The AHA wants Congress to halt Medicare payment cuts and extend or make permanent certain waivers, among other requests.
The American Hospital Association has released a report on patient acuity that shows hospital patients are sicker and more medically complex than they were before the COVID-19 pandemic.
This is driving up hospital costs for labor, drugs and supplies, according to the AHA report.
Hospital patient acuity, as measured by average length of stay, rose almost 10% between 2019 and 2021, including a 6% increase for non-COVID-19 Medicare patients as the pandemic contributed to delayed and avoided care, the report said. For example, the average length of stay rose 89% for patients with rheumatoid arthritis and 65% for patients with neuroblastoma and adrenal cancer.
In 2022, patient acuity as reflected in the case mix index rose 11.1% for mastectomy patients, 15% for appendectomy patients and 7% for hysterectomy patients.
WHY THIS MATTERS
Mounting costs, combined with economy-wide inflation and reimbursement shortfalls, are threatening the financial stability of hospitals around the country, according to the AHA report.
The length of stay due to increasing acuity is occurring at a time of significant financial challenges for hospitals and health systems, which have still not received support to address the Delta and Omicron surges that have comprised the majority of all COVID-19 admissions, the AHA said.
The AHA is asking Congress to halt its Medicare payment cuts to hospitals and other providers; extend or make permanent certain waivers that improve efficiency and access to care; extend expiring health insurance subsidies for millions of patients; and hold commercial insurers accountable for improper and burdensome business practices.
THE LARGER TREND
Hospitals, through the AHA, have long been asking the federal government for relief beyond what’s been allocated in provider relief funds.
In January, the American Hospital Association sought at least $25 billion for hospitals to help combat workforce shortages and labor costs exacerbated by what the AHA called “exorbitant” rates on the part of some staffing agencies. The Department of Health and Human Services released $2 billion in additional funding for hospitals.
In March, the AHA asked Congress to allocate additional provider relief funds beyond the original $175 billion in the Coronavirus Aid, Relief and Economic Security Act.
Earlier this month, the Centers for Medicare and Medicaid Services increased what it originally proposed for payment in the Inpatient Prospective Payment system rule. The AHA said the increase was not enough to offset expenses and inflation.
Children, young adults will be impacted disproportionately, with 5.3 million children and 4.7 million adults ages 18-34 predicted to lose coverage.
Roughly 15 million people could lose Medicaid coverage when the COVID-19 public health emergency ends, and only a small percentage are likely to obtain coverage on the Affordable Care Act exchanges, according to a new report from the Department of Health and Human Services.
Using longitudinal survey data and 2021 enrollment information, HHS estimated that, based on historical patterns of coverage loss, this would translate to about 17.4% of Medicaid and Children’s Health Insurance Program (CHIP) enrollees leaving the program.
About 9.5% of Medicaid enrollees, or 8.2 million people, will leave Medicaid due to loss of eligibility and will need to transition to another source of coverage. Based on historical patterns, 7.9% (6.8 million) will lose Medicaid coverage despite still being eligible – a phenomenon known as “administrative churning” – although HHS said it’s taking steps to reduce this outcome.
Children and young adults will be impacted disproportionately, with 5.3 million children and 4.7 million adults ages 18-34 predicted to lose Medicaid/CHIP coverage. Nearly one-third of those predicted to lose coverage are Hispanic (4.6 million) and 15% (2.2 million) are Black.
Almost one-third (2.7 million) of those predicted to lose eligibility are expected to qualify for marketplace premium tax credits. Among these, more than 60% (1.7 million) are expected to be eligible for zero-premium marketplace plans under the provisions of the American Rescue Plan. Another 5 million would be expected to obtain other coverage, primarily employer-sponsored insurance.
An estimated 383,000 people projected to lose eligibility for Medicaid would fall in the coverage gap in the remaining 12 non-expansion states – with incomes too high for Medicaid, but too low to receive Marketplace tax credits. State adoption of Medicaid expansion in these states is a key tool to mitigate potential coverage loss at the end of the PHE, said HHS.
States are directly responsible for eligibility redeterminations, while the Centers for Medicare and Medicaid Services provides technical assistance and oversight of compliance with Medicaid regulations. Eligibility and renewal systems, staffing capacity, and investment in end-of-PHE preparedness vary across states.
HHS said it’s working with states to facilitate enrollment in alternative sources of health coverage and minimize administrative churning. These efforts could reduce the number of eligible people losing Medicaid, the agency said.
The Inflation Reduction Act of 2022extends the ARP’s enhanced and expanded Marketplace premium tax credit provisions until 2025, providing a key source of alternative coverage for those losing Medicaid eligibility, said HHS.
WHAT’S THE IMPACT?
While the model projects that as many as 15 million people could leave Medicaid after the PHE, about 5 million are likely to obtain other coverage outside the marketplace and nearly 3 million would have a subsidized Marketplace option. And some who lose eligibility at the end of the PHE may regain it during the unwinding period, while some who lose coverage despite being eligible may re-enroll.
The findings highlight the importance of administrative and legislative actions to reduce the risk of coverage losses after the continuous enrollment provision ends, said HHS. Successful policy approaches should address the different reasons for coverage loss.
Broadly speaking, one set of strategies is needed to increase the likelihood that those losing Medicaid eligibility acquire other coverage, and a second set of strategies is needed to minimize administrative churning among those still eligible for coverage.
Importantly, some administrative churning is expected under all scenarios, though reducing the typical churning rate by half would result in the retention of 3.4 million additional enrollees.
THE LARGER TREND
CMS has released a roadmap to ending the COVID-19 public health emergency as health officials are expecting the Biden administration to extend the PHE for another 90 days after mid-October.
The end of the PHE, last continued on July 15, is not known, but HHS Secretary Xavier Becerra has promised to give providers 60 days’ notice before announcing the end of the public health emergency.
A public health emergency has existed since January 27, 2020.
The virus has likely been circulating in U.S. cities intermittently for years, experts say.
The fact that poliovirus was detected in New York City wastewater samples as far back as April of this year shouldn’t be surprising, as the virus likely has been circulating for longer and more widely than previously believed, several experts told MedPage Today.
“I think you’re gonna see over the next weeks more and more reports of poliovirus in wastewater elsewhere,” said Vincent Racaniello, PhD, a virologist at Columbia University in New York City.
Poliovirus probably still circulated in the U.S. after 2000, when officials stopped giving the oral polio vaccine, he said. That version protects against paralysis and provides short-term protection against intestinal infection from poliovirus.
The transition to injectable polio vaccine, which is equally as effective against paralysis but not against intestinal infection, meant that the U.S. population was more susceptible to transmitting vaccine-associated poliovirus, he explained.
This circulation is likely occasional and sporadic, he said, but the threat to vulnerable populations is still high.
“Here’s the thing: polio is here in the U.S. It’s not gone,” Racaniello said. “It’s in the wastewater. It could contaminate you, so if you’re not vaccinated, that could be a problem.”
Calls for Nationwide Surveillance
Racaniello said there’s value in learning more about the circulation of the virus, especially for communities with low vaccination rates.
The first step to understanding how long and how broadly poliovirus is circulating, he said, is to start testing wastewater everywhere. The CDC used stored wastewater from April to confirm that the virus had been circulating then, but it is just as possible to conduct nationwide surveillance for poliovirus now, he noted.
In fact, Racaniello said, he has long believed that this kind of surveillance should be done routinely to provide an early detection system for poliovirus.
“Ten years ago, I said to the CDC, you should really be looking in the sewage for poliovirus because of this issue where it could come in from overseas and be in our sewage,” he said. “If someone is unvaccinated, that would be a threat to them, but [the CDC] never did it.”
Davida Smyth, PhD, of Texas A&M University-San Antonio, pointed out that the National Wastewater Surveillance System (NWSS) was established to detect COVID-19 in 2020, so the infrastructure to conduct a wide search for the spread of polio is available.
The primary issue, she said, is that the collaboration that academic researchers have enjoyed with the CDC in surveillance of COVID-19 is so far absent with poliovirus.
“I imagine the CDC is testing those samples for polio, even as we speak, given the nature of what has happened,” Smyth said.
Better coordination with academia and better surveillance, she said, is crucial for finding any potential pockets of poliovirus circulating in other communities around the U.S.
In fact, she said, she is “absolutely convinced” that more polio will be found in the coming weeks.
MedPage Today contacted the CDC to ask whether there are plans to use the NWSS to look for polio around the U.S., but as of press time had not received a response.
Smyth noted that most areas in the country have high rates of polio vaccination, but she is concerned about pockets of rural America where vaccination has dipped in recent years.Most states boast polio vaccination rates over 90%, but Smyth said in some regions, the percentages may be as low as the mid-30s.
“[In] the vast majority of the United States, the vaccination rates are quite high, but the COVID pandemic has led to a decrease in vaccination rates,” Smyth told MedPage Today. “The rates are going down. They’re dipping below 90%, which is shocking, frankly.”
Smyth said the decline is largely due to a lack of opportunity or access to healthcare in some areas, but vaccine hesitancy around the COVID-19 vaccine might be affecting polio vaccinations as well.
“There’s a variety of reasons why people don’t get vaccinated,” she said. “The problem is children are very vulnerable. So if you have a population where the vaccination rates drop, those are exactly the kinds of areas where we need to do this surveillance.”
Racaniello echoed the importance of polio vaccination in adults as well. If patients don’t have a record of their shot, “just vaccinate them,” he said, “because there’s no downside to getting vaccinated again.”
Re-evaluating the Polio Endgame
The recent case of paralytic polio infection and concerns over the wider circulation of poliovirus have also altered some of the thinking around the goal of polio eradication.
In fact, William Schaffner, MD, of Vanderbilt University Medical Center in Nashville, highlighted the unique difficulty of preventing the spread of poliovirus.
“As you can imagine, we’ve gotten into polio endgame,” he told MedPage Today. “I think the notion has now been modified. Eradication isn’t going to be as neat and clean and quick as we once thought. Once we get rid of all paralytic disease, we will have to keep vaccinating for a long time, because there will still be circulating vaccine-associated viruses — some of which will mutate back.”
Schaffner compared the final push to eradicate polio with the successful eradication of smallpox. When the last case of smallpox ended, he explained, public health officials were able to end smallpox vaccination campaigns. For polio, however, he said, it will likely not be that simple, and it will be necessary “to keep vaccinating for quite a long time.”
He said that as public health officials in the U.S. and globally continue to grapple with the nuances of eradicating poliovirus, healthcare providers and their patients will have to come to terms with the simple fact that polio is a real health concern.
“[It’s] the reverse of the old saying, ‘it’s gone, but not forgotten,'” Schaffner said. “Polio is forgotten, but it’s not gone.”
Radio Advisory’s Rachel Woods sat down with Advisory Board’s Sarah Hostetter and Vidal Seegobin to discuss the good and bad elements of private equity and what leaders can do to make it a valuable partner to their practices.
Private equity (PE) tends to get a bad rap when it comes to health care. Some see it as a disruptive force that prioritizes profits over the patient experience, and that it’s hurting the industry by creating a more consolidated marketplace. Others, however, see it as an opportunity for innovation, growth, and more movement towards value-based care.
Radio Advisory’s Rachel Woods sat down with Advisory Board‘s Sarah Hostetter and Vidal Seegobin to discuss the good and bad elements of PE and what leaders can do to make it be a valuable partner to their practices.
Rachel Woods: Clearly there are a lot of feelings about private equity. I’m frankly not that surprised, because the more we see PE get involved in the health care space, we hear more negative feelings about what that means for health care.
Frankly, this bad guy persona is even seen in mainstream media. I can think of several cable medical dramas that have made private equity, or maybe it’s specific investors, as the literal enemy, right? The enemy of the docs that are the saviors of their hospital or ER or medical practice. Is that the right way we should be thinking about private equity? Are they the bad guy?
Sarah Hostetter: The short answer is no. I think private equity is a scapegoat for a lot of the other problems we’re seeing in the industry. So the influx of money and where it’s going and the influence that that has on health care. I think private equity is a prime example of that.
I also think the horror stories all get lumped together. So we don’t think about who the PE firm is or what is being invested in. We put together physician practices and health systems and SNPs, and we lump every story all together, as opposed to considering those on their individual merits.
Woods: And feeds to this bad guy kind of persona that’s out there.
Hostetter: Yeah. And like you said, the media doesn’t help, right? If the average consumer is watching and seeing different portrayals or lumped portrayals, it’s not helping.
Vidal Seegobin: Private equity, as all actors in our complex ecosystem, is not a monolith, and no one has the monopoly on great decisions in health care, nor do they have a monopoly on the bad decisions in health care. And so if you attribute a bad case to private equity, then you also have to attribute the positive returns done from a private equity investment as well.
Hostetter: Agree with what Vidal’s saying, but bottom line is that every stakeholder is not going to have the same outcomes or ripple effects from a private equity deal. It really depends on the deal itself, the market, and the vantage points that you take.
Woods: I want to actually play out a scenario with the two of you and I want you to talk about the positive and the potentially negative consequences for different sectors or different stakeholders.
So let’s take the newest manifestation that Sarah, you talked to us through. Let’s say that there is a PE packed multi-specialty practice heavily in value-based care. That practice starts to get bigger. They acquire other practices, including maybe even some big practices in a market and they start employing all of the unaffiliated or loosely affiliated practices in the market.
I am guessing that every health system leader listening to this episode is already starting to sweat. What does this mean for the incumbent health system?
Seegobin: So I think one thing that’s going to be pretty clear is that size does confer clear advantages and health care is part and parcel that kind of benefit. What I think is challenging is when we’re entering into a moment where access to capital is challenging for health systems in particular and we’re going to need to scale up investments, health systems could see themselves falling further and further behind as private equity makes smart investments into these practices to both capture and retain volume. And as a consequence of that, reduces the amount of inpatient demand or the demand to their bread and butter services.
Hostetter: And I think it’s really important that you phrase the question, Rae, as health system. Because we so often equate health system and hospital.
But a health system includes lots of hospitals, it includes ambulatory facilities, a range of services. And so I think for systems to equate health system and hospital, it’s really hard when any type of super practice or large backed practice comes into the market.
Whether we are talking about a plan backed practice, a PE backed practice, or just a really large independent group. There are pressures on health systems who think of their job or their primary service as the hospital. And there is a moment where the power dynamics can shift in markets away from the health system, if they aren’t able to pivot their strategy beyond just the hospital.
Woods: Which is exactly why health systems see this scenario as, let’s just say it, threatening. Sarah, then how do the physicians feel? Do they have the opposite feelings as the incumbent health systems?
Hostetter: There’s a huge range. Private equity is incredibly polarizing in the physician practice world, the same way that it is in other parts of the industry. So I think there is a hope from some practices that private equity is a type of investor that is aligned with them.
Physicians who go into private practice historically tend to be more entrepreneurial. They are shareholders in their own practice, so there are some natural synergies between private equity, business minded folks, and these physicians.
Also, even though I go into a small business, it takes a lot to run a small business, so there are potentially welcome synergies and help that you can get from a PE firm. On the flip side of that, there are groups who would never in a million years consider taking a private equity investment and are unwilling to have these conversations.
Woods: There is a tendency, especially in the conversation that we’re having, for folks to think about private equity as being something that primarily impacts the provider space, at least when it comes to health care. But I’m not sure that that’s actually true. So what consequences, good or bad, might the payers feel? Might the life sciences companies feel?
Seegobin: So one common refrain when talking about private equity and their acquisition or partnering with traditional health care businesses like physician practices is that they are immediately focused on cutting costs. So they are going to consolidate all of the purchasing contracts, they are going to make pretty aggressive decisions about real estate, all the types of cost components that run the business.
Now, if you are a kind of life sciences or a diagnostic business for whom you would depend on being an incumbent in those contracting decisions, you’re worried that the private equity is either going to direct you to a lower cost provider, or in many cases, another business that the private equity firm owns as well, right?
They would love to keep synergies within the portfolio of businesses that they’ve acquired and they partner. So if you were relying on incumbent or historical purchasing practices with these physician practices, it can be disrupted, depending on the arrangement.
Hostetter: And then I think there’s a range of potential implications for payers. So you have some payers who themselves are aggregating independent practices, and they’re targeting the same type of practices that the PE firms that are betting on value-based care are targeting. They are targeting primary care groups who are big in Medicare Advantage. So there’s some inherent competition potentially for the physician practice landscape there.
Woods: Well, and I think they’re trying to offer the same thing, right? They’re trying to offer capital. They’re trying to do that with the promise of autonomy. And they’re coming up against a competitive partner that is saying, “I can do both of those things and I can do it better and faster.”
Hostetter: Yeah. And both of them are saying we can do it better and faster than hospitals. That’s the other thing, right?
Woods: Which, that part is probably true.
Hostetter: Yeah. Their goals are aligned and they believe they can get there different ways. And I think autonomy is a big sticking point here for me or a big bellwether for me, because I think whoever can get to value-based care while preserving autonomy is going to win. You have to have some level of standardization to do value-based care well. You can’t just let everyone do whatever they want. You need high quality results for lower cost. That inherently requires standardization. So who can thread the needle of getting that standardization while preserving a degree of autonomy?
It’s fascinating, as we’ve had this call, it was suggested multiple times that payers actually might be the end of the line for some of these PE deals. That there’s a lot of alignment between what payers are trying to do with their aggregation and what PE firms who are investing in primary care do, and hey, payers have a lot of money too. So could we actually see some of these PE deals end with a payer acquisition? Because they’re trying to achieve similar things, just differently.
Despite efforts to curtail high expenses, rising inflation and declining federal aid have led many hospitals to begin laying off workers and cutting certain services, Katheryn Houghton writes for Kaiser Health News.
Hospital costs have skyrocketed during the pandemic
At the beginning of the pandemic, hospitals’ financial challenges were largely related to the costs of responding to Covid-19 and missed revenue due to delayed care. However, hospital leaders now say their financial situations are a result of the omicron surge, rising inflation, and growing staffing challenges.
Many hospitals received millions of dollars in federal aid during the pandemic, but much of that money has since dwindled. For example, Bozeman Health said it received $20 million in aid in 2020, but this decreased to $2.5 million in 2021 and around $100,000 in 2022.
Many health systems say low surgery volumes, high supply costs, higher acuity patients, and languishing investments have all contributed to their declining revenues and growing expenses. In particular, labor costs have increased significantly during the pandemic, particularly as staffing shortages pushed hospitals to use more contract workers.
“If you talk with just about any hospital leader across the country, they would put workforce as their top one, two, and three priorities,” said Akin Demehin, senior director of quality and patient safety policy for the American Hospital Association.
According to Brad Ludford, CFO at Bozeman Health, the system spent less than $100,000 a month on contract workers before the pandemic, but that has now increased to roughly $1.4 million a week. Overall, the health system’s labor costs have increased around 12% from the same time last year, reaching around $20 million a month, during the first half of the year.
John Romley, a health economist and senior fellow at the Schaeffer Center for Health Policy and Economics at the University of Southern California, said some hospitals are likely now losing money, particularly with less federal aid coming in and growing inflation on top of their already high expenses.
For example, Bozeman Health president and CEO John Hill said the health system spent $15 million more than it earned in the first six months of the year. Several other health systems, including Providence, have also reported net operating losses this year.
Hospitals lay off workers, cut services to help reduce expenses
To reduce expenses, many hospitals are beginning to lay off workers and cut certain services, which has forced some patients to travel farther to receive care.
For example, Bay Area Hospital in Oregon recently ended 56 contracts with travel nurses and cut its inpatient behavioral health services due to the high costs of quickly filling vacant positions. Hospitals in California, Mississippi, New York, Oregon, and other states have also had to reduce the sizes of their workforces.
St. Charles Health System, headquartered in Bend, Oregon, laid off 105 workers and eliminated 76 vacant positions in May. The system’s CEO at the time, Joe Sluka, said, “It has taken us two pandemic years to get us into this situation, and it will take at least two years for us to recover.”
Similarly, Bozeman Health has laid off 28 workers in leadership positions and has not been able to provide inpatient dialysis at its largest hospital for months.
According to Hill, Bozeman took several other measures before deciding to cut jobs, including stopping out-of-state business travel, readjusting workloads, and reducing executive compensation. At the same time, it worked to transition contract workers to full-time employees and offered existing staffers a minimum-wage increase.
However, “[i]t still has not been enough,” Hill said. The health system currently has 487 open positions for essential workers.
According to Vicky Byrd, an RN and CEO of the Montana Nurses Association, hospitals should be offering longtime employees the same incentives they use to recruit new workers, such as bonuses for longevity and premium pay for taking extra shifts, to increase retention.
“It’s not just about recruiting — you can get anybody in the door for $20,000 bonuses,” Byrd said. “But how are you going to keep them there for 10 or 20 years?”
Going forward, some hospitals are considering automating more of their services, such as allowing patients to order food through an iPad instead of an employee, and are trying to adjust workloads, including having more flexible schedules, to retain their current workers.
“Now that we’ve adapted to life with covid in many regards in the clinical setting, we are dealing with the repercussions of how the pandemic impacted our staff and our communities as a whole,” said Wade Johnson, CEO of St. Peter’s Health.
HENRY KOTULA 