Category Archives: Physician Specialist

Insurers and Private Equity Look to Join Forces to Further Consolidate Control of Americans’ Access to Health Care

Posted on by • Posted in 2024 Election Issues, Access, Antitrust, Health Insurance Industry, Medicare, Medicare Advantage, Monopoly, Monopoly Behavior, Out of Network, Patient Referrals, Pharmacy Benefits Management, Physician Acquisition, Physician Employment, Physician Specialist, Private Equity • Leave a comment
https://healthcareuncovered.substack.com/p/insurers-and-private-equity-look?utm_source=post-email-title&publication_id=255152&post_id=145798815&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

With both Republicans and Democrats taking on these Goliaths individually, this could be a watershed moment for bi-partisan action.

The push and pull between providers and insurance companies is as old as our health payment system. Doctors have long argued insurers pay too little and that they too often interfere in patient care.

Dramatic increases in prior authorization, aggressive payment negotiations and less-generous reimbursement to doctors by Medicare Advantage plans show there’s little question the balance of power in this equation has swung toward payers.

These practices have led some doctors to look for outside investment, namely private equity, to keep their cash flow healthy and their operations functional. The trend of private equity acquisitions of physician practices is worthy of the federal scrutiny it has attracted. Insurers have noticed this trend, too, and appear ready to propose a profitable partnership.

Bloomberg recently reported that CVS/Aetna is looking for a private equity partner to invest in Oak Street Health, the primary care business CVS acquired for $9.5 billion last year. Oak Street is a significant player in primary care delivery, particularly for Americans on Medicare, with more than 100 clinics nationwide. CVS is said to be exploring a joint venture with a private equity firm to significantly expand Oak Street’s footprint and therefore also expand the parent corporation’s direct control over care for millions of seniors and disabled Americans across hundreds of communities.

Republicans have led scrutiny of pharmacy benefit managers on Capitol Hill. And Democratic attacks on private equity in health care have recently intensified. I hope, then, that both parties would find common ground in being watchful of a joint venture between private equity and one of the country’s largest PBMs, Caremark, also owned by CVS/Aetna.

The combination of health insurers and PBMs over the last decade – United Healthcare and Optum; CVS/Aetna and Caremark, and Cigna and Express Scripts – has increasingly handed a few large corporations the ability to approve or deny claims, set payment rates for care, choose what prescriptions to dispense, what prescriptions should cost, and how much patients must pay out-of-pocket for their medications before their coverage kicks in.

As enrollment in Medicare Advantage plans has grown to include a majority of the nation’s elderly and disabled people, we have seen insurers source record profits off the backs of the taxpayer-funded program. But in recent months, insurers have told investors they have had higher than expected Medicare Advantage claims – in particular CVS/Aetna, which took a hammering on Wall Street recently because its Medicare Advantage enrollees were using more health care services than company executives had expected.

It is natural, then, that one of the largest insurer-owned PBMs is looking to expand its hold on primary care for older Americans. Primary care is often the gateway to our health care system, driving referrals to specialists and procedures that lead to the largest claims insurers and their employer customers have to pay. By employing a growing number of primary care providers, CVS/Aetna can increasingly influence referrals to specialists and therefore the care or pharmacy benefit costs those patients may incur.

Control of primary care doctors holds another benefit for insurers: determination of what primary care doctor a patient sees.

People enrolled in an Aetna Medicare Advantage or employer-sponsored plan may find that care is easier to access at Oak Street clinics. Unfortunately, while that feels monopolistic and ethically alarming, this vertical integration has received relatively little scrutiny by lawmakers and regulators.

No law prevents an insurance company or PBM from kicking doctors it does not own out of network while creating preferential treatment for doctors directly employed by or closely affiliated with the corporate mothership.

In fact, the system largely incentivizes this. And shareholders expect insurers to keep up with their peers. As UnitedHealth Group has become increasingly aggressive in its acquisitions of physician practices – now employing or affiliated with about one in ten of the nation’s doctors – it has also become increasingly aggressive in its contract negotiations with physicians it does not control, particularly the specialists who depend on the referrals that come from primary care physicians.

That’s another area where looking to expand Oak Street Health makes smart business sense for CVS/Aetna. Specialist physicians are historically accustomed to higher compensation than primary care doctors and are used to striking hard-fought deals with insurers to stay in-network.

By controlling the flow of primary care referrals to specialists, CVS/Aetna can control what insurers have long-desired greater influence over: patient utilization. As a key driver of referrals to specialists in a specific market, CVS/Aetna will have even more power in contract negotiations with specialists.

As Oak Street’s clinics grow market share in the communities they serve, specialists in that market will feel even more pressured to stay in-network with Aetna and to refer prescriptions to CVS pharmacies. That has the dual benefit for CVS/Aetna of helping to predict what patients will be treated for once they go to a specialist and control over what the insurer will have to pay that specialist.

With different corporate owners, this sort of model could easily run afoul of the federal Anti-Kickback Statute and Stark Law.

No doctor or physician practice is allowed to receive anything of value for the referral of a patient. But that law only applies when there is separate ownership between the referring doctor and the specialist.

CVS/Aetna would clearly be securing value – in the form of lower patient utilization and effective reimbursement rates – under this model. But with Oak Street owned by CVS/Aetna and specialists forced to agree to lower reimbursement rates through negotiations with an insurer that appears separate from Oak Street, there’s no basis for a claim under the Stark Law. There may be antitrust implications, but those are more difficult and take longer to prove – and the fact the federal government cleared CVS/Aetna to acquire Oak Street Health last year wouldn’t help that argument.

This model is already of concern, which is why I continue to urge examination of increasing insurer control of physicians across the country. Their embrace of private equity to accelerate this model is truly alarming. And given Democrats’ recent focus on private equity in health care, they should work with their Republican colleagues who are rightly alarmed about the increasingly anti-competitive, monopolistic health insurance industry.

For-profit hospital operators strained by physician fees, payer relations in Q3

Posted on by • Posted in Denial, Denial Management, Denial Rates, For-Profit, Health Insurance Denial, Health Insurance Industry, Health System, Hospital, Hospital Industry, Hospitalist, No Surprises Act, Operating Expense Reduction, Operating Expenses, Operating Income, Operating Margin, Operating Margin Drivers, Operating Performance, Operating Revenue, Physician Shortage, Physician Specialist, Physician Staffing, Physician Staffing - Private Equity Backed, Rev Cycle Management, Revenue Cycle • Leave a comment
https://www.healthcaredive.com/trendline/payer-provider-relationships/191/?utm_source=HD&utm_medium=3-4BlastDec14&utm_campaign=Veradigm

The nation’s largest for-profit hospital systems by revenue — HCA Healthcare, Community Health Systems, Tenet Healthcare and Universal Health Services — reported mixed results during the third quarter of 2023, despite announcing strong demand for patient services.

With the exception of HCA, each operator reported lower profits in the third quarter compared with the same period last year. Health systems CHS and HCA reported earnings that fell short of Wall Street expectations for revenue.

Major operators posted declining profits in the third quarter compared to the same period in 2022

Q3 net income in millions, by operator

Health SystemProfitPercent Change YOY
Community Health Systems$−91−117%
HCA Healthcare$1,80059%
Tenet Healthcare$101−23%
Universal Health Services$167−9%

Admissions rose across the board compared to the same period last year: Same facility equivalent admissions rose 4.1% at HCA , 3.7% at CHS and 0.6% at Tenet, and adjusted admissions at acute hospitals rose 6.8% at UHS. 

Although the for-profit operators began cost containment strategies earlier this year — recognizing that rising expenses, including costs of salary and wages, were pressuring hospital profitability post-pandemic — expenses also rose, with growth in salaries and benefit costs once again pressuring most operators’ revenue.

Hospital operators faced new challenges this quarter, executives said, including increased physician staffing fees and what hospital executives characterized as aggressive behavior from payers.

Hospitals highlight rising physician fees

Rising physician fees were a topic of concern on earnings calls this quarter, with executives reporting fees that were 15% to 40% higher compared with the same period last year.

Third-party staffing firms charge hospitals physician fees, a percentage of physicians’ salaries, on top of the salaries themselves. Physician fees are separate but related to contract labor costs, which plagued hospitals during the COVID-19 pandemic as they attempted to stem staffing shortages.

Hospitals typically contract specialty hospitalist roles — like anesthesiologists, radiologists and emergency department physicians — and incur associated staffing costs.

Physician fees at HCA, the country’s largest hospital chain, grew 20% year over year in the third quarter, according to CFO Bill Rutherford.

Physician fees were up by as much as 40% at UHS — making up 7.6% of total operating expenses this quarter and surpassing the company’s initial projections for the year, CEO Marc Miller said during an earnings call. Historically, physician fees accounted for about 6% of UHS’ total expenses.

Likewise, Franklin, Tennessee-based CHS attributed some of its third-quarter losses to “increased rates for outsourced medical specialists,” according to a release on the operator’s earnings.

Tenet CEO Saum Sutaria noted that physician fee expenses were up 15% year over year, but said on an earnings call that the operator had spied rising physician fees during the pandemic, and had begun efforts to contain costs — including restructuring staffing contracts and in-sourcing critical physician services.

As a result, physician fee costs at Tenet had remained “relatively flat” from the second quarter to the third quarter this year, according to the Sutaria.

Physician fee increases may be a delayed consequence of the No Surprises Act, which went into effect in January of last year, experts say.

On an earnings call, UHS CFO Steve Filton said “the industry has largely had to reset itself” in wake of the law. Tenet and CHS executives echoed the sentiment, noting that the law had disrupted staffing firms’ business models and complicated payment processes.

The No Surprises Act prevents patients who unknowingly receive out-of-network care at an in-network facility from being stuck with unexpected bills. However, the act has had unintended ripple effects, experts say.

Staffing firms and hospitals allege that the arbitration process created to resolve disputes between providers and insurers is unbalanced and incentivizes insurers to withhold reimbursement for care. In an August survey, over half of doctors reported insurers have either ignored decisions made by arbitrators or declined to pay claims in full.

In other cases, a backlog prevents claims from being adjudicated at all. Last year, the CMS found the federal arbitration process had only reached a payment determination in 15% of cases. Federal regulators have been forced to pause and restart the arbitration process multiple times in the wake of federal court decisions challenging arbitration methodology.

Although the act went into effect more than a year ago, many hospitals are just now feeling the strain, said Loren Adler, associate director at the Brookings Institute’s Schaeffer Initiative on Health Policy.

That’s because most insurers, hospitals and medical groups operate on three-year contracts, according to Adler. Staffing firms, which have struggled since the No Surprises Act was enacted, have passed on costs to hospitals as contracts come up for negotiation and insurers charge firms higher rates.

In the face of rising costs, some hospitals may opt to follow Tenet and CHS and in-source physicians — either to retain contracts with physicians who worked with firms that have folded or because the passing of the No Surprises Act makes outsourcing less attractive.

CHS hired 500 physicians from staffing firm American Physician Partners after the company collapsed in July. CFO Kevin Hammons said on an earnings call that hiring the physicians had saved CHS “approximately $4 million sequentially compared to the subsidy payments previously paid” to the staffing firm. 

However, in-sourcing may not be an effective cost containment strategy for all operators. HCA reported it was hemorrhaging money following its first-quarter majority stake purchase of staffing firm Valesco, which brought about 5,000 physicians onto its payroll. HCA CEO Sam Hazen said the system expects to lose $50 million per quarter on the venture through 2024, citing low payments as the primary issue.

Payer problems

Hospital executives also tied quarterly losses to aggressive behavior from insurers during third-quarter earnings calls.

UHS executives said payers were improperly denying high volumes of claims and disrupting payments to its hospitals, with UHS’ Miller characterizing insurers as “increasingly aggressive” during the third quarter. Though insurers had reduced their number of claims audits, denials and patient status changes during the early stages of the pandemic, payers were increasing denials and reviews, according to UHS’ Filton.

Tenet’s Sutaria said that claims denials were “excessive and inappropriate” during a third-quarter earnings call, adding that the hospital system was working to push back on the volume of claims denials.

Their number one strategy is to provide “excellent documentation” to refute denials quickly, Sutaria said.

Still, excessive claims denials can drive up administrative costs for hospitals, according to Matthew Bates, managing director at Kaufman Hall.

“That denial creates a lot more work, because now I have to deal with that bill two, three, four times to get through the denial process,” Bates said. “It starts to rapidly eat into the operating margins… [becoming] both a cashflow problem and an administrative costs burden.”

Executives across the four for-profit operators said they planned to negotiate with insurers to receive more favorable rates and limit the number of denials in subsequent quarters.

HCA’s Hazen said that it was important for HCA to maintain its in-network status with insurers “to avoid the surprise billing and that [independent dispute resolution] process,” but that it would work with its payers to get “reasonable rates” going forward.

Private equity-backed practices flexing market share muscle 

Posted on by • Posted in Antitrust, Federal Trade Commission, Federal Trade Commission (FTC), High Prices, Market Consolidation, Market Power, Market Trends, Mergers & Acquisitions, Physician, Physician Acquisition, Physician Aggregator, Physician Employment, Physician Practice Acquisition, Physician Specialist, Physician Staffing - Private Equity Backed, Private Equity • Leave a comment

https://mailchi.mp/d0e838f6648b/the-weekly-gist-september-8-2023?e=d1e747d2d8

This week we showcase data from a recent American Antitrust Institute study on the growth of private equity (PE)-backed physician practices, and the impact of this growth on market competition and healthcare prices. 

From 2012 to 2021, the annual number of practice acquisitions by private equity groups increased six-fold, especially in high-margin specialties. During this same time period, the number of metropolitan areas in which a single PE-backed practice held over 30 percent market share rose to cover over one quarter of the country. 

These “hyper-concentrated” markets are especially prevalent in less-regulated states with fast-growing senior populations, like Arizona, Texas, and Florida. 

The study also found an association between PE practice acquisitions and higher healthcare prices. In highly concentrated markets, certain specialties, like gastroenterology, were able to raise prices rise by as much as 18 percent. 

While new Federal Trade Commission proposals demonstrate the government’s renewed interest in antitrust enforcement, it may be too little, too late to mitigate the impact of specialist concentration in many states.  

Searching for new hope in primary care

Posted on by • Posted in Consumer Centered Medical Home, Consumer Experience, Consumer Loyalty, Consumer-Centric, Consumerism, Physician, Physician Acquisition, Physician Burnout, Physician Coverage, Physician Leadership, Physician Network, Physician Practice Valuation, Physician Shortage, Physician Specialist, Physician Staffing, Primary Care, Primary Care Loyalty, Primary Care Strategy • Leave a comment

https://mailchi.mp/377fb3b9ea0c/the-weekly-gist-august-4-2023?e=d1e747d2d8

A physician who has led the primary care enterprise for a large health system for over twenty years told us he’s never seen physician morale as low as it is now:

“Burnout is bad across the board for all specialties, but I’m having a really hard time finding the bright spots for primary care”.

We recalled a recent survey of primary care physicians that confirmed his observations, with 61 percent of doctors stating that primary care is “crumbling”. But it struck us that we’ve been seeing these kinds of dire surveys about the state of primary care for the entire quarter-century we’ve been doing this work.

What’s different now?


He posited one critical change. Ten years ago, during the heyday of accountable care, primary care was central to health system strategy. Systems were devoting resources to converting practices to patient-centered medical homes. “We felt like primary care was at the heart of transforming health systems, and that we were finally getting resources to help patients,” he shared.

“Now it feels like the health system has moved away from ‘value’, the focus is all on specialists and growing procedure volume again, and we’re being treated as a cost center and told to cut staff and up our referral targets.”

We agree. Although large independent primary care groups continue to command record valuations, overall, the transition to value has slowed, and work burden has increased given staffing shortages.

Where could optimism come from now?

We both agreed that workflow innovations to ease documentation burden and help the transition to virtual care appear closer to reality than ever before.

And the increased focus on “consumerism” has many systems recognizing that primary care is the first—and principal—touchpoint for most patients and will be key to winning consumer loyalty.

Are Medicare Advantage plans changing specialist practice patterns? 

Posted on by • Posted in Medicare Advantage, Physician Practice Patterns, Physician Specialist, Skilled Nursing Facility • Leave a comment

https://mailchi.mp/cc1fe752f93c/the-weekly-gist-july-14-2023?e=d1e747d2d8

A hospital CEO recently relayed a story about challenges in access and coverage for pulmonology services in their market. A key group of pulmonologists there had scaled back hospital coverage and stopped seeing outpatients entirely.

“We’re hearing that they are spending almost all of their time seeing patients in skilled nursing facilities (SNFs),” she shared. Shortly after, we heard from another health system that their cardiologists had started rounding frequently in long-term care sites. This seemed unusual, given that payment for specialist consults in SNFs and other long-term care facilities is meager—it’s hard enough to find hospitalists or rehabilitation physicians to provide coverage and round at these sites.

However, it struck us that both of these health systems were located in markets with a high penetration of Medicare Advantage (MA) plans, and we wonder whether MA plans have increased payment to specialists to motivate them to consult in skilled nursing settings?

It’s unclear if policies have changed, but it would make sense. If a cardiologist could evaluate a patient in a SNF and avert an ambulance ride and hospital admission, the MA plan would save money.

But if health plans chose to do this at scale, it could prompt a significant shift in how some doctors spend their time, while leaving access gaps in other settings. If you’re seeing similar changes in your market, we’d be interested in hearing more! 

A mounting specialist access crisis

Posted on by • Posted in Access, Access & Quality of Healthcare, Acuity, Backlog, Delayed Care, Office Visit, Physician, Physician Practice Management, Physician Specialist, Physician Staffing, Physician Workforce, Schedule Backlog, Schedule Control, Scheduling • Leave a comment

https://mailchi.mp/b5daf4456328/the-weekly-gist-july-23-2021?e=d1e747d2d8

Types of Doctors: Some Common Physician Specialties

We’ve been hearing a growing number of stories from patients about difficulties scheduling appointments for specialist consults.

A friend’s 8-year-old son experienced a new-onset seizure and was told that the earliest she could schedule a new patient appointment with a pediatric neurologist at the local children’s hospital was the end of November. Concerned about a five-month wait time after the scary episode, she asked what she should do in the meantime: “They told me if I want him to be seen sooner, bring him to the ED at the hospital if it happens again.”

A colleague shared his frustration after his PCP advised him to see a gastroenterologist. Calling six practices on the recommended referral list, the earliest appointment he could find was nine weeks out; the scheduler at one practice noted that with everyone now scheduling colonoscopies and other procedures postponed during the pandemic, they are busier than they’ve been in years. Recent conversations with medical group leaders confirm a specialist access crunch. 

Patients who delayed care last year are reemerging, and ones who were seen by telemedicine now want to come in person. “We are booked solid in almost every specialty, with wait times double what they were before COVID,” one medical group president shared. The spike in demand is compounded by staffing challenges: “I pray every day that another one of our nurses doesn’t quit, because it will take us months to replace them.”

Doctors and hospitals are now seeing a rise in acuity—cancers diagnosed at a more advanced stage, chronic disease patients presenting with more severe complications—due to care delayed by the pandemic. If patients can’t schedule needed appointments and procedures, this spike in severity could be prolonged, or even made worse. 

For medical groups who can find ways to open additional access, it’s also an opportunity to capture new business and engender greater patient loyalty.