Category Archives: Oversight

Senator urges Pennsylvania AG to intervene in Crozer sale

Posted on by • Posted in Attorney General, Financial Stewardship, Financial Transparency, Financial Viability, Health System, Hospital, Hospital Industry, Market Consolidation, Merger Conditions, Mergers & Acquisitions, Oversight, Public Interest, Public Oversight, Transparency • Leave a comment
https://www.beckershospitalreview.com/finance/senator-urges-pennsylvania-ag-to-intervene-in-crozer-sale.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Pennsylvania state Sen. Tim Kearney has raised concerns about the lack of transparency and details around the planned sale of Upland, Pa.-based Crozer Health and has called on the state attorney general to step in and conduct a thorough analysis of the deal, the Daily Times reported Aug. 22.

Earlier this month, Los Angeles-based Prospect Medical Holdings and CHA Partners signed a letter of intent for CHA to acquire Crozer. The proposed deal would involve transitioning Crozer’s four hospitals back to nonprofit status.

“Prospect’s proposed sale of Crozer to CHA Partners LLC exemplifies the need for state oversight of hospital sales, as both entities appear to have histories of burning public partners despite demanding hefty subsidies,” Mr. Kearney said in a statement shared with Becker’s.

Unlike many other states, Pennsylvania’s Attorney General lacks statutory authority to deeply evaluate these deals, according to Mr. Kearney. 

“While the AG’s legal settlement with Prospect gives them some oversight of this deal, the legislature needs to provide the AG with greater authority to protect hospitals and the communities that depend on them,” he said. “If the choice is CHA or closure, then we need some assurances that they will be a responsible organization and not just a profiteering speculator.”

Prospect, a for-profit company, plans to sell nine of its 16 hospitals in Pennsylvania, Rhode Island and Connecticut and is also being investigated by the Justice Department for alleged violations of the False Claims Act. A spokesperson for Prospect told Becker’s the system will continue to cooperate with the investigation, but feels that the allegations have no merit. 

CHA did not respond to Becker’s request for comment.

House subcommittee focuses on need for 340B transparency

Posted on by • Posted in Dept of Health and Human Services (HHS), Health System, Healthcare Reform, Hospital, Hospital Industry, Lawsuit, Medicare 340B Drug Discount Program, Oversight, Pharmaceutical Industry, Pharmacy, Transparency • Leave a comment

https://www.kaufmanhall.com/healthcare-consulting/gist-resources-kaufman-hall/kaufman-hall-blogs/gist-weekly

On Tuesday, health system leaders testified before the House Energy and Commerce Subcommittee on Oversight and Investigations about potential changes to the 340B Drug Pricing Program.

The committee was receptive to witnesses’ claims that the program is essential to the financial survival of many systems, but representatives stated that “the status quo is not acceptable” and that they had a responsibility to “step in and provide oversight.”

There was little interest expressed in broad overhauls to the program, but both witnesses and representatives focused on how it could benefit from greater transparency, for example requiring hospitals to disclose 340B revenue, how savings are used, and which patient populations are served through the program.

Meanwhile, Republicans and Democrats in both houses have introduced multiple bills this session that focus on various aspects of the 340B program, including transparency.
The Gist: It’s encouraging to see members of congress recognize how essential the 340B program is to health system finances, and of the potential reforms on the table, increased transparency is a relatively palatable option.

Congress is exploring statutory tweaks to the program in response to the myriad legal challenges concerning it, many of which involve the Department of Health and Human Services. Several of these lawsuits stem from more than 20 major drugmakers restricting 340B discounts at contract pharmacies, which has led multiple states to enact legislation protecting these discounts, in turn prompting further lawsuits. 

The mess of conflicting rulings these cases have produced so far is a clear sign that the 340B statute will be amended, and health system advocates should continue working with Congress to find solutions that preserve the integrity of the program. 

Risking lives in pursuit of profits

Posted on by • Posted in Nursing Home, Outcomes, Oversight, Private Equity, Profit Margin, Profit Model, Profit Motive, Regulation, Return on Investment, Shareholder Primacy, Staffing Issues • Leave a comment

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 norms around science and politics are cracking

Posted on by • Posted in 2020 Election Issues, Accountability, Centers for Disease Control & Prevention (CDC), Coronavirus, Credibility, Crisis, Crisis Management, Data Consistency, Data Control, Data Governance, Data Integrity, Data Interpretation, Data Transparency, Evidence-based Leadership, Evidence-Based Plan, Evidence-Based Policy, Executive Orders, Expert, Expert Opinion, Health Policy, Norm, Oversight, Politics, Public Control, Public Discourse, Public Opinion, Public Perception, Public Trust, Rule of Law, Scientists, Silencing, Silencing Speech, Transparency, Trust, Truth • Leave a comment

https://www.axios.com/science-politics-norms-cracking-f67bcff2-b399-44f4-8827-085573f5ae52.html

Illustration of a hand holding a cracked microscope slide containing the U.S. flag.

Crafting successful public health measures depends on the ability of top scientists to gather data and report their findings unrestricted to policymakers.

State of play: But concern has spiked among health experts and physicians over what they see as an assault on key science protections, particularly during a raging pandemic. And a move last week by President Trump, via an executive order, is triggering even more worries.

What’s happening: If implemented, the order creates a “Schedule F” class of federal employees who are policymakers from certain agencies who would no longer have protection against being easily fired— and would likely include some veteran civil service scientists who offer key guidance to Congress and the White House.

  • Those agencies might handle the order differently, and it is unclear how many positions could fall under Schedule F — but some say possibly thousands.
  • “This much-needed reform will increase accountability in essential policymaking positions within the government,” OMB director Russ Vought tells Axios in a statement.

What they’re saying: Several medical associations, including the Infectious Diseases Society of America, strongly condemned the action, and Democrats on the House oversight panel demanded the administration “immediately cease” implementation.

  • “If you take how it’s written at face value, it has the potential to turn every government employee into a political appointee, who can be hired and fired at the whim of a political appointee or even the president,” says University of Colorado Boulder’s Roger Pielke Jr.
  • Protections for members of civil service allow them to argue for evidence-based decision-making and enable them to provide the best advice, says CRDF Global’s Julie Fischer, adding that “federal decision-makers really need access to that expertise — quickly and ideally in house.”

Between the lines: Politics plays some role in science, via funding, policymaking and national security issues.

  • The public health system is a mix of agency leaders who are political appointees, like HHS Secretary Alex Azar, and career civil servants not dependent on the president’s approval, like NIAID director Anthony Fauci.
  • “Public health is inherently political because it has to do with controlling the way human beings move around,” says University of Pennsylvania’s Jonathan Moreno.

Yes, but: The norm is to have a robust discussion — and what has been happening under the Trump administration is not the norm, some say.

  • “Schedule F is just remarkable,” Pielke says. “It’s not like political appointees editing a report, [who are] working within the system to kind of subvert the system. This is an effort to completely redefine the system.”
  • The Center for Strategic and International Studies’ Stephen Morrison says that the administration has been defying normative practices, including statements denigrating scientists, the CDC and FDA.

The big picture: Public trust in scientists,which tends to be high, is taking a hit, not only due to messaging from the administration but also from public confusion over changes in guidance, which vacillated over masks and other suggestions.

  • Public health institutions “need to have the trust of the American people. In order to have the trust of the American people, they can’t have their autonomy and their credibility compromised, and they have to have a voice,” Morrison says.
  • “If you deny CDC the ability to have briefings for the public, and you take away control over authoring their guidance, and you attack them and discredit them so public perceptions of them are negative, you are taking them out of the game and leaving the stage completely open for falsehoods,” he adds.
  • “All scientists don’t agree on all the evidence, every time. But what we do agree on is that there’s a process. We look at what we know, we decide what we can clearly recommend based on what we know, sometimes when we learn more, we change our recommendations, and that’s the scientific process,” Fischer says.

What’s next: The scientific community is going to need to be proactive on rebuilding public trust in how the scientific process works and being clear when guidance changes and why it has changed, Fischer says.

Nonprofit health systems — despite huge cash reserves — get billions in CARES funding

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Coronavirus, Dept of Health and Human Services (HHS), Economic Crisis, Economic Stimulus, Financially Distressed, Health System, Hospital, Hospital Industry, Medicare Advance Payments, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Oversight, The CARES Act, Uncertainty • Leave a comment

https://www.healthcaredive.com/news/nonprofit-health-systems-despite-huge-cash-reserves-get-billions-in-car/580078/

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Next Steps for Public Policy | Cato Institute

Healthcare Dive’s findings revive concerns that greater examination of hospital finances is needed before divvying up COVID-19 rescue funding allocated by Congress.
The nation’s largest nonprofit health systems, led by Kaiser Permanente, Ascension and Providence, have received more than $7.1 billion in bailout funds from the federal government so far, as the novel coronavirus forced them to all but shutter their most profitable business lines.

At the same time, some of these same behemoth systems sit on billions in cash, and even greater amounts when taking into account investments that can be liquidated over time. That raises questions about how much money these systems actually need from the federal government given they have hundreds of days worth of cash on hand. Indeed, some big systems, like Kaiser Permanente, are already returning some of the funds.

And it revives concerns that greater examination of hospital finances is needed before divvying up rescue packages.

Nonprofits with more cash and greater net income tend to have received less funding — but not always

This is the second story of a Healthcare Dive series examining the bailout funds health systems received amid the COVID-19 pandemic. In this report, we focus on the 20 largest nonprofits by revenue and the amount of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding they have received compared to the amount of cash on hand and recent financial performance. Healthcare Dive used bond filings filed as of June 12 to compile the amount of CARES funding received by health systems. In some instances, we relied on data from Good Jobs First, which also tracks the money. In addition to bond filings, we relied on annual audited financial statements and analyst reports to compile financial performance and days cash on hand.

Cash reserves

The cash hospitals have on hand has become an important metric to watch over the past few months as many have seen reserves dwindle to pay everyday expenses as revenue has dried up. At the same time, hospital volumes have plunged due to the economy grinding to a halt.

“You can’t write a payroll check off of accounts receivables, you have to write it off your cash and cash equivalents.” Rick Gundling, senior vice president of healthcare financial practices for Healthcare Financial Management Association, told Healthcare Dive.

In the early days of the outbreak in the U.S., some hospital executives sounded the alarm over dire financial straits, particularly small, rural hospitals whose executives warned they were weeks away from not making payroll. These pleas helped push Congress to pass massive rescue packages, with providers earmarked for $175 billion thus far.

Nonprofit health systems tend to keep more cash on hand than publicly-traded hospital chains. That’s because investor-owned facilities can raise capital more quickly, mainly through the stock market, while nonprofits have to rely on the bond market and their own operations, Gundling said.

Another important avenue that can boost cash is investments. It’s common for large nonprofits to rake in more in net income than they do from their core operations of running hospitals and caring for patients, in large part due to their investments in the stock market.

For example, Chicago-based CommonSpirit posted an operating loss of $602 million during its fiscal year 2019 but net income far exceeded that, totaling $9 billion. It was buoyed by investments and its recent merger, bringing together Catholic Health Initiatives and Dignity Health, according to its audited financial statement for the year ended June 30, 2019.

Many nonprofit health systems rake in more in net income than they do from their core operations

Ascension, the second-largest nonprofit system, received about $492 million in CARES funding, according to Good Jobs First. Ascension reported having 231 days cash on hand. Its unrestricted cash and investments totaled a sum of $15.5 billion as of March 31.

Kaiser, the nation’s largest nonprofit system, has about 200 days of cash on hand as of its fiscal year end, Dec. 31, according to a recent report from Fitch Ratings.

Providence, the third-largest nonprofit and first U.S. health system to treat a COVID-19 patient, reported 182 days of cash on hand as of March 31, according to a May bond filing.

However, Cleveland Clinic has the most cash on hand when measured in days among the top 20 nonprofits.

Cleveland Clinic had 337 days of cash on hand at the end of March, according to an unaudited financial statement from May. That’s nearly an entire year’s worth of operating expenses. The system has received $199 million in CARES funding, according to that same filing.

Rochester, Minnesota-based Mayo Clinic had the second most days of cash on hand with 252. Mayo Clinic has received $220 million in grant money, according to a May financial filing.

“You would never see that much cash on an investor-owned hospital,” Gundling said. “Generally, they want to pour that cash back into the services,” he said.

NYC Health + Hospitals, also the nation’s largest municipal health system, had the fewest days of cash on hand and it received $745 million in CARES funding, the second-most compared to other systems.

How health systems’ funding and cash on hand compare

Samantha Liss (@samanthann) | Twitter

Risks of accepting bailout money

Sitting on a pile of money and accepting the bailout funds is already raising eyebrows.

“There is significant headline risk,” Michael Abrams, co-founder and partner at Numerof & Associates, told Healthcare Dive.

Worried about the optics, other institutions with considerable reserves or endowments have returned federal bailout funds, including Harvard University and major health insurers.

Providers are returning relief funds, too. Kaiser Permanente, the nation’s largest nonprofit by revenue, told the San Francisco Business Times it has returned more than $500 million in CARES funding. CEO Greg Adams the system “will do fine” despite the setback from the pandemic.

Mara McDermott, vice president of McDermott+Consulting, agrees there is a risk in accepting the grant money if systems possess such large reserves. Yet, she also cautioned that the healthcare ecosystem is so much more complicated.

“Regardless of the structure, it requires a deeper dive into need and that’s not what HHS did. They just wrote checks,” McDermott told Healthcare Dive.

Just because a parent company has a large cash reserve, it doesn’t mean that the money is readily available on a daily basis to a smaller practice it may own down the chain and one that hasn’t had any patients since March, she said.

“It’s easy to point the finger… but it’s much more complex than that,” she said.

The first tranche of money HHS sent to hospitals was based on Medicare fee-for-service business, and later on net patient service revenue. These formulas were criticized for putting some hospitals at an advantage compared to others, particularly those with larger shares of Medicaid patients. HHS has since released more targeted funding for providers in hot spots such as New York and plans to funnel funding to those serving a large share of Medicaid members in an attempt to address earlier concerns.

Still, without certainty of how long this public health crisis will last, no one knows how much cash on hand will ultimately be enough.

“A year’s cash on hand sounds like a lot of money but when you expend hundreds of millions of dollars a month, it won’t take you long to burn through that,” Scott Graham, CEO of Three Rivers Hospital, a 25-bed facility in rural Washington state, told Healthcare Dive.

Graham had feared in March that without quick intervention from the government, his hospital was near closure with just a few weeks cash on hand. The federal grant money has bought his hospital some time, about six months if volumes stay where they are, longer if they tick back up.

“I think what HHS did was right at the moment because we needed to ensure that the healthcare system survived this. It’s one thing for a small rural hospital to close, it’s another thing for the entire health system to collapse,” he said.

 

Nursing homes go unchecked as fatalities mount

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Clinical Testing, Contact Tracing, Coronavirus, Crisis, Crisis Management, Health Policy, Infection Control, Infection Control Plan, Infectious Virus, Mortality, Nursing Home, Oversight, Pandemic, Personal Protective Equipment (PPE), Public Health, Public Safety, Quarantine, Social Distancing • Leave a comment

https://www.politico.com/news/2020/06/15/nursing-homes-coronavirus-321220

Health workers help a patient into Cobble Hill Health Center

About half of all facilities have yet to be inspected for procedures to stop the spread of coronavirus.

Thousands of nursing homes across the country have not been checked to see if staff are following proper procedures to prevent coronavirus transmission, a form of community spread that is responsible for more than a quarter of the nation’s Covid-19 fatalities.

Only a little more than half of the nation’s nursing homes had received inspections, according to data released earlier this month, which prompted a fresh mandate from Medicare and Medicaid chief Seema Verma that states complete the checks by July 31 or risk losing federal recovery funds.

A POLITICO survey of state officials, however, suggests that the lack of oversight of nursing homes has many roots. Many states that were hit hard by the virus say they chose to provide protective gear to frontline health workers rather than inspectors, delaying in-person checks for weeks if not months. Some states chose to assess facilities remotely, conducting interviews over the phone and analyzing documentation, a process many experts consider inadequate.

In places where state officials claimed that in-person inspections have taken place, the reports found no issues in the overwhelming majority of cases, even as Covid-19 claimed more than 31,000 deaths in nursing homes. Less than 3 percent of the more than 5,700 inspection surveys the federal government released this month had any infection control deficiencies, according to a report on Thursday by the Center for Medicare Advocacy, a nonprofit patient activist group.

“It is not possible or believable that the infection control surveys accurately portray the extent of infection control deficiencies in U.S. nursing facilities,” the report states.

Noting the vast and unprecedented danger that the coronavirus presents to the elderly and people with disabilities, patient advocates described the lack of inspections as a shocking oversight.

“If you’re not going in, you’re essentially taking the providers’ word that they’re doing a good job,” said Richard Mollot, the executive director of the Long Term Care Community Coalition.

In March, the Trump administration paused routine nursing home inspections, which typically occur about once a year. Instead, the Centers for Medicare and Medicaid Services asked that state agencies focus on inspecting facilities for their infection control practices, such as whether staff wash their hands or properly wear protective clothing before tending to multiple patients.

But for more than two months, state inspectors failed to enter half the country’s homes — a revelation that prompted CMS to crack down.

“We are saying you need to be doing more inspections,” Verma told reporters, explaining her message to states. “We called on states in early March to go into every single nursing home and to do a focused inspection around infection control.”

In some hard-hit states, inspectors conducted remote surveys rather than going into nursing homes, a process that involved speaking to staff by phone and reviewing records. In Pennsylvania, for example, inspectors conducted interviews and reviewed documents for 657 facilities from March 13 to May 15 — most of which was done remotely.

But critics say the failure to make in-person checks prevented states from identifying lapses at a crucial time. The fact that family members were blocked from visiting their relatives — a policy intended to prevent the virus from entering the facility — removed another source of accountability in homes, some of which ended up having more than half of their residents stricken with the coronavirus.

Keeping relatives out of nursing homes — a policy that continues — has made it more difficult to advocate on behalf of residents in the state, said Karen Buck, executive director of the Pennsylvania-based SeniorLAW Center. More than 4,000 residents of nursing homes and other personal care facilities have died of coronavirus in the Keystone State.

“The inspections are vital,” said Buck. “I think access to residents is essential, and we are very concerned that Pennsylvanians are behind where we should be. We recognize these are very difficult times for our leaders, but we can’t continue to wait.”

Pennsylvania officials maintained that the remote inspections were beneficial, and said they went into the facilities when they felt there was significant concern over residents’ health.

“We can conduct the same interviews, review the same documentation and do all the same actions we could in person, except for the ability to be on-site,” health department spokesperson Nate Wardle wrote in an email, adding that Verma’s office approved the remote procedures earlier this spring.

Nonetheless, many public health experts say they believe states have erred in choosing not to prioritize nursing home inspectors when handing out protective equipment. While it makes sense to direct resources to front-line workers, nursing home inspectors were only a tiny number of people compared to the hundreds of thousands of hospital employees — and experts contend that the situation in nursing facilities was dire enough to require immediate action.

David Grabowski, an expert in aging and long-term care at Harvard Medical School, said he understands inspectors were put in a tough position in the early days of the pandemic, but that inspections needed to be ramped up within a few weeks.

“I think after those first few weeks we should have had personal protective equipment in place for the inspectors and doing these inspections remotely is really second best,” he said.

And yet state after state waited on inspections or performed them remotely.

In Utah, only a small portion of the state’s nearly 100 facilities received inspections over the first three months of the pandemic. Only now is the state health department ramping up on-site inspections, with the goal of hitting all of its nursing homes by the second week of July. It conducted 14 last week, and received some help from federal inspectors with another four.

The state survey agency said it made a conscious determination not to request protective equipment for state inspectors in the initial phase of the pandemic, fearing they would take supplies away from frontline health providers, said Greg Bateman, the head of long-term care surveys. Instead, the department conducted 43 remote reviews and talked to nursing homes at least twice a week.

In Idaho, state inspectors have only recently received the N95 masks, face shields and gowns necessary to perform inspections.

“The reason we had difficulty is because Idaho, like many other states, was challenged to secure adequate PPE to meet the needs of the various health care entities,” health department spokesperson Niki Forbing-Orr wrote in an email. “The state surveyors had concerns about potentially using PPE that other entities could use that provide direct medical services and care to Idaho residents.”

In New Jersey, which has seen roughly 6,000 deaths in nursing homes and other communal settings, the health department also first chose sending supplies to frontline workers in nursing homes and hospitals. The state began making in-person checks when it received PPE April 16, said Dawn Thomas, a New Jersey health department spokesperson.

But New Jersey still has a long way to go. The state has completed inspections in only about 115 out of more than 360 nursing homes as of June 3, according to Thomas.

While Pennsylvania, Idaho, New Jersey and other states complained of a lack of PPE, other states battling major outbreaks of coronavirus in nursing homes have completed nearly all of their inspections, calling into question the explanations for why others have struggled.

Washington state, where the Life Care Center of Kirkland became an early epicenter of the coronavirus outbreak, has completed 99 percent of its inspections, the state reported this spring to CMS. And Michigan, which has had nearly 2,000 deaths in nursing homes, has completed nearly 85 percent of its inspections.

By contrast, states such as West Virginia and Maryland, with only 11.4 and 16.4 percent of facilities inspected as of the end of May, lagged way behind.

A nursing home in Maryland’s Carroll County served as an early example of just how quickly the coronavirus can ravage nursing homes. On March 26, a resident at a Carroll County, Md., facility tested positive for the coronavirus. Two weeks later, the number of confirmed cases was up to 77 out of 95 residents, along with 24 staff members. At least 28 residents have died.

A Maryland health department spokesperson says the state took “early and aggressive measures” to address the virus in nursing homes, noting that Maryland created the country’s first strike teams — composed of state and local health officials, medical professionals and National Guard members — to help triage seniors and scrutinize facilities.

Nonetheless, state inspectors didn’t have personal protective equipment until late April, according to the health department.

“In April, PPE acquisition was challenging across the nation and in Maryland due to the rapidly evolving Covid-19 pandemic,” the spokesperson wrote in an email, adding that the department sought N95 masks, gowns and other items from “the national stockpile, FEMA and national and international supply chains.”

With many facilities still closed to visitors, the slow pace of inspections lost a key window into the nursing homes during the pandemic.

“I think having more eyes on what’s happening is really important,” Grabowski said.

Last month, the Health and Human Services’ watchdog agency announced plans to review the pace of inspections in nursing homes and barriers to completing them — referring to such checks as a “fundamental safeguard to ensure that nursing home residents are safe and receive high-quality care.”

“There is no substitute for boots on the ground — for going into a facility to assess whether a facility is abiding by long-standing infection control practices,” Verma told reporters this month.