Buyer of 4 California hospitals misses closing deadline

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/buyer-of-4-california-hospitals-misses-closing-deadline.html?origin=cfoe&utm_source=cfoe

Image result for Buyer of 4 California hospitals misses closing deadline

Corona Calif.-based KPC Group missed the court-appointed deadline to purchase four hospitals from El Segundo, Calif.-based Verity Health, which entered Chapter 11 bankruptcy in August 2018.

KPC Group bid $610 million in January to purchase the four hospitals from Verity. Three months later, U.S. Bankruptcy Judge Ernest M. Robles approved the asset purchase agreement for KPC’s Strategic Global Management to acquire the hospitals. In late November, the judge ordered SGM to close the deal by Dec. 5.

After SGM failed to complete the purchase by the court-appointed deadline, Verity asked the court to issue an order requiring SGM’s principals to testify as to why the deal did not close and whether SGM has the financial ability to close the sale. Verity also asked the court to issue an order finding SGM in breach of the asset purchase agreement and allowing it to keep SGM’s $30 million deposit and proceed with other plans to sell the hospitals.

On Dec. 9, the court denied Verity’s request to force SGM’s executives to appear and testify in court.

“By failing to close, SGM risks the loss of its $30 million good-faith deposit as well as the possibility of damages for breach of contract in an amount of up to $60 million,” Judge Robles wrote in a Dec. 9 court filing. “Being compelled to offer testimony will not motivate SGM to close where the threat of the loss of up to $90 million has failed to accomplish that end.”

The judge assured Verity that it would have the chance to litigate the issues of whether SGM breached the asset purchase agreement and whether it’s entitled to keep the good-faith deposit.

Though neither party has terminated the sale process, the judge said Verity can “explore options for the alternative disposition of the hospitals” without violating the asset purchase agreement.

The next bankruptcy court hearing is slated for Dec. 30.

 

 

 

Memphis hospital CEOs discuss policies on debt collection after patient lawsuits draw scrutiny

https://www.commercialappeal.com/story/news/2019/12/05/medical-debt-memphis-hospital-patients-sued/2611018001/

Dr. Reginald Coopwood, CEO of Regional One Health, on Feb. 5, 2016.

Representing more than half of the hospitals in Shelby County, the CEOs of four local health care organizations convened at the University of Memphis Tuesday for a panel on “successfully leading change” in the industry.

The gathering took place amid a growing conversation on medical debt — the cause of more than 58 percent of bankruptcies in the United States, according to the American Journal of Public Health. 

Communities across the countries have recently seen individuals and faith-based organizations launch fundraising initiatives to erase millions in medical expenses as part of a burgeoning movement to buy medical debt for the sole purpose of erasing it.

Memphis has also been at the fore of the conversation in recent months, with a pair of investigations by MLK50 and ProPublica revealing an aggressive system of suing patients involving wage garnishments, interest charges and court fees.

That reporting has since prompted a wave of debt reduction and forgiveness for thousands who were being sued by Methodist Le Bonheur Healthcare and Southeastern Emergency Physicians, a private equity-owned firm that staffs Baptist Memorial Health Care’s four local emergency rooms.

‘We have to be a profitable business’

At the Tuesday panel, organized by the professional association Mid-South Health Care Executives, the discussion touched on workplace harassment, the impending automation of health care jobs, and diversity.

The CEOs of Methodist Le Bonheur and Baptist Memorial also addressed medical debt as did their fellow panelists.

Dr. Reginald Coopwood, CEO of Regional One Health, the county hospital, said his organization was compelled to reassess its policies as a result of the recent scrutiny surrounding debt collection, though he defended the practice of suing patients in general.

“We send people through processes of collection,” Coopwood said of the public hospital.

“We have a great passion to deliver great care to whoever walks into our door. The flip side of that is … if everybody cannot pay their bills, we can’t buy $100 million record systems and we can’t buy technology that the community as a whole wants,” Coopwood said. “So we have policies to collect whatever is collectible from individuals.”

“That’s what a business needs to do,” he said.

According to General Sessions Court data, analyzed by MLK50 and ProPublica and shared with The Commercial Appeal, those hospitals and a physicians staffing firm, sued more than 2,500 patients in the first six months of the year, between January 1 and June 30:

  • Baptist Memorial Hospital, 486 lawsuits
  • Methodist Le Bonheur, 622 lawsuits
  • Regional One Health, 161 lawsuits
  • Southeastern Emergency Physicians, 1,292 lawsuits

“At the end of the day, we’re businesses, and in order to stay in business, we have to be able — in order to take care of those that are uninsured — we have to be a profitable business,” Coopwood said.

Sally Deitch, CEO of St. Francis Hospitals in Memphis, said the amount of charity care hospitals give back to communities is rarely seen, and, meanwhile, “most of these hospitals are living under their margins of actually being able to say ‘We are financially solid and stable and ready to make investments in new technology.'”

In a Memphis Business Journal review of nonprofit tax filings, Coopwood, Methodist Le Bonheur CEO Michael Ugwueke and Baptist Memorial Health Care CEO Jason Little are listed among the five highest paid nonprofit executives in the metro area, earning between $874,493 and $1,300,954 in 2018. Deitch was appointed to her position in October, after the Memphis Business Journal’s compensation review.

‘No one is perfect’

In the Methodist Le Bonheur system, MLK50 and ProPublica’s investigation found the nonprofit hospital’s practice of taking patients to court, through its in-house collection agency, had entrapped some of its own workers in a cycle of wage garnishments, interest and debt — while they were being paid less than a living wage.

Ugwueke, president of Methodist Le Bonheur’s hospitals in Shelby County, said his organization has gone “above and beyond the issues that were raised.”

The hospital, which is affiliated with the United Methodist Church, announced in July it would cease suing its employees and would raise the hospital network’s minimum wage to $15 an hour.

Methodist Le Bonheur also said it would institute a revamped financial assistance policy to ensure no one making less than 250 percent of federal poverty guidelines would be sued for debt collection in the future. For the approximately 6,500 patients who were in the process of being sued, the hospital also committed to forgiving or reducing their debts.

“As part of our process, we have made additional changes and accommodations,” Ugwueke said. “No one is perfect. I don’t think it’s anyone’s intention to do anything to harm patients.”

He added that he thinks other institutions have a role to play in serving the needs of low-income and poor communities.

“Memphis is a very challenging community. Health care organizations are not going to be the only ones solving the problems,” he said.

Deitch said no one seeking emergency care would ever be turned away from any hospital. Beyond that, she said she considered hospitals to be participants in helping their communities but not a deciding factor.

“When you start to think through the cost to the system and the burden to the system — at a certain point, it can’t all be the responsibility of a hospital,” she said.

Charity care

Little said he  thinks hospitals should address problems with affordability.

“We still need change in health care because it’s expensive. … Seventy-five percent of Americans are living paycheck to paycheck,” Little said, “and nobody sets money aside and plans to need a transplant. So that’s a challenge for all Americans and all Memphians.”

“And it’s a challenge that I’m really bullish on my colleagues up here continuing to address,” Little said, “because I think we’ve gotten really good at caring for our communities, particularly those in the greatest of need.”

For every dollar spent on expenses, Little said, Baptist Memorial spends 21 cents of it on charity care.

But that financial assistance hasn’t always been accessible to emergency-room patients, MLK50 and ProPublica reported in an investigation into Southeastern Emergency Physicians. The staffing firm contracts with doctors to treat emergency room patients in four of Baptist’s five hospitals in the region.

Southeastern filed nearly 1,300 lawsuits in the first half of 2019, according to MLK50 and ProPublica’s analysis of General Sessions Court data — more lawsuits than Regional One, Baptist Memorial and Methodist Le Bonheur combined.

But by the end of the year, in response to the MLK50 and ProPublica investigation, the firm’s parent company, TeamHealth, said it promote financial assistance program participation and would no longer pursue its active lawsuits — or sue any patients again.

 

 

Physician staffing firm suing patients

https://www.axios.com/newsletters/axios-vitals-bd00103b-e940-45bb-ad9a-a4576971fc39.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Image result for team health billing lawsuits

An emergency room staffing firm owned by TeamHealth has filed thousands of lawsuits against patients in Memphis in the last few years, ProPublica and MLK50 report.

This is a collision of two storylines: the aggressive billing practices of private equity-backed health care companies, and providers’ decision to take patients to court to collect their medical debts.

  • Media reports have, until now, mostly focused on hospitals’ lawsuits, but ProPublica and MLK50’s reporting suggest the practice could be more widespread.

Between the lines: TeamHealth has already been in hot water for its role in surprise billing.

  • Emergency room physicians send patients surprise medical bills more often than other specialties, especially physicians employed by TeamHealth.
  • These doctors then have leverage to obtain higher in-network payment rates, making the practice lucrative.
  • The group is also one of the main funders of the dark-money group that has run millions in ads against what was Congress’ leading solution to surprise medical bills.
  • The company was acquired by the Blackstone Group in 2017.

By the numbers: The Memphis subsidiary Southeastern Emergency Physicians has filed more than 4,800 lawsuits against patients in Shelby County General Sessions Court since 2017, per ProPublica and MLK50.

  • TeamHealth said last week, after receiving questions from reporters, that it will no longer sue patients and won’t pursue the lawsuits it’s already filed.

 

Prospect Medical Holdings can’t consider $50M acquisition offer

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/prospect-medical-holdings-can-t-consider-50m-acquisition-offer.html

Image result for Prospect Medical Holdings

Los Angeles-based Prospect Medical Holdings says it cannot consider a $50 million acquisition offer from Ontario, Calif.-based Prime Healthcare Services because it has already entered into another deal, according to the Journal Inquirer.

Prospect Medical Holdings is owned by certain funds of private equity firm Leonard Green & Partners and members of the company’s management team. In October, Prospect said its shareholders reached an agreement to purchase Leonard Green & Partners’ outstanding shares of the company, according to the report.

Leonard Green & Partners is considering selling its majority stake in Prospect for roughly $12 million, and Prime said it would pay $50 million for the company, according to an offer letter from Prime President and CEO Prem Reddy, MD, obtained by the Journal Inquirer

In a Nov. 24 statement to the Journal Inquirer, Prospect said it cannot consider Prime’s offer or other proposals because it signed a “binding agreement” with Leonard Green & Partners “several months ago.” Prospect said it is required to close the transaction, which is expected to take three to six months to complete, according to the report.

Access the full Journal Inquirer article here.

 

 

 

1,250 healthcare deals have been announced, completed this year

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/1-250-healthcare-deals-have-been-announced-completed-this-year.html?origin=cfoe&utm_source=cfoe

Related image

The healthcare industry saw 1,250 deals announced or completed through October of this year, according to Bloomberg Law. 

The healthcare deal volume in 2019 is significantly higher than the same period last year, which had 900 deals announced or closed.

Merger and acquisition activity for long-term care, physician services, health IT and pharmaceutical companies are on pace to exceed the deal volume hit in 2018.

Walgreens is one company that is driving deal activity in the healthcare sector. The retail pharmacy giant recently announced it would close 157 in-store healthcare clinics it operated by the end of the year.

TriHealth announced it would buy seven of the Walgreens clinics in the Cincinnati area, and the deal is likely to be replicated elsewhere, Gary Herschman, a member of law firm Epstein Becker Green, told Bloomberg Law. 

However, the hospital and health system sector will likely end 2019 with fewer deals than in 2018, according to the report.

There were only 12 transactions in the hospital and health system sector in October, according to Nicholas Davis, a senior analyst at healthcare consultancy ECG Management Partners.

 

The Role of Private Equity in Driving Up Health Care Prices

https://hbr.org/2019/10/the-role-of-private-equity-in-driving-up-health-care-prices

Private investment in U.S. health care has grown significantly over the past decade thanks to investors who have been keen on getting into a large, rapidly growing, and recession-proof market with historically high returns. Private equity and venture capital firms are investing in everything from health technology startups to addiction treatment facilities to physician practices. In 2018, the number of private equity deals alone reached  almost 800, which had a total value of more than $100 billion.

While private capital is bringing innovation to health care through new delivery models, technologies, and operational efficiencies, there is another side to investors entering health care. Their common business model of buying, growing through acquisition or “roll-up,” and selling for above-average returns is cause for concern.

Take the phenomenon of surprise bills: medical invoices that a patient unexpectedly receives because he or she was treated by an out-of-network provider at an in-network facility. These have been getting a lot of attention lately and are driven, at least in part, by investor-backed companies that remain out of network (without contracts with insurers) and can therefore charge high fees for services that are urgently or unexpectedly required by patients. Private equity firms have been buying and growing the specialties that generate a disproportionate share of surprise bills: emergency room physicians, hospitalists, anesthesiologists, and radiologists.

In other sectors of the economy, consumers can find out the price of a good or service and then choose not to buy it if they don’t believe it to be worth the cost. In surprise bill cases, they can’t. Patients are often unaware that they need these particular services in advance and have little choice of physician when they use them.

To blunt growing bi-partisan political support for protecting patients from surprise bills, various groups have lobbied against legislation that would limit the practice. They include Doctor Patient Unity, which has spent more than $28 million on ads and is primarily funded by large private-equity-backed companies that own physician practices and staff emergency rooms around the country. Their work seems to be having an impact: efforts to pass protections have stalled in Congress.

Physician practices have been a popular investment for private equity firms for years. According to an analysis published in Bloomberg Law, 45 physician practice transactions were announced or closed in the first quarter of 2019. At the current pace, the number of deals to buy physician and dental practices will surpass 250 this year, far exceeding 2018 totals. Yes, these investments can provide independent physicians and small practices with an alternative to selling themselves to hospitals and can help them deal with administrative overhead that takes them away from the job they were trained to perform: providing care. But, at least in some cases, the investors’ strategy appears to be to increase revenues by price-gouging patients when they are most vulnerable.

Surprise billing from investor-backed physician practices isn’t the only problem. Private-equity-owned freestanding emerging rooms (ERs) are garnering scrutiny because of their proliferation and high rates. The majority of freestanding ER visits are for non-emergency care, and their treatment can be 22 times more expensive than at a physician’s office.

However lucrative in the short run, private investor-backed companies that hurt consumers are not likely to perform well financially in the long term. Unlike many other markets, health care is both highly regulated and highly sensitive to the reality or appearance of victimizing the sick and vulnerable. Consumer outrage leads quickly to government intervention.

Investors will benefit most by solving the health care system’s legion of problems and by adding true value to our health system — delivering high-quality services at affordable prices and eliminating waste. Those that try to maximize their short-term profits by pushing up prices without adding real healthcare benefits are likely to find that those strategies are unsustainable. Lawmakers and regulators won’t let them get away with such practices for long.

 

 

 

Kaiser Permanente, American Cancer Society join blood test startup’s $160M funding round

https://www.beckershospitalreview.com/healthcare-information-technology/kaiser-permanente-american-cancer-society-join-blood-test-startup-s-160m-funding-round.html?oly_enc_id=2893H2397267F7G

Image result for freenome funding

South San Francisco-based biotech company Freenome announced the close of a $160 million funding round, with participation from Kaiser Permanente Ventures, the American Cancer Society’s BrightEdge Ventures and Alphabet’s GV and Verily Life Sciences.

The Series B financing will be used to further develop Freenome’s blood test for early cancer detection. The startup uses an artificial intelligence-powered multiomics platform to analyze routine blood draws for often-missed biomarkers of early-stage cancer. Development of the platform has so far centered on use in detecting colorectal cancer.

Beyond further refinement of the platform, Freenome will also conduct a validation study to be submitted to the FDA and CMS for review and, eventually, expand the test to detect other forms of cancer and disease, according to CEO Gabe Otte.