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7 recent hospital, health system outlook and credit rating actions
The following hospital and health system rating and outlook changes and affirmations took place in the last week, beginning with the most recent.
1. Moody’s affirms ‘A1’ rating on Munson Healthcare
Moody’s Investors Service affirmed the “A1” rating on Traverse City, Mich.-based Munson Healthcare’s revenue bonds issued by the Grand Traverse County Hospital Authority, affecting $155 million of debt.
2. S&P downgrades North Broward Hospital District’s bond rating to ‘BBB+’
S&P Global Ratings downgraded the rating on Fort Lauderdale, Fla.-based Broward Hospital District’s series 2005A, 2007 and 2008A variable-rate revenue bonds to “BBB+” from “A-.”
3. Fitch affirms ‘AA-‘ on SCL Health’s revenue bonds
Fitch Ratings affirmed the “AA-” rating on Broomfield, Colo.-based SCL Health’s revenue bonds issued by the Colorado Health Facilities Authority, Kansas Development Finance Authority and Montana Facility Finance Authority, affecting $1.3 billion of outstanding debt.
4. Moody’s revises Agnesian HealthCare’s outlook to negative
Moody’s Investors Service assigned its “A2” rating to Fond du Lac, Wis.-based Agnesian HealthCare’s proposed $58 million series 2017 revenue bonds to be issued by the Wisconsin Health and Educational Facilities Authority. The expected sale date is July 27.
5. Fitch affirms ‘BBB’ rating on Methodist Hospitals’ revenue bonds
Fitch Ratings affirmed its “BBB” rating on Gary, Ind.-based The Methodist Hospitals’ series 2014A revenue refunding bonds issued by the Indiana Finance Authority.
6. Fitch affirms ‘AA’ rating on Texas Children’s Hospital’s
Fitch Ratings affirmed the “AA” rating on a number of Houston-based Texas Children’s Hospital’s revenue bonds, including series 2015-1, series 2015-3, series 2015-4, series 2010, series 2009 and series 2008-2, all issued by the Harris County Cultural Education Facilities Finance Corp. These rating actions affect a total of $683 million of debt.
7. Moody’s affirms ‘Baa1’ rating on Cooper Health System
Moody’s Investors Service affirmed its “Baa1” rating on Camden, N.J.-based Cooper Health System’s revenue bonds issued by the Camden County Improvement Authority and New Jersey Economic Development Authority, affecting $240 million of outstanding debt.
ACOs are leaving $886M in net payments on the table, analysis finds
ACOs in Track 1 of the Medicare Shared Savings Program are losing out on millions of dollars in additional net payments from CMS by not taking on more risk and missing out on the Quality Payment Program’s 5 percent lump sum bonus payment for ACOs in Track 2 and 3, according to an analysis from Avalere.
The analysis simulates how much Track 1 ACOs would earn if they were enrolled in Track 2 — based on 2015 performance — and the QPP was in place. Track 1 ACOs do not bear downside financial risk, and therefore share in a smaller portion of savings than their Track 2 and 3 counterparts. However, if these ACOs had taken on more risk in 2015, they would have earned $178 million more in shared savings, according to the analysis. And if the Track 1 ACOs took on downside risk, they would qualify as an Advanced Alternative Payment Model under the Medicare Access and CHIP Reauthorization Act’s QPP. These models have the opportunity to earn a bonus up to 5 percent on Medicare Part B expenditures — and based on 2015 performance, those ACOs would be leaving $1.1 billion in AAPM bonus payments on the table by not bearing the downside risk necessary to qualify, according to the report.
“The CMS’ new value-based payment incentives really tip the scales for doctors to assume greater financial risk,” Josh Seidman, PhD, senior vice president at Avalere, said in a statement. “For those physicians who were dipping their toes in the water with low-risk ACO models, the incentives now make it advantageous for a majority of them to move more aggressively into greater accountability for population health.”
Of course, some of the ACOs would have also generated net losses. The analysis indicates some of the ACOs in the simulation would have had to pay back CMS for spending above the benchmark. These shared losses would have totaled $437 million. Benefits and losses taken together, if all Track 1 ACOs joined Track 2 of the MSSP and performed as well as they did in 2015, they would earn additional net payments of $886 million, according to the analysis.
However, the majority of ACOs would still benefit by joining Track 2. Avalere found 79 percent, or 307 of the Track 1 ACOs, would have financially benefitted, compared to 21 percent, or 82, that would not.
This year 486 ACOs are participating in Track 1, accounting for most of the MSSP program. Track 2 counts just six participants and Track 3 has 36 ACOs.
Adventist Health closes Washington hospital
http://www.beckershospitalreview.com/finance/adventist-health-closes-washington-hospital.html
Roseville, Calif.-based Adventist Health on Monday closed Walla Walla (Wash.) General Hospital along with its affiliated home health division and medical group.
The closure comes after Adventist called off plans in June to transfer ownership of Walla Walla General to Renton, Wash.-based Providence Health & Services. Under the deal, Providence agreed to assume ownership and operation of the Walla Walla campus and disburse $14 million over 24 years into a special fund for community health that Adventist would direct.
However, Adventist said late last month the proposed transaction encountered “unexpected regulatory challenges” that could possibly block the deal. The system discontinued negotiations with Providence and announced it would close the Walla Walla campus.
Adventist said Walla Walla General has faced financial troubles for the past decade. The system invested $68 million into Walla Walla General in recent years, but that wasn’t enough to save the hospital.
“We respect the legacy of this hospital, its place in the heart of our community, and the investments we have all made to sustain it for more than a century,” Adventist said. “Unfortunately, the current volatile healthcare environment, legislative challenges, and consistent low inpatient census have created an unsustainable future for Walla Walla General Hospital.”
Adventist said many of the Walla Walla General Hospital physicians will remain local and will inform patients of their future plans.
Walla Walla General Hospital was founded in 1899 and has more than 400 employees, including a medical staff of more than 175 clinicians.
How GOP Will Still Carve Up Medicare
https://www.forbes.com/sites/johnwasik/2017/07/19/how-gop-will-still-carve-up-medicare/#48a9aa5943f1
Now that the GOP’s plan for repealing and replacing Obamacare seems to be in a coma, the party has turned its attention to the 2018 federal budget.
Although specific spending details in the House committee mark-ups are still being hammered out, the GOP is back to its old script.
The GOP has a working blueprint to cut billions out of federal programs and balance the budget without tax increases. And, among other items, it still wants to privatize Medicare.
Speaker of the House Paul Ryan (R-WI). (Photo by Win McNamee/Getty Images)
Medicare covers more than 55 million Americans. Most of them are 65 or older and millions are permanently disabled. It’s the nation’s second-largest government-managed single-payer plan after Medicaid, which covers some 70 million.
While Medicare provides coverage for doctors and hospitals, it also covers prescription drugs if you pay an additional premium. You also have the option to buy into private policies through Medicare Advantage — if you don’t want the fee-for-service part of basic Medicare.
The rehashed House GOP budget blueprint wants to reshape Medicare into more of a Medicare Advantage model, which now covers some 19 million Americans.
What does that mean? Funding for the guaranteed part of Medicare would be shifted into the privatized scheme. You’d receive a fixed stipend or “premium support” to buy a private policy on an exchange.
Buying private plans on an exchange? Where have we heard that before? Oh yes, that was the model for the Affordable Care Act, or Obamacare, which the GOP has spent the last seven yearstrying to repeal. It’s been a staple of House Speaker Paul Ryan’s policy platform for years.
According to the House Budget Committee blueprint:
“The Medicare improvements envisioned in this budget resolution would adopt the popular simplified coverage structure of Medicare Advantage, and allow seniors greater plan choices while reducing costs.
It would resemble the private insurance market, in which the majority of Americans select a single health care plan to cover all their medical needs.”
In theory, having private insurers compete with the government to provide more coverage at a lower cost sounds like a good idea. But is it possible, given the government’s massive economies of scale?
Without generous subsidies, the prospect of insurers offering a better Medicare deal is like the corner grocer trying to compete with Wal-Mart. Moreover, using Medicare Advantage as a model is a horrible idea.
Medicare Advantage insurers have been embroiled in numerous billing scams, according to the non-partisan Center for Public Integrity. The Center, an independent watchdog, has published more than two dozen pieces on this ongoing morass. Here’s a summary of their findings:
“Congress created private Medicare Advantage health plans 11 years ago to help control health care spending on the elderly. But a Center for Public Integrity investigation found that billions of tax dollars are wasted every year through manipulation of a Medicare payment tool called a “risk score.”
The formula is supposed to pay health plans more for sicker patients and less for healthy people, but often it pays too much. The government has for years missed opportunities to corral tens of billions of dollars in overcharges and other billing errors tied to abuse of risk scores.
Meanwhile, the growing power of the Medicare Advantage industry has muzzled many critics in Congress, and turned others into cheerleaders for the program.”
Back to the main story: What House Speaker Paul Ryan and GOP congressional leaders are proposing is to tear down and remold basic Medicare into the troubled Medicare Advantage program, which would be like throwing kerosene on a house fire.
There’s even more of a muddle on how the GOP would calculate how much to give seniors for their yearly stipend to cover private premiums. What if policy costs go up double digits and the stipend doesn’t keep pace with the private market?
Would private insurers offer lower rates to healthier seniors and price less-healthy Americans out of the market? Although basic Medicare would still be available, wouldn’t the money diverted to premium support undermine funding for the traditional Medicare Hospital Trust Fund, which may be insolvent by 2029?
I think there’s a reason why there’s a billboard in Kenosha, Wisconsin — in the heart of Ryan’s Congressional District — that shows Ryan in a robber’s mask. There’s an attempted theft in progress, but older Americans and the disabled will be the victims.
State-by-State Estimates of Reductions in Federal Medicaid Funding
Medicaid Changes under the BCRA and Possible State Responses
Our analysis examines the changes in the BCRA that would phase out the enhanced matching rate for the ACA Medicaid expansion and limit federal Medicaid spending to a capped amount per enrollee for five eligibility groups (expansion adults, other adults, children, the elderly and people with disabilities). First, under the BCRA, for states that adopted the expansion as of March 1, 2017, the enhanced federal match would phase out from 90% in 2020 to 85% in 2021, 80% in 2022, 75% in 2023 and then to the regular state match rate in 2024 and beyond. This phase out lowers federal Medicaid spending relative to current law, under which federal financing for the expansion population would remain at 90% in 2020 and in subsequent years.
Second, under the BCRA, federal Medicaid spending for most enrollees would be limited to a set amount per enrollee. To establish these limits, states would use data from FY 2014-2016 to develop base year per enrollee spending that would be inflated to 2019 based on the medical component of the consumer price index (CPI-M). Beginning in 2020, federal spending would be limited to the federal share of spending based on per enrollee amounts calculated by inflating the base year spending by CPI-M for children and adults and CPI-M plus one percentage point for the elderly and disabled. Beginning in 2025, all per enrollee limits would be increased by general inflation (CPI-U). Certain spending and populations would be excluded from the per enrollee caps, including enrollees who do not receive the full scope of Medicaid benefits.
States could respond to these changes in federal policy in several ways. We examine changes in federal Medicaid spending under two possible scenarios of state responses: (1) All states, both expansion states and non-expansion states, fill gaps in the loss of federal funding and maintain coverage, including the ACA Medicaid expansion coverage, and (2) states that expanded Medicaid under the ACA fully drop their expansions but maintain spending and coverage for other groups, resulting in declines in both federal and state spending. In the second scenario, we model the loss of federal dollars that the state would have received had it fully maintained its expansion.
Building a ‘nimble’ multi-state health system: 5 questions with Ascension CEO Dr. Anthony Tersigni
With 2,500 sites of care — including 141 hospitals and 30 senior living facilities that sprawl across 23 states and Washington, D.C. — St. Louis-based Ascension may not seem well-suited to make sudden business changes. But Ascension President and CEO Anthony Tersigni, EdD, aims to make the nation’s largest nonprofit health system into one of America’s most agile hospital networks.
Here, Dr. Tersigni discusses the system’s recent national rebrand, how he instills a spirit of risk-taking and innovation and the issues he is focusing on over the next five years, despite uncertainty on Capitol Hill.
Question: What prompted the decision to rebrand Ascension’s healthcare facilities? What effect has the rebranding had within the organization and outside in the communities it serves since being implemented in 2016?
Dr. Anthony Tersigni: In 1999 we decided not to brand Ascension because the brand equity was in the local entities. But since then, we believe we’ve made enough inroads in safety, quality and high-reliability that we felt Ascension has developed a reputation of its own. How do we combine the national reputation with the local reputation? Since co-branding the Ascension name with the names of our hospitals in our communities in advertising and on the web, the results have been outstanding. It’s about making it easier for the people we serve to navigate our system within a particular community because they now understand we’re all connected. We’re going to roll this out throughout the country, but we’re doing it in a sequential way because it’s very costly. But we believe now is the time to position ourselves as the national system that we are.
Q: What are your primary goals for the organization for the next five years?
AT: We want to continue to grow our primary care, expand access and continue to move toward value-based care. We want to be able to take on risk in a way where we can move into first-dollar coverage so we can move the patient through the continuum of care. We promise healthcare that works, that is safe and that leaves no one behind — for life. For us to do that, we need to be able to put patients in the right setting for the right care at the right time. If we can take on risk and walk with our patients and their families through our clinically integrated systems of care, we believe we can keep them well.
When it comes to population health management, the mindset is we need to change the way we look at our current business. We are moving from fee-for-service, where we get paid for doing things, to fee-for-value, or how to keep people well. We’ve been so successful as a hospital company under fee-for-service, and now we have to change the mindset and culture of all of these stakeholders. We have to go in a different direction. It’s like changing a flat tire on a car while it’s moving. No one has figured out yet how to do it, but you’re going to have to figure it out.
Another priority is mental and behavioral health. That’s very important to us. It’s a core part of our mission, and we want to be partners with whoever else sees that as a key component.
Q: What are the most important management practices when leading such a vast system with thousands of employees?
AT: In the 18 years since we created Ascension, we’ve been trying to have a culture that’s transparent, candid and nonpunitive. That’s a dramatic departure from the healthcare industry of old. I like to think I surround myself with really bright individuals and subject matter experts, and I try to empower everyone to do what’s in the best interest of those we serve. That’s what this is really all about. I like to think I hire people who are brighter than I am and give them the resources to do their jobs. Then I get out of the way.
That’s one of the principles we try to instill in our Leadership Academy — a program where we take high-potential employees for two to three years and help them develop. They focus on spiritual health to better understand their inner self. The second thing is leadership development. Everyone comes to us with certain gifts. We want them to hone those gifts and develop other skills. And the other piece, which people don’t talk about often, is personal health and vitality management. We expect our executives to work eight, 10 or 12 hours per day at optimal performance level. That’s virtually impossible unless you understand the physiology of your body.
Q: How would people describe you personally as a boss?
AT: My job is to allow leaders across the country to do what they are capable of doing. I like to think I am the supporting cast to what they do, and therefore I want to give them as much leeway and support as possible, and I want them to take risks. I am a risk-taker. As long as you don’t hurt people, that’s how we learn — through making mistakes. So take that risk.
Q: How do you plan for the future amid the current uncertainty surrounding healthcare policy?
AT: We need to be the highest-quality, lowest-cost, best-outcome provider in every market that we’re in. Then regardless of what happens in Washington D.C., we are going to be there for our patients and they’re going to want to seek us out.
We are working to do our part to reduce costs and cut waste in healthcare. But at the other end of what we do are human beings whose lives can either be helped or ruined by our actions or inactions. We are constantly advocating as a voice for the voiceless because many of those folks don’t get a chance to have this kind of conversation. I feel compelled to represent them because we are at ground zero in terms of healthcare. We see the pain and suffering that’s happening in society. They are in our clinics; they’re in our emergency rooms; they’re in our hospitals; they’re in our nursing homes.
I spent a couple weeks on Capitol Hill meeting with every senator I could meet and say, “Look, we want to be a resource. If you have a policy idea, let us know what that is and we will tell you the practical implications of that policy on the people we serve.”
We will continue to advocate for the poor and vulnerable. Last year we provided $1.8 billion of community care, community benefit and charity care. Given where this is going, I believe that number is going to go up next year. Because we are a faith-based, Catholic organization, we are going to continue to serve those people. If it ends up being over $2 billion, we’re going to figure out a way to serve them. We have to do so until we find a national solution here.
Cartoon – Hostile Takeover vs. Hostile Merger
Cartoon – That’s our mission statement
Cartoon – When It comes to Making Money
HENRY KOTULA 