The Role of Private Equity in Driving Up Health Care Prices

https://hbr.org/2019/10/the-role-of-private-equity-in-driving-up-health-care-prices

Private investment in U.S. health care has grown significantly over the past decade thanks to investors who have been keen on getting into a large, rapidly growing, and recession-proof market with historically high returns. Private equity and venture capital firms are investing in everything from health technology startups to addiction treatment facilities to physician practices. In 2018, the number of private equity deals alone reached  almost 800, which had a total value of more than $100 billion.

While private capital is bringing innovation to health care through new delivery models, technologies, and operational efficiencies, there is another side to investors entering health care. Their common business model of buying, growing through acquisition or “roll-up,” and selling for above-average returns is cause for concern.

Take the phenomenon of surprise bills: medical invoices that a patient unexpectedly receives because he or she was treated by an out-of-network provider at an in-network facility. These have been getting a lot of attention lately and are driven, at least in part, by investor-backed companies that remain out of network (without contracts with insurers) and can therefore charge high fees for services that are urgently or unexpectedly required by patients. Private equity firms have been buying and growing the specialties that generate a disproportionate share of surprise bills: emergency room physicians, hospitalists, anesthesiologists, and radiologists.

In other sectors of the economy, consumers can find out the price of a good or service and then choose not to buy it if they don’t believe it to be worth the cost. In surprise bill cases, they can’t. Patients are often unaware that they need these particular services in advance and have little choice of physician when they use them.

To blunt growing bi-partisan political support for protecting patients from surprise bills, various groups have lobbied against legislation that would limit the practice. They include Doctor Patient Unity, which has spent more than $28 million on ads and is primarily funded by large private-equity-backed companies that own physician practices and staff emergency rooms around the country. Their work seems to be having an impact: efforts to pass protections have stalled in Congress.

Physician practices have been a popular investment for private equity firms for years. According to an analysis published in Bloomberg Law, 45 physician practice transactions were announced or closed in the first quarter of 2019. At the current pace, the number of deals to buy physician and dental practices will surpass 250 this year, far exceeding 2018 totals. Yes, these investments can provide independent physicians and small practices with an alternative to selling themselves to hospitals and can help them deal with administrative overhead that takes them away from the job they were trained to perform: providing care. But, at least in some cases, the investors’ strategy appears to be to increase revenues by price-gouging patients when they are most vulnerable.

Surprise billing from investor-backed physician practices isn’t the only problem. Private-equity-owned freestanding emerging rooms (ERs) are garnering scrutiny because of their proliferation and high rates. The majority of freestanding ER visits are for non-emergency care, and their treatment can be 22 times more expensive than at a physician’s office.

However lucrative in the short run, private investor-backed companies that hurt consumers are not likely to perform well financially in the long term. Unlike many other markets, health care is both highly regulated and highly sensitive to the reality or appearance of victimizing the sick and vulnerable. Consumer outrage leads quickly to government intervention.

Investors will benefit most by solving the health care system’s legion of problems and by adding true value to our health system — delivering high-quality services at affordable prices and eliminating waste. Those that try to maximize their short-term profits by pushing up prices without adding real healthcare benefits are likely to find that those strategies are unsustainable. Lawmakers and regulators won’t let them get away with such practices for long.

 

 

 

GEISINGER OFFERS DEBT-FREE PRIMARY CARE MEDICAL SCHOOL

https://www.healthleadersmedia.com/clinical-care/geisinger-offers-debt-free-primary-care-medical-school?spMailingID=16548061&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1760517984&spReportId=MTc2MDUxNzk4NAS2

Program offered for medical students who’ll commit to primary care at the Pennsylvania-based health system after graduating.


KEY TAKEAWAYS

The program will pick 40 first- and second-year students in each medical class through a competitive application process.

Selection criteria include  financial need, academic merit, diversity, and predictors of whether the applicant will stay in Geisinger’s service area.

The program will provide full coverage of tuition and fees plus a monthly $2,000 stipend through four years of medical school. 

Geisinger and Geisinger Commonwealth School of Medicine have created the Geisinger Primary Care Scholars Program that will offer debt-free medical school and living assistance to medical students who agree to work within primary care at the health system after they graduate.

Medical students often carry $200,000 or more in debt, which pushes them into higher-paying specialties. Geisinger President and CEO Jaewon Ryu, MD, says that removing the financial strain in exchange for a four-year commitment to practice at Geisinger will make it easier for more med students to pursue primary care.

“At Geisinger, we’ve been able to prove that by focusing on primary care we can improve outcomes, lower costs and improve satisfaction among patients and providers,” Ryu said.

“We’ve built some innovative programs that expand upon the notion of what is primary care and where it is delivered. With all of these different offerings, we are thrilled to welcome anyone who shares this passion around new and exciting ways to deliver this core care,” Ryu said.

“So, it’s only natural that we extend that commitment to training the next generation of physicians. These scholars have the opportunity to learn and later work in Geisinger’s innovative primary care environment without the worry of how they will pay for their education,” he said.

The program will pick 40 first- and second-year students in each incoming medical class through a competitive application process. Selection criteria include demonstrated financial need, academic merit, diversity, passion for serving their communities, and predictors of whether the applicant is likely to stay in Geisinger’s service area.

The program will provide full coverage of tuition and fees plus a monthly $2,000 stipend through the four years of medical school.

“I can’t think of a better opportunity for these scholars to pursue their commitment to primary care than by providing debt-free medical schooling,” said Steven J. Scheinman, MD, executive vice president and chief academic officer at Geisinger and Dean of the Geisinger Commonwealth School of Medicine.

Last year Geisinger started the Abigail Geisinger Scholars Program. Which gives 10 students in each class up to four years of tuition in the form of a loan, which is forgiven upon completion of a service commitment as a Geisinger physician in any specialty.

“I CAN’T THINK OF A BETTER OPPORTUNITY FOR THESE SCHOLARS TO PURSUE THEIR COMMITMENT TO PRIMARY CARE THAN BY PROVIDING DEBT-FREE MEDICAL SCHOOLING. ”

 

 

 

Gainesville health system paying patients’ out-of-network costs

https://www.albanyherald.com/news/gainesville-health-system-paying-patients-out-of-network-costs/article_5a82d58a-f4f1-11e9-b7b5-8bebc4253708.html

gainesville hospital.jpg

With a contract impasse in its third week, a Gainesville-based health system is spending millions of dollars so that thousands of patients are not having to pay more when visiting the system’s doctors and hospitals.

Northeast Georgia Health System’s contract with Anthem ended Sept. 30, which means that since then, Georgians with Anthem insurance have been out of network for NGHS facilities and physicians.

But in an unusual move, the Northeast Georgia system is making up the financial difference between in-network and out-of-network prices through Dec. 31. That way, Anthem patients won’t pay higher fees when visiting NGHS medical providers, the system said.

“While it will cost millions of dollars per month to protect our patients from out-of-network costs, we’d rather do that than agree to a proposal that would jeopardize the health of our community for years to come,’’ Steve McNeilly, vice president of managed care for NGHS, said.

Most contract disputes between health systems and insurers get resolved before the end of the previous deal, although some agreements come just hours before the end of the expiring pact. The terminated contract between NGHS and Anthem is an exception, and this particular stalemate doesn’t show any sign of progress. Neither side has mentioned any negotiations or even indicated that talks are being scheduled.

The standoff comes at a time when many Georgians are entering their open enrollment period for the 2020 health plan year.

Anthem is by far the state’s biggest health insurer. Northeast Georgia’s hospitals in Gainesville, Braselton, Winder and Dahlonega, as well as its urgent care facilities and many physician group locations, are now out of network for Anthem patients.

“Anthem has only contacted NGHS once since the end of September – and that was only to inform us that they would be processing all claims as out-of-network,’’ McNeilly said. He said Northeast Georgia has proposed a contract with concessions, but that Anthem “refuses to take any meaningful action.’’

“Unfortunately, it appears that Anthem intends for us to be out of network for an extended period of time, so we’re urging patients to switch to a different health insurance plan during open enrollment,’’ McNeilly added.

Northeast Georgia said patients can call its Patient Access Service Center at (770) 219-7678 to get a personalized estimate of hospital charges for upcoming surgeries or procedures. If patients have questions about charges for physician office visits, they can call their physician’s office for more information, NGHS said.

Anthem said Monday that it is “standing firm for our consumers who need greater affordability.’’

The latest proposals from NGHS would increase costs “well above other health systems in the state,’’ Christina Gaines, an Anthem spokeswoman, said. “These increases place a significant burden on consumers because any substantial price increase in the services at these facilities would be directly reflected in increases in medical expenses covered by employer-sponsored group health plans, as well as to member premiums and cost share amounts.’’

What NGHS proposed “was simply not sustainable’’ for Anthem members, she said.

“We provided a revised proposal to them two days before the contract expired and did not receive a response,’’ Gaines said. “We are willing to resume talks so we can come to a new agreement that is fair, provides flexibility and protects affordability.”

Anthem said it can’t guarantee that Northeast Georgia will continue to charge patients the same rates as under the previous contract.

“To protect against unexpected balance billing, and other expenses associated with out-of-network providers, we are urging members to use in-network physicians and facilities,’’ Gaines said. “Anthem continues to have a broad, statewide provider network that delivers access to other quality health care options that remain in-network for our consumers.” Anthem directed consumers to visit www.anthem.com/nghs for information.

Craig Savage, a consultant with CMBC Advisors in North Carolina, said he had not heard previously of a hospital-based system covering the cost gap for patients who are forced out of network by a contract dispute.

“I think it’s a demonstration of good faith to patients,’’ Savage said. “It puts a little marketing pressure on Anthem.’’

But he added that even losing the business of 40,000 patients is “not going to have a huge [financial] impact on Anthem in Georgia.’’

And Savage said the contract standoff may put pressure on local physicians who could lose many patients to another insurer during open enrollment season.

 

 

 

California will be first state to train doctors in how their counsel can prevent gun deaths

https://www.sacbee.com/news/politics-government/capitol-alert/article236257503.html

Image result for California will be first state to train doctors in how their counsel can prevent gun deaths

The state of California will pay $3.85 million to researchers at the University of California, Davis, to develop the nation’s first program to train health care professionals to help their patients reduce firearm-related injury and death, university officials announced Tuesday.

Gov. Gavin Newsom approved the funding on Friday when he signed Assembly Bill 521 . Money will go toward educating a variety of California providers, including practicing physicians, mental health care professionals, physician assistants, nurse practitioners, nurses, health professions students and other specialists.

Dr. Amy Barnhorst, a UC Davis Health psychiatrist, will oversee the training. She has spent a good deal of her career studying gun violence, suicide and public mental health.

“Medical and mental health providers are uniquely positioned to respond to and prevent firearm-related harm,” Barnhorst said. “Many have asked for more information on when and how to discuss firearms with patients and what to do when patients have access to guns and are at high risk for harming themselves or others.”

Barnhorst and other UC Davis researchers look into how to prevent violence, what causes it, and the consequences of it at the Violence Prevention Research Program. This research program is home to the UC Firearm Violence Research Center.

Around the nation, physicians have called for meaningful policy changes to address the public health risk of gun violence in the wake of mass shootings like those at the Gilroy Garlic Festival in July and the Borderline Bar and Grill in Thousand Oaks last November. California reported 3,184 gun-related deaths in 2017, including 1,610 suicides and 1,435 homicides, according to data from the U.S. Centers for Disease Control and Prevention.

Researchers from UCD’s Violence Prevention Research Program, Stanford University and other institutions teamed up to publish guidelines in the Annals of Internal Medicine on how the nation’s physicians could begin to have conversations with patients at risk of harm.

Dr. Garen Wintemute, the program’s director, said the new law allows Barnhorst and other team members to build upon this work.

Physicians can, for instance, counsel patients on safe storage practices or how to initiate gun violence restraining orders or how to intervene on behalf of individuals with mental health issues. To emphasize the importance of these conversations, researchers cited data in the Annals of Internal Medicine that show that as many as 30 percent of firearms owners keep at least one gun loaded but not locked up.

“California health professionals are committed to making firearm violence prevention part of their practices, and we are very excited by the opportunity to equip them with the knowledge and skills they need,” Wintemute said.

In addition to training physicians, Wintemute said, UC Davis will continue its rigorous search for specific gaps in knowledge and structural barriers that prevent society from being able to reduce the threat of gun violence.

Assemblyman Marc Berman, D-Palo Alto, co-authored AB 521 with Assembly members Cecilia Aguiar-Curry, D-Winters; David Chiu, D-San Francisco; Jesse Gabriel, D-San Fernando Valley; Todd Gloria, D-San Diego; Marc Levine, D-Marin County; and Mark Stone, D-Monterey Bay; as well as state Sens. Anthony Portantino, D-La Canada Flintridge, and Scott Wiener, D-San Francisco.

 

 

 

Health care’s fraud and abuse laws are getting overhauled

https://www.axios.com/health-care-fraud-abuse-stark-law-antikickback-changes-fd354212-9583-44c7-85e4-86e4690cc56e.html

Doctors dressed in blue operate on a patient in a surgical suite.

The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.

Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing “value-based care.” But critics worry the broad and vague changes could engender more fraud and abuse than there already is.

Driving the news: The Department of Health and Human Services would create new exemptions for the physician self-referral law and the federal anti-kickback statute — decades-old, complex laws that forbid payments that encourage unnecessary care and increase taxpayer costs.

  • Hospitals, doctors, nursing homes and other entities would be able to create “value-based arrangements,” and those deals could include exchanging bonuses or other types of “remuneration” without running afoul of referral laws.
  • For example, under these exemptions, a hospital could provide a nursing home with a behavioral health nurse for certain discharged patients, or a hospital could donate cybersecurity technology to a physician’s office.
  • Many exemptions already exist, including for organizations called “accountable care organizations” that try to keep a patient’s care within a narrow set of hospitals and doctors, but these changes would go much further.

Between the lines: The overarching concern is everyone’s definition of “value” is different. How will regulators know whether providers are acting in good faith to coordinate care, or if they are using “value-based care” as a cover to control patient referrals and enrich themselves?

A major exclusion: Pharmaceutical companies, medical device firms, labs and medical equipment makers are cut out from the changes because the federal government is afraid those companies would “misuse the proposed safe harbors.”

  • Pharma lobbyists, in particular, have pushed hard to change the law so drug companies could directly subsidize drug copays for Medicare and Medicaid patients, even though federal officials have said that practice “masks the high prices those companies charge for their drugs.”
  • HHS Secretary Alex Azar told reporters the government may consider separate regulations for value-based drug contracts, even though the evidence of those deals’ effectiveness is limited at best.

The bottom line: These changes come at the same time that hospitals, physicians, pharmaceutical companies and others are paying out billions of dollars every year in fraud settlements.

  • Public comments are due Dec. 31, and if this comment process is anything like the initial requests that asked for guidance, the industry will be heavily involved.