A nurse was charged with murder Aug. 23 for allegedly causing the death of a 97-year-old patient at Baptist Health Lexington (Ky.), the Lexington Police Department said in a statement.
Eyvette Hunter, RN, was indicted in the death of James Morris. Ms. Hunter “intentionally performed actions of medical maltreatment” to Mr. Morris on April 30, and he died as a result of those actions on May 5, police said.
Ms. Hunter’s nursing license was also suspended this week, according to the Kentucky Board of Nursing.
The order suspending her license said Ms. Hunter administered lorazepam, a sedative, to Mr. Morris without a physician’s order, according to WKYT. Another nurse found the patient a short time later with labored breathing, and he died May 5. His cause of death was listed as aspirational pneumonia.
Ms. Hunter admitted to administering the drug to Mr. Morris without an order, according to WKYT.
“We have learned that a former nurse at our hospital has been arrested on criminal charges. The nurse has not worked here since April 30,” Baptist Health said in an Aug. 23 statement, according to WKYT. “The nurse was terminated and was reported to the Kentucky Board of Nursing. The hospital has fully cooperated with the police investigation. Patient care and safety are always our top priorities. Out of respect for the family and because this is a criminal matter, we are not able to talk about the investigation.”
UPMC reported higher revenue in the first half of this year than in the same period of 2021, but the Pittsburgh-based health system’s operating income declined year over year, according to financial documents released Aug. 23.
UPMC reported revenue of $12.5 billion in the first six months of this year, up from $12.2 billion in the same period of 2021.
Expenses also increased year over year. UPMC reported operating expenses of $12.4 billion in the first half of this year, up from $11.6 billion a year earlier. Expenses increased across all categories, including supplies and salaries and benefits.
“Throughout 2022, the continued effect of COVID-19, along with conditions in the labor and supply markets have resulted in cost growth in employment, staffing and other operating expenses in excess of revenue growth,” UPMC management wrote in the financial filing.
The health system ended the first half of this year with operating income of $81.9 million, down 86 percent from $604.6 million in the same period last year. UPMC’s operating margin was 0.7 percent for the first half of this year, compared with 5 percent in the same period last year.
UPMC reported a net loss of $844.1 million in the first half of this year, compared to net income of $1.1 billion in the same period of 2021. The system’s loss from investing and financing activities totaled $865.9 million in the first two quarters of 2022, compared to a gain of $531.1 million in the same period a year earlier.
Credit rating downgrades for several hospitals and health systems were tied to capital expenditures and cash flow issues in recent months.
The following six hospital and health system credit rating downgrades occurred since June:
Boone Hospital Center (Columbia, Mo.) — lowered in August from “Ba1” to “Ba3” (Moody’s Investors Service) “The downgrade to ‘Ba3’ reflects the continued and material deterioration of unrestricted cash, along with simultaneous operational challenges facing BHC,” Moody’s said. “Operating headwinds, along with recent turnover in senior management, will contribute to challenges in attaining performance improvements. These headwinds will include elevated labor and supply costs, partly raised by supply chain system implementation issues, and volume disruption, which has been exacerbated by the on-going pandemic, as well as the absence of state or federal funds in 2022.”
Jackson Hospital (Montgomery, Ala.) — lowered in August from “Baa3” to “Ba3” (Moody’s Investors Service) “The downgrade to ‘Ba3’ reflects Jackson Hospital & Clinic’s material and recent deterioration of operating performance and unrestricted cash through June 2022,” Moody’s said. “As a result, headroom to both the debt service coverage and days cash on hand covenants has been materially reduced increasing the risk of a covenant violation, which could lead to immediate acceleration of debt, a governance consideration under our ESG framework.”
Memorial Health System (Marietta, Ohio) — lowered in July from “BB-” to “B+” (Fitch Ratings) “The downgrade of the IDR to ‘B+’ reflects MHS’s weak net leverage profile through Fitch’s forward-looking scenario analysis given stated growth and spending objectives,” Fitch said. “While operating performance has stabilized over the past three years … and reflects cost efficiency strategies and pandemic relief funding, improved cash flow funded higher levels of capital spending in fiscals 2020 and 2021.”
Doylestown (Pa.) Hospital — lowered in June from “Ba1” to “Ba3” (Moody’s Investors Service) “The downgrade to Ba3 reflects Doylestown Hospital’s … significant and recent decline in operating performance and unrestricted cash reserves through fiscal 2022, which have materially reduced headroom to the days cash on hand covenant (100 days) and increases the risk of an event of default and immediate acceleration as soon as June 30, 2022, a governance consideration under our ESG framework,” Moody’s said.
Jupiter (Fla.) Medical Center — lowered in June from “BBB+” to “BBB” (Fitch Ratings) “The ‘BBB’ rating reflects JMC’s increased leverage profile with the issuance of $150 million in additional debt to fund various campus expansion and improvement projects,” Fitch said. “While favorable population growth in the service area and demonstrated demand for services in an increasingly competitive market justify the overall strategic plan and project, the additional debt weakens JMC’s financial profile metrics and increases the overall risk profile.”
South Shore Hospital (South Weymouth, Mass.) — lowered in June from “BBB+” to “BBB” (Fitch Ratings) “The downgrade to ‘BBB’ reflects SSH’s track record of very weak operating performance over the last four fiscal years, exacerbated by staffing shortages and other pandemic-related challenges, which are stymying the system’s efforts towards an operational turnaround,” Fitch said.
While Advocate Aurora Health’s year-to-date operating income sits at $51.2 million, $666 million in investment declines weigh heavy on its bruised bottom line.
Following a tight first quarter, Advocate Aurora Health managed to grow its operating margin but still landed negative due to $400 million in investment losses during the quarter ended June 30, according to financial filings.
The 27-hospital nonprofit—which pending regulatory review slated to merge with Atrium Health in one of the year’s biggest hospital transactions—reported a $48.7 million operating income during its second fiscal quarter of 2022 (1.7% margin).
This is up from the $2.5 million (0.3% margin) it scraped out earlier this year but well below the $213.7 million (6.5% margin) of Q2 2021.
Revenues for the quarter increased 1.5% year over year to more than $3.5 billion. While patient service revenue and other revenue both grew by tens of millions, capitation revenue declined slightly due to a shift in overall membership mix and a 6.1% dip in capitated lives, the system wrote in its filing.
Discharge volumes fell 7.7% year over year during the most recent quarter, as did home care visits by 7.6%. The system saw increases compared to the previous year among its observation cases (11.6%), hospital outpatient visits (2.1%) and physician visits (7.1%).
Advocate Aurora’s expenses grew at a faster rate, at 6.7% year over year during the second quarter. The increase was led by a 10.2% jump in salaries, wages and benefits payouts, which the system said was fueled by a blend of higher nurse agency costs, higher merit and premium pay for clinical care and volume-driven demand for more full-time equivalent employees.
The nonprofit saw last year’s investment gains largely upended, recording a $400 million net loss during the quarter compared to the $571.6 million gain of the prior year’s equivalent quarter.
The shortfall dragged Advocate Aurora’s net income to a $347.6 million loss for the quarter. It had logged a $545.6 million gain the previous year.
Looking at six-month numbers, the health system reported $7.1 billion in total revenue and $7 billion in total expenses for an operating income of $51.2 million. Year-to-date investment losses landed at $666 million, bringing the organization to a $600.8 million net loss.
Advocate Aurora was formed in 2018 from the merger of nonprofits Advocate Health Care and Aurora Health Care. It treats 2.6 million unique patients, employs 75,000 people and logged just under $14.1 billion in total revenue across 2021 and a net income of more than $1.8 billion.
Should its merger plans go through, Advocate Aurora and Atrium Health would control 67 hospitals and $27 billion of combined revenues across six states. The deal is anticipated to close before the end of the year, according to the earnings filing.
The system’s latest numbers will come as no surprise in light of similar quarterly reports from Advocate Aurora’s nonprofit contemporaries.
Investment struggles and increased expenses were reported across the board, although not every major system was able to keep operations in the black. Mayo Clinic, Kaiser Permanente and UPMC were among those on the stronger side of the scale while Sutter Health, Mass General Brigham and Providence each reported tens to hundreds of millions in operational losses.
Fitch Ratingswarned last week that these sector-wide challenges are unlikely to vanish during the remainder of the year. As such, the agency has downgraded its outlook for the nonprofit hospital industry from “neutral” to “deteriorating.”
Three years after it began piloting a primary care service for its employees that blended telehealth and in-person medical services, Amazon plans to cease operations of its Amazon Care service.
Amazon announced Wednesday afternoon that it would end Amazon Care operations after December 31. In an email to Amazon Health Services employees, Neil Lindsay, senior vice president of Amazon Health Services, said Amazon Care wasn’t a sustainable, long-term solution for its enterprise customers.
Amazon provided a copy of the email to Fierce Healthcare.
The decision only impacts Amazon Care and Care Medical teams and not Amazon’s other healthcare services.
While operating Amazon Care, the company “gathered and listened to extensive feedback” from its enterprise customers and their employees and evolved the service to continuously improve the experience for customers.
“However, despite these efforts, we’ve determined that Amazon Care isn’t the right long-term solution for our enterprise customers, and have decided that we will no longer offer Amazon Care after December 31, 2022,” Lindsay wrote.
“This decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term,” he said.
The online retail company piloted virtual urgent care and primary care service with its employees and their families in the Seattle region in 2019.
Amazon Care has since expanded rapidly with telehealth services available in all 50 states and in-person services in at least seven cities, including Dallas, D.C. and Baltimore. As part of its ambitions in healthcare, Amazon then focused on ramping up partnerships with employers and signed on other companies as clients including Silicon Labs, TrueBlue, Whole Foods Market, Precor—a Washington-based fitness equipment company that was acquired by Peloton—and Hilton.
Some industry insiders have said that Amazon Care struggled to gain a foothold with employer clients.
The company was on track to rapidly expand its hybrid care model to more than 20 additional cities in 2022, including major metropolitan areas like San Francisco, Miami, Chicago and New York City.
If the One Medical deal goes through, it would significantly expand Amazon’s foothold in the nearly $4 trillion healthcare market, specifically in the competitive primary care market.
One Medical markets itself as a membership-based, tech-integrated, consumer-focused primary care platform. The company operates 188 offices in 29 markets. At the end of March, One Medical had 767,000 members.
The deal also gives Amazon rapid access to the lucrative employer market as One Medical works with 8,000 companies.
The One Medical acquisition has not yet closed.
Lindsay said the company’s work building Amazon Care has deepened its understanding of “what’s needed long-term to deliver meaningful health care solutions for enterprise and individual customers.“
“I believe the health care space is ripe for reinvention, and our efforts to help improve the health care experience can have an immensely positive impact on our quality of life and health outcomes. However, none of these reasons make this decision any easier for the teams that have helped to build Amazon Care, or for the customers our Care team serves,” he wrote.
The decision to cease Amazon Care’s operations will likely mean some employees will be laid off. Lindsay said in his email to employees that many Amazon Care employees will have an opportunity to join other parts of the Health Services organization or other teams at Amazon. “Well also support employees looking for roles outside of the company,” he said.
Before 2011, Medicare Advantage health plans absorbed a greater share of Medicare enrollment because traditional Medicare enrollees were transitioning to Medicare Advantage plans. From 2011 to 2019, Medicare Advantage enrollment continued to increase but the source changed.
The researchers used the Master Beneficiary Summary File from 2011 to 2019 to inform their study of the source of Medicare Advantage enrollment during that timeframe. These files provided over 524.4 million person-years.
Medicare Advantage still drew enrollees from traditional Medicare from 2012 to 2019, with the share of those who came from Medicare Advantage growing from 65.9 percent to 71.1 percent.
The number of enrollees that were new to Medicare who chose Medicare Advantage coverage also grew. A little over 18 percent of enrollees who did not have Medicare coverage previously transitioned into Medicare Advantage in 2012. But by 2019, that share had swelled to 24.7 percent.
Beneficiaries who switched to Medicare Advantage from traditional Medicare tended to be older. Fewer of them identified as Hispanic individuals but more of them identified as Black individuals. Additionally, they were more likely to be dually eligible and more likely to have a disability. Finally, they were more likely to die within two years of enrolling in Medicare Advantage.
“Our study is limited in that it was not designed to examine these mechanisms,” the researchers acknowledged. “As MA continues to grow, understanding the reasons for switching from TM to MA will become more important.”
Although the study did not explicitly explore the causes behind these enrollment shifts, the researchers cited three factors that might contribute to the growth and diversity of the Medicare Advantage population.
First, they noted that Medicare Advantage plans offer supplemental benefits and dental and vision coverage, which traditional Medicare does not cover.
In 2022, more Medicare Advantage plans offered more supplemental benefits, including special supplemental benefits for the chronically ill (SSBCI), expanded supplemental benefits, and traditional supplemental benefits, according to a Better Medicare Alliance brief.
Second, Medicare Advantage plans offer lower out-of-pocket healthcare spending compared to traditional Medicare.
Finally, Medicare Advantage might be more attractive due to the lower premiums.
In 2022, costs were particularly low since Medicare Advantage premiums dropped to the lowest level in 15 years, 10 percent lower than in 2021, the Better Medicare Alliance report shared.
The results corroborate separate studies that show that the Medicare Advantage population is growing and becoming more diverse.
In more than 100 congressional districts, Medicare Advantage coverage represents half or more of enrollment, according to Better Medicare Alliance research. Medicare Advantage coverage is particularly strong in Alabama, Michigan, and Florida.
Medicare Advantage plans grew 60 percent from 2013 to 2020. By 2020, Medicare Advantage plans served 25 million seniors, of which six out of ten were women. Also, more than half of all Hispanic American seniors (52 percent), 49 percent of African American seniors, and 35 percent of Asian Americans selected Medicare Advantage plans for their coverage.
The Biden Administration has released final surprise billing rules implementing the No Surprises Act, a federal law enacted in January 2021 that protects patients from out-of-network medical bills when they seek care at in-network facilities.
The new surprise billing rules detail the process for payers and providers to settle on payment for those out-of-network services. Previously, payers and providers would submit payment rates to an independent arbiter, selected by the government. The arbiter would choose the rate closest to the area’s median in-network payment for the services, otherwise known as the qualifying payment amount (QPA), while considering other factors, such as provider training and experience, the provider’s market share, and how difficult it was to provide the service, after the fact.
Provider groups have criticized the use of the QPA as the primary factor in an arbiter’s decision, arguing that the added weight to the QPA amount favors payers over providers.
Notably, the Texas Medical Association challenged the surprise billing arbitration process over the QPA issue and won. A district court vacated the requirement that arbiters select payment offers closest to the QPA unless the additional information warrants a closer review.
The American Hospital Association (AHA) and the American Medical Association (AMA) have also filed a lawsuit challenging the interim final rule implementing the dispute process, arguing that lawmakers did not intend for rules implementing the No Surprises Act to place that much emphasis on the QPA. The lawsuit is ongoing.
In light of the district court’s decision, the latest final surprise billing rules roll back the “rebuttable presumption” that favors the QPA. The rules state that arbiters are to consider the QPA “and then must consider all additional information submitted by a party to determine which offer best reflects the appropriate out-of-network rate.”
The final rules specify that arbiters “should select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties.”
The final rules also cover situations where payers have “downcoded” a claim. According to previous rulemaking, downcoding occurs when payers change service codes or change, add, or remove a modifier, which can lower the QPA for the service code or modifier billed by a provider.
The rules will create new requirements related to what information payers must share with providers when downcoding occurs. The information includes a statement that the service code or modifier was downcoded, an explanation of why the claim was downcoded, and the amount that would have been the QPA had the service code or modifier not been downcoded.
The Biden Administration—through the Departments of Labor, Health and Human Services, and Treasury, which officially released the final surprise billing rules—said that the rules “will help providers, facilities and air ambulance providers engage in more meaningful open negotiations with plans and issuers and will help inform the offers they submit to certified independent entities to resolve claim disputes.”
But whether the updated language is enough to tip the balance for providers remains to be seen. AHA said in a news release late last week that it is closely reviewing the final surprise billing rules.
From the spring of 2021 through June of this year, the U.S. has been in a period of high and rising economywide price inflation. Pressures such as labor scarcities, global energy interruptions, and supply chain disruptions have made everything from consumer goods to business services more expensive. Yet, in our ongoing series of Health Sector Economic Indicators (HSEI) briefs, we have been detailing data that find, quite surprisingly, overall inflation for the health care sector—as measured by the aggregate Health Care Price Index (HCPI)—has remained in a very tight and modest range, rarely exceeding three percent year-over-year growth or falling beneath two percent growth. In our monthly briefs, we have explored how factors such as the time it takes for new contracts and reimbursement rates to take effect and recent policy changes restraining public health care costs have kept overall health care inflation well below economywide rates. As these factors continue to play out, the recently-released July price data are revealing what may be a key inflection point in Medicare and private insurance prices for health care services.
In July, the prices paid for many types of health care from these two major payer types diverged substantially. Medicare prices fell by nearly a full percentage point, putting overall Medicare services prices below the levels seen back in January 2021 (Exhibit 1). These declining Medicare prices are due to two major factors: very low or no increases in the statutory reimbursement rates for hospital care and physician services in the calendar year 2022 and the re-institution of the mandated sequestration cuts for Medicare provider payments in April and July of this year. These sequestration cuts, which had been postponed for many years since they were updated in 2011, are having a meaningful impact as seen in the chart below (click on link above). The impact of the two sequestration cuts can be seen clearly in the data, pulling down Medicare prices between March and April and then between June and July across all three major settings of care as first a 1% and then a 2% cut were put in place. Due to the fact that physician services received relatively smaller baseline increases in new Medicare rates for 2022, the sequestration cuts have pulled those price levels the lowest, down by 2.2% since January 2021. Medicare price changes for nursing homes care fall in between hospitals and physician services, down by 1.0% since January 2021.
At the same time Medicare prices are falling, the prices for similar types of care paid by private insurance increased substantially in July, up a full percentage point from the previous month and 5.4% higher than the price levels in January 2021 (Exhibit 2). We believe many of these increases are occurring as new contracts or updated rates are slowly taking effect, and further expect there may be a noticeable discrete jump in private prices beginning in 2023, as recent comments from providers and insurers are stating 2023 negotiations are generally favoring providers. We can see in the data that it appears hospitals are experiencing much higher private price growth than other components (up 7.2% since January 2021) and faster recent growth, with price levels increasing by nearly a full percentage point in each of the past three months. Physician services are the next fastest growing component, while nursing home private prices have barely moved since the beginning of 2021. Faster increases in hospital prices may indicate stronger negotiating positions for those providers, particularly given ongoing consolidation in the industry over the past ten years.
When looking at the HCPI in aggregate, these two diverging trends have been cancelling out, leading to overall moderate growth in health care prices. Yet, these detailed, by-payer data indicate that significant trends in health care prices are occurring underneath, with the long-expected increases in private prices beginning to follow overall economywide inflation trends. All else equal, these price increases in care paid by private insurance will further exacerbate an already wide gap between public and private prices. This is especially true for hospital care, where the disparity between Medicare and private prices diverged by a whopping 7.2 percentage points in the last eighteen months. The most important factors driving the trends going forward for private prices will be the extent to which overall economywide inflation slows and who has the balance of power in insurer/provider contract negotiations. For public prices, government policy decisions will continue to be most important influencer of their growth. We expect to follow all these factors and the overall impact of the diverging data on overall health sector inflation in our ongoing series of HSEI briefs through the rest of the year and into 2023.
Intermountain Healthcare reported net income of $2.7 billion in the first six months of the year, despite a heavy loss on investments and flagging operating income.
The 46% year-over-year jump in net income for the Utah-based nonprofit was spurred by more than $4 billion in contribution from its merger with SCL Health that closed in April, according to recent financial documents.
Intermountain and SCL entered into a merger agreement to combine their health systems in December. The merger was completed in April, creating a $12 billion system and expanding Intermountain’s reach into Colorado.
In its first financial filing since the affiliation, 33-hospital Intermountain, which also manages hundreds of clinics across seven states, reported revenues of $6.5 billion in the first six months of 2022, up 25% year over year.
Expenses climbed 31% to $5.9 billion, driven primarily by growth in employee compensation and benefits and increasingly pricey supplies.
Net operating income was $285 billion, down 38% year over year.
Intermountain’s inpatient admissions and hospital outpatient visits ticked down 1% and 7% respectively, though its emergency rooms visits climbed 11%. Visits at the system’s non-hospital clinics were also up 11%.
Inpatient surgeries were down 2% while outpatient surgeries were up 4%, suggesting a broader shift away from care being delivered in the hospital setting.
Intermountain’s results mirror those of other large U.S. systems in 2022 so far, as major for-profit chains report lower operating income and admissions. Tight competition for labor amid ongoing workforce shortages has resulted in skyrocketing labor expenses while inflation and supply chain pressures has ratcheted up the cost of hospital supplies needed to provide patient care.
Some of the biggest nonprofits in the U.S. have reported net losses in the second quarter, including Kaiser Permanente and Sutter Health. Nonprofit giant Providence reported an operating loss of $934 million in the first half of 2022, citing cost and operational stressors. Providence plans to restructure and cut executive roles in a bid to become a nimbler organization.
On Tuesday, ratings agency Fitch said its outlook for nonprofit hospitals is “deteriorating” amid elevated expense pressures, along with investment losses.
On Friday, Intermountain named Lydia Jumonville as interim CEO after Marc Harrison announced plans to depart the Salt Lake City-based system for the venture capital firm General Catalyst. Intermountain’s board is conducting a national search for a permanent chief executive, which it hopes to complete by the fall.
Tenet Healthcare and Steward Health Care System are battling in Delaware Chancery Court over whether Tenet can end information technology and data services to hospitals it sold to Steward last year, according to Law360.
Tenet entered into an agreement to sell five Florida hospitals to Steward last June, and the $1.1 billion deal closed less than two months later. Since the transaction closed, Tenet and Steward have been involved in litigation, with both Dallas-based organizations arguing they’re owed money.
Tenet claims Steward owes nearly $18.2 million and is insolvent, while Steward alleges Tenet owes more than $16.3 million and is obligated to continue providing the data and IT services to the hospitals now owned by Steward, according to Law360.
Vice Chancellor Sam Glasscock III ruled Aug. 1 that Steward and the five Florida hospitals must pay Tenet $2.8 million a month pending a final ruling in the case. The amount is based on the judge’s assessment of the likelihood Tenet will prevail in the case, according to Law360.
Mr. Glasscock wrote in his opinion that he finds it “readily conceivable” that Tenet will ultimately prevail on the issue of whether it has a right to terminate the services for nonpayment.
The Florida hospitals included in the sale were Coral Gables Hospital, Florida Medical Center in Lauderdale Lakes, Hialeah Hospital, North Shore Medical Center in Miami and Palmetto General Hospital in Hialeah.
HENRY KOTULA 