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When private equity and doctors break up
https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8
We recently spoke with a health system COO who wanted help playing out scenarios regarding the relationship between specialist physicians and their private equity (PE) partners. The system is located in one of the markets referenced in a recent study that has some of the highest levels of private equity ownership in the country. One physician group, whose doctors provide almost all the system’s coverage for a key specialty, has worked with PE partners for five years, and the relationship is not going well. “We’re hearing that many of the younger doctors want to leave. And many of the others are close to retirement,” he shared.
“We’re really concerned about what could happen if the group implodes.” The key issue: the doctors signed very restrictive noncompete agreements when they sold their practice, which could prohibit them from working in the market.
The health system would consider bringing some of the doctors into their employed medical group, but executives are worried this might be impossible for the duration of the noncompete agreements. “If these doctors can’t stay locally, we might have to rebuild that specialty from scratch. And I can’t imagine how disruptive that would be,” he worried.
When the FTC announced a proposed rule earlier this year that would ban employers from imposing noncompete agreements, many health systems reacted with alarm, fearing the that the freedom to move would lead to frequent bidding wars, ultimately driving up the cost of physician talent in the market.
But the situation shows how perspectives would change depending on who holds the noncompete.
Mid-sized markets like this one, where coverage for several specialties may come from single groups, are particularly vulnerable. Regardless, this situation highlights the need to diversify physician relationships to guard against getting caught in a “coverage crisis”.
Hospitals still struggling to retain talent
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Of all the pandemic’s impacts still felt today, disruptions to the healthcare workforce and rising labor costs may be most impactful to current health system operations.
Over the next three editions of the Weekly Gist, we’ll be exploring the lingering effects of this workforce crisis, with a focus on nurse staffing and recruitment.
In this week’s graphic, we use data from the 2023 NSI National Health Care Retention Report to show how hospital turnover and vacancy rates have changed over the past several years.
While wage increases helped reduce hospital registered nurse (RN) turnover rates from 27 percent in 2021 to 23 percent in 2022, nurses—along with hospital employees in general—are still changing jobs at higher rates than before the pandemic.
Over half of all hospitals still face nurse vacancy rates above 15 percent, a slight improvement from 2022 but still far more than before the pandemic.
While the worst of nursing turnover appears to have passed, the “rebasing” of wages (for nursing, 27 percent higher compared to 2019) will provide ongoing pressure to strained hospital margins.
Physicians lack trust in hospital leadership
https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8
A recent physician survey conducted by strategic healthcare communications firm Jarrard Inc. uncovered a startling finding: only 36 percent of physicians employed by or affiliated with not-for-profit health systems trust that their system’s leaders are honest and transparent. In contrast, a slight majority of physicians working with investor-owned health systems and practices answered that question in the opposite.
Overall, only around half of physicians trust their organization’s leaders when it comes to financial, operational, and patient care decision-making. Unsurprisingly, doctors put the most trust in peer physicians, by a wide margin.
The Gist: While the numbers, especially for nonprofit systems, are stark, this survey reflects an on-the-ground reality felt at health systems in recent years. Physician fatigue has spiked in the wake of the pandemic.
And health system-physician relationships are also being disrupted by cost pressures, payer and investor acquisitions, and the shift of care to ambulatory settings. We’ve heard from physicians that, compared to hospital owners, investor-backed systems provide greater transparency and clearer financial goals centered around the success of the business.
That physicians trust their peers so highly suggests a path forward: provide physician leaders with greater transparency into system performance and agency over strategy, with clear goals and metrics.
Johnson & Johnson is latest drugmaker to sue to stop Medicare drug price negotiations
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Last week Johnson & Johnson followed Merck, Bristol Myers Squibb, and Astellas Pharma by filing a lawsuit against the Biden administration in federal court over the Medicare Drug Price Negotiation Program, established through the 2022 Inflation Reduction Act. PhRMA, the industry trade group, and the US Chamber of Commerce have also filed suits.
The lawsuits claim that the program violates the First and Fifth Amendments by compelling speech, and taking private property for public use without just compensation. The US Chamber of Commerce also filed a motion earlier this month requesting a preliminary injunction.
This flurry of legal activity comes just a month before the Centers for Medicare & Medicaid Services is due to publish its list of the first ten drugs selected for negotiations. The makers of those drugs will then have a month to decide if they will participate in negotiations, risking significant financial penalties if they do not. Any negotiated prices would take effect in 2026.
The Gist: The ability for Medicare to negotiate drug prices is a key pillar of the Biden administration’s healthcare agenda, one the President plans to tout in his upcoming reelection campaign. But the pharmaceutical industry’s legal challenges—multiple, separate suits in different federal courts nationwide—are destined for the Supreme Court if these cases generate conflicting rulings, which is likely. A protracted legal fight will delay or potentially alter the program before it is fully implemented.
Biden administration seeks to compel insurers to cover mental healthcare
https://mailchi.mp/c02a553c7cf6/the-weekly-gist-july-28-2023?e=d1e747d2d8
On Tuesday, the White House issued a proposal to enhance the 2008 Mental Health Parity and Addiction Equity Act, which requires insurers to cover mental healthcare at the same level as physical care.
Health plans would be required to evaluate mental health coverage policies, including network size, prior authorization rules, and out-of-network payment policies.
The proposal also includes closing a loophole in the original law that excludes non-federal government health plans from these parity standards.
The Gist: Fewer than half of the one in five US adults experiencing mental illness in 2020 received care for their illness, and fewer than one in 10 received treatment for a substance abuse disorder.
But while insurance companies’ failure to establish adequate mental health networks is part of the problem, there are other, larger access issues at play, including the nationwide shortage of mental health clinicians, many of whom don’t accept insurance.
HENRY KOTULA 