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450 hospitals at risk of potential closure, Morgan Stanley analysis finds
More than 15 percent of U.S. hospitals have weak financial metrics or are at risk of potential closure, according to Business Insider, which cited a recent report from Morgan Stanley.
Morgan Stanley analyzed data from more than 6,000 hospitals and found 600 of the hospitals were “weak” based on criteria for margins for earnings before interest and other items, occupancy and revenue, according to Bloomberg. The analysis revealed another 450 hospitals were at risk of potential closure, according to Business Insider.
Texas, Oklahoma, Louisiana, Kansas, Tennessee and Pennsylvania had the highest concentration of hospitals in the “at risk” pool, according to the report.
Industry M&A may be no savior as the pace of hospital closures, particularly in hard-to-reach rural areas, seems poised to accelerate.
Hospitals have been closing at a rate of about 30 a year, according to the American Hospital Association, and patients living far from major cities may be left with even fewer hospital choices as insurers push them toward online providers like Teladoc Inc. and clinics such as CVS Health Corp’s MinuteClinic.
Morgan Stanley analysts led by Vikram Malhotra looked at data from roughly 6,000 U.S. private and public hospitals and concluded eight percent are at risk of closing; another 10 percent are considered “weak.” The firm defined weak hospitals based on criteria for margins for earnings before interest and other items, occupancy and revenue. The “at risk” group was defined by capital expenditures and efficiency, among others.
The next year to 18 months should see an increase in shut downs, Malhotra said in a phone interview.
The risks are coming following years of mergers and acquisitions. The most recent deal saw Apollo Global Management LLC swallowing rural hospital chain LifePoint Health Inc. for $5.6 billion last month. Apollo declined to comment on the deal; LifePoint has until Aug. 22 to solicit other offers. Consolidation among other health-care players, such as CVS’s planned takeover of insurer Aetna Inc., could also pressure hospitals as payers push patients toward outpatient services.
There are already a lot of hospitals with high negative margins, consultancy Veda Partners health care policy analyst Spencer Perlman said, and that’s going to become unsustainable. Rural hospitals with a smaller footprint may have less room to negotiate rates with managed care companies and are often hobbled by more older and poorer patients.
Also wearing away at margins are technological improvements that allow patients to get more surgeries and imaging done outside of the hospital. They are also likely to be forced to pay more to attract and retain doctors in key areas, Bloomberg Intelligence analyst Jason McGorman said.
They “are getting eaten alive from these market trends,” Perlman cautioned.
Future M&A options could be too late — buyers may hesitate as debt laden operators like Community Health Systems Inc. and Tenet Healthcare Corp. focus on selling underperforming sites to reduce leverage, Morgan Stanley’s Zachary Sopcak said.
The light at the end of the tunnel is some hospitals are rising to the occasion, Perlman said. Some acute care facilities are restructuring as outpatient emergency clinics with free-standing emergency departments. “Microhospitals,” or facilities with ten beds or less, are another trend that may hold promise.
Steward Ohio hospital ups layoffs to 468 as closure looms
Dallas-based Steward Health Care issued a revised notice Aug. 17 indicating job losses from the pending closure of one of its hospitals in Ohio will affect approximately 80 more people than previously reported, according to the Ohio Department of Job and Family Services.
Steward revealed plans last week to close Youngstown-based Northside Regional Medical Center on Sept. 20. The health system initially stated it would lay off all of the facility’s 388 employees, according to a WARN notice filed Aug. 15.
However, a revised WARN notice dated Aug. 17 indicates the closure will affect 468 employees. All hospital workers will be paid through Oct. 14.
Steward acquired Northside Regional and seven other facilities from Franklin, Tenn.-based Community Health Systems last year.
Area healthcare leaders expressed dismay over the planned closure to The Business Journal, but said the move was not entirely unexpected.
California Legislature bans short-term health insurance
https://www.sfchronicle.com/business/article/Defying-Trump-California-legislature-bans-13169686.php
The California Legislature has passed a bill banning the sale of short-term health insurance plans — a type of insurance the Trump administration is seeking to expand.
The bill, SB910, authored by State Sen. Ed Hernandez (D-West Covina), was approved by the Senate on Monday and the Assembly last week. It will need the signature of Gov. Jerry Brown to become law.
Short-term plans are generally cheaper but do not need to cover all the benefits required under the Affordable Care Act, such as preventive care, essential health benefits and protections for people with pre-existing conditions. An estimated 10,000 people in California are currently enrolled in such plans.
The U.S. Department of Health and Human Services this month finalized a rule extending the amount of time consumers can be on short-term plans from three months to almost 12 months, after which they can be renewed for up to three years. However, the HHS rule allows states to regulate the sale of such plans on their own terms.
California had long capped the amount of time consumers could be on short-term plans to six months; the Obama administration limited it even further, to three months. Hernandez’s bill eliminates the sale of such plans altogether, for any amount of time.
If Brown signs the bill, California would join a handful of states, including New Jersey, Massachusetts and New York, that have severely restricted or banned short-term plans, according to the California Health Care Foundation.
If the bill becomes law, it would take effect in January 2019. Californians would still be able to buy short-term coverage — if they are in between jobs, for instance — through the state insurance exchange Covered California, or directly from health insurers like Blue Shield or Kaiser. These plans do comply with Affordable Care Act consumer protections like essential health benefits. Consumers would be able to do this at any time during the year, not just during annual enrollment, because losing job-based coverage counts as a qualifying life event.
Can ‘Medicare for All’ Carry Democrats at the Polls?
http://www.thefiscaltimes.com/2018/08/21/Can-Medicare-All-Carry-Democrats-Polls
The idea of “Medicare for all” has support from top Democrats considered likely 2020 presidential contenders, including Sens. Kamala Harris of California, Elizabeth Warren of Massachusetts, Cory Booker of New Jersey and Kirsten Gillibrand of New York. But Politico’s Paul Demko reports that progressives promising a single-payer health care system have failed to win over voters in some Democratic primaries in swing districts this year:
Democratic candidates who made that a centerpiece of their campaigns in key districts this year lost their primaries, in some cases getting clobbered by rivals who offered vaguer health care plans or backed a more incremental approach. Democratic primary voters in battleground districts in Iowa, Texas, Kansas and New York passed over candidates who emphatically supported single payer.
The key quote: “The problem is Medicare for all just isn’t one of those litmus tests for Democratic primary voters,” John Anzalone, a Democratic pollster, tells Politico. “Voters are smart enough to know that Medicare for all isn’t going to happen right now, or maybe ever.”
Why it matters: While progressives may Medicare for all as a potent rallying cry, and polls show voters increasingly support the notion of a government-funded system, it’s still not a lock that the party will coalesce around such a plan, and it’s not clear how strongly the idea will motivate moderate swing-state voters. Some Democratic strategists and losing candidates argue that support for a single-payer system wasn’t the deciding factor in the contests Politico highlights, but the results still indicate just how complicated it can be for the party to turn the polling advantage it now has on health care into election — or policy — wins.
It’s not just the uninsured — it’s also the cost of health care
We still have an uninsured problem in the U.S., but we have a far broader health care affordability problem that hits sick people especially hard.
Why it matters: It’s time to think more broadly about who’s having trouble paying for the health care they need. The combination of lack of insurance and affordability affects about a quarter of the non-elderly population at any one time, but almost half of people who are sick.
HENRY KOTULA 