5 health systems zeroing in on exec teams, administration

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https://www.beckershospitalreview.com/hospital-management-administration/5-health-systems-zeroing-in-on-exec-teams-administration.html?origin=CEOE&utm_source=CEOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

At least five health systems announced changes to executive ranks and administration teams in February and March. 

The changes come as hospitals continue to grapple with financial challenges, leading some organizations to cut jobs and implement other operational adjustments. Changes to executive ranks include reorganizing executive responsibilities and executive appointments.

The following changes were announced within the last two months and are summarized below, with links to more comprehensive coverage of the changes. 

1. Philadelphia-based Penn Medicine is eliminating administrative positions. The change is part of a reorganization plan to save the health system $40 million annually, the Philadelphia Business Journal reported March 13. Kevin Mahoney, CEO of the University of Pennsylvania Health System, told Penn Medicine’s 49,000 employees last week that changes include the elimination of a “small number of administrative positions which no longer align with our key objectives,” according to the publication. The memo did not indicate the exact number of positions that were eliminated.

2. Sovah Health, part of Brentwood, Tenn.-based Lifepoint Health, has eliminated the COO positions at its Danville and Martinsville, Va., campuses. The responsibilities of both COO roles will now be spread across members of the existing administrative team. 

3. Cox Medical Group, a subsidiary of Springfield, Mo.-based CoxHealth, has made several leadership changes to support the health system’s new operating model. The new model is focused on key service lines — such as cardiovascular services, orthopedics and primary care. Four things to know.

4. Valley Health, a six-hospital health system based in Winchester, Va., eliminated 31 administrative positions. The job cuts are part of the consolidation of the organization’s leadership team and administrative roles. They were announced internally on Feb. 28. 

5. Roseville, Calif.-based Adventist Health will transition from seven networks of care to five systemwide to reduce costs and strengthen operations, according to a Feb. 15 news release shared with Becker’s. Under the reorganization, the health system will have separate networks for Northern California, Central California, Southern California, Oregon and Hawaii. The reorganization will result in job cuts, including reducing administration by more than $100 million.

New MetroHealth CEO suspends bonuses that led to predecessor’s firing

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https://www.beckershospitalreview.com/compensation-issues/new-metrohealth-ceo-suspends-bonuses-that-led-to-predecessors-firing.html?origin=CEOE&utm_source=CEOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

MetroHealth CEO Airica Steed, EdD, RN, is suspending supplemental and one-time bonus programs that led to the firing of former CEO Akram Boutros, MD, Cleveland.com reported March 14. 

Dr. Steed also told Cuyahoga County Council that new safeguards are being put in place after Dr. Boutros was accused of taking $1.9 million in what the health system’s board called “improper bonuses,” according to the report.

The plan outlined by Dr. Steed includes a national search to fill several critical executive roles, including a human resources officer who will ensure the department is thoroughly involved in compensation matters going forward, according to the report. Dr. Steed said that structure was not previously in place. 

The system is also seeking a permanent CFO after Craig Richmond resigned from the role, according to the report. Geoff Himes, the health system’s former vice president of finance, is serving as interim CFO. 

The plan also calls for creating a workplace culture where “no one is afraid to speak up if they’re not sure what’s being asked of them is the right thing to do,” according to the report.  

A report from the accounting firm BDO at the request of the system’s board found that Dr. Boutros paid himself $1.9 million in unauthorized bonuses and concealed the actions from the board, according to Cleveland.com. He was fired in November after the payments came to light. He was set to retire at the end of 2022. 

The BDO report said Dr. Boutros created the Supplemental Performance Based Variable Compensation/Supplemental Incentive Compensation program without involving the human resources department. Former CFO Mr. Richmond allegedly forwarded details of the program down the chain for payroll approval without confirming there had been board approval.  

Dr. Boutros’ attorney Jason Bristol sent a letter to Cuyahoga County Council alleging the BDO report is “biased, inaccurate and seriously flawed,” according to Cleveland.com. Mr. Bristol argued the report contained no supporting evidence for the assertion Dr. Boutros secretly created a bonus program. He also said Mr. Richmond resigned because he believed the report “inaccurate, incomplete, and misleading,” citing a letter released by Mr. Richmond’s attorney. Mr. Richmond resigned two days before the report was released. 

Dr. Boutros has filed multiple lawsuits since his firing. He filed a lawsuit Nov. 28 in Cuyahoga County Common Pleas Court, alleging violations of Ohio’s Open Meetings Act and the board bylaws. Dr. Boutros also alleges board retaliation and accuses the MetroHealth board of violating the law in its hiring of Dr. Steed. Dr. Boutros filed a separate lawsuit against the health system in December alleging breach of contract. He has repaid the system $2.1 million for the bonuses and interest. 

Non-hospital physician employment rose sharply during pandemic 

Posted on by • Posted in Market Consolidation, Medicare Advantage, Pandemic, Physician, Physician Employment, Physician Independence, Private Equity • Leave a comment

https://mailchi.mp/28f390732e19/the-weekly-gist-march-10-2023?e=d1e747d2d8

While hospitals, payers, and private equity firms have long been competing to acquire independent physician groups, the COVID pandemic spurred a marked acceleration of the physician employment trend, with non-hospital corporate entities leading the charge.

The graphic above uses data released by consulting firm Avalere Health and the nonprofit Physicians Advocacy Institute to show that nearly three quarters of American physicians were employed by a larger entity as of January 2022, up from 62 percent just three years prior. 

While hospitals employ a majority of those physicians, corporate entities (a group that includes payers, private equity groups, and non-provider umbrella organizations) have been increasing their physician rolls at a much faster rate. 

Corporate entities employed over 40 percent more physicians in 2022 than in 2019, and in the southern part of the country—a hotspot for growth of Medicare Advantage—corporate physician employment grew by over 50 percent.

We expect the move away from private practice, accelerated by the pandemic, will only continue as physicians seek financial returns, secure a path to retirement, and look to access capital for necessary investments to help grow and manage the increasing complexities of running a practice. 

We’ve become even less prepared for the next pandemic

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https://mailchi.mp/28f390732e19/the-weekly-gist-march-10-2023?e=d1e747d2d8

Published this week in the Washington Post, this sobering article surveys the dismantling of our nation’s patchwork public health infrastructure, driven by a backlash to COVID pandemic restrictions. Positioning themselves as defenders of freedom, a coalition of conservative and libertarian activists, legislators, and judges have neutered many of the nation’s public health authorities. State health officials and governors in over half the country are now unable to issue mask mandates or order school closures without the permission of their state legislatures.

While the implications for a hypothetical “next COVID” are dire, we’re already seeing the consequences today: officials in Columbus, OH can no longer, for example, quarantine a child with measles, or shut down a restaurant experiencing a hepatitis A outbreak. 

The Gist: The anti-public health backlash in the wake of COVID has now been codified, with far reaching consequences for future disease outbreaks. COVID protections for hospital-based healthcare providers are winding down, even in states like California which quickly embraced masking.

But now in over half the country, many reasonable responses to unknown future health threats won’t even be on the table, or will involve debate and legislative action, wasting precious response time. 

Eli Lilly cuts prices on its insulin products

Posted on by • Posted in High Drug Prices, Insulin, Out of Pocket Expenses, Pharmaceutical Industry • Leave a comment

https://mailchi.mp/175f8e6507d2/the-weekly-gist-march-3-2023?e=d1e747d2d8

On Wednesday, Indianapolis, IN-based pharmaceutical giant Eli Lilly announced that it will cut its list price for both Humalog and Humulin, its two most commonly prescribed insulin products, by 70 percent. While these changes will go into effect later this year, the company is also immediately expanding its Insulin Value Program, available at participating pharmacies for the commercially insured and upon program enrollment for the uninsured, to match Medicare Part D’s $35 per month out-of-pocket insulin cap. Eli Lilly shared that 30 percent of the US’s 8M insulin users rely on its products, though the company is only cutting prices for its older insulin products.

The Gist: Nearly 30 percent of uninsured and 20 percent of commercially insured insulin users in the US report having to ration their doses due to cost concerns.While it still won’t be providing its insulin for free, as some have demanded, Lilly’s move should help the company gain market share, in addition to generating some good PR—and it’s expected that other large insulin manufacturers will be pressured to follow suit. 

But even if a $35 out-of-pocket cap was adopted nationally, Americans would still be paying three times more for their insulin than people in comparable countries. 

Questioning the value of the integrated delivery system

Posted on by • Posted in Business Model, Health System, Hospital, Hospital Industry, Integrated Delivery System, Value Based Care Model, Value Journey, Value Proposition, Value-Based Healthcare • Leave a comment

https://mailchi.mp/175f8e6507d2/the-weekly-gist-march-3-2023?e=d1e747d2d8

During one of our regular check-ins with a health system CEO this week, the conversation took a turn for the existential. Lamenting the difficult economic situation in the industry, the continued shift of care to ambulatory disruptors, and the mounting pressure to dial back money-losing services, he shared that he was starting to question the fundamental business model. 

“Many years ago, we set out to become an integrated delivery system. But I’m not sure we’ve succeeded at any of those things: we’re not integrated enough, we don’t act like a system, and we don’t seem to be delivering the kind of care consumers want.” A stark admission, but one that could apply to many large health systems across the industry.

In theory, those three “legs of the stool” should create a virtuous flywheel: greater integration across the care continuum (perhaps in a risk-bearing model, but not necessarily) ought to allow systems to deliver quality care at the right place, right time. And a system-oriented approach ought to allow for efficiencies and cost-savings that enable care to be delivered at lower cost to patients.

Instead, the three components often create a vicious spiral: care that’s not coordinated across an integrated continuum, with little success at leveraging system-level efficiencies, resulting in unnecessary, duplicative, and variable-quality care delivery at excessive cost.

Capturing the value of integrated delivery systems will ultimately require hard work, and not just lip service, on all three pieces. Meanwhile, scaling a broken model will only exacerbate the problems of organizations that are neither integrated, nor systemic, nor delivering care that is high value.

Payers racing to expand their provider footprints

Posted on by • Posted in Health Insurance Industry, Market Consolidation, Market Share, Market Trends, Mergers & Acquisitions, Vertical Integration, Vertical Merger • Leave a comment

https://mailchi.mp/175f8e6507d2/the-weekly-gist-march-3-2023?e=d1e747d2d8

In last week’s graphic, we showed how the nation’s largest health insurance companies earn annual revenues several times greater than the largest health systems. In the graphic above, we unpack the 2022 revenue of five of the largest payers, to show just how diversified they have become. 

UnitedHealth Group (UHG) continues to lead the way not only as the largest US payer, but also the most vertically integrated, growing its OptumCare provider business by over 30 percent last year. 

Playing catch-up, the other payers have also shown willingness to spend large sums on provider acquisitions, with CVS dropping nearly $20B on primary care company Oak Street and home health company Signify last year. UHG and Humana also recently spent over $5B each, on their own home health companies, in pursuit of lower cost settings for treating their Medicare Advantage enrollees.

In contrast, Cigna and Elevance have not been as active in the M&A space of late, prompting Cigna investors to question the CEO on whether the company may be at a competitive disadvantage. We’d expect the race to create full-stack, vertically integrated healthcare platforms, of the kind illustrated by these large payers, to gain steam across the rest of 2023 and beyond. Looming even larger than UHG, CVS Health, and the like: Amazon and Walmart, both of which are actively pursuing their own platform visions in healthcare.  

FDA approves first combination flu and COVID at-home test

Posted on by • Posted in Coronavirus Testing, Food and Drug Administration (FDA), Home Testing, Home-Based Care • Leave a comment

https://mailchi.mp/175f8e6507d2/the-weekly-gist-march-3-2023?e=d1e747d2d8

Last Friday, the Food and Drug Administration (FDA) granted emergency use authorization to the Lucira COVID-19 and Flu Test, making it the first at-home flu test approved for US consumers. The decision came just days after Lucira filed for Chapter 11 bankruptcy, blaming a protracted approval process for a test it had anticipated would be approved last August. As Lucira was unable to find a buyer prior to filing for bankruptcy, it remains unclear if the test will ever reach store shelves.

The Gist: While most Americans first experienced at-home viral testing with COVID, Europeans have used the same underlying technology to diagnose themselves with the flu at home for years. Lucira’s test was only approved because its capacity to detect COVID qualified it for emergency approval, and even then, approval took so long that the company began to falter. Many have questioned the FDA’s slow-walking of at-home diagnostics, especially now that Americans have demonstrated both the willingness and ability to swab their own noses. 

With the locus of care shifting towards the home, and in an environment of cost-conscious consumers, the push for more at-home diagnostics will continue to grow.