Category Archives: Uncategorized

In health care, it’s still about the prices

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https://www.axios.com/jp-morgan-health-care-industry-prices-1111d185-faad-4c2b-a281-d762031db433.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of a price tag as an IV bag.

Health care executives gave no indication to bankers and investors at this year’s J.P. Morgan Healthcare Conference that their pricing practices would change any time soon.

Why it matters: That sentiment comes the same week when three of the original authors of an influential 2003 article — which studied why health care is so expensive in the U.S.— published an update. Their conclusion was the same: “It’s still the prices, stupid.”

The big picture: The U.S. spends far more than other industrialized countries on health care. But Americans, on a per-person basis, don’t go to the doctor or hospital more than people in other wealthy nations. There are also fewer doctors, nurses and hospital beds, per capita, in the U.S.

  • That means the U.S. spends more because hospitals, doctors, pharmaceutical companies, device manufacturers and others charge higher prices, and health insurers aren’t negotiating good enough deals.
  • “Lowering prices in the U.S. will need to start with private insurers and self-insured corporations,” the authors wrote in this week’s update, published in the journal Health Affairs.

Reality check: Health care companies, even not-for-profits like hospitals that don’t have typical investors, have prioritized meeting revenue and profitability goals, and that short-term thinking compromises reform, according to interviews with people who attended the J.P. Morgan event.

  • Many executives continue to tout different ways of getting paid, like “value-based” pricing, but there’s no evidence those models will save money.
  • Drug companies are still focused on raising prices or buying lucrative biotechs, while providers find more ways to maximize what they get paid from insurers. As a result, insurers and employers raise premiums or deductibles for taxpayers and employees, which affects everyone’s paychecks.
  • One example: Dennis Dahlen, the chief financial officer of Mayo Clinic, told attendees how his academic medical center is building its own “five-star” hotel and is expanding proton beam therapy, even though that expensive treatment has limited or no clinical benefit.
  • “This is about money and [investors] getting a return,” said Stephen Buck, founder of cancer tech app Courage Health.

Yes, but: Some in the industry realize they need to act.

  • Marc Harrison, CEO of Intermountain Healthcare, said in an interview his hospital system has lowered the “cash price” of some services, like normal vaginal childbirth, to help people who have high deductibles — although services like childbirth often cost a lot more than the deductible.
  • Intermountain also has negotiated with insurers, with the exception of one unnamed company, to hold patients harmless if they get a surprise out-of-network bill, Harrison said.
  • Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, acknowledged in an interview that “the status quo is not acceptable. We understand the system needs to change.”
  • However, he continued to argue for changes in what people pay out of pocket, instead of changing the patent system or how companies price their products. Ubl described the Trump administration’s proposal to index the prices of some Medicare drugs to lower rates in other countries as “fruit of the poisonous tree of government price-setting.”

What to watch: Democrats are using “Medicare for All” and price-setting as a litmus test for 2020 candidates, and Democrats in Congress are proposing Medicare negotiation for drugs — an idea that Trump supported in the past. Regulatory or legislative changes to pricing are not completely out of the question if the industry fails to act.

 

 

 

48% of CFOs don’t have a succession plan

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https://www.beckershospitalreview.com/finance/48-of-cfos-don-t-have-a-succession-plan.html?origin=cfoe&utm_source=cfoe

OR Efficiencies

Though CFOs are usually known for their careful attention to detail, 48 percent of them  have not identified a successor, according to a study in The Wall Street Journal.

Robert Half Management Resources surveyed 1,100 CFOs in  various industries. Of those respondents who have not created a succession plan, nearly two-thirds said they had no plan because they did not intend  to step down soon. They also cited the need to focus on other priorities and the absence of qualified candidates.

Jenna Fisher,  head of the global corporate sector at executive search firm Russell Reynolds Associates, said  the percentage of CFOs with succession plans represents a dramatic improvement from five years ago, when she estimated less than 10 percent of her clients had CFO succession plans.

“The role of CFO has become more salient,” Ms. Fisher said.

 

 

 

Fifth Circuit Hits Pause on ACA Lawsuit Over Government Shutdown

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https://www.healthleadersmedia.com/strategy/fifth-circuit-hits-pause-aca-lawsuit-over-government-shutdown

At the urging of the Trump administration, an appellate judge put legal wrangling over the Obama-era law’s constitutionality on hold until the partial government shutdown ends.

The appeals process to review a ruling that declared the entire Affordable Care Act invalid will have to wait until attorneys for the federal government have funding to proceed.

Fifth Circuit Court Judge Leslie H. Southwick issued a stay in the case Friday, granting a request filed earlier in the week by the U.S. Department of Justice.

The pause comes three weeks into a partial government shutdown that’s poised to become this weekend the longest in U.S. history, as President Donald Trump insists that Congress authorize $5.7 billion for a wall along the U.S. border with Mexico and Democrats refuse to do so.

While most of the federal government was funded by earlier legislation, this shutdown affects about 800,000 federal workers and inhibits the work of several agencies that handle health-related tasks.

Both the plaintiffs and federal defendants agreed that a stay would be appropriate. But the California-led coalition of Democratic state attorneys general challenging the lower court’s decision and the U.S. House of Representatives—which, newly under Democratic control, is seeking to intervene in the case to defend the ACA—opposed the stay request.

 

 

 

 

Scaling the “specialty care business” across the health system

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https://gisthealthcare.com/wp-content/uploads/2018/11/Health-system-map.png?utm_source=The+Weekly+Gist&utm_campaign=8df1d116c3-EMAIL_CAMPAIGN_2019_01_11_12_03&utm_medium=email&utm_term=0_edba0bcee7-8df1d116c3-41271793

Over the past month we’ve been sharing our framework for helping health systems rethink their approach to investment in delivery assets, built around a functional view of the enterprise. We’ve encouraged providers to take a consumer-oriented approach to planning, starting by asking what consumers need and working backward to what services, programs and facilities are required to meet those needs. That led us to break the enterprise into component parts that perform different “jobs” for the people they serve. We think of each of those parts as a “business”, located at either the market, regional or national level depending on where the best returns to scale are found (and on the geographic scale of any particular system). So far we have described how a consumer-oriented health system should be organized at the market level, with expanded access and senior-care businesses providing lower-cost care in an outpatient setting for many services that were previously delivered in an acute-care hospital, and how the profile of the local hospital needs to change in response.

This week we shift our attention to health system services that can be scaled at the regional level, starting with specialty care, the medical and surgical specialty services that comprise many hospital service lines. Today nearly every community hospital is a “jack of all trades” with the same portfolio of services: obstetrics, cardiac care, orthopedics, and cancer care are the marquee service lines. Incentives, both market-based and internal to the health system, have encouraged this. Hospitals build services aimed at capturing the same handful of profitable (and usually procedurally-focused) DRGs. And many health systems reward local hospital leaders on the profitability of the hospitals they run, creating no incentive for those leaders to shift profitable volume to other hospitals in the system, and often resulting in redundant, inefficient, and sub-scale specialty care services.
 
We believe many specialty care services could be improved by moving care “up and out” of the community hospital. As we described before, a large portion of routine surgical care could be moved “out” of the hospital to lower-cost outpatient centers, supported by short-stay capabilities and expanded home health. At the same time, more complex specialty care should move “up” in the health system and be concentrated in regional “centers of excellence”, where expensive talent and expertise can be scaled, and systems can aggregate the volume needed for highly-efficient operations that lower the cost of delivering complex specialty care.

While the center of excellence model is not new, it’s often little more than a marketing slogan. Few systems have deployed it for operational efficiency, redirecting specialty care patients to high-volume-centers—and shuttering their low-volume or sub-standard local programs. Even fewer have invested in the infrastructure needed to effectively coordinate care between a regional center and local providers: telemedicine for effective provider collaboration and consultation, effective information sharing, and strong local care management support. One question inevitably arises: will patients travel for care? As individuals bear a larger portion of the cost of care, they do seem to be willing to travel longer distances in pursuit of better value. Understanding how the consumer “travel radius” changes with higher levels of financial accountability, and how that radius differs among services, ought to rank high on the priority list of systems looking to determine what business to consolidate at regional centers.