U.S. hospitals performed more than 100,000 surgeries on older patients during the first year of the pandemic, according to a new Lown Institute analysis.
The healthcare think tank relied on Medicare claims data and analyzed eight common low-value procedures. It called the 100,000 procedures unnecessary and potentially harmful in a press release. It found that between March and December 2020, among the most-performed surgeries were coronary stents and back surgeries.
The procedures either offered little to no clinical benefit, according to the institute, or were more likely to harm patients than help them.
“You couldn’t go into your local coffee shop, but hospitals brought people in for all kinds of unnecessary procedures,” Vikas Saini, M.D., president of the Lown Institute, said in a statement. “The fact that a pandemic barely slowed things down shows just how deeply entrenched overuse is in American healthcare.”
Here is the volume of each procedure analyzed, for a total of 106,474 procedures identified:
1. Stents for stable coronary disease: 45,176 2. Vertebroplasty for osteoporosis: 16,553 3. Hysterectomy for benign disease: 14,455 4. Spinal fusion for back pain: 13,541 5. Inferior vena cava filter: 9,595 6. Carotid endarterectomy: 3,667 7. Renal stent: 1,891 8. Knee arthroscopy: 1,596
Among the “U.S. News & World Report” 20 top-ranked hospitals, all had rates of coronary stent procedures above the national average in what the Lown Institute called “overuse.” Four had at least double the national average, including the Cleveland Clinic, Houston Methodist Hospital, Mt. Sinai and Barnes Jewish Hospital. The procedures and overuse criteria were based on previous Lown research.
“We’ve known for over a decade that we shouldn’t be putting so many stents into patients with stable coronary disease, but we do it anyway,” Saini said. “As a cardiologist, it’s frustrating to see this behavior continue at such high levels, especially during the pandemic.”
In response to the Lown analysis, the American Hospital Association said in a statement Tuesday that delays or cancelations in non-emergency care may have negative outcomes on patients. “Lown may define these services as ‘low value,‘ but they can be of tremendous value to the patients who receive them,” the statement read.
It also pointed to its response to last year’s Lown analysis, which it criticized as being based “on data that are not only incomplete, but also not current.” The organization argued the services surveyed only represent a portion of the care hospitals provide. It added that procedures are determined by physicians based on an evaluation of the patient’s medical needs.
A group of emergency room physicians filed a lawsuit in March alleging representatives for their employer, American Physician Partners, discouraged them from testing for COVID-19 and pressured them to work while ill, according to the Houston Chronicle.
Brentwood, Tenn.-based American Physician Partners staffs and manages ER physicians at more than 15 Houston Methodist facilities, including hospitals and emergency care centers. The lawsuit, which does not involve Houston Methodist employees, centers on a dispute between eight physicians and APP.
The physicians allege APP is underpaying them and engaging in “unethical practices,” such as urging physicians with COVID-19 to work, as a way to boost revenue.
APP’s protocol, “discourages testing and disregards physician, staff, and patient safety when a doctor does test positive for COVID-19,” the lawsuit alleges. The physicians claim APP is putting “profit over patient.”
APP denied its involvement in the alleged financial damages in a response to the physicians’ complaint filed April 25. The company told the Houston Chronicle that it has been in discussions with the physicians since they raised concerns four months ago.
“We advised them at that time that their concerns do not reflect the facts known to APP and otherwise appear to be based on misinformation,” APP said in a statement to the Chronicle. “Thus we are disappointed these physicians — who represent a very small minority of the physicians APP partners with in the Houston area — have decided to move forward with this litigation. We remain open to continuing our dialogue with these physicians outside of the litigation, which, again, APP believes is without merit.”
Houston Methodist, which isn’t involved in or named in the lawsuit, said it cannot comment on the specific allegations, according to the Chronicle. “We are unaware of any ER doctor who came to work after testing positive for COVID-19,” a hospital spokesperson told Becker’s.
At a recent health system physician leadership retreat, two cardiologists presented a fascinating update on the electrophysiology (EP) service line. Electrophysiologists use advanced heart mapping and ablation technologies to diagnose, pinpoint, and treat abnormal heart rhythms, and the field has made dramatic advances over the past decade. The success rate of interventions has risen, and procedures which used to take hours in a cath lab are now performed in a fraction of the time—with some patients even able to go home same-day.
This increased efficiency has expanded the EP program’s capacity, but the system still finds itself overwhelmed with demand. The system is located in a high-growth market, and demand is also fueled by shifting demographics, with more aging Baby Boomers seeking care. But a key driver of growthhas been the spread of “smart watches” like the Apple Watch and Fitbit, which tout the ability to detect abnormal heart rhythms like atrial fibrillation. With “half of the community walking around with an EKG on their wrist”, the number of patients seeking evaluations for “a-fib” has skyrocketed: at this system, over 50 percent growth in patient volume, leading to 25 jump in procedures during the pandemic.
While the doctors were excited about growth, they also stressed the need to rethink care pathways to make sure that electrophysiologists’ time was prioritized for the patients who needed it most. The system should look to develop care pathways and technology that enable other physicians to readily triage and manage routine atrial fibrillation.
But smartwatch-driven self-diagnosis raises larger questions about how doctors and hospitals must adapt when consumer technology outpaces the science evaluating its effectiveness, and the health system’s ability to meet new demand. With private equity firms now focused on acquiring cardiology practices, this massive spike of demand, coupled with the ability to move more heart rhythm procedures outpatient, is seen by investors as a significant profit opportunity—making it even more critical for doctors, researchers, and hospitals to ensure that sound clinical guidelines are developed to drive high-quality, appropriate management.
Medicare Advantage (MA) focused companies, like Oak Street Health (14x revenues), Cano Health (11x revenues), and Iora Health (announced sale to One Medical at 7x revenues), reflect valuation multiples that appear irrational to many market observers. Multiples may be exuberant, but they are not necessarily irrational.
One reason for high valuations across the healthcare sector is the large pools of capital from institutional public investors, retail investors and private equity that are seeking returns higher than the low single digit bond yields currently available. Private equity alone has hundreds of billions in investable funds seeking opportunities in healthcare. As a result of this abundance of capital chasing deals, there is a premium attached to the scarcity of available companies with proven business models and strong growth prospects.
Valuations of companies that rely on Medicare and Medicaid reimbursement have traditionally been discounted for the risk associated with a change in government reimbursement policy. This “bop the mole” risk reflects the market’s assessment that when a particular healthcare sector becomes “too profitable,” the risk increases that CMS will adjust policy and reimbursement rates in that sector to drive down profitability.
However, there appears to be consensus among both political parties that MA is the right policy to help manage the rise in overall Medicare costs and, thus, incentives for MA growth can be expected to continue. This factor combined with strong demographic growth in the overall senior population means investors apply premiums to companies in the MA space compared to traditional providers.
Large pools of available capital, scarcity value, lower perceived sector risk and overall growth in the senior population are all factors that drive higher valuations for the MA disrupters.However, these factors pale in comparison the underlying economic driver for these companies. Taking full risk for MA enrollees and dramatically reducing hospital utilization, while improving health status, is core to their business model. These companies target and often achieve reduced hospital utilization by 30% or more for their assigned MA enrollees.
In 2019, the average Medicare days per 1,000 in the U.S. was 1,190. With about $14,700 per Medicare discharge and a 4.5 ALOS, the average cost per Medicare day is approximately $3,200. At the U.S. average 1,190 Medicare hospital days per thousand, if MA hospital utilization is decreased by 25%, the net hospital revenue per 1,000 MA
enrollees is reduced by about $960,000. If one of the MA disrupters has, for example, 50,000 MA lives in a market, the decrease in hospital revenues for that MA population would be about $48 million. This does not include the associated physician fees and other costs in the care continuum. That same $48 million + in the coffers of the risk-taking MA disrupters allows them deliver comprehensive array of supportive services including addressing social determinants of health. These services then further reduce utilization and improves overall health status, creating a virtuous circle. This is very profitable.
MA is only the beginning. When successful MA businesses expand beyond MA, and they will, disruption across the healthcare economy will be profound and painful for the incumbents. The market is rationally exuberant about that prospect.
From 2003 to 2017, private equity firms focused their acquisition crosshairs on larger hospitals with higher operating margins and greater patient charge-to-cost ratios, according to a new review of healthcare investments published in Health Affairs.
These private equity (PE)-owned hospitals also saw greater increases to their operating margins and charge-to-cost ratios over the course of the 15-year study period than their non-PE-owned counterparts.
Combined with a decrease in all-personnel staffing ratios, the study’s researchers said these data make a case for further investigation into how PE investment may be influencing operational decisions to boost profits and secure favorable exits.
“[Short-term acute care] hospitals’ large size, stable cashflow environment and prevalence of valuable fixed assets (that is, properties) make them highly desirable targets for acquisition,” researchers wrote in Health Affairs. “Broadly speaking, PE acquisition of hospitals invites questions about the alignment of the financial incentives necessary to achieve high-quality clinical outcomes.”
To inform that discussion, the researchers reviewed PE deal data collected by Pitchbook, CB Insights and Zephyr. They also collected information on hospital characteristics and financials from the Centers for Medicare and Medicaid Services’ (CMS) Healthcare Provider Cost Reporting Information System database and the American Hospital Association’s Annual Survey.
Their efforts yielded 42 PE acquisitions involving 282 different hospitals during the 15-year time period. These deals were most frequent among hospitals in Mid-Atlantic and Southern states.
Of note, 161 of the acquired hospitals were tied to a single deal: Bain Capital, Kohlberg Kravis & Roberts and Merrill Lynch Global Private Equity’s roughly $33 billion (more than $21 billion cash, $11.7 billion debt) acquisition of HCA Healthcare in 2007.
The study outlined differences between the PE-acquired hospitals and others that were not acquired before any of the deals (in 2003) and after (in 2017).
Nearly three-quarters of hospitals acquired by PE were for-profit in 2003, versus about a quarter of those that were not acquired, the researchers wrote. By 2017, those respective proportions had increased to 92.3% and 25.3%.
Acquired hospitals were significantly larger in terms of beds and total discharges both in 2003 and in 2017. In fact, while acquired hospitals increased in size during the 15-year window, other hospitals decreased in beds and discharges by 2017.
Nurse staffing ratios were similar on both ends of the study period for both categories of hospitals. However, all-staff ratios were lower among the soon-to-be-acquired hospitals in 2003 and saw a slight decrease over the years, whereas hospitals that had not been acquired instead recorded an increase over time.
In terms of financials, the researchers reviewed measures including net patient revenue per discharge, total operating expenses per discharge and the percentage of discharges paid out by Medicaid. Differences among these three areas were not significant with the exception of a larger 15-year increase in total operating expenses per discharge among non-PE hospitals.
The primary financial differences between the PE and non-PE hospitals were instead found among the organizations’ percent operating margins and charge-to-cost ratio, the researcher wrote.
In 2003, both measures were higher among the soon-to-be acquired hospitals. By 2017, the percent operating margin and charge-to-cost ratio increased 66.5% and 105% among the PE-acquired hospitals, respectively, versus changes of -3.8% and 54.2% for the non-PE hospitals.
These and the study’s other findings outline the playbook an investor could follow to identify a profitable hospital and increase its margins, the researchers wrote.
“Post-acquisition, these hospitals appeared to continue to boost profits by restraining growth in cost per patient, in part by limiting staffing growth,” they wrote.
The trends affirm findings published in a 2020 JAMA Internal Medicine study, which similarly tied PE acquisition to moderate income and charge-to-cost ratio increases over the same time period, the researchers wrote.
The data also contrast “the prevailing narrative” that PE investors target distressed businesses to extract value for a quick turnaround sale, they wrote. Outside of a few outlier acquisitions, the researchers said that PE’s goal for short-term acute care hospitals appears to be the opposite—operations refinement and further profit improvements among potential top performers.
Still, the differing structure of PE investments warrants questions as to whether these groups are promoting high-quality outcomes alongside their high margins, Anaeze Offodile II, M.D., an assistant professor at the University of Texas MD Anderson Cancer Center and the study’s lead author, said during an accompanying Health Affairs podcast.
In contrast to the public market,PE investments often lean on leveraged buyouts that are higher risk and higher reward, he said. Partners are targeting a three-to-seven-year exit window for their investments and often need to hit 20% to 30% annualized returns.
More investigation is needed to determine whether these economic incentives come in tandem with better care or are instead hindering patient outcomes, he said.
“The question becomes ‘Are there unintended consequences or tradeoffs invited due to pursuit of profitability?’” Offodile said during the podcast. “I think someone could make the same argument that if there is a value enhancement strategy by PE firms, then it behooves them to actually raise the level of care delivery up because that enhances the value and engineers a better sale.
“In seeing that sort of exploratory result and how it challenged the prevailing narrative, we’re glad that we took this sort of [setting the] stage approach, and I look [forward] to seeing what we find—which we’re doing now—with respect to quality, spending, access domains,” he said.
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 asignificant 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.
Government spending on testing and contact tracing pays for itself more than 30 times over, according to yet another paper published in JAMA (good series!).
What they found: Harvard economists David Cutler and Lawrence Summers calculated the total cost of the coronavirus pandemic at more than $16 trillion in the U.S. alone. Of that, about $7 trillion is attributable to loss of life and long-term impairment from the disease, Axios’ Felix Salmon writes.
Enhanced testing and tracing would cost about $6 million per 100,000 inhabitants, they calculate. Out of that population, 14 lives would be saved, on which they place a value of $96 million, and 33 critical and severe cases would be avoided, representing savings of $80 million.
That adds up to $176 million in benefits from $6 million in costs — before taking into account any second-order effects from even fewer cases down the road.
The bottom line: “Currently, the U.S. prioritizes spending on acute treatment,” write Cutler and Summers, “with far less spending on public health services and infrastructure.”
Going forward, they write, “a minimum of 5% of any COVID economic relief intervention should be devoted to such health measures.”
The first coronavirus vaccinewill likely get authorized within months, but that will only be the beginning of what’s likely to be a long, chaotic vaccination process, the New York Times’ Carl Zimmer reports.
The big picture: The first vaccines probably will offer only moderate protection against the virus, meaning we can’t ditch our masks even if we get one. And we probably won’t have a good way to choose between these vaccines once several of them are on the market.
Some vaccines that are in earlier stages of development today may struggle to cross the finish line, even if they work better than earlier vaccines.
And some vaccines may be pulled off of the market because they’re unsafe.
Between the lines:Some of this is inherent to the breakneck speed of the vaccination effort, but some of it is a result of how that effort was designed.
Earlier this year, some government scientists had wanted to test vaccine candidates against each other, instead of testing all of them against a placebo. But these kinds of trials are risky for drug companies, because they show the value of one vaccine against another.
That information could be useful for patients, but is a business risk for manufacturers.
“You have to have the total cooperation of the pharmaceutical companies to get involved in a master protocol,” top infectious disease expert Anthony Fauci told NYT. “That — I don’t know what the right word is — didn’t turn out to be feasible.”
NeuroBehavioral Hospital in Crown Point, Ind., terminated the employment of a discharge planner last week after she spoke to the New York Times about nursing homes discharging unprofitable patients, a practice known as “patient dumping,” the NYT reports.
In the Sept. 19 NYT article, Kimberly Jackson said that during the pandemic nursing homes in Illinois and Michigan have repeatedly sent elderly and disabled Medicaid patients to NeuroBehavioral Hospital, a psychiatric facility, even though they were not experiencing psychosis, seemingly in an effort to get rid of patients who are not lucrative for reimbursement or require extra care.
“The homes seem to be purposely taking symptoms of dementia as evidence of psychosis,” Ms. Jackson is quoted in the article.
She was fired from NeuroBehavioral Hospital Sept. 24. Rebecca Holloway, the hospital’s corporate director of human resources, told the NYT that Ms. Jackson violated the hospital’s media policy.
Ms. Jackson told the newspaper she was shocked to be fired for speaking to the media.
“I saw something that was wrong, and I called it out,” she said.
NeuroBehavioral Hospital is part of NeuroPsychiatric Hospitals. The South Bend, Ind.-based network has five facilities in Indiana, two in Texas and one in Arizona.