Category Archives: Public Perception

The Affordable Care Act is Back on Stage: What to Expect

Posted on by • Posted in 2024 Election Issues, ACA, Affordability, American Recovery and Reconstruction Act (ARRA), District Court, District Court of Appeals, Health Insurance Coverage Adequacy, Healthcare Reform, Medical Loss Ratio (MLR), Misinformation, Mislead, Misleading, Preexisting Conditions, Public Opinion, Public Perception, Supreme Court, Triple Aim • Leave a comment
The Affordable Care Act is Back on Stage: What to Expect

In the last 2 weeks, the Affordable Care Act (ACA) has been inserted itself in Campaign 2024 by Republican aspirants for the White House:

  • On Truth Social November 28, former President Trump promised to replace it with something better: “Getting much better Healthcare than Obamacare for the American people will be a priority of the Trump Administration. It is not a matter of cost; it is a matter of HEALTH. America will have one of the best Healthcare Plans anywhere in the world. Right now, it has one of the WORST! I don’t want to terminate Obamacare, I want to REPLACE IT with MUCH BETTER HEALTHCARE. Obamacare Sucks!!!!” 
  • Then, on NBC’s Meet the Press December 3, Florida Governor Ron DeSantis offered “We need to have a healthcare plan that works,” Obamacare hasn’t worked. We are going to replace and supersede with a better plan….a totally different healthcare plan… big institutions that are causing prices to be high: big pharma, big insurance and big government.”

It’s no surprise. Health costs and affordability rank behind the economy as top issues for Republican voters per the latest Kaiser Tracking Poll. And distaste with the status quo is widespread and bipartisan: per the Keckley Poll (October 2023), 70% of Americans including majorities in both parties and age-cohorts under 65 think “the system is fundamentally flawed and needs major change.” To GOP voters, the ACA is to blame.

Background:

The Affordable Care Act (aka Obamacare aka the Patient Protection and Affordable Care Act) was passed into law March 23, 2013. It is the most sweeping and controversial health industry legislation passed by Congress since Lyndon Johnson’s Medicare and Medicaid Act (1965). Opinions about the law haven’t changed much in almost 14 years: when passed in 2010, 46% were favorable toward the law vs. 40% who were opposed. Today, those favorable has increased to 59% while opposition has stayed at 40% (Kaiser Tracking Poll).

Few elected officials and even fewer voters have actually read the law. It’s understandable: 955 pages, 10 major sections (Titles) and a plethora of administrative actions, executive orders, amendments and legal challenges that have followed. It continues to be under-reported in media and misrepresented in campaign rhetoric by both sides. Campaign 2024 seems likely to be more of the same.

In 2009, I facilitated discussions about health reform between the White House Office of Health Reform and the leading private sector players in the system (the American Medical Association, the American Hospital Association, America’s Health Insurance Plans, AdvaMed, PhRMA, and BIO). The impetus for these deliberations was the Obama administration’s directive that systemic reform was necessary with three-aims:  reduce cost, increase access via insurance coverage and improve the quality of care provided by a private system. In parallel, key Committees in the House and Senate held hearings ultimately resulting in passage of separate House and Senate versions with the Senate’s becoming the substance of the final legislation. Think tanks on the left (I.e. the Center for American Progress et al.) and on the right (i.e. the Heritage Foundation) weighed in with members of Congress and DC influencers as the legislation morphed. And new ‘coalitions, centers and institutes’ formed to advocate for and against certain ACA provisions on behalf of their members while maintaining a degree of anonymity.

So, as the ACA resurfaces in political discourse in coming months, it’s important it be framed objectively. To that end, 3 major considerations are necessary to have a ‘fair and balanced’ view of the ACA:

1-The ACA was intended as a comprehensive health reform legislative platform. It was designed to be implemented between 2010 and 2019 in a private system prompted by new federal and state policies to address cost, access and quality. It allowed states latitude in implementing certain elements (like Medicaid expansion, healthcare marketplaces) but few exceptions in other areas (i.e.individual and employer mandates to purchase insurance, minimum requirements for qualified health plans, et al). The CBO estimated it would add $1.1 trillion to overall healthcare spending over the decade but pay for itself by reducing demand, administrative red-tape and leveraging better data for decision-making. The law included provisions to…

  • To improve quality by modernizing of the workforce, creating an Annual Quality Report obligation by HHS, creating the Patient Centered Outcome Research Institute and expanding the the National Quality Forum, adding requirements that approved preventive care be accessible at no cost, expanding community health centers, increasing residency programs in primary care and general surgery, implementing comparative effectiveness assessments to enable clinical transparency and more.
  • To increase access to health insurance by subsidizing coverage for small businesses and low income individuals (up to 400% of the Federal poverty level), funding 90% of the added costs in states choosing to expand their Medicaid enrollments for households earning up to 138% of the poverty level, extending household coverage so ‘young invincibles’ under 26 years of age could stay on their parent’s insurance plan, requiring insurers to provide “essential benefits” in their offerings, imposing medical loss ratio (MLR) mandates (80% individual, 85% group) and more.
  • To lower costs by creating the CMS Center for Medicare and Medicaid Innovation to construct 5-year demonstration pilots and value-based purchasing programs that shift provider incentives from volume to value, imposing price and quality reporting and transparency requirements and more.

The ACA was ambitious: it was modeled after Romneycare in MA and premised on the presumption that meaningful results could be achieved in a decade. But Romneycare (2006) was about near-universal insurance coverage for all in the Commonwealth, not the triple aim, and the resistance calcified quickly among special interests threatened by its potential.

2-The ACA passed at a time of economic insecurity and hyper-partisan rancor and before many of the industry’s most significant innovations had taken hold. The ACA was the second major legislation passed in the first term of the Obama administration (2009-2012); the first was the $831 billion American Recovery and Reconstruction Act (ARRA) stimulus package that targeted “shovel ready jobs” as a means of economic recovery from the 2008-2010 Great Recession. But notably, it included $138 billion for healthcare including requirements for hospitals and physicians to computerize their medical records, extension of medical insurance to laid off workers and additional funding for states to offset their Medicaid program expenses. The Obama-Biden team came to power with populist momentum behind their promises to lower health costs while keeping the doctors and insurance plans they had. Its rollout was plagued by miscues and the administration’s most popular assurances (‘keep your doctor and hospitals’) were not kept. The Republican Majority in the 111th Congress’ (247-193)) seized on the administration’s miss fueling anti-ACA rhetoric among critics and misinformation.

3-Support for the ACA has grown but its results are mixed. It has survived 7 Supreme Court challenges and more than 70 failed repeal votes in Congress.  It enjoys vigorous support in the Biden administration and among the industry’s major trade groups but remains problematic to outsiders who believe it harmful to their interests. For example, under the framework of the ACA, the administration is pushing for larger provider networks in the 18 states and DC that run their own marketplaces, expanded dental and mental health coverage, extended open enrollment for Marketplace coverage and restoration of restrictions on “junk insurance’ but its results to date are mixed: access to insurance coverage has increased. Improvements in quality have been significant as a result of innovations in care coordination and technology-enabled diagnostic accuracy. But costs have soared: between 2010 and 2021, total health spending increased 64% while the U.S. population increased only 7%.

So, as the ACA takes center stage in Campaign 2024, here are 4 things to watch:

1-Media attention to elements of the ACA other than health insurance coverage. My bet: attention from critics will be its unanticipated costs in addition to its federal abortion protections now in the hands of states. The ACA’s embrace of price and quality transparency is of particular interest to media and speculation that industry consolidation was an unintended negative result of the law will energize calls for its replacement. Thus, the law will get more attention. Misinformation and disinformation by special interests about its original intent as a “government takeover of the health system” will be low hanging fruit for antagonists.

2- Changes to the law necessary intended to correct/mitigate its unintended consequences, modernize it to industry best practice standards and responses to court challenges will lend to the law’s complex compliance challenges for each player in the system. New ways of prompting Medicaid expansion, integration of mental health and social determinants with traditional care, the impact of tools like ChatGPT, quantum computing, generative AI not imagined as the law was built, the consequences of private equity investments on prices and spending, and much more.

3-Public confusion. The ACA is a massive law in a massive industry. Cliff’s Notes are accessible but opinions about it are rarely based on a studied view of its intent and structure. It lends itself to soundbites intended to obscure, generalize or misdirect the public’s attention.  

4-The ACA price tag. In 2010, the CBO estimated its added cost to health spending at $1.1 trillion (2010-2019) but its latest estimate is at least $3 trillion for its added insurance subsidies alone. The fact is no one knows for sure what its costs are nor the value of the changes it has induced into the health system. The ranks of those with insurance coverage has been cut in half. Hospitals, physicians, post-acute providers, drug manufacturers and insurers are implementing value-based care strategies and price transparency (though reluctantly) but annual health cost increases have consistently exceeded 4% annually as the cumulative impact of medical inflation, utilization, consolidation and price increases are felt.

Final thought:

I have studied the ACA, and the enabling laws, executive orders, administrative and regulatory actions, court rulings and state referenda that have followed its passage. Despite promises to ‘repeal and replace’ by some, it is more likely foundational to bipartisan “fix and repair’ regulatory reforms that focus more attention to systemness, technology-enabled self-care, health and wellbeing and more.

It will be interesting to see how the ACA plays in Campaign 2024 and how moderators for the CNN-hosted debates January 10 in Des Moines and January 21 in New Hampshire address it. In the 2-hour Tuscaloosa debate last Wednesday, it was referenced in response to a question directed to Gov. DeSantis about ‘reforming the system’ 101 minutes into the News Nation broadcast. It’s certain to get more attention going forward and it’s certain to play a more prominent role in the future of the system.

The ACA is back on the radar in U.S. healthcare. Stay tuned.

PS The resignations under pressure of Penn President Elizabeth Magill and Board Chair Scott Bok over inappropriate characterization of Hamas’ genocidal actions toward Jews are not surprising. Her response to Congressional questioning was unfortunate. The eventuality turned in 4 days, sparked by student outrage and adverse media attention that tarnished the reputations of otherwise venerable institutions like Penn, MIT and Harvard.

The lessons for every organization, including the big names in healthcare, are not to be dismissed: Beyond the issues of genocide, our industry is home to a widening number of incendiary issues like Hamas.

They’re increasingly exposed to public smell tests that often lead to more: Workforce strikes. CEO compensation. Fraud and abuse. Tax exemptions and community benefits. Prior authorization and coverage denial. Corporate profit. Patient collection and benevolent use policies. Board independence and competence and many more are ripe for detractors and activist seeking attention. 

Public opinion matters. Reputations matter. Boards of Directors are directly accountable for both.  

Health Care Sharing Ministries Leave Consumers with Unpaid Medical Claims

Posted on by • Posted in Denial, Health Care Sharing Ministries (HCSMs), Health Insurance Coverage Adequacy, Health Policy, Marketing Deceptive, Out of Pocket Expenses, Public Good, Public Perception, Underinsured, Uninsured • Leave a comment

https://www.commonwealthfund.org/blog/2023/health-care-sharing-ministries-leave-consumers-unpaid-medical-claims

Health care sharing ministries (HCSMs) claim to offer health coverage: members follow a common set of religious or ethical beliefs and make monthly payments to help pay the qualifying medical expenses of other members.

These products often appear comparable to insurance, but they lack the consumer protections and benefit standards that apply to comprehensive coverage. HCSMs are under no obligation to pay members’ claims and often require members to negotiate discounts or seek charity care from health care providers.

Because of how HCSMs are marketed, consumers may have difficulty identifying the significant limitations of these arrangements and risk getting stuck with unpaid bills. Until recently, states did not have access to data on HCSMs’ enrollment, operations, and finances.

Massachusetts and Colorado have begun to fill these gaps, and the data they have obtained are revealing. The Massachusetts marketplace began requiring HCSMs to report key data in 2020; and last year, Colorado became the first state to require comprehensive data from all HCSMs enrolling Colorado residents. The state’s first report provides a detailed look at HCSMs selling memberships in Colorado.

What’s in Colorado’s First Report?

The data show HCSMs have grown to include far more members than previously understood and shed light on risks for consumers who pay monthly fees with an expectation that their membership will cover health care claims.

Greater than expected enrollment. National enrollment for the HCSMs included in the Colorado report is larger than previously recognized: 1.7 million people. In Colorado alone, HCSM enrollment (at least 68,000) is equivalent to 30 percent of marketplace enrollment. Because HCSMs often exclude essential health services and are therefore more attractive to people who are relatively healthy, enrollment of this size, relative to marketplace enrollment, may increase premiums for marketplace plans.

It also means a significant number of people have forgone comprehensive coverage and federal subsidies to buy this alternative arrangement that does not guarantee health care costs will be paid.

One HCSM recently surveyed its members and found 42 percent had incomes under 200 percent of the federal poverty level (about $50,000 annually for a family of three). Individuals and families at this income level would likely be eligible for low- or no-cost coverage in the marketplace or Medicaid.

Broker-driven marketing. Seven HCSMs reported using brokers to market their plans; some said they rely heavily or exclusively on brokers to grow membership. About one-third of all enrollment in these seven HCSMs was attributed to brokers.

Because HCSMs pay substantially higher commissions (15% to 20%) than marketplace insurers (2.6%) typically do, brokers have an incentive to place consumers in these arrangements.

Unpaid claims. Though their members submitted about $362 million in claims during the reporting period, the HCSMs asserted that only one-third of this amount — about $132 million — was eligible for payment. During the same time period, HCSMs brought in about $97 million, resulting in an apparent shortfall of $35 million. The low share of eligible claims is attributable in part to the HCSMs’ strict rules that disallow reimbursement for various types of care.

In addition, HCSMs have broad flexibility to refuse sharing of a claim even if it otherwise meets the rules. For example, HCSMs often require their members to negotiate their own discounts or seek charity care from health care providers before their claims will be eligible for sharing.

Essential care ineligible for sharing. HCSMs reported they exclude from sharing any expenses for certain essential health care, including costs related to preventive care, mental health care, and substance use disorders, and exclude coverage for many preexisting conditions, including asthma, autism, cancer, diabetes, and hypertension. Alternatively, comprehensive insurance must cover essential health benefits and all preexisting conditions.

Getting Uniform Data Is Challenging but Essential

The first-year report shows the challenges of obtaining data from HCSMs that are not subject to any of the standards or oversight that apply to comprehensive health insurance. Regulators determined that several HCSMs marketing memberships in Colorado had failed to report data and getting complete and accurate data from those that did was difficult. A second report, recently released, indicates those challenges continue, making it impossible to draw comparisons between the two years. Still, by requiring HCSMs to use templates and state-defined terms to submit data in a uniform way, Colorado regulators seem to be on the path to a clearer understanding of how HCSMs are working, their financial solvency, and their effect on state residents and the health insurance market. Indeed, data in the second report show the risks to consumers described above persist.

Looking Ahead

Colorado’s annual requirement to share data will help regulators better understand HCSM operations and finances and, with improved compliance to data submission requirements, should allow for comparisons across HCSMs and from year to year. Data can help point regulators to HCSMs that warrant closer scrutiny and identify for policymakers ways to better protect consumers who may lack a clear understanding of the financial risks of HCSM membership.

Six Majority Beliefs about the U.S. Health System Compromise its Value Proposition

Posted on by • Posted in Abortion, ACA, Health System, Healthcare Industry, Healthcare Reform, Interest Rates, Misinformation, Political Differences, Political Lobbying, Politics, Public Opinion, Public Perception, Value Proposition • Leave a comment
Six Majority Beliefs about the U.S. Health System Compromise its Value Proposition

Last week was notable for healthcare because current events thrust it into the limelight…

Hospitals and emergency responders in Maine: Media attention to Gaza and the Speaker-less U.S. House of Representatives was temporarily suspended as the deaths of 18 in the U.S.’ 36h mass shooting in Lewiston, Maine took center stage. The immediate overload on Lewiston’s Central Maine Medical Center and Mass General where the 13 injured were treated (including 4 still hospitalized) drew media attention—largely gone by Friday when the shooter’s death by suicide was confirmed.

The New Speaker of the House: The GOP House of Representatives elected Mike Johnson, the 4-term Representative from Shreveport to the post vacant since October 3.

Johnson is no stranger to partisan positions on healthcare issues. As Chairman of the conservative-leaning Republican Steering Committee from 2019-2021, he led the group’s platform to dismantle the Affordable Care Act and supports a national restriction on abortions despite Senate GOP Leader McConnell’s preference it be left to states to decide.

With the prospect of a government shutdown November 17 due to inaction on the FY2024 federal budget, the 52-year-old lawyer faces delicate maneuvering around $106 billion proposed for Israel, the Ukraine, Taiwan and border security alongside appropriations for the health system that consumes 28% of entire federal outlays.

Health organizational business strategy announcements: Friction between physicians and hospital officials in Asheville (Mission) and Minnesota (Allina) attracted national coverage and brought attention to staffing, cultural and financial circumstances in these prominent organizations. —and on the heels of the Kaiser Permanente strike settlement. The divorce from Mass General by Dana Farber in Boston and announcements by GNC, Best Buy, Optum (re-branding NaviHealth) and Sanofi hit last week’s news cycle.

And indirectly, the 3Q 2023 GDP report by the Department of Commerce raised eyebrows: it was up 4.9%–far higher than expected prompting speculation that the Federal Open Market Committee (FOMC) will raise interest rates (again) at its meeting this week or next month. That means borrowing costs for struggling hospitals, nursing homes and consumers needing loans will go up along with household medical debt.

As news cycles go, this one was standard fare for healthcare: with the exception of business plan announcements by organizations or as elements of tragedies like Lewiston, Gaza or a pandemic,

the business of the health system—how it operates is largely uncovered and often subject to misinformation or disinformation.

That’s the problem: it’s background noise to most voters who can be stoked to action over a single issue when prompted by special interests (i.e., Abortion rights, surprise billing, price transparency et al) but remain inattentive and marginally informed about the bigger role it plays in our communities and country and where it’s heading long-term.

The narrative common to most boils down to these:

  • The U.S. health system is good, but it’s complicated. ‘How good’ depends on your insurance and your health—both are key.
  • The U.S. health system is expensive and profitable. It pays its executives well and its frontline workers unfairly.
  • The delivery system focuses on the sick and injured; prevention and public health matter less.
  • Hospitals and physicians are vital to the system; health insurers keep their costs down.
  • The U.S. system pays lip service to “customer service” and ‘engaged consumers.” It is spin not supported by actions.
  • The U.S. system needs to change dramatically.

In the next 3 weeks, attention will be on the federal budget: healthcare will be in the background unless temporarily an element of a mass tragedy. Each trade group will tout its accomplishments to regulators and pimp their advocacy punch list. Each company will gin-out news releases and commentary about the future of the system will default to think tanks and focused on a single issue of interest.

That’s the problem. In this era of social media, polarization, and mass transparency, these old ways of communicating no longer work. Left unattended, they undermine the value proposition on which the U.S. system is based.

The Conundrum facing Not-for-Profit Hospital Systems

Posted on by • Posted in Board, Community Benefit, Competition, Conundrum, Executive Compensation, For-Profit, Health System, Hospital, Hospital Industry, Leadership Vision, Non-Profit Healthcare Industry, Private Equity, Public Perception, Public Understanding, Strategic Imperative, Strategic Leadership, Tax Exempt Status • Leave a comment
The Conundrum facing Not-for-Profit Hospital Systems

Does hospital ownership matter? According to a study published last week in Health Affairs Scholar, NOT MUCH. That’s a problem for not-for-profit hospitals who claim otherwise.

58% of U.S. hospitals are not-for-profit hospitals; the rest are public (19%) or investor-owned (24%). In recent months, not-for-profit systems have faced growing antagonism from regulators and critics who challenge the worthwhileness of their tax exemptions and reasonableness of the compensation paid their top executives.

The lion’s share of this negative attention is directed at large, not-for-profit hospital system operators. Case in point: last week, Banner Health (AZ) joined the ranks of high-profile operators taken to task in the Arizona Republic for their CEO’s compensation contrasting it to not-for-profit sectors in which compensation is considerably lower.

Unflattering attention to NFP hospitals, especially the big-name systems, is unlikely to subside in the near-term. U.S. healthcare has become a winner-take-all battleground increasingly dominated by large-scale, investor-owned interests in hospitals, medical groups, insurance, retail health in pursuit of a piece of the $4.6 trillion pie. 

The moral high ground once the domain of not-for-profit hospitals is shaky.

The NYU study examined whether hospital ownership influenced decisions made by consumers: they found “Fewer than one-third of respondents (29.5%) indicated that hospital status had ever been relevant to them in making decisions about where to seek care…significantly more important to respondents who indicated the lowest health literacy—74.7% of whom answered the key question affirmatively—than it was for people who indicated high health literacy, of whom only 18.3% found hospital ownership status to be relevant…also considerably more relevant for people working in health care than for those who did not work in health care (61.0% vs 24.5%)…

We found little evidence that hospital nonprofit status influenced Americans’ decisions about where to seek care. Ownership status was relevant for fewer than 30% of respondents and preference was greatest overall for public hospitals. Only 30–45% of respondents could correctly identify the ownership status of nationally recognized hospitals, and fewer than 30% could identify their local hospitals.

These findings suggest that contract failure does not currently provide a justification of nonprofit hospitals’ value; further scrutiny of tax exemption for nonprofit hospitals is warranted.”

Are NFP hospitals concerned? YES. It’s reality as systems address near term operational challenges and long-term questions about their strategies.

Last weekend, I facilitated the 4th Annual Chief Strategy Officers Roundtable in Austin TX sponsored by Lumeris. The group consisted of senior-level strategists from 11 not-for-profit systems and one for-profit. In one session, each reacted to 50 future state scenarios in terms of “likelihood” and “disruptive impact” in the NEAR term (3-5 years) and LONG TERM (8-10 years) using a 1 to 10 scale with 10 HI.

From these data and the discussion that followed, there’s consensus that the U.S. healthcare market is unlikely to change dramatically long-term, their short-term conditions will be tougher and their challenges unique.

  • ‘Near-term cost containment is a priority. Hospitals are here-to-stay, but operating them will be harder.’
  • ‘Increased scale and growth are necessary imperatives for their systems.’
  • ‘Hospital systems will compete in a market wherein private capital and investor ownership will play a growing role, insurers will be hostile and value will the primary focus of cost-reduction by purchasers and policymakers.’
  • ‘Distinctions between not-for-profit and for-profit hospitals are significant.’
  • ‘Conditions for hospitals will be tougher as insurers play a stronger hand in shaping the future.’

Given the NYU study findings (above) concluding NFP ownership has marginal impact on hospital choices made by consumers, it’s understandable NFPs are anxious.

My take:

The issues facing not-for-profit hospitals in the U.S. are unique and complex. Per the commentary of the CSOs, their market conditions are daunting and major changes in their structure, funding and regulation unlikely.

That means lack of public understanding of their unique role is a conundrum. 

Paul

PS: Issues about CEO compensation in healthcare are touchy and often unfair.

In every major NFP system, comp is set by the Independent Board Compensation Committee with outside consultative counsel. The vast majority of these CEOs aren’t in the job for the money joining their workforce in pursuit of the unique higher calling afforded service leaders in NFP healthcare.

As HLTH 2023 Convenes, Three Themes speak Volumes about Where U.S, Healthcare is Headed

Posted on by • Posted in Access to Capital, Health Policy, Health System, Hospital, Hospital Industry, Inflation, Price Transparency, Private Equity, Public Opinion, Public Perception, Systemness, Value-Based Healthcare • Leave a comment
As HLTH 2023 Convenes, Three Themes speak Volumes about Where U.S, Healthcare is Headed

In Las Vegas this week, 10,000 healthcare entrepreneurs, investors, purchasers and industry onlookers are gathered to celebrate the business of U.S. healthcare. It follows the inaugural Nashville Healthcare Sessions last month that drew a crowd to Music City touting “the premier healthcare conference set in the most relevant, exciting, and welcoming city in the south.“

Besides their locations and exceptional marketing, three notable themes are prominent that speak volumes about where this industry is:

1- The focus is systemness—integrated, connected, data-driven and scalable. Traditional divides that separate health and social services, hospitals and insurers, biotherapeutics and companion diagnostics are obsolete and access to private capital and swift execution vitals. And embedded in systemness is an expanded role of human resources that create workforces that are right-sized, diverse, AI-enabled and productive.
2-Technologies focused on end user value are gaining traction. Solutions that enable better, quicker, more accurate and affordable transactions with consumers are prominent. While traditional providers—hospitals, physicians, long-term care providers and public health programs– see HIT and AI investments as ways to make their work more efficient and satisfying, disruptors are focused on the untapped consumer market that’s dissatisfied with the status quo.
3-Access to smart capital is key. The venture capital and private equity markets in healthcare services are weathering corrections that have deflated returns and forced many to pullback or exit. The possibility of regulatory reforms involving greater transparency, carried interest restrictions and minimum hold periods means stronger funds with experienced operating partners and stable LP funding will be advantaged. In Vegas, they’ll be working the hallways to find tuck-ins for their platform bets and courting not-for-profit hospitals needing non-operating income to fund their growth and diversification efforts.

Those attending recognize the U.S. health industry faces unprecedented challenges:

  • Growing employer activism against lack of price transparency and inexplicably high unit costs for hospital care, prescription drugs, insurer overhead and mal-effect of consolidation in each sector.
  • Medical inflation that’s persistent but disproportionately absorbed by fewer and fewer employers and individuals who lack bargaining power.
  • Value-based purchasing activities that have failed to achieve desired cost containment goals.
  • Public dissatisfaction with the “system” and growing receptivity to alternatives.
  • Growing hostility in media coverage about hospitals, especially large not-for-profit hospitals, deemed to be profitable and wasteful.
  • Increased tension between providers (hospitals, medical groups) and insurers.
  • Increased regulation in states and court rulings that change (or have the potential to alter) how care is defined, provided, funded and legally authorized.

HLTH and Session attendees recognize the uncertainties of the political, economic and global markets in which healthcare operates. Israel will be front of mind to all as the fast-paced HLTH proceedings continue this week. 

The root causes of the system’s poor performance are understood and considered: they’re daunting. But that does not impede the willingness of private investors to make bets presuming the future of the U.S. healthcare is not a repeat of its past.

Contrary to pop culture, what happens in Vegas this week will not stay in Vegas: that’s the point. The health system is not working well. While some HLTH and Sessions attendees are no doubt focused on incremental innovations to improve the performance of their legacy organizations, others are looking beyond. And, if industries akin to healthcare like financial services and higher education are instructive, the latter are better prepared to respond than the former.

PS: Nearly 50 years to the day after the Yom Kippur War in 1973, Israel was again taken by surprise by a sudden attack. Unlike the series of clashes with Palestinian forces in Gaza over the past few years, this appears to be a full-scale conflict mounted by Hamas and its allies including Iran. 

Thousands are dead, more are injured and the health systems in both will be overwhelmed by the need. Health systems matter!

Not for Profit Hospitals: Are they the Problem?

Posted on by • Posted in CEO, Community Benefit, Elevance Health Policy Institute, Executive Compensation, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Lobbyist, Market Consolidation, Market Power, Medical Debt, Non-Profit Healthcare Industry, Out of Pocket Expenses, Pharmaceutical Industry, Public Perception, Tax Exempt Status • Leave a comment
Not for Profit Hospitals: Are they the Problem?

Last Monday, four U.S. Senators took aim at the tax exemption enjoyed by not-for-profit (NFP) hospitals in a letter to the IRS demanding detailed accounting for community benefits and increased agency oversight of NFP hospitals that fall short.

Last Tuesday, the Elevance Health Policy Institute released a study concluding that the consolidation of hospitals into multi-hospital systems (for-profit/not-for-profit) results in higher prices without commensurate improvement in patient care quality. “

Friday, Kaiser Health News Editor in Chief Elizabeth Rosenthal took aim at Ballad Health which operates in TN and VA “…which has generously contributed to performing arts and athletic centers as well as school bands. But…skimped on health care — closing intensive care units and reducing the number of nurses per ward — and demanded higher prices from insurers and patients.”

And also last week, the Pharmaceuticals’ Manufacturers Association released its annual study of hospital mark-ups for the top 20 prescription drugs used on hospitals asserting a direct connection between hospital mark-ups (which ranged from 234% to 724%) and increasing medical debt hitting households.

(Excerpts from these are included in the “Quotables” section that follows).

It was not a good week for hospitals, especially not-for-profit hospitals.

In reality, the storm cloud that has gathered over not-for-profit health hospitals in recent months has been buoyed in large measure by well-funded critiques by Arnold Ventures, Lown Institute, West Health, Patient Rights Advocate and others. Providence, Ascension, Bon Secours and now Ballad have been criticized for inadequate community benefits, excessive CEO compensation, aggressive patient debt collection policies and price gauging attributed to hospital consolidation.

This cloud has drawn attention from lawmakers: in NC, the State Treasurer Dale Folwell has called out the state’s 8 major NFP systems for inadequate community benefit and excess CEO compensation.

In Indiana, State Senator Travis Holdman is accusing the state’s NFP hospitals of “hoarding cash” and threatening that “if not-for-profit hospitals aren’t willing to use their tax-exempt status for the benefit of our communities, public policy on this matter can always be changed.” And now an influential quartet of U.S. Senators is pledging action to complement with anti-hospital consolidation efforts in the FTC leveraging its a team of 40 hospital deal investigators.

In response last week, the American Hospital Association called out health insurer consolidation as a major contributor to high prices and,

in a US News and World Report Op Ed August 8, challenged that “Health insurance should be a bridge to medical care, not a barrier.

Yet too many commercial health insurance policies often delay, disrupt and deny medically necessary care to patients,” noting that consumer medical debt is directly linked to insurer’ benefits that increase consumer exposure to out of pocket costs.

My take:

It’s clear that not-for-profit hospitals pose a unique target for detractors: they operate more than half of all U.S. hospitals and directly employ more than a third of U.S. physicians.

But ownership status (private not-for-profit, for-profit investor owned or government-owned) per se seems to matter less than the availability of facilities and services when they’re needed.

And the public’s opinion about the business of running hospitals is relatively uninformed beyond their anecdotal use experiences that shape their perceptions. Thus, claims by not-for-profit hospital officials that their finances are teetering on insolvency fall on deaf ears, especially in communities where cranes hover above their patient towers and their brands are ubiquitous.

Demand for hospital services is increasing and shifting, wage and supply costs (including prescription drugs) are soaring, and resources are limited for most.

The size, scale and CEO compensation for the biggest not-for-profit health systems pale in comparison to their counterparts in health insurance and prescription drug manufacturing or even the biggest investor-owned health system, HCA…but that’s not the point.

NFPs are being challenged to demonstrate they merit the tax-exempt treatment they enjoy unlike their investor-owned and public hospital competitors and that’s been a moving target.

In 2009, the Internal Revenue Service (IRS) updated the Form 990 Schedule H to require more detailed reporting of community benefit expenditures across seven different categories including charity care, unreimbursed costs from means-tested government programs, community health spending, research, and others. The Affordable Care Act added requirements that non-profit hospitals complete community health needs assessments (CHNAs) every three years to identify the most pressing community health priorities and create detailed implementation strategies explaining how the identified needs will be addressed.

But currently, there are no federal community benefit requirements that ensure hospitals use the most accurate accounting standards for charity care and unreimbursed Medicaid services; set a minimum level of community benefit spending; require hospitals to spend on community benefit dollars on identified needs; or describe in detail the type of activities that quality as community benefit spending.

Thus, the methodology for consistently defining and accounting for community benefits needs attention. That would be a good start but alone it will not solve the more fundamental issue: what’s the future for the U.S. health system, what role do players including hospitals and others need to play, and how should it be structured and funded?

The issues facing the U.S. health industry are complex. The role hospitals will play is also uncertain. If, as polls indicate, the majority of Americans prefer a private health system that features competition, transparency, affordability and equitable access, the remedy will require input from every major healthcare sector including employers, public health, private capital and regulators alongside others.

It will require less from DC policy wonks and sanctimonious talking heads and more from frontline efforts and privately-backed innovators in communities, companies and in not-for-profit health systems that take community benefit seriously.

No sector owns the franchise for certainty about the future of U.S. healthcare nor its moral high ground. That includes not-for-profit hospitals.

The darkening cloud that hovers over not-for-profit health systems needs attention, but not alone, despite efforts to suggest otherwise.

Clarifying the community-benefit standard is a start, but not enough.

Are NFP hospitals a problem? Some are, most aren’t but all are impacted by the darkening cloud.

Senate Finance Hearing on Hospital Consolidation: Political Theatre or Something More?

Posted on by • Posted in Affordability, Antitrust, Cost Management, Cost Structure, Cost-Effective, Health System, Horizontal Consolidation, Horizontal Integration, Horizontal Merger, Horizontal Mergers, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Trends, Mergers & Acquisitions, Monopoly, Monopoly Behavior, Physician Compensation, Public Opinion, Public Perception, Quality of Care, Vertical Consolidation, Vertical Integration, Vertical Merger, Vertical Mergers • Leave a comment
Senate Finance Hearing on Hospital Consolidation: Political Theatre or Something More?

Last Thursday, the Senate Finance Committee heard testimony from experts who offered damning testimony about hospital consolidation (excerpts below).  Committee Chair Ron Wyden (D-OR) gaveled the session to order with this commentary:

“I’d like to talk about health care costs and quality. Advocates for proposed mergers often say they will bring lower health costs due to increased efficiency. Time after time, it’s simply not proven to be the case. When hospitals merge, prices go up, not down. When insurers merge, premiums go up, not down. And quality of care is not any better with this higher cost. “

Ranking Member Mike Crapo (R-ID) offered a more conciliatory assessment in his opening statement: “In exploring and addressing these problems, we have the opportunity to build on our efforts to improve medication access and affordability by taking a broader look at the health care system through a similarly bipartisan, consensus-based lens…We need to examine the drivers of consolidation, as well as its effects on care quality and costs, both for patients and taxpayers. We also need to develop focused, bipartisan and bicameral solutions that reduce out-of-pocket spending while protecting access to lifesaving services.”

Congress’ concern about consolidation in healthcare is broad-based. Pharmacy benefits managers and health insurers face similar scrutiny. Drug price control referenda have passed in several states and a federal cap was included in the Inflation Reduction Act.

The reality is this: the entire U.S. health system is on trial in the court of public opinion for ‘careless disregard for affordability’. And hospitals are seen as part of the problem justifying consolidation as a defense mechanism.

What followed in this 3-hour hearing was testimony from 3 experts critical of hospital consolidation, a Colorado community hospital CEO who opined to competition with big hospital systems and a Peterson Foundation spokesperson who offered that data access and transparency are necessary to mitigate consolidation’s downside impact.

None of their testimony was surprising. Nor were questions from the 25 members of the committee. It’s a narrative that played out in House Energy and Commerce and Ways and Means Committee hearings last month. It’s likely to continue.

Often, Congressional Hearings on healthcare issues amount to little more than political theatre. In this one, four key themes emerged:

  1. Consolidation among hospitals has adversely impacted quality of care and affordability of healthcare. Prices have gone up without commensurate improvements in quality harming consumers.
  2. Larger organizations use horizontal and vertical integration to strengthen their positions relative to smaller competitors. Physician employment by hospitals is concerning. Rural and safety net hospitals are impaired most.
  3. Anti-trust efforts, price transparency mandates, data sharing and value-based programs have not been as effective as anticipated.
  4. Physicians are victims of consolidation and corporatization in U.S. healthcare. They’re paid less because others are paid more.

While committee members varied widely in the intensity of their animosity toward hospitals, a consensus emerged that the hospital status quo is not working for voters and consumers.

My take:

Consolidation is part of everyday life. Last Tuesday’s bombshell announcement of the merger of the PGA Tour and the Saudi Arabia’s Public Investment Fund caught the golfing world by surprise. Anti-trust issues and monopolistic behaviors are noticed by voters and lawmakers. Hospital consolidation is no exception festering suspicions among lawmakers and voters that the public’s good is ill-served. And studies showing that charity care among not-for-profit hospitals is lower than for-profit confuse and complicate.

As I listened to the hearing, I had questions…

  • Were all relevant perspectives presented?
  • Was the information provided by witnesses and cited in Committee member questioning accurate?
  • Will meaningful action result?

But having testified before Congressional Committees, I find myself dismissive of most hearings which seem heavy on political staging but light on meaningful insight. Many are little more than political theatre. Hospital consolidation seems different. There seems to be growing consensus that it’s harmful to some and costly to all.

Sadly, this hearing is the latest evidence that the good will built by hospital heroics in the pandemic is now forgotten. It’s clear hospital consolidation is an issue that faces strong and increased headwinds with evidence mounting—accurate or not– showing more harm than good.

Consumers are skeptical of “hospitals”—just not their own

Posted on by • Posted in Consumer Experience, Consumer Loyalty, Health System, Hospital, Hospital Industry, Mission, Mistrust, Net Income, Operating Margin, Profit, Profit Margin, Profit Motive, Public Opinion, Public Perception, Public Relations • Leave a comment

https://mailchi.mp/89b749fe24b8/the-weekly-gist-february-17-2023?e=d1e747d2d8

Health systems have recently been the subject of high-profile media accusations that they prioritize “profits over patients”, as an unflattering New York Times series has framed it.

New consumer survey data from strategic healthcare communications consulting firm Jarrard Inc. shows that while consumers find some merit in these claims, they tend to see their local hospital in a better light. As shown in the graphic above, a majority of US adults believe that, on a national level, hospitals are more focused on making money than caring for patients, and that they don’t do enough to help low-income people access high quality care.

Despite only one in five survey participants having seen news stories alleging hospitals fail to provide enough charity care in exchange for tax breaks, 65 percent of survey respondents find those allegations believable.

But while the consumer perception of hospitals may be suffering nationally, the responses were quite different when consumers were asked about their preferred local hospital. More than half strongly agreed that their preferred local hospital is a good community partner—one that puts patient care ahead of making money.

(Just as with Congress: people love to criticize the institution, while continuing to return their own representatives to Washington.) While the negative national attention can be disheartening, at the end of the day, to consumers, healthcare is local, and health systems must continue to build direct consumer relationships to strengthen patient loyalty. 

So, Is the Pandemic Over Yet?

Posted on by • Posted in Coronavirus, Coronavirus Mutation, Pandemic, Public Health Emergency (PHE), Public Opinion, Public Perception • Leave a comment

In his second State of the Union speech on Feb. 7, President Joe Biden made it clear that the Administration is moving into the next phase of the COVID-19 pandemic—one in which the threats of disease and death are considerably diminished, and therefore no longer require the resources and urgent allocation of funds that the previous two years have.

“While the virus is not gone…we have broken COVID’s grip on us,” Biden said. “And soon we’ll end the public health emergency.”

The President outlined his reasons for not renewing the COVID-19 national and public health emergencies when they expire on May 11, which have been extended every 90 days since they were established in 2020. The decision represents a de-escalation in the way the government is treating the pandemic.

But health experts say now is not the time to let down our collective guard on SARS-CoV-2. “I don’t believe the virus has gotten the memo that the pandemic is winding down,” says Dr. Jeffrey Glenn, director of the Stanford Biosecurity and Pandemic Preparedness Initiative.

“There is a disconnect between the broad perception that the pandemic is behind us, and focusing on getting back to life as it was pre-pandemic,” says Wafaa El-Sadr, founder and director of the International Center for AIDS Care and Treatment Programs (ICAP) at Columbia University’s Mailman School of Public Health. “But the reality is that we still continue to have substantial transmission and deaths due to COVID in the U.S., and we are in a situation where the virus will be with us for a long time.”

Even when the emergency states end, therefore, the pandemic will not be over, they and others say.

One reason is that the definition of a “pandemic” is primarily based on the breadth and speed of a virus’ spread, and the amount of the world affected by a pathogen. It’s only partially related to the severity of disease caused by a virus like SARS-CoV-2, or even the amount of immunity a population may have against it.

By that main criterion, COVID-19 is still very much with us, with around 200,000 new cases and 1,000 deaths a day globally. The latest Omicron variants quashed any hope of the pandemic ending any time soon. While they do not cause more serious infections than past variants, they have mastered the challenge of hopping more efficiently from one infected person to another.

Even though the pandemic is far from over, many health experts agree that ending the U.S. national emergencies is justified at this point. When these measures were first implemented in 2020, most people were immunological sitting ducks for the virus. The declarations were designed to devote financial resources and personnel to controlling the impact of infections on the population’s health as much as possible by shoring up the health care system and later by providing free vaccinations. U.S. officials decided to end the national and public health emergencies in May primarily because most people have either been vaccinated or have recovered from an infection (or both), so the population’s immunity stands at a higher level. COVID-19 cases—both overall and the severe kind—have declined considerably since those early days.

But the continuing stream of infections means that the virus is still reproducing and churning out mutations. So far, those variants haven’t caused more serious disease—but that’s purely by chance, which makes public health experts uncomfortable with declaring victory just yet. Even though COVID-19 cases are no longer inundating most hospitals, that means it’s time to rethink the COVID-19 response, not abandon it.

The best way forward at this point is to refine and target COVID-19 services to optimize the chances of controlling the virus where it may be causing the most health problems. “I think we need to move away from universal guidance on vaccines and boosters and mitigation measures where everybody gets the same guidance, to a more differentiated and tailored approach based on the different characteristics—both socioeconomic and clinical—of different groups of people,” says El-Sadr. “We are at a different moment in the pandemic, so the moment is now for a different message.”

That message isn’t to put COVID-19 completely behind us, but to move forward armed with the lessons we’ve learned from our experience—the most important of which is never to underestimate SARS-CoV-2.

‘Hospital purgatory’: Confidence in healthcare plunges as criticism grows louder and larger

Posted on by • Posted in Board, Financial Stewardship, Financial Strength, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Leadership, Market Consolidation, Market Outlook, Market Power, Monopoly, Monopoly Behavior, Price Transparency, Public Opinion, Public Perception • Leave a comment
https://www.beckershospitalreview.com/?view=article&id=218056%3Ahospital-purgatory-confidence-in-healthcare-plunges-as-criticism-grows-louder-and-larger&catid=31&utm_medium=email&utm_content=newsletter

Payers, pharmacy benefit managers and drug manufacturers are no strangers to heavy criticism from the public and providers alike. Now another sector of the healthcare system has found itself increasingly caught in the crosshairs of constituents looking to point a finger for the rising cost of care: hospitals.

As sharp words against the industry bubble up more often and encompass a wider variety of issues, it marks an important turn in the ethos of American healthcare. Most policymakers have historically wanted hospitals on their side, and health systems are often the largest employer within their communities and in many states.

“In my career, I’ve never seen things more aligned to the detriment of hospitals than it is now,” Paul Keckley, PhD, said. Dr. Keckley is a widely known industry analyst and editor of The Keckley Report, a weekly newsletter discussing healthcare policy and current trends. 

Confidence in the medical system as a whole fell from 51 percent in 2020 to a record low of 38 percent in 2022. Though the healthcare system is among all major U.S. institutions facing record-low public confidence, are hospitals ready for an era of widespread distrust? 

“We’re going into hospital purgatory. It’s a period in which old rules may not work in the future,” Dr. Keckley said. “The only thing we know for sure is that it’s not going to get easier.”

State-versus-hospital fights have popped up throughout the U.S. over the past year. Most recently, in Colorado, a back and forth unfolded between Gov. Jared Polis and the state’s hospital association over who is ultimately responsible for high care costs. In a speech Jan. 17, the Democratic governor accused Colorado’s hospitals of overcharging patients and sitting on significant cash reserves.

“It’s time that we hold them accountable,” he said.

The Colorado Hospital Association says the data supporting those claims does not reflect the several ongoing industry challenges, among them labor shortages, regulatory burdens and inflationary pressures.

“Unfortunately, we continue to hear rhetoric against the hospitals and health systems that have worked diligently on healthcare quality, access and affordability,” CHA said in a statement to Becker’s. “Colorado’s hospitals and health systems have been working with the administration on many of these programs, including reinsurance, hospital discounted care, price transparency, out-of-network patient protections, and more.”

Some 1,500 miles eastward, another incident of hospital-community conflict grew. In January, Pennsylvania lawmakers promoted a nonpartisan report that accuses UPMC of building a monopoly in the state through consolidation over the last decade — the Pittsburgh-based system refuted the claims, saying they were based on “flawed data.”

To the south, North Carolina officials accused the state’s seven largest health systems in June of using pandemic aid to enrich themselves. Hospitals said the accusations were based on “cherry-picked data” spun in a way that does not reflect their ongoing challenges.

As state- and market-level fights against hospitals intensify and grab national attention, hospitals and health systems may find themselves less familiar in steadying public perception than their payer and pharmaceutical counterparts, who are no strangers to vocal opponents.  

“With public opinion shifting a bit amid COVID, and with some anecdotal evidence that hospitals are doing some bad things, state policymakers feel that they are enjoying the political will to make these gestures,” Ge Bai, PhD, said. “It’s also a key issue for voters. Even if they don’t do anything in reality, the gesture will probably get political capital.”

Dr. Bai is a professor of accounting and health policy at Baltimore-based Johns Hopkins University. She believes a key underlying factor driving hospital critiques as of late is the reduced public confidence in medicine by way of the pandemic. 

“The hospital industry has moved away from its traditional charitable mission and toward a business orientation that is undeniable,” she said. “With the [pandemic] dust settling, I think a lot of people realize the clinicians are the heroes, but hospitals are maybe not as altruistic as they once thought.”

In 2021, over 70 percent of Americans said they trusted physicians and nurses, but only 22 percent said the same about hospital executives, according to a study from the University of Chicago and The Associated Press-NORC Center for Public Affairs Research. 

“It’s a tough job and a complicated business to run, and everybody in the community has an opinion about it based on anecdotal evidence,” Dr. Keckley said. “I think much of the blame too for hospitals taking a lot of hits has been boards that are not prepared to govern.”

For both Drs. Keckley and Bai, there are other major issues they each point to as contributing factors to the growing wariness around hospital operations: 

  • A lack of compliance with CMS price transparency rules. Some of the most recent studies estimate hospital compliance rates could range from 16 percent to 55 percent, while hospitals say the issue has been mischaracterized. CMS has penalized very few hospitals for noncompliance since the rule took effect in 2021.
  • The decades-long trend of consolidation hitting a tipping point. With consolidation, hospitals have long argued the trend would lead to more efficiency, care access, quality of care and lower costs. One of the most comprehensive consolidation studies to date was released Jan. 24 in JAMA and concluded that merged health systems have led to “marginally better care at significantly higher costs.”

    “Hospitals are doing exactly what they’re supposed to do — make money to survive and expand,” Dr. Bai said. “Instead of blaming individual players, we have to raise the bar and think about who created the system in the first place that makes competition so difficult — the government.”
  • State retirement benefits plans struggling financially. Though not a new trend, unfunded healthcare benefits promised to retired public employees and their dependents continues to grow around the country, incentivizing state lawmakers to look in new directions to save on costs. Unfunded retiree healthcare liabilities across all states surpassed $1 trillion in 2019, according to the American Legislative Exchange Council.
  • Competition from other healthcare sectors. Competition for patients has arrived from other healthcare sectors, especially from payers. In 2023, UnitedHealth Group’s Optum owns or is affiliated with the most physicians in the country at 60,000, though it’s likely higher after several large acquisitions last year.

“The center of gravity in healthcare has shifted from hospitals that muscled their way into scaling,” Dr. Keckley said. “The reality is that providing hospital services in non-hospital settings that are safe, effective and less costly is where the market, and insurers, are going.”

Despite the uptick in states and Americans that have gone into fault-finding mode against hospitals and those running them, operating a financially successful hospital or health system in 2023 is a monumental task, perhaps even close to impossible for many. Last year, approximately half of U.S. hospitals finished the year with a negative margin, making it “the worst financial year” for the industry since the start of the pandemic, according to Kaufman Hall’s latest “National Flash Hospital Report.”

“Hospitals aren’t going into this with a huge amount of goodwill at their backs, and I think that’s what they need to be prepared for,” Dr. Keckley said. “You can’t just go in and tell the story of ‘look at what we do for the community’ or ‘look at all the people we employ’ — that is not going to work anymore.”