Population health initiatives are stalling

Numerof’s annual report indicates some disturbing trends are emerging in industry’s progress to new models of care. Financial loss, culture, and cancelation of mandatory bundled pricing programs may be to blame.

While healthcare executives agree that population health is essential, most organizations are dragging their feet when it comes to embracing these new models of care, according to The State of Population Health Fourth Annual Numerof Survey Report.

The report, produced by global healthcare consultancy Numerof & Associates in partnership with David B. Nash, MD, MBA, founding dean of the Jefferson College of Population Health at Jefferson in Philadelphia, is based on surveys and interviews conducted with more than 500 C-Suite healthcare executives between August and October 2018.


While 94% of respondents agree that population health is the future, and 99% predict that they will have revenue in upside gain/downside risk models in the next two years, the majority of respondents in risk-based agreements report that 10% or less of revenue came through such contracts. Compared to earlier surveys conducted by Numerof, this measure remains flat and fell significantly short of the projections by previous respondents regarding how much revenue would be at risk in 2018.

A Numerof executive posits that the absence of external pressure may be partially responsible for the stall in population health initiatives, but warns that that outside forces may change the game.

“Healthcare delivery organizations may breathe a sigh of relief as policymakers ease the pressure for change, but their comfort should be short-lived, as a slew of nontraditional competitors like Amazon, JPMorgan, Berkshire Hathaway, Apple, Google and others are on the prowl,” said Michael Abrams, managing partner of Numerof & Associates in the news release. “A $3 trillion industry with a deeply dissatisfied customer base is attracting a wave of innovation from entities that aren’t beholden to the old ways of doing business.”


The report also provides other details:

  • Financial loss is the largest barrier to assuming risk. Nearly 25% of respondents cited financial loss as the biggest challenge for adapting to models based on risk. Other roadblocks include challenges related to changing the culture. In addition, policy uncertainty at the federal level also may contribute to hesitancy. “The cancellation of several mandatory bundled pricing programs in favor of voluntary versions has raised questions about the future of value-based care, just as many administrators were beginning to accept it as inevitable,” according to a news release.
  • Smaller organizations are behind. The survey indicates 90% of large hospitals had at least one contract based on risk, compared to the 71% of smaller organizations.
  • Despite some progress, cost and quality management is lacking. When asked about management in cost variation, 61% of respondents rated their organization as average or worse than average. This reflects an improvement of only 8% over three years.

“Healthcare is an industry in transition, but the resistance to necessary change is deeply entrenched,” said Numerof President Rita Numerof, PhD in the release. “Rather than embracing new models that they perceive as risky and difficult to manage, providers are trying to muddle their way through as long as possible.”


Numerof’s fourth annual State of Population Health survey report summarizes online responses gathered between August to October 2018 from more than 500 executives in urban, suburban, and rural locations across the United States. Open-ended interviews with select executives provided deeper insights. Participants include physician group executives and vice presidents, as well as individuals working in U.S. provider organizations including healthcare systems, hospitals, and academic medical centers. Respondents represent a wide range of delivery organizations, including standalone facilities, small systems, and IDNs; for-profit, not-for-profit and government institutions; and academic and community facilities.




4 hospitals file for bankruptcy in Oklahoma, Kansas

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Four hospitals in Oklahoma and Kansas, all owned by affiliates of EmpowerHMS, filed for Chapter 11 bankruptcy on March 17.

Three of the four hospitals that filed for bankruptcy are in Oklahoma. According to the bankruptcy petitions for Fairfax (Okla.) Community Hospital, Drumright (Okla.) Regional Hospital and Haskell County Community Hospital in Stigler, each hospital entered bankruptcy with less than $50,000 in assets and at least $1 million in liabilities. Drumright Regional has upward of $10 million in estimated liabilities.

Oswego (Kan.) Community Hospital, which abruptly closed Feb. 14, also entered bankruptcy on March 17. It is the third hospital in Kansas owned by Kansas City, Mo.-based EmpowerHMS that has filed for bankruptcy in recent weeks. Hillsboro (Kan.) Community Hospital and Horton (Kan.) Community Hospital entered Chapter 11 bankruptcy earlier this month.

Two other hospitals owned by EmpowerHMS — Lauderdale Community Hospital in Ripley, Tenn., and Washington County Hospital in Plymouth, N.C. — have entered bankruptcy since late February.


Ex-CEO of Louisiana hospital’s fundraising arm allegedly embezzled $810K

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The former president and CEO of Our Lady of The Lake Foundation, the fundraising arm that supports Baton Rouge, La.-based Our Lady of the Lake Regional Medical Center, stole more than $810,000 of donations, according to an independent auditor’s report cited by The Advocate.

John Paul Funes headed the foundation for more than 10 years and led several multimillion-dollar fundraising campaigns for the hospital. He was fired in November after a third-party investigation revealed “a pattern of forgery and embezzlement of funds.

The hospital hired Deloitte Touche Tohmatsu to review documentation that led to Mr. Funes’ firing.

“We’ve identified approximately $810,000 lost due to fraudulent activity committed by Mr. Funes,” Baton Rouge-based Franciscan Missionaries of Our Lady Health System, which owns Our Lady of the Lake Regional Medical Center, told The Advocate. “Over several years, he orchestrated a series of fraudulent transactions that involved the purchase and distribution of gift cards, charter flights and payments to individuals, including forged documents, invoices and signatures. He misled hundreds of people in and outside of our organization.”

Over the next 30 days, the Franciscan Missionaries will replace the $810,00 in lost funds. The organization plans to seek restitution from Mr. Funes.



A 56-year-old man who works at Walmart — we’ll call him Bill — had been suffering from mild neck pain for years. Recently the pain had worsened, and his wife noticed a subtle tremor in his hands. An MRI showed some narrowing of the spinal column along with disc degeneration. A local surgeon explained that Bill’s best option was spine surgery.



Healthcare companies have reported their earnings from the final quarter of 2018, revealing some success stories and some ongoing struggles.

Earnings season for Q4 2018 has concluded for companies across the healthcare industry, from insurers, for-profit providers, telemedicine companies, and others in between.

Given the challenging market conditions during the final quarter of last year, including the surprise federal ruling that struck down the Affordable Care Act as unconstitutional, many companies reported weaker earnings than they did earlier in 2018.

However, some were buoyed by new intitiatives and product performance that sustained a level of success they intend to carry into 2019.

Below is a list of healthcare’s winners and losers from the 2018 Q4 earnings season:


UnitedHealth Group

  • The Minnetonka, Minnesota-based insurer led the pack again, ending 2018 on an upswing thanks to Optum’s record-breaking performance.
  • The PBM subsidiary recorded year-end revenues above $100 billion for the first time ever.
  • Based United expects to achieve revenues above $240 billion in 2019.

Centene Corp.

  • 2018 was a strong year for the St. Louis-based insurer, finishing with more than $60.1 billion in revenues.
  • Managed care membership reached 14 million, an increase of 15% year-over-year.
  • Centene’s net earnings for Q4 2018 were $241 million, an increase of $11 million year-over-year.

Anthem Inc.

  • IngenioRX, Anthem’s PBM slated for debut in 2020, is now expected to launch in Q2.
  • The subsidiary is expected to achieve gross annual savings north of $4 billion, including more than 20% returned to shareholders.
  • Anthem added 37,000 medical enrollment members in Q4, and saw its operating gain grow by 30% year-over-year.




  • The Purchase, New York-based telemedicine company produced revenues of $122 million and saw total visits rise by 70% while net losses fell.
  • The company still has sizable net losses to account for, posting a net loss of nearly $25 million in Q4 and $97.1 million for the full year.
  • Despite some positive financial metrics, Teladoc’s issued a tepid financial guidance for 2019.


  • While we still wait on final federal approval for the megamerger set to drastically change the healthcare landscape, CVS Health posted its earnings report from a difficult Q4.
  • The Aetna merger played a role in rising revenues by 12.5% for CVS in the last quarter of 2018, but it also hampered some crucial metrics.
  • CVS suffered a net loss of $421 million in Q4 2018 and $596 million during the full year.
  • However, CEO Larry Merlo said he believes CVS’ acquisition of Aetna provides the company with “long-term value” in a rapidly transforming market.

Cigna Corp.

  • As with CVS, a megamerger couldn’t save Cigna from a down quarter to wrap up 2018.
  • The Philadelphia-based insurer produced $14.3 billion in total quarterly revenues and $144 million in net income, but failed to meet earnings estimates after closing its deal with Express Scripts.
  • Overall, Cigna capped off 2018 with total adjusted revenues of $48 billion, a 15% year-over-year increase, along with a net income of $3.6 billion.


Community Health Systems 

  • Amidst lingering divestiture activity, CHS posted a net loss of more than $325 million.
  • CHS recorded a net loss attributable to shareholders of $328 million in Q4 2018, down from a net loss of more than $2 billion during Q4 2017.
  • On one positive note, the the Franklin, Tennessee-based for-profit hospital operator did manage net operating revenues of $3.5 billion, an increase of nearly $400 million year-over-year.

Tenet Healthcare Corp.

  • Tenet experienced a net loss of $5 million in Q4 and saw its full year operating revenues decline 4.5%.
  • The Dallas-based company’s quarterly adjusted EBITDA fell 34.6% year-over-year.
  • CEO Ron Rittenmeyer praised the “significant progress” Tenet made to “create a more efficient, agile enterprise with new leadership.”

Magellan Health

  • Segment profit fell to $16 million in Q4, down 83.8% year-over-year, and only reached $228 million in 2018, a 26.7% drop.
  • Net revenues for 2018 did increase more than 25%, a lone bright spot for Magellan.
  • CEO Barry Smith remains confident despite the significant financial declines over the past year.