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Tenet eliminates poison pill, adopts governance changes
Dallas-based Tenet Healthcare announced March 5 that its board of directors has approved several changes to the company’s corporate governance.
Here are five things to know about the changes.
1. The board approved changes to Tenet’s bylaws that allow shareholders with a 25 percent stake in the company to request a special meeting. The move comes after the board approved amendments to the company’s bylaws in January that allowed majority shareholders to request special meetings.
2. Tenet approved a short-term shareholder rights plan in August 2017, which was designed to protect $1.7 billion in net operating loss carryforwards and ensure the board could protect all shareholder interests as it executed CEO and board changes. Under the poison pill, if any person or entity acquired 4.9 percent or more of Tenet stock, all holders of rights issued under the plan are entitled to acquire shares of common stock with a 50 percent discount.
3. Tenet terminated the poison pill March 5. “The board made this decision based upon the reduced value of the NOL shareholder rights plan following recent tax law changes and an increase in the company’s stock price since the NOL shareholder rights plan was adopted, as well as shareholder feedback,” Tenet said in a statement. The poison pill was originally slated to expire following Tenet’s 2018 annual meeting of stockholders, which is typically held in May.
4. Tenet announced March 5 that it also eliminated the executive committee as a standing committee of the company’s board of directors.
5. “The board of directors and management have spent considerable time in recent weeks engaging with shareholders representing a majority of our outstanding stock and we received constructive input regarding Tenet and our objective to lead with best corporate governance practices,” said Ronald A. Rittenmeyer, executive chairman and CEO of Tenet. “We believe the actions which we are taking today demonstrate our continued commitment to being responsive in a timely manner to shareholder feedback and to implementing measures that increase transparency and accountability.”
Moody’s: Nonprofit hospital rating downgrades rose sharply in 2017
Despite a strong economy and low uninsured population, nonprofit hospital rating downgrades sharply outpaced upgrades throughout 2017 — creating a downgrade-to-upgrade ratio of 3.4 to 1.0, which is more than double the 2016 ratio of 1.5 to 1.0, according to a new report by Moody’s Investors Service.
In 2017, there were 41 credit downgrades and 12 credit upgrades for nonprofit hospitals, compared to 32 credit downgrades and 21 credit upgrades in 2016.
Moody’s attributed the credit stress in 2017 to rising labor and supply costs coupled with a low revenue growth environment.
“An acute nursing shortage in many markets, along with rising supply and pharmaceutical costs, resulted in expense growth outpacing revenue growth for many hospitals and health systems,” the Moody’s report reads.
While hospitals of all sizes were downgraded, 60 percent of the downgrades in 2017 affected smaller health systems with less than $1 billion in total operating revenue. In addition, 12 of the downgrades occurred in Pennsylvania and Ohio, reflecting the lagging economy, aging demographics, competitive service area and commercial payer challenges in the Rust Belt area.
Although downgrades outpaced upgrades in 2017, Moody’s affirmed the vast majority of ratings in 2017, which is in line with historical trends.
18k Kaiser nurses vote for option to strike at California facilities
Tens of thousands unionized registered nurses at facilities owned by Oakland, Calif.-based Kaiser Permanente voted for the option to call a strike if an agreement is not reached on issues such as staffing and patient care, according to a California Nurses Association news release.
The CNA — which represents 18,000 RNs who work at more than 20 Kaiser Permanente medical centers and dozens of medical clinics and office buildings in California — said nurses are calling on the healthcare giant to improve patient care standards.
“With this vote nurses are making it absolutely clear: We are ready to strike to make sure our patients get safe care,” said Zenei Cortez, a South San Francisco Kaiser Permanente RN and co-president of CNA.
Union officials said nurses specifically are calling on Kaiser Permanente to support their proposals regarding staffing and patient care standards. These include bringing in a charge nurse on each unit, as well as resource nurses to assist other nurses so they are able to take breaks. The union said nurses also propose “interventions with pharmacy to expedite patients receiving correct medications,” and “increased staffing when needed due to emergent conditions and heightened patient volume.”
Additionally, the CNA said nurses are opposed to Kaiser Permanente’s proposal to move from the existing GRASP patient classification system to Epic Acuity, which nurses contend is less transparent. Nurses are also opposed to what they said are Kaiser Permanente’s plans to cut pay for new hires by 10 percent in the Sacramento region, and 20 percent in Fresno and the Central Valley.
Regarding the union’s claims about staffing, Debora Catsavas, senior vice president of human resources for Kaiser Permanente Northern California, said in a statement: “Our nurse staffing meets, and often exceeds, state-mandated staffing as necessary for patients, based on the complexity of their medical conditions. We employ more than 18,000 nurses, and have hired more than 2,000 nurses in multiple key specialty areas over the last three years, and continue to hire more as needed.”
As far as the move to Epic Acuity, Ms. Catsavas said the move addresses various issues nurses have raised about the existing GRASP patient classification system.
“GRASP is a system from the 1980s based on studies of nursing work flows conducted nearly 50 years ago. Epic Acuity is an up-to-date, comprehensive system that directly reflects the care provided and allows nurses to spend more time at the bedside,” her statement reads. “Epic Acuity uses clinical information directly inputted by the nurses into our electronic medical record.”
She said Kaiser Permanente also offered nurse representatives paid time to talk about and review Epic Acuity’s implementation.
Furthermore, Ms. Catsavas said there are no proposed wage cuts or wage reductions for current nurses. However, she said Kaiser Permanente last October proposed a new wage scale for new nurses hired in the Sacramento, Central Valley and Fresno areas on or after Jan. 1, 2019, “to more closely align with the lower cost of living in these markets.”
She noted Kaiser Permanente nurses in Sacramento, the Central Valley and Fresno earn 24 percent, 37 percent and 45 percent more than non-Kaiser Permanente nurses, respectively.
While the Kaiser Permanente nurses have authorized a potential strike, no strike date is set. For a strike to occur, nurses would have to provide at least 10 days notice.
Ms. Catsavas said Kaiser Permanente anticipated a strike authorization might occur but believes an agreement is within reach.
White House pitch to bolster Obamacare includes tough trade-offs for Democrats
https://www.politico.com/story/2018/03/06/obamacare-democrats-white-house-insurance-stable-388816
The White House is seeking a package of conservative policy concessions — some of which are certain to antagonize Democrats — in return for backing a legislative package bolstering Obamacare markets, according to a document obtained by POLITICO.
The document indicates the administration will support congressional efforts to prop up the wobbly marketplaces, in exchange for significantly expanding short-term health plans and loosening other insurance regulations.
The document also makes severalreferences to abortion language that will be problematic for Democrats. A potential stumbling block in passing any stabilization package is whether conservatives will insist on including language prohibiting the use of government dollars to pay for abortions.
“Although congressional efforts to provide taxpayer money to prop up the exchanges is understandable, any such efforts must also provide relief to middle-class families harmed by the law and protect life,” the document states.
The source of the document provided to POLITICO isn’t identified and it isn’t dated. The White House declined to comment on the document but didn’t question its authenticity. A spokesperson for HHS said the department does not comment on leaked documents.
Two health policy experts who have been in contact with White House officials indicated that the document is consistent with ideas the administration has discussed for creating more stability and flexibility in the insurance markets.
“It’s legit,” said one former White House policy official.
Republican and Democratic lawmakers have been in delicate negotiations over a stabilization package that could clear the House and Senate. Democrats want to bolster the federal health care law after Republicans failed in their efforts to repeal it last year.
The list of White House policy requests includes allowing insurers to charge older enrollees up to five times as much as their younger counterparts, as opposed to the current three-to-one cap. That policy would require amending the Affordable Care Act.
The White House is also seeking to allow short-term plans — which offer skimpier benefits with lower premiums — to be renewed. Short-term plans, exempt from Obamacare rules, can deny people coverage or charge them more based on a health condition, in a process known as underwriting. The Trump administration recently proposed expanding the maximum length of these plans from three months to one year. However, the White House document envisions allowing people to renew this coverage “without those individuals going through health underwriting.”
The document doesn’t include support for reinsurance, which insurers have been pushing to shield them from the costs of particularly expensive customers.
The document also reiterates that the administration supports funding for cost-sharing reduction payments, which Trump cut off in October. The president’s budget proposal including funding for the payments, which help insurers reduce out-of-pocket costs for low-income Obamacare customers.
There is at least one item on the White House list that could garner bipartisan support: Expanding the use of health savings accounts. Last week, a bipartisan group of House members introduced a package of potential changes, and business groups have been pushing for HSA proposals to be part of the appropriations package Congress must pass by March 23.
Republicans fear another year of eye-popping premium increases will hit voters just before Election Day — and that they’ll get the blame this time since they’re now in charge.
But the White House asks could further unsettle those talks. In particular, the emphasis on abortion language tripped up earlier negotiations.
Democrats have been seeking a very different list of policies to boost the markets. They want to increase the subsidies provided to Obamacare customers, reinstate funding for outreach and marketing, and prevent the executive branch from expanding the availability of what they deride as “junk” insurance plans.
“People nationwide are looking at higher premiums and out-of-pocket costs as a direct result of the damage President Trump has done on health care,” said Sen. Patty Murray (D-Wash.), who has been in the middle of negotiations over a stabilization package, in a statement to POLITICO. “I certainly hope the president and Republican leaders won’t once again sabotage an opportunity to undo some of the damage they’ve done by choosing to play politics with women’s health and making last-minute, harmful demands that would raise families’ costs even more and place an age tax on seniors.”
Big Pharma’s lobbyists are losing despite their ‘pass the buck’ campaigns
As policymakers and the administration focus on high drug prices, the brand drugmaker lobby has responded by unleashing millions of dollars in an attempt to shift blame.
They’ve blamed price gouging scandals on a “broken system” and claim to want to reform. They bankroll more than 1,400 lobbyists along with many “patient groups” and so-called “experts” to carry these messages to the media outlets and politicians on whom they lavish millions in advertising dollars and campaign contributions.
However, their polling numbers remain as low as before their advertising blitz began as Americans have overwhelmingly negative views of drugmakers and the pricing schemes of “Pharma Bro” Martin Shkreli and others who increased drug prices simply because they found that they could.
The response from the drugmaker lobby has been to rollout slick public relations slogans like “Share the Savings” and “Let’s Talk About Cost” that use fancy infographics in an attempt to move the conversation away from those setting the price of the drug (drug companies) to everyone else who uses or pays for their products, like employers, hospitals, pharmacy benefit managers, insurers, and others.
This isn’t surprising and certainly not unpredictable, but ignores the basic challenge facing drug companies: no amount of money can change the fact that Republicans and Democrats know the problem is high drug prices and that drugmakers alone set those prices.
So despite all this overwhelming lobbying and financial firepower, the question remains: Why are drugmakers losing?
In the recent budget bill, drugmakers were singled out by both parties to pay billions more in discounts to help seniors in the Medicare prescription drug benefit “donut hole.”
This comes as states across the country are taking a harder look at drugmaker pricing schemes and passing legislation in California and Nevada that faced significant pushback from drug companies (and their surrogates).
Like the emperor who wore no clothes, drugmakers have confused politician’s fear of speaking out against them with support for their pricing practices. It appears that most politicians will tolerate, but not believe in the drug lobby’s messages or goals.
Drug manufacturers have a number of options to alter public perception of their pricing strategies. They can assert that their products are a great value at any price but there is definitely a level where that argument fails. They can also compete on price and refrain from automatic pricing increases that obviously impact healthcare affordability.
Instead, they peddle distracting narratives and government mandates that undermine federal programs and result in huge industry profit windfalls. One recent example would be to prevent brand discounts and rebates from being used to lower premiums for seniors.
According to the White House’s budget proposal, this mandate alone would cost the government about more than $42 billion and lead to higher premiums for Medicare beneficiaries.
This is yet another distraction from the real problem of excessive drug pricing. If the drugmakers were truly concerned about affordability, the drug companies would simply reduce their prices. That would have a direct impact on the cost of health care to every American consumer.
Simply put, drugmakers have failed to give policymakers the one thing they need: real solutions that reduce costs. They’ve offered no solutions that score savings — in fact, they all raise costs.
Their relentless, ongoing PR blitz is simply an effort to pass the buck and direct attention away from their pricing strategies. The drug lobby has underestimated the one politician, with whom their money and power doesn’t carry much weight: President Trump. It was only last year that he said drugmakers were “getting away with murder.”
If the record is any indicator, he still thinks Big Pharma is one of the creatures lurking in the swamp he intends to drain.
The Price They Pay
https://features.propublica.org/drug-prices/high-cost-drugs-the-price-they-pay/
THE BURDEN of high drug costs weighs most heavily on the sickest Americans.
Drug makers have raised prices on treatments for life-threatening or chronic conditions like multiple sclerosis, diabetes and cancer. In turn, insurers have shifted more of those costs onto consumers. Saddled with high deductibles and other out-of-pocket costs that expose them to a drug’s rising list price, many people are paying thousands of dollars a month merely to survive.
For more than a year, President Donald Trump and Democrats in Congress have promised to take action on high drug prices, but despite a flurry of proposals, little has changed.
These are the stories of Americans living daily with the reality of high-cost drugs. And there are millions of others just like them.
Health Insurance Markets Perform Better in States That Run Their Own Marketplaces
In spite of actions by Congress and President Trump that undermine parts of the Affordable Care Act (ACA), reports of the law’s death are greatly exaggerated, as Mark Twain might have said. Enrollment in the ACA’s subsidized marketplace exchanges remains strong, and coverage remains available throughout the country. Not all insurance markets have remained as resilient as others, however. It appears that attempts to undermine the ACA have had greater effects in some locations than in others. In particular, analysts have noted that insurance markets remain healthier in the 17 states that run their own insurance marketplaces than in those that rely on the federal marketplace. We use newly released federal data to explore this difference between states.
Lower ACA Individual Market Premiums, Claims, and Costs in States with State-Run Marketplaces
In the individual market, insurers projected premiums for ACA-compliant coverage in 2018 that averaged 21 percent higher ($633 per month vs. $526 per month) in states using the federal marketplace than in those running their own marketplaces. Comparing these numbers to those from last year, insurers’ premium projections increased 68 percent more on average in federal marketplace states than in states with their own marketplaces ($135 per month vs. $82 per month).
These greater projected premiums in federal marketplace states continue a trend that has existed since near the beginning of the marketplaces. During the second year of the ACA marketplaces (2015), rate increases between the two sets of states were similar, but thereafter they began to diverge. In 2016, 2017, and 2018, insurers had greater premium increases in states using the federal marketplace than in states operating their own, with differences averaging 6 percentage points a year . Notably, the differences in rate increases were substantially greater for 2018 (11 percentage points) than for the prior two years (3 percentage points), as the stability of health care markets was thrown into question in the wake of the Trump administration’s pronouncements and policies.
For 2018, the difference in premiums between the two sets of states is based in part on greater projected medical claims in federal marketplace states. Insurers in federal marketplace states projected claims for 2018 that were 14 percent greater ($478 per month vs. $419 per month) than in states with their own marketplaces. Insurers in the federal marketplace states also projected higher administrative costs and operating profits per member, resulting in a substantially higher proportion of premiums (24.7% vs. 20.2%) going to overhead rather than to medical claims.
States That Run Their Own Marketplaces Are Better Positioned for Negative Impacts of ACA Changes
As insurers were adjusting to recent changes in administrative policy as well as market conditions, insurance markets in states with their own marketplaces appear to be more resilient than those in states using the federal marketplace. Under state-based marketplaces, insurers were able to project lower claims costs and keep administrative and overhead costs lower than in other states.
This greater resilience to policy efforts to weaken or undermine the ACA could result from a combination of factors that these data do not illuminate, but which other analysts (noted above, and here) have suggested. Principally, states with their own marketplaces have a more proactive engagement with the ACA, which is likely to translate into a more balanced risk pool and a greater willingness of insurers to enter or remain in the market. For example, when the Trump administration shortened the open-enrollment period and reduced advertising for the federal marketplace, states with their own marketplaces extended their open-enrollment periods and supplemented federal funds for outreach and assistance.
Other factors may well be at play in this observed difference between states.1 But the consistently and increasingly lower premiums in state-based marketplace states suggest that, as additional changes are made to the ACA, these states may be better situated and more motivated to buffer the potential negative impacts. States that wish to avoid the worst effects of market destabilization flowing from the most recent set of federal health policy reversals might want to follow the lead set by states that operate their own marketplaces.2
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HENRY KOTULA 