Cartoon – A Perfect Manager
Cartoon – Keeping It All on One Slide
Irresponsible rhetoric should not drive public policy
https://www.aha.org/news/blog/2023-03-29-blog-irresponsible-rhetoric-should-not-drive-public-policy
The AHA has previously noted the third party observers who demonstrate a tenuous grasp of the data and rules regarding federal hospital transparency requirements. Now, some of those same entities with deep pockets and an apparent vendetta against hospitals and health systems have turned their attention toward the broader financial challenges facing the field. The results, as described in a recent Health Affairs blog, are as expected — a complete misunderstanding of current economic realities.
The three most egregious suggestions in this piece are that hospitals are seeking some kind of bailout from the federal government, employers and patients; that investment losses are the most problematic aspect of hospital financing; and that hospitals’ analyses of their financial situation are dishonest.
We debunk these in turn.
Hospitals are seeking fair compensation, not a government bailout. The authors state that hospitals are asking “constituents to foot the bill for hospitals’ investment losses.” This is patently false. Indeed, if you read the request we made to Congress cited in their blog, hospitals and health systems are simply asking to get paid for the care they deliver or to lower unnecessary administrative costs. This includes asking Medicare to pay for the days hospitals care for patients who are otherwise ready for discharge. Increasingly, this has occurred because there is no space in the next site of care or the patient’s insurer has delayed the authorization for that care. Keeping someone in a hospital bed for days, if not weeks, requires skilled labor, supplies and basic infrastructure costs. This doesn’t even account for the impact on a patient’s health for not being in the most appropriate care setting. Today, hospitals are not paid for these days. Asking for fair compensation is not a bailout; it is a basic responsibility of any purchaser.
While investment income may be down, hospitals and health systems have faced massive expense increases in the last year. The authors note that patient care revenue was up “by just below 1 percent in relative terms from 2021 to 2022,” suggesting that implies a positive financial trend. However, hospital total expenses were up 7% in 2022 over 2021, and were up by even more, 20%, when compared to pre-pandemic levels, according to Kaufman Hall. And it’s not just the AHA and Kaufman Hall saying this either: in its 2023 outlook, credit rating agency Moody’s noted that “margins will remain constrained by high expenses.” Hospitals should not need to rely on investment income for operations. However, many have been forced into this situation by substantial underpayments from their largest payers (Medicare and Medicaid), which even the Medicare Payment Advisory Commission (MedPAC), an independent advisor to Congress, has acknowledged. MedPAC’s most recent report showed a negative 8.3% Medicare operating margin. Hospitals and health systems are experiencing run-away increases in the supplies, labor and technology needed to care for patients. At the same time, commercial insurance companies are increasing their use of policies that can cause dangerous delays in care for patients, result in undue burden on health care providers and add billions of dollars in unnecessary costs to the health care system.
Hospitals and health systems are committed to an honest examination of the facts. The authors imply that the studies documenting hospitals’ financial distress are biased. They note that certain studies conducted by Kaufman Hall are based on proprietary data and therefore “challenging to draw general inferences.” They then go on to cherry-pick metrics from specific non-profit health care systems voluntarily released financial disclosures to make general claims about “the primary driver of hospitals’ financial strain.” The authors and their financial backers clearly seem to have a preconceived narrative, and ignore all the other realities that hospital and health system leaders are confronting every day to ensure access to care and programs for the patients and communities they serve.
It is imperative to acknowledge financial challenges facing hospitals and health systems today. Too much is at stake for the patients and communities that depend upon hospitals and health systems to be there, ready to care.
High-deductible and skinny health insurance plans drive medical debt
A recent Urban Institute report highlights the issue of medical debt but fails to examine two of the chief driving forces of this debt: inadequate enrollment in comprehensive health care coverage and high-deductible health plans that intentionally push more costs onto patients. It also fails to appreciate the looming crisis when the public health emergency ends and Medicaid enrollment could plummet.
As the extent of medical debt shows, both the government and the private market is failing too many patients, leaving too many either uninsured or with subpar plans that expose too many people to bills they cannot afford to pay. While hospital financial assistance is crucial to helping many individuals of limited means access care, it is no substitute for a solution that gets to the root causes of medical debt.
Affordable, comprehensive health care coverage is the most important protection against medical debt. While the U.S. health care system has achieved record rates of coverage, significant gaps remain and new threats are on the horizon. One of the gaps is the failure by some states to expand Medicaid, while the most imminent threat is the potential loss of Medicaid coverage for millions of people as the public health emergency ends. We must ensure that every individual has access to some form of comprehensive coverage.
In doing so, we must put an end to deceptively inadequate health plans. These include short-term limited duration health plans and health sharing ministries that often appeal to consumers because they are cheaper and often marketed to appear comprehensive. The reason they are cheaper is because when you read the fine print you discover they cover fewer benefits and include few-to-no consumer protections, like required coverage of pre-existing conditions and limits on out-of-pocket costs. Subscribers for these types of plans often find themselves responsible for their entire medical bill without any help from their health plan and can accumulate significant medical debt.
Many of the same concerns apply to high-deductible health plans. These plans are specifically designed to increase patients’ financial exposure through high cost-sharing – the amount the subscriber must pay out-of-pocket. Yet, many individuals enrolled in these plans find they can’t manage the gap between what their insurance pays and what they themselves owe as a result. It’s not a mystery why high-deductible health plans contribute to medical debt.
Hospitals and other providers do not determine how much insured patients owe for their care. Instead, that amount is set by the health plan. While every hospital has a financial assistance policy to help those most in need, they can only help so much and so many. And no matter how generous, hospital financial assistance will never be a substitute for a health plan that covers preventive and necessary care at an affordable price on the front and back end of coverage.
We must tackle the problem of medical debt, and we must do so at the root: ensuring all individuals are enrolled in comprehensive health care coverage and ending deceptive marketing of health plans and unaffordable cost-sharing.
Potential solutions include:
- Restricting the sale of high-deductible health plans to only those individuals with the demonstrated means to afford the associated cost-sharing.
- Prohibiting the sale of health sharing ministry products and short-term limited duration plans that go longer than 90 days.
- Lowering the maximum out-of-pocket cost-sharing limits.
- Eliminating the use of deductibles and co-insurance and rely solely on flat co-payments, which are easier for patients to anticipate.
- Removing providers from the collection of cost-sharing altogether and require that health plans collect directly from their enrollees the cost-sharing payments they impose. This approach would eliminate the vast majority of patient bills from providers altogether.
Moreover, the AHA has been actively engaged in identifying and promoting best practices in patient billing for decades. The AHA updated our voluntary patient billing guidance in 2020. The guidelines include assisting patients who cannot pay for the care they receive and protecting patients from certain debt collection practices, such as garnishment of wages, liens, interest on debt, adverse credit reporting and lawsuits. Most hospitals provide free care for patients with the most limited means as defined by income below 200% of the federal poverty limit. In the event of an unpaid bill, the Internal Revenue Service has prescribed an extensive series of steps and wait times that most hospitals must adhere to before taking any collection actions, which is a last resort.
Hospitals’ doors are always open to anyone who needs care, regardless of ability to pay. In total, hospitals and health systems of all types provided in 2020 more than $42 billion in uncompensated care, or care for which they received no payment.
Hospitals and health systems will continue to work to advance solutions that make care more affordable and accessible for all patients. But health plans must do their part by providing adequate coverage that does not subject patients to unaffordable bills and medical debt.
Vibrio vulnificus: The flesh-eating bacteria working its way up the East Coast
https://www.advisory.com/daily-briefing/2023/03/29/vibrio-vulnificus
Vibrio vulnificus, a flesh-eating bacteria in the same family as cholera, is becoming more common along the East Coast of the United States as ocean temperatures rise, according to research published Thursday in Scientific Reports.
What you need to know about Vibrio vulnificus
Vibrio vulnificus is a bacteria that lives in warm, salty water and can cause infections by coming into contact with wounds, bites, or cuts. It can also infect oysters, mussels, clams, and scallops — however the foodborne form of Vibrio vulnificus is typically only caused by oysters, since they’re not cooked before eating.
The bacteria kills roughly 20% of its victims — sometimes within just a day or two of a person getting sick — and those who get infected can require intensive care, with around 10% needing surgical tissue removal or limb amputations. The bacteria is also capable of causing necrotizing fasciitis, a medical term describing a “flesh-eating” infection.
Symptoms of an infected wound can include swelling, pain, redness, warmth, fever, discoloration, and discharge.
According to the report, infections of Vibrio vulnificus remain rare but have been steadily increasing along the East Coast between 1988 and 2018, jumping from around 10 per year to around 80 per year.
Infections used to be localized to the Gulf of Medico and the southern Atlantic coast of the United States and were previously rare north of Georgia. However, the researchers’ analysis of CDC data has found infections are being reported as far north as Philadelphia. As ocean temperatures have risen, the researchers said Vibrio vulnificus has spread northwards up the East Coast at a rate of around 30 miles per year.
“It’s not that it’s shifting north, it’s expanding,” said Elizabeth Archer, the report’s first author and a postgraduate researcher at the University of East Anglia. “We’re still seeing cases in Texas but we’re also seeing them in Pennsylvania, which we weren’t seeing 20 years ago.”
Accounting for warming temperatures, the researchers predicted Vibrio vulnificus could expand as far as New York within the next 20 years. Using climate models where carbon emissions are even worse, they predicted the bacteria could spread to every East Coast state and infections could be as high as 140 to 200 a year by the end of the century. People over 60, who are more susceptible to infections, could see infections from the bacteria double by 2041-2060 or triple by 2081-2100, the researchers projected.
What to watch for
The report’s findings point to the wider impact that climate change is having on the environment, Archer said. Given how sensitive Vibrio vulnificus is to temperature, it’s “sort of a microbial barometer of climate change,” she said.
Archer added that the bacteria is a natural part of the coastal ecosystem and eradicating it isn’t possible or reasonable. “We can’t just eradicate them from the environment they naturally occur in,” she said.
Jim Oliver, an emeritus professor of biology at the University of North Carolina and an author on the report, said the take-away message is not to avoid going to the beach but to be aware of the bacteria and its symptoms.
Young and healthy people are less at risk while older people and the immunocompromised are at higher risk, Oliver said.
“We don’t want to make people afraid to go to the beach,” he said. “Just be aware.”
“This kind of wound contamination is usually sustained by people working in seawater such as fishermen,” said William Schaffner, an infectious disease expert at Vanderbilt University. He added that it’s essential to immediately seek medical care if you have a wound that’s been infected.
“The infection can proceed incredibly fast,” Schaffner said. “I worked with one woman whose husband was infected and it went from looking like a spider bite to necrotizing fasciitis within four hours.”
“It’s very important not to tough it out,” Schaffner added. “If you sustained an injury and you think you have a wound infection, have it attended to as quickly as possible. That’s key.” (Hart, Forbes, 3/23; Weise, USA Today, 3/26; O’Kane, CBS News, 3/23)
Sharing an Almost Unique Perspective — Putting the Hospital Out of Business
I have been both a frontline officer and a staff officer at
a health system. I started a solo practice in 1977 and
cared for my rheumatology, internal medicine and
geriatrics patients in inpatient and outpatient settings.
After 23 years in my solo practice, I served 18 years as
President and CEO of a profitable, CMS 5-star, 715-bed,
two-hospital healthcare system.
From 2015 to 2020, our health system team added
0.6 years of healthy life expectancy for 400,000 folks
across the socioeconomic spectrum. We simultaneously
decreased healthcare costs 54% for 6,000 colleagues and
family members. With our mentoring, four other large,
self-insured organizations enjoyed similar measurable
results. We wanted to put our healthcare system out of
business. Who wants to spend a night in a hospital?
During the frontline part of my career, I had the privilege
of “Being in the Room Where It Happens,” be it the
examination room at the start of a patient encounter, or
at the end of life providing comfort and consoling family.
Subsequently, I sat at the head of the table, responsible for
most of the hospital care in Southwest Florida. [1]
Many folks commenting on healthcare have never touched
a patient nor led a large system. Outside consultants, no
matter how competent, have vicarious experience that
creates a different perspective.
At this point in my career, I have the luxury of promoting
what I believe is in the best interests of patients —
prevention and quality outcomes. Keeping folks healthy and
changing the healthcare industry’s focus from a “repair shop”
mentality to a “prevention program” will save the industry
and country from bankruptcy. Avoiding well-meaning but
inadvertent suboptimal care by restructuring healthcare
delivery avoids misery and saves lives.
RESPONDING TO AN ATTACK
Preemptive reinvention is much wiser than responding to an
attack. Unfortunately, few industries embrace prevention. The
entire healthcare industry, including health systems, physicians,
non-physician caregivers, device manufacturers, pharmaceutical
firms, and medical insurers, is stressed because most are
experiencing serious profit margin squeeze. Simultaneously
the public has ongoing concerns about healthcare costs. While
some medical insurance companies enjoyed lavish profits during
COVID, most of the industry suffered. Examples abound, and
Paul Keckley, considered a dean among long-time observers of
the medical field, recently highlighted some striking year-end
observations for 2022. [2]
Recent Siege Examples
Transparency is generally good but can and has led to tarnishing
the noble profession of caring for others. Namely, once a
sector starts bleeding, others come along, exacerbating the
exsanguination. Current literature is full of unflattering public
articles that seem to self-perpetuate, and I’ve highlighted
standout samples below.
- The Federal Government is the largest spender in the
healthcare industry and therefore the most influential. Not
surprisingly, congressional lobbying was intense during
the last two weeks of 2022 in a partially successful effort
to ameliorate spending cuts for Medicare payments for
physicians and hospitals. Lobbying spend by Big Pharma,
Blue Cross/Blue Shield, American Hospital Association, and
American Medical Association are all in the top ten spenders
again. [3, 4, 5] These organizations aren’t lobbying for
prevention, they’re lobbying to keep the status quo. - Concern about consistent quality should always be top of
mind. “Diagnostic Errors in the Emergency Department: A
Systematic Review,” shared by the Agency for Healthcare
Research and Quality, compiled 279 studies showing a
nearly 6% error rate for the 130 million people who visit
an ED yearly. Stroke, heart attack, aortic aneurysm, spinal
cord injury, and venous thromboembolism were the most
common harms. The defense of diagnostic errors in emergency
situations is deemed of secondary importance to stabilizing
the patient for subsequent diagnosing. Keeping patients alive
trumps everything. Commonly, patient ED presentations are
not clear-cut with both false positive and negative findings.
Retrospectively, what was obscure can become obvious. [6, 7] - Spending mirrors motivations. The Wall Street Journal article
“Many Hospitals Get Big Drug Discounts. That Doesn’t Mean
Markdowns for Patients” lays out how the savings from a
decades-old federal program that offers big drug discounts
to hospitals generally stay with the hospitals. Hospitals can
chose to sell the prescriptions to patients and their insurers for much more than the discounted price. Originally the legislation was designed for resource-challenged communities, but now some hospitals in these programs are profiting from wealthy folks paying normal prices and the hospitals keeping the difference. [8] - “Hundreds of Hospitals Sue Patients or Threaten Their Credit,
a KHN Investigation Finds. Does Yours?” Medical debt is a
large and growing problem for both patients and providers.
Healthcare systems employ collection agencies that
typically assess and screen a patient’s ability to pay. If the
credit agency determines a patient has resources and has
avoided paying his/her debt, the health system send those
bills to a collection agency. Most often legitimately
impoverished folks are left alone, but about two-thirds
of patients who could pay but lack adequate medical
insurance face lawsuits and other legal actions attempting
to collect payment including garnishing wages or placing
liens on property. [9] - “Hospital Monopolies Are Destroying Health Care Value,”
written by Rep. Victoria Spartz (R-Ind.) in The Hill, includes
a statement attributed to Adam Smith’s The Wealth of
Nations, “that the law which facilitates consolidation ends in
a conspiracy against the public to raise prices.” The country
has seen over 1,500 hospital mergers in the past twenty
years — an example of horizontal consolidation. Hospitals
also consolidate vertically by acquiring physician practices.
As of January 2022, 74 percent of physicians work directly for
hospitals, healthcare systems, other physicians, or corporate
entities, causing not only the loss of independent physicians
but also tighter control of pricing and financial issues. [10]
The healthcare industry is an attractive target to examine.
Everyone has had meaningful healthcare experiences, many have
had expensive and impactful experiences. Although patients do
not typically understand the complexity of providing a diagnosis,
treatment, and prognosis, the care receiver may compare the
experience to less-complex interactions outside healthcare that
are customer centric and more satisfying.
PROFIT-MARGIN SQUEEZE
Both nonprofit and for-profit hospitals must publish financial
statements. Three major bond rating agencies (Fitch Ratings,
Moody’s Investors Service, and S & P Global Ratings) and
other respected observers like KaufmanHall, collate, review,
and analyze this publicly available information and rate health
systems’ financial stability.
One measure of healthcare system’s financial strength is
operating margin, the amount of profit or loss from caring
for patients. In January of 2023 the median, or middle value,
of hospital operating margin index was -1.0%, which is an
improvement from January 2022 but still lags 2021 and 2020.
Erik Swanson, SVP at KaufmanHall, says 2022,
“Is shaping up to be one of the worst financial years on
record for hospitals. Expense pressures — particularly
with the cost of labor — outpaced revenues and drove
poor performance. While emergency department visits
and operating room minutes increased slightly, hospitals
struggled to discharge patients due to internal staffing
shortages and shortages at post-acute facilities,” [11]
Another force exacerbating health system finance is the
competent, if relatively new retailers (CVS, Walmart, Walgreens,
and others) that provide routine outpatient care affordably.
Ninety percent of Americans live within ten miles of a Walmart
and 50% visit weekly. CVS and Walgreens enjoy similar
penetration. Profit-margin squeeze, combined with new
convenient options to obtain routine care locally, will continue
disrupting legacy healthcare systems.
Providers generate profits when patients access care.
Additionally, “easy” profitable outpatient care can and has
switched to telemedicine. Kaiser-Permanente (KP), even before
the pandemic, provided about 50% of the system’s care through
virtual visits. Insurance companies profit when services are
provided efficiently or when members don’t use services.
KP has the enviable position of being both the provider
and payor for their members. The balance between KP’s
insurance company and provider company favors efficient
use of limited resources. Since COVID, 80% of all KP’s visits are
virtual, a fact that decreases overhead, resulting in improved
profit margins. [12]
On the other hand, KP does feel the profit-margin squeeze
because labor costs have risen. To avoid a nurse labor strike,
KP gave 21,000 nurses and nurse practitioners a 22.5% raise over
four years. KP’s most recent quarter reported a net loss of $1.5B,
possibly due to increased overhead. [13]
The public, governmental agencies, and some healthcare leaders
are searching for a more efficient system with better outcomes
at a lower cost. Our nation cannot continue to spend the most
money of any developed nation and have the worst outcomes.
In a globally competitive world, limited resources must go to
effective healthcare, balanced with education, infrastructure, the
environment, and other societal needs. A new healthcare model
could satisfy all these desires and needs.
Even iconic giants are starting to feel the pain of recent annual
losses in the billions. Ascension Health, Cleveland Clinic,
Jefferson Health, Massachusetts General Hospital, ProMedica,
Providence, UPMC, and many others have gone from stable
and sustainable to stressed and uncertain. Mayo Clinic had
been a notable exception, but recently even this esteemed
system’s profit dropped by more than 50% in 2022 with higher
wage and supply costs up, according to this Modern Healthcare
summary. [14]
The alarming point is even the big multigenerational health
system leaders who believed they had fortress balance sheets
are struggling. Those systems with decades of financial success
and esteemed reputations are in jeopardy. Changing leadership
doesn’t change the new environment.
Nonprofit healthcare systems’ income typically comes from three
sources — operations, namely caring for patients in ways that are
now evolving as noted above; investments, which are inherently
risky evidence by this past year’s record losses; and philanthropy,
which remains fickle particularly when other investment returns
disappoint potential donors. For-profit healthcare systems don’t
have the luxury of philanthropic support but typically are more
efficient with scale and scope.
The most stable and predictable source of revenue in the
past was from patient care. As the healthcare industry’s cost
to society continues to increase above 20% of the GDP, most
medically self-insured employers and other payors will search for
efficiencies. Like it or not, persistently negative profit margins
will transform healthcare.
Demand for nurses, physicians, and support folks is increasing,
with many shortages looming near term. Labor costs and burnout
have become pressing stresses, but more efficient delivery of
care and better tools can ameliorate the stress somewhat. If
structural process and technology tools can improve productivity
per employee, the long-term supply of clinicians may keep up.
Additionally, a decreased demand for care resulting from an
effective prevention strategy also could help.
Most other successful industries work hard to produce products
or services with fewer people. Remember what the industrial
revolution did for America by increasing the productivity of each
person in the early 1900s. Thereafter, manufacturing needed
fewer employees.
PATIENTS’ NEEDS AND DESIRES
Patients want to live a long, happy and healthy life. The best
way to do this is to avoid illness, which patients can do with
prevention because 80% of disease is self-inflicted. When
prevention fails, or the 20% of unstoppable episodic illness kicks
in, patients should seek the best care.
The choice of the “best care” should not necessarily rest just on
convenience but rather objective outcomes. Closest to home may
be important for take-out food, but not healthcare.
Care typically can be divided into three categories — acute,
urgent, and elective. Common examples of acute care include
childbirth, heart attack, stroke, major trauma, overdoses, ruptured
major blood vessel, and similar immediate, life-threatening
conditions. Urgent intervention examples include an acute
abdomen, gall bladder inflammation, appendicitis, severe
undiagnosed pain and other conditions that typically have
positive outcomes even with a modest delay of a few hours.
Most every other condition can be cared for in an appropriate
timeframe that allows for a car trip of a few hours. These illnesses
can range in severity from benign that typically resolve on their
own to serious, which are life-threatening if left undiagnosed and
untreated. Musculoskeletal aches are benign while cancer is life-threatening if not identified and treated.
Getting the right diagnosis and treatment for both benign and
malignant conditions is crucial but we’re not even near perfect for
either. That’s unsettling.
In a 2017 study,
“Mayo Clinic reports that as many as 88 percent of those
patients [who travel to Mayo] go home [after getting a
second opinion] with a new or refined diagnosis — changing
their care plan and potentially their lives. Conversely, only
12 percent receive confirmation that the original diagnosis
was complete and correct. In 21 percent of the cases, the
diagnosis was completely changed; and 66 percent of
patients received a refined or redefined diagnosis. There
were no significant differences between provider types
[physician and non-physician caregivers].” [15]
The frequency of significant mis- or refined-diagnosis and
treatment should send chills up your spine. With healthcare
we are not talking about trivial concerns like a bad meal at a
restaurant, we are discussing life-threatening risks. Making an
initial, correct first decision has a tremendous influence on
your outcome.
Sleeping in your own bed is nice but secondary to obtaining the
best outcome possible, even if car or plane travel are necessary.
For urgent and elective diagnosis/treatment, travel may be a
good option. Acute illness usually doesn’t permit a few hours of grace, although a surprising number of stroke and heart attack victims delay treatment through denial or overnight timing. But even most of these delayed, recognized illnesses usually survive. And urgent and elective care gives the patient the luxury of some time to get to a location that delivers proven, objective outcomes, not necessarily the one closest to home.
Measuring quality in healthcare has traditionally been difficult for the average patient. Roadside billboards, commercials, displays at major sporting events, fancy logos, name changes and image building campaigns do not relate to quality. Confusingly, some heavily advertised metrics rely on a combination of subjective reputational and lagging objective measures. Most consumers don’t know enough about the sources of information to understand which ratings are meaningful to outcomes.
Arguably, hospital quality star ratings created by the Centers for Medicare and Medicaid Services (CMS) are the best information for potential patients to rate hospital mortality, safety, readmission, patient experience, and timely/effective care. These five categories combine 47 of the more than 100 measures CMS publicly reports. [16]
A 2017 JAMA article by lead author Dr. Ashish Jha said:
“Found that a higher CMS star rating was associated with lower patient mortality and readmissions. It is reassuring that patients can use the star ratings in guiding their health care seeking decisions given that hospitals with more stars not only offer a better experience of care, but also have lower mortality and readmissions.”
The study included only Medicare patients who typically are over
65, and the differences were most apparent at the extremes,
nevertheless,
“These findings should be encouraging for policymakers
and consumers; choosing 5-star hospitals does not seem to
lead to worse outcomes and in fact may be driving patients
to better institutions.” [17]
Developing more 5-star hospitals is not only better and safer
for patients but also will save resources by avoiding expensive
complications and suffering.
As a patient, doing your homework before you have an urgent or
elective need can change your outcome for the better. Driving a
couple of hours to a CMS 5-star hospital or flying to a specialty
hospital for an elective procedure could make a difference.
Business case studies have noted that hospitals with a focus on
a specific condition deliver improved outcomes while becoming
more efficient. [18] Similarly, specialty surgical areas within
general hospitals have also been effective in improving quality
while reducing costs. Mayo Clinic demonstrated this with its
cardiac surgery department. [19] A similar example is Shouldice
Hospital near Toronto, a focused factory specializing in hernia
repairs. In the last 75 years, the Shouldice team has completed
four hundred thousand hernia repairs, mostly performed under
local anesthesia with the patient walking to and from the
operating room. [20] [21]
THE BOTTOM LINE
The Mayo Brother’s quote, “The patient’s needs come first,” is
more relevant today than when first articulated over a century
ago. Driving treatment into distinct categories of acute, urgent,
and elective, with subsequent directing care to the appropriate
facilities, improves the entire care process for the patient. The
saved resources can fund prevention and decrease the need for
future care. The healthcare industry’s focus has been on sickness,
not prevention. The virtuous cycle’s flywheel effect of distinct
categories for care and embracing prevention of illness will decrease
misery and lower the percentage of GDP devoted to healthcare.
Editor’s note: This is a multi-part series on reinventing the healthcare
industry. Part 2 addresses physicians, non-physician caregivers, and
communities’ responses to the coming transformation.
Sign of the Day: A Credit Card
The health of a community depends on fair health insurance practices
The health of a community is measured by the health of its individual members, and the health of its members depends on their access to local, high-quality medical care. Health coverage is a key indicator of the health and wellness of an individual. When people have health insurance, they have greater access to care, reduced mortality, and better health outcomes, according to a report from the American Hospital Association.
However, the current approach taken by some of the nation’s largest health insurers, or payers, is putting this at jeopardy as payers focus on profits and quarterly earnings, strip rates and put the long-term viability of health systems at risk. With hospitals in the middle of the worst economic performance in decades, it is time for payers to own up to how their actions negatively impact the communities and those they claim to serve.
As a physician and the chief of population health at a large metro-area health system, Northeast Georgia Health System, my patients’ ability to readily access medical care at our facilities — and have that care be covered by insurance — matters greatly. Any disruption in a patient’s experience, such as restricting access to care by their health plan or going out of network with an insurance company, can wreak havoc on population health. It’s no secret that many health systems across the country have felt the weight of increased administrative and contractual burdens from health insurers as denial rates continue to creep upwards.
Health insurance companies, like the nation’s largest, UnitedHealthcare, have seen profits soar in recent years. UnitedHeatlhcare’s profits were up 28 percent during the third quarter of 2022 – achieving a profit of $5.3 billion in just those three months – before closing the year at $28.4 billion in net earnings in 2023. Elevance (formerly Anthem), Cigna, and Aetna have also posted record profits recently.
We have seen the impact of the pressure payers are putting on hospitals across the country. Nearly 200 hospitals have closed since 2005, according to the Sheps Center for Health Services Research at the University of North Carolina. Many of these hospitals have closed because they failed to receive fair contracted rates from large payers and thus were insolvent.
Community benefits like charity care, health education and economic impact are provided by hundreds of hospitals nationally, but that impact is at risk if they are not fairly compensated for the services they provide.
‘We’re Going Away’: A State’s Choice to Forgo Medicaid Funds Is Killing Hospitals
Since its opening in a converted wood-frame mansion 117 years ago, Greenwood Leflore Hospital had become a medical hub for this part of Mississippi’s fertile but impoverished Delta, with 208 beds, an intensive-care unit, a string of walk-in clinics and a modern brick-and-glass building.
But on a recent weekday, it counted just 13 inpatients clustered in a single ward. The I.C.U. and maternity ward were closed for lack of staffing and the rest of the building was eerily silent, all signs of a hospital savaged by too many poor patients.
Greenwood Leflore lost $17 million last year alone and is down to a few million in cash reserves, said Gary Marchand, the hospital’s interim chief executive. “We’re going away,” he said. “It’s happening.”
Rural hospitals are struggling all over the nation because of population declines, soaring labor costs and a long-term shift toward outpatient care. But those problems have been magnified by a political choice in Mississippi and nine other states, all with Republican-controlled legislatures.
They have spurned the federal government’s offer to shoulder almost all the cost of expanding Medicaid coverage for the poor. And that has heaped added costs on hospitals because they cannot legally turn away patients, insured or not.
States that opted against Medicaid expansion, or had just recently adopted it, accounted for nearly three-fourths of rural hospital closures between 2010 and 2021, according to the American Hospital Association.
Opponents of expansion, who have prevailed in Texas, Florida and much of the Southeast, typically say they want to keep government spending in check. States are required to put up 10 percent of the cost in order for the federal government to release the other 90 percent.
But the number of holdouts is dwindling. On Monday, North Carolina became the 40th state to expand Medicaid since the option to cover all adults with incomes below 138 percent of the poverty line opened up in 2014 under the terms of the 2010 Affordable Care Act. The law, a major victory for President Barack Obama, has continued to defy Republican efforts to kill or limit it.
“This argument about rural hospital closures has been an incredibly compelling argument to voters,” said Kelly Hall, the executive director of the Fairness Project, a national nonprofit that has successfully pushed ballot measures to expand Medicaid in seven states.
In Mississippi, one of the nation’s poorest states, the missing federal health care dollars have helped drive what is now a full-blown hospital crisis. Statewide, experts say that no more than a few of Mississippi’s 100-plus hospitals are operating at a profit. Free care is costing them about $600 million a year, the equivalent of 8 percent to 10 percent of their operating costs — a higher share than almost anywhere else in the nation, according to the state hospital association.
Expanding Medicaid would uncork a spigot of about $1.35 billion a year in federal funds to hospitals and health care providers, according to a 2021 report by the office of the state economist.
And it would guarantee medical coverage to some 100,000 uninsured adults making less than $20,120 a year in a state whose death rates are at or near the nation’s highest for heart disease, stroke, diabetes, cancer, kidney disease and pneumonia. Infant mortality is also sky-high, and the Delta has the nation’s highest rate of foot and leg amputations because of diabetes or hypertension.
Health officials blame those numbers in part on the high rate of uninsured residents who miss out on preventive care.
“I can tell you I have a number of patients who are on dialysis with renal failure for the rest of their life because they couldn’t afford the medication for their blood pressure, and that caused their kidneys to go bad,” said Dr. John Lucas, a Greenwood Leflore surgeon.
Among Mississippi adults, only disabled people and parents with extremely low incomes, along with most pregnant women, are eligible for Medicaid. Many of the ineligible are also too poor to qualify for the tax credits for insurance under the Affordable Care Act, leaving them without affordable options.
The same is true for close to two million other Americans who live in the states that have not expanded Medicaid. Three in five are adults of color, according to a 2021 study by the Center on Budget and Policy Priorities, a nonprofit research group. In Mississippi, more than half are Black.
Gov. Tate Reeves, a Republican, and key G.O.P. state lawmakers argue that a bigger Mississippi program is not in taxpayers’ best interest. The governor says the state’s $3.9 billion surplus would be best used to help eliminate Mississippi’s income tax.
“Don’t simply cave under the pressure of Democrats and their allies in the media who are pushing for the expansion of Obamacare, welfare and socialized medicine,” Mr. Reeves said in his annual State of the State address in January.
Opponents also argue that the newly insured would become dependent on Medicaid and therefore be less likely to work. “I believe we should be working to get people off Medicaid as opposed to adding more people to it,” said Philip Gunn, the powerful Republican House speaker.
Yet in Mississippi’s Delta, a flat swath of fields of corn, soybeans and other crops nearly as big as Delaware, access to any kind of medical care is drying up for lack of money. More than 300,000 people live here, nearly 35 percent of them Black. About the same percentage live in poverty, a rate three times the national average.
Dr. Daniel P. Edney, the state’s top health officer, said he did not set Medicaid policy, and he has been careful not to take sides. But he predicted emerging health care deserts where women would have to travel long distances to deliver babies and more sick people would die because they could not gain access to care.
Of the state’s hospitals, “I have maybe heard of two that are generating any profit,” he said. When he asks hospital executives if Medicaid expansion would help their balance sheets, he said, “they say it’s a game changer.”
He predicted that five hospitals would soon downgrade into mere emergency rooms, where doctors work to stabilize patients, then transfer them to the nearest hospital.
If that happens, some of the sickest will not make it, said Dr. Jeff Moses, an emergency room physician at Greenwood Leflore.
“Where are they going? Davy Jones’s locker,” he said. “It is very dark, and I’m not exaggerating this. I just can’t imagine what will happen to this community if this hospital closes.”
Nine years after states began expanding Medicaid, evidence is growing that broader coverage saves lives. In a 2021 analysis, researchers for the National Bureau of Economic Research estimated that in one four-year period, 19,200 more adults aged 55 to 64 survived because of expanded coverage, and nearly 16,000 more would have lived if that coverage was nationwide.
Other studies suggest why: Making medical care more affordable led to increases in regular checkups, cancer screenings, diagnoses of chronic diseases and prescriptions for needed medicines.
Especially during the first six years of the Medicaid expansion, when the federal government picked up 95 to 100 percent of the cost, many states found that the program was a net fiscal gain. Some states have imposed taxes on hospitals or health care providers to cover their share of the expense, the same strategy used to help fund other Medicaid costs.
Now the federal government is offering a new incentive for the holdouts: As part of a 2021 pandemic relief measure, it agreed to temporarily pay a higher proportion of costs for some existing Medicaid patients if states broadened eligibility.
Mississippi’s office of the state economist has estimated that for at least the first decade, those savings and others would fully cover the roughly $200 million a year that Medicaid expansion would cost the state government.
Tim Moore, the president of the Mississippi Hospital Association, said expansion was “a no-brainer.” The state is so poor, he said, that for every dollar it spends on Medicaid, the federal government pumps four back in.
Polls, including by Mississippi Today and Siena College, appear to show Mississippians support Medicaid expansion, regardless of their political affiliation. Brandon Presley, the Democratic candidate for governor, is highlighting hospital closures as a reason to deny Mr. Reeves a second term in elections this November.
In a possible sign of political nervousness, the governor and the legislature recently agreed to extend Medicaid coverage to pregnant women for 12 months after they give birth, prolonging a federal pandemic-era policy.
The legislators are also trying to prop up the hospitals with a one-time infusion of $83 million or more. But that is a pittance compared with what the state has given up in Medicaid payments.
The state has lost four hospitals since 2008, according to the hospital association, and Dr. Edney, the state health officer, said that it would inevitably lose more. He said he worried most about health care access in the Delta, where he grew up, the child of working-class parents with no health insurance.
On Saturday, Representative Bennie Thompson, Democrat of Mississippi, said victims of a tornado that struck the Delta last week had to be ferried 50 miles away for medical treatment because the local hospital had no power. More Medicaid dollars, he said, would have equipped it with an emergency generator.
An hour due west from Greenwood Leflore, another major hospital, run by Delta Health System, is also in serious trouble. Licensed for more than 300 beds, the hospital one day last month held just 72 inpatients.
Thirty-two of them were kept in the emergency department, partly because of nursing cuts. One upshot is that patients seeking emergency care now wait an average of two hours, four times as long as they should, according to Amy Walker, the chief nursing officer. Some simply walk out.
The neonatal intensive care unit closed last July. Now babies in trouble must be ferried by ambulance or helicopter 125 miles south to Jackson.
Iris Stacker, the chief executive, said the hospital could remain open through the end of the year; after that, she makes no promises. She is hoping federal grants will help keep the doors open, despite the state’s failure to expand Medicaid.
But she said, “It’s very hard to ask the federal government for more money when you have this pot of money sitting here that we won’t touch.”
A top message on Greenwood Leflore’s website is now a request for donations. So far, the hospital has raised less than $12,000.
Mike Hardin, a 70-year-old retiree, was one of a handful of inpatients one recent day. He had come to the emergency room two days before with slurred speech. Doctors quickly diagnosed a stroke and now were sending him home with revised medications.
“They have to do something to keep this hospital open,” he said as he was wheeled out of his room. “The people around this area wouldn’t have any place else to go.”
The hospital’s outpatient clinics are largely still in business, and doctors there say their caseloads are full of impoverished patients who should have been treated earlier.
Dr. Abhash Thakur, a cardiologist, said he routinely saw patients in the late stages of congestive heart failure who had never seen a cardiologist or been prescribed heart medication. Some have as little as 10 percent of their heart function left.
“They are not the exception,” he said, before examining a 52-year-old man who uses a wheelchair because of his heart disease. “Every day, probably, I will see a few of them.”
Dr. Raymond Girnys, a general surgeon, had just treated a man in his late 50s. He said that a week earlier, the man had punctured his foot on a sharp stick while walking in his tennis shoes in a field.
The man did not seek medical attention until the foot became infected because he was poor and uninsured. Dr. Girnys pointed out the irony: If his patient lost his foot, he would become eligible for Medicaid because then he would be disabled.
“If they had insurance, they wouldn’t be afraid to seek care,” he said.
Experts say that no more than a few of Mississippi’s 100-plus hospitals are operating at a profit.
Walgreens healthcare division boosts retail giant’s second-quarter earnings
Dive Brief:
- Walgreens’ growing U.S. healthcare segment is continuing to bolster the retail health chain’s financial performance. The business, which includes value-based provider VillageMD, recorded $1.6 billion in sales in the second quarter, an increase of $1.1 billion from last year.
- VillageMD sales were up 30%, including a boost from its recent acquisition of medical group Summit Health. Specialty pharmacy Shields Health Solutions grew sales 41%, while at-home care provider CareCentrix’s sales were up 25%.
- Thanks in part to a jump in revenue in its healthcare segment, Walgreens’ results beat Wall Street expectations even as profit declined more than 20% amid lower COVID-19 vaccine volumes and test sales, higher salary costs, opioid litigation charges and costs associated with its $3.5 billion investment in its Summit acquisition.
Dive Insight:
Walgreens has been working to expand its business scope beyond pharmacies to more consumer-centric healthcare, and has acquired a number of companies to build out its growing U.S. healthcare division.
In its earnings results for the second quarter ended Feb. 28, the business reported gross profit of $32 million, as income from Shields and CareCentrix was offset by VillageMD expansion costs. VillageMD added 133 clinics compared to the second quarter last year.
In November, Walgreens agreed to acquire healthcare provider Summit through VillageMD. The almost $9 billion deal closed in January and included investments from Cigna’s health services division Evernorth.
“With the closing of VillageMD’s acquisition of Summit Health, [Walgreens] is now one of the largest players in primary care,” CEO Roz Brewer said in the company’s earnings release on Tuesday.
VillageMD also acquired a Connecticut-based medical group in March for an undisclosed amount. That group, called Starling Physicians, operates more than 30 primary care and multi-specialty practices across the state.
Starling “will contribute heavily to revenue and EBITDA growth in the second half of 2023,” said Walgreens CFO James Kehoe on a Tuesday morning call with investors. “Overall, the primary care business and the specialty care business is doing really, really well.”
Despite the recent deals, Walgreens is moving beyond its peak investment period in healthcare, management said on the call. VillageMD, for example, plans to concentrate growth and investments in specific markets where it can be “hyper-relevant” moving forward, according to Walgreens President John Standley.
HENRY KOTULA 