Twenty U.S. hospitals have received consecutive “A” safety grades from The Leapfrog Group since 2012, according to the group’s spring safety grades released May 3.
Since 2012, Leapfrog has assigned letter grades to nearly 3,000 acute-care general hospitals across the nation every fall and spring. The safety grades evaluate hospitals’ performance on up to 22 patient safety measures from CMS, the Leapfrog Hospital survey and other supplemental sources. The safety grades are the only hospital ratings program solely based on hospitals’ ability to protect patients from preventable errors, accidents, injuries and infections.
Twenty hospitals have received 23 consecutive “A” grades since the launch.
Last fall, 22 hospitals achieved consecutive “A” grades. For the spring grades, two hospitals lost their consecutive “A” streak: Sentara Williamsburg Regional Medical Center in Virginia and Sierra Vista Regional Medical Center in San Luis Obispo, Calif., both earned a “B.”
Read more about Leapfrog’s hospital safety grade methodology here.
Here are the 20 hospitals that have achieved 23 consecutive “A” grades:
Arizona
Mayo Clinic Hospital (Phoenix)
California
French Hospital Medical Center (San Luis Obispo)
Kaiser Permanente Orange County-Anaheim Medical Center
Colorado
Rose Medical Center (Denver)
Florida
AdventHealth Daytona Beach
Illinois
Elmhurst Memorial Hospital
University of Chicago Medical Center
Northwestern Medicine Central DuPage Hospital (Winfield)
Massachusetts
Beverly Hospital
Saint Anne’s Hospital (Fall River)
Michigan
University of Michigan Health (Ann Arbor)
Mississippi
Baptist Memorial Hospital Golden Triangle (Columbus)
With input from stakeholders across the industry, Modern Healthcare outlines six challenges health care is likely to face in 2023—and what leaders can do about them.
1. Financial difficulties
In 2023, health systems will likely continue to face financial difficulties due to ongoing staffing problems, reduced patient volumes, and rising inflation.
According to Tina Wheeler, U.S. health care leader at Deloitte, hospitals can expect wage growth to continue to increase even as they try to contain labor costs. They can also expect expenses, including for supplies and pharmaceuticals, to remain elevated.
Health systems are also no longer able to rely on federal Covid-19 relief funding to offset some of these rising costs. Cuts to Medicare reimbursement rates could also negatively impact revenue.
“You’re going to have all these forces that are counterproductive that you’re going to have to navigate,” Wheeler said.
In addition, Erik Swanson, SVP of data and analytics at Kaufman Hall, said the continued shift to outpatient care will likely affect hospitals’ profit margins.
“The reality is … those sites of care in many cases tend to be lower-cost ways of delivering care, so ultimately it could be beneficial to health systems as a whole, but only for those systems that are able to offer those services and have that footprint,” he said.
2. Health system mergers
Although hospital transactions have slowed in the last few years, market watchers say mergers are expected to rebound as health systems aim to spread their growing expenses over larger organizations and increase their bargaining leverage with insurers.
“There is going to be some organizational soul-searching for some health systems that might force them to affiliate, even though they prefer not to,” said Patrick Cross, a partner at Faegre Drinker Biddle & Reath. “Health systems are soliciting partners, not because they are on the verge of bankruptcy, but because they are looking at their crystal ball and not seeing an easy road ahead.”
Financial challenges may also lead more physician practices to join health systems, private-equity groups, larger practices, or insurance companies.
“Many independent physicians are really struggling with their ability to maintain their independence,” said Joshua Kaye, chair of U.S. health care practice at DLA Piper. “There will be a fair amount of deal activity. The question will be more about the size and specialty of the practices that will be part of the next consolidation wave.”
3. Recruiting and retaining staff
According to data from Fitch Ratings, health care job openings reached an all-time high of 9.2% in September 2022—more than double the average rate of 4.2% between 2010 and 2019. With this trend likely to continue, organizations will need to find effective ways to recruit and retain workers.
Currently, some organizations are upgrading their processes and technology to hire people more quickly. They are also creating service-level agreements between recruiting and hiring teams to ensure interviews are scheduled within 48 hours or decisions are made within 24 hours.
Eric Burch, executive principal of operations and workforce services at Vizient, also predicted that there will be a continued need for contract labors, so health systems will need to consider travel nurses in their staffing plans.
“It’s really important to approach contract labor vendors as a strategic partner,” Burch said. “So when you need the staff, it’s a partnership and they’re able to help you get to your goals, versus suddenly reaching out to them and they don’t know your needs when you’re in crisis.”
When it comes to retention, Tochi Iroku-Malize, president of the American Academy of Family Physicians (AAFP), said health systems are adequately compensated for their work and have enough staff to alleviate potential burnout.
AAFP also supports legislation to streamline prior authorization in the Medicare Advantage program and avoid additional cuts to Medicare payments, which will help physicians provide care to patients with less stress.
4. Payer-provider contract disputes
A potential recession, along with the ensuing job cuts that typically follow, would limit insurers’ commercial business, which is their most profitable product line. Instead, many people who lose their jobs will likely sign up for Medicaid plans, which is much less profitable.
Because of increased labor, supply, and infrastructure costs, Brad Ellis, senior director at Fitch Ratings, said providers could pressure insurers into increasing the amount they pay for services. This will lead insurers to passing these increased costs onto members’ premiums.
Currently, Ellis said insurers are keeping an eye on how legislators finalize rules to implement the No Surprise Act’s independent resolution process. Regulators will also begin issuing fines for payers who are not in compliance with the law’s price transparency requirement.
5. Investment in digital health
Much like 2022, investment in digital health is likely to remain strong but subdued in 2023.
“You’ll continue to see layoffs, and startup funding is going to be hard to come by,” said Russell Glass, CEO of Headspace Health.
However, investors and health care leaders say they expect a strong market for digital health technology, such as tools for revenue cycle management and hospital-at-home programs.
According to Julian Pham, founding and managing partner at Third Culture Capital, he expects corporations such as CVS Health to continue to invest in health tech companies and for there to be more digital health mergers and acquisitions overall.
In addition, he predicted that investors, pharmaceutical companies, and insurers will show more interest in digital therapeutics, which are software applications prescribed by clinicians.
“As a physician, I’ve always dreamed of a future where I could prescribe an app,” Pham said. “Is it the right time? Time will tell. A lot needs to happen in digital therapeutics and it’s going to be hard.”
6. Health equity efforts
This year, CMS will continue rolling out new health equity initiatives and quality measurements for providers and insurers who serve marketplace, Medicare, and Medicaid beneficiaries. Some new quality measures include maternal health, opioid related adverse events, and social need/risk factor screenings.
CMS, the Joint Commission, and the National Committee for Quality Assurance are also partnering together to establish standards for health equity and data collection.
In addition, HHS is slated to restore a rule under the Affordable Care Act that prohibits discrimination based on a person’s gender identity or sexual orientation. According to experts, this rule may conflict with recently passed state laws that ban gender-affirming care for minors.
“It’s something that’s going to bear out in the courts and will likely lack clarity. We’ll see differences in what different courts decide,” said Lindsey Dawson, associate director of HIV policy and director of LGBTQ health policy at the Kaiser Family Foundation. “The Supreme Court acknowledged that there was this tension. So it’s an important place to watch and understand better moving forward.”
The Taylor Swift ticketing debacle of 2022 left thousands of frustrated ‘Swifties’ without a chance to see their favorite artist in concert. And it also highlighted the trouble that arises when companies like Ticketmaster gain monopolistic control.
In any industry, market consolidation limits competition, choice and access to goods and services, all of which drive up prices.
But there’s another—often overlooked—consequence.
Market leaders that grow too powerful become complacent. And, when that happens, innovation dies. Healthcare offers a prime example.
And industry of monopolies
De facto monopolies abound in almost every healthcare sector: Hospitals and health systems, drug and device manufacturers, and doctors backed by private equity. The result is that U.S. healthcare has become a conglomerate of monopolies.
For two decades, this intense concentration of power has inflicted harm on patients, communities and the health of the nation. For most of the 21st century, medical costs have risen faster than overall inflation, America’s life expectancy (and overall health) has stagnated, and the pace of innovation has slowed to a crawl.
This article, the first in a series about the ominous and omnipresent monopolies of healthcare, focuses on how merged hospitals and powerful health systems have raised the price, lowered the quality and decreased the convenience of American medicine.
Future articles will look at drug companies who wield unfettered pricing power, coalitions of specialist physicians who gain monopolistic leverage, and the payers (businesses, insurers and the government) who tolerate market consolidation. The series will conclude with a look at who stands the best chance of shattering this conglomerate of monopolies and bringing innovation back to healthcare.
How hospitals consolidate power
The hospital industry is now home to a pair of seemingly contradictory trends. On one hand, economic losses in recent years have resulted in record rates of hospital (and hospital service) closures. On the other hand, the overall market size, value and revenue of U.S. hospitals are growing.
This is no incongruity. It’s what happens when hospitals and health systems merge and eliminate competition in communities.
Today, the 40 largest health systems own 2,073 hospitals, roughly one-third of all emergency and acute-care facilities in the United States. The top 10 health systems own a sixth of all hospitals and combine for $226.7 billion in net patient revenues.
Though the Federal Trade Commission and the Antitrust Division of the DOJ are charged with enforcing antitrust laws in healthcare markets and preventing anticompetitive conduct, legal loopholes and intense lobbying continue to spur hospital consolidation. Rarely are hospital M&A requests denied or even challenged.
The ills of hospital consolidation
The rapid and recent increase in hospital consolidation has left hundreds of communities with only one option for inpatient care.
But the lack of choice is only one of the downsides.
Hospital administrators know that state and federal statutes require insurers and self-funded businesses to provide hospital care within 15 miles of (or 30 minutes from) a member’s home or work. And they understand that insurers must accept their pricing demands if they want to sell policies in these consolidated markets. As a result, studies confirm that hospital prices and profits are higher in uncompetitive geographies.
These elevated prices negatively impact the pocketbooks of patients and force local governments (which must balance their budgets) to redirect funds toward hospitals and away from local police, schools and infrastructure projects.
Perhaps most concerning of all is the lack of quality improvement following hospital consolidation. Contrary to what administrators claim, clinical outcomes for patients are no better in consolidated locations than in competitive ones—despite significantly higher costs.
How hospitals could innovate (and why they don’t)
Hospital care in the United States accounts for more than 30% of total medical expenses (about $1.5 trillion). Even though fewer patients are being admitted each year, these costs continue to rise at a feverish pace.
If our nation wants to improve medical outcomes and make healthcare more affordable, a great place to start would be to innovate care-delivery in our country’s hospitals.
To illuminate what’s possible, below are three practical innovations that would simultaneously improve clinical outcomes and lower costs. And yet, despite the massive benefits for patients, few hospital-system administrators appear willing to embrace these changes.
Innovation 1: Leveraging economies of scale
In most industries, bigger is better because size equals cost savings. This advantage is known as economies of scale.
Ostensibly, when bigger hospitals acquire smaller ones, they gain negotiating power—along with plenty of opportunities to eliminate redundancies. These factors could and should result in lower prices for medical care.
Instead, when hospitals merge, the inefficiencies of both the acquirer and the acquired usually persist. Rather than closing small, ineffective clinical services, the newly expanded hospital system keeps them open. That’s because hospital administrators prefer to raise prices and keep people happy rather than undergo the painstaking process of becoming more efficient.
The result isn’t just higher healthcare costs, but also missed opportunities to improve quality.
Following M&A, health systems continue to schedule orthopedic, cardiac and neurosurgical procedures across multiple low-volume hospitals. They’d be better off creating centers of excellence and doing all total joint replacements, heart surgeries and neurosurgical procedures in a single hospital or placing each of the three specialties in a different one. Doing so would increase the case volumes for surgeons and operative teams in that specialty, augmenting their experience and expertise—leading to better outcomes for patients.
But hospital administrators bristle at the idea, fearing pushback from communities where these services close.
Innovation 2: Switching to a seven-day hospital
When patients are admitted on a Friday night, rather than a Monday or Tuesday night, they spend on average an extra day in the hospital.
This delay occurs because hospitals cut back services on weekends and, therefore, frequently postpone non-emergent procedures until Monday. For patients, this extra day in the hospital is costly, inconvenient and risky. The longer the patient stays admitted, the greater the odds of experiencing a hospital acquired infection, medical error or complications from underlying disease.
It would be possible for physicians and staff to spread the work over seven days, thus eliminating delays in care. By having the necessary, qualified staff present seven days a week, inpatients could get essential, but non-emergent treatments on weekends without delay. They could also receive sophisticated diagnostic tests and undergo procedures soon after admission, every day of the week. As a result, patients would get better sooner with fewer total inpatient days and far lower costs.
Hospital administrators don’t make the change because they worry it would upset the doctors and nurses who prefer to work weekdays, not weekends.
Innovation 3: Bringing hospitals into homes
During Covid-19, hospitals quickly ran out of staffed beds. Patients were sent home on intravenous medications with monitoring devices and brief nurse visits when needed.
Clinical outcomes were equivalent to (and often better than) the current inpatient care and costs were markedly less.
Building on this success, hospitals could expand this approach with readily available technologies.
Whereas doctors and nurses today check on hospitalized patients intermittently, a team of clinicians set up in centralized location could monitor hundreds of patients (in their homes) around the clock.
By sending patients home with devices that continuously measure blood pressure, pulse and blood oxygenation—along with digital scales that can calibrate fluctuations in a patient’s weight, indicating either dehydration or excess fluid retention—patients can recuperate from the comforts of home. And when family members have questions or concerns, they can obtain assistance and advice through video.
Despite dozens of advantages, use of the “hospital at home” model is receding now that Covid-19 has waned.
That’s because hospital CEOs and CFOs are paid to fill beds in their brick-and-mortar facilities. And so, unless their facilities are full, they prefer that doctors and nurses treat patients in a hospital bed rather than in people’s own homes.
Opportunities for hospital innovations abound. These three are just a few of many changes that could transform medical care. Instead of taking advantage of them, hospital administrators continue to construct expensive new buildings, add beds and raise prices.
Published this week in the New England Journal of Medicine, this concerning study found that seven percent of all inpatient hospital admissions feature at least one preventable adverse event, and that nearly a quarter of all adverse events are preventable, with drug administration errors the most frequent. While the complexities behind studying adverse events make it difficult to measure progress over time, the authors assert that these episodes are still far too common, and advocate for establishing standard approaches to measure the frequency of adverse events more reliably.
The Gist: Health systems had been making at least some progress in their decades-long effort to reduce adverse events before COVID turned the industry upside down, drawing clinical leaders’ focus to the crisis and upending industry benchmarks.
Today’s short-staffed, traveler-dependent labor force presents yet another challenge to hospitals aiming to achieve quality benchmarks. COVID has also accelerated the outpatient shift, heightening the importance of tracking quality metrics in non-hospital settings.
As more complex procedures are performed in ambulatory surgery centers, and more hospital care is administered at home, there’s also a concern that hospital-based quality measures are not telling the whole story on the state of patient safety.
A rethinking of quality metrics and processes to measure and prevent adverse events across the continuum is long overdue.
Despite the hype, accountable care organizations (ACOs) and other Medicare-driven payment reform programs intended to improve quality and lower healthcare spending haven’t bent the cost curve to the extent many had hoped.
A recent and provocative opinion piece in STAT News, from health policy researcher Kip Sullivan and two single-payer healthcare advocates, calls for pressing pause on value-based payment experimentation. The authors argue that current attempts to pay for value have ill-defined goals and hard-to-measure quality metrics that incentivize reducing care and upcoding, rather than improving outcomes.
The Gist: We agree with the authors that current value-based care experiments have been disappointing.
The intention is good, but the execution has been bogged down by entrenched industry dynamics and slow-to-move incumbents. One fair criticism: ACOs and other “total cost management” reforms largely focus on the wrong problem. They address utilization, rather than excessive price.
But we’re having a price problem in the US, not a utilization problem.Europeans, for example, have more physician visits each year than Americans, yet spend less per-person on healthcare. It’s our high prices—for everything from physician visits to hospital stays to prescription drugs—that drive high healthcare spending.
The root cause: our third-party payer structure actively discourages real efforts to lower price—every player in the value chain, including providers, brokers, and insurers, does better economically as prices increase. That’s why price control measures like reference pricing or price caps have been nonstarters among industry participants.
Recent reforms that increase price transparency, while not the entire solution, at least shine a light on the real challenges our healthcare system faces.
The healthcare industry has made some strides in the “journey to value” across the last decade, but in reality, most health systems and physician groups are still very much entrenched in fee-for-service incentives.
While many health plans report that significant portions of their contract dollars are tied to cost and quality performance, what plans refer to as “value” isn’t necessarily “risk-based.”
The left-hand side of the graphic below shows that, although a majority of payer contracts now include some link to quality or cost, over two-thirds of those lack any real downside risk for providers.
Data on the right show a similar parallel in physician compensation. Whilethe majority of physician groups have some quality incentives in their compensation models, less than a tenth of individual physician compensation is actually tied to quality performance.
Though myriad stakeholders, from the federal government to individual health systems and physician groups, have collectively invested billions of dollars in migrating to value-based payment over the last decade, we are still far from seeing true, performance-based incentives translate into transformation up and down the healthcare value chain.
A National Bureau of Economic Research working paper found that higher-priced hospitals in competitive markets were associated with lower patient mortality—flying in the face of the common policy narrative that higher-priced care is not higher quality. However, in more concentrated, less-competitive healthcare markets (in which over two-thirds of the nation’s hospitals are located), the study found no correlation between price and quality. Authors of the study analyzed patient outcomes from more than 200K admissions among commercially insured patients, transported by ambulance to about 1,800 hospitals between 2007 and 2014.
The Gist: As hospitals have consolidated, prices have risen by about 30 percent between 2015 to 2019, leading policy experts and regulators to search for ways to rein in price inflation.
While there continues to be widespread consensus that industry consolidation has resulted in unsustainable cost growth, the new study’s findings bring a bit of welcome nuance around impact on quality and outcomes to an otherwise one-sided, price-centric policy narrative.
Of the 764 hospitals the Centers for Medicare and Medicaid Services (CMS) is penalizing this year with a one percent reduction in Medicare payments for scoring in the bottom quartile in the Hospital-Acquired Condition Reduction (HAC) Program, 38 also earned a five-star rating from CMS for overall quality of care.
This paradox is in part because Medicare’s star ratings compare a hospital’s safety and quality to a calculated average, whereas the HAC program requires Medicare to penalize the lowest-performing quartile of hospitals each year, even if they are showing improvement, or if the difference between low- and high-performing hospitals is miniscule.
The Gist: The promise of Medicare’s pay-for-performance incentive programs has not materialized, and is unlikely to be driving true clinical improvement. In addition to being confusing and tedious to comply with, the programs lack impact because penalties and rewards are too small to impact a hospital’s bottom line—the benefits don’t justify the costs of redesigning care processes or changing behavior. With years of evidence that many of these ACA-era quality programs aren’t producing the desired results, it’s time to find more effective ways of improving patient outcomes.
The agency’s end goal for Medicare Advantage is to match CMS’ vision for its programs as a whole, with an emphasis on health equity.
On Wednesday, the Centers for Medicare and Medicaid Services released proposed payment policy changes for Medicare Advantage and Part D drug programs in 2023 that are meant to create more choices and provide affordable options for consumers.
The Calendar Year 2023 Advance Notice for Medicare Advantage and Part D plans is open to public comment for 30 days. This year, CMS is soliciting input through a health equity lens on the approach to some future potential changes.
The agency’s end goal for Medicare Advantage is to match CMS’ vision for its programs as a whole, which Administrator Chiquita Brooks-LaSure said is “to advance health equity; drive comprehensive, person-centered care; and promote affordability and the sustainability of the Medicare program.”
CMS is proposing an effective growth rate of 4.75% and an overall expected average change in revenue of 7.98%, following a 4.08% revenue increase planned for 2022.
WHAT’S THE IMPACT?
CMS is requesting input on a potential change to the MA and Part D Star Ratings that would take into account how well each plan advances health equity.
The agency is also requesting comment on including a quality measure in MA and Part D Star Ratings that would assess how often plans are screening for common health-related social needs, such as food insecurity, housing insecurity and transportation problems.
The Health Equity Index has been tasked with creating more transparency on how MA plans care for disadvantaged beneficiaries.
Additionally, CMS is requesting input on considerations for assessing the impact of using sub-state geographic levels of rate setting for enrollees with end-stage renal disease, particularly input regarding the impact of MA payment on care provided to rural and urban underserved populations and how such payment changes may impact health equity.
Other areas in which CMS is soliciting input include a variety of payment updates, a new measure concept to assess whether and how MA plans are transforming care by engaging in value-based models with providers’ and updates to risk-adjustment models to continue to pay appropriately for people enrolled in MA and Part D plans.
Public comments on the Advance Notice must be submitted by March 4. The Medicare Advantage and Part D payment policies for 2023 will be finalized in the 2023 Rate Announcement, which will be published no later than April 4.
REACTION
The proposed rule has already elicited reaction from various organizations, including Better Medicare Alliance.
“As we continue to review the Advance Notice in further detail, we appreciate that CMS has offered a thoughtful proposal that will help ensure stability for the millions of diverse seniors and individuals with disabilities who count on Medicare Advantage,” Mary Beth Donahue, president and CEO of the Better Medicare Alliance, said, adding that the proposal furthers the shared goal of improving health equity.
“Medicare Advantage has proven its worth for seniors and taxpayers – providing lower costs, meaningful benefits that address social determinants of health, better outcomes and greater efficiencies for the Medicare dollar,” she said. “A stable rate for 2023 ensures this work can continue. On behalf of our 170 Ally organizations and over 600,000 beneficiary advocates, we applaud CMS for putting seniors first by issuing an Advance Notice that protects coverage choices, advances health equity and preserves affordability for beneficiaries.”
AHIP also responded, with President and CEO Matt Eyles pointing out that for 2022 the average Medicare Advantage monthly premium dropped to $19, down more than 10% since 2021.
“We agree that MA plans play an essential role in improving health equity and addressing the social determinants of health that impact millions of seniors and people with disabilities,” he said. “We support CMS soliciting input on ways to advance these important goals.
“Medicare Advantage enjoys strong bipartisan support because it provides America’s seniors and people with disabilities with access to affordable, high-quality healthcare services,” said Eyles. “We will continue to review the 2023 rate notice and look forward to providing constructive feedback to CMS during the comment period.”
THE LARGER TREND
CMS’ Advance Notice follows a recent congressional letter in which 346 bipartisan members of Congress declared support for Medicare Advantage and urged the agency “to provide a stable rate and policy environment” for the program in 2023.
A December 2021 Morning Consult poll showed that 94% of Medicare Advantage beneficiaries are satisfied with their coverage, while 93% believe that protecting MA should be a priority of the Biden administration.
HENRY KOTULA 