Midwest nonprofits Sanford Health, Fairview Health Services target a 58-hospital merger for 2023

Posted on by • Posted in Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Rural Health, Rural Hospital • Leave a comment

https://www.fiercehealthcare.com/providers/midwest-nonprofits-sanford-health-fairview-health-services-target-58-hospital-merger-2023

South Dakota-based Sanford Health and Minnesota-based Fairview Health Services unveiled plans Tuesday to merge and form a 58-hospital juggernaut serving rural and urban patients across the Midwest.

The nonprofits have signed a nonbinding letter of intent as they proceed with due diligence and regulatory antitrust reviews, they said in a press release. Each would maintain their own regional presence, leadership and regional boards but operate as a single integrated system under Sanford Health’s banner.

The organizations said they anticipate closing their deal sometime next year.

“Our organizations are united by a shared commitment to advance the health and well-being of our communities,” Sanford Health President and CEO Bill Gassen said in the release. “As a combined system, we can do more to expand access to complex and highly specialized care, utilize innovative technology and provide a broader range of virtual services, unlock greater research capabilities and transform the care delivery experience to ensure every patient receives the best care no matter where they live.”

Gassen is teed up to serve as the president and CEO of the new entity should the merger go through, while Fairview CEO James Hereford would serve as co-CEO for one year following the deal’s close.

Headquarted in Sioux Falls, Sanford Health describes itself as the country’s largest rural health system with nearly 48,000 employees, 47 medical centers, 224 clinics and hundreds of other facilities. It serves over 1 million patients and 220,000 health plan members, according to its website, and each year logs 5.2 million outpatient or clinic visits, nearly 83,000 admissions, about 128,000 surgeries and procedures and roughly 195,000 emergency department visits.

Minneapolis-based Fairview Health Services employs 31,000 people across 11 hospitals as well as dozens of clinics, pharmacies and other facilities. It boasts a network of over 5,000 doctors after merging a few years back with fellow Twin Cities system HealthEast and due to partnerships with University of Minnesota Health specialists.

The two systems said their planned merger will improve care quality, outcomes, patient experience and health equity across their patient populations. New efficiencies will also help the systems offer more affordable care, they noted, while their workforces will benefit from stronger recruitment and advancement opportunities.

“With Sanford Health, Fairview Health Services has found a partner that shares our Midwestern values and our commitment to affordable, accessible and equitable care delivery,” Hereford said in the release. “Our complementary capabilities mean that together, we are uniquely positioned to improve clinical outcomes, develop new care delivery models, expand opportunities for employees and clinicians across our broader operational footprint, and apply our combined resources to positively impact the well-being of our patients and communities today and for decades to come.”

Sanford and Fairview’s news lands about six months after Advocate Aurora Health and Atrium Health announced their own nonprofit megamerger. That deal continues to move through the necessary regulatory hurdles and, if closed, would yield a 67-hospital with strong presences in the nearby Chicago and Milwaukee markets.

Additionally, 2022 has seen the close of Intermountain Healthcare and SCL Health’s 33-hospital system in the Rocky Mountain region and Beaumont Health and Spectrum Health’s 22-hospital system in Michigan.

VC Viewpoint: Cash-pay Care Delivery Has a Serious Social Stratification Problem

Posted on by • Posted in Affordability, Cash Pay Care Delivery, Disruption, Disruptive Technology, Innovation, Innovative Care Models, Physician, Social Stratification, Venture Capital • Leave a comment

http://www.medcitynews.com

When it comes to her feelings about investing in care delivery startups, it’s a real “mixed bag” for Ulili Onovakpuri, managing partner at Kapor Capital. This is because a lot of them operate on a cash-pay model. She summarized the issue quite succinctly: there’s an incredible amount of innovation happening, but the people who could benefit the most from this type of care will be the last ones to receive it.

Healthcare investors are facing a myriad of care delivery startups seeking their capital. And it’s an interesting time in the care delivery startup space — there’s more and more questions arising about how much scrutiny should be applied to the way these companies are growing, what should be included in their gross margins, and how they should be valued.

When it comes to her feelings about investing in care delivery startups, it’s a real “mixed bag” for Ulili Onovakpuri, managing partner at Kapor Capital. She said so Sunday at Engage at HLTH, a patient engagement summit hosted by MedCity News in Las Vegas.

Healthcare is a stratified experience in the U.S. Onovakpuri drew attention to the fact that this stratification is getting worse with the advent of provider startups that operate on a cash-pay model, such as Sesame and Tia. 

These types of cash-pay providers usually offer a simpler healthcare experience compared to the endless bureaucracy and billing confusion patients face in the traditional healthcare system. This can be very attractive to patients — they don’t want to deal with months-long wait times to see a provider, nor do they wish to navigate the Kafkaesque ordeal of trying to understand and pay their healthcare bills.

In Onovakpuri’s view, these cash-pay providers “are good for some” — those who can afford it. But those who lack the means to pay for care outside the traditional healthcare delivery system don’t get to take part in these startups’ care model, regardless of how innovative or convenient it may be.

“If I’m honest, it’s hard for me because I see a lot of great tech every single day, and when I talk to them, I’m like, ‘Wait, this is awesome — how much is this?’ and then I say, ‘Well, we can’t do it because the people that we care the most about can’t afford it.’ And it’s hard, because they’re probably the folks who need it the most,” Onovakpuri said.

She summarized the issue quite succinctly: there’s an incredible amount of innovation happening, but the people who could benefit the most from this type of care will be the last ones to receive it.

“Innovation is great, but it’s another dividing factor we face,” Onovakpuri declared.

Onovakpuri noted another key concern: the fact that many of the country’s most talented physicians are opting to leave their hospitals and health systems to work for cash-pay care delivery startups. She said she can understand why they make this choice (they are understandably fed up with the inefficiency of standard systems), but it still is a problem because it exacerbates hospitals’ labor shortage crisis and makes their patients wait times even longer to receive care.

Do nurses quit their jobs, or their managers? 

Posted on by • Posted in Employee, Health System, Hospital, Hospital Industry, Labor Shortages, Labor Spend Management, Management Scope, Nurses, Retention, Span of Control, Talent Management • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

There’s an old trope among human resources leaders that people don’t quit companies, they quit managers. There’s certainly truth to it. If an employee has a difficult or inattentive boss, they are at much greater risk of leaving for another opportunity. But a “bad” manager is not always someone lacking in the skills necessary to engage employees; sometimes the problem is that their own roles are structured in ways that make it nearly impossible to succeed. 

We’ve recently heard stories from leaders at several health systems describing the untenable management scope for many of their mid-level nursing leaders. It’s common to hear that nurse managers have dozens of direct reports, and a few systems reported that some of their managers have well over a hundred individuals reporting to them. With that scope, it’s impossible to develop relationships with everyone on the team, much less be able to customize roles, or provide tailored feedback and support. 

For younger workers, the manager relationship is critical for engagement, skill development, and building loyalty. 

Given today’s intense margin pressures, it’s tempting to cut clinical managers and increase the span of control for those who remain—but underinvestment here is short-sighted, and will surely exacerbate challenges maintaining critical capacity in the near-term, as well as building the foundation for future growth.

 

Pharmacy chains rapidly expand into primary care

Posted on by • Posted in CVS Health, Medicare Advantage, Pharmaceutical Industry, Primary Care, Primary Care Delivery Model, Primary Care Strategy, Retail Clinic, Retail Healthcare, Retail Pharmacy, Walgreens, Walmart • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

Retailers and insurers are building out their primary care strategies in a bid to become the new front door for patients seeking healthcare services, especially seniors on highly profitable Medicare Advantage (MA) plans. In the graphic above, we examine the capabilities of three of the largest pharmacy chains—CVS Health, Walgreens, and Walmart—to deliver full-service primary care across in-person and virtual settings.

CVS pioneered the pivot to care provision in 2006 with its acquisition of MinuteClinic, which now has over 1,000 locations. The company has further expanded its concept of pairing retail and pharmacy services with primary care by opening over 100 HealthHUBs, which provide an expanded slate of care services. However, CVS lags competitors in the rollout of full-service primary care practices, with its proposed physician-led Super Clinics still stuck in the planning stages.

Walgreens, with its majority stake in VillageMD (on track for 200 co-branded practices by the end of the year) and the recent acquisition of Summit Health (which operates another 370 primary and urgent care clinics) has assembled the most impressive primary care footprint of the three companies. 

Walmart, the largest by number of stores but also the newest to healthcare, has opened more than 25 Walmart Health Centers, a step up from earlier experimentation with in-store care clinics, offering more services and partnering with Epic Systems to integrate electronic health records. 

CVS’s key advantage over its competitors comes from its payer business, having acquired Aetna in 2018, now the fourth-largest MA payer by membership. Walgreens and Walmart have both aligned themselves with UnitedHealth Group (UHG) to participate in MA, with Walmart having struck a ten-year partnership to steer UHG MA beneficiaries to Walmart Health Centers in Florida and Georgia. 

While aligning with UHG expands the reach of these retail giants into MA risk, UHG, whose OptumHealth division is by far the largest employer of physicians nationwide, remains the healthcare juggernaut most poised to unseat incumbent providers as the home for consumers’ healthcare needs.

Agents and brokers for Medicare Advantage plans using deceptive marketing tactics

Posted on by • Posted in Abuse, Center for Medicare and Medicaid Services (CMS), Deceptive Advertising, Health Insurance Benefit Design, Health Insurance Industry, Marketing, Medicare Advantage • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

 In their latest article scrutinizing the MA program, New York Times reporters Reed Abelson and Margot Sanger-Katz highlight MA marketing practices brought to light in a recent report from the Senate Finance Committee. Complaints to the Centers for Medicare and Medicaid Services (CMS) about MA marketing more than doubled from 2020 to 2021, as agents and brokers took advantage of oversight rules relaxed during the Trump administration. Some of the most egregious alleged abuses include agents switching seniors into new plans without their consent and exploiting individuals with cognitive impairments.

The Gist: Media interest is finally catching up to the building legislative and regulatory pressure on Medicare Advantage. While earlier reporting has highlighted how plans can inflate payments from Medicare, this new story shows how the process of selecting a plan can be fraught for the seniors enrolled. 

Plan design is confusing even for industry insiders, so it is no surprise that seniors might find themselves ‘choosing’ plans that omit key providers, or even drug coverage they already rely on, particularly after being badgered or misled by agents and brokers.

Many of the regulatory fixes highlighted in the report can be implemented directly by CMS, but insurers, who remember the managed care backlash of the 90s, shouldn’t wait to tighten the reins on questionable marketing practices, lest they risk losing public support for one of their most lucrative business lines.

Oscar Health pulls out of major Medicare Advantage (MA) markets

Posted on by • Posted in Disruption, Disruptive Technology, Health Insurance Industry, Market Power, Market Share, Market Trends, Medicaid Expansion, Medical Loss Ratio (MLR) • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

In its Q3 earnings call, Oscar Health CEO Mario Schlosser revealed that the “insurtech” has pulled out of the MA market in Texas and New York, leaving it with only one Florida-based plan. Oscar entered the MA business with high hopes in 2020, but counted fewer than 5K MA members in Q3 2022.

Although its Affordable Care Act exchange enrollment has nearly doubled since last year, now covering more than 1M lives, Oscar is still struggling with high medical loss ratios, which have kept it from turning a profit. The company’s stock price is at an all-time low, having declined over 90 percent from its peak, shortly after its 2021 IPO.

The Gist: Like Bright HealthCare before them, Oscar pulling out of MA is another sign that the chance of meaningful disruption from “insurtechs” has nearly vanished. While still privately held, Oscar achieved fame in the early 2010s through catchy marketing that targeted a young, tech-savvy client base, and its move into MA before the pandemic signaled broader ambitions.

Oscar’s travails illustrate just how hard it is to start an insurance company from scratch, even with an intriguing and comprehensive technology platform. The company proved unable to overcome its lack of market power in negotiations with providers, and faced difficulty managing a small, unstable risk pool. 

Now that more traditional insurers are improving their mobile tech interfaces and telehealth offerings, the differentiated value Oscar offers to its members has clearly diminished.

Residents at New York City hospitals seek union recognition

Posted on by • Posted in Labor Activism, Labor Organizing, Labor Union, Physician, Physician's Labor Union, Resident • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

 Last week, over 1,200 resident physicians and interns at Montefiore Medical Center, one of the largest employers in New York City, with four hospitals in the Bronx, held an organizing vote and requested voluntary recognition of their bargaining unit. The residents organized under the Committee of Interns and Residents, a unit of the Service Employees International Union that claims 22K members and has established unions at five hospitals this year. Roughly seven percent of practicing doctors were unionized as of 2019; that number has grown in the wake of pandemic-induced burnout and industry consolidation. Montefiore Medical Center declined to voluntarily recognize the union and has requested that the union re-form via a secret ballot election.

The Gist: Health system executives may see the possibility of resident unions as another headache amid the ongoing labor crisis, but the drivers of the crisis—burnout, workplace safety concerns, work-life balance, and real-wage erosion—are responsible for the growing appeal of unions for physicians. Fueled by economy-wide stressors, unionization has been growing in nontraditional labor sectors, including among baristas and tech workers, and medical residents may be the next to join that wave.

Health systems worried about resident unionization should address residents’ concerns about working conditions proactively, which may involve reevaluating wages in light of residents’ significant contributions to operational and financial success.  

Congressional control still undecided, but voters protect and expand state-level healthcare access in midterms

Posted on by • Posted in ACA, Election, Health Insurance Coverage Adequacy, Health Policy, Healthcare Reform, Medicaid Expansion, Reproductive Rights, Roe v. Wade, Underinsured, Uninsured • Leave a comment

https://mailchi.mp/cfd0577540a3/the-weekly-gist-november-11-2022?e=d1e747d2d8

While the final balance of the House and Senate are still unknown after Tuesday’s midterm elections, both chambers are expected to be narrowly divided. 

Ballot initiatives on reproductive health produced more unambiguous results, with three states—California, Michigan, and Vermont—amending their constitutions to affirm reproductive rights, and two states—Kentucky and Montana—voting down proposals that would have imposed greater legal barriers to abortion access. South Dakota became the seventh, and likely final, state to expand Medicaid via ballot initiative, making an additional 28K South Dakotans eligible for coverage, and reducing the number of states that have yet to expand Medicaid to 11.

The Gist: Democrats beat expectations, bucking historical trends in which midterm voters swing strongly against the President’s party. But healthcare did not feature prominently in voters’ choices, with this being the first election in over a decade where the state of the Affordable Care Act and protecting individuals’ access to care and coverage was not a significant choice driver. 

The fallout from the Supreme Court’s decision in June to overturn Roe v. Wade had a clear impact on voter turnout, with abortion tying inflation for voters’ top concern in exit polls. At the state level, South Dakota voters approved Medicaid expansion, where over 40 percent of the state’s uninsured adults could now gain access to coverage—another clear sign that voters, regardless of party affiliation, are behind the ACA’s expanded vision for the safety net program. 

Moving forward, a closely divided Congress is unlikely to take on significant healthcare legislation, regardless of who ultimately holds the House and Senate.

Big payers ranked by Q3 profits

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https://www.beckerspayer.com/payer/big-payers-ranked-by-q3-profits.html?utm_medium=email&utm_content=newsletter

The nation’s largest payers have filed their third-quarter earnings reports, revealing which grew their profits the most year over year.

1. UnitedHealth Group: $5.3 billion
The company’s third quarter earnings increased over 28 percent year over year. Total net earnings in 2022 are $15.7 billion, an increase of 16.2 percent from $13.5 billion in 2021.

2. Cigna: $2.8 billion
The company’s third quarter earnings increased over 70 percent year over year. Total net earnings in 2022 are $5.5 billion, an increase of over 29 percent from $4.2 billion in 2021.

3. Elevance Health: $1.6 billion
The company’s third quarter earnings increased over 7 percent year over year. Total net earnings in 2022 are $5.06 billion, an increase of nearly 2 percent from $5 billion in 2021.

4. Humana: $1.2 billion
The company’s third quarter earnings decreased over 21 percent year over year. Total net earnings in 2022 are $2.8 billion, a decrease of over 4 percent from $2.9 billion in 2021.

5. Centene: $738 million
The company’s third quarter earnings increased over 26 percent year over year. Total net earnings in 2022 are $1.4 billion, an increase of over 89 percent from $748 million in 2021.

6. CVS Health: $3.4 billion losses
The company’s third quarter losses are attributable to an opioid legal settlement. Total net earnings in 2022 are $1.9 billion, a decrease of over 71 percent from $6.6 billion in 2021.