to closures.”
  • Qato — who recently took a post as a professor at the University of Southern California, and is in the process of moving from Chicago — said that the new Medicaid policy in Illinois is generating “a lot of outrage in the community right now.”
  • Per Qato’s definition, people live in a “pharmacy desert” if they can’t fill a prescription within a half-a-mile of their homes (for low-income people without cars), and a mile for others.
  • “We’ve estimated it for Chicago at a third of the city’s population, with substantial difference by racial composition,” Qato says.

Between the lines: Because pharmacies get the lowest reimbursements for filling Medicaid prescriptions, they’re more likely to close stores in low-income neighborhoods and open them in wealthy ones, notes Antonio Ciaccia, chief strategy officer of 3 Axis Advisors, a consultancy focused on the drug supply chain.

  • “We’re seeing a general retreat from impoverished areas,” said Ciaccia, who serves as an adviser to the American Pharmacy Association.

Of note: Studies draw a direct line between pharmacy closures and people stopping their vital medications — with terrible health outcomes.

  • Adults over 50 were more likely to drop their cardiovascular pills after their local drug store closed, according to a study published in the Journal of the American Medical Association in 2019 (of which Qato is the lead author). 
  • Benjy Renton, the Middlebury College senior who has been closely tracking the COVID-19 outbreak, noted on Twitter that pharmacy deserts could hold back the administration of vaccines.

What’s next: While “food deserts,” where inner-city residents lack access to fresh and healthy groceries, are a bigger problem in places like New York City, pharmacy access is a growing concern. The number of drugstores has declined 20% in NYC since 2016, according to Jonathan Bowles, executive director of the Center for an Urban Future.

  • “I for one will miss the 70 Duane Reades that closed this year,” was the headline of an an article that New York Magazine’s “Curbed” ran on Dec. 30. (Duane Reade is owned by Walgreens.)

What makes a Bad Vaccine?

A Covid-19 vaccine, amazingly, is close. Why am I so worried?

A mere six months after identifying the SARS-CoV-2 virus as the cause of Covid-19, scientists are on the precipice of a having a vaccine to fight it. Moderna and the National Institutes of Health recently announced the start of a Phase 3 clinical trial, joining several others in a constructive rivalry that could save millions of lives.

It’s a truly impressive a feat and a testament to the power of basic and applied medical sciences. Under normal circumstances, vaccine approvals are measured in decades. Milestones that once took months or years have been achieved in days or weeks. If these efforts are successful, the Covid-19 vaccine could take a place alongside the Apollo missions as one of history’s greatest scientific achievements.

I’m optimistic. And yet, as someone who studies drug development, I want to temper expectations with a dose of realism and perhaps a bit of angst. Behind the proud declarations, many science and medical professionals have been whispering concerns. These whispers have escalated into a murmur. It’s time to cry them loudly:

Hey, Food and Drug Administration: Don’t be rash! Premature approval of a sub-standard Covid-19 vaccine could have dire implications, and not just for this pandemic. It could harm public health for years, if not generations, to come.

Unfortunately, elements now in place make such a disastrous outcome not only possible but in fact quite likely. Specifically, the FDA and its staff of chronically overworked and underappreciated regulators will face enormous public and political pressure to approve a vaccine. Whether or not one worries about an “October surprise” aimed at the upcoming election, regulators will be pressed hard. Some will stand firm. Some may resign in protest. But others could break and allow a bad vaccine to be released.

What makes a “bad vaccine”? Insufficient protection against the disease it is designed for, unwanted side effects, or some combination of the two. If an approved Covid-19 vaccine turns out to be ineffective, this could unintentionally promote wider spread of the disease by individuals who presume they were protected from it. Likewise, a negative experience with one vaccine might discourage the use of other vaccines that are far more safe and effective, whether they are for Covid-19 or other vaccine-preventable diseases.

Some things take time. Under normal circumstances, ensuring that a vaccine’s effects are safe and durable requires years of study and monitoring. And there is some evidence that natural immune responses to SARS-CoV-2 infection could be transient, making sustained investigation all the more necessary. A merely short-term effect could encourage vaccinated individuals to resume risky behaviors, which would all but guarantee that the epidemic endures. And if unintended side effects turn out to include, for instance, chronic inflammatory or autoimmune disease, a bad vaccine could impart lifelong damage.

But wait, there’s worse! A bad Covid-19 vaccine could further undermine confidence in the many safe, reliable vaccines already in our public health arsenal. Vaccine skepticism and anti-science bias, propagated by B-list celebrities and Russian troll farms, have been gaining strength all year. Combined with disappointing Covid-19 outcomes, such malign forces could facilitate the reemergence of once-vanquished foes — polio, measles, mumps, rubella, diphtheria, whooping cough, and tetanus — that once killed multitudes of children each year.

These are enormous risks. Placing all of our bets on a small set of untried vaccine technologies would be gobsmackingly foolish. Yet this is exactly what we are now doing. Most of the high-profile names capturing headlines are pursuing comparatively minor variations on a theme of genetic vaccines (those delivered via DNA or RNA). If one approach happens to work, the odds are higher the others will work as well. Disappointing results from one candidate, though, might presage failure across the board.

Rather than investing in a balanced portfolio of vaccines with different approaches — not to mention different therapies, devices, and diagnostics for treating Covid-19 — too many observers, too many companies, and too many governmental officials seem to be narrowly focused on hopes for a “savior” vaccine. Were that savior to fail, our national morale, already low, could plummet even further.

Don’t get me wrong. I, along with millions of Americans, want a Covid-19 vaccine. But we deserve one that’s been proven to be safe and effective.

It’s not too late to take a deep breath and devise a strategy to balance short- and long-term goals, including vaccination, improved diagnostics, and existing and novel treatments. We must support the FDA and hope that its scientists and physicians retain the strength and conviction to resist approving a substandard vaccine.

For encouragement, we should look to Frances Oldham Kelsey, a veritable patron saint of the FDA. In 1960, during her first month working for the agency, Kelsey was asked to approve a sedative called Kevadon, which had the potential to generate billions in revenue. Despite enormous pressure, Kelsey spotted a risk for toxicity and dug in her heels. She refused to rubber stamp the approval. Her actions saved the lives of countless babies. Kevadon, better known as thalidomide, proved to be one of the most dangerous and disfiguring drugs in history.

Kelsey passed away in 2015 at the age of 101. We must pray that her spirit inspires a new generation of FDA leaders with the courage to say, “No.”

 

 

 

 

 

Medicaid Is Essential for Workers

Medicaid Is Essential for Workers

Earlier this year, when public schools in Kansas City, Missouri, shut down in-person instruction because of the COVID-19 pandemic, Nika Cotton quit her job in social work to start her own business. She has two young children — ages 8 and 10 — and no one to watch them if she were to continue working a traditional job.

It was a big decision, made weightier by the loss of her employer-sponsored health insurance. But on August 5, Cotton awoke to the news that Missouri voters had narrowly approved the expansion of the state’s Medicaid program via ballot initiative, making it the second politically right-leaning state to do so during the pandemic. The expansion opens Medicaid eligibility to individuals and families with incomes up to 138% of the federal poverty guidelines, which are $12,760 for an individual and $21,720 for a family of three, allowing Cotton’s family of three to qualify.

“It takes a lot of stress off of my shoulders with having to think about how I’m going to take care of myself, how I’m going to be able to go and see a doctor and get the health care I need while I’m starting my business,” she told Alex Smith of KCUR, the NPR affiliate in Kansas City.

Nearly 1,264,000 voters weighed in on the measure, with 53% voting for it and 47% against it. Missouri’s Republican governor Mike Parson opposed it, arguing that the state could not afford the coverage expansion — even though the federal government pays 90% of the costs and a fiscal analysis (PDF) by the Center for Health Economics and Policy at Washington University estimated that the state would save $39 million if it implemented Medicaid expansion in 2020.

The ballot measure requires the state to expand Medicaid by July 2021, and an estimated 230,000 residents with low incomes will become eligible for affordable health coverage.

Voters Signal Support

In late June, Oklahoma voters also approved Medicaid expansion by ballot measure, eking out a victory by less than one percentage point.

“It is difficult to ignore that these ballot initiatives passed in right-leaning states in the middle of the coronavirus pandemic, when millions of Americans have lost their jobs and, with them, their employer-sponsored health insurance,” Dylan Scott wrote in Vox. “This is partly a coincidence — the signatures were collected to put the Medicaid expansion questions on the ballot long before COVID-19 ever arrived in the US — but the relatively narrow margins made me wonder if the pandemic and its economic and medical consequences proved decisive.”

Earlier this year, Scott spoke to Cynthia Cox, MPH, director of the Peterson-Kaiser Health System Tracker, about the potential impact of the pandemic on health care politics. “Many of the biggest coverage expansions both in the US and in similar countries happened in the context of wars and social upheavals, as well as financial crises,” Cox said. “One theory is that those circumstances redefine social solidarity, thus expanding views of the role of government.”

Between February and May, Missouri’s Medicaid program saw enrollment rise nearly 9%, one of the largest increases nationwide during the pandemic, Rachel Roubein reported in Politico. During that same period, Oklahoma’s Medicaid program saw enrollment increase by about 6%.

States that implemented Medicaid expansion are better positioned to respond to COVID-19, according to a report by the Center on Budget and Policy Priorities (CBPP). These states entered the health crisis and resulting economic downturn with lower uninsured rates, which is important for public health “because people who are uninsured may forgo testing or treatment for COVID-19 due to concerns that they cannot afford it, endangering their health while slowing detection of the virus’ spread,” the authors wrote.

CBPP and KFF estimate that 3.6 to 4.4 million uninsured adults would become eligible for Medicaid coverage if the 12 states that have not yet expanded the program did so. Those states are Alabama, Florida, Georgia, Kansas, Mississippi, North Carolina, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming.

Coverage for Frontline Essential Workers

Medicaid is particularly important for frontline essential workers — such as those working in grocery stores, meat processing plants, and nursing homes — during the pandemic. Their jobs require them to report in person, increasing their risk of getting sick with the coronavirus as they interact with coworkers and, in many cases, with customers and patients. Essential workers are often paid low wages and not offered employer-sponsored health insurance or can’t afford the premiums for it.

About 5 million essential workers nationwide get health coverage through Medicaid, “including nearly 1.8 million people working in frontline health care services and 1.6 million in other frontline essential services including transportation, waste management, and child care,” Matt Broaddus, senior research analyst at CBPP, wrote on the center’s blog.

In California, over 950,000 essential workers are enrolled in Medi-Cal, the state’s Medicaid program. People of color are overrepresented in many categories of essential jobs. According to a UC Berkeley Labor Center analysis of the 15 largest frontline essential occupations, Latinx workers are overrepresented in agriculture, construction, and food preparation, among other occupations. Asian workers are overrepresented among registered nurses and personal care aides; and Black workers are overrepresented among personal care aides, laborers and material movers, and office clerks.

In addition to low-wage workers, Medi-Cal continues to bridge the coverage gap for other key populations amid the COVID-19 crisis, which is magnifying historical health inequities. (Medi-Cal covers nearly 40% of the state’s children, half of Californians with disabilities, and over one million seniors. For a refresher on the program, see CHCF’s Medi-Cal Explained series.)

Medicaid Saves Lives

Research has shown time and time again the varied benefits of Medicaid expansion: lower mortality rates among older adults with low incomes, declines in infant mortality, reductions in racial disparities in the care of cancer patients, and fewer personal bankruptcies, just to name a few.

Even though Missouri’s Medicaid expansion won’t take effect for another year, Nika Cotton remains excited. “It’s better late than never,” she said. “The fact that it’s coming is better than nothing” — perhaps a takeaway for the remaining 12 states.

 

 

 

 

10 best, worst states for healthcare in 2020

https://www.beckershospitalreview.com/rankings-and-ratings/10-best-worst-states-for-healthcare-in-2020-080320.html

2020's Best & Worst States for Health Care

Americans in Massachusetts receive the best healthcare in the country, while those in Georgia receive the worst, according to an analysis by WalletHub, a personal finance website. 

To identify the best and worst states for healthcare, analysts compared the 50 states and the District of Columbia across 44 different measures of healthcare cost, access and outcomes. The metrics ranged from average hospital expenses per inpatient day to share of patients readmitted to hospitals. Read more about the methodology here.

Here are the 10 states with the highest overall rank across cost, access and outcomes, according to the analysis: 

1. Massachusetts

2. Minnesota

3. Rhode Island

4. District of Columbia

5. North Dakota

6. Vermont

7. Colorado

8. Iowa

9. Hawaii

10. South Dakota

Here are the bottom 10 states on healthcare cost, access and outcomes combined:

1. Georgia

2. Louisiana

3. Alabama

4. North Carolina

5. Mississippi

6. Arkansas

7. Tennessee

8. South Carolina

9. Texas

10. Alaska

Access the full list here

 

 

 

 

Covid-19 has decimated independent US primary care practices—how should policymakers and payers respond?

Covid-19 has decimated independent US primary care practices—how should policymakers and payers respond? 

9 ways Covid-19 may forever upend the U.S. health care industry - STAT

The coronavirus pandemic has torn through the global economy, suppressing consumer demand and industrial production. As countries look to an eventual recovery, but in a very different environment characterized by continuing distancing measures and loss of public confidence, businesses in many sectors, such as hospitality and retail, are asking how they can adapt to survive these new economic conditions. Yet perhaps surprisingly, those feeling threatened include independent primary care practices in the United States. Despite the USA being one of the most expensive healthcare systems in the world, many primary care practices are now facing financial collapse. Some estimates suggest that primary care practices will lose up to $15 billion during 2020 as a consequence of the coronavirus pandemic.

Covid-19 has highlighted a fundamental weakness in how primary care is paid for in the USA. Many practices are financed by fee-for-service (FFS) reimbursement. Put bluntly, providers make money from office visits, diagnostic tests, and procedures. This has long been criticized for encouraging an expansion of what is considered disease and overtreatment, contributing to the high cost of the American health system. However, it can only work as long as patients keep coming, and they are no longer doing so, at least not in sufficient numbers for many primary care practices to remain viable. The imposition of social distancing policies has seen a severe reduction in office visits, and with it a substantial decline in revenue. The pandemic has taught Americans that the financial model that underpins primary care needs to be reformed. It needs to move from a per-visit reimbursement to a per-patient reimbursement, in other words primary care capitation, as used in many other countries, including the UK.

If the existing reimbursement model is not reformed, the clinical and financial implications for struggling primary care practices, which could play a key role in the continuing coronavirus pandemic, will be far-ranging. From a clinical standpoint, primary care practices that need to lay off staff or close will not be able to respond effectively to an influx of patients who have been delaying care since the pandemic began. Given that primary care is often the entry point into the healthcare system, this could lead to severe reductions in access to routine health care as well as referrals to specialty providers for advanced complaints. From a financial standpoint, many of these independent practices may consider consolidation with larger health systems, something that has been shown to increase prices without improving quality in the long run.

To overcome these issues, insurers and primary care practices could work together to construct capitated payment models. In capitated contracts, providers are paid a risk-adjusted sum for each patient enrolled in the practice. Payment to providers is not reliant on volume of office visits, but rather delivering cost-effective care focused on the health of primary care patients.

As we noted above, this system is already widely used internationally, but there are also good examples in the USA. For example, Iora Health is a venture-backed primary care company that partners with insurers to obtain a flat $150 per-member-per-month (PMPM) fee for taking care of its patients. They also receive bonuses for reducing total cost of care (TCOC). As a result, they have been able to use their dollars for health-related interventions, such as hiring health coaches. They have also demonstrated significant reductions in hospitalizations and health spending along with high patient satisfaction scores. Most importantly, they were able to quickly adapt to the needs of their patient population in the pandemic using alternative models of care, such as online consultations, without the added stress of losing revenue.

There are also many other promising examples of both public and private payers designing capitated contracts for independent primary care practices. In the public sector, the Centers for Medicare and Medicaid Services (CMS) introduced the multi-payer Primary Care First (PCF) Model. Under PCF, primary care practices will receive a risk-adjusted population-based payment for patients as well as a flat fee for any office visits performed. In addition, there are bonuses for practices to limit hospitalizations, an expensive component of delivering care. However, this is still an experimental program that is supposed to begin in 2021, which may be too late for primary care practices that are already facing financial strain from the pandemic.

In the private sector, Blue Cross Blue Shield of North Carolina (BCBS NC) has created the Accelerate to Value program for independent primary care practices. Through this program, BCBS NC is offering independent primary care practices a supplemental stabilization payment, based on the number of members a particular practice serves. In return, it is asking them to remain open for patients and deliver care appropriate to the circumstances created by the pandemic. In the longer term, it also asks them to join an accountable care organization (ACO) and consider accepting capitation for future reimbursement. 

While CMS and BCBS can offer blueprints for a path towards primary care capitation, there will be challenges to implement capitation at scale across the nation’s primary care system. A key defining aspect of the US healthcare system is its multitude of payers, from commercial to Medicaid to Medicare. For primary care capitation to succeed, practices will need to pursue multi-payer contracts that cover a critical mass of the patients they serve. Independent practices will also have to adapt to a fixed budget model where excess healthcare utilization could actually lead to financial losses, unlike in fee-for-service.

Ultimately, it is important to recognize that no payment model will be a panacea for healthcare providers during the pandemic and afterwards. However, the coronavirus pandemic has highlighted clear deficiencies in the American fee for service system that have existed for almost a century. Covid-19 has created an opportunity for policymakers and providers to look anew at a model that is already implemented widely in other countries, and in parts of the US. At some point there will have to be an inquiry into the many failures that have characterized the American response to covid-19. Given the magnitude of the catastrophe that has befallen the US, in stark contrast to the relative successes achieved in many other countries, it will be essential to challenge many things once taken for granted. One must be the fee for service system that has so clearly undermined the resilience of the US health system. Covid-19 has provided an almost unprecedented opportunity to create a healthcare system that rewards providers caring for patients in a coordinated manner, rather than prioritizing expensive and often wasteful healthcare provision.

 

 

 

 

Telehealth could grow to a $250B revenue opportunity post-COVID-19: analysis

https://www.fiercehealthcare.com/tech/telehealth-could-grow-to-a-250b-revenue-opportunity-post-covid-mckinsey-reports

virtual visit

With the acceleration of consumer and provider adoption of telehealth, a quarter of a trillion dollars in current U.S. healthcare spend could be done virtually, according to a new report.

During the COVID-19 pandemic, consumer adoption of telehealth has skyrocketed, from 11% of U.S. consumers using telehealth in 2019 to 46% of consumers now using telehealth to replace canceled healthcare visit, according to consulting firm McKinsey & Company’s COVID-19 consumer survey conducted in April.

McKinsey’s survey also found that about 76% of consumers say they are highly or moderately likely to use telehealth in the future. Seventy-four percent of people who had used telehealth reported high satisfaction.

Health systems, independent practices, behavioral health providers, and other healthcare organizations rapidly scaled telehealth offerings to fill the gap between need and canceled in-person care. Providers are ready for the shift to virtual care: 57% view telehealth more favorably than they did before COVID-19 and 64% are more comfortable using it, according to McKinsey’s recent provider surveys.

Pre-COVID-19, the total annual revenues of U.S. telehealth players were an estimated $3 billion, with the largest vendors focused on virtual urgent care.

Telehealth is now poised to take a bigger share of the healthcare market as McKinsey estimates that up to $250 billion, or 20% of all Medicare, Medicaid, and commercial outpatient, office, and home health spend could be done virtually.

The consulting firm looked at anonymized claims data representative of commercial, Medicare, and Medicaid utilization.

The company’s claims-based analysis suggests that approximately 20% of all emergency room visits could potentially be avoided via virtual urgent care offerings, 24% of healthcare office visits and outpatient volume could be delivered virtually, and an additional 9% “near-virtually.”

Up to 35% of regular home health attendant services could be virtualized, and 2% of all outpatient volume could be shifted to the home setting, with tech-enabled medication administration.

Many of the dynamics that have helped to expand telehealth adoption are likely to be in place for at least the next 12 to 18 months, as concerns about COVID-19 remain until a vaccine is widely available.

Going forward, telehealth can increase access to necessary care in areas with shortages, such as behavioral health, improve the patient experience, and improve health outcomes, McKinsey reported.

Providers and patients are concerned that recent federal and state policies expanding access to telehealth will be rolled back once the emergency period ends.

Industry groups, including the College of Healthcare Information Management Executives (CHIME), are calling on lawmakers to ensure the changes enacted by Congress and the administration become permanent.

McKinsey’s research indicates providers’ concerns about telehealth include security, workflow integration, effectiveness compared with in-person visits, and the future for reimbursement.

“We call on Medicare and all other insurers to continue to fund telehealth programs and work collaboratively on coverage and coding to lessen provider burden. We cannot go back to pre-COVID telehealth; instead, we must go forward. Patients will demand it and providers will expect it,” CHIME CEO and President Russell Branzell said in a recent statement.

Telehealth also is drawing bipartisan support. Senator Marsha Blackburn, R-Tenn., urged Congress to “continue to support this expansion and codify the administration’s changes to support the health needs of the American people,” in a recent news release.

Rep. Robin Kelly, D-Illinois, is introducing a bill directing HHS Secretary Alex Azar to oversee a telehealth study looking at the technology’s impact on health and costs, Politico reported in its newsletter today.

 

Taking advantage of the telehealth opportunity

Healthcare providers and payers will need to take action to ensure the full potential of telehealth is realized after the crisis has passed, according to McKinsey.

There continue to be challenges as providers cite concerns about telehealth include security, workflow integration, effectiveness compared with in-person visits, and the future for reimbursement. There also is a gap between consumers’ interest in telehealth (76%) and actual usage (46%). Factors such as lack of awareness of telehealth offerings and understanding of insurance coverage are some of the drivers of this gap.

“The current crisis has demonstrated the relevance of telehealth and created an opening to modernize the care delivery system,” McKinsey consultants wrote. “Healthcare systems that come out ahead will be those who act decisively, invest to build capabilities at scale, work hard to rewire the care delivery model, and deliver distinctive high-quality care to consumers.”

McKinsey outlined steps industry stakeholders should take to drive the growth of telehealth.

 

Payers: Health plans should look to optimize provider networks and accelerate value-based contracting to incentivize telehealth. Align incentives for using telehealth, particularly for chronic patients, with the shift to risk-based payment models.

Payers also should build virtual health into new product designs to meet changing consumer preferences, This new design may include virtual-first networks, digital front-door features (for example, e-triage), seamless “plug-and-play” capabilities to offer innovative digital solutions, and benefit coverage for at-home diagnostic kits.

 

Health systems: Hospitals and health systems should accelerate the development of an overall consumer-integrated “front door.” Consider what the integrated product will initially cover beyond what currently exists and integrate with what may have been put in place in response to COVID-19, for example, e-triage, scheduling, clinic visits, record access.

Providers also should build the capabilities and incentives of the provider workforce to support virtual care, including, workflow design, centralized scheduling, and continuing education. And, health systems need to take steps to measure the value of virtual care by quantifying clinical outcomes, access improvement, and patient/provider satisfaction. Include the potential value from telehealth when contracting with payers for risk models to manage chronic patients, McKinsey said.

 

Investors and health technology firms: These players also can support the new reality of expanded telehealth services. Technology firms should consider developing scenarios on how virtual health will evolve and when, including how usage evolved post-COVID-19, based on expected consumer preferences, reimbursement, CMS and other regulations.

Investors also should develop potential options and define investment strategies based on the expected virtual health future. For example, combinations of existing players/platforms, linkages between in-person and virtual care offerings and create sustainable value. Investors and technology companies also can identify the assets and capabilities to implement these options, including specific assets or capabilities to best enable the play, and business models that will deliver attractive returns.