Thought of the Day: On Appreciation
RAND: Private plans paid hospitals 224% more than Medicare rates
Private insurance plans paid hospitals on average 224% more compared with Medicare rates for both inpatient and outpatient services in 2020, a new study found.
Researchers at RAND Corporation looked at data from 4,000 hospitals in 49 states from 2018 to 2020. While the 224% increase in rates is high, it is a slight reduction from the 247% reported in 2018 in the last study RAND performed.
“This reduction is a result of a substantial increase in the volume of claims in the analysis from states with prices below the previous average price,” the study said.
The report showed that plans in certain states wound up paying hospitals more than others. It found that Florida, West Virginia and South Carolina had prices that were at or even higher than 310% of Medicare.
But other states like Hawaii, Arkansas and Washington paid less than 175% of Medicare rates.
“Employers can use this report to become better-informed purchasers of health benefits,” study lead author Christopher Waley said in a statement. “The work also highlights the levels and variation in hospital prices paid by employers and private insurers, and thus may help policymakers who may be looking for strategies to curb healthcare spending.”
The data come as the federal government has explored ways to lower healthcare costs, including going toe-to-toe with the hospital industry. The Centers for Medicare & Medicaid Services (CMS) has in recent years sought to cut payments to off-campus outpatient clinics in order to bring Medicare payments in line with payments paid to physicians’ offices but has met with stiff legal and lobbying opposition from the hospital industry that argues the extra payments are needed.
CMS has also published regulations that call on hospitals to increase transparency of prices, including a rule that mandates hospitals publish online the prices for roughly 300 shoppable services.
The hospital industry pushed back against RAND’s findings, arguing that the study is based on incomplete data. The industry group American Hospital Association said researchers only looked at 2.2% of overall hospital spending, a small portion of overall expenses.
“Researchers should expect variation in the cost of delivering services across the wide range of U.S. hospitals – from rural critical access hospitals to large academic medical centers,” said AHA CEO Rick Pollack in a statement to Fierce Healthcare. “Tellingly, when RAND added more claims as compared to previous versions of this report, the average price for hospital services declined.”
‘We have turned to AI to disrupt the future,’ Michael Dowling says
Hospital systems can employ artificial intelligence to reduce the types of health inequities that have made communities of color more vulnerable to COVID-19, the leader of one of the nation’s largest health systems says.
“At Northwell Health, New York’s largest health system, we know health disparities will only grow worse if we don’t move more quickly to identify and correct them,” Michael Dowling, president and CEO of New Hyde Park-based Northwell Health, wrote in a May 11 news release with Tom Manning, chair of Ascertain, an AI venture between Northwell and Aegis Ventures. “To do that, we have turned to AI to disrupt this future.”
For instance, health systems can utilize AI to forecast which expectant mothers could benefit from early intervention and specialized care to treat preeclampsia, a pregnancy complication characterized by high blood pressure that affects Black women at three times the rate of white women, the executives wrote.
Organizations can also use health screenings and predictive models to determine which patients are most likely to develop chronic health conditions such as obesity, diabetes and hypertension, the men wrote. In addition, systems should diligently research AI health care applications, such as the National Institutes of Health’s All of Us initiative, which seeks to obtain health data from a representative sample of the U.S. population.
Dowling and Manning noted that health systems must also commit to high standards of data integrity outlined by the U.S. Food and Drug Administration and apply the Hippocratic oath to AI to make sure it does not widen health inequities.
NYC Nears High Covid-Alert Level, May Consider Requiring Masks
- City strongly recommends masks in public indoor places for now
- About 8% of people tested for Covid in city have been positive
New York City is preparing to hit a high Covid-transmission level in the coming days that would have it reconsidering mask requirements in public places.
“If NYC’s Alert Level is raised to High, the City will consider requiring face masks in all public indoor settings,” according to guidance on the city health department’s website.
New cases per 100,000 people over the last seven days surpassed 300 citywide, with Staten Island the highest at 390, followed by Manhattan at about 366. A month ago, the citywide rate was less than 200 per 100,000. About 8% of people tested for Covid-19 over the last seven days have been positive.
Earlier in May the city moved to a medium alert from low.
“New York City is preparing to potentially enter a high COVID-19 alert level in the coming days and strongly recommends that all New Yorkers mask up in public indoor settings to protect themselves and others,” according to a statement Monday from Mayor Eric Adams’s office.
A high level is reached when new Covid hospital admissions over seven days surpass 10 per 100,000 and the percentage of staffed inpatient beds occupied by Covid-19 patients is greater than 10%, according to guidance from the US Centers for Disease Control and Prevention.
Masks Indoors
New York City’s new admissions are at 9.2 per 100,000 and increasing, while 3.85% of inpatients beds were occupied by Covid-19 patients as of May 10.
Under a high alert level, in addition to masking indoors, New Yorkers are recommended to limit gatherings to small numbers and get tested if they have symptoms, were exposed, traveled or were at a large event.
The city is distributing 16.5 million at-home Covid tests over the next month in an effort to prepare for another wave. The increase in tests will bring the total amount distributed to more than 36 million.
Most of the US remained at a low Covid community transmission-level as of May 12, with medium and high alerts mostly concentrated in the northeast, CDC data show. The nationwide case rate is 185 per 100,000 in the past seven days, up from 66 a month earlier. The rate surged to more than 1,700 per 100,000 during the omicron surge in January.
Providence’s operating loss hits $510M in Q1
Citing inflation and labor cost pressures, Renton, Wash.-based Providence recorded an operating loss of $510.16 million in the first quarter of 2022, according to financial documents released May 13. In the same quarter one year prior, Providence posted an operating loss of $221.91 million.
In the quarter ended March 31, the 51-hospital health system saw its operating revenue hit $6.29 billion. In the same quarter one year prior, Providence recorded operating revenue of $6.44 billion.
Providence’s expenses grew about 2 percent year over year to $6.8 billion. In the comparable quarter in 2021, Providence recorded expenses of $6.67 billion. Providence attributed the expense increase to added costs of agency staff, overtime, retention and wage increases, as well as supply cost boosts.
Providence also said that excluding from the 2021 comparison the assets of Hoag Memorial Hospital Presbyterian in Newport Beach, Calif. — which split from Providence in January — the health system’s expenses grew 9 percent year over year.
After factoring in nonoperating items, including investment losses of $359 million and a $3.41 billion disaffiliation cost tied to the Hoag Memorial split, Providence recorded a net loss of $4.25 billion in the first quarter of 2022.
“With the pandemic, the last two years were challenging for many in healthcare. However, 2022 may be the biggest challenge yet,” Providence CFO Greg Hoffman said. “Rising costs due to inflation and the health care labor crisis are putting significant pressure on major U.S. health systems, some of whom have reported significant operating losses this quarter.”
CommonSpirit posts $591M quarterly operating loss
CommonSpirit Health, a 142-hospital system based in Chicago, reported an operating loss for the three months ended March 31, according to financial documents released May 13.
CommonSpirit, formed through the 2019 merger of San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, saw revenues decline 6.6 percent year over year to $8.3 billion in the third quarter of fiscal year 2022, which ended March 31.
The health system also saw expenses rise. Total operating expenses reached nearly $8.9 billion in the three months ended March 31, up from $8.3 billion in the same period a year earlier. Expenses tied to salaries and benefits increased from $4.2 billion in the third quarter of fiscal year 2021 to nearly $4.7 billion in the most recent quarter.
CommonSpirit recorded an operating loss of $591 million in the three-month period ended March 31, compared to operating income of $539 million in the same period a year earlier.
CommonSpirit closed out the third quarter of fiscal year 2022 with a net loss of $592 million. In the same period of 2021, the health system reported net income of $1.7 billion.
Looking at the nine-month period ended March 31, CommonSpirit posted a net loss of $205 million on revenue of $25.7 billion. In the same period a year earlier, the system reported net income of $4.4 billion on revenue of $24.8 billion.
Allina Health’s operating income rises by $165M
Minneapolis-based Allina Health posted an operating income of $128.8 million for the year ended Dec. 31, up from the $36.3 million loss in 2020, according to its financial results.
The 10-hospital system saw its net income jump 400.8 percent in 2021 to $381.1 million, compared to $76.1 million the year prior.
Allina’s total revenue increased by 11.3 percent, or $493 million, in 2021 compared to 2020. This was directly related to reduced volumes because of the mandatory shutdown in 2020, Allina said in the report. The system’s total patient revenue reached $4.5 billion in 2021, a 14.5 percent increase from the year before at $3.9 billion.
The health system’s operating expenses rose 7.5 percent for the 12 months months ended Dec. 31 to $4.7 billion, compared to $4.4 billion in 2020.
AdventHealth posts $417.7M loss in Q1
AdventHealth, a 48-hospital system based in Altamonte Springs, Fla., recorded a $417.72 net loss in the first quarter of 2022, driven by both investment and operating losses, according to recently released financial results.
In the quarter ended March 31, AdventHealth saw its revenue increase to $3.67 billion, up nearly 8 percent from the same period last year.
Although revenue was up, so were AdventHealth’s expenses. In the first quarter of 2022, AdventHealth saw its expenses grow to $3.72 billion, up from $3.23 billion recorded in the same period in 2021.
“The increased expense is primarily a result of elevated premium and contract labor costs and wage inflation resulting from workforce shortages,” AdventHealth stated in its financial report. “The system continues to implement workforce stabilization plans to reduce turnover and temporary labor utilization.”
AdventHealth ended the first quarter of 2022 with an operating loss of $46.75 million. In the same quarter of 2021, AdventHealth recorded an operating income of $179.11 million.
After factoring in nonoperating items, including a $372.16 million investment loss, AdventHealth ended the first quarter of 2022 with a net loss of $417.72 million. In the first quarter of 2021, AdventHealth recorded a $94.78 million net income.
Cartoon – The illusion of work
Cartoon – Flex Time
HENRY KOTULA 